G.R. No.

212081, February 23, 2015

DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES

(DENR), Petitioner, v. UNITED PLANNERS CONSULTANTS, INC.
(UPCI), Respondent.

DECISION

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari1 is the Decision2 dated March 26, 2014 of
the Court of Appeals (CA) in CA-G.R. SP No. 126458 which dismissed the petition
for certiorari filed by petitioner the Department of Environment and Natural Resources
(petitioner).

The Facts

On July 26, 1993, petitioner, through the Land Management Bureau (LMB), entered into
an Agreement for Consultancy Services3 (Consultancy Agreement) with respondent
United Planners Consultants, Inc. (respondent) in connection with the LMB’s Land
Resource Management Master Plan Project (LRMMP).4 Under the Consultancy
Agreement, petitioner committed to pay a total contract price of P4,337,141.00, based
on a predetermined percentage corresponding to the particular stage of work
accomplished.5 In December 1994, respondent completed the work required, which
petitioner formally accepted on December 27, 1994. 6 However, petitioner was able to
pay only 47% of the total contract price in the amount of P2,038,456.30. 7cratlawred

On October 25, 1994, the Commission on Audit (COA) released the Technical Services
Office Report8(TSO) finding the contract price of the Agreement to be 84.14%
excessive.9 This notwithstanding, petitioner, in a letter dated December 10, 1998,
acknowledged its liability to respondent in the amount of P2,239,479.60 and assured
payment at the soonest possible time.10cralawred

For failure to pay its obligation under the Consultancy Agreement despite repeated
demands, respondent instituted a Complaint11 against petitioner before the Regional
Trial Court of Quezon City, Branch 222 (RTC), docketed as Case No. Q-07-
60321.12cralawred

Upon motion of respondent, the case was subsequently referred to arbitration pursuant
to the arbitration clause of the Consultancy Agreement, 13 which petitioner did not
oppose.14 As a result, Atty. Alfredo F. Tadiar, Architect Armando N. Alli, and
Construction Industry Arbitration Commission (CIAC) Accredited Arbitrator Engr.
Ricardo B. San Juan were appointed as members of the Arbitral Tribunal. The court-
referred arbitration was then docketed as Arbitration Case No. A-001.15cralawred

During the preliminary conference, the parties agreed to adopt the CIAC Revised Rules
Governing Construction Arbitration16 (CIAC Rules) to govern the arbitration
proceedings.17 They further agreed to submit their respective draft decisions in lieu of
memoranda of arguments on or before April 21, 2010, among others. 18cralawred

On the due date for submission of the draft decisions, however, only respondent
complied with the given deadline,19 while petitioner moved for the deferment of the
deadline which it followed with another motion for extension of time, asking that it be
given until May 11, 2010 to submit its draft decision. 20cralawred

In an Order21 dated April 30, 2010, the Arbitral Tribunal denied petitioner’s motions and
deemed its non-submission as a waiver, but declared that it would still consider
petitioner’s draft decision if submitted before May 7, 2010, or the expected date of the
final award’s promulgation.22 Petitioner filed its draft decision23 only on May 7, 2010.

The Arbitral Tribunal rendered its Award24 dated May 7, 2010 (Arbitral Award) in favor of
respondent, directing petitioner to pay the latter the amount of (a) P2,285,089.89
representing the unpaid progress billings, with interest at the rate of 12% per annum
from the date of finality of the Arbitral Award upon confirmation by the RTC until fully
paid; (b) P2,033,034.59 as accrued interest thereon; (c) ?500,000.00 as exemplary
damages; and (d) P150,000.00 as attorney’s fees. 25 It also ordered petitioner to
reimburse respondent its proportionate share in the arbitration costs as agreed upon in
the amount of P182,119.44.26cralawred

Unconvinced, petitioner filed a motion for reconsideration, 27 which the Arbitral Tribunal
merely noted without any action, claiming that it had already lost jurisdiction over the
case after it had submitted to the RTC its Report together with a copy of the Arbitral
Award.28cralawred

Consequently, petitioner filed before the RTC a Motion for Reconsideration 29 dated May
19, 2010 (May 19, 2010 Motion for Reconsideration) and a Manifestation and
Motion30 dated June 1, 2010 (June 1, 2010 Manifestation and Motion), asserting that
it was denied the opportunity to be heard when the Arbitral Tribunal failed to consider its
draft decision and merely noted its motion for reconsideration.31 It also denied receiving
a copy of the Arbitral Award by either electronic or registered mail. 32 For its part,
respondent filed an opposition thereto and moved for the confirmation 33 of the Arbitral
Award in accordance with the Special Rules of Court on Alternative Dispute Resolution
(Special ADR Rules).34cralawred

In an Order35 dated March 30, 2011, the RTC merely noted petitioner’s aforesaid
motions, finding that copies of the Arbitral Award appear to have been sent to the
parties by the Arbitral Tribunal, including the OSG, contrary to petitioner’s claim. On the
other hand, the RTC confirmed the Arbitral Award pursuant to Rule 11.2 (A) 36 of the
Special ADR Rules and ordered petitioner to pay respondent the costs of confirming the
award, as prayed for, in the total amount of P50,000.00. From this order, petitioner did
not file a motion for reconsideration.

Thus, on June 15, 2011, respondent moved for the issuance of a writ of execution, to
which no comment/opposition was filed by petitioner despite the RTC’s directive
therefor. In an Order37 dated September 12, 2011, the RTC granted respondent’s
motion.38cralawred

Petitioner moved to quash39 the writ of execution, positing that respondent was not
entitled to its monetary claims. It also claimed that the issuance of said writ was
premature since the RTC should have first resolved its May 19, 2010 Motion for
Reconsideration and June 1, 2010 Manifestation and Motion, and not merely noted
them, thereby violating its right to due process.40cralawred

The RTC Ruling

In an Order41 dated July 9, 2012, the RTC denied petitioner’s motion to quash.

It found no merit in petitioner’s contention that it was denied due process, ruling that its
May 19, 2010 Motion for Reconsideration was a prohibited pleading under Section
17.2,42 Rule 17 of the CIAC Rules. It explained that the available remedy to assail an
arbitral award was to file a motion for correction of final award pursuant to Section
17.143 of the CIAC Rules, and not a motion for reconsideration of the said award
itself.44 On the other hand, the RTC found petitioner’s June 1, 2010 Manifestation and
Motion seeking the resolution of its May 19, 2010 Motion for Reconsideration to be
defective for petitioner’s failure to observe the three-day notice rule.45 Having then failed
to avail of the remedies attendant to an order of confirmation, the Arbitral Award had
become final and executory.46cralawred

On July 12, 2012, petitioner received the RTC’s Order dated July 9, 2012 denying its
motion to quash.47cralawred

Dissatisfied, it filed on September 10, 2012 a petition for certiorari48 before the CA,
docketed as CA-G.R. SP No. 126458, averring in the main that the RTC acted with
grave abuse of discretion in confirming and ordering the execution of the Arbitral
Award.chanroblesvirtuallawlibrary

The CA Ruling

In a Decision49 dated March 26, 2014, the CA dismissed the certiorari petition on two (2)
grounds, namely: (a) the petition essentially assailed the merits of the Arbitral
Award which is prohibited under Rule 19.750 of the Special ADR Rules;51 and (b) the
petition was filed out of time, having been filed way beyond 15 days from notice of the
RTC’s July 9, 2012 Order, in violation of Rule 19.2852 in relation to Rule 19.853 of said
Rules which provide that a special civil action for certiorari must be filed before the
CA within 15 days from notice of the judgment, order, or resolution sought to be
annulled or set aside (or until July 27, 2012).

Aggrieved, petitioner filed the instant petition.chanroblesvirtuallawlibrary

The Issue Before the Court

The core issue for the Court’s resolution is whether or not the CA erred in applying the
provisions of the Special ADR Rules, resulting in the dismissal of petitioner’s special
civil action for certiorari.

The Court’s Ruling

The petition lacks merit.chanroblesvirtuallawlibrary

I.

Republic Act No. (RA) 9285,54 otherwise known as the Alternative Dispute Resolution
Act of 2004,” institutionalized the use of an Alternative Dispute Resolution System (ADR
System)55 in the Philippines. The Act, however, was without prejudice to the adoption
by the Supreme Court of any ADR system as a means of achieving speedy and efficient
means of resolving cases pending before all courts in the Philippines.56cralawred

Accordingly, A.M. No. 07-11-08-SC was created setting forth the Special Rules of Court
on Alternative Dispute Resolution (referred herein as Special ADR Rules) that shall
govern the procedure to be followed by the courts whenever judicial intervention is
sought in ADR proceedings in the specific cases where it is allowed. 57cralawred

Rule 1.1 of the Special ADR Rules lists down the instances when the said rules shall
apply, namely: “(a) Relief on the issue of Existence, Validity, or Enforceability of the
Arbitration Agreement; (b) Referral to Alternative Dispute Resolution (“ADR”); (c)
Interim Measures of Protection; (d) Appointment of Arbitrator; (e) Challenge to
Appointment of Arbitrator; (f) Termination of Mandate of Arbitrator; (g) Assistance in
Taking Evidence; (h) Confirmation, Correction or Vacation of Award in Domestic
Arbitration; (i) Recognition and Enforcement or Setting Aside of an Award in
International Commercial Arbitration; (j) Recognition and Enforcement of a Foreign
Arbitral Award; (k) Confidentiality/Protective Orders; and (l) Deposit and Enforcement of
Mediated Settlement Agreements.”58cralawred

Notably, the Special ADR Rules do not automatically govern the arbitration
proceedings itself. A pivotal feature of arbitration as an alternative mode of dispute
resolution is that it is a product of party autonomy or the freedom of the parties to make
their own arrangements to resolve their own disputes.59 Thus, Rule 2.3 of the
Special ADR Rules explicitly provides that “parties are free to agree on the procedure
to be followed in the conduct of arbitral proceedings. Failing such agreement, the
arbitral tribunal may conduct arbitration in the manner it considers
appropriate.”60cralawred

In the case at bar, the Consultancy Agreement contained an arbitration clause.61 Hence,
respondent, after it filed its complaint, moved for its referral to arbitration 62 which was
not objected to by petitioner.63 By its referral to arbitration, the case fell within the
coverage of the Special ADR Rules. However, with respect to the arbitration
proceedings itself, the parties had agreed to adopt the CIAC Rules before the Arbitral
Tribunal in accordance with Rule 2.3 of the Special ADR Rules.

On May 7, 2010, the Arbitral Tribunal rendered the Arbitral Award in favor of
respondent. Under Section 17.2, Rule 17 of the CIAC Rules, no motion for
reconsideration or new trial may be sought, but any of the parties may file a motion for
correction64 of the final award, which shall interrupt the running of the period for
appeal,65 based on any of the following grounds, to wit:chanRoblesvirtualLawlibrary

a. an evident miscalculation of figures, a typographical or arithmetical

error;ChanRoblesVirtualawlibrary

b. an evident mistake in the description of any party, person, date, amount, thing or
property referred to in the award;ChanRoblesVirtualawlibrary

c. where the arbitrators have awarded upon a matter not submitted to them, not
affecting the merits of the decision upon the matter
submitted;ChanRoblesVirtualawlibrary

d. where the arbitrators have failed or omitted to resolve certain issue/s formulated
by the parties in the Terms of Reference (TOR) and submitted to them for
resolution, and

e. where the award is imperfect in a matter of form not affecting the merits of the
controversy.

The motion shall be acted upon by the Arbitral Tribunal or the surviving/remaining
members.66cralawlawlibrary

Moreover, the parties may appeal the final award to the CA through a petition for review
under Rule 43 of the Rules of Court.67cralawred

Records do not show that any of the foregoing remedies were availed of by petitioner.
Instead, it filed the May 19, 2010 Motion for Reconsideration of the Arbitral Award,
which was a prohibited pleading under the Section 17.2, 68 Rule 17 of the CIAC Rules,
thus rendering the same final and executory.

Accordingly, the case was remanded to the RTC for confirmation proceedings pursuant
to Rule 11 of the Special ADR Rules which requires confirmation by the court of the final
arbitral award. This is consistent with Section 40, Chapter 7 (A) of RA 9285 which
similarly requires a judicial confirmation of a domestic award to make the same
enforceable:chanRoblesvirtualLawlibrary

SEC. 40. Confirmation of Award. – The confirmation of a domestic arbitral award shall
be governed by Section 2369 of R.A. 876.70cralawred

A domestic arbitral award when confirmed shall be enforced in the same manner
as final and executory decisions of the regional trial court.
The confirmation of a domestic award shall be made by the regional trial court in
accordance with the Rules of Procedure to be promulgated by the Supreme
Court.

A CIAC arbitral award need not be confirmed by the regional trial court to be executory
as provided under E.O. No. 1008. (Emphases supplied)cralawlawlibrary

During the confirmation proceedings, petitioners did not oppose the RTC’s confirmation
by filing a petition to vacate the Arbitral Award under Rule 11.2 (D) 71 of the Special ADR
Rules. Neither did it seek reconsideration of the confirmation order in accordance with
Rule 19.1 (h) thereof. Instead, petitioner filed only on September 10, 2012 a special
civil action for certiorari before the CA questioning the propriety of (a) the RTC Order
dated September 12, 2011 granting respondent’s motion for issuance of a writ of
execution, and (b) Order dated July 9, 2012 denying its motion to quash. Under Rule
19.26 of the Special ADR Rules, “[w]hen the Regional Trial Court, in making a ruling
under the Special ADR Rules, has acted without or in excess of its jurisdiction, or with
grave abuse of discretion amounting to lack or excess of jurisdiction, and there is no
appeal or any plain, speedy, and adequate remedy in the ordinary course of law, a
party may file a special civil action for certiorari to annul or set aside a ruling of the
Regional Trial Court.” Thus, for failing to avail of the foregoing remedies before
resorting to certiorari, the CA correctly dismissed its petition.chanroblesvirtuallawlibrary

II.

Note that the special civil action for certiorari described in Rule 19.26 above may be
filed to annul or set aside the following orders of the Regional Trial Court.

a. Holding that the arbitration agreement is inexistent, invalid or

unenforceable;ChanRoblesVirtualawlibrary

b. Reversing the arbitral tribunal’s preliminary determination upholding its

jurisdiction;ChanRoblesVirtualawlibrary

c. Denying the request to refer the dispute to

arbitration;ChanRoblesVirtualawlibrary

d. Granting or refusing an interim relief;ChanRoblesVirtualawlibrary

e. Denying a petition for the appointment of an

arbitrator;ChanRoblesVirtualawlibrary

f. Confirming, vacating or correcting a domestic arbitral

award;ChanRoblesVirtualawlibrary
 g. Suspending the proceedings to set aside an international commercial arbitral
award and referring the case back to the arbitral
tribunal;ChanRoblesVirtualawlibrary

h. Allowing a party to enforce an international commercial arbitral award pending

appeal;ChanRoblesVirtualawlibrary

i. Adjourning or deferring a ruling on whether to set aside, recognize and or enforce

an international commercial arbitral award;ChanRoblesVirtualawlibrary

j. Allowing a party to enforce a foreign arbitral award pending appeal; and

k. Denying a petition for assistance in taking evidence. (Emphasis supplied)

cralawlawlibrary

Further, Rule 19.772 of the Special ADR Rules precludes a party to an arbitration from
filing a petition for certiorari questioning the merits of an arbitral award.

If so falling under the above-stated enumeration, Rule 19.28 of the Special ADR Rules
provide that said certiorari petition should be filed “with the [CA] within fifteen (15) days
from notice of the judgment, order or resolution sought to be annulled or set aside. No
extension of time to file the petition shall be allowed.”

In this case, petitioner asserts that its petition is not covered by the Special ADR Rules
(particularly, Rule 19.28 on the 15-day reglementary period to file a petition
for certiorari) but by Rule 65 of the Rules of Court (particularly, Section 4 thereof on the
60-day reglementary period to file a petition for certiorari), which it claimed to have
suppletory application in arbitration proceedings since the Special ADR Rules do not
explicitly provide for a procedure on execution.

The position is untenable.

Execution is fittingly called the fruit and end of suit and the life of the law. A judgment, if
left unexecuted, would be nothing but an empty victory for the prevailing
party.73cralawred

While it appears that the Special ADR Rules remain silent on the procedure for the
execution of a confirmed arbitral award, it is the Court’s considered view that the Rules’
procedural mechanisms cover not only aspects of confirmation but necessarily extend
to a confirmed award’s execution in light of the doctrine of necessary implication which
states that every statutory grant of power, right or privilege is deemed to include all
incidental power, right or privilege. In Atienza v. Villarosa,74 the doctrine was explained,
thus:chanRoblesvirtualLawlibrary

No statute can be enacted that can provide all the details involved in its application.
There is always an omission that may not meet a particular situation. What is thought, at
the time of enactment, to be an all-embracing legislation may be inadequate to provide
for the unfolding of events of the future. So-called gaps in the law develop as the law is
enforced. One of the rules of statutory construction used to fill in the gap is the doctrine
of necessary implication. The doctrine states that what is implied in a statute is as much
a part thereof as that which is expressed. Every statute is understood, by
implication, to contain all such provisions as may be necessary to effectuate its
object and purpose, or to make effective rights, powers, privileges or jurisdiction
which it grants, including all such collateral and subsidiary consequences as may
be fairly and logically inferred from its terms. Ex necessitate legis. And every
statutory grant of power, right or privilege is deemed to include all incidental
power, right or privilege. This is so because the greater includes the lesser,
expressed in the maxim, in eo plus sit, simper inest et minus.75 (Emphases
supplied)cralawlawlibrary

As the Court sees it, execution is but a necessary incident to the Court’s confirmation of
an arbitral award. To construe it otherwise would result in an absurd situation whereby
the confirming court previously applying the Special ADR Rules in its confirmation of the
arbitral award would later shift to the regular Rules of Procedure come execution.
Irrefragably, a court’s power to confirm a judgment award under the Special ADR Rules
should be deemed to include the power to order its execution for such is but a collateral
and subsidiary consequence that may be fairly and logically inferred from the statutory
grant to regional trial courts of the power to confirm domestic arbitral awards.

All the more is such interpretation warranted under the principle of ratio legis est
anima which provides that a statute must be read according to its spirit or intent, 76 for
what is within the spirit is within the statute although it is not within its letter, and that
which is within the letter but not within the spirit is not within the statute. 77 Accordingly,
since the Special ADR Rules are intended to achieve speedy and efficient resolution of
disputes and curb a litigious culture,78 every interpretation thereof should be made
consistent with these objectives.

Thus, with these principles in mind, the Court so concludes that the Special ADR Rules,
as far as practicable, should be made to apply not only to the proceedings on
confirmation but also to the confirmed award’s execution.

Further, let it be clarified that – contrary to petitioner’s stance – resort to the Rules of
Court even in a suppletory capacity is not allowed. Rule 22.1 of the Special ADR Rules
explicitly provides that “[t]he provisions of the Rules of Court that are applicable to the
proceedings enumerated in Rule 1.1 of these Special ADR Rules have either
been included and incorporated in these Special ADR Rules or specifically
referred to herein.”79 Besides, Rule 1.13 thereof provides that “[i]n situations where no
specific rule is provided under the Special ADR Rules, the court shall resolve such
matter summarily and be guided by the spirit and intent of the Special ADR Rules and
the ADR Laws.”

As above-mentioned, the petition for certiorari permitted under the Special ADR Rules
must be filed within a period of fifteen (15) days from notice of the judgment, order or
resolution sought to be annulled or set aside.80 Hence, since petitioner’s filing of
its certiorari petition in CA-G.R. SP No. 126458 was made nearly two months after its
receipt of the RTC’s Order dated July 9, 2012, or on September 10, 2012, 81 said petition
was clearly dismissible.82cralawred

III.

Discounting the above-discussed procedural considerations, the Court still finds that
the certiorari petition had no merit.

Indeed, petitioner cannot be said to have been denied due process as the records
undeniably show that it was accorded ample opportunity to ventilate its position. There
was clearly nothing out of line when the Arbitral Tribunal denied petitioner’s motions for
extension to file its submissions having failed to show a valid reason to justify the same
or in rendering the Arbitral Award sans petitioner’s draft decision which was filed only on
the day of the scheduled promulgation of final award on May 7, 2010. 83 The touchstone
of due process is basically the opportunity to be heard. Having been given such
opportunity, petitioner should only blame itself for its own procedural blunder.

On this score, the petition for certiorari in CA-G.R. SP No. 126458 was likewise properly
dismissed.chanroblesvirtuallawlibrary

IV.

Nevertheless, while the Court sanctions the dismissal by the CA of the petition
for certiorari due to procedural infirmities, there is a need to explicate the matter of
execution of the confirmed Arbitral Award against the petitioner, a government agency,
in the light of Presidential Decree No. (PD) 144584 otherwise known as the “Government
Auditing Code of the Philippines.”

Section 26 of PD 1445 expressly provides that execution of money judgment against

the Government or any of its subdivisions, agencies and instrumentalities is within the
primary jurisdiction of the COA, to wit:chanRoblesvirtualLawlibrary

SEC. 26. General jurisdiction. The authority and powers of the Commission shall
extend to and comprehend all matters relating to auditing procedures, systems and
controls, the keeping of the general accounts of the Government, the preservation of
vouchers pertaining thereto for a period of ten years, the examination and inspection
of the books, records, and papers relating to those accounts; and the audit and
settlement of the accounts of all persons respecting funds or property received
or held by them in an accountable capacity, as well as the examination, audit, and
settlement of all debts and claims of any sort due from or owing to the
Government or any of its subdivisions, agencies and instrumentalities. The said
jurisdiction extends to all government-owned or controlled corporations, including their
subsidiaries, and other self-governing boards, commissions, or agencies of the
Government, and as herein prescribed, including non-governmental entities subsidized
by the government, those funded by donation through the government, those required
to pay levies or government share, and those for which the government has put up a
counterpart fund or those partly funded by the government. (Emphases supplied)
cralawlawlibrary

From the foregoing, the settlement of respondent’s money claim is still subject to the
primary jurisdiction of the COA despite finality of the confirmed arbitral award by the
RTC pursuant to the Special ADR Rules.85 Hence, the respondent has to first seek the
approval of the COA of their monetary claim. This appears to have been complied with
by the latter when it filed a “Petition for Enforcement and Payment of Final and
Executory Arbitral Award”86 before the COA. Accordingly, it is now the COA which has
the authority to rule on this latter petition.

WHEREFORE, the petition is DENIED. The Decision dated March 26, 2014 of the Court
of Appeals in CA-G.R. SP No. 126458 which dismissed the petition for certiorari filed by
petitioner the Department of Environment and Natural Resources is hereby AFFIRMED.

SO ORDERED.cralawlawlibrary

Sereno, C.J., (Chairperson), Leonardo-De Castro, Bersamin, and Perez, JJ., concur.