G.R. No. 118249 ; February 14, 2003
MANILA INTERNATIONAL AIRPORT AUTHORITY, petitioner, vs. COURT OF APPEALS, HON. EDITA M. MULINGTAPANG, Presiding Judge, Regional Trial Court of Pasay City, Metro Manila, Branch 115, and K SERVICES COMPANY, respondents.

FACTS

K Services Company provided porterage services at the Manila International Airport under a series of contracts that expired in December 1984. It continued operations without a formal contract until MIAA terminated its services in February 1987. K Services filed an injunction suit, which culminated in a final and executory Court of Appeals decision declaring that MIAA could terminate the contract. This established the principle of res judicata on MIAA’s right to terminate. Subsequently, in a 1991 letter, MIAA’s General Manager instructed K Services to “continue operating said service until further notice,” subject to payment of concession fees and adherence to the terms of the expired contract. Relying on this letter and alleged verbal assurances, K Services continued and even expanded its operations.
In December 1992, MIAA’s new General Manager notified K Services to wind up its operations as management decided to take over the services. K Services filed a new Petition for Prohibition with Injunction. The Regional Trial Court granted a writ of preliminary injunction, restraining MIAA from terminating K Services’ porterage services. The Court of Appeals initially reversed this but later, in an Amended Decision, upheld the injunction, prompting MIAA’s petition to the Supreme Court.

ISSUE

Whether the Court of Appeals erred in upholding the issuance of the writ of preliminary injunction in favor of K Services Company.

RULING

Yes. The Supreme Court granted MIAA’s petition and set aside the Amended Decision of the Court of Appeals. The Court ruled that a writ of preliminary injunction is a preservative remedy requiring a clear and unmistakable right in the applicant. K Services failed to establish such a right. The prior final judgment in the earlier case constituted res judicata, conclusively settling that MIAA had the right to terminate the porterage arrangement. The 1991 letter from MIAA’s General Manager did not create a new contractual right; it was merely a provisional permission to continue operations “until further notice,” which MIAA validly exercised by issuing the termination notice. This permission did not strip MIAA of its managerial prerogative, rooted in its charter, to directly operate essential airport services like porterage for efficiency and security. The alleged verbal assurances could not override the clear provisional nature of the written permission. Since K Services’ right to continue operations was neither clear nor established, the trial court gravely abused its discretion in issuing the injunction. The preliminary injunction was improperly granted as it altered the status quo by forcing a continued service arrangement that MIAA had legally terminated.