Power Generation Employees Association-NPC vs. National Power Corporation

A petition for injunction under Section 78 of the Electric Power Industry Reform Act of 2001 may only be filed to restrain or enjoin the implementation of any provision of the law itself, not to enjoin the implementation of contracts alleged to be against the law. Moreover, the petition must be filed by a real party in interest — one who stands to be benefited or injured by the judgment — otherwise, the action may be dismissed for lack of cause of action.

Petitioners are the Power Generation Employees Association-National Power Corporation (PGEA-NPC), represented by its President and Vice-President, and several individual NAPOCOR employees. Respondents are the National Power Corporation (NAPOCOR), the Power Sector Assets and Liabilities Management Corporation (PSALM), and their respective Boards of Directors. Republic Act No. 9136, or the Electric Power Industry Reform Act of 2001 (EPIRA), was signed into law on June 8, 2001, mandating the privatization of NAPOCOR assets. Pursuant to this objective, PSALM was created to manage the orderly sale, disposition, and privatization of NAPOCOR's generation assets, real estate, and other disposable assets, with the objective of liquidating all NAPOCOR financial obligations and stranded contract costs.

Sometime in 2008, PSALM drafted the Operation and Maintenance Agreement for NAPOCOR's acceptance. The contract provided that NAPOCOR would perform all functions and services necessary to successfully and efficiently operate, maintain, and manage power plants, generation assets, or facilities until their transfer or turnover to PSALM. It further provided that NAPOCOR must submit its proposed budget to PSALM for review and approval, and that all revenues related to the maintenance and operation of power plants, generation assets, or facilities would be considered PSALM's properties.

Then NAPOCOR President Cyril C. Del Callar wrote a letter dated August 6, 2008 to Representative Arnulfo P. Fuentebella, one of the authors of EPIRA, inquiring whether PSALM had the authority to take control over NAPOCOR's assets and revenues. In a letter dated August 20, 2008, Rep. Fuentebella opined that PSALM "should not be meddling with how NAPOCOR operates and sells electricity from the undisposed generating assets and Independent Power Producer contracts," and that it was wrong for PSALM to assume authority to operate the undisposed generating assets. Del Callar resigned as NAPOCOR President on September 30, 2008, and was replaced by Froilan A. Tampinco.

On March 9, 2009, the Operation and Management Agreement was signed by PSALM, represented by Jose F. Ibazeta, and NAPOCOR, represented by Tampinco, and was confirmed and ratified by NAPOCOR's Board of Directors on the same day. Petitioners filed the present Petition for Injunction on April 28, 2009, seeking to restrain the implementation of the Agreement for contravening EPIRA. They argued that PSALM's ownership extends only to net profits, and not to all revenues, of NAPOCOR under Section 55(e) of EPIRA, and that NAPOCOR's revenues should not be billed for PSALM's account. Petitioners estimated that since the implementation of the Agreement, revenue of "P104 Billion, more or less . . . ha[s] been illegally transferred" to PSALM.

• PSALM's Lack of Authority: Petitioners argued that while EPIRA authorizes PSALM to take ownership of NAPOCOR's generation assets, liabilities, IPP contracts, real estate, and disposable assets, its ownership should be based on its mandate to privatize NAPOCOR's assets and liquidate its liabilities, and that EPIRA did not authorize PSALM to enter into the Operation and Maintenance Agreement with NAPOCOR.
• Violation of Section 55(e): Petitioners argued that the remittance of NAPOCOR's revenues to PSALM violates EPIRA since Section 55 of EPIRA and Section 11(a)(i) of its Implementing Rules and Regulations mandate that only the net profits shall be owned by PSALM.
• Encroachment on NAPOCOR Board's Prerogative: Petitioners asserted that EPIRA did not grant PSALM the power to control and supervise the internal operations of NAPOCOR, and that the provision requiring NAPOCOR to submit its proposed budget to PSALM violates EPIRA since NAPOCOR's Charter grants its Board of Directors the authority to adopt a budget without prior approval from PSALM.

• PSALM's Ownership Rights: The Office of the Solicitor General argued that the Operation and Maintenance Agreement merely recognized PSALM's ownership of NAPOCOR's generation assets and facilities, consistent with EPIRA, and that under Sections 49 and 55, PSALM became the owner of NAPOCOR's generation assets, real estate, IPP contracts, other disposable assets, residual assets, and net profits, including all proceeds from the operation or disposition of the assets.
• Lack of Real Party in Interest: The Office of the Solicitor General maintained that petitioners were not entitled to injunctive relief since they were neither the real parties in interest nor had they shown that they would suffer a grave and irreparable injury with the implementation of the Agreement.
• Jurisdictional Challenge: Respondent PSALM submitted that Section 78 of EPIRA refers to the Court's jurisdiction to enjoin or restrain the implementation of the provisions of EPIRA, not operation and management agreements, and that the Court's jurisdiction over questions of law is appellate, not original, so petitioners should have first filed before a Regional Trial Court.
• Legislative Intent: Respondent PSALM reiterated that Rep. Fuentebella's opinion does not express legislative intent, which is ascertained by the statute itself and its Implementing Rules and Regulations crafted by the Department of Energy and approved by the Joint Congressional Power Commission.

• Scope of Section 78 EPIRA: Whether petitioners may file a Petition for Injunction under Section 78 of EPIRA to question the validity of the Operation and Maintenance Agreement between respondents PSALM and NAPOCOR.
• Real Party in Interest: Whether petitioners may question the validity of the Operation and Maintenance Agreement despite not being one of the contracting parties.
• Violation of EPIRA: Whether the Operation and Maintenance Agreement violated the provisions of EPIRA when it mandated the remittance of NAPOCOR's revenues to PSALM and when it required NAPOCOR to submit its proposed budget to PSALM for approval.

• Scope of Section 78 EPIRA: Yes, but only in part. Section 78 of EPIRA vests upon the Supreme Court the jurisdiction to restrain or enjoin the implementation of the provisions of EPIRA, and the Operation and Maintenance Agreement is a contract that preserves the implementation of EPIRA, thus covered by Section 78. However, the injunction contemplated in EPIRA is a permanent remedy, not a mere interlocutory action, so the ruling in Carpio-Morales regarding temporary restraining orders does not apply.
• Real Party in Interest: No. Petitioners, not being privy to the Operation and Maintenance Agreement, have no cause of action against respondents, as they are not the real parties in interest to question its validity, and the Petition fails to show how NAPOCOR employees will be affected by the Agreement's implementation.
• Violation of EPIRA: No. The assailed provisions of the Operation and Maintenance Agreement do not contravene the provisions of EPIRA, as PSALM exercises all attributes of ownership over NAPOCOR's generation assets, including the right to the fruits, and the submission of the Operation and Maintenance Budget for approval does not transfer the power to adopt a Corporate Operating Budget to PSALM.

• Scope of Section 78 EPIRA: The Court explained in NPC Drivers and Mechanics Association vs. National Power Corporation that Section 78 vests upon the Supreme Court the jurisdiction to restrain or enjoin the implementation of the provisions of EPIRA, meaning the Court exercises jurisdiction on all questions involving the enforcement of the provisions of EPIRA. The Operation and Maintenance Agreement is a contract that preserves the implementation of EPIRA, thus covered by Section 78. However, in Carpio-Morales vs. Court of Appeals, the Court invalidated the second paragraph of RA 6770, Section 14 for being unconstitutional, as it prohibited any court except the Supreme Court from enjoining Ombudsman investigations, encroaching upon the Court's constitutional rule-making authority. But Carpio-Morales dealt only with temporary restraining orders, not permanent injunctions, and the injunction contemplated in EPIRA is a permanent remedy, so Section 78 of EPIRA can still apply.
• Real Party in Interest: Under Rule 3, Section 2 of the Rules of Court, a real party in interest is the party who stands to be benefited or injured by the judgment in the suit, or the party entitled to the avails of the suit. Petitioners alleged that while they were not privy to the Agreement, they would be affected by its implementation as NAPOCOR employees since they are the ones engaged in the operations and maintenance of the unsold generation plants. However, the Petition fails to show how NAPOCOR employees will be affected by the Agreement's implementation. Petitioners' arguments center on Articles XVI and XVII of the Agreement, which concern the submission of the budget for PSALM's approval and the remittance of revenues to PSALM. Petitioners have not shown how, as NAPOCOR employees, they will be affected by respondent NAPOCOR's submission of its budget for respondent PSALM's approval, nor how the remittance would affect their wages, salaries, and benefits or their working conditions. If there was indeed an encroachment of the NAPOCOR Board of Directors' prerogative under its Charter to approve its own budget, the Board of Directors would be the proper party to question the validity of Article XVI. Actions must be instituted by the real parties in interest; otherwise, the action may be dismissed for lack of cause of action.
• Violation of EPIRA: The Court cited Freedom from Debt Coalition vs. Energy Regulatory Commission for the rationale of EPIRA, which established a new policy, legal structure, and regulatory framework for the electric power industry, including the privatization of NAPOCOR assets. Under Sections 49 and 50 of EPIRA, PSALM was created to take ownership of all existing NPC generation assets, liabilities, IPP contracts, real estate, and all other disposable assets, and to manage the orderly sale, disposition, and privatization of these assets. Under Section 51, PSALM has the power to take title to and possession of, administer and conserve the assets transferred to it, and NAPOCOR may generate and sell electricity only from the undisposed generating assets and IPP contracts of PSALM. The Court stated that EPIRA must be read in its entirety, and the enumeration of assets must be read together with the extent of PSALM's ownership over them. Section 49 provides that PSALM "shall take ownership of all existing NPC generation assets," which implies that PSALM exercises all the rights of an owner, albeit for a limited purpose: the conservation and liquidation of these assets. Among the attributes of ownership are the right to possess or enjoy (jus utendi), the right to the fruits (jus fruendi), the right to abuse or consume (jus abutendi), the right to dispose or alienate (jus disponendi), and the right to recover (jus vindicandi). Under the law, PSALM exercises all attributes of ownership over NAPOCOR's generation assets, including the right to operate these assets if the operation prevents its dissipation, and has the right over all the fruits produced by the assets including its revenues. Since PSALM is mandated to administer these generation assets, it has the correlative obligation to answer for the expenses of its operations, and whatever remains from the revenues would be NAPOCOR's net profits, over which PSALM has explicit ownership under the law. The Court also addressed the letter of Rep. Fuentebella, stating that it is a mere expression of an opinion by a representative of Congress and does not reflect the intent of both the House of Representatives and the Senate. Legislative intent is determined from the law itself, and a legislator's opinion is not binding on courts. Finally, the submission for approval of NAPOCOR's Operation and Maintenance Budget does not violate NAPOCOR's Charter, as the assailed provision does not transfer the power to adopt a Corporate Operating Budget to PSALM; it merely mandates that the Operation and Maintenance Budget be included in the Corporate Operating Budget, and PSALM's approval of the Operation and Maintenance Budget is within its authority to operate and administer NAPOCOR's generation assets.

• Real Party in Interest — A real party in interest is the party who stands to be benefited or injured by the judgment in the suit, or the party entitled to the avails of the suit. Unless otherwise authorized by law or the Rules, every action must be prosecuted or defended in the name of the real party in interest. In this case, petitioners, not being privy to the Operation and Maintenance Agreement and having failed to show how they would be affected by its implementation, were not real parties in interest, and the Petition was dismissed for lack of cause of action.
• Scope of Statutory Injunction Provisions — A statutory provision vesting exclusive jurisdiction in the Supreme Court to enjoin the implementation of a law's provisions covers only challenges to the implementation of the law itself, not contracts alleged to be contrary to the law. However, where the contract preserves the implementation of the law, it may be covered by such provision. The injunction contemplated in EPIRA is a permanent remedy, not a mere interlocutory action, so the constitutional concerns regarding provisional remedies do not apply.
• Legislative Intent and Individual Legislator Opinions — Individual statements made by legislators, whether in letters or during deliberations, do not necessarily reflect the view of the legislative body that actually passed the bill into law. Legislative intent is determined from the law itself, where each and every provision is considered in light of the purpose to which it was enacted, and the interpretation of laws is inherently a judicial function.
• Attributes of Ownership — The attributes of ownership include the right to possess or enjoy (jus utendi), the right to the fruits (jus fruendi), the right to abuse or consume (jus abutendi), the right to dispose or alienate (jus disponendi), and the right to recover (jus vindicandi). Under EPIRA, PSALM exercises all attributes of ownership over NAPOCOR's generation assets, including the right to the fruits produced by the assets, such as revenues.

• "A petition for injunction under Section 78 of the Electric Power Industry Reform Act of 2001 (EPIRA) is filed only to restrain or enjoin the implementation of any provision of the law. It may not be invoked to enjoin the implementation of contracts alleged to be against the law. Moreover, the petition must be filed by a real party in interest. Otherwise, it may be dismissed for lack of cause of action." — This is the opening statement of the decision, articulating the two primary grounds for dismissal: the limited scope of Section 78 EPIRA and the requirement of real party in interest.
• "The provision vests upon the Supreme Court the jurisdiction to restrain or enjoin the implementation of the provisions of the EPIRA. In other words, the Court exercises jurisdiction on all questions involving the enforcement of the provisions of the EPIRA." — This passage, quoting NPC Drivers and Mechanics Association v. National Power Corporation, defines the scope of the Court's jurisdiction under Section 78 of EPIRA.
• "Petitioners have not established how they will benefit by enjoining the implementation of the Operation and Maintenance Agreement. They have not established the injury they will suffer if this Agreement is not enjoined. Thus, this Petition is dismissed for lack of cause of action." — This passage states the Court's conclusion on the real party in interest issue, emphasizing the failure of petitioners to establish any direct injury.
• "Under the law, respondent PSALM exercises all attributes of ownership over respondent NAPOCOR's generation assets, including the right to operate these assets if the operation prevents its dissipation. PSALM was given a lifespan of 25 years, during which it would have ownership over all of NAPOCOR's generation assets. PSALM, thus, has right over all the fruits produced by the assets including its revenues." — This passage articulates the Court's reasoning on the merits, holding that PSALM's ownership over NAPOCOR's generation assets includes the right to the revenues derived from their operation.

• NPC Drivers and Mechanics Association vs. National Power Corporation, 737 Phil. 210 (2014) — Cited as controlling precedent for the interpretation of Section 78 of EPIRA, vesting exclusive jurisdiction in the Supreme Court to restrain or enjoin the implementation of EPIRA's provisions.
• Carpio-Morales vs. Court of Appeals, G.R. Nos. 217126-27, November 10, 2015 — Distinguished from the present case; the Court invalidated a statutory provision prohibiting courts from enjoining Ombudsman investigations as an encroachment on the Court's rule-making authority, but that case dealt only with temporary restraining orders, not permanent injunctions.
• Freedom from Debt Coalition vs. Energy Regulatory Commission, 476 Phil. 134 (2004) — Cited for the rationale and policy behind EPIRA, including the restructuring of the electric power industry and the privatization of NAPOCOR assets.
• Legaspi vs. Executive Secretary, 160-A Phil. 905 (1975) — Cited for the principle that individual statements made by legislators do not necessarily reflect the view of the legislative body, and that legislative intent is determined from the law itself.

• Section 78, Republic Act No. 9136 (EPIRA) — Provides that the implementation of the provisions of the Act shall not be restrained or enjoined except by an order issued by the Supreme Court. The Court held that this provision vests exclusive jurisdiction in the Supreme Court over questions involving the enforcement of EPIRA's provisions, but does not extend to enjoining contracts alleged to be contrary to the law.
• Sections 49, 50, 51, and 55, Republic Act No. 9136 (EPIRA) — These provisions create PSALM, define its purpose and powers, and enumerate the property constituting PSALM's assets. The Court held that PSALM takes ownership of all existing NPC generation assets, liabilities, IPP contracts, real estate, and other disposable assets, and exercises all attributes of ownership over these assets, including the right to the fruits or revenues.
• Rule 3, Section 2, Rules of Court — Defines a real party in interest as the party who stands to be benefited or injured by the judgment in the suit, or the party entitled to the avails of the suit. The Court applied this rule to dismiss the petition for lack of cause of action.
• Rule 58, Section 3, Rules of Court — Provides the grounds for issuance of a preliminary injunction, requiring the applicant to establish entitlement to the relief demanded and that the commission of the act complained of would probably work injustice to the applicant. The Court noted that petitioners failed to establish any right sought to be protected.
• Section 6, paragraph 8(b), Republic Act No. 6395 (NAPOCOR Charter) — Grants the NAPOCOR Board of Directors the power to adopt an annual and supplemental budget of receipts and expenditures. The Court held that the assailed provision of the Agreement does not transfer this power to PSALM but merely requires the Operation and Maintenance Budget to be included in the Corporate Operating Budget.

• Carpio, J. (Chairperson) — Concurred in the decision.
• Peralta, J. — Concurred in the decision.
• Mendoza, J. — Concurred in the decision.
• Martires, J. — Concurred in the decision.