PSALM: Only SC has jurisdiction to grant TRO

13 Sep 2015

The Power Sector Assets and Liabilities Management (PSALM) Corporation asserted its position that the grant of the temporary restraining order (TRO) on the termination of the government's contract with South Premiere Power Corporation (SPPC) as Independent Power Producer Administrator (IPPA) in the 1,200-megawatt Ilijan combined-cycle power plant should not be under the jurisdiction of the Mandaluyong Regional Trial Court (RTC). PSALM argued that only the Supreme Court has jurisdiction to grant a TRO or any other injunctive relief to complainant SPPC.

The TRO against PSALM runs contrary to the provisions of Republic Act No. 9136, the Electric Power Industry Reform Act (EPIRA), which mandates the government power firm to "manage the orderly sale, disposition, and privatization of NPC (National Power Corporation) generation assets, real estate and other disposable assets, and 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.

"Essentially, SPPC would like the Honorable Court to prohibit PSALM from terminating the Administration Agreement and reinstate it as an Administrator," it added.

PSALM specified that for the period 26 December 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.

Likewise, 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 10 August 2015 for the payment thereof, which by then had already amounted to PhP6.46 billion (PhP6,460,973,606.46).

For failure to still settle the outstanding Generation Payments, PSALM was compelled to avail of the relief provided under the Ilijan IPPA AA on 04 September 2015.

Corporate Communications Division
Tel. No. (632) 9029067