What’s wrong with this picture? A little bit of everything.
Last week, the Power Sector Assets and Liabilities Management (PSALM) Corporation received a bit of a shock—no pun intended—when it learned that the Regional Trial Court of Quezon City had dispatched its constables with notices of garnishment to PSALM’s customers, banks, and other creditors to the tune of a cool P60.24 billion, the final total judgment won by former employees of the National Power Corporation (NPC, or Napocor) represented in a class-action suit filed by the NPC Drivers and Mechanics Association (NPC-DAMA).
The lawsuit, which involved 8,018 people in the plaintiff class, alleged—successfully, as it turned out—that Napocor had illegally terminated the employees when the state-owned power producer was reorganized in 2003; the hefty amount assessed as damages included 11 years’ worth of back wages and other compensation for the former employees themselves, plus legal fees for the plaintiffs’ lawyers amounting to a little more than P6 billion, and court fees of about P1.8 billion. The NPC-DAMA group had actually won the case in 2011, but naturally had to wait until the appeals had run their course, which they did on June 30 of this year when the Supreme Court’s Third Special Division upheld the lower court judgment against Napocor.
Now that the judgment is apparently as final as it is going to get, the original court in Quezon City means to collect. PSALM, however, has no intention of cooperating. Last Friday, PSALM President and CEO Emmanuel R. Ledesma, Jr. issued a statement declaring the notices of garnishment “legally baseless, violative of due process, premature at best, and hence patently void.”
Here’s an interesting piece of news for Mr. Ledesma: No, they’re not.
He believes they are because of a 2009 Supreme Court ruling that acknowledged PSALM’s subsidiary liability and specifically noted that the agency was entitled to due process to prevent the seizure of assets that it did not acquire from Napocor. Ledesma also pointed out that judicial claims involving public funds should be coursed through the Commission on Audit. Finally, he said that the court sheriff should first provide an accounting showing that the court has already expropriated everything it could from Napocor, and that the settlement amount has properly accounted for “separation pay previously received from NPC or PSALM and/or income earned through new employment in NPC, PSALM or other government entities.”
The problem PSALM and its agitated CEO have is, first of all, an existential one. PSALM is not a court. It is not a court-appointed assessor tasked with determining the proper way of calculating and collecting a monetary settlement. Rather, the sole reason for PSALM’s existence, according to its very own gov.ph website, is:
“[T]o take over the ownership of all existing generation assets of the National Power Corporation (NPC), independent power producer (IPP) contracts, real estate, and all other disposable assets including the transmission business of the National Transmission Corporation. By the same token, PSALM assumed all outstanding obligations of NPC arising from loans, issuances of bonds, securities, and other instruments of indebtedness. The principal purpose of PSALM, as mandated by the EPIRA, is to manage the orderly sale and privatization of these assets with the objective of liquidating all of NPC’s financial obligations in an optimal manner,” as provided for in the damnable Electric Power Industry Reform Act (Epira) of 2001.
Therefore, if it’s Napocor’s problem, it automatically becomes PSALM’s problem. And while it certainly is true PSALM’s own, non-Napocor assets should be bypassed by the settlement order, in theory, PSALM shouldn’t even have any of those. Even describing PSALM as having “subsidiary liability” in this case is probably letting the agency off the hook to some extent; there are reports floating around that PSALM was in fact a party to the decision to illegally terminate the Napocor employees. Those reports are unverifiable at this point, but they are certainly plausible—PSALM was formed immediately after the enactment of Epira in June 2001, and the reorganization of Napocor’s workforce happened two years later, by which time PSALM would have had not only the opportunity but would have been legally required to oversee Napocor changes of that magnitude.
A news brief over the weekend reported that PSALM and relevant government personalities were meeting to come up with a “coordinated response” to the demand for payment, warning that a loss of PSALM’s receivables would cause it to “lose its capability to operate and prevent it from contracting backup power in 2015, when the energy crisis is expected to take a turn for the worse.” Which, unfortunately, is probably true, as PSALM has always followed the day-late-and-a-dollar short approach to planning; this is an agency that, having been charged with the task of resolving Napocor’s huge debts, spent its first decade of operations increasing those debts by about $340 million, and which thinks leaving Napocor “only” $4 billion in debt by 2026 at the end of PSALM’s 25-year corporate life will be some kind of achievement.
If the payment of the court-ordered settlement leaves PSALM in the lurch and deepens the impending power crisis, PSALM itself should be held responsible. Emmanuel Ledesma and his management team are bright enough to generate a list of reasons why PSALM should not be compelled to pay the settlement due Napocor’s former employees, but they are not conscientious enough to raise the issue in an appropriate venue (Hint: The appropriate venue is not the “News Room” page of the agency’s website) at the appropriate time, which would have been, at the latest, the instant the final ruling on the case was made known on June 30, or ideally, sometime in 2009 when PSALM was impleaded into the Napocor case and more or less told in so many words that it should prepare itself for what is happening now.
If they’re lucky, the former Napocor employees entitled to compensation and who have waited for 11 years already will receive it shortly before the heat death of the universe, and in the meantime, the electricity-consuming public will be saddled with yet another huge lump sum of expenses to be paid off in annoying little bits as a “universal charge” on the monthly electric bill, which, as an added bonus, will probably be delivered in the dark by this time next year.
Bad labor relations, slow-moving courts, an agency accomplishing pretty much the exact opposite of what it’s supposed to be doing, and unnecessary added costs to consumers: Someone needs to build a nice pedestal for this whole case, and install it in the park—it’s the perfect monument to institutional failure.