METRO ILOILO WATER DISTRICT, PETITIONER, VS. FLO WATER RESOURCES [ILOILO], INC., RESPONDENT.
FACTS
Petitioner Metro Iloilo Water District (MIWD), a government-owned and controlled corporation, engaged in a Bulk Water Supply Project. Following a public bidding under Republic Act No. 9184, a joint venture corporation, respondent Flo Water Resources (Iloilo), Inc. (Flo Water), was formed and subsequently executed a Bulk Water Supply Contract (BWSC) with MIWD on 24 August 2011. The contract required Flo Water to deliver 15,000 cubic meters per day to a designated injection point (IP 3). Flo Water commenced delivery but MIWD could only receive approximately 6,000 cubic meters per day due to the incapacity of its own 200 mm transmission pipeline at IP 3. Flo Water demanded payment for the full 15,000 cubic meters per day, characterizing the BWSC as a “take or pay” contract, while MIWD refused to pay for volumes not actually received. The Office of the Government Corporate Counsel initially opined the contract was not a “take or pay” agreement, but the Department of Justice later issued an opinion finding merit in Flo Water’s arguments. As MIWD continued to refuse payment, Flo Water initiated arbitration as provided in the BWSC. The ad hoc arbitral tribunal issued an award on 25 May 2017, ruling the BWSC was a “take or pay” contract based on the parties’ intention as evidenced by their contemporaneous and subsequent acts, and ordered MIWD to pay Flo Water ₱164,542,623.75 plus interest for the unpaid bulk water supply from 16 February 2013 to 20 April 2016. MIWD filed a petition for review with the Court of Appeals under Rule 43 of the Rules of Court. The CA dismissed the petition, holding that an arbitral award is not appealable via Rule 43 and that the proper remedy was to file a petition to vacate or modify the award with the Regional Trial Court under the Special Alternative Dispute Resolution Rules. MIWD filed the instant petition for review on certiorari without first filing a motion for reconsideration with the CA.
ISSUE
Whether the Court of Appeals erred in dismissing MIWD’s petition for review and affirming the arbitral award.
RULING
The Supreme Court denied the petition and affirmed the Court of Appeals Decision. The Court held that the CA correctly dismissed MIWD’s petition for review under Rule 43. Citing established jurisprudence, the Court ruled that an arbitral award is not appealable via a petition for review under Rule 43 because: (1) there is no statutory basis for an appeal from a final arbitral award; (2) arbitral tribunals are not quasi-judicial agencies; and (3) the Special ADR Rules specifically prohibit an appeal on the merits of an arbitral award. The proper remedy against an arbitral award is to file a petition to vacate (on grounds listed in Section 24 of Republic Act No. 9285) or to correct/modify (on grounds listed in Section 25 of R.A. No. 9285) the award with the appropriate Regional Trial Court within thirty (30) days from receipt of the award. By filing the wrong remedy, MIWD’s petition before the CA warranted dismissal. Furthermore, the Court found that MIWD’s failure to file a motion for reconsideration with the CA before elevating the case to the Supreme Court was a fatal procedural defect, as a motion for reconsideration is a condition precedent for filing a petition for review on certiorari under Rule 45, absent any recognized exception. The Court also noted that MIWD failed to sufficiently show that the arbitral award suffered from any of the grounds for vacating an award under the law.
