DENR vs. UPCI
The Arbitral Tribunal rendered its award in favor of the
G.R No. 212081/February 23, 2015
FACTS:
On July 26, 1993, petitioner, through the Land Management Bureau (LMB), entered
into an Agreement for Consultancy Services (Consultancy Agreement) with
respondent United Planners Consultants, Inc. (respondent) in connection with the
LMB' s Land Resource Management Master Plan Project (LRMMP). Under the
Consultancy Agreement, petitioner committed to pay a total contract price of
₱4,337,141.00, based on a predetermined percentage corresponding to the
particular stage of work accomplished. Respondent completed the work required
which the petitioner formally accepted on December 27, 1994, however, petitioner
was only able to pay 47% (P2,038,456.30) of the contract price of the total amount
agreed.
Subsequently, the Commission on Audit released the Technical Services Office
Report (TSO) and found the contract price of the agreement to be 84.14% excessive.
Petitioner acknowledged its liability to respondent in the amount of ₱2,239,479.60
and assured payment at the soonest possible time.
Respondent instituted a complaint against petitioner before the RTC of Quezon City
for petitioner’s failure to pay the obligation despite repeated demands. Thereafter, the
case was subsequently referred to arbitration pursuant to the arbitration clause of the
Consultancy Agreement which the petitioner did not oppose. With that, 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 parties agreed to adopt the CIAC Revised
Rules Governing Construction Arbitration (CIAC Rules) to govern the arbitration
proceedings and further agreed to submit their respective draft decisions in lieu of
memoranda of arguments on or before April 21, 2010. However, only respondent
complied with the given deadline while petitioner moved for the deferment of the
deadline which it followed with another motion for extension of time and asked that it
be given until May 11, 2010 to submit its draft decision.
The Arbitral Tribunal denied petitioner’s motion and deemed its non-submission as a
waiver ut 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. Petitioner
complied on the same date.
respondent, directing the petitioner to pay the latter the amount of (a) ₱2,285,089.89
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) ₱2,033,034.59 as accrued interest thereon; (c) ₱500,000.00 as exemplary
damages; and (d) ₱150,000.00 as attorney’s fees. It also ordered petitioner to
reimburse respondent its proportionate share in the arbitration costs as agreed upon
in the amount of ₱182,119.44.
Petitioner filed a Motion for Reconsideration which the Arbitral Tribunal merely noted
without action claiming that it had lost jurisdiction over the case after it had submitted
to the RTC its report together with a copy of the Arbitral Award. Consequently,
petitioner filed before the RTC a Motion for Reconsideration and a 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. Respondent filed an Opposition and moved for the confirmation of
the of the arbitral award in accordance with the Special ADR Rules. RTC merely
noted petitioner’s motion and confirmed the arbitral award. Respondent moved
for the issuance of a writ of execution, petitioner did not file any comment despite
RTC’s directive. Petitioner moved to quash the writ of execution but was denied by
the RTC.
Petitioner filed a petition for certiorari before the CA. CA dismissed the certiorari
petition.
ISSUE:
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- No
HELD:
The Court ruled in the negative and cited RA 9285 (Alternative Dispute Resolution
Act of 2004) which institutionalized the use of an ADR system. 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. 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. Rule 1.1 of the Special ADR Rules lists down the instances when
the said rules apply. It should be noted that the Special ADR Rules do not
automatically govern the arbitration proceedings itself and 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 as laid down in Rule 2.3 of the Special ADR Rules proceedings.
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. The Court concluded 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.

In the case at bar, the Consultancy Agreement contained an arbitration clause. Petition is DENIED.
Hence, respondent, after it filed its complaint, moved for its referral to
arbitration which was not objected to by petitioner. 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. The
Arbitral Tribunal rendered the arbitral award in favor of the respondent and as
provided by the CIAC rules, no motion for reconsideration or new trial may be sought
but any of the parties may file a motion for correction of the final award based on
miscalculation of figures, a typographical or arithmetical error. Such motion shall be
acted upon by the Arbitral Tribunal or the surviving/remaining members. Moreover,
the parties may appeal the final award to the CA through a petition for review under
Rule 43 of the Rules of Court but petitioner did not avail of any mentioned remedies.
Instead it filed a Motion for Reconsideration of the arbitral award which was a
prohibited pleading according to the CIAC Rules.

A special civil action for certiorari may be filed to annul or set aside the orders of the
RTC as provided for in Rule 19.26. Petitioner, in this case, asserted 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 Court held that 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. 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