G.R. No. 134692 - Fajardo, Jr. vs. Freedom to Build, Inc.

The case arises under the Electric Power Industry Reform Act of 2001 (EPIRA), or Republic Act No. 9136, which sought to restructure the electric power industry in the Philippines.
EPIRA provided for the privatization of the National Power Corporation (NPC) assets and created the Power Sector Assets and Liabilities Management Corporation (PSALM) to manage and dispose of these assets.
PSALM’s mandate included the orderly sale and disposition of NPC generation assets, real estate, and independent power producer (IPP) contracts, with the goal of liquidating NPC’s financial obligations.

Among the assets put on sale was the 600‑MW Batangas Coal‑Fired Thermal Power Plant (Calaca Power Plant) in Batangas.
In July 2009, DMCI Holdings, Inc. was declared the highest bidder, and an Asset Purchase Agreement (APA) was executed on July 29, 2009, which took effect on August 3, 2009.
On December 2, 2009, DMCI transferred all its rights and obligations under the APA and the accompanying Land Lease Agreement to Sem‑Calaca Power Corporation (SCPC) through an Amendment, Accession and Assumption Agreement.
SCPC assumed physical possession, operation, and maintenance of the Calaca Power Plant and began delivering electricity to customers, including MERALCO, as set out in Schedule W of the APA.

Schedule W of the APA contained a provision that appeared to impose an obligation on SCPC to supply 10.841% of MERALCO’s energy requirements.
Ambiguity arose from the concurrent appearance of the figure “169,000 kW,” which one party (SCPC) interpreted as a cap on the supply obligation, while PSALM contended that the obligation was to deliver the full 10.841% of MERALCO’s requirements, regardless of any cap.
Dispute centered on whether SCPC was liable only for supplying up to 169,000 kW at any given hour or for the entire 10.841% share regardless of this figure.

Amid allegations that NPC and PSALM improperly nominated excess electricity—leading SCPC to rely on power purchased from the Wholesale Electricity Spot Market (WESM) to cover shortages—SCPC initiated the dispute resolution process.
The Energy Regulatory Commission (ERC) rendered a decision on July 6, 2011, ruling in favor of SCPC by interpreting the contract as obliging it to deliver 10.841% of MERALCO’s energy requirements but not to exceed a 169,000 kW capacity allocation per hour.
Motions for reconsideration were denied by the ERC (February 13, 2012); subsequently, PSALM’s petition for review was rejected by the Court of Appeals on September 4, 2012.
PSALM then elevated the matter to the Supreme Court, contesting the interpretation of the contractual figures and alleging errors in the ERC’s and CA’s reasoning.

The Supreme Court denied PSALM’s petition, upholding the interpretations and findings of the ERC and the Court of Appeals.
The Court reiterated that administrative agencies are granted deference in technical matters and that their findings, when supported by substantial evidence, are not readily disturbed on appeal.
The decision emphasized that the contractual ambiguity in Schedule W—specifically the incomplete mathematical statement of 10.841% lacking a base value and the duplicative appearance of 169,000 kW—required harmonious interpretation.

Whether the contractual obligation required SCPC to supply 10.841% of MERALCO’s energy requirements without limitation or was capped at 169,000 kW per hour.
How the dual figures (10.841% and 169,000 kW) contained in Schedule W should be reconciled to reflect the true intention of the parties.

Whether the ERC erred in relying on extrinsic evidence—such as witness testimony and operational data regarding plant capacity—to interpret the ambiguous contractual figures.
Whether such evidence improperly influenced the interpretation of the APA’s provisions.

Whether the Supreme Court should defer to the technical and factual findings of the ERC and the Court of Appeals, given their specialization in energy-related disputes.
Whether there was any grave abuse of discretion or error of law in the administrative bodies’ rulings.

Whether SCPC assumed all of NPC’s and PSALM’s obligations regarding MERALCO’s supply, or whether its assignment was limited strictly to the portion defined in Schedule W.
The implications of the provision allowing SCPC to enter into back-to-back supply contracts with other generators or to purchase from the market if it met its capacity limit.