DEPARTMENT OF FOREIGN AFFAIRS and BANGKO o BCA: DFA failed to perform its reciprocal

SENTRAL NG PILIPINAS v. HON. FRANCO T. FALCON obligation to issue to BCA a certificate of

GR No. 176657 | September 01, 2010 acceptance of Phase 1 within 14 days which was
required by the Amended BOT. Furthermore, it
Petitioner: DFA & BSP | Respondent: Judge Falcon & BCA alleged that every new appointee to the position of
International Corporation DFA secretary wanted to review the award to BCA
that’s why it took 3 years for DFA to issue said
SHORT FACTS: Certificate.
DFA and BCA entered into an agreement for the implementation  DFA sent a Notice of Termination to BCA and PPC due to
of machine readable passport and visa project. their alleged failure to submit proof of financial capability to
 Dispute arose between DFA and BCA/PPC (BCA’s complete the entire MRP/V Project in accordance with the
assignee) due to alleged breaches by both parties. financial warranty under Section 5.02(A) of the Amended
 DFA terminated its contract with BCA. BCA sent a notice BOT Agreement. DFA likewise demanded for liquidated
of default against DFA. damages.
 BCA filed for arbitration with PDRCI. During the pendency  BCA sent a letter to the DFA demanding that it immediately
of the Request for Arbitration, DFA and BSP entered into an reconsider and revoke its previous notice of termination,
agreement for the latter to provide passports compliant with otherwise, BCA would be compelled to declare the DFA in
international standards (E-Passports). default pursuant to the Amended BOT Agreement.
 BCA thereafter filed for a Petition for Interim Relief with the  When the DFA failed to respond to said letter, BCA issued
RTC of Pasig. TRO and thereafter a writ of preliminary its own Notice of Default against the DFA, stating that if the
injunction were issued by RTC directed against DFA. default is not remedied within 90 days, BCA will be
 DFA filed the instant case alleging that TC committed grave constrained to terminate the MRP/V Project and hold the
abuse of discretion. DFA liable for damages.
 BCA filed its Request for Arbitration with the Philippine
FACTS: Dispute Resolution Center (PDRCI) pursuant to Section
DFA needed to implement the Machine Readable Passport 19.02 of the Amended BOT Agreement. BCA’s request for
and Visa Project under the Build-Operate-and-Transfer (BOT Arbitration sought for the following reliefs
scheme). o Judgment nullifying the Notice of Termination by
 Thus, the PBAC (Prequalification, Bids and Awards DFA including the demand to pay liquidated
Committee) published an invitation to prequalify and bid for damages.
the supply of the needed machine readable passports and o Judgment confirming the Notice of Default issued
visas, and conducted the public bidding for the MRP/V by BCA and ordering DFA to comply with its
Project. obligations under the Amended BOT.
 PBAC found BCA International Corporation’s bid to be the o A judgment ordering DFA to pay damages to
sole complying bid; hence, it permitted the DFA to engage BCA in the amount of 50M representing lost
in direct negotiations with BCA. business opportunities, financing fees, etc.
 BCA, in compliance with the Notice of Award (NOA),  Thereafter, the DFA and the BSP entered into a
incorporated a project company, the Philippine Passport Memorandum of Agreement for the latter to provide the
Corporation (PPC) to undertake and implement the MRP/V former passports compliant with international standards.
Project. The BSP then solicited bids for the supply, delivery,
 A Build-Operate-Transfer Agreement (BOT Agreement) installation and commissioning of a system for the
between DFA and PPC was signed. The BOT Agreement production of Electronic Passport Booklets or e-Passports
 Thus, BCA filed a Petition for Interim Relief under Section
was later amended to include the following changes.1
28 of the Alternative Dispute Resolution Act of 2004 (R.A.
o An Assignment Agreement was executed by BCA No. 9285), with the Regional Trial Court (RTC) of Pasig
and PPC whereby BCA assigned its rights arising praying for the issuance of TRO restraining DFA and BSP
from the Amended BOT Agreement to PPC. from awarding a new contract to implement the Project or if
o MRP/V Project was divided into 6 phases,2 with such contract has been awarded, from implementing such
each phase having a different set of timeline and projects.
due dates.  DFA filed an Opposition (to the Application for Temporary
Restraining Order and/or Writ of Preliminary Injunction
DFA and BCA impute breach of the Amended BOT Agreement alleging that:
against each other. o BCA has no cause of action: MRP/V is not the
 DFA: Delay of project is due to the submission of deficient same as the contract with BSP which is for the
documents as well as intervening issues regarding BCA’s supply of electronic passports.
financial incapacity. o RTC is prohibited from issuing a TRO pursuant
to RA 8975.

Section 9.05. The PPC has posted in favor of the DFA the performance security Project Completion dates were likewise changed which set the completion of
required for Phase 1 of the MRP/V Project and shall be deemed, for all intents the implementation phase of the project within 18 to 23 months from date of
and purposes, to be full compliance by BCA with the provisions of this Article effectivity of the Amended BOT agreement.
9.
Section 20.15. It is clearly and expressly understood that BCA may assign, cede 2
Phase 1: Project Planning Phase; Phase 2: Implementation of MRP/V
and transfer all of its rights and obligations under this Amended BOT Project at the Central Facility; Phase 3: Implementation of MRP/V
Agreement to PPC, as fully as if PPC is the original signatory to this Amended Project at the Regional Consular Offices; Phase 4: Full Implementation,
BOT Agreement, provided however that BCA shall nonetheless be jointly and including Foreign Service Posts; Phase 5: In Service Phase; Phase 6:
severally liable with PPC for the performance of all the obligations and Transition/Turnover
liabilities under this Amended BOT Agreement.
 The TC, after summarily hearing the parties’ oral arguments the BOT are enumerated under Sec. 2 of RA 6957,
on BCA’s application for TRO, TC ordered the issuance of as amended, otherwise known as the BOT Law.
the TRO. DFA filed an MR. Notably, it includes “information technology
 After notice and hearing, an order granting BCA’s networks and database infrastructure.” In relation
application for preliminary injunction was issued by TC. to information technology projects, infrastructure
 DFA and BSP filed the instant Petition for Certiorari and projects refer to the “civil works components”
prohibition with a prayer for issuance of TRO and/or a writ thereof.
of preliminary injunction, imputing GAD on the trial court  We cannot uphold the theory of BCA and the trial court
when it granted interim relief to BCA and issued the WPI. that the definition of the term “infrastructure project” in
o Main allegation: RTC is prohibited under RA Republic Act No. 91843 should be applied to the BOT Law.4
8975 Section 3 to issue a TRO and a writ of o Section 5 of Republic Act No. 9184 prefaces the
preliminary injunction against national government definition of the terms therein, including the term
projects such as ePassport project. “infrastructure project,” with the following phrase:
 TRO prayed for by DFA and BSP was granted. “For purposes of this Act”
o There is no legal or rational basis to apply the
Issues: definition of the term “infrastructure project” in one
1. Whether an information and communication technology statute (RA 9184) to another statute enacted years
project (such as ePassport Project), which does not before (BOT law) and which already defined the
conform to our traditional notion of the term “infrastructure,” types of projects it covers.
is covered by the prohibition on the issuance of court  There is a legislative intent to treat information technology
injunctions found in Republic Act No. 8975? NO projects differently under the BOT Law and the Government
2. Whether the trial court’s issuance of writ of injunction was Procurement Reform Act.
proper? NO o Under the BOT Law, wherein the projects are to
be privately funded, the entire information
Ratio: technology project, including the civil works
1. Section 3 of RA 8975 provides that court, aside from the component and the technological aspect
Supreme Court, may enjoin a “national government thereof, is considered an infrastructure or
project” unless the matter is one of extreme urgency development project and treated similarly as
involving a constitutional issue such that unless the act traditional “infrastructure” projects. All the rules
complained of is enjoined, grave injustice or irreparable applicable to traditional infrastructure projects are
injury would arise. also applicable to information technology projects.
 “National government project” has three types under o In contrast, under Republic Act No. 9184 or the
Section 2(a) of RA 8975: Government Procurement Reform Act, which
a. Current and future national government contemplates projects to be funded by public
infrastructure projects, engineering works and funds, the term “infrastructure project” was limited
service contracts, including projects undertaken to only the “civil works component” of
by government-owned and –controlled information technology projects.
corporations;  Civil works are subject to the provisions
b. All projects covered by R.A. No. 6975, as on infrastructure projects.
amended by R.A. No. 7718, or the  Technological are covered by the
Build­Operate­and­Transfer (BOT) Law; and provisions of procurement of goods.
c. Other related and necessary activities, such as  Petitioners presented no proof that the ePassport Project
site acquisition, supply and/or installation of was a BOT project. On the contrary, evidence adduced by
equipment and materials, implementation, both sides tended to show that the ePassport Project was a
construction, completion, operation, maintenance, procurement contract under Republic Act No. 9184
improvement repair and rehabilitation, regardless o Being a government procurement contract under
of the source of funding. Republic Act No. 9184, only the civil works
component of the e-Passport Project would be
Is the ePassport project covered under (b) projects covered considered an infrastructure project that may not
under BOT laws? NO be the subject of a lower court-issued writ of
 SC pointed out that DFA represented to TC that ePassport injunction under Republic Act No. 8975
Project is a BOT project but in their Petition before the SC,
DFA merely claims that the project is a national government Is the ePassport project covered under (a) “engineering
project under RA 8974. works or a service contract” or as “related and necessary
o The TC, relying on the representation of DFA and activities”? NO
agreeing with the contention of BCA, ruled as  Service contract” refers to “infrastructure contracts entered
follows: “The prohibition against issuance of TRO into by any department, office or agency of the national
and/or writ of preliminary injunction under RA 8975 government with private entities and nongovernment
applies only to national government organizations for services related or incidental to the
infrastructure project covered by the BOT Law. functions and operations of the department, office or
The national government projects covered under agency concerned.”

3 4
RA 9184: infrastructure projects include the construction, RA 7718 (amended RA 6957): private sector infrastructure or
improvement, rehabilitation, demolition, repair, restoration or development projects are those normally financed and operated by
maintenance of roads and bridges…civil works components of the public sector but which will now be wholly or partly implemented by
information technology projects xxx the private sector, including but not limited to…information
technology networks and database infrastructure xxx
 On the other hand, the phrase “other related and necessary urgent and paramount necessity for the writ to
activities” obviously refers to activities related to a prevent serious damage.
government infrastructure, engineering works, service o An injury is considered irreparable if it is of such
contract or project under the BOT Law constant and frequent recurrence that no fair and
 In other words, to be considered a service contract or reasonable redress can be had therefor in a court
related activity, petitioners must show that the e-Passport of law, or where there is no standard by which their
Project is an infrastructure project or necessarily related to amount can be measured with reasonable
an infrastructure project accuracy, that is, it is not susceptible of
o DFA failed to do this. There is nothing on record to mathematical computation. It is considered
indicate that the ePassport Project has a civil irreparable injury when it cannot be adequately
works component or is necessarily related to an compensated in damages due to the nature of the
infrastructure project. injury itself or the nature of the right or property
o Within the context of Republic Act No. 9184— injured or when there exists no certain pecuniary
which is the governing law for the e-Passport standard for the measurement of damages.
Project—the said Project is not an infrastructure  In this case, whether this is a termination by the DFA alone
project that is protected from lower court issued without fault on the part of BCA or a termination due to
injunctions under Republic Act No. 8975, which, to default on the part of either party, the BOT Law and the
reiterate, has for its purpose the expeditious and Amended BOT Agreement lay down the measure of
efficient implementation and completion of compensation to be paid under the appropriate
government infrastructure projects. circumstances.
 Significantly, in BCA’s Request for Arbitration with the
In short: The prohibition in Republic Act No. 8975 is inoperative PDRCI, it prayed for, among others,“a judgment ordering
in so far as the ePassport is concerned, since petitioners failed respondent [DFA] to pay damages to Claimant [BCA],
to prove that the e-Passport Project is national government reasonably estimated at P50M. All the purported damages
project as defined therein. that BCA claims to have suffered by virtue of the DFA’s
termination of the Amended BOT Agreement are plainly
2. With respect to petitioners’ contention that BCA will suffer determinable in pecuniary terms and can be “reasonably
no grave and irreparable injury so as to justify the grant of estimated” according to BCA’s own words.
injunctive relief, the Court finds that this particular argument
merits consideration. Other points noted by SC [dahil bibo yung nagsulat ng
 Under the BOT Law and the Amended BOT Agreement, in kaso]:
the event of default on the part of the government (in this  In seeking to enjoin the government from awarding or
case, the DFA) or on the part of the proponent, the non implementing a machine readable passport project or any
defaulting party is allowed to terminate the agreement, similar electronic passport or visa project and praying for
again subject to proper compensation in the manner set the maintenance of the status quo ante pending the
forth in the agreement. T resolution on the merits of BCA’s Request for Arbitration,
o Even if we hypothetically accept BCA’s contention BCA effectively seeks to enjoin the termination of the
that the DFA terminated the Amended BOT Amended BOT Agreement for the MRP/V Project. There is
Agreement without any default or wrongdoing on no doubt that the MRP/V Project is a project covered by the
BCA’s part, it is not indubitable that BCA is BOT Law and, in turn, considered a “national government
entitled to injunctive relief. project” under Republic Act No. 8795.
 BOT Law expressly allows the government to terminate a o As national government project, TCs are
BOT agreement, even without fault on the part of the project prohibited from issuing a TRO or WPI against the
proponent, subject to the payment of the actual expenses government to restrain or prohibit the termination
incurred by the proponent plus a reasonable rate of return. or rescission of any such national
 Time and again, this Court has held that to be entitled to contract/project.5
injunctive relief the party seeking such relief must be able  For if a project proponent is allowed to
to show grave, irreparable injury that is not capable of enjoin the termination of its contract on
compensation. the ground that it is contesting the validity
o WPI is resorted to only when there is a pressing of said termination, then the government
necessity to avoid injurious consequences which will be unable to enter into a new contract
cannot be remedied under any standard with any other party while the controversy
compensation is pending litigation. Obviously, a court’s
o Two requisites are necessary if a preliminary grant of injunctive relief in such an
injunction is to issue, namely: instance is prejudicial to public interest
 the existence of a right to be protected since government would be indefinitely
and hampered in its duty to provide vital
 the facts against which the injunction is to public goods and services in order to
be directed are violative of said right. preserve the private proprietary rights of
o It must be shown that the invasion of the right the project proponent.
sought to be protected is material and o Although BCA did not specifically pray for the trial
substantial, that the right of complainant is court to enjoin the termination of the Amended
clear and unmistakable and that there is an BOT Agreement and thus, there is no direct

5Relax. Ung discussion na mahaba sa taas refers to “ePassport.” Itong sinasabi

ng SC dito refers to MRP/V Project. Pero sana ito nalang sinabi nila agad para
tapos na kanina pa.
 violation of Republic Act No. 8795, a grant of
injunctive relief as prayed for by BCA will
indirectly contravene the same statute.
 BCA contends that if no injunctive relief will be issued in its
favor, the award of ePassport project would be tantamount
to a violation of property without due process of the law.
o The relationship of DFA to BCA is primarily
contractual and their dispute involves the
adjudication of contractual rights. The propriety of
the DFA’s acts, in relation to the termination of the
Amended BOT Agreement, should be gauged
against the provisions of the contract itself
 BCA’s petition for interim relief before the trial court is
essentially a petition for a provisional remedy ancillary
to its Request for Arbitration in PDRCI. 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 was dismissed for lack of jurisdiction, in view of the
lack of agreement between the parties to arbitrate before
the PDRCI
o The dismissal of the principal action thus results in
the denial of the prayer for the issuance of the writ.
x x x.” 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