In the En Banc decision of Maynilad Water Services, Inc. v. National Water and Resources Board, et. al dated 7 December 2021, the Supreme Court ruled that rule 11.2(A) of the Special Rules of Court on Alternative Dispute Resolution ("Special ADR Rules") ("Rule 11.2") has superseded section 23 of the Republic Act ("RA") No. 876 ("Domestic Arbitration Law") ("Section 23"). As such, the period for filing a Petition for Confirmation and Execution of Arbitral Award is no longer any time within one month after an award is made (as provided under section 23 of the Domestic Arbitration Law) but at any time after the lapse of 30 days from receipt of the arbitral award (as provided under rule 11.2 of the Special ADR Rules).
In this case, Maynilad Water Services, Inc. ("Maynilad"), secured a favorable arbitral award and then sought to enforce it. Maynilad thus filed a Petition for Confirmation of the Arbitral Award with the Regional Trial Court, albeit beyond the period for filing provided in Section 23, but within the period provided in Rule 11.2. The Supreme Court held that Maynilad's Petition was timely filed in accordance with Rule 11.2. The Supreme Court explained that Section 23 is deemed to have been superseded by rule 11.2(A) of the Special ADR Rules insofar as the reglementary period for filing a Petition for Confirmation of a Domestic Arbitral Award is concerned. While RA No. 9285 or the Alternative Dispute Resolution Act states that domestic arbitration shall continue to be governed by the Domestic Arbitration Law, it also provides that its provisions are without prejudice to the alternative dispute resolution system that the Supreme Court may adopt, which shall be governed by the rules that the Supreme Court may approve.
Nevertheless, the Supreme Court held that the arbitral award in favor of Maynilad could not be enforced as it would be contrary to public policy. Rule 19.10 of the Special ADR Rules provides that recognition and enforcement of an arbitral award may be refused on public policy grounds such as when the enforcement of the award would be contrary to the state’s fundamental tenets of justice and morality, or would blatantly be injurious to the public, or the interests of the society. The Supreme Court held that the award in favor of Maynilad, which allowed Maynilad to include its corporate income taxes in its water charges, would adversely affect and be unfair to Maynilad's customers vis-à-vis customers serviced by another water service provider (Manila Water) that was previously prohibited from incorporating its corporate income taxes in its water charges. According to the Supreme Court, the enforcement of Maynilad's arbitral award would result in an unequal protection of water consumers.
