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Australian firm cleared to pursue paper deal with PCSO

The Court of Appeals has denied the petition of Philippine Gaming Management Corp. seeking to overturn its  decision that affirmed the right of an Australian firm to pursue its 50-year joint venture contract with the Philippine Charity Sweepstakes Office for the supply of thermal paper to all lotto outlets in the country.

In a two-page resolution, the CA’s Special Fourteenth Division through Associate Justice Priscilla Baltazar-Padilla said that  PGMC failed to offer new arguments that would warrant the setting aside of its decision issued on Sept. 17, 2018.

The appellate court had denied the petition filed by PGMC seeking nullify the writ of preliminary injunction that the Regional Trial Court of Makati City issued in favor of TMA Australia PTY Ltd. and its local subsidiary TMA Group Philippines, Inc. 

The injunction stopped PGMC from performing any act which would violate or render ineffective TMA’s right under the Contractual Joint Venture Agreement it entered into with PCSO in Dec. 4, 2009.

Court records showed that following the signing of the agreement, the TMA spent $400 million to relocate its thermal manufacturing plant in the Philippines from China.

TMA is the only thermal paper plant set up in the country using high-tech machinery in the production of thermal paper and other paper products while other local suppliers have to import thermal papers being utilized by government agencies, airlines and other private firms.

However, the PCSO revoked the agreement through a resolution issued on April 15, 2011 after the Office of the Government Corporate Counsel found that the agreement was essentially a supply contract, which is void for being a ploy to circumvent Republic Act 9184 or the Government Procurement Reform Act, particularly on bidding for government procurement supplies, and to evade the audit by the Commission on Audit.

This prompted the TMA to seek relief from the trial court, which issued a writ or preliminary injunction against PCSO’s revocation order of the CJVA on May 6, 2011. 

Subsequently, TMA informed PGMC of the existence of its agreement with PCSO and the pending civil case for specific performance as well the writ of preliminary injunction issued by the trial court. 

Despite this, PGMC entered into an interim agreement with PCSO where the latter would source its thermal paper and ticket requirements from the former, thus, affecting TMA’s exclusive rights under the agreement.

 TMA filed another complaint, this time for tortious interference and injunction against PGMC.

In an order issued on Oct. 18, 2017, the trial court granted TMA’s application for preliminary injunction enjoining PGMC from entering into an interim agreement with PCSO with regard to the supply of thermal paper. 

The PGMC elevated the case to the CA, which subsequently ruled in favor of TMA.

The CA held that TMA has a “clear and unmistakable” right to be protected that warranted the issuance of a writ of preliminary injunction by the lower court. 

Topics: Philippine Gaming Management Corp , Philippine Charity Sweepstakes Office , Government Corporate Counsel , Commission on Audit
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