DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES

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

G.R. No. 212081, 23 February 2015, FIRST DIVISION, (Perlas-Bernabe, J.)

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.

The Department of Environment and Natural Resources (DENR), through

the Land Management Bureau (LMB), entered into an Agreement for Consultancy
Services with United Planners Consultants, Inc. (UPCI) in connection with an
LMB's project. Under the Consultancy Agreement, DENR committed to pay a total
contract price of P4,337,141.00. UPCI completed the work required, however,
DENR was able to pay only 47% of the total contract price. For failure to pay its
obligation under the Consultancy Agreement despite repeated demands, UPCI
instituted a complaint against DENR before the Regional Trial Court (RTC). Upon
motion of UPCI, the case was subsequently referred to arbitration pursuant to the
arbitration clause of the Consultancy Agreement. The parties agreed to adopt the
CIAC Revised Rules Governing Construction Arbitration (CIAC Rules) to govern
the arbitration proceedings. They further agreed to submit their respective draft
decisions in lieu of memoranda of arguments on or before April 21, 2010, among
others.

The Arbitral Award ruled in favor of UPCI. When DENR filed a Motion
for Reconsideration before the RTC, the Arbitral Award was confirmed by the
RTC. The RTC also denied DENR’s motion to quash the writ of execution of the
Arbitral Award. The Court of Appeals denied DENR’s petition for certiorari,
applying the Special Alternative Dispute Resolution (ADR) Rules.

ISSUE:

May the Special ADR Rules be applied even until the execution of the
Arbitral Award, even if the Special Rules are silent as to execution of a confirmed
arbitral award?

RULING:

Yes. 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.

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

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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, 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. Accordingly, since the Special ADR Rules are intended to achieve speedy
and efficient resolution of disputes and curb a litigious culture, every interpretation
thereof should be made consistent with these objectives.

UST Law Review, Vol. LIX, No. 1, May 2015

 DOÑA ADELA EXPORT INTERNATIONAL, INC. v. TRADE AND
INVESTMENT DEVELOPMENT CORPORATION (TIDCORP) &
BANK OF THE PHILIPPINE ISLANDS (BPI), G.R. No. 201931, 11
February 2015, THIRD DIVISION, (Villarama, Jr., J.)

A judgment based entirely on a compromise agreement is binding only on the parties to

the compromise the court approved, and not upon the parties who did not take part in the
compromise agreement and in the proceedings leading to its submission and approval by the court.

Doña Adela Export International, Inc., filed a Petition for Voluntary

Insolvency with the Regional Trial Court (RTC). The RTC, after finding the petition
sufficient in form and substance, declared Doña Adela as insolvent and stayed all
civil proceedings against Doña Adela. Atty. Arlene Gonzales was appointed as
receiver. After taking her oath, Atty. Gonzales proceeded to make the necessary
report, engaged appraisers and required the creditors to submit proof of their
respective claims. Doña Adela, through its President Epifanio C. Ramos, Jr., and
Technology Resource Center (TRC) entered into a Dacion En Pago by Compromise
Agreement wherein Doña Adela agreed to transfer a parcel of land with existing
improvements in favor of TRC in full payment of Doña Adela’s obligation bearing
the conformity of Atty. Gonzales as receiver. Creditors TIDCORP and BPI also
filed a Joint Motion to Approve Agreement, with a waiver of confidentiality
provision. Epifanio Ramos, Jr. filed a Manifestation and Motion to the Proposed
Compromise Agreement of TIDCORP and BPI wherein he stated that Doña Adela
has a personality separate and distinct from its stockholders and officers.

The RTC rendered the assailed Decision approving the Dacion En Pago by
Compromise Agreement and the Joint Motion to Approve Agreement. Doña Adela
filed a motion for partial reconsideration and claimed that TIDCORP and BPI’s
agreement imposes on it several obligations but it is not a party and signatory to the
said agreement.

ISSUE:

Is the waiver of confidentiality provision in the Agreement between

TIDCORP and BPI bind Doña Adela despite not being a party and signatory to the
same?

RULING:

No. In this case, the Joint Motion to Approve Agreement was executed by
BPI and TIDCORP only. There was no written consent given by Doña Adela or its
representative, Epifanio Ramos, Jr., that Doña Adela is waiving the confidentiality
of its bank deposits. The provision on the waiver of the confidentiality of Doña
Adela’s bank deposits was merely inserted in the agreement. It is clear therefore

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that Doña Adela is not bound by the said provision since it was without the express
consent of Doña Adela who was not a party and signatory to the said agreement.

In addition, considering that Doña Adela was already declared insolvent by

the RTC, all its property, assets and belongings were ordered delivered to the
appointed receiver or assignee. Thus, in the order of the RTC appointing Atty.
Gonzales as receiver, Doña Adela was directed to assign and convey to Atty.
Gonzales all its real and personal property, monies, estate and effects with all the
deeds, books and papers relating thereto, pursuant to Section 32 of the Insolvency
Law. Such assignment shall operate to vest in the assignee all of the estate of the
insolvent debtor not exempt by law from execution. Corollarily, the stipulation in
the Joint Motion to Approve Compromise Agreement that Doña Adela waives its
right to confidentiality of its bank deposits requires the approval and conformity of
Atty. Gonzales as receiver since all the property, money, estate and effects of Doña
Adela have been assigned and conveyed to her and she has the right to recover all
the estate, assets, debts and claims belonging to or due to the insolvent debtor.

While it was Atty. Gonzales who filed the Motion for Parties to Enter into
Compromise Agreement, she did not sign or approve the Joint Motion to Approve
Agreement submitted by TIDCORP and BPI. In her Manifestation and Comment
(on Dacion En Pago by Compromise Agreement with TRC and Joint Motion to
Approve Agreement of BPI and TIDCORP) there is no showing that Atty.
Gonzales signified her conformity to the waiver of confidentiality of Doña Adela’s
bank deposits.

UST Law Review, Vol. LIX, No. 1, May 2015