SC tells Australian paper supplier to return P707M seized from PCSO, annuls orders forcing agency to accept deliveries
The Supreme Court (SC) has ordered an Australian thermal paper supplier to return the P707.22 million garnished from the Philippine Charity Sweepstakes Office (PCSO) as payment for goods that were forcibly delivered to it.
In a recent 33-page decision, the SC 3rd Division granted three petitions of the PCSO to annul various orders by the Makati City Regional Trial Court (RTC) in favor of TMA Australia Pty. Ltd.
The SC said the lower courts failed to consider the “substantial and irreparable injury” that would be sustained by the PCSO when it was forced to pay for thermal paper from its erstwhile exclusive supplier.
“The trial court should have similarly considered these interests of the PCSO, as the latter invoked a corresponding obligation to protect its funds from misuse,” read the decision penned by Associate Andres Reyes, Jr.
The case concerned the PCSO’s December 4, 2009 contractual joint venture agreement (CJVA) with TMA for the establishment of a thermal coating plant and the exclusive supply of paper products.
The PCSO on August 20, 2010 suspended the implementation of the CJVA and a review by the Office of the Government Corporate Counsel (OGCC) found various irregularities that would render it null and void. This prompted TMA to sue the PCSO before the Makati City RTC.
On May 13, 2011, the court’s Branch 59 issued a writ of preliminary injunction (WPI) directing the PCSO to lift the suspension of the CJVA and stopping it from bidding out its paper supply to other companies.
On November 6, 2013, the court ordered the PCSO to comply with the WPI by accepting and paying for the paper to be exclusively delivered by TMA under the agreement. The Court of Appeals (CA) on March 27, 2014 affirmed these orders.
The Makati RTC Branch 133 on June 11, 2014 issued a writ of execution to force the payment of P82 million for the paper TMA tried to deliver months before. Again, the CA affirmed the RTC’s action on February 4, 2016.
Finally, on January 18, 2018, the court’s Branch 66 ordered the sheriff to garnish P707.22 million from the bank account of the PCSO to pay for more paper manufactured by TMA for the agency.
In annulling the orders, the SC said these were issued by the RTC “even in the absence of facts sufficient to establish” that TMA had a clear and unmistakable right, that it would suffer a material and substantial invasion of its rights, and that there was an urgent need to prevent serious damage.
The SC said the RTC and the CA erred when they “readily accepted” TMA’s claim to rights solely on the basis of the CJVA.
It said the lower courts should have assessed the contents and implications of the terms of the CJVA, especially as the PCSO had found its validity questionable enough to suspend it.
“The validity of the CJVA was a key issue in the main case, and the alleged right of TMA under the CJVA remained to be resolved… The claimed rights of TMA were far from being ‘clear and unmistakable,'” read the decision.
The SC added that the damage TMA would supposedly sustain “was more apparent than real.”
It noted that the thermal coating plant was not shown to be operating already. Besides, any possible damage to TMA, in the event that the validity of the agreement was upheld, would have been “purely economic and… capable of reparation.”
The SC also pointed out that by forcing the PCSO to comply with its obligations pending the resolution of the case, the lower courts prematurely granted remedies that “fully correspond to the same prayer sought by TMA in the main action for specific performance.”
“This equated to a breach of another fundamental tenet on the matter of issuance of writs of preliminary injunction: that such writs should not be issued if it would amount to a prejudgment of the case by the trial court,” read the decision.
Lastly, the SC observed that TMA had an “apparent intent to ‘railroad’ the enforcement of the CJVA through the issuance of writs of preliminary prohibitory and mandatory injunction” even if the main issue was not resolved yet.
“In a manner of speaking, TMA used the coercive powers under the writ of preliminary injunction to force the CJV A upon PCSO despite indications of irregularities and illegalities which were the precise cause of PCSO’ s trepidation in enforcing the CJVA,” read the decision.
“This abuse of court processes cannot be countenanced by the Court,” it added.
Note that none of the annulled interlocutory orders resolved the merits of the revocation of the CJVA. The main issue regarding the legality of the PCSO’s refusal to honor the deal had not yet reached the SC.
The OGCC questioned the agreement, struck during the administration of former President Gloria Macapagal-Arroyo, because the establishment of a thermal coating plant went beyond the PCSO’s primary purpose and mandate to operate sweepstakes and lotteries for charity.
It also found that the PCSO’s promise to exclusively purchase paper from TMA breached the rule that requires government contribution to joint ventures to be in the form of assets.
It added that the agreement to construct a plant was actually a disguise to subjecting the supply of paper to public bidding. #