SC orders Australian firm to return P707.2 M to PCSO

Published November 26, 2019, 2:16 PM

by Patrick Garcia

By Rey Panaligan

The Supreme Court (SC) has ordered an Australian firm doing business in the Philippines to return to the Phil­ippine Charity Sweepstakes Office (PCSO) the P707.2 million the firm garnished as pay­ment for thermal papers and bet slips for lotto operations.

(MANILA BULLETIN)
Supreme Court of the Philippines (MANILA BULLETIN)

Ordered to return the PCSO funds was TMA Group of Compa­nies, now known as TMA Australia Pty. Ltd. The firm had successfully garnished the funds on orders of the Makati City regional trial court (RTC) on Jan. 18, 2018.

The SC decision, written by As­sociate Justice Andres B. Reyes Jr., resolved the three petitions filed by PCSO which challenged the rulings handed down by the Makati City RTC and affirmed by the Court of Appeals (CA).

The CA rulings that affirmed the RTC orders were reversed by the SC.

The cases arose from the 2009 Contractual Joint Venture Agree­ment (CJVA) between the PCSO and TMA Australia Pty. Ltd., through its local subsidiary TMA Group Phil­ippines, Inc., for the setting up of the first thermal coating plant in the country, primarily for export sales, with the balance production for the local market and the PCSO requirements.

On April 15, 2011, the PCSO re­voked the agreement after the Of­fice of the Government Corporate Counsel (OGCC) found that the agreement was essentially a supply contract, which is void for being a ploy to circumvent Republic Act No. 9184 or the Government

Pro­curement Reform Act, particularly on bidding for government pro­curement supplies, and to evade audit by the Commission on Audit (COA).

The revocation of the agree­ment spawned the filing of several cases against the PCSO before the Makati City RTC. The cases were then elevated to the CA and even­tually to the SC.

One of the cases involved the garnishment of PCSO funds as ordered by the RTC to pay for the thermal papers and bet slips stored in the warehouse of TMA Group of Companies in Laguna.

In resolving PCSO’s petition, the SC said: “The purported dam­age to TMA by the suspension of the implementation of the CJVA was more apparent than real. It was not even established that the thermal coating plant intended to be set up under the parties’ joint venture agreement was already or­ganized and operating at the time of the RTC’s issuance of the writs of preliminary injunction.

Further­more, any damage that TMA could sustain from the suspension of the CJVA’s implementation would be purely economic and is capable of reparation.

“… we cannot help but dis­cern in TMA’s actuations before the trial court and this Court, an apparent intent to ‘railroad’ the enforcement of the CJVA through the issuance of writs of prelimi­nary prohibitory and mandatory injunction; and subsequently, the relentless filing of motions seeking to compel PCSO to accept its forced deliveries and to make continued payments to it on the strength of said forced deliveries.

“It bears emphasis that the CJVA was specific on the estab­lishment by the joint venture of the first thermal coating plant in the Philippines from which PCSO committed to obtain its thermal paper requirements.

“Absent sufficient proof that the intended plant had been built and already operating at the time of the issuance of the trial court’s orders, TMA could not compel PCSO to source the paper prod­ucts from it. Any other plant from which TMA could have produced or sourced its papers was beyond the scope of the agreement.

“Thus, even granting that the CJVA was valid, PCSO’s commit­ment to TMA was limited to those that would be produced by the thermal coating plant that they both contemplated under their joint venture.

“It is quite ironic that the RTC repeatedly sought to justify its in­junctive writs and writs of execu­tion by claiming to avoid a disrup­tion of PCSO’s lotto operations, as it invoked the public interest that was vested in such activities.

“What the trial court, however, refused to recognize was the simi­lar need to guard the agency from unlawful agreements and unneces­sary disbursement of funds if such public interest were to be truly considered.

“All told, the Court holds as void and of no force and effect the following writs issued by the RTC in Civil Case No. 11-310: (a) the Writ of Preliminary Injunc­tion that directed the petitioners to immediately lift the suspension of the implementation of the CJVA, and to resume such implementa­tion without delay; (b) the Writ of Preliminary Prohibitory Injunction that enjoined the petitioners to cease and desist from perform­ing any act that would lead to or constitute cancellation of the CJVA and committing any other act that would nullify, in effect, the imple­mentation of the CJVA, including but not limited to the conduct of any bidding for its lotto paper re­quirements; and ( c) the Writs of Execution that were issued pursu­ant to the injunctive writs.

“Consequently, TMA must re­turn to PCSO any and all amounts paid by the latter under such void writs. It must be noted, however, that PCSO had already used up the P82,354,037.32 worth of thermal paper delivered to it as a conse­quence of the payment directed by the Orders dated June 11, 2014 and August 12, 2014.

“TMA Group of Companies Pty Ltd. (now known as TMA Australia Pty. Ltd.), and TMA Group Philippines, Inc., are ORDERED to RETURN the amount of P707,223,555.44 repre­senting the amount garnished under the Order dated January 18, 2018 of the Regional Trial Court of Makati City, Branch 66 in Civil Case No. 11-310.”

 
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SC orders Australian firm to return P707.2 M to PCSO

Published November 26, 2019, 12:00 AM

by manilabulletin_admin

By Rey Panaligan

The Supreme Court (SC) has ordered an Australian firm doing business in the Philippines to return to the Phil­ippine Charity Sweepstakes Office (PCSO) the P707.2 million the firm garnished as pay­ment for thermal papers and bet slips for lotto operations.

(MANILA BULLETIN)
Supreme Court of the Philippines (MANILA BULLETIN)

Ordered to return the PCSO funds was TMA Group of Compa­nies, now known as TMA Australia Pty. Ltd. The firm had successfully garnished the funds on orders of the Makati City regional trial court (RTC) on Jan. 18, 2018.

The SC decision, written by As­sociate Justice Andres B. Reyes Jr., resolved the three petitions filed by PCSO which challenged the rulings handed down by the Makati City RTC and affirmed by the Court of Appeals (CA).

The CA rulings that affirmed the RTC orders were reversed by the SC.

The cases arose from the 2009 Contractual Joint Venture Agree­ment (CJVA) between the PCSO and TMA Australia Pty. Ltd., through its local subsidiary TMA Group Phil­ippines, Inc., for the setting up of the first thermal coating plant in the country, primarily for export sales, with the balance production for the local market and the PCSO requirements.

On April 15, 2011, the PCSO re­voked the agreement after the Of­fice of the Government Corporate Counsel (OGCC) found that the agreement was essentially a supply contract, which is void for being a ploy to circumvent Republic Act No. 9184 or the Government

Pro­curement Reform Act, particularly on bidding for government pro­curement supplies, and to evade audit by the Commission on Audit (COA).

The revocation of the agree­ment spawned the filing of several cases against the PCSO before the Makati City RTC. The cases were then elevated to the CA and even­tually to the SC.

One of the cases involved the garnishment of PCSO funds as ordered by the RTC to pay for the thermal papers and bet slips stored in the warehouse of TMA Group of Companies in Laguna.

In resolving PCSO’s petition, the SC said: “The purported dam­age to TMA by the suspension of the implementation of the CJVA was more apparent than real. It was not even established that the thermal coating plant intended to be set up under the parties’ joint venture agreement was already or­ganized and operating at the time of the RTC’s issuance of the writs of preliminary injunction.

Further­more, any damage that TMA could sustain from the suspension of the CJVA’s implementation would be purely economic and is capable of reparation.

“… we cannot help but dis­cern in TMA’s actuations before the trial court and this Court, an apparent intent to ‘railroad’ the enforcement of the CJVA through the issuance of writs of prelimi­nary prohibitory and mandatory injunction; and subsequently, the relentless filing of motions seeking to compel PCSO to accept its forced deliveries and to make continued payments to it on the strength of said forced deliveries.

“It bears emphasis that the CJVA was specific on the estab­lishment by the joint venture of the first thermal coating plant in the Philippines from which PCSO committed to obtain its thermal paper requirements.

“Absent sufficient proof that the intended plant had been built and already operating at the time of the issuance of the trial court’s orders, TMA could not compel PCSO to source the paper prod­ucts from it. Any other plant from which TMA could have produced or sourced its papers was beyond the scope of the agreement.

“Thus, even granting that the CJVA was valid, PCSO’s commit­ment to TMA was limited to those that would be produced by the thermal coating plant that they both contemplated under their joint venture.

“It is quite ironic that the RTC repeatedly sought to justify its in­junctive writs and writs of execu­tion by claiming to avoid a disrup­tion of PCSO’s lotto operations, as it invoked the public interest that was vested in such activities.

“What the trial court, however, refused to recognize was the simi­lar need to guard the agency from unlawful agreements and unneces­sary disbursement of funds if such public interest were to be truly considered.

“All told, the Court holds as void and of no force and effect the following writs issued by the RTC in Civil Case No. 11-310: (a) the Writ of Preliminary Injunc­tion that directed the petitioners to immediately lift the suspension of the implementation of the CJVA, and to resume such implementa­tion without delay; (b) the Writ of Preliminary Prohibitory Injunction that enjoined the petitioners to cease and desist from perform­ing any act that would lead to or constitute cancellation of the CJVA and committing any other act that would nullify, in effect, the imple­mentation of the CJVA, including but not limited to the conduct of any bidding for its lotto paper re­quirements; and ( c) the Writs of Execution that were issued pursu­ant to the injunctive writs.

“Consequently, TMA must re­turn to PCSO any and all amounts paid by the latter under such void writs. It must be noted, however, that PCSO had already used up the P82,354,037.32 worth of thermal paper delivered to it as a conse­quence of the payment directed by the Orders dated June 11, 2014 and August 12, 2014.

“TMA Group of Companies Pty Ltd. (now known as TMA Australia Pty. Ltd.), and TMA Group Philippines, Inc., are ORDERED to RETURN the amount of P707,223,555.44 repre­senting the amount garnished under the Order dated January 18, 2018 of the Regional Trial Court of Makati City, Branch 66 in Civil Case No. 11-310.”

 
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