Case Digest (G.R. No. 173137)
Facts:
Bases Conversion Development Authority v. DMCI Project Developers, Inc., G.R. Nos. 173137 and 173170, January 11, 2016, Supreme Court Second Division, Leonen, J., writing for the Court.The dispute arose from a series of agreements to implement the Manila–Clark railroad project. On June 10, 1995, Bases Conversion Development Authority (BCDA) executed a Joint Venture Agreement (JVA) with the Philippine National Railways and several foreign corporations to establish North Luzon Railways Corporation (Northrail) and to develop, operate and manage the railway system. Article XVI of the JVA contained an arbitration clause; Articles II–IV and 17.1–17.2 described the corporation’s incorporation, capitalization, shareholder participation and restrictions on assignment and nomination.
On February 8, 1996, the JVA was amended to include D.M. Consunji, Inc. (DMCI) and/or its nominee, and on the same date the parties executed a Memorandum of Agreement (MOA) to raise seed capital (P600 million) to Northrail, with DMCI’s share ultimately reflected as P300 million. At BCDA’s and Northrail’s request, DMCI Project Developers, Inc. (DMCI‑PDI) deposited P300 million into Northrail’s account on August 7, 1996 as “Deposits For Future Subscription.” Northrail later withdrew its application to increase authorized capital, and BCDA sought Official Development Assistance that required Northrail to be 100% government‑owned.
When DMCI‑PDI demanded return of the P300 million on September 27, 2000, BCDA and Northrail refused. The Office of the Government Corporate Counsel (OGCC) issued an opinion (June 27, 2001) advising return, but BCDA denied refund by letter dated March 18, 2005, characterizing the contribution as capital rather than a refundable deposit. DMCI‑PDI served a demand for arbitration on August 17, 2005, relying on the JVA arbitration clause; BCDA and Northrail did not respond.
DMCI‑PDI filed a Petition to Compel Arbitration before the Regional Trial Court (RTC) of Makati (Branch 150). BCDA and Northrail moved to dismiss: BCDA contended DMCI‑PDI was not a party to the JVA and therefore could not invoke the arbitration clause (and alleged lack of consent to any assignment); Northrail maintained it was not a signatory and therefore could not be compelled to arbitrate. On February 9, 2006 the RTC denied the Motions to Dismiss and granted the petition to compel arbitration, ruling that the JVA, the amended JVA and the MOA constituted one contract and that DMCI‑PDI was D.M. Consunji, Inc.’s assignee/nominee and thus could invoke the arbitration clause. The RTC denied reconsideration on June 9, 2006.
BCDA and Northrail separately filed Rule 45 petitions before the Supreme Court challenging the RTC orders; they argued (inter alia) that Rule 45 was the wrong mode of review, that DMCI‑PDI was not a party to the JVA and had...(Subscriber-Only)
Issues:
- Was Rule 45 the proper mode of review for BCDA’s and Northrail’s petitions — i.e., are the questions presented questions of law appropriate for certiorari?
- Does the arbitration clause in the June 10, 1995 JVA extend to the amended JVA and the Memorandum of Agreement executed to effect the same project?
- Could DMCI‑PDI, as nominee or assignee of D.M. Consunji, Inc., invoke and compel arbitration under the JVA’s arbitration clause?
- Could Northrail, a corporation established pursuant to the agreements but not an original signatory to the JVA, be...(Subscriber-Only)
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)