Power Sector Assets and Liabilities Management Corporation v. Court of Appeals
REITERATIONFacts
The Antecedents: National Power Corporation (NPC) conducted a public bidding for a security package. San Miguel Protective Security Agency (SMPSA), represented by Francisco Labao, was disqualified for failing to meet equipage requirements. Labao filed a petition for certiorari against NPC and its officials, leading the Regional Trial Court (RTC) to issue a temporary restraining order (TRO) and subsequently a writ of preliminary injunction, which was later made permanent. The RTC ordered NPC to set aside the disqualification, open SMPSA's bid, and pay damages and attorney's fees to SMPSA. Procedural History: NPC appealed the RTC decision to the Court of Appeals (CA). Meanwhile, on March 9, 2009, NPC and Power Sector Assets and Liabilities Management Corporation (PSALM) entered into an operation and maintenance agreement (OMA), wherein PSALM, as owner of NPC's assets by virtue of Republic Act No. 9136 (EPIRA), was obligated to provide security for these assets. Consequently, PSALM conducted its own public bidding for security services, with Tiger Investigation, Detective & Security Agency (TISDA) emerging as the winning bidder for the NPC MinGen security package. The Petition: On April 7, 2010, PSALM received a TRO issued by the CA on April 5, 2010, enjoining appellants (NPC and its officials) from awarding the security package. Notably, Labao did not furnish PSALM a copy of the motion for the TRO. Despite PSALM not being a party to the case between Labao and NPC, the CA's TRO expressly included PSALM as subject to the writ. PSALM filed a petition for certiorari with the Supreme Court, arguing that the CA acted without or in excess of jurisdiction, or with grave abuse of discretion.
Issue(s)
Whether the Court of Appeals acted without or in excess of jurisdiction or with grave abuse of discretion in issuing a writ of preliminary injunction enjoining the petitioner from offering or bidding out or accepting bid proposals for the procurement of security services for the MinGen Headquarters despite the fact that private respondent Labao is not entitled to the injunctive relief. Whether the Court of Appeals acted without or in excess of jurisdiction or with grave abuse of discretion amounting to lack or excess of jurisdiction in holding petitioner bound by the decision of the lower court although petitioner was not a party to the case between private respondents NPC and Labao.
Ruling
The Supreme Court granted the petition for certiorari. It modified the CA's resolution of June 9, 2010, by excluding PSALM from the coverage and legal effects of the Writ of Preliminary Injunction. It also annulled and set aside the CA's resolution of August 18, 2010, denying PSALM's motion for reconsideration, and explicitly excluded PSALM from the scope of the Writ of Preliminary Injunction. Respondent Francisco Labao was ordered to pay the costs of suit.
Ratio Decidendi
On the issue of whether the CA acted without or in excess of jurisdiction or with grave abuse of discretion in issuing a writ of preliminary injunction enjoining PSALM from bidding out security services: The Court ruled that the CA committed a manifest error. PSALM was created as a corporate entity separate and distinct from NPC by virtue of Republic Act No. 9136 (EPIRA). The CA erred in holding that PSALM was subject to the writ of injunction issued against NPC, thereby confusing their distinct and separate personalities. Furthermore, PSALM, as the owner of NPC's generation assets, was an indispensable party to the case, and Labao should have impleaded PSALM in the RTC proceedings, or the RTC should have ensured PSALM's inclusion. PSALM was not acting as an agent of NPC when it conducted its own bidding; it was acting in its own interest as the owner of the assets under the OMA. The security contract between NPC and SMPSA had expired, and PSALM, lacking privity of contract, had no obligation to SMPSA. The CA's theory that PSALM was covered by the TRO as an agent of NPC lacked factual and legal basis. On the issue of whether the CA acted without or in excess of jurisdiction or with grave abuse of discretion in holding PSALM bound by the lower court's decision despite not being a party: The Court held that the CA gravely erred. Section 49 of EPIRA expressly created PSALM as a government-owned and controlled corporation separate and distinct from NPC. The CA's conclusion that PSALM was merely an agent or assignee of NPC, or that it was a real party in interest whose continuance against its predecessor-in-interest was sanctioned by the Rules of Court, was erroneous. PSALM's ownership of NPC's assets was established by law, making it an indispensable party. The CA's reliance on the OMA and the theory of agency was misplaced, as PSALM was acting in its proprietary capacity as owner, not as an agent. Moreover, the transfer of NPC's assets to PSALM was effective in 2001, predating SMPSA's action commenced in 2009. Thus, PSALM was not a transferee pendent lite or successor-in-interest within the context of Section 19, Rule 3 of the Rules of Court. Consequently, no order or judgment rendered in the action between SMPSA and NPC could bind PSALM. The principle of relativity of contracts also dictated that the security contract between NPC and SMPSA, which had expired, did not affect PSALM due to the absence of privity of contract.
Main Doctrine
A writ of preliminary injunction, being a provisional remedy, can only bind parties to the action or their privies or successors-in-interest. A person not impleaded and duly served with summons cannot be adversely affected by the outcome of an action, consistent with the constitutional guarantee of due process.