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MANILA, Philippines–The Court of Appeals has denied the government’s bid to be part of the P14 billion settlement agreement between Manila Electric Company (Meralco) and state-owned National Power Corp (Napocor).
In a 30-page decision, the appeals court Special 12th Division declared the settlement agreement as valid, affirming the Pasig Regional Trial Court’s ruling.
The case stemmed when Meralco and Napocor entered into a settlement agreement where Meralco will pay Napocor P14 billion out of the P27,515 billion it owed Napocor. The amount was for unsettled collections under their 10-year power supply contract that lapsed in December 2004.
The amount was lowered on account of Napocor’s delay in the construction of transmission facilities that would have connected Meralco to some of its contracted independent power producers then and of Napocor’s sales to directly connected customers within Meralco’s franchise area.
The agreement was submitted to the Pasig Court for approval. The government, through the Office of the Solicitor General intervened saying the agreement was invalid due to Napocor’s lack of authority to enter into any agreement.
It also took the case to the Court of Appeals to stop the lower court’s proceedings. Initially, the appeals court issued a restraining order but it was lifted and the OSG’s bid was denied paving way for the proceedings in the lower court to push through.
In the Pasig Court, the government refused to participate in the proceedings regarding the settlement agreement, saying they filed another petition before the appeals court.
The government argued that the Pasig Court erred in proceeding with the case despite pending motion before the Court of Appeals and the lower court also erred in allowing Napocor to enter into an agreement despite its lack of authority to do so.
The appeals court said that while there was a pending motion before them, there was no restraining order issued against the lower court from stopping the proceedings regarding approval of the settlement.
Also, the appeals court said it was the government itself who waived their right to participate in the lower court’s proceedings.
“The RTC acted in accordance with the rules when it declared appellant “as in default” and no longer allowed to participate in the pre-trial and present evidence on its behalf,” the appeals court said.
“It is true that litigation is not a game of technicalities and that the rules of procedure should not be strictly enforced at the cost of substantial justice. However, it does not mean that the Rules of Court may be ignored at will and at random to the prejudice of the orderly presentation and assessment of the issues and their just resolution,” it added.
Also, the appeals court said that contrary to the government’s argument, there is no law prohibiting Napocor from entering into any compromise agreement or release any settled claim.
With the approval of the settlement, an estimate of P0.12 per kilowatt hour will be added to consumers in areas serviced by Meralco. But this is still subject to ERC approval.
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