DEPARTMENT OF FOREIGN AFFAIRS (DFA), Petitioner vs.

BCA CORPORATION INTERNATIONAL & AD HOC ARBITRAL TRIBUNAL

G.R. No. 225051 July 19, 2017

This is a petition for certiorari under Rule 65 of the Rules of Court, seeking to annul and set aside Procedural
Order No. 11 dated February 15, 2016 and Procedural Order No. 12 dated June 8, 2016, both issued by the
UNCITRAL Ad Hoc Arbitral Tribunal in the arbitration proceedings between petitioner Department of Foreign
Affairs (DFA) and respondent BCA International Corporation.

Facts:

In an Amended BOT Agreement, petitioner (DFA) awarded the Machine Readable Passport and Visa Project
(MRPN Project) to respondent BCA International Corporation (BCA). During the implementation of the MRPN
Project, DFA sought to terminate the Agreement. However, BCA opposed the termination and filed a Request
for Arbitration, according to the provision in the Agreement.

The Tribunal hereby decides to allow the submission of additional documentary evidence by any Party in
support of its position in relation to the Amended Statement of Claims and to which the other may submit its
comments or objections. The Tribunal allowed the amendment of the Statement of Claims but only for the
purpose of making the Statement of Claims conform to the evidence that had already been presented.

As Procedural Order No. 12 denied petitioner's motion for reconsideration of Procedural Order No. 11, petitioner
filed this petition for certiorari under Rule 65 of the Rules of Court with application for issuance of a temporary
restraining order and/or writ of preliminary injunction, seeking to annul and set aside Procedural Order No. 11
dated February 15, 2016 and Procedural Order No. 12 dated June 8, 2016.

Petitioner stated that it opted to file the petition directly with this court in view of the immensity of the claim
concerned, significance of the public interest involved in this case, and the circumvention of the temporary
restraining order issued by this Court in Department of Foreign Affairs v. BCA International Corporation,
wherein the Court overlooked the rule on hierarchy of courts and took cognizance of the petition for certiorari.

Issue:

1. WON the Procedural Orders, pursuant to RA 876 and RA 9285, issued by the UNCITRAL Ad hoc Arbitral
Tribunal applies on this case.

2. WON the petition filed before the Court is proper.

Ruling:

1. Under Article 33 of the UNCITRAL Arbitration Rules governing the parties, "the arbitral tribunal shall apply
the law designated by the parties as applicable to the substance of the dispute." "Failing such designation by
the parties, the arbitral tribunal shall apply the law determined by the conflict of laws rules which it considers
applicable." Established in this jurisdiction is the rule that the law of the place where the contract is made
governs, or lex loci contractus. As the parties did not designate the applicable law and the Agreement was
perfected in the Philippines, our Arbitration laws, particularly, RA No. 876, RA No. 9285 and its IRR, and the
Special ADR Rules apply. The IRR of RA No. 9285 provides that "the arbitral tribunal shall decide the dispute
in accordance with such law as is chosen by the parties. In the absence of such agreement, Philippine law shall
apply."

2. No, the petition is not proper.

It is clear that an appeal by certiorari to the Supreme Court is from a judgment or final order or resolution of
the Court of Appeals and only questions of law may be raised. There have been instances when we overlooked
the rule on hierarchy of courts and took cognizance of a petition for certiorari alleging grave abuse of discretion
by the Regional Trial Court when it granted interim relief to a party and issued an Order assailed by the
petitioner, considering the transcendental importance of the issue involved therein or to better serve the ends
of justice when the case is determined on the merits rather on technicality. However, in this case, the appeal
by certiorari is not from a final Order of the Court of Appeals or the Regional Trial Court, but from an
interlocutory order of the Arbitral Tribunal; hence, the petition must be dismissed.
 DEPARTMENT OF FOREIGN AFFAIRS vs. BCA INTERNATIONAL CORPORATION
G.R. No. 210858
June 29, 2016

Facts:
In an Amended BOT Agreement, petitioner (DFA) awarded the Machine Readable Passport and Visa Project
(MRPN Project) to respondent BCA International Corporation (BCA). During the implementation of the MRPN
Project, DFA sought to terminate the Agreement. However, BCA opposed the termination and filed a Request
for Arbitration, according to the provision in the Agreement.

Consequently, an ad hoc arbitral tribunal was constituted. It approved the BCA’s request application for the of
subpoena, subject to the conditions that the application will not affect its proceedings and the hearing set in
October 2013 will proceed whether the witnesses attend or not.

BCA filed before the RTC a Petition for Assistance in Taking Evidence pursuant to the IRR of "The Alternative
Dispute Resolution Act of 2004," or Republic Act No. 9285 (RA 9285). In its petition, BCA sought the issuance
of subpoena ad testificandum and subpoena duces tecum to the following witnesses and documents in their
custody:
Secretary of Foreign Affairs
Secretary of Finance or his representative
Chairman of the COA or his representative
Executive Director of the DTI-BOT Center
Chairman of the DFA MRP/V Advisory Board or his Representative
DFA filed its comment alleging that the presentation of the witnesses and documents was prohibited by law
and protected by the deliberative process privilege.

RTC ruled in favor of BCA and held that evidence sought to be produced was no longer covered by the
deliberative process privilege and subsequently issued said subpoenas. DFA filed a motion to quash which the
RTC denied and held that the motion was actually a motion for reconsideration, which is prohibited under Rule
9.9 of the Special Rules of Court on Special ADR Rules. So the witnesses appeared before the arbitral tribunal.

RTC denied the motion for reconsideration filed by DFA. The RTC ruled that the motion became moot with the
appearance of the witnesses during the arbitration hearings. Hence, DFA filed this petition with an urgent
prayer for the issuance of a TRO and/or a writ of preliminary injunction.

The Court issued a TRO enjoining the arbitral tribunal from taking cognizance of the testimonies.

Issues:
1. WON the 1976 UNCITRAL Arbitration Rules and the Rules of Court apply to the present arbitration
proceedings, not RA 9285 and the Special ADR Rules;
2. WON the witnesses presented during the hearings before the ad hoc arbitral tribunal are prohibited from
disclosing information on the basis of the deliberative process privilege.

Ruling:

1. Yes, the 1976 UNCITRAL Arbitration Rules and the Rules of Court apply to the present arbitration
proceedings, not RA 9285 and the Special ADR Rules.

While said act was passed only in 2004, it nonetheless applies in the instant case since it is a procedural law
which has a retroactive effect. Procedural laws are construed to be applicable to actions pending and
undetermined at the time of their passage, and are deemed retroactive. As a general rule, the retroactive
application of procedural laws does not violate any personal rights because no vested right has yet attached nor
arisen from them. Thus, contrary to DFA's contention, RA 9285, its IRR, and the Special ADR Rules are
applicable to the present arbitration proceeding. The arbitration between the DFA and BCA is still pending,
since no arbitral award has yet been rendered. Moreover, DFA did not allege any vested rights impaired by the
application of those procedural rules.

RA 9285, its IRR, and the Special ADR Rules provide that any party to an arbitration, whether domestic or
foreign, may request the court to provide assistance in taking evidence such as the issuance of subpoena ad
testificandum and subpoena duces tecum. The Special ADR Rules specifically provide that they shall apply to
assistance in taking evidence and the RTC order granting assistance in taking evidence shall be immediately
executory and not subject to reconsideration or appeal. An appeal with the Court of Appeals (CA) is only possible
where the RTC denied a petition for assistance in taking evidence. An appeal to the Supreme Court from the
CA is allowed only under any of the grounds specified in the Special ADR Rules.24 We rule that the DFA failed
to follow the procedure and the hierarchy of courts provided in RA 9285, its IRR, and the Special ADR Rules,
when DFA directly appealed before this Court the RTC Resolution and Orders granting assistance in taking
evidence.

DFA contends that the RTC issued the subpoenas on the premise that RA 9285 and the Special ADR Rules
apply to this case. However, we find that even without applying RA 9285 and the Special ADR Rules, the RTC
still has the authority to issue the subpoenas to assist the parties in taking evidence.

The 1976 UNCITRAL Arbitration Rules, agreed upon by the parties to govern them, state that the "arbitral
tribunal shall apply the law designated by the parties as applicable to the substance of the dispute. Failing
such designation by the parties, the arbitral tribunal shall apply the law determined by the conflict of laws rules
which it considers applicable." Established in this jurisdiction is the rule that the law of the place where the
contract is made governs, or lex loci contractus. Since there is no law designated by the parties as applicable
and the Agreement was perfected in the Philippines, "The Arbitration Law," or Republic Act No. 876 (RA 876),
applies.

2. In the present case, considering that the RTC erred in applying the ruling in Chavez v. Public Estates
Authority, and both BCA's and DFA's assertions of subpoena of evidence and the deliberative process privilege
are broad, the Court cannot determine whether the evidence sought to be produced is covered by the deliberative
process privilege. The parties are directed to specify their claims before the RTC and, thereafter, the RTC shall
determine which evidence is covered by the deliberative process privilege, if any. It is necessary to consider the
circumstances surrounding the demand for the evidence to determine whether or not its production is injurious
to the consultative functions of government that the privilege of non-disclosure protects.

Accordingly, a proceeding in the arbitral tribunal does not prevent the possibility of the purpose of the privilege
being defeated, if it is not allowed to be invoked. In the same manner, the disclosure of an information covered
by the deliberative process privilege to a court arbitrator will defeat the policy bases and purpose of the privilege.

Petition is partially granted and remanded to the RTC for the determination of whether the documents and
records sought to be subpoenaed are protected by the deliberative process privilege.

UNIWIDE SALES REALTY AND RESOURCES CORP v. TITAN-IKEDA CONSTRUCTION

G.R. No. 126619; December 20, 2006
Ponente: J. Tinga

FACTS:

The case originated from an action for a sum of money filed by Titan-Ikeda Construction and Development
Corporation (Titan) against Uniwide Sales Realty and Resources Corporation (Uniwide) with the Regional Trial
Court (RTC), Branch 119, Pasay City arising from Uniwide’s non-payment of certain claims billed by Titan after
completion of three projects covered by agreements they entered into with each other.

Upon Uniwide’s motion to dismiss/suspend proceedings and Titan’s open court manifestation agreeing to the
suspension, Civil Case No. 98-0814 was suspended for it to undergo arbitration. Titan’s complaint was thus re-
filed with the CIAC. Before the CIAC, Uniwide filed an answer which was later amended and re-amended,
denying the material allegations of the complaint, with counterclaims for refund of overpayments, actual and
exemplary damages, and attorney’s fees.

An Arbitral Tribunal consisting of a chairman and two members was created in accordance with the CIAC Rules
of Procedure Governing Construction Arbitration. It conducted a preliminary conference with the parties and
thereafter issued a Terms of Reference (TOR) which was signed by the parties. The tribunal also conducted an
ocular inspection, hearings, and received the evidence of the parties consisting of affidavits which were subject
to cross-examination.

On 17 April 1995, the Arbitral Tribunal promulgated a Decision, the decretal portion of which is as follows:

“WHEREFORE, judgment is hereby rendered as follows:

On Project 1 – Libis:

[Uniwide] is absolved of any liability for the claims made by [Titan] on this Project.

Project 2 – Edsa Central:

[Uniwide] is absolved of any liability for VAT payment on this project, the same being for the account of
the [Titan]. On the other hand, [Titan] is absolved of any liability on the counterclaim for defective construction
of this project.

[Uniwide] is held liable for the unpaid balance in the amount of P6,301,075.77 which is ordered to be
paid to the [Titan] with 12% interest per annum commencing from 19 December 1992 until the date of payment.

On Project 3 – Kalookan:

[Uniwide] is held liable for the unpaid balance in the amount of P5,158,364.63 which is ordered to be
paid to the [Titan] with 12% interest per annum commencing from 08 September 1993 until the date of payment.

[Uniwide] is held liable to pay in full the VAT on this project, in such amount as may be computed by
the Bureau of Internal Revenue to be paid directly thereto. The BIR is hereby notified that [Uniwide] Sales
Realty and Resources Corporation has assumed responsibility and is held liable for VAT payment on this project.
This accordingly exempts Claimant Titan-Ikeda Construction and Development Corporation from this
obligation.

ISSUE:

Whether the award given by CIAC is final

HELD:

As a rule, findings of fact of administrative agencies and quasi-judicial bodies, which have acquired expertise
because their jurisdiction is confined to specific matters, are generally accorded not only respect, but also
finality, especially when affirmed by the Court of Appeals. In particular, factual findings of construction
arbitrators are final and conclusive and not reviewable by this Court on appeal. This rule, however admits of
certain exceptions.

In David v. Construction Industry and Arbitration Commission, we ruled that, as exceptions, factual findings
of construction arbitrators may be reviewed by this Court when the petitioner proves affirmatively that:
(1) the award was procured by corruption, fraud or other undue means;
(2) there was evident partiality or corruption of the arbitrators or of any of them; (3) the arbitrators were guilty
of misconduct in refusing to hear evidence pertinent and material to the controversy;
(4) one or more of the arbitrators were disqualified to act as such under Section nine of Republic Act No. 876
and willfully refrained from disclosing such disqualifications or of any other misbehavior by which the rights of
any party have been materially prejudiced; or
(5) the arbitrators exceeded their powers, or so imperfectly executed them, that a mutual, final and definite
award upon the subject matter submitted to them was not made.
Other recognized exceptions are as follows:
(1) when there is a very clear showing of grave abuse of discretion resulting in lack or loss of jurisdiction as
when a party was deprived of a fair opportunity to present its position before the Arbitral Tribunal or when an
award is obtained through fraud or the corruption of arbitrators,
(2) when the findings of the Court of Appeals are contrary to those of the CIAC, and
(3) when a party is deprived of administrative due process.