Fund loss threatens PSALM

With a P60.24-billion settlement hanging over it, the Power Sector Assets and Liabilities Management (PSALM) Corp. may lose its capability to operate and prevent it from contracting backup power in 2015, when the energy crisis is expected to take a turn for the worse.

Recently, the sheriff of the Regional Trial Court (RTC) of Quezon City ordered PSALM to pay P60.24 billion in compensation to class suit petitioners who were among those terminated when the state energy firm was reorganized in 2003 in compliance with the Electric Power Industry Reform Act (Epira). At the same time, the sheriff sent private sector power generation administrators and distributors notices of garnishment requiring them to report the existence of PSALM funds in their possession, for garnishment or seizure, five days upon receipt.

The notices were sent to implement a Supreme Court decision, circa 2008, that was recently upheld with finality. The prescribed settlement on the severance pay and back wages of National Power Corp. (Napocor) Drivers and Mechanics Association (Dama) members has so far ballooned to P60.24 billion from P34.7 billion when the original ruling was issued.

If the recipients of the notices of garnishment were to release PSALM money to the sheriffs, then the agency would lose its funds, PSALM president and CEO Emmanuel R. Ledesma Jr. said in a text message.

PSALM’s inability to operate could complicate proposals for the government to invoke a provision in the energy deregulation law that would enable the state to contract or even build power generation capacity in case of a power crisis.

Asked whether this could clip PSALM’s ability to help deal with the power supply gap, Ledesma said: “Yes, [PSALM] also cannot purchase fuel for its owned and some IPP [independent power producer]-owned plants, and will not be able to pay its debts as they fall due.”

Ledesma said that, in issuing the garnishment notices, which would allow the court to seize assets, the sheriffs effectively denied due process.

Ledesma also urged recipients of the garnishment order to stay put.

“In order to preclude any devastating effects on the general welfare and the country’s energy security and financial stability, PSALM cautions the recipients of the notices of garnishment against unlawfully, carelessly and hastily releasing PSALM’s receivables or bank deposits in their possession,” Ledesma said.

The QC RTC issued the garnishment notices in accordance with the Supreme Court Special Third Division’s resolution dated June 30 on the case filed by Napocor-Dama against Napocor.

PSALM’s alleged payables was set by the sheriffs at P60,244,316,841.88 for the class suit petitioners, which comprised around 8,018 beneficiaries based on the petitioners’ representation to the Supreme Court.

The amount included 10 percent lien amounting to P6,024,431,684.18 for the petitioners’ two lawyers and P1,807,329,725.25 for the QC RTC as fees and costs for the execution of the Supreme Court’s resolution.

Ledesma said government funds dedicated for specific public uses must not be diverted for other purposes and seized under writs of garnishment to satisfy the court’s monetary judgments.

Instead, he said, all disbursements of public funds should be covered by an appropriation from Congress in order to avoid disruption of public functions.

Ledesma also said that a money claim against the government should first be filed with the Commission on Audit given its primary jurisdiction to examine, audit and settle all claims against the government.

The 2001 Electric Power Industry Reform Act unbundled Napocor, making way for the creation of PSALM to privatize or sell off Napocor’s assets and pay its debts.

Napocor employees were terminated as part of its reorganization and, although many were rehired in February 2003, the workers contested that they got lower pay and that new arrangements increased contractualization in their workplace.