The Court of Appeals has rejected the bid of wholesale electricity spot market operator Philippine Electricity Market Corp. to collect P234 million from a power generation firm allegedly involved in the collusion among industry players to manipulate electricity prices in the spot market during the 2013 Malampaya shutdown.
In a 22-page decision, the CA’s Special Fifth Division through Associate Justice Stephen Cruz sustained the April 1, 2015 ruling issued by the Regional Trial Court of Pasig City granting Thermal Mobile Inc.’s petition for the issuance of an injunction stopping the PEMC from demanding payment of P234.9 million, representing financial penalties for violation of the Must Offer Rule.
The MOR requires generation companies to offer all their registered capacity to the wholesale electricity spot market in order to avoid market manipulation through the artificial withholding of capacity or offering at an insanely high price such that it will not be dispatched.
PEMC, which acts as the market operator that governs WESM, found several violations of the MOR, and TMO was found to be one of the biggest violators, liable for 3,578 counts of breach of the MOR and was fined P243.9 million.
Because of this, TMO sought refuge from the Pasig City RTC, which in turn stopped PEMC from demanding payment of the penalties.
The appellate court agreed with the assertions of TMO that the payment of the huge amount would jeopardize its operations.
“In the instant case, TMO sufficiently established the importance of the issuance of the writ of preliminary injunction. TMO, in its comment to PEMC’s petition for review, mentioned that it is not financially capable to settle the financial penalty. As such payment of the enormous penalty amounting to P234,900,000 would be a threat to its very existence,” the CA stressed.
“Simply stated, what is involved herein is not just money but TMO’s very own existence, which obviously is not susceptible of any mathematical computation and cannot be adequately compensated in damages. In fact, no device can measure and calculate the injury that TMO would suffer if the same would be executed and implemented,” it said.
The CA noted that the arguments raised by PEMC in its petition “are utterly misplaced.”
PEMC argued that the Pasig RTC erred in taking cognizance of TMO’s petition based on the rules of court on alternative dispute resolution and resolving the same despite the fact that no civil contract to which entitles them to arbitrate.
It added that the trial court erred in ruling that WESM DRMM and the WESM Rules are considered the dispute resolution agreement of the parties, thus, the court has jurisdiction over the case.
The PEMC also insisted that there is no irreparable injury that would justify the issuance of the injunction pending arbitration.
It noted that contrary to PEMC’s claim that there is no specific arbitration agreement, which covers the relationship between PEMC and TMO, there exists the Market Participation Agreement dated April 5, 2013 where both parties were signatories.