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.