Case 96 Dfa Vs Bca Intl

96. G.R. No. 225051. July 19, 2017 DEPARTMENT OF FOREIGN AFFAIRS (DFA) VS.
BCA
INTERNATIONAL CORPORATION & AD HOC ARBITRAL TRIBUNAL
Principles:
Court intervention is allowed under Republic Act (RA) No. 9285 in the following instances: (1)
when a party in the arbitration proceedings requests for an interim measure of protection; (2)
judicial review of arbitral awards by the Regional Trial Court (RTC); and (3) appeal from the
RTC decisions on arbitral awards to the Court of Appeals (CA). RA No. 9285 declares the policy
of the State to actively promote party autonomy in the resolution of disputes or the freedom of
the parties to make their own arrangements to resolve their disputes. Towards this end, the
State shall encourage and actively promote the use of Alternative Dispute Resolution as an
important means to achieve speedy and impartial justice and declog court dockets.
Court intervention in the Special ADR Rules is allowed through these remedies: (1) Specific
Court Relief, which includes Judicial Relief Involving the Issue of Existence, Validity and
Enforceability of the Arbitral Agreement, Interim Measures of Protection, Challenge to the
Appointment of Arbitrator, Termination of Mandate of Arbitrator, Assistance in Taking Evidence,
Confidentiality/Protective Orders, Confirmation, Correction or Vacation of Award in Domestic
Arbitration, all to be filed with the RTC; (2) a motion for reconsideration may be filed by a party
with the RTC on the grounds specified in Rule 19.1; (3) an appeal to the Court of Appeals
through a petition for review under Rule 19.2 or through a special civil action for certiorari under
Rule 19.26; and (4) a petition for certiorari with the Supreme Court from a judgment or final
order or resolution of the Court of Appeals, raising only questions of law.
Doctrine: Arbitration is deemed a special proceeding and governed by the special provisions of
RA 9285, its IRR, and the Special ADR Rules. RA 9285 is the general law applicable to all
matters and controversies to be resolved through alternative dispute resolution methods. While
enacted only in 2004, RA 9285 applies to pending arbitration proceedings since it is a
procedural law which has a retroactive effect.
Facts:
DFA entered into an Amended-Built-Operate-Transfer (BOT) Agreement with BCA International

Corp. and awarded to the latter the Machine Readable Passport and Visa Project (MRP/V
Project). In the course of implementing the MRP/V Project, conflict arose and DFA seek to
terminate the agreement. BCA Int’l Corp. opposed the termination and requested for arbitration,
hence an Arbitral Tribunal was constituted. The Arbitral issued Procedural Order No. 11,
allowing BCA International Corp. to submit its Amended Statement of Claims of actual damages
amounting to 390,000,000 plus an additional 10,000,000 for exemplary, temperate or nominal
damages in order for the claim to conform to the evidence presented by the respondent.
Thereafter it issued Procedural No. 12 which disallows the presentation of additional evidence
by BCA International Corp. to prove the increase in the amount of claim, and disallowed the
taking of testimonial evidence from any witness by any party. Procedural No. 12 denied DFA’s
motion for reconsideration of Procedural No. 11.
Aggrieved, DFA filed a petition for Certiorari under Rule 65 of the Rules of Court before the SC
with application of a TRO and/or preliminary injunction for the annulment of Procedural Nos. 11
and 12. DFA avers that the amendment caused undue delay and prejudice to it; that the
amendment relied falls outside the scope of the arbitration clause and hence outside the
jurisdiction of the Ad Hoc Tribunal. Also, it contends that the parties in this case has agreed to
refer any dispute to arbitration under the 1976 UNCITRAL Arbitration Rules and not by
Alternative Dispute Resolution (ADR) Act of 2004 (R.A. 9285) for to do so would amount to
transgression of vested rights and vitiation of consent to arbitration proceedings. On the other
hand, respondent contends that SC has no jurisdiction to intervene in private arbitration, which
is a special proceeding governed by the ADR Act of 2004 (R.A. 9285), its IRR and Special ADR
Rules; that the tribunal derives their authority to hear and resolve cases from the contractual
consent of the parties expressed in Sec. 19.02 of the Agreement.
Issues: What law should govern the Arbitration Proceedings?
Held:
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."
Arbitration is deemed a special proceeding and governed by the special provisions of RA 9285,
its IRR, and the Special ADR Rules. RA 9285 is the general law applicable to all matters and
controversies to be resolved through alternative dispute resolution methods. While enacted only
in 2004, we held that RA 9285 applies to pending arbitration proceedings since it is a procedural
law, which has retroactive effect. The IRR of RA 9285 reiterate that RA 9285 is procedural in
character and applicable to all pending arbitration proceedings. Consistent with Article 2046 of
the Civil Code, the Special ADR Rules were formulated and were also applied to all pending
arbitration proceedings covered by RA 9285, provided no vested rights are impaired.
Thus, contrary to DFA's contention, RA 9285, its IRR, and the Special ADR Rules are applicable
to the present arbitration proceedings. 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. 2. No. Court intervention is
allowed under R.A. No. 9285 in the following instances: (1) when a party in the arbitration
proceedings requests for an interim measure of protection;(2) judicial review of arbitral awards
by the Regional Trial Court (RTC); and (3) appeal from the RTC decisions on arbitral awards to
the Court of Appeals. Under the Special ADR Rules, review by the Supreme Court of an appeal
by certiorari is not a matter of right, thus: RULE 19.36. Review Discretionary. — A review by the
Supreme Court is not a matter of right, but of sound judicial discretion, which will be granted
only for serious and compelling reasons resulting in grave prejudice to the aggrieved party. The
following, while neither controlling nor fully measuring the court's discretion,

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96. G.R. No. 225051. July 19, 2017 DEPARTMENT OF FOREIGN AFFAIRS (DFA) VS.

DFA entered into an Amended-Built-Operate-Transfer (BOT) Agreement with BCA International

Issues: What law should govern the Arbitration Proceedings?

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