SC reaffirms ruling in MERALCO, NAPOCOR Settlement

MERALCO – Napocor

The Supreme Court has maintained the validity of the settlement between the Manila Electric Co. (MERALCO) and the National Power Corp. (NAPOCOR) amounting to Php20.05 billion. 

“To reiterate, there is no longer any arbitrable dispute to speak of when MERALCO and NPC agreed to settle any dispute between them under the contract for the sale of electricity (CSE) through mediation,” SC said in a 24-resolution dated Sept. 28. 

The high court was referring to a 2003 settlement between MERALCO and NAPOCOR, where the private distribution utility agreed to pay Php 20.05 billion for 18,222 gigawatt-hours (GWh) over a dispute related to the sale of electricity to the government. 

The SC First Division said that the Court of Appeals did not commit an error when it ruled the agreement between MERALCO and NAPOCOR was not “disadvantageous to the government” 

“Having voluntarily agreed to undergo mediation, and thereafter, having signified its consent to be bound by the provision of the settlement agreement, NPC should not be allowed to renege on its obligations thereunder simply because it belatedly had a change of mind. NPC is bound by the terms of the settlement agreement and must comply therewith in utmost good faith,” SC stated. 

MERALCO and NAPOCOR entered into a CSE in 1994. Under the agreement, NAPOCOR is obligated to supply MERALCO with power while the latter was required to purchase a minimum volume of power with the rates approved by the Energy Regulatory Board. 

Back then, NAPOCOR engaged in generating, supplying, and selling power for distribution utilities approved by the government. 

Meanwhile, MERALCO was granted a franchise to operate and maintain a distribution utility in Metro Manila, Bulacan, Cavite, and Rizal, among others.