DENR v. United Planners Consultants Inc.

(UPCI), GR 212081, February 23, 2015

FACTS:
Non-payment of Consultancy Agreement price- DENR, thru Land Management Bureau (LMB),
entered into a Consultancy Agreement with respondent UPCI in connection with LMB’s Land
Resource Management Master Plan Project. DENR committed to pay a total contract price of
P4.337M. UPCI completed the work. But DENR was able to pay only 46% of the contract price or
only P2.038M. DENR failed to pay despite demands. Thus, UPCI filed a complaint against DENR
with RTC. Upon motion of UPCI, the case was referred to arbitration pursuant to the arbitration
clause of the Consultancy Agreement.

Arbitral Award for UPCI- During preliminary conference, the parties agreed to adopt the CIAC
Revised Rules Governing Construction Arbitration (CIAC Rules). UPCI timely filed its draft
decision, while DENR moved for extension of time, which was denied. DENR submitted its draft
decision only on the day of the final award’s promulgation. The tribunal ruled in favor of UPCI,
ordering DENR to pay P2.285M. DENR filed its motion for reconsideration (MR), which the
tribunal only noted, ruling that it had already lost jurisdiction over the case as it had submitted
to RTC its report with a copy of the Award.

RTC Confirmation- DENR filed a MR with RTC, claiming that it was denied opportunity to be
heard when the tribunal did not consider its draft decision and merely noted its MR. RTC
confirmed the award.

UPCI moved for issuance of a writ of execution. DENR did not comment or file opposition. RTC
granted execution. DENR moved to quash the writ of execution. On July 12, 2012, DENR
received RTC’s order denying the motion to quash. On September 10, 2012, DENR filed a
petition for certiorari (R65) with CA.

CA dismissed the petition for certiorari, ruling that 1) the petition assailed the merits of the
award, which is prohibited under R19.7 of Special ADR Rules, 2) the petition was filed out of
time, being filed beyond 15 days from notice of RTC’s order, violating Rule 19,28. Hence this
petition.

ISSUE:
4) Whether the petition for certiorari was proper under Special ADR Rules.
5) Whether the Rules of Court, particularly Rule 65 on the 60-day reglementary period therein,
may apply suppletorily to cases governed by the Special ADR Rules.
HELD:
1) Special ADR Rules apply- Rule 1.1 of the Special ADR Rules lists down the instances when it
applies: “(a) xxx; (b) Referral to Alternative Dispute Resolution ("ADR") ; (c) xxx.” By its referral
to arbitration, the case fell within the coverage of the Special ADR Rules.

CIAC rules also apply- A pivotal feature of arbitration 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.
Thus, Rule 2.3 of the Special ADR Rules provides that “parties are free to agree on the
procedure to be followed in the conduct of arbitral proceedings. xxx.” Here, with respect to the
arbitration proceedings itself, the parties had agreed to adopt the CIAC Rules in accordance
with Rule 2.3.

2) Award is final and executory- Under CIAC Rules, no MR may be sought, but the parties may
file a motion for correction of the final award which shall interrupt the period of appeal. The
parties may also appeal the final award to CA through Rule 43. Here, DENR did not avail of
these remedies and instead filed a MR, which is a prohibited pleading under CIAC Rules. Thus,
the arbitral award is final and executory.

3) The case was remanded to 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, Republic Act (RA) 9285 requiring judicial confirmation of a domestic
award to make the same enforceable.

4) NO. DENR had other remedies than certiorari- Rule 19.26 of Special ADR Rules states:
When 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."
Here, DENR did not oppose the RTC’s confirmation by filing a petition to vacate under Rule
11.2(D). Neither did it seek reconsideration under Rule 19.1(h). Thus, for failing to avail of
these remedies before resorting to certiorari, the dismissal of the petition for certiorari was
correct.

5) NO. Petitioner asserts that its petition is not covered by the Special ADR Rules (Rule 19.28,
15-day reglementary period) but by Rule 65 of Rules of Court (Sec. 4, 60-day reglementary
period) which DENR claims has suppletory application since Special ADR Rules do not provide
for a procedure on execution.

SC Ruled that: While Special ADR Rules is silent on the procedure for execution, its procedural
mechanisms covers not only confirmation but extend to the confirmed award’s execution,
applying the doctrine of necessary implication. Execution is but a necessary incident to the
confirmation. SC also applied ratio legis est anima.

As to the applicability of Rule 65: Rule 22.1 of Special ADR Rules provides:
"The 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."
Thus, resort to the Rules of Court even in a suppletory capacity is not allowed. Besides, Rule
1.13 provides: "In 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."
Thus, the petition for certiorari of DENR, being filed beyond the 15 day period under Special
ADR Rules, is dismissible.

Department of Foreign Affairs (DFA) v. Hon. Falcon, GR 176657, September 01, 2010
FACTS:
The president, as chairman of the Board of National Economic and Development Authority
(NEDA), approved DFA’s implementation of the Machine Readable Passport and Visa Project
(MRP/V Project) under the Build-Operate-Transfer (BOT) scheme provided under RA 6957 as
amended by RA 7718 (BOT Law). Thus, the Pre-qualification, Bids, and Awards Committee
(PBAC) published an invitation to bid and conducted public bidding for the project. BCA
International Corporation (BCA) won the bidding.

DFA and BCA entered into a BOT Agreement. But later, both DFA and BCA impute to each other
breach of the BOT Agreement. DFA sent a notice of termination to BCA due to failure to submit
proof of financial capability to complete the MRP/V Project. BCA requested for mutual
discussion pursuant to the BOT Agreement, which DFA ignored. BCA filed a request for
arbitration with the Philippine Dispute Resolution Center, Inc. (PDRCI) pursuant to Sec. 19.02 of
the BOT Agreement. PDRCI invited DFA to participate. DFA declined.

DFA sought the opinion of the DOJ on DFA’s notice of termination. DOJ recommended the
implementation of the project with a different contractor. Thereafter, DFA and Banko Sentral
ng Pilipinas (BSP) entered into a Memorandum of Agreement for BSP to provide electronic
passport booklets or e-passports. BSP solicited bids for supply of such e-passports.

BCA filed a petition for interim relief under Sec. 28 of the ADR Act of 2004 (RA 9285) with RTC,
claiming that unless DFA and BSP were restrained, they would undertake the project with a
third party to defeat BCA’s request for arbitration. RTC issued a TRO, restraining DFA and BSP
from awarding a new contract or implementing a new contract. RTC, after hearings, then
granted BCA’s application for preliminary injunction upon posting of P10M bond. Hence this
petition for certiorari under Rule 65 of DFA/BSP.

ISSUE:
Whether RA 8975 would have applied to an application for injunction or interim relief under
Sec. 28, RA 9285.
HELD: YES.
1) RTC had jurisdiction to issue preliminary injunction- Under RA 8975, no court, except the
Supreme Court, may enjoin a “national government project” unless the matter is one of
extreme urgency involving a constitutional issue such that unless the act complained of is
enjoined, grave injustice or irreparable injury would arise. “National government projects”
refers to “xxx all projects covered by RA 6975 as amended by RA 7718 (BOT Law) xxx.”
Here, the e-Passport Project was not proven to be a BOT project, but a procurement contract
under RA 9184. Thus, said project is not an infrastructure project that is protected from lower
court injunctions under RA 8975.

1.1) Under RA 9285, Section 28, ADR Act of 2004, the grant of an interim measure of protection
by the proper court before the constitution of an arbitral tribunal is allowed. RA 9285 is a
general law applicable to all matters and controversies to be resolved through alternative
dispute resolution methods. This law allows a RTC to grant interim or provisional relief,
including preliminary injunction, to parties in an arbitration case prior to the constitution of the
arbitral tribunal. This general statute, however, must give way to a special law governing
national government projects, Republic Act No. 8975 which prohibits courts, except the
Supreme Court, from issuing TROs and writs of preliminary injunction in cases involving national
government projects.

However, as discussed above, the prohibition in Republic Act No. 8975 is inoperative in this
case, since petitioners failed to prove that the e-Passport Project is national government
project as defined therein. Thus, the trial court had jurisdiction to issue a writ of preliminary
injunction against the e-Passport Project

1.2) Principal action dismissed, application for injunction denied- BCA’s petition for interim relief
before the trial court is essentially a petition for a provisional remedy (preliminary injunction)
ancillary to its request for arbitration. However, during pendency of this case, PDRCI dismissed
the request for arbitration for lack of jurisdiction due to the lack of agreement between the
parties to arbitrate before PDRCI. The dismissal of the principal action results in the denial of
the prayer for issuance of the writ of preliminary injunction since the writ is only an ancillary or
preventive remedy.

China National Machinery & Equipment Corp. (CNMEG) v. Hon. Santamaria, GR 185572,
February 07, 2012
FACTS:
CNMEG entered into a Memorandum of Understanding (MOU) with North Luzon Railways
Corporation (Northrail) for the conduct of a feasibility study on a possible railway line from
Manila to San Fernando, La Union (Northrail Project). Department of Finance of the Philippines
and Export Import Bank of China (EXIM Bank) entered into a MOU (Aug 30 MOU) wherein the
Chinese government agreed to extend preferential buyer’s credit to PH government to finance
the Northrail Project. China designated EXIM Bank as lender, while the PH government named
DOF as borrower. EXIM, under the Aug 30 MOU, agreed to extend up to US$400M to DOF
payable in 20 years at 3% per annum.

Later, Northrail and CNMEG executed a Contract Agreement for Phase 1 of the project. The PH
government and EXIM Bank entered into a Loan Agreement where EXIM Bank agreed to extend
preferential buyer’s credit of $US400M to the PH government to finance Phase 1 of the
Northrail Project.
Respondents filed a complaint for annulment of the Contract Agreement and Loan Agreement
for being contrary to the constitution, the Government Procurement Reform Act (RA 9184),
Government Auditing Code (PD 1445), and the Administrative Code. CNMEG moved to dismiss,
alleging lack of jurisdiction since it was immune from suit, being an agent of the Chinese
government. RTC denied the motion to dismiss. CA affirmed. Hence this petition.

ISSUE:
Whether CNMEG is immune from suit.
HELD: NO.
SC held that CNMEG is not immune from suit because it was engaged in a proprietary activity
based on the provisions of the Loan Agreement expressly stating that the project is a
“Commercial Activity” and being performed for “commercial purposes.” The Loan Agreement
also had a “Waiver of Immunity.” CNMEG also did not have any certification or endorsement
from the DFA that it was immune from suit.

Also, SC held that an agreement to submit any dispute to arbitration may be construed as an
implicit waiver of immunity from suit. In the United States, the Foreign Sovereign Immunities
Act of 1976 provides for a waiver by implication of state immunity. In the said law, the
agreement to submit disputes to arbitration in a foreign country is construed as an implicit
waiver of immunity from suit. Although there is no similar law in the Philippines, there is reason
to apply the legal reasoning behind the waiver in this case.

The Contract Agreement provides: “All disputes xxx arising from this Contract xxx shall be
submitted to arbitration in accordance with the UNCITRAL Arbitration Rules xxx. The appointing
authority/place of arbitration shall be Hong Kong International Arbitration Center (HKIAC).”

Thus, Northrail and CNMEG are bound to submit any dispute to HKIAC for arbitration. If HKIAC
makes an arbitral award for Northrail, its enforcement in the PH would be subject to the Special
Rules on Alternative Dispute Resolution. Rule 13 thereof provides for the Recognition and
Enforcement of a Foreign Arbitral Award. Under Rules 13.2 and 13.3 of the Special Rules, the
party to arbitration wishing to have an arbitral award recognized and enforced in the
Philippines must petition the proper regional trial court (a) where the assets to be attached or
levied upon is located; (b) where the acts to be enjoined are being performed; (c) in the
principal place of business in the Philippines of any of the parties; (d) if any of the parties is an
individual, where any of those individuals resides; or (e) in the National Capital Judicial Region.

From all the foregoing, it is clear that CNMEG has agreed that it will not be afforded immunity
from suit. Thus, the courts have the competence and jurisdiction to ascertain the validity of the
Contract Agreement.