G.R. No. 230112 - Separate Opinion

G.R. No. 230112, May 11, 2021,
♦ Decision, Caguioa, [J]
♦ Separate Concurring & Opinion, Perlas-Bernabe, [J]
♦ Separate Opinion, Leonen, [J]
♦ Concurring and Dissenting Opinion, Lazaro-Javier, [J]

GLOBAL MEDICAL CENTER OF LAGUNA, INC., PETITIONER, VS. ROSS SYSTEMS INTERNATIONAL, INC., RESPONDENT.

Essentially, the Majority would like to give true force and effect to the legislature's express intent on how and under what grounds the review of domestic arbitral awards should be operationalized. The Majority pushes for Rule 45, instead of Rule 43, as the prescribed mode of review for construction arbitration cases. In so doing, the Ponencia rejects the following:

First, the present iteration of Rule 43 stating that a petition for review "shall apply to appeals from awards, judgments, final orders or resolutions of or authorized by any quasi-judicial agency in the exercise of its quasi-judicial functions. Among these agencies (is) the ... Construction Industry Arbitration Commission, and voluntary arbitrators authorized by law."1

Second, the consistent and long-standing recognition by the Construction Industry Arbitration Commission, the litigants, and even by this Court that it is the Court of Appeals, no other, which has appellate jurisdiction over CIAC's dispositions (through its panel of arbitrators) in construction arbitration cases ever since Republic Act No. (RA) 79022 took effect in 1995.3

Third, all our decisions4 under Rule 45 where we took cognizance of and resolved petitions emanating from the Rule 43 appellate dispositions of the Court of Appeals in CIAC cases brought before it. We ourselves have never before impugned such vesture of jurisdiction in the Court of Appeals. Far from it, we have, for the longest time, explicitly and consistently recognized this jurisdiction via our present iteration of Rule 43.

Fourth, the CIAC Revised Rules of Procedure Governing Construction Arbitration5 which took effect on December 15, 2005. Section 186 of the rules similarly echoes the vesture of appellate jurisdiction in the Court of Appeals over construction arbitration cases via Rule 43. CIAC is the agency tasked by law to implement the CIAC Law, hence, its interpretation of the law, as borne in the rules, deserves the Court's highest respect.

With due respect, however, the Majority appears to have conflated the vacatur and the modification or correction mechanisms in RA 8767 and RA 92858 and the Revised CIAC Rules with the appeal process also provided for and delineated in the same laws. If the Court should abide by legislative intent, there is nothing clearer and more explicit than the distinctions between the vacatur and the modification or correction mechanisms and the appeal process in the relevant statutes and implementing rules themselves.

The vacatur and correction mechanisms referred by the Majority, including the allegedly exclusive grounds to be invoked for the same, all refer to the proceedings at the Regional Trial Court and not the appeal/review proceedings at the Court of Appeals. It is therefore a leap in logic to restrict the appeal/review proceedings in the Court of Appeals solely to the grounds for vacating or correcting an arbitral award by a Regional Trial Court.

The "integrity-centered" grounds9 referred to by the Majority does not pertain to the appeal/review of the Court of Appeals but to the vacatur and modification proceedings before the Regional Trial Court. On one hand, RA 87610 allows the Court of Appeals to entertain questions of law in the appeal/review; on the other, RA 928511 is open-ended as regards the questions that may be raised in the appeal/review process.

To be sure, under both RA 876 and RA 9285, an appeal to the Court of Appeals is from an order or decision rendered by the Regional Trial Court in confirming, vacating, or correcting an arbitral award or otherwise. The appeal/review of the Court of Appeals is not from the arbitral award itself. This should thus explain Rule 19.712 of the Special ADR Rules that "[c]onsequently, a party to an arbitration is precluded from filing an appeal or a petition for certiorari questioning the merits of an arbitral award."

However, Section 40 of RA 928513 provides that "[a] CIAC arbitral award need not be confirmed by the Regional Trial Court to be executory as provided under E.O. No. 1008." Hence, there will be no order or decision from the Regional Trial Court that may be appealed to or reviewed by the Court of Appeals, unless one of the parties moved to vacate or correct a CIAC arbitral award before the Regional Trial Court.

Notably, a CIAC arbitral award itself is NOT immune from appeal/review by the Court of Appeals. A party to an arbitration DOES NOT also have to first seek to vacate or correct the arbitral award before it may be appealed to and reviewed by the Court of Appeals.

The Majority nonetheless posits that RA 9285 has re-enacted the appeal procedure under the original version of Section 19 of Executive Order No. (EO) 100814 so that the appeal is now back to this Court from the Court of Appeals on questions of law and the appeal procedure will already be under Rule 45, Rules of Court, by certiorari.15

Section 1916 of EO 1008 (circa 1985), however, cannot be deemed to have been reenacted into RA 9285 (circa 2004). Section 19 states that the arbitral award shall be final and inappealable except on questions of law which shall be brought to the Supreme Court.

While it is true that Section 34 of RA 9285 states that the arbitration of construction disputes shall be governed by EO 1008, this refers only to the arbitration proceedings proper before the CIAC, not thereafter. This is clear from the entirety of CHAPTER 6 entitled ARBITRATION OF CONSTRUCTION DISPUTES of RA 9285 which includes Sections 34 to 39, viz.:

SECTION 34. Arbitration of Construction Disputes: Governing Law. – The arbitration of construction disputes shall be governed by Executive Order No. 1008, otherwise known as the Construction Industry Arbitration Law.

SECTION 35. Coverage of the Law. – Construction disputes which fall within the original and exclusive jurisdiction of the Construction Industry Arbitration Commission (the "Commission") shall include those between or among parties to, or who are otherwise bound by, an arbitration agreement, directly or by reference whether such parties are project owner, contractor, subcontractor, fabricator, project manager, design professional, consultant, quantity surveyor, bondsman or issuer of an insurance policy in a construction project.

The Commission shall continue to exercise original and exclusive jurisdiction over construction disputes although the arbitration is "commercial" pursuant to Section 21 of this Act.

SECTION 36. Authority to Act as Mediator or Arbitrator. – By written agreement of the parties to a dispute, an arbitrator may act as mediator and a mediator may act as arbitrator. The parties may also agree in writing that, following a successful mediation, the mediator shall issue the settlement agreement in the form of an arbitral award.

SECTION 37. Appointment of Foreign Arbitrator. – The Construction Industry Arbitration Commission (CIAC) shall promulgate rules to allow for the appointment of a foreign arbitrator as co-arbitrator or chairman of a tribunal a person who has not been previously accredited by CIAC: Provided, That:

SECTION 38. Applicability to Construction Arbitration. – The provisions of Section 17(d) of Chapter 2, and Sections 28 and 29 of this Act shall apply to arbitration of construction disputes covered by this Chapter.

SECTION 39. Court to Dismiss Case Involving a Construction Dispute. – A Regional Trial Court before which a construction dispute is filed shall, upon becoming aware, not later than the pre-trial conference, that the parties had entered into an arbitration agreement, dismiss the case and refer the parties to arbitration to be conducted by the CIAC, unless both parties, assisted by their respective counsel, shall submit to the Regional Trial Court a written agreement exclusively for the Court, rather than the CIAC, to resolve the dispute.17

The fact that Section 34 is grouped together with the provisions governing the construction disputes within the jurisdiction of CIAC, the manner by which the parties may choose the arbitrator or mediator who will resolve their dispute, the requisites for appointment of foreign arbitrator, the adoption of certain provisions of RA 9285, specifically Section 17,18 Chapter 2 on the enforcement of mediated settlement agreement and Sections 2819 and 29,20 Chapter 3 on the grant of interim measure of protection pending arbitration before the CIAC, means that Section 3421 in fact refers only to the adoption of EO 1008 governing the arbitration proceedings before the CIAC and not thereafter when judicial remedies already come into play.

Indeed, after an award or judgment is rendered at the CIAC level, the arbitration process should be deemed to have ended too. Thus, when this award or judgment, etc. is challenged in court, the adversarial judicial process begins, not via Rule 45 as supposedly prescribed by Section 19 of EO 1008, but via Rule 43 and before the Court of Appeals as validly decreed under RA 7902 which is deemed to have long amended Section 19 of EO 1008.

Admittedly, we have the Special Rules of Court on Alternative Dispute Resolution, Rule 19.7 which read: "… a party to an arbitration is precluded from filing an appeal or a petition for certiorari questioning the merits of an arbitral tribunal." But these rules should not be construed to repeal a statute enacted by Congress, such as RA 7902, which the Court is conclusively presumed to have known of when it promulgated these Special Rules. Notably, even after the promulgation of the Special Rules in 2009, we did not amend Rule 43. In fact, even in 2019 when we revised our Rules on Civil Procedure, we did not amend Rule 43 insofar as CIAC cases are concerned. We simply continued to recognize the jurisdiction of the Court of Appeals over the dispositions of CIAC via Rule 43 pursuant to RA 7902. If at all, Rule 19.7 should be construed as applying only to the process of alternative dispute resolution before arbitration tribunals other than CIAC which is already specifically governed by Rule 43.

In any event, if the Majority is correct, that Rule 19.7 should be understood to be absolute and literal, then even the prescribed remedy by the Ponencia, a Rule 45 petition to this Court, would also have been prohibited.

More important, RA 9285 took effect in 2004, hence, it is governed by the 1987 Constitution. Section 30, Art. VI22 of the 1987 Constitution provides that "no law shall be passed increasing the appellate jurisdiction of the Supreme Court as provided in this Constitution without its advice and consent." On the basis of this provision, therefore, the alleged vesture under the so-called reenacted Section 19 of EO 1008 of "exclusive appellate jurisdiction in the Supreme Court" over CIAC awards, judgments, etc., without its advice and consent, is unconstitutional. This must be the reason why despite the effectivity of EO 1008 and its so-called reenactment into RA 9285, the iteration of Rule 43 since 1997 remains the same to this very date, that is, the jurisdiction of the Court of Appeals over CIAC awards, etc. remains vested in the Court of Appeals via a petition for review. Clearly, in promulgating Rule 43, the Supreme Court has applied RA 7902,23 and never Section 19 of EO 1008 whether in its original text or as purportedly reenacted.

Further, note the specific provisions in Chapter 7 of RA 9285 on judicial review. If the intention of Section 34 were to adopt in toto EO 1008 (specifically Section 19) and not only the provisions with respect to the voluntary dispute resolution of arbitration, RA 9285 would not have enacted Chapter 7 and would not have provided specific provisions on judicial review by the Regional Trial Court, viz.:

SECTION 40. Confirmation of Award. — The confirmation of a domestic arbitral award shall be governed by Section 23 of R.A. No. 876.

A domestic arbitral award when confirmed shall be enforced in the same manner as final and executory decisions of the Regional Trial Court.

The recognition and enforcement of an award in an international commercial arbitration shall be governed by Article 35 of the Model Law.

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. 1008.24

Too, if Section 34 of RA 9285 were all encompassing, there would have been no need for Congress to enact the last paragraph of Section 40 of RA 9285, viz.:

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. 1008.25

Further, note that Section 40 is actually a mere reiteration of Section 20 of EO 1008, viz.:

SECTION 20. Execution and Enforcement of Awards. — As soon as a decision, order or award has become final and executory, the Arbitral Tribunal or the single arbitrator with the occurrence of the CIAC shall motu proprio, or on motion of any interested party, issue a writ of execution requiring any sheriff or other proper officer to execute said decision, order or award.26

Yet, Congress still included this portion of Section 40 in RA 9285. This shows even more that the adoption of EO 1008 into RA 9285 applies only to the provisions pertaining to the arbitration proceeding proper before the CIAC and does not include the adoption of the provisions on judicial remedies.

If truly the intent of Section 34 were truly what the Majority asserts it to be, Section 40 would have been an unnecessary provision. But Congress could not have enacted a useless provision. The fact that the last paragraph of Section 40 was enacted only means that Section 34 is not all encompassing as the Ponencia says it is.

I cannot subscribe to the position of the Majority that since Section 19 of EO 1008 originally took effect in 1985 under the 1973 Constitution where advice and consent of the Supreme Court was not yet required,27 its reenactment into RA 9285, albeit the same took effect under the new Constitution, remains exempt from complying with the consent and advice requirement. Surely, every provision of law even that which has been simply reenacted, is, in the eyes of the Constitution, a new provision altogether. As such, it must comply with the requirements of the Constitution effective at the time it is passed and becomes effective. It is absurd to say that most of the provisions of RA 9285 are governed by the 1987 Constitution while one stand out provision remains governed by the 1973 Constitution.

At any rate, in promulgating every single provision in the Rules of Court, the Highest Court of the land is conclusively presumed to know all the relevant existing laws and it will never promulgate rules contrary thereto. To repeat, the claim that the appeal jurisdiction over CIAC arbitral awards has reverted back to the Supreme Court pursuant to Section 34 of RA 9285, specifically pertaining to Section 19 of EO 1008, has no legal basis, nay, unconstitutional. The appellate jurisdiction over CIAC arbitral awards is still with the Court of Appeals and the appellate procedure for this purpose is still under Rule 43 of the Rules of Court.

As for the grounds upon which the appeal to the Court of Appeals is made, the same cannot be restricted to the grounds impacting on the arbitral tribunal's integrity. RA 7902 provides questions of law as the ground for appeal. These are not limited to issues about the integrity of the arbitral tribunal. Questions of law include whether on the basis of the facts on record, the standard of proof has been satisfied. They assume the credibility and reliability of the factual findings of the arbitral tribunal but ask: Did the claimant prove its case according to the standard of proof demanded by the case?

Going now to Rule 65, the same is always available where there is grave abuse of discretion amounting to excess or lack of jurisdiction and there is no appeal or any plain, speedy, or adequate remedy available in the ordinary course of law. But even though appeal may be available, Rule 65 may still be resorted to if appeal is not a plain speedy or adequate remedy to the aggrieved party under the circumstances. There is no question that Rule 65 is the appropriate remedy where the CIAC acted with grave abuse of discretion, amounting to excess or lack of jurisdiction. I agree with Senior Associate Justice Estela Perlas-Bernabe that this ground cannot be altered or narrowed down by the Court into just:

The resort to Rule 65, instead of Rule 43, further finds support in the very nature of the factual circumstances which trigger said exceptional factual review—those that center not on the actual findings of fact but on the integrity of the tribunal that makes these findings, or their compliance with the Constitution or positive law, i.e., any of the following factual allegations: (1) the award was procured by corruption, fraud or other undue means; (2) there was evident partiality or corruption of the arbitrators or of any of them; (3) the arbitrators were guilty of misconduct in refusing to hear evidence pertinent and material to the controversy; (4) one or more of the arbitrators were disqualified to act as such under Section 9 of R.A. 876, and willfully refrained from disclosing such disqualifications or of any other misbehavior by which the rights of any party have been materially prejudiced; or (5) the arbitrators exceeded their powers, or so imperfectly executed them, that a mutual, final and definite award upon the subject matter submitted to them was not made.28

In any case, the Court cannot rule that Rule 65, and exclusively on such limited grounds, is the only remedy available at the Court of Appeals. To emphasize, this pronouncement is contrary to RA 7902 which defines the remedy as an appeal and the ground as questions of law. In the exercise of its rule making power, the Court had, over two (2) decades ago, identified the procedure of this appeal as falling under Rule 43. This determination by the t is of course correct. The remedy cannot be under Rule 65 because it is not an appeal procedure.

Finally, because the Majority pushes for the abandonment of our nearly 24-year-old Rule 43 and the countless cases we resolved upholding it, there is also the consequent abandonment of the present CIAC Rules, albeit CIAC is not before us and has not been heard. Most of all, the issue whether we should revise Rule 43 and, thus, prescribe a new mode of review is being motu proprio advocated, in violation of the Court's strict procedure in revising the provisions of the Rules of Court. Included in this procedure are the creation of a corresponding sub-committee to undertake the study of the proposed amendment and the invitation to the stakeholders to participate and be heard in the process, among others. The amendment of Rule 43, with all its serious repercussions, cannot be done hastily here and now, nay, sharply departing from our prescribed rules on amendments. More so because the appeal or review procedure we now seek to overhaul is not even the subject of the present cases before us now. Thus, the parties are absolutely unaware of this issue and consequently have not been heard thereon.

Lastly, I respectfully stress the Court's efforts to empower our lower courts, especially the third level appellate courts, by decentralizing the appeal/review process and entrusting them with greater than the usual adjudicative jurisdiction and responsibility for the decisions they make. This advocacy has also helped the Court to focus its attention to some extent only to cases of transcendental importance and impact. I respectfully submit that the Majority goes against this tide of adjudicative empowerment and proper case focus and management. Allowing the Court of Appeals to take cognizance of the appeal/review from a CIAC Decision under Rule 43 as there is no other procedure, is more in keeping with the time-honored rule that the transfer of appeals by the Court to subordinate appellate courts is purely a procedural and not a substantive power.29

When the Court resolves to transfer an appeal to a lower court, it only has in mind practicality and efficiency.ℒαwρhi৷ Procedural amendments are always aimed to upgrade the Court's efficiency by maxing up the Court of Appeals' capability before they finally reach the Court. It is actually a filtering mechanism adopted by the Court so that by the time a case reaches the Court, the relevant issues have already been laid straight and the Court can now be true to its mandate of resolving only issues of transcendental importance and impact. Again, this is to enable the Court to devote its precious time and effort to cases with more pressing issues.

Here, there are no strong and justifiable reasons to overhaul jurisprudence that upholds the jurisdiction of the Court of Appeals over appeals/review from CIAC arbitral awards and to reject Rule 43 of the Rules of Court as the governing procedure for this purpose. Maintaining the status quo would acknowledge not only the competence and expertise of arbitrators and the generally final nature of their orders and decisions but also the importance to us of ensuring ample protection for the rights of the parties.

On the merits, I humbly agree with the Majority that the Court of Appeals erred in awarding RSII the amount of Php1,088,214.83. The decision of the arbitrators denying RSII any claim under Progress Billing No. 15 is based on substantial evidence. Hence, the Court of Appeals erred in modifying the arbitrators' decision on this aspect. GMCLI should furnish RSII with the pertinent BIR Form 2307. This is pursuant to a straightforward application of Section 2.57.3 of Revenue Regulation No. 2-98. As applied here, this Revenue Regulation should have already called for GMCLI to remit the 2% CWT as soon as each Progress Billing was paid and to issue the corresponding BIR Form 2307 to RSII in order for the latter to have had a tax credit claim on the same.

ACCORDINGLY, I vote to PARTIALLY REVERSE the Decision dated October 28, 2016 of the Court of Appeals in CA-G.R. SP No. 145753 with respect to the entitlement of RSII to the amount of P1,088,214.83, and to REINSTATE with MODIFICATION, the Arbitrators' Decision dated May 10, 2016. GMCLI should be ORDERED to furnish RSII with BIR Form 2307.

However, I maintain my position that the appellate jurisdiction over CIAC arbitral awards is still with the Court of Appeals and the appellate procedure for this purpose is still under Rule 43 of the Rules of Court.