SC allows Meralco to pass on P14B debt to customers | Inquirer News

SC allows Meralco to pass on P14B debt to customers


MANILA, Philippines — The Supreme Court has denied a government bid to stop the Manila Electric Co. (Meralco) and the National Power Corp. (Napocor) from finalizing a 2003 settlement agreement that would allow the distribution firm to pass on its P14-billion debt to the power supplier to its customers.

In a 16-page ruling dated Dec. 13, 2013, the high court’s First Division upheld an earlier decision of the Court of Appeals denying the government’s petition to review the decision of the lower court approving the agreement.


The high court agreed that the Pasig Regional Trial Court did not commit a grave abuse of discretion when it waived the Office of the Solicitor General’s participation in the pretrial conference and eventually approved the agreement.


“The waiver appears to have been caused by the deliberate refusal of the (OSG’s) counsel to participate in the proceedings,” the high court division said.

Records showed the OSG had asked and gotten the RTC to reset the pretrial conference twice in 2010, and when it finally showed up for a new pretrial date, the OSG lawyer excused himself from participating.

The ruling, penned by Associate Justice Lucas Bersamin, also noted that the settlement agreement between Meralco and Napocor was approved by the Pasig RTC in 2006 but it was only in 2008 that the OSG questioned the validity of the settlement agreement in court.

The settlement agreement has to do with Meralco’s payment of its electricity purchase dues from 2002 to 2004 amounting to P27.5 billion. After mediation, this amount was reduced to P14 billion.

The agreement had a controversial pass-through provision. Meralco was allowed to pay Napocor the net settlement amount “from collections recovered from Meralco’s consumers once the Energy Regulatory Commission (ERC) approved the pass-through.”

The ERC was hearing the application for the pass-through when it suspended its proceedings after the OSG opposed the settlement agreement in 2008. Meralco went to the Pasig court in November 2009 to seek declaratory relief.


The agreement was to spread payment to Napocor over a five to six year period so as to minimize the impact of the adjustment on the consumers—estimated to be about 12 centavos per kilowatt-hour.

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TAGS: courts, Judiciary, litigation, MERALCO, NAPOCOR, News, Supreme Court, trials

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