The Thirteenth Division of the Court of Appeals issued a writ of preliminary injunction in favor of South Premiere Power Corp. stopping Manila Electric Co. from implementing the order of the Energy Regulatory Commission to honor their fixed-rate power supply agreement signed in 2019.
“To be clear, the grant of the WPI suspends the continued implementation of the PSA but does not terminate the same. This is to allow the parties to negotiate the terms of the PSA,” according to the CA ruling, signed by Associate Justice Mary Charlene Hernandez-Azura and concurred by Associate Justices Victoria Isabel Paredes and Florencio Mamauag Jr. on Jan. 25.
The ERC order dated Sept. 29, 2022 prevents SPPC, a subsidiary of SMC Global Power Holdings Corp., from terminating its power supply agreement with Meralco.
The CA said the injunction is an ancillary remedy sought by SPPC in its petition for certiorari to question the ERC order denying its joint motion with Meralco for a price adjustment dated May 10, 2022.
SPPC and Meralco sought a temporary rate hike adjustment for their 670-megawatt PSA because of the Malampaya gas constraints, which the ERC rejected. SPPC owns the 1,200-MW Ilijan natural gas power plant in Batangas.
“After considering all the pleadings and the respective arguments/submission of the parties, this court grants the application for the WPI for the reason the petitioner has sufficiently demonstrated that all the requisites for the grant of a valid WPI are present,” it said.
The court said SPPC stands to suffer irreparable injury through the ERC order and since the same was issued, its continued supply to Meralco had caused it to suffer millions in losses every day.
The CA said SPPC was forced to sell on a negative margin, which produces an “untenable situation because the more the petitioner sells, its business losses become greater.”
“The continued implementation of the PSA where petitioner is compelled to bear the cost of energy supplied to the public on its own without expectation of a reasonable return on its investments not only deprives the petitioner of its property without due process of law but also takes its private property for public use without just compensation,” it said.
The CA also said the ERC order that SPPC and Meralco should continue honoring the PSA is “deemed implied.”
It said the issuance of the writ is urgent because the petitioner would be forced to cease operations altogether. SPPC said it could only remain in business for the next 10 months if the effectivity of the PSA would not be suspended.
“The judgment being prayed for the petitioner will be rendered ineffectual without the issuance of the writ since the petitioner might cease to exist by that time,” the CA said.
SPPC incurred more than P1.3 billion in losses from January to May 2022 because of the continued implementation of the PSA.
The CA directed SPPC to post a P100-million bond to answer for any damages that the respondents may suffer from the issuance of the injunction if the court finally decided that the SPPC is not entitled to it.
The CA earlier issued a 60-day temporary restraining order in favor of SPPC on Dec. 2, 2022.
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