THE Philippine Charity and Sweepstakes Office (PCSO) is ordered to pay P27 million to DFNN Inc. as liquidated damages for illegally terminating its agreement with the latter.
In a regulatory filing on Monday, the information-technology solutions provider and systems integrator disclosed the favorable outcome of the arbitration proceedings it initiated against the PCSO for improperly rescinding their equipment lease agreement (ELA) on systems design development and upgrade for lotto betting via personal communication devices (PCDs).
“We are gratified with the positive outcome of the arbitration. We would like to thank the Arbitration Panel for validating our stance on the baseless and unjust termination of our license by the previous administrators of the PCSO,“ said Ramon Garcia Jr., president and CEO of DFNN.
On April 9, 2003, both parties signed the ELA, wherein the PCSO agreed to exclusively rent from DFNN all the hardware, software, and know-how to design and develop a system that would enable it to accept and process bets from PCD users through text, GPRS, Bluetooth, 3G, Wi-Fi protocols, and other wireless devices nationwide.
Before the scheduled commercial operation of the system, however, DFNN was informed on April 5, 2005, about the ELA’s termination.
After this, the PCSO started a PCD-betting project negotiation with third parties, thus, violating its obligation under the pact to exclusively lease the system from DFNN.
As a legal action, the latter filed on February 9, 2010, a Petition for Preliminary Injunction (with Application for Urgent Issuance of Ex-Parte Temporary Order of Protection) in aid of arbitration.
In its favor, the Regional Trial Court in Quezon City issued a temporary order of protection in March 2010, based on its finding that the ELA was not validly terminated and that there was a need for immediate injunctive relief, pending the initiation and/or resolution of the arbitration proceedings.
On May 21 the Ad Hoc Arbitration Panel comprised of Victor N. Alimirong, chairman; Fulgencio S. Factoran Jr., member; and Jose Tomas C. Syquia declared in their arbitral ruling that PCSO committed a mistake when it terminated the ELA.
They noted that the grounds relied upon the contract’s cancellation were misplaced and/or unfounded.
Also, they acknowledged that DFNN’s undertaking under the agreement was satisfied when it delivered a system that was integratable with the government’s charity arm’s existing lotto betting system.
Despite the favorable decision, Garcia said they remain committed to examining and evaluating all further legal solutions to make sure that the maximum restitution is effected to protect the interests of their shareholders. “We would also like to state our willingness to work with the present PCSO management, led by its new chairman, Ayong Maliksi. We strongly believe in the mission of the PCSO to raise funds for charity, and would like to reiterate our commitment to partner with the PCSO in the critical task of nation-building and ensuring that no single Filipino gets left behind,” he said.