Case Digest (G.R. No. 223366)
Facts:
This case, titled Manila International Airport Authority (Petitioner) vs. Powergen, Inc. (Respondent), originated in a context where Metro Manila, including the airport vicinity, faced incessant power outages and related issues in the early 1990s. As a response, the Manila International Airport Authority (MIAA) decided to construct a baseload power plant designed to provide reliable electricity to airport facilities, as it was dependent on the Manila Electric Company (MERALCO) for power needs. MIAA sought to contract a builder and operator for this facility, leading to a public bidding process. Powergen, Inc. submitted a bid, which MIAA accepted on April 4, 1994, culminating in a Power Generation Agreement (PGA) delineating the obligations of both parties.
The PGA established that MIAA would pay Powergen for a minimum guaranteed energy consumption of four million kilowatt-hours (KWH) per month at a discounted rate based on MERALCO’s billing system. A notice to proceed was issue
...Case Digest (G.R. No. 223366)
Facts:
- Background and Context
- In the early 1990s, Metro Manila—including the airport area—experienced frequent power outages, voltage fluctuations, and power surges that disrupted the operations of airport facilities and essential public services.
- The Manila International Airport Authority (MIAA), then entirely dependent on MERALCO for its power needs, resolved to construct its own baseload power plant to ensure continuous and adequate power supply.
- Project Initiation and Procurement Process
- Due to its lack of technical expertise and capability, MIAA solicited contractors on a Build-Operate-Own scheme.
- MIAA prepared the terms of reference and conducted a public bidding process for constructing the power plant.
- Respondent Powergen, Inc. submitted a bid and was awarded the contract on April 4, 1994, when MIAA issued a notice of award.
- Formation and Terms of the Power Generation Agreement (PGA)
- MIAA and Powergen, Inc. entered into a Power Generation Agreement which included key provisions:
- Article 7.3 designated MIAA’s obligation to purchase and pay for a minimum guaranteed energy of 4,000,000 KWH per month at a privilege discount rate, in addition to energy consumed above that minimum.
- The Sixth Schedule of the contract provided that energy fees would be calculated based on the MERALCO Billing System with a 40% discount, ensuring the discounted rate payment for all energy supplied.
- The PGA stipulated that MIAA must answer for any additional charges if MERALCO’s standby power supply was used.
- Notice to Proceed and Subsequent Contractual Developments
- On December 18, 1995, MIAA issued a notice to proceed to Powergen, Inc., which reiterated the project's parameters but introduced a significant modification:
- The initial 7.250 MW power station was to be constructed as part of the original bid proposal.
- The guaranteed minimum energy consumption clause (4,000,000 KWH per month) was to be ignored temporarily, making the energy fee computation based solely on actual consumption until full capacity was reached.
- Powergen, Inc. acknowledged receipt and acceptance of this notice through a certified acknowledgment signed by its president, Luisito C. Magpayo.
- Operational Phase and Emergence of the Dispute
- The power station was subsequently constructed and became operational. MIAA made payments in accordance with the billings provided by Powergen, Inc.
- In June 2000, MIAA discovered that MERALCO was charging a lower rate (P2.03 per KWH) than the rate collected by Powergen, Inc. (P2.22 per KWH).
- As a result, MIAA adjusted its payments to reflect the lower MERALCO rate, leading Powergen, Inc. to claim non-compliance with the contractual obligation under Article 7.3.
- Litigation History
- On January 4, 2001, Powergen, Inc. filed a complaint for the reformation of the contract in the Regional Trial Court of Pasig City, Branch 168, seeking:
- Determination of the proper rate for energy fees.
- Enforcement of MIAA’s obligation to purchase the guaranteed minimum energy consumption as per Article 7.3 of the PGA.
- On July 24, 2001, Powergen, Inc. amended its complaint to include a request for a temporary restraining order or preliminary injunction to prevent MIAA from deducting alleged overpayments from future billings.
- On November 12, 2002, an urgent motion for a preliminary injunction was filed, resulting in:
- A January 21, 2003, trial court order granting a preliminary injunction.
- A January 23, 2003, issuance of a writ of preliminary mandatory injunction.
- A subsequent March 24, 2003, order denying a motion for reconsideration.
- MIAA sought reconsideration and appealed the trial court’s decision, with the Court of Appeals upholding the trial court’s ruling. Ultimately, MIAA filed a petition for review on certiorari challenging these decisions.
- Central Dispute and Controversial Issues
- The core issue revolves around whether Powergen, Inc. is entitled to a preliminary mandatory injunction that compels MIAA to adhere to the guaranteed minimum energy consumption provision of the PGA.
- MIAA contends that:
- There is no irreparable injury justifying such an injunction.
- The notice to proceed effectively altered the PGA, thereby negating the obligation to purchase the guaranteed minimum energy.
- Powergen, Inc. argues that:
- The notice to proceed did not amend the PGA.
- The extreme urgency and potential financial ruin it faces (especially in light of possible operational changes at Terminal 3) justify the issuance of the injunctive writ.
Issues:
- Whether the preliminary mandatory injunction granted by the trial court was proper.
- Does the situation warrant the immediate issuance of an injunction given the disputed contractual obligations?
- Whether the notice to proceed issued by MIAA constituted a valid amendment to the PGA.
- To what extent did the notice to proceed modify the contractual requirement for MIAA to purchase the guaranteed minimum energy consumption?
- Whether the trial court acted with grave abuse of discretion by issuing a mandatory injunction that effectively disposes of most of the issues reserved for trial.
- Has the trial court’s decision preempted the necessity of a full trial to determine the merits of the contractual dispute?
- Whether the alleged extreme urgency and irreparable injury claimed by Powergen, Inc. are sufficiently proven to justify the preliminary injunction.
- Does the mere assertion of potential financial ruin and loss of viability meet the threshold for issuing a mandatory injunction without a full trial?
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)