Case Summary (G.R. No. 204719)
Applicable Law
The primary law governing this dispute is the EPIRA (Republic Act No. 9136), which set forth the framework for the privatization and restructuring of the electric power industry, along with the establishment of PSALM's role in managing assets and liabilities previously held by the National Power Corporation (NPC).
Case Background
The case centers on an Asset Purchase Agreement (APA) involving SCPC, which took over certain obligations from DMCI Holdings, Inc. regarding the Calaca Power Plant. A significant point of contention is SCPC's alleged obligation to supply electricity to MERALCO, with PSALM asserting that SCPC must fulfill this supply obligation without a cap, while SCPC argued for a limit based on its capacity.
Dispute Over Supply Obligations
SCPC contended that its obligation to supply MERALCO was capped at 169,000 kW for any hourly interval, while PSALM insisted that SCPC must provide 10.841% of MERALCO's requirements without regard to such a limit. This conflict led to a supply shortfall encountered by SCPC during peaks in demand, resulting in additional purchases from the Wholesale Electricity Spot Market (WESM) to meet the requirements.
Findings of the Energy Regulatory Commission
The Energy Regulatory Commission (ERC) ruled in favor of SCPC, affirming that its obligation to deliver power was indeed subject to the 169,000 kW cap, beginning from the date SCPC assumed control over the Calaca Power Plant. The ERC further ordered the return of withheld payments from PSALM while clarifying that SCPC would not be held accountable for shortfalls beyond this cap.
Court of Appeals Decision
PSALM's subsequent petitions to the Court of Appeals, arguing against the ERC's cap, were denied. The Court upheld the ERC's interpretation that the combination of the percentages and caps in the APA should harmonize to reflect a practical, limit-based obligation for SCPC.
Supreme Court's Affirmation of Lower Court Findings
Upon review, the Supreme Court affirmed the Court of Appeals' decision, emphasizing the deference given to factual findings and interpretations made by administrative agencies like the ERC. The Court held that the standard practices in contract interpretation supported the ERC's findings, stipulating that the obligations set forth in Schedule W of the APA must work together.
Interpretation Strategies
The Supreme Court underscored that the lack of clarity in the figures presented in the APA demanded an interpretation that harmoniz
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Case Overview
- The case revolves around a petition for review on certiorari filed by the Power Sector Assets and Liabilities Management Corporation (PSALM) against the decision of the Court of Appeals (CA) affirming the rulings of the Energy Regulatory Commission (ERC) regarding the capacity allocation of SEM-Calaca Power Corporation (SCPC) as a power producer.
- The dispute stems from the interpretation of the Asset Purchase Agreement (APA) between PSALM and SCPC, specifically concerning SCPC's obligation to supply electricity to MERALCO.
Legal Framework
- The Electric Power Industry Reform Act of 2001 (EPIRA), enacted as Republic Act No. 9136, aimed to restructure the electric power industry in the Philippines, facilitating the privatization of the National Power Corporation (NPC) and defining the roles of government and private entities.
- PSALM was established as a government-owned and controlled corporation tasked with managing NPC's generation assets and financial obligations.
Key Facts
- PSALM sold the 600-MW Calaca Power Plant to DMCI Holdings, Inc. (DMCI), which later transferred its rights and obligations under the APA to SCPC.
- SCPC began supplying electricity to customers, including MERALCO, under the APA, which included a provision for SCPC to supply 10.841% of MERALCO's total energy requirements, subject to a cap of 169,000 kW.
- A disagreement arose when SCPC contended that its obligation was capped at 169,000 kW, while PSALM argued that SCPC was required to supply the e