CASE DIGEST: South Pacific Sugar vs. CA

G.R. No. 180462 : February 9, 2011

SOUTH PACIFIC SUGAR CORPORATION and SOUTH EAST ASIA SUGAR MILL CORPORATION, Petitioners, v. COURT OF APPEALS and SUGAR REGULATORY ADMINISTRATION, Respondents.


CARPIO, J.:

FACTS:

In 1999, the government projected a shortage of some 500,000 metric tons of sugar due to the effects of El Niño and La Niña phenomena. To fill the expected shortage and to ensure stable sugar prices, then President Joseph Ejercito Estrada issued Executive Order No. 87, Series of 1999 (EO 87), facilitating sugar importation by the private sector.

On 3 May 1999, the Committee on Sugar Conversion/Auction issued the Bidding Rules providing guidelines for sugar importation. Under the Bidding Rules, the importer pays 25% of the conversion fee within three working days from receipt of notice of the bid award and the 75% balance upon arrival of the imported sugar.

The Bidding Rules also provide that if the importer fails to make the importation or if the imported sugar fails to arrive on or before the set arrival date, 25% of the conversion fee is forfeited in favor of the Sugar Regulatory Administration.

The Committee on Sugar Conversion/Auction caused the publication of the invitation to bid. Several sugar importers submitted sealed bid tenders. Petitioners Southeast Asia Sugar Mill Corporation (Sugar Mill) and South Pacific Sugar Corporation (Pacific Sugar) emerged as winning bidders for the 1st, 2nd, and 3rd tranches.

Pursuant to the Bidding Rules, Sugar Mill paid 25% of the conversion fee amounting to P14,340,000.00, while Pacific Sugar paid 25% of the conversion fee amounting to P28,599,000.00.

As it turned out, Sugar Mill and Pacific Sugar (sugar corporations) delivered only 10% of their sugar import allocation, or a total of only 3,000 metric tons of sugar. They requested the SRA to cancel the remaining 27,000 metric tons of sugar import allocation blaming sharp decline in sugar prices. The sugar corporations sought immediate reimbursement of the corresponding 25% of the conversion fee amounting to P38,637,000.00.

The sugar corporations filed a complaint for breach of contract and damages in the Regional Trial Court (Branch 77) of Quezon City.

The Office of the Solicitor General (OSG) deputized Atty. Raul Labay of the SRA’s legal department to assist the OSG in this case. The RTC held that paragraph G.1 of the Bidding Rules contemplated delay in the arrival of imported sugar, not cancellation of sugar importation. It concluded that the forfeiture provision did not apply to the sugar corporations which merely cancelled the sugar importation. the deputized SRA counsel, Atty. Raul Labay, received his own copy of the Decision and filed a notice of appeal. The sugar corporations moved to expunge the notice of appeal, which was thereafter granted, on the ground that only the OSG, as the principal counsel, can decide whether an appeal should be made.

The Court of Appeals held that the deputized SRA counsel had authority to file a notice of appeal.

ISSUE: Whether or not a deputized SRA counsel may file a notice of appeal.

Whether or not the sugar corporations are entitled to reimbursement of P38,637,000.00 in conversion fee.


HELD: The petition lacks merit.

CIVIL LAW: SRA

First issue: The deputized SRA counsel may file a notice of appeal.

Section 35, Chapter 12, Title III, Book IV of the Administrative Code of 1987 authorizes the OSG to represent the SRA, a government agency established pursuant to Executive Order No. 18, Series of 1986, in any litigation, proceeding, investigation, or matter requiring the services of lawyers.

Assuming Atty. Labay had no authority to file a notice of appeal, such defect was cured when the OSG subsequently filed its opposition to the motion to expunge the notice of appeal.

Second issue: The sugar corporations are not entitled to reimbursement of 25% of the conversion fee amounting to P38,637,000.00.

Paragraph G.1 of the Bidding Rules provides that if the importer fails to make the importation, 25% of the conversion fee shall be forfeited in favor of the SRA. In joining the bid for sugar importation, the sugar corporations are deemed to have assented to the Bidding Rules, including the forfeiture provision under paragraph G.1.

Petition is DENIED.

Popular Posts