THE Commission on Audit has dismissed a compensation claim filed by DMCI Project Developers Inc. (DMCI-PDI) on Aug. 22, 2022 seeking payment of a P853.117-million judgment award against the Bases Conversion and Development Authority (BCDA) and North Luzon Railways Corp. (Northrail).
COA Chairperson Gamaliel A. Cordoba and Commissioners Roland Café Pondoc and Mario G. Lipana were unanimous that the Commission en banc cannot assume jurisdiction over the petition because of matters still pending with the courts.
The claim stemmed from the 1995 joint venture agreement (JVA) among BCDA, the Philippine National Railways (PNR), Spanish Railways Group, and Euroma Development Corp for the construction and operation of a double-track railways system between Metro Manila and a then still non-operational international airport in Clark.
Under the said JVA, the railway project would still be managed by Northrail which was incorporated and registered with the Securities and Exchange Commission with an initial capitalization of P100 million fully subscribed and paid by the BCDA.
The JVA was amended on Feb. 8, 1996 with DMCI joining with an equity share set at P200 million. This was later raised to P300 million representing 30 percent of the P1-billion capitalization.
DMCI-PDI, as DMCI’s nominee, deposited the P300 million to Northrail’s account with the Land Bank of the Philippines on Aug. 7, 1996. However, the following year, Northrail withdrew its application for increase of authorized capital stock from the SEC, which ended the plan for its privatization and prevented the conversion of DMCI-PDI’s contribution into Northrail shares of stocks.
On Feb. 9, 2006, on a petition from the DMCI-PDI, the Makati Regional Trial Court ordered all parties to submit to arbitration.
After 14 years, the arbitral tribunal issued the final award dated Feb. 21, 2020 which granted DMCI-PDI’s claim for the return of its P300 million deposit with legal interest of 12 percent from February 2005 to June 2013 and 6 percent from June 2013 to full payment.
However, the claimant’s prayer for attorney’s fees, costs and expenses of arbitration was denied together with the counterclaims filed by Northrail and BCDA.
On Dec. 20, 2021, the BCDA and Northrail filed a petition for certiorari with the Court of Appeals asking to annul and set aside the Makati RTC resolutions of Aug. 24 and Dec. 3, 2021 that confirmed the arbitral award.
The DMCI-PDI then filed its claim for payment with the COA en banc on Aug. 22, 2022. BCDA and Northrail contested the claim arguing it was “unnecessary, excessive, and unreasonable charges against public funds.”
They said that under special rules, the costs that can be awarded should be limited to those incurred in the proceedings for confirmation of an arbitral award and only such amount as the court may find “reasonable.”
“This Commission rules to dismiss the petition as the legality and propriety of the claim have still to be ruled upon by the Court. In this case, although there is a final award …, it is however subject of a petition for certiorari which remains pending to date before the Court of Appeals,” the COA said.
The Commission said until the court decides on the final amount of obligation, it would be premature on its part to get involved.
“Only a final and executory decision with complete and authenticated supporting documents may be acted upon by this Commission,” the COA added.