Rules of the gain
As things stand, the state-owned PSALM, or Power Sector Assets and Liabilities Management Corp., is staying the course in its fight over the 153-MW power plant called Naga.
Perhaps PSALM wants to get much more money than the P1.08 billion offered by the company in Aboitiz group called TPVI for the complex made up of one coal plant and one diesel plant on some 20-hectare property.
But then PSALM may also be aware that it will still be up against the Supreme Court division in which it earlier lost the case involving the complex.
From what I gathered, PSALM nevertheless now wants the Supreme Court en banc to take over the case.
It all started in 2013 when PSALM conducted a public bidding for the coal power plant in the Naga complex.
What followed after that bidding, actually, became the big issue in the Supreme Court case on the Naga complex.
You see, PSALM declared Therma Power Visayas Inc., or TPVI, belonging to the Aboitiz group, as the winner in the bidding.
TPVI would thus get the coal plant (minus the diesel plant) and the 20-hectare property.
But TPVI still had to overcome one more hurdle—what became known as the controversial RTT, the “right to top.”
Some four years earlier in 2009, PSALM already sold to another firm called SPC Power, the diesel plant unit in the Naga complex, plus a lease on the real estate.
That particular sale nevertheless featured the RTT, basically saying that, if and when PSALM would sell the entire Naga complex in the future— meaning, the land and the coal plant—SPC would exercise the RTT.
SPC simply would have to match the price of the winning bidder, plus at least 5 percent, and SPC would get the complex.
TPVI of the Aboitiz group offered about P1.08 billion for the complex, and so SPC offered PSALM about P1.14 billion, or P54 million more.
Because of the 2009 agreement, PSALM awarded the sale to SPC.
But then former Senator Sergio Osmeña III went to the Supreme Court to question the RTT, arguing that it worked against the very idea of competitive bidding.
The third division in the Supreme Court handled the case, and it efficiently worked on the case for only 15 months to make its decision.
It ruled that RTT was invalid, because it “discouraged more potential buyers … knowing that even their most reasonable bid can be defeated by SPC’s exercise of its right to top.”
Still SPC and PSALM argued that the bidders—including the Aboitiz group TPVI—knew about the RTT in the first place.
From the start, in effect, all the bidders, including the Aboitiz group TPVI, actually agreed to play the game with that set of rules.
By implication, under the ruling, if the RTT was null and void, the sale by PSALM of the diesel plant to SPC should be revoked.
And so the ruling of the Supreme Court third division became what lawyers called “final.”
Meaning, that was it, and not even the Pope or the motorbike riding Duterte Harley could do anything about it!
Except of course that the TPVI asked the third division of the Supreme Court to award the sale of the entire Naga complex to it.
That would include the diesel plant that PSALM earlier sold to SPC.
It so happened that the third division of the Supreme Court agreed with TPVI, even if it had to reopen the vault of heaven to amend the ruling that was already “final.”
Of course PSALM objected to the new decision by Supreme Court third division.
Together with SPC, the state company argued for another bidding, instead of an outright award to TPVI.
If the rules were wrong, to begin with, the players would have to play again in a rematch.
For one, they argued that the Supreme Court third division declared RTT as invalid because it would discourage bidders.
Yet the same division would not allow PSALM to conduct another bidding to encourage more bidders—this time including the refurbished diesel plant.
PSALM thus should at least gain more value for the Naga complex.
Question: Why is PSALM the only government outfit fighting in this case?
