G.R. No. 162716 September 27, 2006
Honorable Secretary Emilia T. Boncodin of the Department of Budget and Management (DBM), petitioner, vs. National Power Corporation Employees Consolidated Union (NECU), respondent.

FACTS

The National Power Corporation (NPC) Board issued Resolution No. 2001-113, amending a prior resolution to grant a salary step increment to employees with three years of service in their current position, down from a ten-year requirement. NPC then issued implementing circulars. The DBM, through Secretary Emilia Boncodin, informed NPC that the grant lacked legal basis, as it constituted an additional benefit not applicable to NPC’s higher salary plan and would incur significant cost. Following this, the Corporate Auditor enjoined payment, and the NPC Board subsequently passed Resolution No. 2002-81, which revised the implementation by limiting the grant and ordering a rollback of salaries for those who received excess increments.
NECU filed a Petition for Prohibition with an application for a Temporary Restraining Order (TRO) and Preliminary Injunction before the Regional Trial Court (RTC). The union argued that the implementing circulars were lawful and that members had acquired a vested right to the increments. The RTC granted the writ of preliminary injunction, enjoining the implementation of the DBM’s letter, the Auditor’s memorandum, and the NPC’s rollback resolution. The Court of Appeals affirmed the RTC’s order.

ISSUE

Whether the Court of Appeals erred in affirming the RTC’s issuance of the writ of preliminary injunction.

RULING

Yes. The Supreme Court granted the petition and reversed the appellate court’s decision. The Court emphasized that a writ of preliminary injunction is an extraordinary remedy issued only upon a clear showing of a right in esse that must be protected. The applicant must establish a clear and unmistakable legal right. In this case, NECU failed to prove such a clear legal right to the salary step increments.
The legal logic is grounded on the principle that a preliminary injunction should not be granted when the right claimed is doubtful or disputed. The Court found that the grant of step increments under the NPC resolutions was subject to the review and approval of the DBM, as mandated by the Administrative Code and relevant budget circulars. The DBM’s disapproval, based on its finding that the grant lacked legal basis and was fiscally unsound, rendered the NPC’s authority to implement the increments questionable at best. Since NECU’s right was not clear and was in fact contested by a valid exercise of administrative authority, the RTC gravely abused its discretion in issuing the injunctive writ. The issuance effectively prejudged the main case without a full determination of the legal merits.