Garnishment of Napocor’s P62-billion assets deferred

By: Joel R. San Juan .

THE Supreme Court (SC) on Tuesday stopped the enforcement of its numerous orders, as well as the orders issued by the Regional Trial Court (RTC) in Quezon City, that would have paved the way for the garnishment of some P62 billion worth of assets and bank deposits of the National Power Corp. (Napocor) to compensate more than 5,000 employees who were allegedly illegally terminated as part of its restructuring under Republic Act (RA) 9311, or the Electric Power Industry Reform Act of 2001 (Epira).

In a resolution, the SC’s Third Division lifted the notice of garnishment issued on August 14, 2014 by the RTC in Quezon City pursuant to its June 30, 2014, decision affirming the claim of Napocor’s dismissed employees for compensation.

“The Court’s action today…stops the execution of the writs of garnishment and allows the Court to determine who are entitled to be paid under the terms of its previous resolutions, and how much each is entitled to be paid,” the SC said.

The Court also ordered Napocor to submit within 45 days from receipt of the resolution its separate lists of Napocor employees as of January 31, 2002, showing information such as the full name; date of hire; last date of uninterrupted service after date of hire; position and salary as of last date of service; if termination or separation pay has been received at anytime from Napocor; the amount of termination or separation pay received and date of receipt.

In deferring the garnishment of Napocor’s assets and bank deposits, the SC took into consideration various submissions to the Court, which include a letter from several Cabinet secretaries, including the secretaries of Finance and Energy, expressing concern about its June 30, 2014, ruling.

The Cabinet secretaries claimed that garnishment of Napocor’s assets and bank deposits would have “injurious effects” on the economy, as well as the energy sector, if garnishment was not stopped.

In its June 30, 2014, ruling, the Court upheld all its previous rulings, declaring that the resolution of the issue of illegal dismissal and the award of reinstatement and/or payment of separation benefits are logical, and necessary consequences of its ruling declaring null and without effect Napocor Resolutions 2002-124 and 2002-125 that implemented its reorganization.

The Court declared the resolutions invalid because four department secretaries who were members of the Napocor did not participate personally in the deliberation of the resolutions and sent their representatives, instead.

It stressed that department secretaries could not delegate their duties as members of the board much less their power to vote and approve the board resolutions because it is their personal judgment that must be exercised in the fulfillment of such responsibility.

The Court subsequently held that the illegally dismissed employees were entitled to reinstatement or payment of separation benefits.

The garnishment order issued by the RTC in Quezon City covers Napocor’s current assets to Manila Electric Co., Land Bank of the Philippines and Philippine Electricity Marketing Corp.

The SC also required the dismissed Napocor workers to comment on the power firm’s motion seeking to reconsider the December 2, 2009, resolution until Monday.

Napocor earlier said, “By garnishing and effectively freezing its monthly financial receivables from power customers, Napocor would be unable to support and sustain its operational and maintenance expenses—including those needed to finance its monthly fuel supply requirement, payment of capital expenditures and payment of personal services, i.e. salaries of respondent Napocor’s employees.”

Napocor added that the hasty implementation of the trial court of the garnishment order would trigger not only possible bankruptcy of the agency but also of the national government as a whole.

Recently, the Power Sector Assets and Liabilities Management Corp. (PSALM), asset manager of Napocor, warned the public of a possible nationwide power shortage should the garnishment order be enforced.

PSALM had said that without any budget allotted for this unscheduled expenditure, it would have to rely on the national government for support through advances, or on-lending arrangements, which would entail additional government borrowings.

The state firm, which took over the assets of the Napocor, is responsible for the fuel supply and operations budget of the Malaya Thermal Power Plant in Luzon, Power Barges (PBs) 101 and 102 and Naga Coal-fired Thermal Power Plant (CFTPP) in the Visayas and PB 104 in Mindanao, all of which produce around 430 megawatts (MW) in dependable capacity.

PSALM is, likewise, obliged contractually to provide for the fuel requirements of independent power producer (IPP) plants, namely, Ilijan Natural Gas Power Plant (NGPP) in Luzon, and Zamboanga Diesel Power Plant (DPP) and General Santos DPP in Mindanao.

PSALM explained that if the independent power producer administrators (IPPA) allows the garnishment of monthly and generation payments to PSALM, it, in turn, will be unable to pay capacity and other fees for the IPPs in breach of its contract with the IPPs. PSALM is contractually responsible to pay for the capacity fees for the following power plants with appointed IPPAs: Bakun Hydroelectric Power Plant (HEPP), Ilijan NGPP, Pagbilao CFTPP, Sual CFTPP and San Roque HEPP.

The capacity or energy fees for the following power plants without IPPAs are, in contrast, PSALM’s direct obligations, which will, likewise, be adversely affected: Benguet Mini-Hydros, Caliraya-Botocan-Kalayaan HEPP, Casecnan HEPP, General Santos DPP, Mindanao CFTPP, Mount Apo 1 and 2 GPP, Unified Leyte Geothermal Power Plant (GPP) and Zamboanga DPP. PSALM also collects and administers the Universal Charge for Missionary Electrification, which is the source of funds of the Napocor for its operations in off-grid areas.

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