DEPARTMENT OF FOREIGN   G.R. No. 176657

AFFAIRS and BANGKO  
SENTRAL NG PILIPINAS,  
Petitioners, Present:
   
  CORONA, C.J.,
- versus - Chairperson,
  VELASCO, JR.,
  LEONARDO-DE CASTRO,
HON. FRANCO T. FALCON, IN DEL CASTILLO, and
HIS CAPACITY AS THE PEREZ, JJ.
PRESIDING JUDGE OF BRANCH  
71 OF THE REGIONAL TRIAL  
COURT IN PASIG CITY and BCA Promulgated:
INTERNATIONAL  
CORPORATION,  
Respondents. September 1, 2010
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
 
 
DECISION
 
 
LEONARDO-DE CASTRO, J.:
 
 
Before the Court is a Petition for Certiorari and prohibition under Rule 65 of the
Rules of Court with a prayer for the issuance of a temporary restraining order
and/or a writ of preliminary injunction filed by petitioners Department of Foreign
Affairs (DFA) and Bangko Sentral ng Pilipinas (BSP). Petitioners pray that the
Court declare as null and void the Order[1] dated February 14, 2007 of respondent
Judge Franco T. Falcon (Judge Falcon) in Civil Case No. 71079, which granted the
application for preliminary injunction filed by respondent BCA International
Corporation (BCA). Likewise, petitioners seek to prevent respondent Judge Falcon
from implementing the corresponding Writ of Preliminary Injunction dated
February 23, 2007[2] issued pursuant to the aforesaid Order.
 
The facts of this case, as culled from the records, are as follows:
 
Being a member state of the International Civil Aviation Organization (ICAO),
[3]
 the Philippines has to comply with the commitments and standards set forth in
ICAO Document No. 9303[4] which requires the ICAO member states to issue
machine readable travel documents (MRTDs)[5] by April 2010.
 
Thus, in line with the DFAs mandate to improve the passport and visa issuance
system, as well as the storage and retrieval of its related application records, and
pursuant to our governments ICAO commitments, the DFA secured the approval
of the President of the Philippines, as Chairman of the Board of the National
Economic and Development Authority (NEDA), for the implementation of the
Machine Readable Passport and Visa Project (the MRP/V Project) under the Build-
Operate-and-Transfer (BOT) scheme, provided for by Republic Act No. 6957, as
amended by Republic Act No. 7718 (the BOT Law), and its Implementing Rules
and Regulations (IRR). Thus, a Pre-qualification, Bids and Awards Committee
(PBAC) published an invitation to pre-qualify and bid for the supply of the needed
machine readable passports and visas, and conducted the public bidding for the
MRP/V Project on January 10, 2000. Several bidders responded and BCA was
among those that pre-qualified and submitted its technical and financial
proposals. On June 29, 2000, the PBAC found BCAs bid to be the sole complying
bid; hence, it permitted the DFA to engage in direct negotiations with BCA. On
even date, the PBAC recommended to the DFA Secretary the award of the MRP/V
Project to BCA on a BOT arrangement.
 
In compliance with the Notice of Award dated September 29, 2000 and Section
11.3, Rule 11 of the IRR of the BOT Law,[6] BCA incorporated a project company,
the Philippine Passport Corporation (PPC) to undertake and implement the MRP/V
Project.
 
On February 8, 2001, a Build-Operate-Transfer Agreement[7] (BOT Agreement)
between the DFA and PPC was signed by DFA Acting Secretary Lauro L. Baja, Jr.
and PPC President Bonifacio Sumbilla. Under the BOT Agreement, the MRP/V
Project was defined as follows:
 
 Section 1.02 MRP/V Project refers to all the activities and
services undertaken in the fulfillment of the Machine Readable Passport
and Visa Project as defined in the Request for Proposals (RFP), a copy
of which is hereto attached as Annex A, including but not limited to
project financing, systems development, installation and maintenance in
the Philippines and Foreign Service Posts (FSPs), training of DFA
personnel, provision of all project consumables (related to the production
of passports and visas, such as printer supplies, etc.), scanning of
application and citizenship documents, creation of data bases, issuance
of machine readable passports and visas, and site preparation in the
Central Facility and Regional Consular Offices (RCOs) nationwide.[8]
 
 
On April 5, 2002, former DFA Secretary Teofisto T. Guingona and
Bonifacio Sumbilla, this time as BCA President, signed an Amended BOT
Agreement[9] in order to reflect the change in the designation of the parties and to
harmonize Section 11.3 with Section 11.8[10] of the IRR of the BOT Law. The
Amended BOT Agreement was entered into by the DFA and BCA with the
conformity of PPC.
 
The two BOT Agreements (the original version signed on February 8, 2001
and the amended version signed April 5, 2002) contain substantially the same
provisions except for seven additional paragraphs in the whereas clauses and two
new provisions Section 9.05 on Performance and Warranty Securities and Section
20.15 on Miscellaneous Provisions. The two additional provisions are quoted
below:
 
Section 9.05. The PPC has posted in favor of the DFA the
performance security required for Phase 1 of the MRP/V Project and
shall be deemed, for all intents and purposes, to be full compliance by
BCA with the provisions of this Article 9.
 
xxxx
 
Section 20.15 It is clearly and expressly understood that BCA
may assign, cede and transfer all of its rights and obligations under this
Amended BOT Agreement to PPC, as fully as if PPC is the original
signatory to this Amended BOT Agreement, provided however that BCA
shall nonetheless be jointly and severally liable with PPC for the
 performance of all the obligations and liabilities under this Amended
BOT Agreement.[11]
 
 
Also modified in the Amended BOT Agreement was the Project Completion
date of the MRP/V Project which set the completion of the implementation phase
of the project within 18 to 23 months from the date of effectivity of the Amended
BOT Agreement as opposed to the previous period found in the original BOT
Agreement which set the completion within 18 to 23 months from receipt of the
NTP (Notice to Proceed) in accordance with the Project Master Plan.
 
On April 12, 2002, an Assignment Agreement[12] was executed by BCA and
PPC, whereby BCA assigned and ceded its rights, title, interest and benefits arising
from the Amended BOT Agreement to PPC.
 
As set out in Article 8 of the original and the Amended BOT Agreement, the
MRP/V Project was divided into six phases:
 
Phase 1. Project Planning Phase The Project Proponent [BCA]
shall prepare detailed plans and specifications in accordance with Annex
A of this [Amended] BOT Agreement within three (3) months from
issuance of the NTP (Notice to Proceed) [from the date of effectivity of
this Amended BOT Agreement]. This phase shall be considered
complete upon the review, acceptance and approval by the DFA of these
plans and the resulting Master Plan, including the Master Schedule, the
business process specifications, the acceptance criteria, among other
plans.
 
xxxx
 
The DFA must approve all detailed plans as a condition precedent to the
issuance of the CA [Certificate of Acceptance] for Phase 1.
 
Phase 2. Implementation of the MRP/V Project at the Central
Facility Within six (6) months from issuance of the CA for Phase 1, the
PROJECT PROPONENT [BCA] shall complete the implementation of
the MRP/V Project in the DFA Central Facility, and establish the
network design between the DFA Central Facility, the ten (10) RCOs
[Regional Consular Offices] and the eighty (80) FSPs [Foreign Service
Posts].
 
xxxx
 
Phase 3. Implementation of the MRP/V Project at the
Regional Consular Offices This phase represents the replication of the
systems as approved from the Central Facility to the RCOs throughout
the country, as identified in the RFP [Request for Proposal]. The
approved systems are those implemented, evaluated, and finally
approved by DFA as described in Phase 1. The Project Proponent [BCA]
will be permitted to begin site preparation and the scanning and database
building operations in all offices as soon as the plans are agreed upon
and accepted. This includes site preparation and database building
operations in these Phase-3 offices.
 
Within six (6) months from issuance of CA for Phase 2, the Project
Proponent [BCA] shall complete site preparation and implementation of
the approved systems in the ten (10) RCOs, including a fully functional
network connection between all equipment at the Central Facility and the
RCOs.
 
Phase 4. Full Implementation, including all Foreign Service
Posts Within three (3) to eight (8) months from issuance of the CA for
Phase-3, the Project Proponent [BCA] shall complete all preparations
and fully implement the approved systems in the eighty (80) FSPs,
including a fully functional network connection between all equipment
at the Central Facility and the FSPs. Upon satisfactory completion of
Phase 4, a CA shall be issued by the DFA.
 
Phase 5. In Service Phase Operation and maintenance of the
complete MRP/V Facility to provide machine readable passports and
visas in all designated locations around the world.
 
Phase 6. Transition/Turnover Transition/Turnover to the DFA
of all operations and equipment, to include an orderly transfer of
ownership of all hardware, application system software and its source
code and/or licenses (subject to Section 5.02 [H]), peripherals, leasehold
improvements, physical and computer security improvements,
Automated Fingerprint Identification Systems, and all other MRP/V
facilities shall commence at least six (6) months prior to the end of the
 [Amended] BOT Agreement. The transition will include the training of
DFA personnel who will be taking over the responsibilities of system
operation and maintenance from the Project Proponent [BCA]. The
Project Proponent [BCA] shall bear all costs related to this transfer.
[13]
 (Words in brackets appear in the Amended BOT Agreement)
 
 
To place matters in the proper perspective, it should be pointed out that both
the DFA and BCA impute breach of the Amended BOT Agreement against each
other.
 
According to the DFA, delays in the completion of the phases permeated the
MRP/V Project due to the submission of deficient documents as well as
intervening issues regarding BCA/PPCs supposed financial incapacity to fully
implement the project.
 
On the other hand, BCA contends that the DFA failed to perform its
reciprocal obligation to issue to BCA a Certificate of Acceptance of Phase 1 within
14 working days of operation purportedly required by Section 14.04 of the
Amended BOT Agreement. BCA bewailed that it took almost three years for the
DFA to issue the said Certificate allegedly because every appointee to the position
of DFA Secretary wanted to review the award of the project to BCA. BCA further
alleged that it was the DFAs refusal to approve the location of the DFA Central
Facility which prevented BCA from proceeding with Phase 2 of the MRP/V
Project.
 
Later, the DFA sought the opinion of the Department of Finance (DOF) and
the Department of Justice (DOJ) regarding the appropriate legal actions in
connection with BCAs alleged delays in the completion of the MRP/V Project. In a
Letter dated February 21, 2005,[14] the DOJ opined that the DFA should issue a
final demand upon BCA to make good on its obligations, specifically on the
warranties and responsibilities regarding the necessary capitalization and the
required financing to carry out the MRP/V Project. The DOJ used as basis for said
recommendation, the Letter dated April 19, 2004[15] of DOF Secretary Juanita
Amatong to then DFA Secretary Delia Albert stating, among others, that BCA may
not be able to infuse more capital into PPC to use for the completion of the MRP/V
Project.
 
Thus, on February 22, 2005, DFA sent a letter[16] to BCA, through its project
company PPC, invoking BCAs financial warranty under Section 5.02(A) of the
Amended BOT Agreement.[17] The DFA required BCA to submit (a) proof of
adequate capitalization (i.e., full or substantial payment of stock subscriptions); (b)
a bank guarantee indicating the availability of a credit facility of P700 million; and
(c) audited financial statements for the years 2001 to 2004.
 
In reply to DFAs letter, BCA, through PPC, informed the former of its position that
its financial capacity was already passed upon during the prequalification process
and that the Amended BOT Agreement did not call for any additional financial
requirements for the implementation of the MRP/V Project. Nonetheless, BCA
submitted its financial statements for the years 2001 and 2002 and requested for
additional time within which to comply with the other financial requirements
which the DFA insisted on.[18]
 
According to the DFA, BCAs financial warranty is a continuing warranty
which requires that it shall have the necessary capitalization to finance the MRP/V
Project in its entirety and not on a per phase basis as BCA contends. Only upon
sufficient proof of its financial capability to complete and implement the whole
project will the DFAs obligation to choose and approve the location of its Central
Facility arise. The DFA asserted that its approval of a Central Facility site was not
ministerial and upon its review, BCAs proposed site for the Central Facility was
purportedly unacceptable in terms of security and facilities. Moreover, the DFA
allegedly received conflicting official letters and notices[19] from BCA and PPC
regarding the true ownership and control of PPC. The DFA implied that the
disputes among the shareholders of PPC and between PPC and BCA appeared to
be part of the reason for the hampered implementation of the MRP/V Project.
 
BCA, in turn, submitted various letters and documents to prove its financial
capability to complete the MRP/V Project.[20] However, the DFA claimed these
documents were unsatisfactory or of dubious authenticity. Then on August 1, 2005,
BCA terminated its Assignment Agreement with PPC and notified the DFA that it
would directly implement the MRP/V Project.[21] BCA further claims that the
termination of the Assignment Agreement was upon the instance, or with the
conformity, of the DFA, a claim which the DFA disputed.
 
On December 9, 2005, the DFA sent a Notice of Termination[22] to BCA and
PPC due to their alleged failure to submit proof of financial capability to complete
the entire MRP/V Project in accordance with the financial warranty under Section
5.02(A) of the Amended BOT Agreement. The Notice states:
 
After a careful evaluation and consideration of the matter,
including the reasons cited in your letters dated March 3, May 3, and
June 20, 2005, and upon the recommendation of the Office of the
Solicitor General (OSG), the Department is of the view that your
continuing default in complying with the requisite bank guarantee and/or
credit facility, despite repeated notice and demand, is legally unjustified.
 
In light of the foregoing considerations and upon the instruction of
the Secretary of Foreign Affairs, the Department hereby formally
TERMINATE (sic) the Subject Amended BOT Agreement dated 5 April
2005 (sic)[23] effective 09 December 2005. Further, and as a consequence
of this termination, the Department formally DEMAND (sic) that you
pay within ten (10) days from receipt hereof, liquidated damages
equivalent to the corresponding performance security bond that you had
posted for the MRP/V Project.
 
Please be guided accordingly.
 
 
On December 14, 2005, BCA sent a letter[24] to the DFA demanding that it
immediately reconsider and revoke its previous notice of termination, otherwise,
BCA would be compelled to declare the DFA in default pursuant to the Amended
BOT Agreement. When the DFA failed to respond to said letter, BCA issued its
own Notice of Default dated December 22, 2005[25] against the DFA, stating that if
the default is not remedied within 90 days, BCA will be constrained to terminate
the MRP/V Project and hold the DFA liable for damages.
 
BCAs request for mutual discussion under Section 19.01 of the Amended BOT
Agreement[26] was purportedly ignored by the DFA and left the dispute unresolved
through amicable means within 90 days. Consequently, BCA filed its Request for
Arbitration dated April 7, 2006[27] with the Philippine Dispute Resolution Center,
Inc. (PDRCI), pursuant to Section 19.02 of the Amended BOT Agreement which
provides:
 
Section 19.02 Failure to Settle Amicably If the Dispute cannot be
settled amicably within ninety (90) days by mutual discussion as
contemplated under Section 19.01 herein, the Dispute shall be settled
with finality by an arbitrage tribunal operating under International Law,
hereinafter referred to as the Tribunal, under the UNCITRAL Arbitration
Rules contained in Resolution 31/98 adopted by the United Nations
General Assembly on December 15, 1976, and entitled Arbitration Rules
on the United Nations Commission on the International Trade Law. The
DFA and the BCA undertake to abide by and implement the arbitration
award. The place of arbitration shall be Pasay City, Philippines, or such
other place as may mutually be agreed upon by both parties. The
arbitration proceeding shall be conducted in the English language.[28]
 
 
As alleged in BCAs Request for Arbitration, PDRCI is a non-stock, non-profit
organization composed of independent arbitrators who operate under its own
Administrative Guidelines and Rules of Arbitration as well as under the United
Nations Commission on the International Trade Law (UNCITRAL) Model Law on
International Commercial Arbitration and other applicable laws and
rules. According to BCA, PDRCI can act as an arbitration center from whose pool
of accredited arbitrators both the DFA and BCA may select their own nominee to
become a member of the arbitral tribunal which will render the arbitration award.
 
BCAs Request for Arbitration filed with the PDRCI sought the following reliefs:
 
1. A judgment nullifying and setting aside the Notice of
Termination dated December 9, 2005 of Respondent [DFA], including
its demand to Claimant [BCA] to pay liquidated damages equivalent to
the corresponding performance security bond posted by Claimant
[BCA];
 
2. A judgment (a) confirming the Notice of Default dated
December 22, 2005 issued by Claimant [BCA] to Respondent [DFA];
and (b) ordering Respondent [DFA] to perform its obligation under the
Amended BOT Agreement dated April 5, 2002 by approving the site of
 the Central Facility at the Star Mall Complex on Shaw Boulevard,
Mandaluyong City, within five days from receipt of the Arbitral Award;
and
 
3. A judgment ordering respondent [DFA] to pay damages to
Claimant [BCA], reasonably estimated at P50,000,000.00 as of this date,
representing lost business opportunities; financing fees, costs and
commissions; travel expenses; legal fees and expenses; and costs of
arbitration, including the fees of the arbitrator/s.[29]
 
 
PDRCI, through a letter dated April 26, 2006,[30] invited the DFA to submit
its Answer to the Request for Arbitration within 30 days from receipt of said letter
and also requested both the DFA and BCA to nominate their chosen arbitrator
within the same period of time.
 
Initially, the DFA, through a letter dated May 22, 2006,[31] requested for an
extension of time to file its answer, without prejudice to jurisdictional and other
defenses and objections available to it under the law. Subsequently, however, in a
letter dated May 29, 2006,[32] the DFA declined the request for arbitration before
the PDRCI. While it expressed its willingness to resort to arbitration, the DFA
pointed out that under Section 19.02 of the Amended BOT Agreement, there is no
mention of a specific body or institution that was previously authorized by the
parties to settle their dispute. The DFA further claimed that the arbitration of the
dispute should be had before an ad hoc arbitration body, and not before the PDRCI
which has as its accredited arbitrators, two of BCAs counsels of record. Likewise,
the DFA insisted that PPC, allegedly an indispensable party in the instant case,
should also participate in the arbitration.
 
The DFA then sought the opinion of the DOJ on the Notice of Termination dated
December 9, 2005 that it sent to BCA with regard to the MRP/V Project.
 
In DOJ Opinion No. 35 (2006) dated May 31, 2006,[33] the DOJ concurred with the
steps taken by the DFA, stating that there was basis in law and in fact for the
termination of the MRP/V Project. Moreover, the DOJ recommended the
immediate implementation of the project (presumably by a different contractor) at
the soonest possible time.
 
Thereafter, the DFA and the BSP entered into a Memorandum of Agreement for
the latter to provide the former passports compliant with international
standards. The BSP then solicited bids for the supply, delivery, installation and
commissioning of a system for the production of Electronic Passport Booklets or e-
Passports.[34]
 
For BCA, the BSPs invitation to bid for the supply and purchase of e-Passports
(the e-Passport Project) would only further delay the arbitration it requested from
the DFA. Moreover, this new e-Passport Project by the BSP and the DFA would
render BCAs remedies moot inasmuch as the e-Passport Project would then be
replacing the MRP/V Project which BCA was carrying out for the DFA.
 
Thus, BCA filed a Petition for Interim Relief[35] under Section 28 of the Alternative
Dispute Resolution Act of 2004 (R.A. No. 9285),[36] with the Regional Trial Court
(RTC) of Pasig City, Branch 71, presided over by respondent Judge Falcon. In that
RTC petition, BCA prayed for the following:
 
WHEREFORE, BCA respectfully prays that this Honorable Court,
before the constitution of the arbitral tribunal in PDRCI Case No. 30-
2006/BGF, grant petitioner interim relief in the following manner:
 
(a) upon filing of this Petition, immediately issue an order temporarily
restraining Respondents [DFA and BSP], their agents, representatives,
awardees, suppliers and assigns (i) from awarding a new contract to
implement the Project, or any similar electronic passport or visa project;
or (ii) if such contract has been awarded, from implementing such
Project or similar projects until further orders from this Honorable Court;
 
(b) after notice and hearing, issue a writ of preliminary injunction
ordering Respondents [DFA and BSP], their agents, representatives,
awardees, suppliers and assigns to desist (i) from awarding a new
contract to implement the Project or any similar electronic passport or
visa project; or (ii) if such contract has been awarded, from
implementing such Project or similar projects, and to maintain the status
quo ante pending the resolution on the merits of BCAs Request for
Arbitration; and
 
 (c) render judgment affirming the interim relief granted to BCA until the
dispute between the parties shall have been resolved with finality.
 
BCA also prays for such other relief, just and equitable under the
premises.[37]
 
 
BCA alleged, in support for its application for a Temporary Restraining Order
(TRO), that unless the DFA and the BSP were immediately restrained, they would
proceed to undertake the project together with a third party to defeat the reliefs
BCA sought in its Request for Arbitration, thus causing BCA to suffer grave and
irreparable injury from the loss of substantial investments in connection with the
implementation of the MRP/V Project.
 
Thereafter, the DFA filed an Opposition (to the Application for Temporary
Restraining Order and/or Writ of Preliminary Injunction) dated January 18, 2007,
[38]
 alleging that BCA has no cause of action against it as the contract between them
is for machine readable passports and visas which is not the same as the contract it
has with the BSP for the supply of electronic passports. The DFA also pointed out
that the Filipino people and the governments international standing would suffer
great damage if a TRO would be issued to stop the e-Passport Project. The DFA
mainly anchored its opposition on Republic Act No. 8975, which prohibits trial
courts from issuing a TRO, preliminary injunction or mandatory injunction against
the bidding or awarding of a contract or project of the national government.
 
On January 23, 2007, after summarily hearing the parties oral arguments on BCAs
application for the issuance of a TRO, the trial court ordered the issuance of a TRO
restraining the DFA and the BSP, their agents, representatives, awardees, suppliers
and assigns from awarding a new contract to implement the Project or any similar
electronic passport or visa project, or if such contract has been awarded, from
implementing such or similar projects.[39] The trial court also set for hearing BCAs
application for preliminary injunction.
 
Consequently, the DFA filed a Motion for Reconsideration[40] of the January 23,
2007 Order. The BSP, in turn, also sought to lift the TRO and to dismiss the
petition. In its Urgent Omnibus Motion dated February 1, 2007,[41] the BSP
asserted that BCA is not entitled to an injunction, as it does not have a clear right
which ought to be protected, and that the trial court has no jurisdiction to enjoin the
implementation of the e-Passport Project which, the BSP alleged, is a national
government project under Republic Act No. 8975.
 
In the hearings set for BCAs application for preliminary injunction, BCA presented
as witnesses, Mr. Bonifacio Sumbilla, its President, Mr. Celestino Mercader, Jr.
from the Independent Verification and Validation Contractor commissioned by the
DFA under the Amended BOT Agreement, and DFA Assistant Secretary Domingo
Lucenario, Jr. as adverse party witness.
 
The DFA and the BSP did not present any witness during the hearings for BCAs
application for preliminary injunction. According to the DFA and the BSP, the trial
court did not have any jurisdiction over the case considering that BCA did not pay
the correct docket fees and that only the Supreme Court could issue a TRO on the
bidding for a national government project like the e-Passport Project pursuant to
the provisions of Republic Act No. 8975. Under Section 3 of Republic Act No.
8975, the RTC could only issue a TRO against a national government project if it
involves a matter of extreme urgency involving a constitutional issue, such that
unless a TRO is issued, grave injustice and irreparable injury will arise.
 
Thereafter, BCA filed an Omnibus Comment [on Opposition and Supplemental
Opposition (To the Application for Temporary Restraining Order and/or Writ of
Preliminary Injunction)] and Opposition [to Motion for Reconsideration (To the
Temporary Restraining Order dated January 23, 2007)] and Urgent Omnibus
Motion [(i) To Lift Temporary Restraining Order; and (ii) To Dismiss the Petition]
dated January 31, 2007.[42] The DFA and the BSP filed their separate Replies (to
BCAs Omnibus Comment) dated February 9, 2007[43] and February 13, 2007,
[44]
 respectively.
 
On February 14, 2007, the trial court issued an Order granting BCAs application
for preliminary injunction, to wit:
 
WHEREFORE, in view of the above, the court resolves that it has
jurisdiction over the instant petition and to issue the provisional remedy
prayed for, and therefore, hereby GRANTS petitioners [BCAs]
 application for preliminary injunction. Accordingly, upon posting a bond
in the amount of Ten Million Pesos (P10,000,000.00), let a writ of
preliminary injunction issue ordering respondents [DFA and BSP], their
agents, representatives, awardees, suppliers and assigns to desist (i) from
awarding a new contract to implement the project or any similar
electronic passport or visa project or (ii) if such contract has been
awarded from implementing such project or similar projects.
 
The motion to dismiss is denied for lack of merit. The motions for
reconsideration and to lift temporary restraining Order are now moot and
academic by reason of the expiration of the TRO.[45]
 
 
On February 16, 2007, BCA filed an Amended Petition,[46] wherein paragraphs
3.3(b) and 4.3 were modified to add language to the effect that unless petitioners
were enjoined from awarding the e-Passport Project, BCA would be deprived of its
constitutionally-protected right to perform its contractual obligations under the
original and amended BOT Agreements without due process of law. Subsequently,
on February 26, 2007, the DFA and the BSP received the Writ of Preliminary
Injunction dated February 23, 2007.
 
Hence, on March 2, 2007, the DFA and the BSP filed the instant Petition
for Certiorari[47] and prohibition under Rule 65 of the Rules of Court with a prayer
for the issuance of a temporary restraining order and/or a writ of preliminary
injunction, imputing grave abuse of discretion on the trial court when it granted
interim relief to BCA and issued the assailed Order dated February 14, 2007 and
the writ of preliminary injunction dated February 23, 2007.
 
The DFA and the BSP later filed an Urgent Motion for Issuance of a Temporary
Restraining Order and/or Writ of Preliminary Injunction dated March 5, 2007.[48]
 
On March 12, 2007, the Court required BCA to file its comment on the said
petition within ten days from notice and granted the Office of the Solicitor
Generals urgent motion for issuance of a TRO and/or writ of preliminary
injunction,[49] thus:
 
After deliberating on the petition for certiorari and prohibition
with temporary restraining order and/or writ of preliminary injunction
 assailing the Order dated 14 February 2007 of the Regional Trial Court,
Branch 71, Pasig City, in Civil Case No. 71079, the Court, without
necessarily giving due course thereto, resolves to require respondents
to COMMENT thereon (not to file a motion to dismiss) within ten (10)
days from notice.
 
The Court further resolves to GRANT the Office of the Solicitor
Generals urgent motion for issuance of a temporary restraining order
and/or writ of preliminary injunction dated 05 March 2007
and ISSUE a TEMPORARY RESTRAINING ORDER, as prayed for,
enjoining respondents from implementing the assailed Order dated 14
February 2007 and the Writ of Preliminary Injunction dated 23 February
2007, issued by respondent Judge Franco T. Falcon in Civil Case No.
71079 entitled BCA International Corporation vs. Department of
Foreign Affairs and Bangko Sentral ng Pilipinas, and from conducting
further proceedings in said case until further orders from this Court.
 
 
BCA filed on April 2, 2007 its Comment with Urgent Motion to Lift TRO, [50] to
which the DFA and the BSP filed their Reply dated August 14, 2007.[51]
 
In a Resolution dated June 4, 2007,[52] the Court denied BCAs motion to lift
TRO. BCA filed another Urgent Omnibus Motion dated August 17, 2007, for the
reconsideration of the Resolution dated June 4, 2007, praying that the TRO issued
on March 12, 2007 be lifted and that the petition be denied.
 
In a Resolution dated September 10, 2007,[53] the Court denied BCAs Urgent
Omnibus Motion and gave due course to the instant petition. The parties were
directed to file their respective memoranda within 30 days from notice of the
Courts September 10, 2007 Resolution.
 
Petitioners DFA and BSP submit the following issues for our consideration:
 
ISSUES
 
I
 
WHETHER OR NOT THE RESPONDENT JUDGE GRAVELY
ABUSED HIS DISCRETION AMOUNTING TO LACK OR EXCESS
 OF JURISDICTION WHEN HE ISSUED THE ASSAILED ORDER,
WHICH EFFECTIVELY ENJOINED THE IMPLEMENTATION OF
THE E-PASSPORT PROJECT -- A NATIONAL GOVERNMENT
PROJECT UNDER REPUBLIC ACT NO. 8975.
 
II
 
WHETHER OR NOT THE RESPONDENT JUDGE ACTED WITH
GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR
EXCESS OF JURISDICTION IN GRANTING RESPONDENT
BCAS INTERIM RELIEF INASMUCH AS:
 
(I)                RESPONDENT BCA HAS NOT ESTABLISHED
A CLEAR RIGHT THAT CAN BE PROTECTED
BY AN INJUNCTION; AND
 
(II)             RESPONDENT BCA HAS NOT SHOWN THAT
IT WILL SUSTAIN GRAVE AND
IRREPARABLE INJURY THAT MUST BE
PROTECTED BY AN INJUNCTION. ON THE
CONTRARY, IT IS THE FILIPINO PEOPLE,
WHO PETITIONERS PROTECT, THAT WILL
SUSTAIN SERIOUS AND SEVERE INJURY BY
THE INJUNCTION.[54]
 
 
At the outset, we dispose of the procedural objections of BCA to the
petition, to wit: (a) petitioners did not follow the hierarchy of courts by filing their
petition directly with this Court, without filing a motion for reconsideration with
the RTC and without filing a petition first with the Court of Appeals; (b) the person
who verified the petition for the DFA did not have personal knowledge of the facts
of the case and whose appointment to his position was highly irregular; and (c) the
verification by the Assistant Governor and General Counsel of the BSP of only
selected paragraphs of the petition was with the purported intent to mislead this
Court.
 
Although the direct filing of petitions for certiorari with the Supreme Court
is discouraged when litigants may still resort to remedies with the lower courts, we
have in the past overlooked the failure of a party to strictly adhere to the hierarchy
of courts on highly meritorious grounds. Most recently, we relaxed the rule on
court hierarchy in the case of Roque, Jr. v. Commission on Elections,[55] wherein
we held:
 
The policy on the hierarchy of courts, which petitioners indeed failed
to observe, is not an iron-clad rule. For indeed the Court has full
discretionary power to take cognizance and assume jurisdiction of
special civil actions for certiorari and mandamus filed directly with
it for exceptionally compelling reasons or if warranted by the nature
of the issues clearly and specifically raised in the petition.[56] (Emphases
ours.)
 
 
The Court deems it proper to adopt a similarly liberal attitude in the present case in
consideration of the transcendental importance of an issue raised herein. This is the
first time that the Court is confronted with the question of whether an information
and communication technology project, which does not conform to our traditional
notion of the term infrastructure, is covered by the prohibition on the issuance of
court injunctions found in Republic Act No. 8975, which is entitled An Act to
Ensure the Expeditious Implementation and Completion of Government
Infrastructure Projects by Prohibiting Lower Courts from Issuing Temporary
Restraining Orders, Preliminary Injunctions or Preliminary Mandatory Injunctions,
Providing Penalties for Violations Thereof, and for Other Purposes. Taking into
account the current trend of computerization and modernization of administrative
and service systems of government offices, departments and agencies, the
resolution of this issue for the guidance of the bench and bar, as well as the general
public, is both timely and imperative.
 
Anent BCAs claim that Mr. Edsel T. Custodio (who verified the Petition on
behalf of the DFA) did not have personal knowledge of the facts of the case and
was appointed to his position as Acting Secretary under purportedly irregular
circumstances, we find that BCA failed to sufficiently prove such allegations. In
any event, we have previously held that [d]epending on the nature of the
allegations in the petition, the verification may be based either purely on personal
knowledge, or entirely on authentic records, or on both sources.[57] The alleged lack
of personal knowledge of Mr. Custodio (which, as we already stated, BCA failed
to prove) would not necessarily render the verification defective for he could have
verified the petition purely on the basis of authentic records.
  
As for the assertion that the partial verification of Assistant Governor and
General Counsel Juan de Zuniga, Jr. was for the purpose of misleading this Court,
BCA likewise failed to adduce evidence on this point. Good faith is always
presumed. Paragraph 3 of Mr. Zunigas verification indicates that his partial
verification is due to the fact that he is verifying only the allegations in the petition
peculiar to the BSP. We see no reason to doubt that this is the true reason for his
partial or selective verification.
 
In sum, BCA failed to successfully rebut the presumption that the official
acts (of Mr. Custodio and Mr. Zuniga) were done in good faith and in the regular
performance of official duty.[58] Even assuming the verifications of the petition
suffered from some defect, we have time and again ruled that [t]he ends of justice
are better served when cases are determined on the merits after all parties are given
full opportunity to ventilate their causes and defenses rather than on technicality or
some procedural imperfections.[59] In other words, the Court may suspend or even
disregard rules when the demands of justice so require.[60]
 
We now come to the substantive issues involved in this case.
 
On whether the trial court had jurisdiction to
issue a writ of preliminary injunction in the
present case
 
In their petition, the DFA and the BSP argue that respondent Judge Falcon
gravely abused his discretion amounting to lack or excess of jurisdiction when he
issued the assailed orders, which effectively enjoined the bidding and/or
implementation of the e-Passport Project. According to petitioners, this violated
the clear prohibition under Republic Act No. 8975 regarding the issuance of TROs
and preliminary injunctions against national government projects, such as the e-
Passport Project.
 
The prohibition invoked by petitioners is found in Section 3 of Republic Act
No. 8975, which reads:
 
 Section 3. Prohibition on the Issuance of Temporary Restraining
Orders, Preliminary Injunctions and Preliminary Mandatory
Injunctions. No court, except the Supreme Court, shall issue any
temporary restraining order, preliminary injunction or preliminary
mandatory injunction against the government, or any of its subdivisions,
officials or any person or entity, whether public or private, acting under
the governments direction, to restrain, prohibit or compel the following
acts:

(a)    Acquisition, clearance and development of the right-of-

way and/or site or location of any national government
project;
 
(b)   Bidding or awarding of contract/project of the national
government as defined under Section 2 hereof;
 
(c)    Commencement, prosecution, execution, implementation,
operation of any such contract or project;
 
(d)   Termination or rescission of any such contract/project; and
 
(e)    The undertaking or authorization of any other lawful
activity necessary for such contract/project.
 
This prohibition shall apply in all cases, disputes or controversies
instituted by a private party, including but not limited to cases filed by
bidders or those claiming to have rights through such bidders involving
such contract/project. This prohibition shall not apply when the matter is
of extreme urgency involving a constitutional issue, such that unless a
temporary restraining order is issued, grave injustice and irreparable
injury will arise. The applicant shall file a bond, in an amount to be fixed
by the court, which bond shall accrue in favor of the government if the
court should finally decide that the applicant was not entitled to the relief
sought.
 
If after due hearing the court finds that the award of the contract is null
and void, the court may, if appropriate under the circumstances, award
the contract to the qualified and winning bidder or order a rebidding of
the same, without prejudice to any liability that the guilty party may
incur under existing laws.
 
  
From the foregoing, it is indubitable that no court, aside from the Supreme
Court, may enjoin a national government project unless the matter is one of
extreme urgency involving a constitutional issue such that unless the act
complained of is enjoined, grave injustice or irreparable injury would arise.
 
What then are the national government projects over which the lower courts
are without jurisdiction to issue the injunctive relief as mandated by Republic Act
No. 8975?
 
Section 2(a) of Republic Act No. 8975 provides:
 
Section 2. Definition of Terms.
 
(a) National government projects shall refer to all current and
future national government infrastructure, engineering works and service
contracts, including projects undertaken by government-owned and -
controlled corporations, all projects covered by Republic Act No. 6975,
as amended by Republic Act No. 7718, otherwise known as the Build-
Operate-and-Transfer Law, and other related and necessary activities,
such as site acquisition, supply and/or installation of equipment and
materials, implementation, construction, completion, operation,
maintenance, improvement, repair and rehabilitation, regardless of the
source of funding.
 
 
As petitioners themselves pointed out, there are three types of national
government projects enumerated in Section 2(a), to wit:
 
(a)                current and future national government infrastructure
projects, engineering works and service contracts, including
projects undertaken by government-owned and controlled
corporations;
 
(b)               all projects covered by R.A. No. 6975, as amended by R.A. No.
7718, or the Build-Operate-and-Transfer ( BOT) Law; and
 
(c)                other related and necessary activities, such as site acquisition,
supply and/or installation of equipment and materials,
 implementation, construction, completion, operation,
maintenance, improvement repair and rehabilitation, regardless of
the source of funding.
 
 
Under Section 2(a) of the BOT Law as amended by Republic Act No. 7718,
[61]
 private sector infrastructure or development projects are those normally
financed and operated by the public sector but which will now be wholly or
partly implemented by the private sector, including but not limited to, power
plants, highways, ports, airports, canals, dams, hydropower projects, water supply,
irrigation, telecommunications, railroads and railways, transport systems, land
reclamation projects, industrial estates or townships, housing, government
buildings, tourism projects, markets, slaughterhouses, warehouses, solid waste
management, information technology networks and database infrastructure,
education and health facilities, sewerage, drainage, dredging, and other
infrastructure and development projects as may be authorized by the appropriate
agency.
 
In contrast, Republic Act No. 9184,[62] also known as the Government Procurement
Reform Act, defines infrastructure projects in Section 5(k) thereof in this manner:
 
(k) Infrastructure Projects - include the construction,
improvement, rehabilitation, demolition, repair, restoration or
maintenance of roads and bridges, railways, airports, seaports,
communication facilities, civil works components of information
technology projects, irrigation, flood control and drainage, water
supply, sanitation, sewerage and solid waste management systems, shore
protection, energy/power and electrification facilities, national buildings,
school buildings, hospital buildings and other related construction
projects of the government. (Emphasis supplied.)
 
 
In the present petition, the DFA and the BSP contend that the bidding for the
supply, delivery, installation and commissioning of a system for the production of
Electronic Passport Booklets, is a national government project within the definition
of Section 2 of Republic Act No. 8975. Petitioners also point to the Senate
deliberations on Senate Bill No. 2038[63] (later Republic Act No. 8975) which
allegedly show the legislatives intent to expand the scope and definition of national
government projects to cover not only the infrastructure projects enumerated in
Presidential Decree No. 1818, but also future projects that may likewise be
considered national government infrastructure projects, like the e-Passport Project,
to wit:
 
Senator Cayetano. x x x Mr. President, the present bill, the Senate Bill
No. 2038, is actually an improvement of P.D. No. 1818 and definitely
not a repudiation of what I have earlier said, as my good friend clearly
stated. But this is really an effort to improve both the scope and
definition of the term government projects and to ensure that lower court
judges obey and observe this prohibition on the issuance of TROs on
infrastructure projects of the government.
 
xxxx
 
Senator Cayetano. That is why, Mr. President, I did try to explain why I
would accept the proposed amendment, meaning the totality of the
repeal of P.D. 1818 which is not found in the original version of the bill,
because of my earlier explanation that the definition of the term
government infrastructure project covers all of those enumerated in
Section 1 of P.D. No. 1818. And the reason for that, as we know, is we
do not know what else could be considered government infrastructure
project in the next 10 or 20 years.
 
x x x So, using the Latin maxim of expression unius est exclusion
alterius, which means what is expressly mentioned is tantamount to an
express exclusion of the others, that is the reason we did not include
particularly an enumeration of certain activities of the government found
in Section 1 of P.D. No. 1818. Because to do that, it may be a good
excuse for a brilliant lawyer to say Well, you know, since it does not
cover this particular activity, ergo, the Regional Trial Court may issue
TRO.
 
 
Using the foregoing discussions to establish that the intent of the framers of the
law was to broaden the scope and definition of national government projects and
national infrastructure projects, the DFA and the BSP submit that the said scope
and definition had since evolved to include the e-Passport Project. They assert that
the concept of infrastructure must now refer to any and all elements that provide
support, framework, or structure for a given system or organization, including
information technology, such as the e-Passport Project.
 
Interestingly, petitioners represented to the trial court that the e-Passport Project is
a BOT project but in their petition with this Court, petitioners simply claim that the
e-Passport Project is a national government project under Section 2 of Republic
Act No. 8975. This circumstance is significant, since relying on the claim that the
e-Passport Project is a BOT project, the trial court ruled in this wise:
 
The prohibition against issuance of TRO and/or writ of preliminary
injunction under RA 8975 applies only to national government
infrastructure project covered by the BOT Law, (RA 8975, Sec 3[b]
in relation to Sec. 2).
 
The national government projects covered under the BOT are
enumerated under Sec. 2 of RA6957, as amended, otherwise known as
the BOT Law. Notably, it includes information technology networks
and database infrastructure.
 
In relation to information technology projects, infrastructure
projects refer to the civil works components thereof. (R.A. No. 9184
[2003], Sec. 5[c]{sic}).[64]
 
Respondent BSPs request for bid, for the supply, delivery, installation
and commissioning of a system for the production of Electronic Passport
Booklets appears to be beyond the scope of the term civil works.
Respondents did not present evidence to prove otherwise.[65] (Emphases
ours.)
 
 
From the foregoing, it can be gleaned that the trial court accepted BCAs reasoning
that, assuming the e-Passport Project is a project under the BOT Law, Section 2 of
the BOT Law must be read in conjunction with Section 5(c) of Republic Act No.
9184 or the Government Procurement Reform Act to the effect that only the civil
works component of information technology projects are to be considered
infrastructure. Thus, only said civil works component of an information technology
project cannot be the subject of a TRO or writ of injunction issued by a lower
court.
 
Although the Court finds that the trial court had jurisdiction to issue the writ of
preliminary injunction, we cannot uphold the theory of BCA and the trial court that
the definition of the term infrastructure project in Republic Act No. 9184 should be
applied to the BOT Law.
 
Section 5 of Republic Act No. 9184 prefaces the definition of the terms therein,
including the term infrastructure project, with the following phrase: For purposes
of this Act, the following terms or words and phrases shall mean or be understood
as follows x x x.
 
This Court has stated that the definition of a term in a statute is not conclusive as to
the meaning of the same term as used elsewhere.[66] This is evident when the
legislative definition is expressly made for the purposes of the statute containing
such definition.[67]
 
There is no legal or rational basis to apply the definition of the term infrastructure
project in one statute to another statute enacted years before and which already
defined the types of projects it covers. Rather, a reading of the two statutes
involved will readily show that there is a legislative intent to treat information
technology projects differently under the BOT Law and the Government
Procurement Reform Act.
 
In the BOT Law as amended by Republic Act No. 7718, the national infrastructure
and development projects covered by said law are enumerated in Section 2(a) as
follows:
 
SEC. 2. Definition of Terms. - The following terms used in this
Act shall have the meanings stated below:
 
(a)                Private sector infrastructure or development
projects - The general description of infrastructure or
development projects normally financed and operated by
the public sector but which will now be wholly or partly
implemented by the private sector, including but not
limited to, power plants, highways, ports, airports, canals,
dams, hydropower projects, water supply, irrigation,
 telecommunications, railroads and railways, transport
systems, land reclamation projects, industrial estates of
townships, housing, government buildings, tourism
projects, markets, slaughterhouses, warehouses, solid waste
management, information technology networks and
database infrastructure, education and health facilities,
sewerage, drainage, dredging, and other infrastructure and
development projects as may be authorized by the
appropriate agency pursuant to this Act. Such projects shall
be undertaken through contractual arrangements as defined
hereunder and such other variations as may be approved by
the President of the Philippines.
 
For the construction stage of these infrastructure
projects, the project proponent may obtain financing from
foreign and/or domestic sources and/or engage the services
of a foreign and/or Filipino contractor: Provided, That, in
case an infrastructure or a development facility's operation
requires a public utility franchise, the facility operator must
be a Filipino or if a corporation, it must be duly registered
with the Securities and Exchange Commission and owned
up to at least sixty percent (60%) by Filipinos: Provided,
further, That in the case of foreign contractors, Filipino
labor shall be employed or hired in the different phases of
construction where Filipino skills are available: Provided,
finally, That projects which would have difficulty in
sourcing funds may be financed partly from direct
government appropriations and/or from Official
Development Assistance (ODA) of foreign governments or
institutions not exceeding fifty percent (50%) of the project
cost, and the balance to be provided by the project
proponent. (Emphasis supplied.)
 
 
A similar provision appears in the Revised IRR of the BOT Law as amended, to
wit:
 
SECTION 1.3 - DEFINITION OF TERMS
 
For purposes of these Implementing Rules and Regulations, the terms
and phrases hereunder shall be understood as follows:
 
xxxx
 
v. Private Sector Infrastructure or Development
Projects - The general description of infrastructure or
Development Projects normally financed, and operated by
the public sector but which will now be wholly or partly
financed, constructed and operated by the private sector,
including but not limited to, power plants, highways, ports,
airports, canals, dams, hydropower projects, water supply,
irrigation, telecommunications, railroad and railways,
transport systems, land reclamation projects, industrial
estates or townships, housing, government buildings,
tourism projects, public markets, slaughterhouses,
warehouses, solid waste management, information
technology networks and database infrastructure, education
and health facilities, sewerage, drainage, dredging, and
other infrastructure and development projects as may
otherwise be authorized by the appropriate Agency/LGU
pursuant to the Act or these Revised IRR. Such projects
shall be undertaken through Contractual Arrangements as
defined herein, including such other variations as may be
approved by the President of the Philippines.
 
xxxx
 
SECTION 2.2 - ELIGIBLE TYPES OF PROJECTS
 
The Construction, rehabilitation, improvement, betterment, expansion,
modernization, operation, financing and maintenance of the following
types of projects which are normally financed and operated by the public
sector which will now be wholly or partly financed, constructed and
operated by the private sector, including other infrastructure and
development projects as may be authorized by the appropriate agencies,
may be proposed under the provisions of the Act and these Revised IRR,
provided however that such projects have a cost recovery component
which covers at least 50% of the Project Cost, or as determined by the
Approving Body:
 
xxxx
 
 h. Information technology (IT) and data base
infrastructure, including modernization of IT, geo-spatial
resource mapping and cadastral survey for resource
accounting and planning. (Underscoring supplied.)
 
 
Undeniably, under the BOT Law, wherein the projects are to be privately funded,
the entire information technology project, including the civil works component and
the technological aspect thereof, is considered an infrastructure or development
project and treated similarly as traditional infrastructure projects. All the rules
applicable to traditional infrastructure projects are also applicable to information
technology projects. In fact, the MRP/V Project awarded to BCA under the BOT
Law appears to include both civil works (i.e., site preparation of the Central
Facility, regional DFA offices and foreign service posts) and non-civil works
aspects (i.e., development, installation and maintenance in the Philippines and
foreign service posts of a computerized passport and visa issuance system,
including creation of databases, storage and retrieval systems, training of personnel
and provision of consumables).
 
In contrast, under Republic Act No. 9184 or the Government Procurement Reform
Act, which contemplates projects to be funded by public funds, the term
infrastructure project was limited to only the civil works component of information
technology projects. The non-civil works component of information technology
projects would be treated as an acquisition of goods or consulting services as the
case may be.
 
This limited definition of infrastructure project in relation to information
technology projects under Republic Act No. 9184 is significant since the IRR of
Republic Act No. 9184 has some provisions that are particular to infrastructure
projects and other provisions that are applicable only to procurement of goods or
consulting services.[68]
 
Implicitly, the civil works component of information technology projects are
subject to the provisions on infrastructure projects while the technological and
other components would be covered by the provisions on procurement of goods or
consulting services as the circumstances may warrant.
 
When Congress adopted a limited definition of what is to be considered
infrastructure in relation to information technology projects under the Government
Procurement Reform Act, legislators are presumed to have taken into account
previous laws concerning infrastructure projects (the BOT Law and Republic Act
No. 8975) and deliberately adopted the limited definition. We can further presume
that Congress had written into law a different treatment for information technology
projects financed by public funds vis-a-vis privately funded projects for a valid
legislative purpose.
 
The idea that the definitions of terms found in the Government Procurement
Reform Act were not meant to be applied to projects under the BOT Law is further
reinforced by the following provision in the IRR of the Government Procurement
Reform Act:
 
Section 1. Purpose and General Coverage
 
This Implementing Rules and Regulations (IRR) Part A, hereinafter
called IRR-A, is promulgated pursuant to Section 75 of Republic Act
No. 9184 (R.A. 9184), otherwise known as the Government Procurement
Reform Act (GPRA), for the purpose of prescribing the necessary rules
and regulations for the modernization, standardization, and regulation of
the procurement activities of the government. This IRR-A shall cover
all fully domestically-funded procurement activities from
procurement planning up to contract implementation and
termination, except for the following:
 
a) Acquisition of real property which shall be governed by Republic Act
No. 8974 (R.A. 8974), entitled An Act to Facilitate the Acquisition of
Right-of-Way Site or Location for National Government Infrastructure
Projects and for Other Purposes, and other applicable laws; and
 
b) Private sector infrastructure or development projects and other
procurement covered by Republic Act No. 7718 (R.A. 7718), entitled
An Act Authorizing the Financing, Construction, Operation and
Maintenance of Infrastructure Projects by the Private Sector, and
for Other Purposes, as amended: Provided, however, That for the
portions financed by the Government, the provisions of this IRR-A
shall apply.
  
The IRR-B for foreign-funded procurement activities shall be the subject
of a subsequent issuance. (Emphases supplied.)
 
 
The foregoing provision in the IRR can be taken as an administrative interpretation
that the provisions of Republic Act No. 9184 are inapplicable to a BOT project
except only insofar as such portions of the BOT project that are financed by the
government.
 
Taking into account the different treatment of information technology projects
under the BOT Law and the Government Procurement Reform Act, petitioners
contention the trial court had no jurisdiction to issue a writ of preliminary
injunction in the instant case would have been correct if the e-Passport Project was
a project under the BOT Law as they represented to the trial court.
 
However, petitioners presented no proof that the e-Passport Project was a BOT
project. On the contrary, evidence adduced by both sides tended to show that the e-
Passport Project was a procurement contract under Republic Act No. 9184.
 
The BSPs on-line request for expression of interest and to bid for the e-Passport
Project[69] from the BSP website and the newspaper clipping[70] of the same request
expressly stated that [t]he two stage bidding procedure under Section 30.4 of the
Implementing Rules and Regulation (sic) Part-A of Republic Act No. 9184 relative
to the bidding and award of the contract shall apply. During the testimony of DFA
Assistant Secretary Domingo Lucenario, Jr. before the trial court, he admitted that
the e-Passport Project is a BSP procurement project and that it is the BSP that will
pay the suppliers.[71] In petitioners Manifestation dated July 29, 2008[72] and the
Erratum[73] thereto, petitioners informed the Court that a contract for the supply of a
complete package of systems design, technology, hardware, software, and
peripherals, maintenance and technical support, ecovers and datapage security
laminates for the centralized production and personalization of Machine Readable
Electronic Passport was awarded to Francois Charles Oberthur Fiduciaire. In the
Notice of Award dated July 2, 2008[74] attached to petitioners pleading, it was
stated that the failure of the contractor/supplier to submit the required performance
bond would be sufficient ground for the imposition of administrative penalty under
Section 69 of the IRR-A of Republic Act No. 9184.
 
Being a government procurement contract under Republic Act No. 9184, only the
civil works component of the e-Passport Project would be considered an
infrastructure project that may not be the subject of a lower court-issued writ of
injunction under Republic Act No. 8975.
 
Could the e-Passport Project be considered as engineering works or a service
contract or as related and necessary activities under Republic Act No. 8975 which
may not be enjoined?
 
We hold in the negative. Under Republic Act No. 8975, a service contract refers
to infrastructure contracts entered into by any department, office or agency of
the national government with private entities and nongovernment organizations for
services related or incidental to the functions and operations of the department,
office or agency concerned. On the other hand, the phrase other related and
necessary activities obviously refers to activities related to a government
infrastructure, engineering works, service contract or project under the BOT
Law. In other words, to be considered a service contract or related activity,
petitioners must show that the e-Passport Project is an infrastructure project or
necessarily related to an infrastructure project. This, petitioners failed to do for
they saw fit not to present any evidence on the details of the e-Passport Project
before the trial court and this Court. There is nothing on record to indicate that the
e-Passport Project has a civil works component or is necessarily related to an
infrastructure project.
 
Indeed, the reference to Section 30.4[75] of the IRR of Republic Act No. 9184 (a
provision specific to the procurement of goods) in the BSPs request for interest and
to bid confirms that the e-Passport Project is a procurement of goods and not an
infrastructure project. Thus, within the context of Republic Act No. 9184 which is
the governing law for the e-Passport Project the said Project is not an infrastructure
project that is protected from lower court issued injunctions under Republic Act
No. 8975, which, to reiterate, has for its purpose the expeditious and efficient
implementation and completion of government infrastructure projects.
 
 We note that under Section 28, Republic Act No. 9285 or the Alternative
Dispute Resolution Act of 2004,[76] the grant of an interim measure of protection by
the proper court before the constitution of an arbitral tribunal is allowed:
 
Sec. 28. Grant of Interim Measure of Protection. (a) It is not
incompatible with an arbitration agreement for a party to request, before
constitution of the tribunal, from a Court an interim measure of
protection and for the Court to grant such measure. After constitution of
the arbitral tribunal and during arbitral proceedings, a request for an
interim measure of protection, or modification thereof, may be made
with the arbitral tribunal or to the extent that the arbitral tribunal has no
power to act or is unable to act effectively, the request may be made with
the Court. The arbitral tribunal is deemed constituted when the sole
arbitrator or the third arbitrator, who has been nominated, has accepted
the nomination and written communication of said nomination and
acceptance has been received by the party making the request.
 
(a)                The following rules on interim or provisional relief shall
be observed:
 
(1)               Any party may request that provisional relief
be granted against the adverse party.
 
(2)               Such relief may be granted:
 
(i)                 to prevent irreparable loss or injury;
 
(ii)               to provide security for the
performance of any obligation;
 
(iii)             to produce or preserve any evidence;
or
(iv)             to compel any other appropriate act or
omission.
 
(3)               The order granting provisional relief may be
conditioned upon the provision of security or any act or
omission specified in the order.
 
(4)               Interim or provisional relief is requested by
written application transmitted by reasonable means to the
 Court or arbitral tribunal as the case may be and the party
against whom the relief is sought, describing in appropriate
detail the precise relief, the party against whom the relief is
requested, the grounds for the relief, and the evidence
supporting the request.
 
(5)               The order shall be binding upon the parties.
 
(6)               Either party may apply with the Court for
assistance in implementing or enforcing an interim measure
ordered by an arbitral tribunal.
 
(7)               A party who does not comply with the order
shall be liable for all damages resulting from
noncompliance, including all expenses and reasonable
attorneys fees, paid in obtaining the orders judicial
enforcement.
 
 
Section 3(h) of the same statute provides that the "Court" as referred to in
Article 6 of the Model Law shall mean a Regional Trial Court.
 
Republic Act No. 9285 is a general law applicable to all matters and
controversies to be resolved through alternative dispute resolution methods. This
law allows a Regional Trial Court to grant interim or provisional relief, including
preliminary injunction, to parties in an arbitration case prior to the constitution of
the arbitral tribunal. This general statute, however, must give way to a special law
governing national government projects, Republic Act No. 8975 which prohibits
courts, except the Supreme Court, from issuing TROs and writs of preliminary
injunction in cases involving national government projects.
 
However, as discussed above, the prohibition in Republic Act No. 8975 is
inoperative in this case, since petitioners failed to prove that the e-Passport Project
is national government project as defined therein. Thus, the trial court had
jurisdiction to issue a writ of preliminary injunction against the e-Passport Project.
 
On whether the trial courts issuance of a writ of
injunction was proper
 
 
Given the above ruling that the trial court had jurisdiction to issue a writ of
injunction and going to the second issue raised by petitioners, we answer the
question: Was the trial courts issuance of a writ of injunction warranted under the
circumstances of this case?
 
Petitioners attack on the propriety of the trial courts issuance of a writ of
injunction is two-pronged: (a) BCA purportedly has no clear right to the injunctive
relief sought; and (b) BCA will suffer no grave and irreparable injury even if the
injunctive relief were not granted.
 
To support their claim that BCA has no clear right to injunctive relief,
petitioners mainly allege that the MRP/V Project and the e-Passport Project are not
the same project. Moreover, the MRP/V Project purportedly involves a technology
(the 2D optical bar code) that has been rendered obsolete by the latest ICAO
developments while the e-Passport Project will comply with the latest ICAO
standards (the contactless integrated circuit). Parenthetically, and not as a main
argument, petitioners imply that BCA has no clear contractual right under the
Amended BOT Agreement since BCA had previously assigned all its rights and
obligations under the said Agreement to PPC.
 
BCA, on the other hand, claims that the Amended BOT Agreement also
contemplated the supply and/or delivery of e-Passports with the integrated circuit
technology in the future and not only the machine readable passport with the 2D
optical bar code technology. Also, it is BCAs assertion that the integrated circuit
technology is only optional under the ICAO issuances. On the matter of its
assignment of its rights to PPC, BCA counters that it had already terminated
(purportedly at DFAs request) the assignment agreement in favor of PPC and that
even assuming the termination was not valid, the Amended BOT Agreement
expressly stated that BCA shall remain solidarily liable with its assignee, PPC.
 
Most of these factual allegations and counter-allegations already touch upon
the merits of the main controversy between the DFA and BCA, i.e., the validity
and propriety of the termination of the Amended BOT Agreement (the MRP/V
Project) between the DFA and BCA. The Court deems it best to refrain from ruling
on these matters since they should be litigated in the appropriate arbitration or
court proceedings between or among the concerned parties.
 
One preliminary point, however, that must be settled here is whether BCA
retains a right to seek relief against the DFA under the Amended BOT Agreement
in view of BCAs previous assignment of its rights to PPC. Without preempting any
factual finding that the appropriate court or arbitral tribunal on the matter of the
validity of the assignment agreement with PPC or its termination, we agree with
BCA that it remained a party to the Amended BOT Agreement, notwithstanding
the execution of the assignment agreement in favor of PPC, for it was stipulated in
the Amended BOT Agreement that BCA would be solidarily liable with its
assignee. For convenient reference, we reproduce the relevant provision of the
Amended BOT Agreement here:
 
Section 20.15. It is clearly and expressly understood that BCA
may assign, cede and transfer all of its rights and obligations under this
Amended BOT Agreement to PPC [Philippine Passport Corporation], as
fully as if PPC is the original signatory to this Amended BOT
Agreement, provided however that BCA shall nonetheless be jointly
and severally liable with PPC for the performance of all the
obligations and liabilities under this Amended BOT
Agreement. (Emphasis supplied.)
 
 
Furthermore, a review of the records shows that the DFA continued to
address its correspondence regarding the MRP/V Project to both BCA and PPC,
even after the execution of the assignment agreement. Indeed, the DFAs Notice of
Termination dated December 9, 2005 was addressed to Mr. Bonifacio Sumbilla as
President of both BCA and PPC and referred to the Amended BOT Agreement
executed between the Department of Foreign Affairs (DFA), on one hand, and the
BCA International Corporation and/or the Philippine Passport Corporation
(BCA/PPC). At the very least, the DFA is estopped from questioning the
personality of BCA to bring suit in relation to the Amended BOT Agreement since
the DFA continued to deal with both BCA and PPC even after the signing of the
assignment agreement. In any event, if the DFA truly believes that PPC is an
indispensable party to the action, the DFA may take necessary steps to implead
PPC but this should not prejudice the right of BCA to file suit or to seek relief for
causes of action it may have against the DFA or the BSP, for undertaking the e-
Passport Project on behalf of the DFA.
 
With respect to petitioners contention that BCA will suffer no grave and
irreparable injury so as to justify the grant of injunctive relief, the Court finds that
this particular argument merits consideration.
 
The BOT Law as amended by Republic Act No. 7718, provides:
 
SEC. 7. Contract Termination. - In the event that a project is revoked,
cancelled or terminated by the Government through no fault of the
project proponent or by mutual agreement, the Government
shall compensate the said project proponent for its actual
expenses incurred in the project plus a reasonable rate of
return thereon not exceeding that stated in the contract as of the date of
such revocation, cancellation or termination: Provided, That the interest
of the Government in this instances shall be duly insured with the
Government Service Insurance System [GSIS] or any other insurance
entity duly accredited by the Office of the Insurance
Commissioner: Provided, finally, That the cost of the insurance coverage
shall be included in the terms and conditions of the bidding referred to
above.
 
In the event that the government defaults on certain major obligations
in the contract and such failure is not remediable or if remediable shall
remain unremedied for an unreasonable length of time, the project
proponent/contractor may, by prior notice to the concerned national
government agency or local government unit specifying the turn-over
date, terminate the contract. The project proponent/contractor shall be
reasonably compensated by the Government for equivalent or
proportionate contract cost as defined in the contract. (Emphases
supplied.)
 
 
In addition, the Amended BOT Agreement, which is the law between and
among the parties to it, pertinently provides:
Section 17.01 Default In case a party commits an act
constituting an event of default, the non-defaulting party may
terminate this Amended BOT Agreement by serving a written notice
to the defaulting party specifying the grounds for termination and giving
the defaulting party a period of ninety (90) days within which to rectify
the default. If the default is not remedied within this period to the
satisfaction of the non-defaulting party, then the latter will serve upon
the former a written notice of termination indicating the effective date of
termination.
 
Section 17.02 Proponents Default If this Amended BOT
Agreement is terminated by reason of the BCAs default, the DFA
shall have the following options:
 
A.                Allow the BCAs unpaid creditors who hold a
lien on the MRP/V Facility to foreclose on the
MRP/V Facility. The right of the BCAs unpaid
creditors to foreclose on the MRP/V Facility shall be
valid for the duration of the effectivity of this
Amended BOT Agreement; or,
 
B.                 Allow the BCAs unpaid creditors who hold a
lien on the MRP/V Facility to designate a
substitute BCA for the MRP/V Project, provided
the designated substitute BCA is qualified under
existing laws and acceptable to the DFA. This
substitute BCA shall hereinafter be referred to as the
Substitute BCA. The Substitute BCA shall assume
all the BCAs rights and privileges, as well as the
obligations, duties and responsibilities hereunder;
provided, however, that the DFA shall at all times
and its sole option, have the right to invoke and
exercise any other remedy which may be available to
the DFA under any applicable laws, rules and/or
regulations which may be in effect at any time and
from time to time. The DFA shall cooperate with the
creditors with a view to facilitating the choice of a
Substitute BCA, who shall take-over the operation,
maintenance and management of the MRP/V
Project, within three (3) months from the BCAs
receipt of the notice of termination from the DFA.
The Substituted BCA shall have all the rights and
obligations of the previous BCA as contained in this
Amended BOT Agreement; or
  
C.                 Take-over the MRP/V Facility and assume all
attendant liabilities thereof.
 
D.                In all cases of termination due to the default of
the BCA, it shall pay DFA liquidated
damages equivalent to the applicable the (sic)
Performance Security.
 
Section 17.03 DFAs Default If this Amended BOT Agreement is
terminated by the BCA by reason of the DFAs Default, the DFA shall:
 
A.                Be obligated to take over the MRP/V Facility on
an as is, where is basis, and shall forthwith assume
attendant liabilities thereof; and
 
B.                 Pay liquidated damages to the BCA equivalent to
the following amounts, which may be charged to the
insurance proceeds referred to in Article 12:
 
(1)               In the event of termination prior to
completion of the implementation of the
MRP/V Project, damages shall be paid
equivalent to the value of completed
implementation, minus the aggregate
amount of the attendant liabilities assumed
by the DFA, plus ten percent (10%)
thereof. The amount of such compensation
shall be determined as of the date of the notice
of termination and shall become due and
demandable ninety (90) days after the date of
this notice of termination. Under this
Amended BOT Agreement, the term Value of
the Completed Implementation shall mean the
aggregate of all reasonable costs and expenses
incurred by the BCA in connection with, in
relation to and/or by reason of the MRP/V
Project, excluding all interest and capitalized
interest, as certified by a reputable and
independent accounting firm to be appointed
by the BCA and subject to the approval by the
 DFA, such approval shall not be unreasonably
withheld.
 
(2)               In the event of termination after
completion of design, development, and
installation of the MRP/V Project, just
compensation shall be paid equivalent to
the present value of the net income which
the BCA expects to earn or realize during
the unexpired or remaining term of this
Amended BOT Agreement using the internal
rate of return on equity (IRRe) defined in the
financial projections of the BCA and agreed
upon by the parties, which is attached hereto
and made as an integral part of this Amended
BOT Agreement as Schedule 1. (Emphases
supplied.)
 
 
The validity of the DFAs termination of the Amended BOT Agreement and
the determination of the party or parties in default are issues properly threshed out
in arbitration proceedings as provided for by the agreement itself. However, even if
we hypothetically accept BCAs contention that the DFA terminated the Amended
BOT Agreement without any default or wrongdoing on BCAs part, it is not
indubitable that BCA is entitled to injunctive relief.
The BOT Law expressly allows the government to terminate a BOT
agreement, even without fault on the part of the project proponent, subject to the
payment of the actual expenses incurred by the proponent plus a reasonable rate of
return.
 
Under the BOT Law and the Amended BOT Agreement, in the event of
default on the part of the government (in this case, the DFA) or on the part of the
proponent, the non-defaulting party is allowed to terminate the agreement, again
subject to proper compensation in the manner set forth in the agreement.
Time and again, this Court has held that to be entitled to injunctive relief the party
seeking such relief must be able to show grave, irreparable injury that is not
capable of compensation.
 
 In Lopez v. Court of Appeals,  [77] we held:
 
Generally, injunction is a preservative remedy for the protection
of one's substantive right or interest. It is not a cause of action in itself
but merely a provisional remedy, an adjunct to a main suit. It is
resorted to only when there is a pressing necessity to avoid injurious
consequences which cannot be remedied under any standard
compensation. The application of the injunctive writ rests upon the
existence of an emergency or of a special reason before the main case
can be regularly heard. The essential conditions for granting such
temporary injunctive relief are that the complaint alleges facts which
appear to be sufficient to constitute a proper basis for injunction and that
on the entire showing from the contending parties, the injunction is
reasonably necessary to protect the legal rights of the plaintiff pending
the litigation. Two requisites are necessary if a preliminary injunction is
to issue, namely, the existence of a right to be protected and the facts
against which the injunction is to be directed are violative of said
right. In particular, for a writ of preliminary injunction to issue, the
existence of the right and the violation must appear in the allegation of
the complaint and a preliminary injunction is proper only when the
plaintiff (private respondent herein) appears to be entitled to the
relief demanded in his complaint. (Emphases supplied.)
 
 
We reiterated this point in Transfield Philippines, Inc. v. Luzon Hydro
Corporation,[78] where we likewise opined:
 
Before a writ of preliminary injunction may be issued, there must be a
clear showing by the complaint that there exists a right to be protected
and that the acts against which the writ is to be directed are violative of
the said right. It must be shown that the invasion of the right sought to be
protected is material and substantial, that the right of complainant is
clear and unmistakable and that there is an urgent and paramount
necessity for the writ to prevent serious damage. Moreover, an
injunctive remedy may only be resorted to when there is a pressing
necessity to avoid injurious consequences which cannot be remedied
under any standard compensation. (Emphasis supplied.)
 
 
As the Court explained previously in Philippine Airlines, Inc. v. National Labor
Relations Commission[79]:
 
An injury is considered irreparable if it is of such constant and
frequent recurrence that no fair and reasonable redress can be had
therefor in a court of law, or where there is no standard by which
their amount can be measured with reasonable accuracy, that is, it is
not susceptible of mathematical computation. It is considered
irreparable injury when it cannot be adequately compensated in
damages due to the nature of the injury itself or the nature of the
right or property injured or when there exists no certain pecuniary
standard for the measurement of damages. (Emphases supplied.)
 
 
It is still contentious whether this is a case of termination by the DFA alone or both
the DFA and BCA. The DFA contends that BCA, by sending its own Notice of
Default, likewise terminated or abandoned the Amended BOT Agreement. Still,
whether this is a termination by the DFA alone without fault on the part of BCA or
a termination due to default on the part of either party, the BOT Law and the
Amended BOT Agreement lay down the measure of compensation to be paid
under the appropriate circumstances.
 
Significantly, in BCAs Request for Arbitration with the PDRCI, it prayed for,
among others, a judgment ordering respondent [DFA] to pay damages to Claimant
[BCA], reasonably estimated at P50,000,000.00 as of [the date of the Request for
Arbitration], representing lost business opportunities; financing fees, costs and
commissions; travel expenses; legal fees and expenses; and costs of arbitration,
including the fees of the arbitrator/s.[80] All the purported damages that BCA claims
to have suffered by virtue of the DFAs termination of the Amended BOT
Agreement are plainly determinable in pecuniary terms and can be reasonably
estimated according to BCAs own words.
 
Indeed, the right of BCA, a party which may or may not have been in default on its
BOT contract, to have the termination of its BOT contract reversed is not
guaranteed by the BOT Law. Even assuming BCAs innocence of any breach of
contract, all the law provides is that BCA should be adequately compensated for its
losses in case of contract termination by the government.
There is one point that none of the parties has highlighted but is worthy of
discussion. In seeking to enjoin the government from awarding or implementing a
machine readable passport project or any similar electronic passport or visa project
and praying for the maintenance of the status quo ante pending the resolution on
the merits of BCAs Request for Arbitration, BCA effectively seeks to enjoin the
termination of the Amended BOT Agreement for the MRP/V Project.
 
There is no doubt that the MRP/V Project is a project covered by the BOT Law
and, in turn, considered a national government project under Republic Act No.
8795. Under Section 3(d) of that statute, trial courts are prohibited from issuing a
TRO or writ of preliminary injunction against the government to restrain or
prohibit the termination or rescission of any such national government
project/contract.
 
The rationale for this provision is easy to understand. For if a project proponent
that the government believes to be in default is allowed to enjoin the termination of
its contract on the ground that it is contesting the validity of said termination, then
the government will be unable to enter into a new contract with any other party
while the controversy is pending litigation. Obviously, a courts grant of injunctive
relief in such an instance is prejudicial to public interest since government would
be indefinitely hampered in its duty to provide vital public goods and services in
order to preserve the private proprietary rights of the project proponent. On the
other hand, should it turn out that the project proponent was not at fault, the BOT
Law itself presupposes that the project proponent can be adequately compensated
for the termination of the contract. Although BCA did not specifically pray for the
trial court to enjoin the termination of the Amended BOT Agreement and thus,
there is no direct violation of Republic Act No. 8795, a grant of injunctive relief as
prayed for by BCA will indirectly contravene the same statute.
 
Verily, there is valid reason for the law to deny preliminary injunctive relief to
those who seek to contest the governments termination of a national government
contract. The only circumstance under which a court may grant injunctive relief is
the existence of a matter of extreme urgency involving a constitutional issue, such
that unless a TRO or injunctive writ is issued, grave injustice and irreparable injury
will result.
Now, BCA likewise claims that unless it is granted injunctive relief, it would suffer
grave and irreparable injury since the bidding out and award of the e-Passport
Project would be tantamount to a violation of its right against deprivation of
property without due process of law under Article III, Section 1 of the
Constitution. We are unconvinced.
 
Article III, Section 1 of the Constitution provides [n]o person shall be deprived of
life, liberty, or property without due process of law, nor shall any person be denied
the equal protection of the laws. Ordinarily, this constitutional provision has been
applied to the exercise by the State of its sovereign powers such as, its legislative
power,[81] police power,[82]or its power of eminent domain.[83]
 
In the instant case, the State action being assailed is the DFAs termination of the
Amended BOT Agreement with BCA. Although the said agreement involves a
public service that the DFA is mandated to provide and, therefore, is imbued with
public interest, the relationship of DFA to BCA is primarily contractual and their
dispute involves the adjudication of contractual rights. The propriety of the DFAs
acts, in relation to the termination of the Amended BOT Agreement, should be
gauged against the provisions of the contract itself and the applicable statutes to
such contract. These contractual and statutory provisions outline what constitutes
due process in the present case. In all, BCA failed to demonstrate that there is a
constitutional issue involved in this case, much less a constitutional issue of
extreme urgency.
 
As for the DFAs purported failure to appropriate sufficient amounts in its budget to
pay for liquidated damages to BCA, this argument does not support BCAs position
that it will suffer grave and irreparable injury if it is denied injunctive relief. The
DFAs liability to BCA for damages is contingent on BCA proving that it is entitled
to such damages in the proper proceedings. The DFA has no obligation to set aside
funds to pay for liquidated damages, or any other kind of damages, to BCA until
there is a final and executory judgment in favor of BCA. It is illogical and
impractical for the DFA to set aside a significant portion of its budget for an event
that may never happen when such idle funds should be spent on providing
necessary services to the populace. For if it turns out at the end of the arbitration
proceedings that it is BCA alone that is in default, it would be the one liable for
liquidated damages to the DFA under the terms of the Amended BOT Agreement.
With respect to BCAs allegation that the e-Passport Project is grossly
disadvantageous to the Filipino people since it is the government that will be
spending for the project unlike the MRP/V Project which would have been
privately funded, the same is immaterial to the issue at hand. If it is true that the
award of the e-Passport Project is inimical to the public good or tainted with some
anomaly, it is indeed a cause for grave concern but it is a matter that must be
investigated and litigated in the proper forum. It has no bearing on the issue of
whether BCA would suffer grave and irreparable injury such that it is entitled to
injunctive relief from the courts.
 
In all, we agree with petitioners DFA and BSP that the trial courts issuance of a
writ of preliminary injunction, despite the lack of sufficient legal justification for
the same, is tantamount to grave abuse of discretion.
 
To be very clear, the present decision touches only on the twin issues of (a) the
jurisdiction of the trial court to issue a writ of preliminary injunction as an interim
relief under the factual milieu of this case; and (b) the entitlement of BCA to
injunctive relief. The merits of the DFA and BCAs dispute regarding the
termination of the Amended BOT Agreement must be threshed out in the proper
arbitration proceedings. The civil case pending before the trial court is purely for
the grant of interim relief since the main case is to be the subject of arbitration
proceedings.
 
BCAs petition for interim relief before the trial court is essentially a petition for a
provisional remedy (i.e., preliminary injunction) ancillary to its Request for
Arbitration in PDRCI Case No. 30-2006/BGF. BCA specifically prayed that the
trial court grant it interim relief pending the constitution of the arbitral tribunal in
the said PDRCI case. Unfortunately, during the pendency of this case, PDRCI Case
No. 30-2006/BGF was dismissed by the PDRCI for lack of jurisdiction, in view of
the lack of agreement between the parties to arbitrate before the PDRCI.
[84]
 In Philippine National Bank v. Ritratto Group, Inc.,[85] we held:
 
A writ of preliminary injunction is an ancillary or preventive remedy that
may only be resorted to by a litigant to protect or preserve his rights or
interests and for no other purpose during the pendency of the principal
action.  The dismissal of the principal action thus results in the
 denial of the prayer for the issuance of the writ. x x x. (Emphasis
supplied.)
 
 
In view of intervening circumstances, BCA can no longer be granted injunctive
relief and the civil case before the trial court should be accordingly
dismissed. However, this is without prejudice to the parties litigating the main
controversy in arbitration proceedings, in accordance with the provisions of the
Amended BOT Agreement, which should proceed with dispatch.
 
It does not escape the attention of the Court that the delay in the submission of this
controversy to arbitration was caused by the ambiguity in Section 19.02 of the
Amended BOT Agreement regarding the proper body to which a dispute between
the parties may be submitted and the failure of the parties to agree on such an
arbitral tribunal. However, this Court cannot allow this impasse to continue
indefinitely. The parties involved must sit down together in good faith and finally
come to an understanding regarding the constitution of an arbitral tribunal mutually
acceptable to them.
 
WHEREFORE, the instant petition is hereby GRANTED. The assailed Order
dated February 14, 2007 of the Regional Trial Court of Pasig in Civil Case No.
71079 and the Writ of Preliminary Injunction dated February 23, 2007
are REVERSED and SET ASIDE. Furthermore, Civil Case No. 71079 is
hereby DISMISSED.
 
No pronouncement as to costs.
 
 
 
 
SO ORDERED.