G.R. No. 232801 – PHILIPPINE CHARITY SWEEPSTAKES OFFICE (PCSO), Petitioner, VS. DFNN, INC. (DFNNI), Respondent

G.R. No. 234193 – PHILIPPINE CHARITY SWEEPSTAKES OFFICE (PCSO), Petitioner, v. DFNN, INC. (DFNNI), Respondent

LAZARO-JAVIER, J.

Rule Synopsis

An essential requisite of consolidation is that the actions to be consolidated are pending before the court. A case that was already resolved may no longer be consolidated.

“Evident miscalculation of figures” under Section 25 (a), RA 876 means obvious mathematical errors relating to miscalculation that appear on the face of the award. It does not pertain to any allegation of fraud, corruption, or grave abuse. It is limited to clerical errors and honest mistakes and is, thus, correctible insofar as they do not affect the merits of the controversy.

Facts

In April 2003, PCSO and DFNNI entered into an Equipment Lease Agreement (ELA). Under the ELA, PCSO agreed to exclusively lease from DFNNI all hardware, software and technical skills to design and develop the application of Personal Communication Devices (PCD) for the acceptance and processing of bets from PCD users in the Philippines. The ELA had an arbitration clause requiring that any dispute be settled through arbitration.

In March 2005, PCSO unilaterally rescinded the ELA for DFNNI’s supposed failure to comply with its obligations and commitment, including the implementation of the project within six (6) months from the execution of the contract. Meanwhile, DFNNI claimed that PCSO had no legitimate ground to rescind the ELA and that the rescission was void.

The parties disagreed. Thus, in December 2007, DFNNI filed a request for arbitration. It sought the reinstatement of the ELA, plus temperate damages and attorney’s fees. Alternatively, it claimed PhP1.9 billion+ as liquidated damages based on the estimated revenue of the project, inclusive of damages and costs.

In sum, the parties asked the arbitration panel to: (a) rule on the validity of the rescission of the ELA; and (b) should the rescission be found invalid, determine the award of damages due DFNNI, if any.

By arbitration award dated May 2015, the rescission was declared improper, and DFNNI was entitled to liquidated damages of PhP27 million and the return of its equipment.

PCSO filed a petition for confirmation of the arbitral award before the RTC-Mandaluyong in June 2015 (Civil Case No. MC15-9557). A day after, DFNNI filed a petition for correction of the same award with RTC-Makati (Special Proceedings [SP] M-7844).

DFNNI then filed a motion for consolidation dated July 16, 2015, before the RTC-Mandaluyong to consolidate the two above cases. While said motion was pending, the RTC-Makati rendered its Decision dated February 17, 2016, granting DFNNI’s Petition for Correction in SP M-7844.

The RTC-Mandaluyong denied the DFNNI’s motion for consolidation and confirmed the arbitral award in an Order dated April 2016. The CA reversed, ordering RTC-Mandaluyong to consolidate Civil Case MC15-9557 and SP M-7844. The CA also denied PCSO’s motion for reconsideration.

In SP M-7844, the RTC-Makati granted DFNNI’s petition for correction, and increased the award of damages in the arbitral award. The CA affirmed. It also denied CA’s motion for reconsideration.

Hence, the present petitions where: (a) PCSO seeks to reverse and set aside the dispositions of the CA ordering the consolidation of subject cases [G.R. No. 232801]; and (b) PCSO seeks to reverse and set aside the dispositions of the CA increasing the amount of the Arbitral Award.

Issues

1. Did the CA err when it issued the order of consolidation?
2. Did the CA err when it affirmed the increase in the amount of the arbitral award?

Ruling and Discussion

1. Yes. The Court of Appeals erred in ordering the consolidation.
   
   An essential requisite of consolidation is that the actions to be consolidated are pending before the court.
   
   Here, when RTC-Mandaluyong resolved DFNNI’s motion for consolidation in Civil Case No. MC15-9557 in April 2016, RTC-Makati had already rendered its Decision dated February 17, 2016 in SP No. M-7844. Hence, there was no more pending case before the RTC-Makati which could be consolidated with Civil Case No. MC15-9557.
   
   Whether the RTC-Mandaluyong properly acquired jurisdiction over Civil Case No. MC15-9557 and whether the parties and issues involved before the RTC-Mandaluyong and RTC-Makati are similar, have become wholly irrelevant in the issue of consolidation since Special Proceedings No. M-7844 was no longer pending and, hence, could no longer be consolidated with another case.
2. Yes. The CA erred when it affirmed the increase of the arbitral award in favor of DFNNI.
   
   Under the Special ADR Rules, review by the Supreme Court of an appeal by certiorari is discretionary and may be permitted only under very limited and specific grounds. The error imputed to the CA must be grounded upon any grounds for review prescribed under Rule 19.36, or be closely analogous thereto.
   
   Here, G.R. No. 234193 originated from SP No. M-7844, which DFNNI filed under Section 25 (a), RA 876 alleging an “evident miscalculation of figures.” DFNNI seeks to “correct” the refusal of the arbitration panel to impose the 2% monthly interest under the ELA. It further seeks an award of temperate damages and attorney’s fees.
   
   The supposed refusal of the arbitration panel to impose the 2% penalty and DFNNI’s claim for the award of temperate damages and attorney’s fees is not the evident miscalculation of figures contemplated under Section 25 (a), RA 876.
   
   “Evident miscalculation of figures,” means obvious mathematical errors relating to miscalculation that appear on the face of the award. It does not pertain to any allegation of fraud, corruption, or grave abuse. It is limited to clerical errors and honest mistakes and is, thus, correctible insofar as they do not affect the merits of the controversy. Such is the restrained attitude that courts were intended to maintain concerning arbitral awards.
   
   The RTC-Makati passed off its decision as a mere correction of the arbitral award. But in truth, it reversed and set aside the findings of the Arbitration Panel with respect to the 2% penalty provided in the ELA, substituting its decision for that of the arbitration panel.
   
   A party may not invoke the grounds for correction of arbitral awards under Section 25 (a), RA 876, including the correction of “evident miscalculation of figures,” as a ruse to ask for a review of the substantive findings of an arbitral tribunal. The mere fact that a party disagrees with the arbitral tribunal’s factual findings and legal conclusions does not warrant the modification or correction of the arbitral award, much less a review thereof.

dispositive

Petition granted. Decision and Resolution of the CA reversed and set aside.