National Power Corporation v. Jacinto
REITERATIONFacts
The Antecedents: General Milling Corporation (GMC), a BOI-registered flour and feed milling company in Lapu-Lapu City, initially generated its own electricity. Mactan Electric Co., Inc. (MECO) is the franchised electric system operator in Lapu-Lapu City, distributing electricity supplied by petitioner National Power Corporation (NPC) under a contract obligating NPC to supply MECO's entire power requirements. On January 27, 1982, MECO opposed GMC's application for direct NPC power supply, asserting its right to be heard and its capability to provide the same power at the same industrial rate. On March 10, 1982, NPC informed MECO that it had advised GMC to make representations with MECO, as NPC was prepared to match MECO's power cost and reliability. However, NPC and GMC had already signed a Letter of Agreement on October 28, 1981, and a formal Contract for the Sale of Electricity on January 13, 1982, for direct service. Procedural History: Pursuant to the contract, GMC began constructing its own sub-station. MECO filed a petition with the Regional Trial Court (RTC) of Cebu for a writ of prohibition against the contract's implementation and a writ of mandamus to compel GMC to secure power from MECO. The RTC issued a writ of preliminary injunction on January 20, 1984, after due notice and hearing. The Petition: NPC filed the instant petition, praying that the writ of preliminary injunction be voided for allegedly having been issued with grave abuse of discretion and/or in excess of jurisdiction.
Issue(s)
Whether the respondent judge gravely abused his discretion or acted in excess of jurisdiction in issuing the writ of preliminary injunction. Whether respondent MECO, as the franchised operator, has an unquestionable right to be heard on the NPC-GMC direct service contract. Whether the issuance of the writ of preliminary injunction would cause injury to either GMC or NPC.
Ruling
The petition is dismissed for lack of merit. The temporary restraining order issued is lifted. NPC and GMC are ordered to discontinue the implementation of their direct service contract and NPC is ordered to provide GMC's requirements through MECO's distribution system, with MECO charging GMC the same rates as under a direct connection contract with NPC.
Ratio Decidendi
On the issue of grave abuse of discretion and excess of jurisdiction in issuing the writ of preliminary injunction: The Court found no grave abuse of discretion on the part of the respondent judge. The judge correctly identified the main issue as one of due process, not merely NPC's authority to directly serve BOI-registered firms. The evidence showed that MECO was not only denied an opportunity to be heard but was also deceived by NPC into believing that no direct service contract would be approved. NPC's letter of March 10, 1982, stating it had advised GMC to make representations with MECO, was misleading, as the contract was already signed five months prior. On the right of MECO to be heard on the NPC-GMC direct service contract: The Court affirmed that MECO has an unquestionable right to be heard. As the lawful operator of the electric system in Lapu-Lapu City with a contract to be supplied all its requirements by NPC, MECO's reliability is beyond question. Furthermore, MECO had committed to matching NPC's rates. The Court emphasized that franchised operators' rights to due process and priority to be heard on such contracts cannot be denied, as legislative or municipal franchises are properties protected by the Constitution. On whether the issuance of the writ of preliminary injunction would cause injury to either GMC or NPC: The Court found no injury to either party. The records did not suggest any deficiency in MECO's system, and MECO's power supply would be sourced from NPC, the same source under a direct contract. Crucially, the Court noted the undenied fact that NPC had an existing, under-utilized sub-station in Lapu-Lapu City with sufficient capacity to serve GMC's requirements. This fact mitigated any risk of wasted investment for GMC and ensured that GMC's needs could be met immediately, with or without the injunction. The fact that GMC, the party most affected, did not appeal further supported the absence of injury.
Main Doctrine
A franchised operator of an electric system has an unquestionable right to be heard on any direct service contract between the National Power Corporation (NPC) and a BOI-registered enterprise within its franchise area, as this right is guaranteed by due process. The issuance of a preliminary injunction to protect this right is proper when the franchised operator is denied an opportunity to be heard or is deceived by the NPC.