1|ADR Assignment for March 17, 2020
G.R. No. 201715               December 11, 2013
REPUBLIC OF THE PHILIPPINES, Petitioner,
vs.
MANILA ELECTRIC COMPANY (MERALCO), and NATIONAL POWER CORPORATION
(NPC), Respondents.
D E C I S I O N
BERSAMIN, J.:
The intervening rendition by the trial court of a decision on the
merits of the case renders moot and academic the resolution of any
issue raised on certiorari against interlocutory orders setting
the pre-trial and declaring the petitioner to have waived its
right to present its evidence. The resolution of the issue, having
been pre-empted by the decision in the main action, ceased to have
any practical value.
The Case
Under appeal via petition for review on certiorari is the decision
promulgated on October 14, 2011 in C.A.-G.R. SP No. 116863
entitled Republic of the Philippines, represented by the Office
of the Solicitor General v. Hon. Franco T. Falcon, in his capacity
as the Presiding Judge of Branch 71, Regional Trial Court,
National Capital Region, Pasig City, Manila Electric Company and
National Power Corporation,1 whereby the Court of Appeals (CA)
dismissed the original and the supplemental petitions for
certiorari, prohibition and mandamus of herein petitioner Republic
of the Philippines,and in effect upheldthe assailed interlocutory
orders ofNovember 3, 20102 and November 4, 2010,3 and the pre-
trial order of November 24, 2010,4 all issued by the Regional
Trial Court (RTC), Branch 71, in Pasig Cityin Special Civil Action
No. 3392,an action for declaratory relief entitled Manila Electric
Company v. National Power Corporation, et al. The CA further
ordered the RTC, Branch 71, in Pasig City to proceedwith the trial
in Special Civil Action No. 3392, and to resolve the case with
dispatch.
Additionally, the petitioner prays that respondents Manila
Electric Company (MERALCO) and National Power Corporation
(NAPOCOR) be directed to resolve their dispute through
arbitrationpursuant to the arbitration clause of their contract
for the sale of electricity (CSE).5
Antecedents
Thedecision of the CA sums up thefollowing uncontested material
antecedents.
MERALCO and NAPOCOR had entered into the CSE on November 21, 1994.
The CSE would be effective for 10 years starting from January 1,
1995. Under the CSE, NAPOCOR was obliged to supply and MERALCO was
obliged to purchase a minimum volume of electric power and energy
from 1995 until 2004 at the rates approved by the Energy
Regulatory Board (ERB), now the Energy Regulatory Commission
(ERC). A provision of the CSE required MERALCO to pay minimum
monthly charges even if the actual volume of the power and energy
drawn from NAPOCOR fell below the stated minimum quantities.
In the years 2002, 2003 and 2004, due to circumstances beyond the
reasonable control of the parties, MERALCO drew from NAPOCOR
electric power and energy less than the minimum quantities
stipulated in the CSE for those years. MERALCO did not pay the
minimum monthly charges but only the charges for the electric
power and energy actually taken. Thus, NAPOCOR served on MERALCO a
claim for the contracted but undrawn electric power and energy
starting the billing month of January 2002.
MERALCO objected to the claimof NAPOCOR, and served its notice of
termination of the CSE. MERALCO submitted its own claim to NAPOCOR
for, among others: (a) losses suffered due to the delay in the
construction of NAPOCOR’s transmission lines, which prevented it
from fully dispatching the electricity contracted with independent
power producers (IPPs) at their respective minimum energy
quantities; and (b) unrealized revenues owing to NAPOCOR’s
continuing to supply electricity to directly-connected customers
2|ADR Assignment for March 17, 2020
within MERALCO’s franchise area in violation of the MERALCO
franchise and the CSE.
Recognizing that any delays in the resolution of their dispute was
inimical to public interest, MERALCO and NAPOCOR agreedto submit
their dispute to mediation.6 They appointed the late Ambassador
Sedfrey A.Ordoñez and Antonio V. del Rosario as their mediators,
and the mediation required about 20 meetings, during which NAPOCOR
and the Government were represented by high-level officials
(includingthen Energy Secretary Vincent S. Perez, Jr. and PSALM
President Edgardo M. del Fonso).The mediation resulted in the
execution on July 15, 2003 of a settlement (entitled An Agreement
Resolving The Issues In Mediation Between The National Power
Corporation And The Manila Electric Company In Regard To The 1994
Contract For The Sale Of Electricity),7 hereafter referred to as
Settlement Agreementfor brevity.
The Settlement Agreement coveredthe charges being imposed by
NAPOCOR and the National Transmission Corporation (TRANSCO) under
Section 2.1 (Contract Demand and Contract Energy of MERALCO) in
relation to Section 5.2 (Transmission Service) and Section 7
(Direct Connection within MERALCO’s franchise area), all of the
CSE. MERALCO therein agreed to pay to NAPOCOR
₱27,515,000,000.00(i.e., the equivalentof 18,222 gigawatt hours
valued at ₱1.51per kilowatt hour), which amount represented the
value of the difference between the aggregate contracted energy
for the years 2002, 2203 and 2004, on the one hand, and the total
amount of energy MERALCO actually purchasedfrom NAPOCOR from
January 2002 until April 30, 2003 and the amount of energy MERALCO
was scheduled to purchase thereafter and until December 31, 2004,
on the other. NAPOCOR reciprocated by agreeing to give credit to
MERALCO for the delayed completion of the transmission facilities
as well as for the energy corresponding to NAPOCOR’s sales to
directly-connected customers located within MERALCO’s franchise
area. The credit, valued at ₱7,465,000,000.00, reducedthe net
amount payable by MERALCO to NAPOCOR under the Settlement
Agreement to ₱20,050,000,000.00.
Mediators Amb.Ordoñez and del Rosario rendered their
jointattestationto the Settlement Agreement, as follows:
We, Ambassador Sedfrey A. Ordoñezand Antonio V. del Rosario, do
hereby attest andcertify that we have been duly appointed by the
Parties and acted as Mediators in the foregoing Settlement and
that the agreements contained therein are the results of the
painstaking efforts exerted by the Parties to resolve the issues
and differences between them through reasonable, fair and just
solution that places above all considerations the highest concern
for the welfare of the consumers. x xx8
It is noted that from the time the Settlement Agreement was
executed on June 15,2003 until December 31,2004, MERALCO took
further electricity from NAPOCOR, and made payments toward the
total Minimum chargeunder the CSE that exceeded the parties’
estimate. As a result, the net amount due to NAPOCORunder the
Settlement Agreement was further reduced to about
₱14,000,000,000.00.
The Settlement Agreement containeda pass-through provision
thatallowedMERALCO to pay NAPOCORthe net settlement amount from
collectionsrecovered from MERALCO’s consumersonce the ERC
approvedthe pass-through. The net amount due under the Settlement
Agreementwasto be paid by MERALCO to NAPOCOR over a period of five
to six years, starting on the first billing month immediately
following the ERC’s approval of the pass-through of that amount
to MERALCO’sconsumers, and ending 60months after the last billing
month. Spreading payment to NAPOCORover a moving five-to six-year
period was intended to minimize the impact of the adjustment on
the consumers, which was estimated to be about P0.12 per kilowatt
hour.
The Settlement Agreement was duly approved by the respective
Boards of MERALCO and NAPOCOR.
Considering that the Settlement Agreement stipulated in its
Section 3.1 that it would take effect "upon approval by the ERC of
the recovery of the settlement amounts in this Agreement from
3|ADR Assignment for March 17, 2020
consumers, for which the parties shall file a joint petition with
the [ERC],"NAPOCOR and MERALCO filed on April 15, 2004their joint
application in the ERC,9 seeking the approval of the pass-through
provision ofthe Settlement Agreement, and a provisional authority
to implement the pass-through provision subject to a final
decision after hearing on the merits.
The joint application was set for initial hearing, with notice to
the Office of the Solicitor General (OSG) with a request for the
OSG to send a representative to participate in the proceedings.
Hearings were conducted on the application from July 22, 2004
until October 7, 2005, at which NAPOCOR was represented by its
OSG-designated counsel.
On July 10, 2006, MERALCO submitted its memorandum, and the case
was deemed submitted for resolution.
However, on May 13, 2008,or almost two years after the case was
submitted for resolution, the OSG, representing herein petitioner,
filed in the ERC a motion for leave to intervene with motion to
admit its attached opposition.10Considering the opposition by the
OSG to the validity of the Settlement Agreement, the ERC suspended
the proceedings and deferred the approval of the joint
application. This prompted MERALCO to initiate on November 23,
2009 in the RTC in Pasig an action for declaratory relief (Special
Civil Action No. 3392).11
On August 20, 2010, the petitioner filed its comment on the
petitionfor declaratory relief,12 praying for the stay of the
proceedings and forNAPOCOR and MERALCO to be directed to resort to
arbitration.
On September 16, 2010, the representative from the OSG appeared in
the RTCand moved to suspend the proceedings, but the RTC denied
the motion. Subsequently, on September 30, 2010, the OSG filed a
motion to dismiss or to stay the proceedings, and to refer the
parties to arbitration.
On October 28, 2010,the OSG presentedan urgent supplemental motion
to cancel the November 4, 2010 hearing. However, on November 3,
2010, the RTC denied the motion to dismiss or to stay the
proceedings and to refer the parties to arbitrationthrough the
first assailed order,13 stating in its pertinent portions as
follows:
The motions filed by the OSG raise a common issue: whether or not
the parties, MERALCO and NPC, should be referred to arbitration?
After a judicious evaluation of the arguments by the parties, this
Court rules that MERALCO and NPC are not required to undergo
arbitration.
An examination of the Settlement Agreement, which is the subject
matter of this petition for declaratory relief shows that it does
not require the parties therein to resolve their dispute arising
from said agreement through arbitration.
The arbitration clause referred to by the OSG is found in the
Contract for the Sale of Electricity (CSE).1âwphi1 Said contract
is not the one beinglitigatedin thisproceedings. The instant
petition for declaratory relief does not concern the CSE. Besides,
there is no unsettled dispute between MERALCO and NPC arising from
the CSE that would require resort to arbitration.
Further, the parties to the Settlement Agreement have not
requested that any dispute between them should be resolved through
arbitration. The OSG, who is not a party to the Settlement
Agreement or to the CSE, has no standing to demand that MERALCO
and NPC should proceed to arbitration consistent with the Supreme
Court’s ruling in Ormoc Sugarcane Planter’s Association vs.
Court of Appeals, G.R. No. 156660, August 24, 2009, were (sic) it
ruled that-
By their own allegation, petitioners are associations duly
existing and organized under Philippine law, i.e. they have
juridical personalities separate and distinct from that of their
member Planters. It is likewise undisputed that the eighty (80)
4|ADR Assignment for March 17, 2020
milling contracts that were presented were signed only by the
member Planter concerned and one of the Centrals as parties. In
other words, none of the petitioners were parties or signatories
to the milling contracts. This circumstance is fatal to
petitioners’ cause since they anchor their right to demand
arbitration from the respondent sugar centrals upon the
arbitration clause found in the milling contracts. There is no
legal basis for petitioners’ purported right to demand
arbitration when they are not parties to the milling contracts,
especially when the language of the arbitration clause expressly
grants the right to demand arbitration only to the parties to the
contract.
As for OSG’s contention that the instant petition should be
dismissed because it would not terminate the controversy between
the parties due to the existing ERC Proceedings, this Court is
mindful of the fact that the ERC itself has ruled in its order of
September 14, 2009 that the issues raised by the OSG in the
earlier proceedings before it are outside its jurisdiction. This
means that these issues may be properly resolved by this Court and
is in fact duty-bound to consider and rule the issues presented
before it in this case.
This Court therefore holds that there is no impediment for it to
continue this proceedings and to determine the validity of the
Settlement Agreement.
WHEREFORE, the office (sic) Office of the Solicitor General’s
Motion to Dismiss or Stay the Proceedings and Refer the Parties to
Arbitration and the Motion for Reconsideration (of the Honorable
Court’s Order dated September 16, 2010) are DENIED.
SO ORDERED.14
On November 4, 2010, the pre-trialwas held, butthe Presiding Judge
of Branch 71 of the RTC ultimatelyresetit through the second
assailed orderdue to the non-appearance of the representative of
the OSG,15 viz:
When this case was called, Atty. Jonas Emmanuel S. Santos, for the
petitioner, Atty. Julieta S. Baccutan-Estamo, for defendant PNC,
appeared.
Over the vehement objection of Atty. Santos and Atty. Baccutan-
Estamo on the Urgent Supplemental Motion to Cancel November 4,
2010 Hearing filed by the Office of the Solicitor General,
considering that they were both ready, the pre-trial conference
set for today is cancelled and reset to November 24, 2010 at 8:30
A.M., which is an intransferrable date. The manifestation of Atty.
Baccutan-Estamo that if in the next hearing the respondent OSG
still fails to appear they be declared as in default, is noted.
SO ORDERED.
Upon learning that the next scheduled hearing would be on November
24, 2010, the OSG filed on November 22, 2010 a motion to cancel
that pre-trial, and a motion for the inhibition of the RTC Judge.
It set both motions for hearing on November 24, 2010.
Also on November 22, 2010, the petitioner broughtin the CA a
petition for certiorari, prohibition and mandamus (C.A.-G.R. SP
No. 116863), with an application for a temporary restraining order
(TRO) and writ of preliminary injunction (WPI), alleging that
respondent RTC Judge had committed grave abuse of discretion: (a)
in refusing to inhibit himself; (b) in refusing to order
respondentsMERALCO and NAPOCORto resolve their dispute by
arbitration; (c) in proceeding with the pre-trialof the case; and
(d) in declaring the petitioner in default and at the same time
deeming thepetitionerto have waived itsrightto participate and
present evidence.16
During the hearing ofNovember 24, 2010, the representativesof the
OSG (namely: State Solicitors Catalina A. Catral-Talatala and
Donalita R. Lazo) appearedin the RTCto argue for the cancellation
of the pre-trial of that date and to have the RTC Judgeby reason
of his perceived bias in favor of MERALCO. However,the RTCdenied
the motion to cancel the pre-trialand instead declared the
5|ADR Assignment for March 17, 2020
petitioner to have waived the right to participate in the pre-
trial and to present evidence.17
The CA granted the TRO on December 1, 2010,18 and the WPIon
February 3, 2011,19 enjoining the RTC Judge from conducting
further proceedings in Special Civil Action No. 3392 and from
issuing orders and performing other acts that would render the
case moot and academic effective during the pendency of C.A.-G.R.
SP No. 116863.
On October 14, 2011, the CA promulgated itsdecision under
review,20 disposing thuswise:
IN VIEW OF ALL THE FOREGOING, the instant Petition including its
Supplemental Petition are hereby DENIED. The Regional Trial Court,
Branch 71 of Pasig City is hereby ORDEREDto proceed to trial in
S.C.A. Case No. 3392, and to immediately resolve the same with
dispatch.
SO ORDERED.
The CA denied the petitioner’s motion for reconsideration through
its resolution promulgated on April 25, 2012.21
Hence, the petitioner has appealed.
Issues
The petitioner states as the ground for the allowance of its
petition for review on certiorari that:
THE COURT OF APPEALS COMMITTED AN ERROR IN IGNORING FUNDAMENTAL
ISSUES AT THE HEART OF THE CONTROVERSY BETWEEN PETITIONER AND
RESPONDENTS, AND THEREBY IMPROVIDENTLY ALLOWING THE TRIAL COURT TO
PROCEED WITH S.C.A. CASE NO. 3392.22
The petitioner submitsargumentsin support of the foregoing, to
wit:
I
THE DISPUTE BETWEEN MERALCO AND NPC SHOULD BE RESOLVED THROUGH
ARBITRATION INSTEAD OFMEDIATION IN ACCORDANCEWITH THEIR
ARBITRATIONAGREEMENT UNDER THE CSE.
II
RESPONDENT JUDGE HAS NOJURISDICTION OVER THESUBJECT MATTER RAISED
INS.C. A. CASE NO. 3392.
III
THE COURT OF APPEALS ERREDIN ALLOWING THE TRIAL COURT TO PROCEED
WITH THE PRE-TRIAL AND SUBSEQUENT TRIALIN S.C.A. CASE NO. 3392
INDISREGARD OF PETITIONER’S RIGHTS. IN PARTICULAR, THECOURT OF
APPEALS ERRED IN [i] FAILING TO ACKNOWLEDGE THECIRCUMSTANCES
OFPARTIALITY THAT WARRANTEDRESPONDENT JUDGE’SINHIBITION FROM THE
CASE; [ii] APPROVING THE TRIAL COURT’SPRECIPITATE ACTION
TOPROCEED WITH THE PRE-TRIALDESPITE INFORMATION THAT A PETITION
FOR CERTIORARI HAD BEEN FILED BY PETITIONER, AND THEREUPON
DECLARING THE PETITIONER TO HAVEWAIVED THE RIGHT TOPARTICIPATE
THEREIN AND TOPRESENT EVIDENCE.
IV
THE SETTLEMENT IS GROSSLYDISADVANTAGEOUS ANDPREJUDICIAL TO THE
GOVERNMENT.
V.
THE PASS-ON PROVISIONIMPOSED UNDER THESETTLEMENT IS CONTRARY TOL
AW, MORALS, PUBLICINTEREST, AND PUBLIC POLICY.
VI
THE SETTLEMENT AGREEMENTWAS ENTERED INTO WITHOUT THE PARTICIPATION
AND LEGAL GUIDANCE OF THE OFFICE OFTHE SOLICITOR GENERAL.23
6|ADR Assignment for March 17, 2020
Ruling
We deny the petition for review, and affirm the decision of the
CA.
I
RTC’s intervening rendition of the decisionon the merits has
rendered this appealmoot
In its assaileddecisionof October 14, 2011, the CAdirectedthe RTC
to proceed to the trial on the merits in Special Civil Action No.
3392, and to resolve the case with dispatch. It is worth
mentioning at this juncture, therefore, that, as the petitioner
indicated in its petition,24the RTCcomplied and ultimatelyrendered
its decision on the merits in Special Civil Action No. 3392 on May
29, 2012 granting MERALCO’s petition for declaratory relief and
declaring the Settlement Agreement between NAPOCOR and MERALCO as
valid and binding, save for the pass-through provision that was
reserved for the consideration and approval of the ERC. The
petitioner has probably appealed the decision by now, for its
petition for review expressly manifested theintention to appeal to
the CA.25
With the intervening rendition of the decision on the merits, the
challenge against the interlocutory orders of the RTC designed to
prevent the RTC from proceeding with the pre-trial and the trial
on the merits was rendered mootand academic. In other words, any
determination of the issue on the interlocutory orders was left
without any practical value.26 Acase that is moot and academic
because of supervening events ceases to present any justiciable
controversy. The courts of law will not determine moot and
academic questions, for they should not engage in academic
declarations and determine moot questions.27
II
CA correctly ruled thatRTC Judge
did not commit graveabuse of discretion
in issuing the assailed orders
Nonetheless, the Court considers it necessary to still deal with
the contentions of the petitioner in the interest of upholding the
observations of the CA on the propriety of the interlocutory
orders of the RTC.Doing so will be instructive for the Bench and
the practicing Bar who may find themselves in similar situations.
The petitioner assails the order of the RTC dated November 3, 2010
for denying its motion to dismiss or to stay proceedings and to
refer the parties to arbitration, and the pre-trial order dated
November 24, 2010 for declaring that the petitioner was being
deemed to have waived the right to participate in the pre-trial
and to present evidence in its behalf. Itargues that the CA
thereby erred, firstly, in ruling that the assailed orders of the
RTCwere not tainted with grave abuse of discretion, and, secondly,
in ordering the RTC to proceed to the trial of Special Civil
Action No. 3392, and to resolve the case with dispatch.
The Court cannot sustain the arguments of the petitioner.
The RTC’s proceedingwith the pre-trial set on November 24,
2010was entirely in accord withthe Rules of Court. While it is
true that the OSG had filed on November 22, 2010 the petition for
certiorari, prohibition and mandamus, theCA did not restrain the
RTC from thus proceeding. Absent any TRO or WPI stoppingthe RTC
from proceeding, the mere filing or pendency of the special civil
actions for certiorari, mandamusand prohibition did not interrupt
the due course of the proceedings inthe main case. This is quite
clear from therevised Section 7, Rule 65 of the Rules of
Court,28 which mandatedthat the petition shall not interrupt the
course of the principal case,viz:
Section7. Expediting proceedings; injunctive relief.–The court in
which the petition is filed may issue orders expediting the
proceedings, and it may also grant a temporary restraining order
or a writ of preliminary injunction for the preservation of the
rights of the parties pending such proceedings. The petition shall
not interrupt the course of the principal case, unless a temporary
restraining order or a writ of preliminary injunction has been
issued, enjoining the public respondent from further proceeding
with the case.
7|ADR Assignment for March 17, 2020
The public respondent shall proceed with the principal case within
ten (10) days from the filing of a petition for certiorariwith a
higher court or tribunal, absent a temporary restraining order or
a preliminary injunction, or upon its expiration. Failure of the
public respondent to proceed with the principal case may be a
ground for an administrative charge. (Emphasis supplied)
As the foregoing rule also indicates, for the RTC not to
proceedwith the pre-trial on its scheduled date of November 24,
2010despite the absence of any TRO or WPI enjoining it from doing
so could have subjected its Presiding Judge to an administrative
charge.
We further concur with the holding of theCA that the RTC did not
commit any grave abuse of discretion amounting to lack or excess
of jurisdictionin deeming the petitioner’s right to participate
in the pre-trial and its right to present evidence as waived
throughthe third assailed pre-trial order dated November 24, 2010.
The waiver appears to have been caused by the deliberate refusal
of the petitioner’s counsel to participate in the proceedings.
The pre-trial, initially set on September 16, 2010,29 wasreset by
the RTC on October 7, 2010 upon the motion of the OSG itself
notwithstanding that bothMERALCO and NAPOCOR hadalreadysubmitted
their pre-trial briefs and had manifested their readinessto
proceedto the pre-trial. Yet, on October 7, 2010, the
representative of the OSG again requested a resettingof the pre-
trial. MERALCO expressed its strong oppositionto the request, but
the RTC granted the request and moved the pre-trial to November 4,
2010.30
Prior to November 4, 2010, the OSGfiled an omnibus motion, again
requesting the RTC to cancel the pre-trial. Onthe scheduled pre-
trial of November 4, 2010,the representative of the OSG did not
appear forthe petitioner, subsequentlyadmitting that thenon-
appearance had beenintentional. Nonetheless, the RTCreset the pre-
trial on November 24, 2010over the "vehement objection" of
MERALCO’s counsel, but the RTC expresslyconditioned the new date
as"intransferable."31
On November 24, 2010,however, the representative of the OSG
appeared in court but only to movefor the cancellation ofthe
hearing. The recorded proceedings of that date were recounted in
the assailed decision of the CA, which also rendered its cogent
observations on the consequences of the actuations of the
representative of the OSG, as follows:
x x x While petitioner was initially present during the scheduled
pre-trial conference on 24 November 2011, State Solicitor Lazo
(one of petitioner’s counsels) asked to be excused from
participating thereat. Excerpts of the stenographic notes taken
during the hearing a quoon 24 November 2010 reveals:
"xxx
COURT:
Now, on the matter regarding the pre-trial conference which has
been set today, the Court believes that in the absence of a TRO,
we will proceed with the pre-trial conference as scheduled.
ATTY. LAZO:
Your Honor, may we ask for a written order resolving our motion to
cancel hearing today and our motion for inhibition.
COURT:
The court has already made oral order. In the meantime, you be
ready for the conduct of the pre-trial.
ATTY. LAZO:
Your Honor, may we be excused from participating with the pre-
trial.
COURT:
8|ADR Assignment for March 17, 2020
It was your first stand during the first day when the pre-trial
was set. In fact, one of the lawyers of OSG likewise stated that
he will not participate. In the interest of substantial justice
let us be more fair in the conduct of this proceedings, we (sic)
all officers of the court, we are guided by the rules, we have to
comply, we will proceed. The order will be made after the hearing,
unless that we will suspend the hearing now then the stenographer
will prepare the order so that you’ll have a copy, what do you
want, are we going to suspend the proceedings so that the written
order will be given to you. Is that what you want? We will
proceed.
This is one request which has never been done by the Court. An
oral order of the Court is only released after the hearing,
because it will be prepared by the stenographer. Are you agreeable
to that statement of the Court or you want to suspend all
proceedings of today so that you will be given a chance that your
request will be granted. Are you not changing your motion?
ATTY. LAZO:
Your Honor, I submit to the discretion of this Court.
COURT:
When you submit then you wait, we will proceed. Second call.
ATTY. LAZO:
Can we have a copy of the same by registered mail because we have
some urgent matters to attend to your Honor.
COURT:
Okay.
ATTY. LAZO:
May we be excused, your Honor.
COURT:
Okay.
What are we going to do?
ATTY. SANTOS:
Your Honor, we are ready to proceed with the pre-trial. We have
our Pre-Trial Brief filed and so with the NPC, your Honor.
COURT:
Now, in the conduct of the pre-trial, you have to reiterate what
you already mentioned in your Pre-Trial Briefs for purposes of
this Court to come out with the pre-trial order based on the
stipulations made by the parties.
xxx" (Emphasis supplied)
The above-quoted TSN belies petitioner’s claim that despite its
State Solicitor’s appearance and objection to the holding of the
said hearing of 24 November 2010, public respondent proceeded to
declare petitioner in default. A quo, public respondent did not
categorically declare petitioner in default, but instead, decreed
petitioner to have waived its right to participate in the pre-
trial and present evidence in its behalf which is in accordance
with Section 5, Rule 18 of the Rules of Court for the apparent
reason that State Solicitor Lazo himself asked to be excusedfrom
participating in the pre-trial conference. The case of Development
Bank of the Philippines vs. Court of Appeals, et al. is
enlightening on this point where the Supreme Court had the
occasion to state therein that:
"Consistently with the mandatory character of the pre-trial, the
Rules oblige not only the lawyers but the parties as well to
appear for this purpose before the Court, and when a party "fails
to appear at a pre-trial conference (be) may be non-suited or
considered as in default.The obligationin(sic) appear denotes not
9|ADR Assignment for March 17, 2020
simply the personal appearance, or the mere physical presentation
by a party of one’s self, but connotes as importantly,
preparedness to go into the different subject assigned by law to a
pre-trial. (Emphasis supplied)
Petitioner’s State Solicitors’ initial attendance during the
pre-trial conference could not be equated to the personal
appearance mandated by Section 4, Rule 18 of the Rules of Court.
The duty to appear during the pre-trial conference is not by mere
initial attendance, but taking an active role during the said
proceedings. Petitioner (as defendant a quo) has no valid reason
to complain for its predicament now as it chose to withhold its
participation during the pre-trial conference.32
From an objective view of the proceedings, the RTC’sdeeming of
the petitioner’s right to participate in the pre-trial and its
right to present evidence as waived was reasonable under the
circumstances. Thus, it did not act arbitrarily, whimsically, or
capriciously. The dismissal of the petition for certiorari,
prohibition and mandamuswas correctand justified, for grave abuse
of discretion on the part of the RTC was not persuasively
demonstratedby the petitioner. Grave abuse of discretionmeans
either that the judicial or quasi-judicial power wasexercised in
an arbitrary or despotic manner by reason of passion or personal
hostility, or that the respondent judge, tribunal or board evaded
a positive duty, or virtually refused to perform the duty enjoined
or to act in contemplation of law, such as when such judge,
tribunal or board exercising judicial or quasi-judicial powers
acted in a capricious or whimsical manner as to be equivalent to
lack of jurisdiction.33
III
Validity of the Settlement Agreement
is not an issue in this appeal
In hereby assailing the decision of the CA to uphold the
challenged orders of the RTC, the OSG raises various arguments
against the validity of the Settlement Agreement.
The Court believes and holds that it cannot address such arguments
simply because the issue in this appeal concerns only the
upholding by the CA of the propriety of the assailed interlocutory
orders of the RTC. The validity of the Settlement Agreement is not
an issue.
Moreover, the validity of the Settlement Agreement is properly
within the competence of the RTC, the proper court for that
purpose (except the matter of the pass-through provision, which
was within the jurisdiction of the ERC).
IV
Mediation v. Arbitration
The petitioner requests the Court's intervention to direct MERALCO
and NAPOCOR to resolve their dispute through arbitration pursuant
to the arbitration clause of the CSE.
The Court declines the request, considering that the primary
competence to determine the enforceability of the arbitration
clause of the CSE pertained to the RTC in Special Civil Action No.
3392. Yielding to the request would have the Court usurping the
jurisdiction of the RTC. Moreover, with the RTC having meanwhile
rendered its decision declaring the Settlement Agreement valid,
the recourse of the petitioner as to its request is probably an
appeal in due course.
WHEREFORE, we DENY the petition for review on certiorari, and
AFFIRM the decision promulgated by the Court of Appeals on October
14, 2011 in C.A.-G.R. SP No. 116863.
SO ORDERED.
10 | A D R A s s i g n m e n t f o r M a r c h 1 7 , 2 0 2 0
EN BANC
G.R. No. L-11884           October 27, 1958
STANLEY WINCH, Plaintiff-Appellant, vs. P. J. KIENER CO.
LTD., Defendant-Appellee.
Vicente J. Francisco and Jose R. Francisco for appellant.
Joaquin L. Misa for appellee.
BAUTISTA ANGELO, J.: chanrobles virtual law library
On November 4, 1955, plaintiff filed a verified complaint against
defendant with Regional Office No. 1 of the Department of Labor
claiming the total amount of P20,000.00 as overtime, vacation,
sick leave and separation pay. Defendant was notified by said
office to appear at the hearing of said claim on November 8, 1955.
On November 19, 1955, counsel for defendant filed a motion for a
bill of particulars. On December 2, 1955, the investigator
assigned to hear the claim required plaintiff to file the bill of
particulars within 10 days which plaintiff complied with but in
filing the new claim the amount demanded was increased to
P55,600.00. On December 5, 1955, both parties were notified to be
present at the hearing of the amended claim on December 12, 1955
but before said date arrived, defendant filed a motion to strike
out the amended claim, and without waiting for any action on its
motion, defendant filed its answer to the claim. Issues having
been joined, the evidence of both parties was received on several
days, namely, December 12, 1955, February 6, 1956, March 13, 1956,
March 26, 1956, April 10, 1956 and April 17, 1956, when the
reception of the evidence was apparently terminated. On May 31,
1956, plaintiff filed a written manifestation withdrawing his
claim on the ground that he has decided to file a complaint
directly in court. On June 21, 1956, counsel for defendant filed a
motion to have the case decided on the merits, objecting to the
withdrawal of the claim, and on July 3, 1956, the investigator
issued an order dismissing the case with
prejudice.chanroblesvirtualawlibrary chanrobles virtual law
library
True to his manifestation, plaintiff on July 7, 1956, began the
present action in the Court of First Instance of Manila against
defendant claiming overtime compensation, separation pay with
actual damages for unjustified dismissal, compensation for accrued
vacation leave, and attorney's fees as well as exemplary and
corrective damages. Defendant filed a motion to dismiss alleging
as main ground that the causes of action of plaintiff are barred
by a prior judgment referring to the order issued by the
investigator of Regional Office No. 1 of the Wage Administration
Service dismissing with prejudice  the claim filed by plaintiff
covering the same subject matter. This motion was upheld, the
court dismissing the complaint with costs; and having failed to
obtain the reconsideration of this order, plaintiff took the
present appeal.chanroblesvirtualawlibrary chanrobles virtual law
library
The order of the investigator of Regional Office No. 1 of the WAS
which served as basis of the order of dismissal issued by the
lower court reads:
This is a claim filed last November 4, 1955 by Stanley Winch
against P. J. Kiener Co., Ltd., for alleged overtime service and
for separation pay. The case was investigated wherein both parties
were represented by counsel, and on May 31, 1956, respondent
completed the presentation of its evidence and the case was
considered submitted for
decision.chanroblesvirtualawlibrary chanrobles virtual law
library
However, on June 6, 1956, before any decision could be rendered in
the above case, complainant Stanley Winch mailed a written
manifestation to this office withdrawing his
complaint.chanroblesvirtualawlibrary chanrobles virtual law
library
11 | A D R A s s i g n m e n t f o r M a r c h 1 7 , 2 0 2 0
In view of said manifestation, the above-entitled case is hereby
considered dismissed with prejudice.
And the court a quo  in arriving at its conclusion that the above
order of dismissal is a bar to the institution of the present
action, gave the following reasons:
In the light of the ruling just quoted, this court is of the
opinion, and so rules, that defendant's aforesaid contention is
well taken, namely, that the order of dismiss at dated July 3,
1956, issued by Regional Office No. 1 of the Department of Labor,
is a bar to the institution of the present action. This is so
because it is admitted on all sides that the parties in said Case
No. C-4413 are the very same parties in the case at bar, and that
the subject matter of the complaint in the former case is the very
same subject matter of the latter case. It is likewise undisputed
that the said Regional Office No. 1 of the Department of Labor
like the WAS, in the Brillantes vs. Castro case, supra, is a
quasi-judicial body and acted as such when it took cognizance of
Case No. C-4413, tried and received the evidence of the parties
therein, and thereafter issued the order complained of, hence its
actuations in the said case are quasi-judicial proceedings
conducted in accordance with law. It is finally a matter of law
that the said order of dismissal is an adjudication upon the
merits, pursuant to Section 3 of Rule 30 of the Rules of Court
reading: "SEC. 3. Failure to prosecute. - When plaintiff fails to
appear at the time of the trial, or to prosecute his action for an
unreasonable length of time, or to comply with these rules or any
order of the court, the action maybe dismissed upon motion of the
defendant or upon the court's own motion. This dismissal shall
have the effect of an adjudication upon the merits, unless
otherwise provided by court." No appeal having admittedly been
taken from the order of dismissal in question, it had long become
"final and conclusive and served as a bar to another action
between the same parties involving the same subject matter and
cause of action and the same issues", to borrow again from the
language of the Brillantes vs. Castro  case, supra.
Evidently, the court a quo  was persuaded to consider the order
of dismissal of the investigator of Regional Office No. 1 of the
WAS as a bar to the institution of the present action in view of
the ruling laid down by this Court in Brillantes vs. Castro, 99
Phil., 497; 56 Off. Gaz. (29) 4621, the pertinent portion of which
reads:
We fully agree with the trial court in its order dismissing the
complaint on the ground that the action is barred by prior
judgment." There is no question that the complaint filed by
plaintiff-appellant with the WAS may be regarded as a suit by one
party against another to enforce a right; that the WAS in
entertaining said suit, hearing the parties and deciding the case
acted as a quasi-judicial body and the proceedings before it were
quasi-judicial proceedings, and conducted in accordance with law
and so was the decision rendered. Not only this, but the parties
before the commencement of the proceedings signed an agreement
whereby they submitted their case to the WAS, binding themselves
by whatever decision the WAS may render on the same, and that they
recognized the decision to be final and conclusive. After signing
that agreement or pledge, plaintiff-appellant may not now be heard
to say that the decision rendered by the WAS has no legal effect
on him. Besides, even assuming that despite the agreement the
decision did not automatically become final, still plaintiff's
failure to appeal therefrom to the Supreme Court as provided by
the Minimum Wage Law (Rep. Act 602) rendered it final and
conclusive and served as a bar to another action between the same
parties involving the same subject matter and cause of action and
the same issues.
We believe however that the trial court erred in following as a
precedent our ruling in the Brillantes case for the reason that
the facts involved therein are different from those involved in
the case at bar. To begin with, it is important to determine the
extent of the function of the WAS in connection with the claims
which may be filed by an employee against an employer under the
Minimum Wage Law (Republic Act 602) for only in so doing can we
ascertain if its investigator has acted within his authority in
the present case.chanroblesvirtualawlibrary chanrobles virtual
law library
12 | A D R A s s i g n m e n t f o r M a r c h 1 7 , 2 0 2 0
The Minimum Wage Law does not specify in precise terms the duties
and functions of the Wage Administration Service for the same
merely provides that it shall discharge the same functions
formerly performed by the Wage Claim Division of the Bureau of
Labor [Section 12, (b)], shall exercise any or all powers that may
be delegated to it by the Secretary of Labor [Section 12, (e)],
and shall enforce the provisions of the Act and the orders and
regulations that may be issued thereunder [Section 12, (f)], but
because of the vagueness of the law in this regard, it deemed
proper to confer on said Secretary broad powers to make and issue
such rules and regulation as may be necessary to carry out the
provisions of the Act (Section 11). This was done when the
Secretary of approved a Code of Rules and Regulations wherein he
outlined the steps, procedure and manner in which the claim of an
employee against an employer may be filed and enforced. Thus, in
Chapter III, Article 7 of said Code we find provisions relative to
how a claim should be filed and the different methods an employee
may to enforce the same. They postulate that, once a claim is
filed, the same shall be assigned to an investigator whose
function shall be to mediate and endeavor to induce the parties to
settle the claim by amicable agreement. This function is called
mediation. If an agreement is arrived at then the same becomes
binding and must be complied
with.chanroblesvirtualawlibrary chanrobles virtual law library
Another method refers to arbitration. This is resorted to if no
amicable agreement is arrived at between the parties. The
investigator shall ask the parties whether they are willing to
submit the case to arbitration and if they do then they should
subscribe to an agreement in writing which shall be signed by them
before the investigator. If they do agree to arbitration as
stated, the decision of the arbitrator shall be binding, final and
conclusive between them. But the rule requires that the agreement
should be made in writing and signed by both parties before an
investigator could arbitrate, otherwise no arbitration can take
place.chanroblesvirtualawlibrary chanrobles virtual law library
Finally, the rule provides that in the event mediation fails and
the parties are not willing to arbitrate, then the claim shall be
assigned to a Claims Attorney who, if he finds the claim
meritorious and the employee is indigent, shall prepare the
corresponding complaint to be submitted to a competent court
within one week after receiving the
case.chanroblesvirtualawlibrary chanrobles virtual law library
There are therefore three steps that a claimant may pursue in the
enforcement of his claim: mediation, arbitration and court action.
As may be noted, the first step is purely administrative in
character, the second is a quasi-judicial function, while the
third is an auxiliary remedy extended to an employee who may not
be financially able to get legal assistance in
court.chanroblesvirtualawlibrary chanrobles virtual law library
In the present case, neither of the steps above outlined has been
pursued by plaintiff except probably the first when he filed his
claim with the WAS in an attempt to secure an amicable settlement
of his claim, but far from his expectation, he was met by a
vigorous opposition on the part of defendant. Apparently, the
efforts of the investigator to bring about a conciliation or
amicable settlement of plaintiff's claim proved futile for he had
to go through the cumbersome procedure of hearing the claim and
receiving the evidence of both parties. But before he could decide
the case, the claim was withdrawn, and instead of recommending
that the claim be assigned to a Claims Attorney for appropriate
court action, he dismissed the case with prejudice, a function
which he does not possess. He therefore acted without authority
and so his actuation has no legal
effect.chanroblesvirtualawlibrary chanrobles virtual law library
Obviously, the parties never agreed to submit their case to
arbitration within the meaning of the rule laid down by the
Secretary of Labor, for, in order that arbitration may take place,
it is necessary that the parties submit an agreement in writing to
be signed by them before the arbitrator wherein they should agree
to consider his decision as binding, final and conclusive between
them. No such step was taken by the parties. Indeed, in order that
there may be arbitration, the following procedure should be
complied with:
13 | A D R A s s i g n m e n t f o r M a r c h 1 7 , 2 0 2 0

SEC. 9. If no amicable agreement is arrived at between the parties

on the whole or any part of the claim, the investigator or claims
attorney shall immediately ask the parties whether they are
willing to submit the case for arbitration by the Service with him
or any other claims attorney or investigator acting as arbitrator,
whose decision shall be binding, final and conclusive between
them, the agreement to arbitrate shall be made in writing and
signed by the parties before the claims investigator or claims
attorney. In case of arbitration, the hearing on the claim shall
not exceed one week from the initiation thereof. (Section 9, Code
of Rules and Regulations to Implement the Minimum Wage Law).

The Brillantes case differs from the present in that there the
parties expressly submitted the case to the WAS for arbitration
strictly in accordance with the rule and so the actuation of the
investigator was there considered as one of a quasi-judicial
officer. And after the case was submitted and partially dismissed
for lack of merit, the order of the investigator was deemed final
and conclusive between the parties and considered as a bar to
another action between them involving the same subject matter and
issues. No such step was taken in the present case. Rather,
plaintiff withdrew his claim precisely because he desired to bring
the matter to a competent court. The Brillantes case cannot
therefore be invoked as a
precedent.chanroblesvirtualawlibrary chanrobles virtual law
library

Wherefore, the order appealed from is set aside and the case is
remanded to the lower court for further proceedings. No
costs.chanroblesvirtualawlibrary chanrobles virtual law library

Paras, C. J., Bengzon, Padilla, Montemayor, Labrador, Concepcion,

Reyes, J.B.L., and Endencia, JJ., concur.