SC reverses CA; reinstates trial court order on P5.5-B SBMA-HCPTI contract

Published May 23, 2022, 4:10 PM

by Rey Panaligan 

Supreme Court

The Supreme Court (SC) has reversed the 2013 decision of the Court of Appeals (CA) as it reinstated the 2012 trial court ruling which ordered the Subic May Metropolitan Authority (SBMA) to award the P5.5 billion contract to Harbour Centre Port Terminal, Inc. (HCPTI) for the development, operation and management of several ports inside the Subic Special Economic and Freeport Zone.

The 2012 ruling of the Olongapo City regional trial court (RTC) directed SBMA to issue a notice of award (NOA) and notice to proceed (NTP) to HCPTI for the joint venture projects covering the Naval Supply Deport, Boton, Alava, Rivera and Bravo Wharfs/Point.

In reversing the trial court, the CA said that the SBMA has no legal duty to issue the NOA and NTP because “the SBMA has the discretion to either approve or reject the recommendation to award” and that HCPTI “has no vested right to the issuance of the NOA and the NTP.”

The SC, in a decision written by Associate Justice Rodil V. Zalameda and made public last May 18, said:

“In sum, there is no law justifying the non-issuance of the NOA due to the withdrawal of the NEDA (National Economic Development Authority) endorsement. Petitioner (HCPTI) has complied with all the legal requisites for the issuance of the NOA. As such, a writ of mandamus may issue to compel SBMA to perform its legal duty.

“It appears that there is no legal or contractual obstacle to the issuance of the NTP. Hence, the same must also be issued to petitioner in preparation for the implementation of the JVA (joint venture agreement), and so that the parties may start complying with other conditions precedent stipulated therein.

“WHEREFORE, premises considered, the petition is hereby GRANTED. The Decision dated 08 August 2013 and Resolution dated 14 January 2014 of the Court of Appeals in CA-G.R. SP No. 125330 are REVERSED and SET ASIDE.

“The Decision dated 12 January 2012 of Branch 72, Regional Trial Court of Olongapo City in Civil Case No. 108-0-2011 is hereby REINSTATED. SO ORDERED.”

On Nov. 16, 2009, SBMA received an unsolicited proposal from HCPTI to enter into an unincorporated joint venture (JV) for the development, operation and management of the ports in the Subic freeport zone. The JV envisioned a consolidation of the break-bulk, bulk and other essential port services to achieve efficiency of port resources.

HCPTI’s proposal was done in line with the 2008 Guidelines and Procedures for entering into JVA between government and private entities issued by NEDA.

However, on July 5, 20211, NEDA withdraw its endorsement of the project based on alleged violation of the 2008 JV guidelines, such as the execution of the agreement as early as stage two of the process and a supposed material change in the project cost from approximately P763 million to P5.37 billion after the competition challenge.

Due to SBMA’s failure and refusal to issue the NOA and NTP, HCPTI filed a petition for mandamus before the Olongapo RTC. During the pendency of the petition, NEDA denied SBMA’s motion and reiterated the withdrawal of its endorsement.

The Office of the Government Corporate Counsel (OGCC), which had found the agreement between SBMA and HCPTI valid, recommended the suspension of the NTP in view of NEDA’s withdrawal of its endorsement.

“In this case, all the requisites for the issuance of the NOA had already been complied with. The existence of these requisites gave rise to a clear legal right in favor of petitioner and correlative ministerial duty upon SBMA,” the SC said.

“As such, a writ of mandamus may issue to compel SBMA to perform its legal duty,” it stressed.

The SC also said:

“The ones duty-bound to ensure observance with laws and rules should not be the ones to depart therefrom. The violation by the government of the rules it set for itself would stain the credibility of the investment environment.

“With the increasing role of private sector entities in development and economic growth, it behooves the Court to hold their public counterparts to account. Thus, when necessary, a writ of mandamus may issue to compel the performance of a government entity’s legal duties.”