G.R. No. 187420 - Power Generation Employees Association-NPC vs. National Power Corp.

The Electric Power Industry Reform Act of 2001 (EPIRA) was enacted on June 8, 2001, with the primary objective of reforming the electric power sector through privatization, restructuring, and improved regulatory measures.
EPIRA provided for the creation of the Power Sector Assets and Liabilities Management Corporation (PSALM) to take over, manage, and eventually privatize the generation assets, liabilities, contracts, and other disposable assets of the National Power Corporation (NAPOCOR).
The law stipulated that while NAPOCOR’s assets would be transferred, its operational functions would be curtailed so that PSALM could assume its role as owner for purposes of asset disposition and liquidation of financial obligations.

In 2008, PSALM drafted an Operation and Maintenance Agreement (O&M Agreement) aimed at ensuring the continued operation and maintenance of NAPOCOR’s power plants and generation assets pending their eventual privatization.
The draft provided that:

NAPOCOR would perform necessary functions to operate and maintain the power plants until PSALM took full control post-privatization;
NAPOCOR was required to submit its budget proposals for PSALM’s review and approval;
All revenues from the operation and maintenance of these assets were to be recognized as PSALM’s property.

President Cyril C. Del Callar of NAPOCOR, in a letter dated August 6, 2008, queried whether PSALM had the authority to take over control of NAPOCOR’s assets and revenues, given its limited mandate under EPIRA.

Representative Arnulfo P. Fuentebella, one of the drafters of EPIRA, responded on August 20, 2008, explaining that:

PSALM was essentially intended to serve as a consolidator or liquidator of NAPOCOR assets rather than as an operator;
NAPOCOR was still meant to generate and sell electricity from the undisposed assets, with PSALM’s role limited to eventually receiving net profits after operating expenses.

Despite this clarification, PSALM proceeded with drafting an agreement that some argued exceeded its intended mandate.

Following Del Callar’s resignation on September 30, 2008, NAPOCOR’s leadership shifted with President Froilan A. Tampinco’s appointment by President Arroyo.
On March 9, 2009, the O&M Agreement was formally signed by PSALM (represented by Jose F. Ibazeta) and NAPOCOR (represented by Tampinco), with immediate ratification by NAPOCOR’s Board of Directors.

Earlier petitions had been filed by labor groups (NECU and NEWU) against the O&M Agreement in related cases, with arguments centering on claims that the remittance of revenues to PSALM contravened EPIRA by transferring assets beyond net profits.
Subsequently, on April 28, 2009, the Power Generation Employees Association-NAPOCOR (PGEA-NPC) and several individual NAPOCOR officials filed a separate Petition for Injunction—under Section 78 of EPIRA—directly with the Supreme Court.
The petition sought both temporary restraining orders and a permanent injunction to annul the O&M Agreement on the grounds that it exceeded EPIRA’s prescribed limits and violated the separation of powers, among other constitutional concerns.

Asserted that the O&M Agreement unlawfully transferred all revenue from NAPOCOR’s operations to PSALM rather than limiting PSALM’s ownership to net profits as provided under Section 55 of EPIRA and relevant implementing rules.
Contended that PSALM, by entering into the agreement, was overstepping its limited mandate of asset privatization and liquidation, thereby encroaching on NAPOCOR’s operational prerogatives.
Claimed that NAPOCOR employees, though not parties to the agreement, would suffer direct injury from the supposed violation of their rights and the alteration of working conditions.
Argued that the petition was proper under Section 78 of EPIRA, which vests the Supreme Court with exclusive jurisdiction to enjoin the implementation of provisions of EPIRA.

The Office of the Solicitor General maintained that the O&M Agreement merely recognized PSALM’s ownership under EPIRA, including assets and related proceeds, and did not violate legislative intent.
Respondent PSALM contended that the petitioners were not the real parties in interest since they were not privy to the agreement and lacked standing to challenge it.
Further argued that the agreement fell squarely within the operational framework set by EPIRA and that any disputes regarding revenue allocation or budget approvals were internal matters to be resolved by NAPOCOR’s Board of Directors.
Emphasized that the petition must be dismissed as it challenged the proper exercise of PSALM’s authority and the statutory scheme of EPIRA, not merely procedural or contractual irregularities.

Whether petitioners, as NAPOCOR employees and officials, were the real parties in interest entitled to file a Petition for Injunction under Section 78 of EPIRA.
Whether the filing of such a petition directly with the Supreme Court was procedurally proper given the purported lack of direct injury by petitioners.

Whether the O&M Agreement between PSALM and NAPOCOR exceeds the powers granted to PSALM under EPIRA.
Whether the agreement, by mandating that all revenues (and not just net profits) be remitted to PSALM and by requiring NAPOCOR to submit its budget for PSALM’s approval, violates the explicit provisions and intent of EPIRA.

Whether Congress, through EPIRA, improperly attempted to limit the judicial power to grant provisional relief (such as temporary restraining orders or injunctions) by vesting the authority solely in the Supreme Court.
Whether the petitioners were entitled to seek a permanent injunction challenging the implementation of a contract that purportedly preserves EPIRA’s provisions.