Title
Philippine Ports Authority vs. Sargasso Construction and Development Corp.
Case
G.R. No. 146478
Decision Date
Jul 30, 2004
PPA awarded a reclamation project without public bidding; respondents sued for contract execution. SC allowed late appeal, prioritizing public interest over procedural lapse.
dismissal of appeal
construction project
public bidding

Case Summary (G.R. No. 146478)

Factual Background

PPA embarked on the northwest Ground Quadrangle project, including the construction of the rock causeway for the port of San Fernando, La Union, and the development of Pier 2. A significant component of the project involved the improvement of the San Fernando port, specifically the reclamation of 4,280 square meters adjacent to Pier 2.

PPA offered for public bidding the construction of Pier 2 and the rock causeway for the port of San Fernando, La Union. The project was awarded to the consortium composed of Sargasso Construction and Development Corp., Pick & Shovel, Inc., and Atlantic Erectors, Inc., the respondents herein. The contractor commenced the project on August 14, 1990.

Instead of awarding the reclamation project through public bidding, PPA’s General Manager directed a negotiated approach. The award of the reclamation project was conditioned on completion of specified fendering works, on the exclusion of certain mobilization/demobilization costs from the contract, and on the computation of escalation from the approval of the supplemental agreement.

On October 1, 1992, the respondents offered to complete the project as extra work under their existing contract, for P36,294,857.03. In a letter dated December 18, 1992, PPA’s Assistant General Manager for Engineering rejected the proposal but indicated that if the price were lowered to P30,794,230.89, PPA would award the reclamation project to the respondents, subject to higher authority approval.

The respondents agreed to reduce the price. On August 26, 1993, PPA’s General Manager issued a Notice of Award for the reclamation project with the condition that it was subject to completion of the rubber dock fendering for Pier 2 of the San Fernando port and the port of Tobaco. The respondents accepted this condition.

Subsequently, after the completion of the installation of the rubber dock fenders, PPA’s General Manager presented for approval during a meeting of the Board of Directors on September 9, 1994 the reclamation approval and the award to the respondents for P30,794,230.89, together with the corresponding contract. After deliberation, the Board resolved to reject the contract and directed that the project be bid due to lack of basis for the negotiated award. The Board reasoned that the Pier 2 project was basically for construction of a pier, while the supplemental agreement referred to reclamation, and therefore there was no basis to compare the reclamation project terms and conditions with the original Pier 2 contract.

Upon learning of the Board’s resolution, the respondents wrote the General Manager on September 19, 1994, requesting that their agreement be presented again to the Board for approval. PPA did not apprise the respondents of the Board’s action on that request.

Trial Court Proceedings and Judgment

On June 30, 1997, the respondents filed a complaint with the Regional Trial Court of Manila, Branch 14 for specific performance against PPA. They sought an order compelling PPA to execute the supplemental contract based on the August 26, 1993 Notice of Award, and to pay damages, attorneys’ fees, and litigation expenses.

PPA was represented by the Office of the Government Corporate Counsel (OGCC), through the Government Corporate Counsel and Atty. Ramiro R. Madarang, with collaboration from PPA’s Legal Services Department through Atty. Francisquiel O. Mancile. PPA executed a Special Power of Attorney appointing these counsel to act at all stages of the proceedings.

Atty. Mancile appeared before the trial court at different stages, and on October 21, 1997, Atty. Madarang of the OGCC appeared with Atty. Mancile.

After trial, the RTC rendered judgment in favor of the respondents, ordering PPA to execute the contract for the reclamation area between the Timber Pier and Pier 2 at San Fernando Port, La Union, for P30,794,230.89, and to pay costs. The counterclaim was dismissed for lack of merit.

PPA received the RTC decision. On July 3, 1998, PPA, through the OGCC, filed a motion for reconsideration. On January 26, 1999, the RTC denied the motion. PPA was served with the denial order on February 16, 1999, through its Legal Department.

On February 26, 1999, PPA filed a notice of appeal, which was given due course.

The Dispute on Timeliness of Appeal

In the Court of Appeals, the respondents moved to dismiss the appeal, arguing that PPA filed its notice of appeal six days late. PPA opposed the motion by arguing that the trial court’s decision and orders were served on its Legal Services Department, not on the OGCC as lead counsel. PPA asserted that because the OGCC was not served with the decision, the reglementary period to perfect the appeal never commenced.

PPA also argued that the respondents’ motion to dismiss was filed belatedly because it was not raised while the case was still in the RTC.

The respondents countered that they discovered the late filing only when PPA filed its appellate brief in the Court of Appeals. They argued that the material dates showed the lateness and pointed out that PPA had not stated those dates in the notice of appeal. They also pressed that the motion to dismiss was proper under the rules even if raised in the appellate forum.

The Court of Appeals granted the motion to dismiss on June 27, 2000, citing the Court’s ruling in Republic vs. Court of Appeals and PPA’s admission that it received the RTC decision on June 22, 1998. The Court of Appeals denied reconsideration on December 12, 2000.

Parties’ Contentions Before the Supreme Court

PPA sought reversal, advancing two issues. First, it argued that the Court of Appeals gravely abused its discretion in dismissing its appeal for being filed out of time, contending that the OGCC was not validly served with the RTC decision. It maintained that service on the Legal Services Department did not trigger the appeal period because the OGCC was its statutory lead counsel.

Second, it argued that even if procedural lapses existed, the Court should reinstate the appeal so the Court of Appeals could decide on the merits rather than on technicality. PPA invoked the principle of liberal construction of procedural rules where substantial justice required it, and pointed to prior cases where technical delays were not treated as fatal.

Legal Basis and Reasoning of the Majority

The Court denied the petition. It held that PPA’s claim that the OGCC was entitled to separate notice was belied by the records. The Court found that PPA was represented in the trial court by both the OGCC and PPA’s Legal Services Department through Atty. Mancile. PPA’s Special Power of Attorney appointed OGCC and the Legal Services Department “as its counsel” not only in pre-trial but throughout the entire proceedings.

On that basis, the Court ruled that service of the RTC orders and decision could be made either through the Legal Services Department or through the OGCC, in accordance with Rule 13, Section 2 of the Revised Rules of Court, as amended. The Court applied the rule stated in Albano v. Court of Appeals, that where a party has appeared by counsel, service upon one of several counsel of record is equivalent to notice to all, and it starts the time to appeal even if other counsel did not personally receive the decision.

The Court acknowledged the statutory role of the OGCC under the Revised Administrative Code of 1987, specifically that the OGCC acts as the principal law office of government-owned or controlled corporations and is entitled to copies of orders and decisions. However, the Court emphasized that PPA, through the OGCC, admitted in its brief in the Court of Appeals that it received the RTC decision on June 22, 1998. It treated this as conclusive, subject only to exceptions for palpable mistake or absence of admission, and found no showing to negate the admission.

The Court reasoned that because PPA’s own submission acknowledged receipt on June 22, 1998, the argument that service had not commenced the appeal period could not prevail. It further observed that PPA did not raise in its motion for reconsideration that service on the Legal Services Department was not binding, nor did it allege the date when the OGCC received the decision served through Atty. Mancile. The Court noted that PPA’s ineffective-service theory was raised only after the respondents filed their motion to dismiss the appeal in the Court of Appeals.

The Court then addressed counsel negligence. It held that the blame for the belated filing of the notice of appeal had to be laid on the OGCC, not on the Legal Services Department. The Court pointed out that the RTC order denying PPA’s motion for reconsideration dated January 21, 1999 was served on Atty. Madarang of the OGCC, and that he had time to file the notice of appeal within the period, yet the notice was filed only later. The Court treated the missed period as jurisdictional, stressing that the right of appeal is statutory, not natural, and that the perfection of an appeal within the reglementary period is mandatory and jurisdictional.

Nevertheless, the Court proceeded to grant relief in this particular case. It recognized PPA’s plea for liberal treatment because the case involved strong substantive justice considerations, including the legal and factual questions on whether the negotiated award of the reclamation project for P30,794,230.89—without public bidding and without Board approval—was contrary to law. It invoked Orata vs. Intermediate Appellate Court and Obut vs. Court of Appeals for the pr

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