G.R. No. L-67143 January 31, 1985
NATIONAL POWER CORPORATION, petitioner, vs. HON. EMILIO A. JACINTO, in his capacity as Presiding Judge, Regional Trial Court of Cebu, Branch XXIII and MACTAN ELECTRIC CO., INC., respondents.

FACTS

Respondent Mactan Electric Co., Inc. (MECO), the franchised electric utility operator in Lapu-Lapu City, sources its entire power supply from petitioner National Power Corporation (NPC) under a contract. MECO learned that General Milling Corporation (GMC), a BOI-registered company in the same city, had applied for a direct power supply from NPC. MECO formally opposed this application in a letter dated January 27, 1982, asserting its franchise rights and offering to supply GMC at the same industrial rate NPC would charge.
NPC replied on March 10, 1982, informing MECO it had advised GMC to negotiate with MECO. However, it was later revealed that NPC and GMC had already executed a Letter of Agreement for direct service on October 28, 1981, and a formal contract on January 13, 1982. Upon learning GMC had begun constructing its own substation pursuant to this contract, MECO filed a petition in the Regional Trial Court for prohibition and mandamus, with a prayer for a preliminary injunction. The trial court granted the preliminary injunction.

ISSUE

Whether the Regional Trial Court committed grave abuse of discretion in issuing the writ of preliminary injunction against the implementation of the direct service contract between NPC and GMC.

RULING

The Supreme Court ruled that the trial court did not commit grave abuse of discretion. The core issue was not NPC’s statutory authority under P.D. 380, as amended, to directly service BOI-registered enterprises, which MECO conceded. Rather, the pivotal issue was MECO’s right to due process. The evidence established that MECO was misled by NPC’s March 1982 reply, which suggested ongoing negotiations, while a binding contract with GMC had already been signed months earlier. This deprived MECO of a meaningful opportunity to be heard on the direct service application, a right integral to the operational guidelines of the BOI-NPC Memorandum of Understanding.
Furthermore, the Court found the injunction proper as it prevented potential irreparable waste of GMC’s investment in its substation pending final resolution, while causing no injury to NPC or GMC. GMC’s power needs could be immediately and reliably supplied by NPC through MECO’s existing distribution system at the same rate, as MECO had committed. GMC itself did not appeal the injunction. The trial court’s order was thus prudent and even-handed, ensuring the status quo was maintained without prejudice to the substantive rights of the parties pending litigation on the merits. The petition was dismissed.