SOUTH PACIFIC SUGAR CORPORATION and SOUTH EAST ASIA SUGAR MILL CORPORATION v. COURT OF APPEALS and SUGAR REGULATORY ADMINISTRATION G.R. No. 180462, February 9, 2011

 

SOUTH PACIFIC SUGAR CORPORATION and SOUTH EAST ASIA SUGAR MILL CORPORATION v. COURT OF APPEALS and SUGAR REGULATORY ADMINISTRATION G.R. No. 180462, February 9, 2011

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 Nina phenomena. To fill the expected shortage and to ensure stable sugar prices, then President Joseph Estrada issued Executive Order No. 87, Series of 1999, facilitating sugar importation by the private sector.

Section 2 of Executive Order No. 87 created a Committee on Sugar Conversion/Auction (Committee) to determine procedures for sugar importation as well as for collection and remittance of conversion fee. Under Section 3, sugar conversion is by auction and is subject to conversion fee to be remitted by Sugar Regulatory Administration (SRA) to the Bureau of Treasury. The Committee issued the Bidding Rules providing guidelines for sugar importation. Under the 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 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 SRA, to wit:

G.1 Forfeiture of Conversion Fee G.1 In case of failure of the importer to make the importation or for the imported sugar to arrive in the Philippines on or before the Arrival Date, the 25% of Conversion Fee Bid already paid shall be forfeited in favor of the SRA and the imported sugar shall not be classified as "B" (domestic sugar) unless, upon application with the SRA and without objection of the Committee, the SRA allows such conversion after payment by the importer of 100% of the Conversion Fee applicable to the shipment. (Emphasis supplied)

The Sugar Mill submitted the winning bid for 10,000 metric tons while Pacific Sugar submitted the winning bid for 20,000 metric tons, for a combined total volume of 30,000 metric tons of sugar. Pursuant to the Bidding Rules, Sugar Mill and Pacific Sugar paid 25% of the conversion fees. As it turned out, Sugar Mill and Pacific Sugar 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 blaming sharp decline in sugar prices. They sought immediate reimbursement of the corresponding 25% of the conversion fee amounting to P38,637,000.00. The SRA informed the sugar corporations that the conversion fee would be forfeited pursuant to paragraph G.1 of the Bidding Rules and notified them that the authority to reconsider their request for reimbursement was vested with the Committee.

The sugar corporations filed a complaint for breach of contract and damages in the RTC of Quezon City. The RTC ruled in favor of the plaintiffs and ordered the SRA to pay plaintiffs the amount of P38,637,000 as reimbursement of 25% of the conversion fee they had paid and 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.

Aggrieved, the SRA filed in the CA a petition for certiorari under Rule 65 seeking to set aside the RTC's Orders as well as the Writ of Execution and the Amended Writ of Execution. The CA ruled to annul and set-aside all the orders of the RTC and remanded the case to the court a quo for further proceedings. Dissatisfied, the sugar corporations filed in this Court a petition for review on certiorari.

ISSUE: Whether the sugar corporations are entitled to reimbursement of P38,637,000.00 in conversion fee.

HELD: The RTC gravely erred in ordering the SRA to return the forfeited conversion fee to the sugar corporations. Its strained interpretation of paragraph G. 1 of the Bidding Rules contemplates cases of delay in the arrival of imported sugar but not cases of cancellation of sugar importation defies logic and the express provision of paragraph G. 1. If delay in the arrival of imported sugar is subject to forfeiture of 25% of the conversion fee, with more reason is outright failure to import sugar, by cancelling the sugar importation altogether, subject to forfeiture of the 25% of the conversion fee. Plainly and expressly, paragraph G.1 identifies two situations which would bring about the forfeiture of 25% of the conversion fee:

(1) when the importer fails to make the importation or

(2) when the imported sugar fails to arrive in the Philippines on or before the set arrival date. It is wrong for the RTC to interpret the forfeiture provision in a way departing from its plain and express language. Where the language of a rule is clear, it is the duty of the court to enforce it according to the plain meaning of the word. There is no occasion to resort to other means of interpretation.