Case Digest (G.R. No. 101761) Core Legal Reasoning Model
Facts:
On October 20, 1987, the National Power Corporation (NPC) entered into a "Contract for the Purchase of Fly Ash of Batangas Coal-Fired Thermal Power Plant (Batangas Contract)" with Pozzolanic Australia Pty. Ltd. Pozzolanic Australia was granted a right of first refusal to purchase fly ash from existing and future NPC coal-fired power plants. In April 1989, Pozzolanic Philippines Incorporated (Pozzolanic), the local subsidiary of Pozzolanic Australia, was incorporated to take over the business. Subsequently, several new coal-fired plants, namely the Masinloc and Sual Plants, began operations in 1998 and 1999 respectively. NPC conducted public bidding for the right to purchase fly ash from these plants. Despite this, Pozzolanic claimed its right of first refusal under the original Batangas Contract, demanding that bidding documents reflect this right. Controversies arose when the right of first refusal was not acknowledged in bidding for the Sual Plant, prompting Pozzola
Case Digest (G.R. No. 101761) Expanded Legal Reasoning Model
Facts:
- Parties and Background
- Petitioner: Power Sector Assets and Liabilities Management Corporation (PSALM), a government-owned corporation established under the Electric Power Industry Reform Act of 2001 (RA No. 9136), tasked with managing the sale and privatization of National Power Corporation (NPC) assets.
- Respondent: Pozzolanic Philippines Incorporated (Pozzolanic), a Philippine subsidiary of Pozzolanic Australia Pty. Ltd., which perfected techniques for processing fly ash for cement making.
- Contractual History
- In 1986, Pozzolanic Australia won the public bidding to purchase fly ash from NPC’s Batangas Coal-Fired Thermal Power Plant.
- In 1987, NPC and Pozzolanic Australia entered into a long-term contract granting Pozzolanic Australia a right of first refusal to purchase fly ash from NPC's existing and future coal-fired plants (the Batangas Contract).
- Pozzolanic Philippines incorporated in 1989 to take over these rights locally.
- Subsequent Developments
- Fly ash from Masinloc and Sual Coal-Fired Thermal Power Plants:
- Masinloc started in 1998, fly ash processing equipment installed by respondent, and a 1-year interim contract (1999) awarded.
- Sual started operations in 1999; NPC published an invitation to bid for Masinloc and Sual fly ash contracts.
- Respondent asserted its right of first refusal, demanding inclusion of this right in tenders.
- NPC deferred bidding for Masinloc and proceeded with Sual bidding without reference to respondent’s right.
- Litigation
- Respondent filed suit to enforce its right of first refusal, seeking to match winning bidders’ prices and terms for both power plants’ fly ash.
- PSALM was impleaded after its creation in 2001.
- Further complications arose when NPC and the Department of Energy entered into a memorandum giving the Provincial Government of Zambales exclusive rights to Masinloc fly ash, leading to additional complaints by respondent.
- Trial Court Proceedings
- Trial court dismissed certain complaints but later issued a decision upholding respondent's right of first refusal as valid and binding on PSALM.
- PSALM’s motions for reconsideration were denied.
- Petition to the Supreme Court
- PSALM assails the trial court decision on two grounds:
- The trial court was divested of jurisdiction after dismissing complaints, making the decision void.
- The right of first refusal is invalid and contrary to public policy for violating the public bidding requirement.
Issues:
- Whether the trial court was divested of jurisdiction following the dismissal of complaints and hence the 30 April 2008 Decision is void.
- Whether respondent’s right of first refusal under the Batangas Contract is valid and binding, or is void for being contrary to law and public policy particularly on competitive public bidding.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)