MANILA, Philippines—The P14-billion settlement agreement between Manila Electric Co. (Meralco) and National Power Corp. (Napocor) has been upheld in court, bringing their decade-long dispute closer to a resolution.
The Court of Appeals (CA) affirmed the ruling of the regional trial court (RTC) in Pasig City that Meralco and Napocor had a “valid and binding” settlement agreement way back in 2003, Meralco officials said after the company published a disclosure at the Philippine Stock Exchange late Tuesday.
Under the settlement agreement, the parties agreed to resolve their dispute concerning their 10-year contract for the supply of electricity and Meralco would pay Napocor the net settlement amount of P14.32 billion.
“The ruling of the CA is not yet final since the OSG (Office of the Solicitor-General) may still file an MR (motion for reconsideration) or elevate the case to the SC (Supreme Court),” Meralco first vice president and head of legal William S. Pamintuan said in a text message when asked for further details.
On Tuesday, Meralco disclosed to the PSE that the CA denied the appeal of the OSG on the decision of the Pasig RTC Branch 71. “(The) decision will resolve the dispute between Napocor and Meralco and will allow the parties to implement their settlement agreement,” Meralco said.
The case stemmed from Meralco’s move in 2002 to cancel its power-purchase contract with Napocor from 2003 to 2004. On Nov. 21, 1994, Meralco signed a 10-year contract for the sale of electricity with Napocor starting Jan. 1, 1995, to December 31, 2004. Under the contract, Meralco agreed to purchase a total of 60,092 GWh covering the years 2002, 2003 and 2004.
Until 2000, Napocor was reported to be supplying 3,600 MW of Meralco’s total monthly electricity requirement and the rest by its three independent power producers-suppliers—Duracom, Quezon Power Plant Ltd. and First Gas Sta. Rita and San Lorenzo. However, from 2001 onward, Meralco apparently began cutting down on the amount of electricity it was getting from Napocor as the First Gas Sta. Rita and San Lorenzo plants became fully operational.
In 2002, Napocor started billing Meralco based on their agreement but Meralco, within that year, served Napocor a formal notice to terminate their agreement. Meralco originally owed P42 billion to Napocor but the amount shrank to P14.3 billion after a series of legal negotiations.