DFNN asks for P310M arbitral damage award vs. PCSO

GAMING technology solutions provider DFNN Inc. has asked the local arbitration tribunal that ruled favorably on its wireless lotto dispute with the state-controlled Philippine Charity Sweepstakes Office (PCSO) to increase the amount of damage award by over 11 times to P310 million.

Arguing that the arbitration court’s order for PCSO to pay DFNN only P27 million as liquidated damages was a “miscalculation,” the technology firm filed for a “petition of correction” of arbitral award.

“In the last few weeks, the DFNN board has assessed and evaluated the possible legal remedies to ensure that maximum restitution is effected with respect to the arbitral ruling announced last May. This petition for correction of arbitral award is a step closer to securing and protecting the interests of our shareholders,” DFNN president and chief executive officer Ramon Garcia Jr. said in a disclosure posted on the Philippine Stock Exchange on Monday.

DFNN said the arbitration tribunal should have computed the damages it awarded to DFNN for the PCSO’s illegal termination of a lotto equipment lease agreement during the Arroyo administration at P310,095,149.70.

The arbitration panel ruled that the PCSO had erred when it rescinded DFNN’s equipment lease agreement covering systems design development and upgrade for lotto betting via personal communication devices such as text, GPRS, BlueTooth, 3G, WiFi protocols and other wireless devices. But while it welcomed this ruling, DFNN noted that the P27 million liquidated damages awarded by the tribunal were insufficient.

DFNN said the computation of liquidated damages was governed by a section in the agreement, which stated that, “PCSO, if it is the party in default, shall pay DFNN liquidated damages in the amount equal to the market value of the system…inclusive of a penalty charge of 2 percent per month on the amount due computed from the date of termination or cancellation of the Agreement to the actual date of payment.” Taking into account such provision, DFNN argued in its petition that the non-inclusion of such penalty charge in the damages awarded to DFNN clearly constituted “an evident miscalculation of figures.”

The petition for correction further stated that from the illegal termination of the agreement in 2005 until the rendition of the award on May 21 this year – 122 months and seven days had passed. Thus, DFNN said the tribunal should have computed the damages it awarded to DFNN for the PCSO’s illegal termination at a higher amount.