Busan Universal Rail, Inc. v. Department of Transportation-Metro Rail Transit 3
REITERATIONFacts
1. The Antecedents: Busan Universal Rail, Inc. (BURI) entered into a contract with the Department of Transportation (DOTr)-Metro Rail Transit 3 (MRT3) for the MRT3 System Maintenance Provider, 43 light rail vehicles (LRVs) General Overhaul, and Total Replacement of the Signaling System. The contract, valued at P3,809,128,888.00, was divided into four packages: system maintenance, LRV general overhauling, signaling system replacement, and additional maintenance works. BURI commenced performance under Package 1, but disputes arose regarding payments, specifically Billing Nos. 9 through 18, which remained unpaid. DOTr-MRT3 also cited serious incidents and the failure to deliver overhauled LRVs as grounds for potential contract termination. BURI, in turn, invoked the contract's dispute settlement clause and requested mutual consultations, which were not acceded to, leading BURI to initiate arbitration proceedings. 2. Procedural History: Following the non-settlement of disputes and the initiation of arbitration proceedings, BURI filed a Petition for the Issuance of Interim Measures of Protection with Prayer for the Issuance of a Temporary Order of Protection before the Regional Trial Court (RTC) of Quezon City, seeking to maintain the status quo and prevent the termination of the MRT3 Contract. The RTC, in an Order dated October 13, 2017, denied BURI's petition, noting that the case had already been referred to arbitration. Subsequently, DOTr-MRT3 issued a Notice to Terminate the contract on October 16, 2017, and a Decision terminating the contract on November 3, 2017. BURI moved for reconsideration, but the RTC, in an Order dated December 11, 2017, denied the motion, citing Republic Act No. 8975, which prohibits lower courts from issuing injunctions against government infrastructure projects, and holding that the issues were arbitrable. 3. The Petition: BURI filed a Petition for Review on Certiorari under Rule 45 of the Rules of Court with the Supreme Court, assailing the RTC's Orders that denied its petition for interim measures of protection. BURI argued that the RTC had the authority to issue such measures, even in cases involving arbitration, by virtue of Republic Act No. 9184 and its Implementing Rules and Regulations, and that the prohibitory provision of Republic Act No. 8975 was not applicable. BURI contended that the arbitration clause in the contract, anchored on RA 9184, explicitly allows for interim protection measures as an incident of arbitration proceedings. The petition raised assignments of error concerning the RTC's dismissal of the petition for interim measures, its ruling on fait accompli, and the validity of the arbitration clause preventing unilateral termination of the contract.
Issue(s)
Whether the RTC has jurisdiction to issue interim measures of protection in a case involving a dispute arising from a contract for a national government project, despite an arbitration clause, considering the applicability of Republic Act No. 8975. Whether the prohibition under Republic Act No. 8975 applies to the petition for interim measures, and whether an exception exists due to an extreme urgency involving a constitutional issue.
Ruling
The petition is bereft of merit. The Supreme Court affirmed the Orders of the RTC, denying BURI's prayer for the issuance of a Status Quo Order and/or Preliminary Mandatory Injunction.
Ratio Decidendi
On the RTC's jurisdiction and the applicability of RA 8975: The Supreme Court held that Republic Act No. 8975 (RA 8975) prohibits lower courts, except the Supreme Court, from issuing temporary restraining orders, preliminary injunctions, or preliminary mandatory injunctions against the government or any of its subdivisions, officials, or any person or entity acting under the government's direction, to restrain, prohibit, or compel acts related to national government projects, including the termination or rescission of such contracts. While Republic Act No. 9285 (RA 9285), the Alternative Dispute Resolution Act of 2004, allows a court to grant interim measures of protection before the constitution of an arbitral tribunal, RA 8975, being a special law governing national government projects, must prevail over the general law (RA 9285) in cases involving such projects. The Court cited the case of Department of Foreign Affairs v. Falcon to emphasize that the prohibition under RA 8975 applies even if the relief sought indirectly contravenes the statute. In this case, BURI sought to restrain DOTr-MRT3 from terminating the MRT3 Contract, which is a national government project. Therefore, the RTC correctly dismissed the petition based on RA 8975. On the existence of an extreme urgency involving a constitutional issue: BURI argued that there was an extreme urgency involving a constitutional issue, making the prohibition under RA 8975 inapplicable. However, the Supreme Court disagreed, stating that the issue between the parties was purely contractual. The Court reiterated the ruling in Falcon that the State action being assailed must be gauged against the provisions of the contract and applicable statutes, and that contractual and statutory provisions outline what constitutes due process in such cases. BURI failed to demonstrate a constitutional issue of extreme urgency that would warrant overriding the prohibition in RA 8975. The dispute was primarily about the adjudication of contractual rights, not a violation of fundamental constitutional rights that would cause grave injustice and irreparable injury.
Main Doctrine
Republic Act No. 8975, which prohibits lower courts from issuing temporary restraining orders, preliminary injunctions, or preliminary mandatory injunctions against national government projects, prevails over Republic Act No. 9285, which allows courts to grant interim measures of protection in arbitration cases, when the dispute involves the termination of a contract for a national government project, unless there is an extreme urgency involving a constitutional issue that would result in grave injustice and irreparable injury.