Bases Conversion vs. DMCI

9/10/2019 SUPREME COURT REPORTS ANNOTATED VOLUME 778
G.R. No. 173137. January 11, 2016.*

BASES CONVERSION DEVELOPMENT AUTHORITY,
petitioner, vs. DMCI PROJECT DEVELOPERS, INC.
respondent.
G.R. No. 173170. January 11, 2016.*

NORTH LUZON RAILWAYS CORPORATION, petitioner,
vs. DMCI PROJECT DEVELOPERS, INC. respondent.
Remedial Law; Civil Procedure; Appeals; Petition for Review

on Certiorari; Rule 45 is applicable when the issues raised before
the Supreme Court (SC) involved purely questions of law.—At the
outset, we must state that BCDA and Northrail invoked the
correct remedy. Rule 45 is applicable when the issues raised
before this court involved purely questions of law. In Villamor, Jr.
v. Umale, 736 SCRA 325 (2014): [t]here is a question of law “when
there is doubt or controversy as to what the law is on a certain
[set] of facts.” The test is “whether the appellate court can
determine the issue raised without reviewing or evaluating the
evidence.” Meanwhile, there is a question of fact when there is
“doubt . . . as to the truth or falsehood of
_______________
* SECOND DIVISION.

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Bases Conversion Development Authority vs. DMCI Project
Developers, Inc.
www.central.com.ph/sfsreader/session/0000016d1a01df0b4d1839b9003600fb002c009e/t/?o=False 1/36
facts.” The question must involve the examination of

probative value of the evidence presented.
Civil Law; Alternative Dispute Resolution; Arbitration; Like
many alternative dispute resolution processes, arbitration is a
product of the meeting of minds of parties submitting a predefined
set of disputes.—Arbitration is a mode of settling disputes
between parties. Like many alternative dispute resolution
processes, it is a product of the meeting of minds of parties
submitting a predefined set of disputes. They agree among
themselves to a process of dispute resolution that avoids extended
litigation. The state adopts a policy in favor of arbitration.
Republic Act No. 9285 expresses this policy: SEC. 2. Declaration
of Policy.—It is hereby declared the policy of the State to actively
promote party autonomy in the resolution of disputes or the
freedom of the parties to make their own arrangements to resolve
their disputes. Towards this end, the State shall encourage and
actively promote the use of Alternative Dispute Resolution (ADR)
as an important means to achieve speedy and impartial justice
and declog court dockets. As such, the State shall provide means
for the use of ADR as an efficient tool and an alternative
procedure for the resolution of appropriate cases. Likewise, the
State shall enlist active private sector participation in the
settlement of disputes through ADR. This Act shall be without
prejudice to the adoption by the Supreme Court of any ADR
system, such as mediation, conciliation, arbitration, or any
combination thereof as a means of achieving speedy and efficient
means of resolving cases pending before all courts in the
Philippines which shall be governed by such rules as the Supreme
Court may approve from time to time.
Same; Contracts; At any time during the lifetime of an
agreement, circumstances may arise that may cause the parties to
change or add to the terms they previously agreed upon. Thus,
amendments or supplements to the agreement may be executed by
contracting parties to address the circumstances or issues that
arise while a contract subsists.—There is no rule that a contract
should be contained in a single document. A whole contract may
be contained in several documents that are consistent with one
other. Moreover, at any time during the lifetime of an agreement,
circumstances may arise that may cause the parties to change or
add to the terms they previously agreed upon. Thus, amendments
or supplements to the

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Developers, Inc.
agreement may be executed by contracting parties to address

the circumstances or issues that arise while a contract subsists.
Same; Same; Amended Contracts; When an agreement is
amended, some provisions are changed. Certain parts or
provisions may be added, removed, or corrected. These changes
may cause effects that are inconsistent with the wordings of the
contract before the changes were applied.—When an agreement is
amended, some provisions are changed. Certain parts or
provisions may be added, removed, or corrected. These changes
may cause effects that are inconsistent with the wordings of the
contract before the changes were applied. In that case, the old
provisions shall be deemed to have lost their force and effect,
while the changes shall be deemed to have taken effect.
Provisions that are not affected by the changes usually remain
effective.
Same; Same; Supplemented Contracts; When a contract is
supplemented, new provisions that are not inconsistent with the
old provisions are added.—When a contract is supplemented, new
provisions that are not inconsistent with the old provisions are
added. The nature, scope, and terms and conditions are expanded.
In that case, the old and the new provisions form part of the
contract.
Same; Same; “Assignment” and “Nomination,” Distinguished.
—Assignment involves the transfer of rights after the perfection
of a contract. Nomination pertains to the act of naming the party
with whom it has a relationship of trust or agency. In Philippine
Coconut Producers Federation, Inc. (COCOFED) v. Republic, 663
SCRA 514 (2012), this court defined “nominee” as follows: In its
most common signification, the term “nominee’’ refers to one who
is designated to act for another usually in a limited way; a person
in whose name a stock or bond certificate is registered but who is
not the actual owner thereof is considered a nominee.” Corpus
Juris Secundum describes a nominee as one: “. . . designated to
act for another as his representative in a rather limited sense. It
has no connotation, however, other than that of acting for
another, in representation of another or as the grantee of another.
In its commonly accepted meaning the term connoted the
delegation of authority to the nominee in a representative or
nominal capacity only, and does not connote the transfer or
assignment to the nominee of any property in, or ownership of,
the rights of the person nominating him.” (Citations omitted)
Contrary

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to BCDA and Northrail’s position, therefore, the agreement’s

prohibition against transfers, conveyance, and assignment of
rights without the consent of the other party does not apply to
nomination.
Same; Same; A beneficiary who communicated his or her
acceptance to the terms of the agreement before its revocation may
be compelled to abide by the terms of an agreement, including the
arbitration clause.—There is, therefore, merit to DMCI-PDI’s
argument that if the Civil Code gives third party beneficiaries to a
contract the right to demand the contract’s fulfillment in its favor,
the reverse should also be true. A beneficiary who communicated
his or her acceptance to the terms of the agreement before its
revocation may be compelled to abide by the terms of an
agreement, including the arbitration clause. In this case,
Northrail is deemed to have communicated its acceptance of the
terms of the agreements when it accepted D.M. Consunji, Inc.’s
funds.
Multiplicity of Suits; Judicial efficiency and economy require
a policy to avoid multiplicity of suits.—Judicial efficiency and
economy require a policy to avoid multiplicity of suits. As we said
in Lanuza v. BF Corporation, 737 SCRA 275 (2014): Moreover, in
Heirs of Augusto Salas, Jr., this court affirmed its policy against
multiplicity of suits and unnecessary delay. This court said that
“to split the proceeding into arbitration for some parties and trial
for other parties would result in multiplicity of suits, duplicitous
procedure and unnecessary delay.” This court also intimated that
the interest of justice would be best observed if it adjudicated
rights in a single proceeding. While the facts of that case
prompted this court to direct the trial court to proceed to
determine the issues of that case, it did not prohibit courts from
allowing the case to proceed to arbitration, when circumstances
warrant.
PETITIONS for review on certiorari of the decision and

order of the Regional Trial Court of Makati City, Branch
150.
The facts are stated in the opinion of the Court.
Ongkiko, Manhit, Custodio & Acorda Law Office for
petitioner BCDA.

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Office of the Government Corporate Counsel for

petitioner Northrail.
Aguirre, Aportadera & Sandico Law Offices for
respondent in both cases.
LEONEN, J.:

An arbitration clause in a document of contract may
extend to subsequent documents of contract executed for
the same purpose. Nominees of a party to and beneficiaries
of a contract containing an arbitration clause may become
parties to a proceeding initiated based on that arbitration
clause.
On June 10, 1995, Bases Conversion Development
Authority (BCDA) entered into a Joint Venture Agreement1
with Philippine National Railways (PNR) and other foreign
corporations.2
Under the Joint Venture Agreement, the parties
agreed to construct a railroad system from Manila to Clark
with possible extensions to Subic Bay and La Union and
later, possibly to Ilocos Norte and Nueva Ecija.3 BCDA
shall establish North Luzon Railways Corporation
(Northrail) for purposes of constructing, operating, and
managing the railroad system.4 The Joint Venture
Agreement contained the following provision:
ARTICLE XVI
ARBITRATION

16. If any dispute arise hereunder which cannot be
settled by mutual accord between the parties to such
dispute, then that dispute shall be referred to arbi-
_______________
1 Rollo (G.R. No. 173137), pp. 104-120.

2 Id., at p. 46.
3 Id., at p. 106.
4 Id., at p. 108.

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tration. The arbitration shall be held in whichever

place the parties to the dispute decide and failing
mutual agreement as to a location within twenty-one
(21) days after the occurrence of the dispute, shall be
held in Metro Manila and shall be conducted in
accordance with the Philippine Arbitration Law
(Republic Act No. 876) supplemented by the Rules of
Conciliation and Arbitration of the International
Chamber of Commerce. All award of such arbitration
shall be final and binding upon the parties to the
dispute.5

BCDA organized and incorporated Northrail.6 Northrail
was registered with the Securities and Exchange
Commission on August 22, 1995.7
BCDA invited investors to participate in the railroad
project’s financing and implementation. Among those
invited were D.M. Consunji, Inc. and Metro Pacific
Corporation.8
On February 8, 1996, the Joint Venture Agreement
was amended to include D.M. Consunji, Inc. and/or
its nominee as party.9 Under the amended Joint Venture
Agreement, D.M. Consunji, Inc. shall be an additional
investor of Northrail.10 It shall subscribe to 20% of the
increase in Northrail’s authorized capital stock.11
On February 8, 1996, BCDA and the other parties to the
Joint Venture Agreement, including D.M. Consunji, Inc.
and/or its nominee, entered into a Memorandum of
Agreement.12 Under this agreement, the parties agreed
that the
_______________
5 Id., at pp. 116-117.

6 Id., at p. 62.
7 Rollo (G.R. No. 173170), p. 74.
8 Rollo (G.R. No. 173137), p. 47.
9 Id., at pp. 122-123.
10 Id., at pp. 47 and 123.
11 Id.
12 Id., at pp. 48 and 126-132.

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initial seed capital of P600 million shall be infused to

Northrail.13 Of that amount, P200 million shall be D.M.
Consunji, Inc.’s share, which shall be converted to equity
upon Northrail’s privatization.14 Later, D.M. Consunji,
Inc.’s share was increased to P300 million.15
Upon BCDA and Northrail’s request,16 DMCI Project
Developers, Inc. (DMCI-PDI) deposited P300 million into
Northrail’s account with Land Bank of the
Philippines.17 The deposit was made on August 7,
199618 for its “future subscription of the Northrail shares of
stocks.”19 In Northrail’s 1998 financial statements
submitted to the Securities and Exchange Commission, this
amount was reflected as “Deposits For Future
Subscription.”20 At that time, Northrail’s application to
increase its authorized capital stock was still pending with
the Securities and Exchange Commission.21
In letters22 dated April 4, 1997, D.M. Consunji, Inc.
informed PNR and the other parties that DMCI-PDI
shall be its designated nominee for all the
agreements it entered and would enter with them in
connection with the railroad project. Pertinent
portions of the letters provide:
[I]n order to formalize the inclusion of [DMCI

Project Developers, Inc.] as a party to the JVA and
MOA, DMCI would like to notify all the parties that it
is designating PDI as its nominee in both agreements
and such other

_______________
13 Id., at p. 48.
14 Id., at pp. 48 and 129.
15 Id., at p. 48.
16 Id., at p. 134.
17 Id., at pp. 48 and 135.

18 Id., at pp. 48, 64, and 135-136.
19 Id., at pp. 48, 65, and 136.
20 Rollo (G.R. No. 173170), p. 37.
21 Rollo (G.R. No. 173137), p. 48.
22 Id., at pp. 137-140.

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agreements that may be signed by the parties in

furtherance of or in connection with the PROJECT. By
this nomination, all the rights, obligations,
warranties and commitments of DMCI under the JVA
and MOA shall henceforth be assumed performed and
delivered by PDI.23 (Emphasis supplied)

Later, Northrail withdrew from the Securities and
Exchange Commission its application for increased
authorized capital stock.24 Moreover, according to DMCI-
PDI, BCDA applied for Official Development Assistance
from Obuchi Fund of Japan.25 This required Northrail to be
a 100% government-owned and -controlled corporation.26
On September 27, 2000, DMCI-PDI started demanding
from BCDA and Northrail the return of its P300 million
deposit.27 DMCI-PDI cited Northrail’s failure to increase its
authorized capital stock as reason for the demand.28 BCDA
and Northrail refused to return the deposit29 for the
following reasons:
a) At the outset, DMCI-PDI/FBDC’s participation

in Northrail was as a joint venture partner and co-
investor in the Manila Clark Rapid Railway Project,
and as such, was granted corresponding
representation in the Northrail Board.
b) DMCI-PDI/FBDC was privy to all the
deliberations of the Northrail Board and participated
in the decisions made and policies adopted to pursue
the project.
_______________
23 Id., at pp. 137 and 139.

24 Id., at pp. 48 and 65.
25 Id., at p. 66.
26 Id.
27 Id., at pp. 48 and 146-147.
28 Id., at pp. 146-147.
29 Id., at p. 48.

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c) DMCI-PDI/FBDC had full access to the financial
statements of Northrail and was regularly informed of
the corporation’s financial condition.30

Upon BCDA’s request, the Office of the Government
Corporate Counsel (OGCC) issued Opinion No. 116, Series
of 200131
on June 27, 2001. The OGCC stated that “since no increase
in capital stock was implemented, it is but proper to return
the investments of both FBDC and DMCI[.]”32
In a January 19, 2005 letter,33 DMCI-PDI reiterated the
request for the refund of its P300 million deposit for future
Northrail subscription. On March 18, 2005, BCDA denied34
DMCI-PDI’s request:

We regret to say that we are of the position that
the P300 [million] contribution should not be returned
to DMCI for the following reasons:
a. the P300 million was in the nature of a
contribution, not deposits for future
subscription; and
b. DMCI, as a joint venture partner, must
share in profits and losses.35

On August 17, 2005,36 DMCI-PDI served a demand for
arbitration to BCDA and Northrail, citing the arbitration
clause in the June 10, 1995 Joint Venture
Agreement.37 BCDA and Northrail failed to respond.38
_______________
30 Id., at pp. 151-152 and 467.

31 Id., at pp. 150-154.
32 Id., at p. 153.
33 Id., at pp. 175-176.
34 Id., at pp. 177-180.
35 Id., at p. 177.
36 Id., at p. 49.
37 Id., at pp. 49, 59, and 76.
38 Id., at pp. 49 and 70.

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DMCI-PDI filed before the Regional Trial Court of

Makati39 a Petition to Compel Arbitration40 against BCDA
and Northrail, pursuant to the alleged arbitration clause in
the Joint Venture Agreement.41 DMCI-PDI prayed for “an
order directing the parties to proceed to arbitration in
accordance with the terms and conditions of the
agreement.”42
BCDA filed a Motion to Dismiss43 on the ground that
there was no arbitration clause that DMCI-PDI could
enforce since DMCI-PDI was not a party to the Joint
Venture Agreement containing the arbitration
clause. Northrail filed a separate Motion to Dismiss45 on
44
the ground that the court did not have jurisdiction over it
and that DMCI-PDI had no cause for arbitration against
it.46
In the Decision47 dated February 9, 2006, the trial court
denied BCDA’s and Northrail’s Motions to Dismiss and
granted DMCI-PDI’s Petition to Compel Arbitration. The
dispositive portion of the decision reads:

WHEREFORE, the petition is granted. The parties
are ordered to present their dispute to arbitration in
accordance with Article XVI of the Joint Agreement.
SO ORDERED.48
The trial court ruled that the arbitration clause in the

Joint Venture Agreement should cover all subsequent docu-
_______________
39 Id., at p. 46. The petition was raffled to Branch 150, Judge Elmo M.
Alameda.
40 Id., at pp. 58-74.
41 Id., at p. 15.
42 Id., at p. 49.
43 Id., at pp. 218-223.
44 Id., at p. 221.
45 Rollo (G.R. No. 173170), pp. 66-73.
46 Id., at pp. 17 and 67-68.
47 Rollo (G.R. No. 173137), pp. 46-54.
48 Id., at p. 54.

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ments including the amended Joint Venture Agreement

and the Memorandum of Agreement. The three (3)
documents constituted one contract for the formation and
funding of Northrail.49
The trial court also ruled that even though DMCI-PDI
was not a signatory to the Joint Venture Agreement and
the Memorandum of Agreement, it was an assignee of D.M.
Consunji, Inc.’s rights. Therefore, it could invoke the
arbitration clause in the Joint Venture Agreement.50
In an Order51 dated June 9, 2006, the trial court denied
BCDA and Northrail’s Motion for Reconsideration of the
February 9, 2006 trial court Decision.
BCDA filed a Rule 45 Petition before this court,
assailing the February 9, 2006 trial court Order granting
DMCI-PDI’s Petition to Compel Arbitration and the June 9,
2006 Order denying BCDA and Northrail’s Motion for
Reconsideration.52
The issue in this case is whether DMCI-PDI may compel
BCDA and Northrail to submit to arbitration.
BCDA argued that only the parties to an arbitration
agreement can be bound by that agreement.53 The
arbitration clause that DMCI-PDI sought to enforce was in
the Joint Venture Agreement, to which DMCI-PDI was not
a party.54 There was also no evidence that the right to
compel arbitration under the Joint Venture Agreement was
assigned to DMCI-PDI.55 Assuming that there was such an

assignment, BCDA did not consent to or recognize
it.56 Therefore, the trial court’s conclusion that DMCI-PDI
was D.M. Consunji, Inc.’s
_______________
49 Id., at p. 52.
50 Id.
51 Id., at pp. 55-56.
52 Id., at pp. 12-13.
53 Id., at p. 24.
54 Id., at p. 25.
55 Id., at pp. 25-26.
56 Id., at p. 31.

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assignee had no basis.57 In BCDA’s view, DMCI-PDI had

no right to compel BCDA to submit to arbitration.58
BCDA also argued that the trial court decided the
Motion to Dismiss in violation of the parties’ right to due
process. The trial court should have conducted a hearing so
that the parties could have presented their respective
positions on the issue of assignment. The trial court merely
accepted DMCI-PDI’s allegations, without basis.59
In a separate Petition for Review,60 Northrail argued
that it cannot be compelled to submit itself to arbitration
because it was not a party to the arbitration agreement.61
Northrail also argued that DMCI-PDI cannot initiate an
action to compel BCDA and Northrail to arbitration
because DMCI-PDI itself was not a party to the arbitration
agreement. DMCI-PDI was not D.M. Consunji, Inc.’s
assignee because BCDA did not consent to that
assignment.62
In its Comment63 on BCDA’s Petition, DMCI-PDI
argued that Rule 45 was a wrong mode of appeal.64 The
issues raised by BCDA did not involve questions of law.65
DMCI-PDI pointed out that BCDA breached their
agreement when it failed to apply the P300 million deposit
to Northrail subscriptions. It turned out that such
application was rendered impossible by the alleged loan

requirement that Northrail be wholly owned by the
government and by Northrail’s withdrawal from the
Securities and Exchange Commis-
_______________
57 Id., at p. 27.
58 Id., at p. 25.
59 Id., at pp. 34-35.
60 Rollo (G.R. No. 173170), pp. 13-30.
61 Id., at p. 24.
62 Id., at pp. 25-26.
63 Rollo (G.R. No. 173137), pp. 291-375.
64 Id., at pp. 293-294.
65 Id.

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sion of its application for an increase in authorized

capital stock.66
DMCI-PDI also argued that it is an assignee and
nominee of D.M. Consunji, Inc., which is a party to the
contracts. Therefore, it is also a party to the arbitration
clause.67
DMCI-PDI contended that the arbitration agreement
extended to all documents relating to the project.68 Even
though the agreement was expressed only in the Joint
Venture Agreement, its effect extends to the amendment to
the Joint Venture Agreement and Memorandum of
Agreement.69
DMCI-PDI emphasized that BCDA had always
recognized it as D.M. Consunji’s assignee in its
correspondences with the OGCC and with the President of
DMCI, Mr. Isidro Consunji.70 In those letters, BCDA
described DMCI-PDI’s participation as being the “joint
venture partner . . . and co-investor in the Manila Clark
Rapid Railway Project[.]”71 Hence, it is now estopped from
denying its personality in this case.72
We rule for DMCI-PDI.

I
The state has a policy in favor of arbitration

At the outset, we must state that BCDA and Northrail
invoked the correct remedy. Rule 45 is applicable when the
issues raised before this court involved purely questions of
law. In Villamor, Jr. v. Umale:73
_______________
66 Id., at pp. 317-318.

67 Id., at pp. 336-337.
68 Id., at p. 339.
69 Id., at pp. 339 and 364-365.
70 Id., at p. 345.
71 Id., at p. 346.
72 Id., at p. 349.
73 G.R. No. 172843, September 24, 2014, 736 SCRA 325 [Per J.
Leonen, Second Division].

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[t]here is a question of law “when there is doubt or

controversy as to what the law is on a certain [set] of
facts.” The test is “whether the appellate court can
determine the issue raised without reviewing or
evaluating the evidence.” Meanwhile, there is a
question of fact when there is “doubt . . . as to the
truth or falsehood of facts.” The question must involve
the examination of probative value of the evidence
presented.74

BCDA and Northrail primarily ask us to construe the
arbitration clause in the Joint Venture Agreement. They
assert that the clause does not bind DMCI-PDI and
Northrail. This issue is a question of law. It does not
require us to examine the probative value of the evidence
presented. The prayer is essentially for this court to
determine the scope of an arbitration clause.
Arbitration is a mode of settling disputes between
parties.75 Like many alternative dispute resolution
processes, it is a product of the meeting of minds of parties

submitting a predefined set of disputes. They agree among
themselves to a process of dispute resolution that avoids
extended litigation.
The state adopts a policy in favor of arbitration.
Republic Act No. 928576 expresses this policy:
SEC. 2. Declaration of Policy.—It is hereby

declared the policy of the State to actively promote
party autonomy in the resolution of disputes or the
freedom of the parties to make their own
arrangements to resolve
_______________
74 Id., at p. 339, citing Central Bank of the Philippines v. Castro, 514

Phil. 425, 434; 478 SCRA 235, 243-244 (2005) [Per J. Puno, Second
Division].
75 Lanuza, Jr. v. BF Corporation, G.R. No. 174938, October 1, 2014,
737 SCRA 275, 293 [Per J. Leonen, Second Division].
76 An Act to Institutionalize the Use of an Alternative Dispute
Resolution System in the Philippines and to Establish the Office for
Alternative Dispute Resolution, and for Other Purposes (2004).

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their disputes. Towards this end, the State shall

encourage and actively promote the use of Alternative
Dispute Resolution (ADR) as an important means to
achieve speedy and impartial justice and declog court
dockets. As such, the State shall provide means for
the use of ADR as an efficient tool and an alternative
procedure for the resolution of appropriate cases.
Likewise, the State shall enlist active private sector
participation in the settlement of disputes through
ADR. This Act shall be without prejudice to the
adoption by the Supreme Court of any ADR system,
such as mediation, conciliation, arbitration, or any
combination thereof as a means of achieving speedy
and efficient means of resolving cases pending before
all courts in the Philippines which shall be governed
by such rules as the Supreme Court may approve

from time to time. (Emphasis supplied)

Our policy in favor of party autonomy in resolving
disputes has been reflected in our laws as early as 1949
when our Civil Code was approved.77 Republic Act No.
87678 later explicitly recognized the validity and
enforceability of parties’ decision to submit disputes and
related issues to arbitration.79
Arbitration agreements are liberally construed in favor
of proceeding to arbitration.80 We adopt the interpretation
that would render effective an arbitration clause if the
terms of the agreement allow for such interpretation.81 In
LM Power Engi-
_______________
77 Civil Code, Arts. 2028-2046.

78 An Act to Authorize the Making of Arbitration and Submission
Agreements, to Provide for the Appointment of Arbitrators and the
Procedure for Arbitration in Civil Controversies, and for Other Purposes
(1953).
79 Supra note 75 at p. 292.
80 Id., at p. 293. See also LM Power Engineering Corporation v.
Capitol Industrial Construction Groups, Inc., 447 Phil. 705, 714; 399
SCRA 562, 569-570 (2003) [Per J. Panganiban, Third Division].
81 Id., at p. 295. See also LM Power Engineering Corporation v.
Capitol Industrial Construction Groups, Inc., id., at p. 714; pp. 560-570.

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neering Corporation v. Capitol Industrial Construction

Groups, Inc.,82 this court said:

Consistent with the above mentioned policy of
encouraging alternative dispute resolution methods,
courts should liberally construe arbitration clauses.
Provided such clause is susceptible of an
interpretation that covers the asserted dispute, an
order to arbitrate should be granted. Any doubt
should be resolved in favor of arbitration.83
This manner of interpreting arbitration clauses is made

explicit in Section 25 of Republic Act No. 9285:

SEC. 25. Interpretation of the Act.—In
interpreting the Act, the court shall have due regard
to the policy of the law in favor of arbitration. Where
action is commenced by or against multiple parties,
one or more of whom are parties to an arbitration
agreement, the court shall refer to arbitration those
parties who are bound by the arbitration agreement
although the civil action may continue as to those who
are not bound by such arbitration agreement.

Hence, we resolve the issue of whether DMCI-PDI may
compel BCDA and Northrail to submit to arbitration
proceedings in light of the policy in favor of arbitration.
BCDA and Northrail assail DMCI-PDI’s right to compel
them to submit to arbitration based on the assumption that
DMCI-PDI was not a party to the agreement containing the
arbitration clause.
Three documents — (a) Joint Venture Agreement, (b)
amended Joint Venture Agreement, and (c) Memorandum
of Agreement — represent the agreement between BCDA,
Northrail, and D.M. Consunji, Inc. Among the three docu-
_______________
82 Id.
83 Id., at p. 714; pp. 569-570.

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Developers, Inc.
ments, only the Joint Venture Agreement contains the

arbitration clause. DMCI-PDI was allegedly not a party to
the Joint Venture Agreement.
To determine the coverage of the arbitration clause, the
relation among the three documents and DMCI-PDI’s
involvement in the execution of these documents must first
be understood.
The Joint Venture Agreement was executed by BCDA,

PNR, and some foreign corporations.84 The purpose of the
Joint Venture Agreement was for the construction of a
railroad system from Manila to Clark with a possible
extension to Subic Bay and later to San Fernando, La
Union, Laoag, Ilocos Norte, and San Jose, Nueva Ejica.85
Under the Joint Venture Agreement, BCDA agreed to
incorporate Northrail, which shall have an authorized
capital stock of P5.5 billion.86 The parties agreed that
BCDA/PNR shall have a 30% equity with
87
Northrail. Other Filipino partners shall have a total of
50% equity, while foreign partners shall have at most 20%
equity.88 Pertinent provisions of the Joint Venture
Agreement are as follows:

JOINT VENTURE AGREEMENT
KNOW ALL MEN BY THESE PRESENTS:
This Joint Venture Agreement (JVA) made and

executed at Makati, Metro Manila, this __ day of June
1995 by and between:
_______________
84 Rollo (G.R. No. 173137), p. 105. The foreign corporations are

Construcciones Y Auxiliar De Ferrocarriles, S.A., Entrecanales Y Tavora,
S.A., Cubiertas Y Mzov, S.A., and Cobra Instalaciones Y Servicios, S.A.
85 Id., at p. 106.
86 Id., at p. 108.
87 Id., at p. 110.
88 Id.

233
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Developers, Inc.
The BASES CONVERSION DEVELOPMENT

AUTHORITY . . . hereinafter referred to
as BASECON;
The PHILIPPINE NATIONAL RAILWAYS . . .;
The following corporations collectively referred to
as the Foreign Group:
a) CONSTRUCCIONES Y AUXILIAR DE

FERROCARRILES, S.A. . . . ;
b) ENTRECANALES Y TAVORA, S.A. . . .;
c) CUBIERTAS MZOV, S.A. . . .;
d) COBRA, S.A. . . .; and
e) Others who may later participate in the
JVA.

-and-
EUROMA DEVELOPMENT CORPORATION . .
.
WITNESSETH:
....
WHEREAS, a project identified pursuant to the
aforesaid policy is the establishment of a Premier
International Airport Complex located at the former
Clark Air Base as expressed in Executive Order 174,
S. 1994 in order to accommodate the expected heavy
flow of passenger and cargo traffic to and from the
Philippines, to start the development of the Northern
Luzon Grid and to accelerate the development of
Central Luzon and finally to decongest Metro Manila
of its vehicular traffic;
....
WHEREAS, in order to implement and provide
such a mass transit and access system, the parties
hereto agreed to construct a double-trac[k] railway
system from Manila to Clark with a possible
extension to Subic Bay and later to San Fernando, La
Union, as the second phase, and finally to Laoag,
Ilocos Norte and to San Jose, Nueva Ecija, as the
third phase of the project, hereinafter referred to as
the PROJECT;
....

234

Developers, Inc.
ARTICLE I
DEFINITION OF TERMS
....
1.5 “PROJECT” means the construction,
operation and management of a double-track railway
system from Manila to Clark with an extension to

Subic Bay, and a possible extension to San Fernando,
La Union, as the second phase, and finally to Laoag,
Ilocos Norte and to San Jose, Nueva Ecija, as the
third phase of the PROJECT.
1.6 “North Luzon Railways Corporation
(NORTHRAIL)[”] means the joint venture
corporation to be established in accordance with
Article II hereof.

....

ARTICLE II
THE NORTH LUZON RAILROAD
CORPORATION

2.1 BASECON shall establish and incorporate in
accordance with the laws of the Republic of the
Philippines a corporation to be known as NORTH
LUZON RAILWAYS CORPORATION
(NORTHRAIL) with an initial capitalization of one
hundred million pesos (P100,000,000.00).
2.2 NORTHRAIL shall eventually have an
authorized capital stock of FIVE BILLION FIVE
HUNDRED MILLION PESOS (P5.5 Billion) divided
into 55,000,000 shares with par value of P100 per
share.

....

235
VOL. 778, JANUARY 11, 2016 235

Developers, Inc.
ARTICLE III
PURPOSE OF NORTHRAIL
A. PRIMARY PURPOSE

3.1 To construct, operate and manage a railroad
system to serve Northern and Central Luzon; and to
develop, construct, manage, own, lease, sublease and
operate establishments and facilities of all kinds
related to the railroad system;

....

ARTICLE IV
PARTICIPATION/TRANSFER/ENCUMBRANCE
OF SHARES

4.1 NORTHRAIL shall increase its authorized
capital stock upon the subscription thereon by the
parties to this JVA in accordance with the following
equity proportion/participation:
Foreign Group up to 20%
Euroma/Filipino partners 50%
BASECON/PNR 30%
....
4.4 The shares owned by Filipino stockholders
including BASECON, PNR, EUROMA Development
Corporation and hereinafter to be owned by Filipino
corporations shall not be less than sixty percent (60%)
at any given time.

....

ARTICLE XVI
ARBITRATION

16 If any dispute arise hereunder which cannot be
settled by mutual accord between the par-

236

Developers, Inc.
ties to such dispute, then that dispute shall be

referred to arbitration. The arbitration shall be held
in whichever place the parties to the dispute decide
and failing mutual agreement as to a location within
twenty-one (21) days after the occurrence of the
dispute, shall be held in Metro Manila and shall be
conducted in accordance with the Philippine
Arbitration Law (Republic Act No. 876) as
supplemented by the Rules of Conciliation and
Arbitration of the International Chamber of
Commerce. All award of such arbitration shall be
final and binding upon the parties to the dispute.

ARTICLE XVII
ASSIGNMENT

17.1 No party to this Agreement may assign,
transfer or convey this Agreement, create or incur any
encumbrance of its rights or any part of its rights and
obligations hereunder or any shares of stocks of
NORTHRAIL to any person, firm or corporation
without the prior written consent of the other parties
or except as provided in the Articles of Incorporation
and By-Laws of NORTHRAIL and this Agreement.
17.2 This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their
respective successors and permitted assignees and
designees or nominees whenever possible.89

The Joint Venture Agreement was amended on
February 8, 199690 to include D.M. Consunji, Inc. and/or its
nominee as
_______________
89 Id., at pp. 105-117.

90 Id., at p. 122.

237
VOL. 778, JANUARY 11, 2016 237

Developers, Inc.
party.91 The participations of the parties in Northrail

were also modified.92 Pertinent provisions of the amended
Joint Venture Agreement are reproduced as follows:

This Amendment to the Joint Venture Agreement
dated 10th of June 1995 (the Agreement) made and
executed at _____________, Metro Manila, on this 8th
day of February 1996 by and among:

BASES CONVERSION DEVELOPMENT
AUTHORITY
. . . hereinafter referred to as BASECON;
with
PHILIPPINE NATIONAL RAILWAYS . . .

and
The following corporations collectively referred to
as the FOREIGN GROUP:

CONSTRUCCIONES Y AUXILIAR DE
FERROCARRILES, S.A. . . .;
ENTRECANALES Y TAVORA, S.A. . . .;
CUBIERTAS Y MZOV, S.A. . . .;
COBRA INSTALACIONES Y SERVICIOS,
S.A. . . .; and
Other investors who may later participate in the
Joint Venture;
and
Other local investors to be represented
by EUROMA DEVELOPMENT CORPORATION .
..
and
D.M. CONSUNJI, INC. and/or its nominee . . .
_______________
91 Id., at pp. 122-125.

92 Id., at pp. 122-123.

238

Developers, Inc.
WITNESSETH THAT
WHEREAS, a Joint Venture Agreement (JVA) was

executed on the 10th of June 1995 between
BASECON, PNR, FOREIGN GROUP, and EUROMA;
....
NOW, THEREFORE, for and in consideration of the

foregoing premises and of the mutual covenant
contained therein, THE PARTIES HEREBY
AGREE that the JVA should be amended as follows:
1. In Article 1.3, D.M. CONSUNJI, INC. shall be
included as strategic partner, being one of the
Philippine registered companies selected by

BASECON, PNR and the Lead Group on the basis of
its qualifications for the implementation of the
Project.
2. Article 4.1 should read as follows:
“NORTHRAIL shall increase its authorized capital
stock upon the subscription thereon by the Parties to
this JVA in accordance with the following equity
proportion/participation:
SRG.............................................. up to 10%
DMCI..................................................... 20%
BASECON/PNR............................up to 30%
Others.................................................... 40%
3. In Article 4.4, the Filipino corporations whose
total shares in NORTHRAIL’s capital stock, which
should not be less than sixty percent (60%) at any
given time, shall include D.M. CONSUNJI,
INC.93 (Underscoring supplied)
_______________
93 Id.

239
VOL. 778, JANUARY 11, 2016 239

Developers, Inc.
On February 8, 1996, the same date of the execution of

the amended Joint Venture Agreement, the same parties
executed a Memorandum of Agreement94 “to set up the
mechanics for raising the seed capitalization needed by
NORTHRAIL[.]”95 Pertinent provisions of the
Memorandum of Agreement are reproduced as follows:

WITNESSETH THAT
WHEREAS, the Manila-Clark Rapid Railway System

Project, hereinafter referred to as the Project, was
identified as one of the major infrastructure projects
to accelerate the development of Central Luzon,
particularly the former U.S. bases at Clark and Subic;
....
WHEREAS, the North Luzon Railways Corporation

(NORTHRAIL) was organized and incorporated to
implement the development, construction, operation
and maintenance of the railway system in Northern
Luzon;
WHEREAS, NORTHRAIL is wholly owned and

controlled by BASECON;
WHEREAS, the privatization of NORTHRAIL is

necessary in order to accelerate the implementation of
the Project by tapping the financial resources and
expertise of the private sector;
. . . .
WHEREAS, the Parties of the Joint Venture

Agreement (JVA) of 10 June 1995, namely
BASECON, PNR, SPANISH RAILWAY GROUP and
EUROMA, agreed to invite other private investors to
help in the financing and implementation of the
Project, and to raise the required equity in order to
accelerate the privatization of NORTHRAIL;

_______________
94 Id., at pp. 126-132.

95 Id., at p. 128.

240

Developers, Inc.
WHEREAS, DMCI and other private investors. . .

have manifested their desire to be strategic partners
in implementing the Project;
WHEREAS, DMCI and other private investors have

the financial capability to implement the Project;
WHEREAS, Phase I of the Project covers the Manila-

Clark section of the North Luzon railway network as
defined by the JVA of 10 June 1995 . . .[;]
....
ARTICLE I
PURPOSE
1.1 Purpose. This Agreement is entered into by the

Parties in order to set up the mechanics for raising
the seed capitalization needed by NORTHRAIL to
accelerate the implementation of the Project.
....
ARTICLE II
TERMS OF AGREEMENT
2.1 The Parties agree to put up the necessary seed

capitalization needed by NORTHRAIL to fast-track
the implementation of the Rapid Rail Transit System
Project according to the following schedule:
BCDA/PNR...................................... Php300 Million
DMCI................................................ Php200 Million
SRG.................................................. Php100 Million
---------------------------
TOTAL............................................. Php600 Million
. . . .
2.3 The amounts contributed by BCDA/PNR, DMCI,

SRG, and others are committed to be converted to
equity when NORTHRAIL is privatized.96
_______________
96 Id., at pp. 127-129.

241
VOL. 778, JANUARY 11, 2016 241

Developers, Inc.
There is no rule that a contract should be contained in a

single document.97 A whole contract may be contained in
several documents that are consistent with one other.98
Moreover, at any time during the lifetime of an
agreement, circumstances may arise that may cause the
parties to change or add to the terms they previously
agreed upon. Thus, amendments or supplements to the
agreement may be executed by contracting parties to
address the circumstances or issues that arise while a
contract subsists.
When an agreement is amended, some provisions are
changed. Certain parts or provisions may be added,
removed, or corrected. These changes may cause effects
that are inconsistent with the wordings of the contract
before the changes were applied. In that case, the old
provisions shall be deemed to have lost their force and
effect, while the changes shall be deemed to have taken
effect. Provisions that are not affected by the changes
usually remain effective.
When a contract is supplemented, new provisions that
are not inconsistent with the old provisions are added. The
nature, scope, and terms and conditions are expanded. In
that case, the old and the new provisions form part of the
contract.
A reading of all the documents of agreement shows that
they were executed by the same parties. Initially, the Joint
Venture Agreement was executed only by BCDA, PNR, and
the foreign corporations. When the Joint Venture
Agreement was amended to include D.M. Consunji,
Inc. and/or its nominee, D.M. Consunji, Inc. and/or its
nominee were deemed to have been also a party to the
original Joint Venture Agreement executed by BCDA,
PNR, and the foreign corporations. D.M. Consunji, Inc.
and/or its nominee became bound to the terms of both the
Joint Venture Agreement and its amendment.
_______________
97 See also BF Corporation v. Court of Appeals, 351 Phil. 507, 523; 288

SCRA 267, 282 (1998) [Per J. Romero, Third Division].
98 Id.

242

Developers, Inc.
Moreover, each document was executed to achieve the

single purpose of implementing the railroad project, such
that documents of agreement succeeding the original Joint
Venture Agreement merely amended or supplemented the
provisions of the original Joint Venture Agreement.
The first agreement — the Joint Venture Agreement —
defined the project, its purposes, the parties, the parties’
equity participation, and their responsibilities. The second
agreement — the amended Joint Venture Agreement —
only changed the equity participation of the parties and
included D.M. Consunji, Inc. and/or its nominee as party to
the railroad project. The third agreement — the
Memorandum of Agreement — raised the seed
capitalization of Northrail from P100 million as indicated
in the first agreement to P600 million, in order to
accelerate the implementation of the same project defined
in the first agreement.
The Memorandum of Agreement is an implementation of
the Joint Venture Agreement and the amended Joint
Venture Agreement. It could not exist without referring to
the provisions of the original and amended Joint Venture
Agreements. It assumes a prior knowledge of its terms.
Thus, it referred to “North Luzon railway network as
defined by the JVA of 10 June 1995[.]”99
In other words, each document of agreement represents
a step toward the implementation of the project, such that
the three agreements must be read together for a complete
understanding of the parties’ whole agreement. The Joint
Venture Agreement, the amended Joint Venture
Agreement, and the Memorandum of Agreement should be
treated as one contract because they all form part of a
whole agreement.
Hence, the arbitration clause in the Joint Venture
Agreement should not be interpreted as applicable only to
the Joint Venture Agreement’s original parties. The
succeeding agree-
_______________
99 Rollo (G.R. No. 173137), p. 128.

243
VOL. 778, JANUARY 11, 2016 243

Developers, Inc.
ments are deemed part of or a continuation of the Joint

Venture Agreement. The arbitration clause should extend
to all the agreements and its parties since it is still
consistent with all the terms and conditions of the
amendments and supplements.

II

BCDA and Northrail argued that they did not consent to
D.M. Consunji, Inc.’s assignment of rights to DMCI-PDI.
Therefore, DMCI-PDI did not validly become a party to any
of the agreement. Section 17.1 of the Joint Venture
Agreement provides that rights under the agreement may
not be assigned, transferred, or conveyed without the
consent of the other party.100 Thus:

17.1 No party to this Agreement may assign,
transfer or convey this Agreement, create or incur any
encumbrance of its rights or any part of its rights and
obligations hereunder or any shares of stocks of
NORTHRAIL to any person, firm or corporation
without the prior written consent of the other parties
or except as provided in the Articles of Incorporation
and By-Laws of NORTHRAIL and the Agreement.101

However, Section 17.2 of the Joint Venture Agreement
provides that the agreement shall be binding on nominees:

and be binding upon the parties . . . and their
designees or nominees whenever
102
applicable. (Emphasis supplied)
_______________
100 Rollo (G.R. No. 173170), p. 96.

101 Id.
102 Id.

244

Developers, Inc.
The principal parties to the agreement after its

amendment include D.M. Consunji, Inc. and/or its nominee:
AMENDMENT TO THE JOINT VENTURE

AGREEMENT
This Amendment to the Joint Venture Agreement

dated 10th of June 1995 (the Agreement) made and
executed at _____________, Metro Manila, on this 8th
day of February 1996 by and among:

AUTHORITY. . .
with

and
. . . .
D.M. CONSUNJI, INC. and/or its nominee, a

domestic corporation duly organized and created
pursuant to the laws of the Republic of the
Philippines . . .103 (Emphasis supplied)

MEMORANDUM OF AGREEMENT
This Agreement made and executed at Pasig, Metro

Manila, Philippines on this 8[th] day of February
1996 by and among:

AUTHORITY . . .

with

and
D.M. CONSUNJI, INC. and/or its nominee, a

domestic corporation duly organized and created
pursuant to
_______________
103 Id., at pp. 101-102.

245
VOL. 778, JANUARY 11, 2016 245

Developers, Inc.
the laws of the Republic of the Philippines . .

.104 (Emphasis supplied)

Based on DMCI-PDFs letter to BCDA and Northrail
dated April 4, 1997, D.M. Consunji, Inc. designated DMCI-
PDI as its nominee for the agreements it entered into in
relation to the project:

[I]n order to formalize the inclusion of [DMCI
Project Developers, Inc.] as a party to the JVA and
MOA, DMCI would like to notify all the parties that it
is designating PDI as its nominee in both agreements
and such other agreements that may be signed by the
parties in furtherance of or in connection with the
PROJECT. By this nomination, all the rights,
obligations, warranties and commitments of DMCI
under the JVA and MOA shall henceforth be assumed
performed and delivered by PDI.105 (Emphasis
supplied)
Thus, lack of consent to the assignment is irrelevant

because there was no assignment or transfer of rights to
DMCI-PDI. DMCI-PDI was D.M. Consunji, Inc.’s nominee.
Section 17.2 of the Joint Venture Agreement clearly
shows an intent to treat assignment and nomination
differently.

and be binding upon the parties . . . and their
designees or nominees whenever
106
applicable. (Emphasis supplied)
Assignment involves the transfer of rights after the

perfection of a contract. Nomination pertains to the act of
naming the party with whom it has a relationship of trust

or agency.
_______________
104 Id., at p. 105.

105 Rollo (G.R. No. 173137), pp. 137 and 139.
106 Rollo (G.R. No. 173170), p. 96.

246

Developers, Inc.

In Philippine Coconut Producers Federation, Inc.
(COCOFED) v. Republic,107 this court defined “nominee” as
follows:

In its most common signification, the term
“nominee’’ refers to one who is designated to act for
another usually in a limited way; a person in whose
name a stock or bond certificate is registered but who
is not the actual owner thereof is considered a
nominee. Corpus Juris Secundum describes a
nominee as one:
“. . . designated to act for another as his
representative in a rather limited sense. It has
no connotation, however, other than that of
acting for another, in representation of another
or as the grantee of another. In its commonly
accepted meaning the term connoted the
delegation of authority to the nominee in a
representative or nominal capacity only, and
does not connote the transfer or assignment to
the nominee of any property in, or ownership of,
the rights of the person nominating
108
him.” (Citations omitted)
Contrary to BCDA and Northrail’s position, therefore,

the agreement’s prohibition against transfers, conveyance,
and assignment of rights without the consent of the other
party does not apply to nomination.
DMCI-PDI is a party to all the agreements, including

the arbitration agreement. It may, thus, invoke the
arbitration clause against all the parties.

III

Northrail, although not a signatory to the contracts, is
also bound by the arbitration agreement.
_______________
107 G.R. Nos. 177857-58, January 24, 2012, 663 SCRA 514 [Per J.
Velasco, Jr., En Banc].
108 Id., at pp. 580-581.

247
VOL. 778, JANUARY 11, 2016 247

Developers, Inc.
In Lanuza v. BF Corporation,109 we recognized that

there are instances when non-signatories to a contract may
be compelled to submit to arbitration.110 Among those
instances is when a non-signatory is allowed to invoke
rights or obligations based on the contract.111
The subject of BCDA and D.M. Consunji, Inc.’s
agreement was the construction and operation of a railroad
system. Northrail was established pursuant to this
agreement and its terms, and for the same purpose, thus:

ARTICLE III
PURPOSE OF NORTHRAIL
A. PRIMARY PURPOSE
3.1. To construct, operate and manage a railroad

system to serve Northern and Central Luzon; and to
develop, construct, manage, own, lease, sublease and
operate establishments and facilities of all kinds
related to the railroad system[.]112

Northrail’s capitalization and the composition of its
subscribers are also subject to the provisions of the original
and amended Joint Venture Agreements, and the
subsequent Memorandum of Agreement. It was pursuant

to the terms of these agreements that Northrail demanded
from D.M. Consunji, Inc. the infusion of its share in
subscription.
Therefore, Northrail cannot deny understanding that its
existence, purpose, rights, and obligations are tied to the
agreements. When Northrail demanded for the amount of
D.M. Consunji, Inc.’s subscription based on the agreements
_______________
109 Supra note 75.

110 Id., at p. 302.
111 Id.
112 Rollo (G.R. No. 173170), p. 87.

248

Developers, Inc.
and later accepted the latter’s funds, it proved that it

was bound by the agreements’ terms. It is also deemed to
have accepted the term that such funds shall be used for its
privatization. It cannot choose to demand the enforcement
of some of its provisions if it is in its favor, and then later
by whim, deny being bound by its terms.
Hence, when BCDA and Northrail decided not to
proceed with Northrail’s privatization and the transfer of
subscriptions to D.M. Consunji, Inc., any obligation to
return its supposed subscription attached not only to
BCDA as party to the agreement but primarily to Northrail
as beneficiary that impliedly accepted the terms of the
agreement and received D.M. Consunji, Inc.’s funds.
There is, therefore, merit to DMCI-PDI’s argument that
if the Civil Code113 gives third party beneficiaries to a
contract the right to demand the contract’s fulfillment in
its favor, the reverse should also be true.114 A beneficiary
who communicated his or her acceptance to the terms of
the agreement before its revocation may be compelled to
abide by the terms of an agreement, including the
arbitration clause. In this case, Northrail is deemed to have
communicated its acceptance of the terms of the
agreements when it accepted D.M. Consunji, Inc.’s funds.
_______________
113 Civil Code, Art. 1311 provides:

ART. 1311. Contracts take effect only between the parties, their
assigns and heirs, except in case where the rights and obligations arising
from the contract are not transmissible by their nature, or by stipulation
or by provision of law. The heir is not liable beyond the value of the
property he received from the decedent.
If a contract should contain some stipulation in favor of a third person,
he may demand its fulfillment provided he communicated his acceptance
to the obligor before its revocation. A mere incidental benefit or interest of
a person is not sufficient. The contracting parties must have clearly and
deliberately conferred a favor upon a third person.
114 Rollo (G.R. No. 173170), pp. 571-574.

249
VOL. 778, JANUARY 11, 2016 249

Developers, Inc.
Finally, judicial efficiency and economy require a policy

to avoid multiplicity of suits. As we said in Lanuza:

Moreover, in Heirs of Augusto Salas, Jr., this court
affirmed its policy against multiplicity of suits and
unnecessary delay. This court said that “to split the
proceeding into arbitration for some parties and trial
for other parties would result in multiplicity of suits,
duplicitous procedure and unnecessary delay.” This
court also intimated that the interest of justice would
be best observed if it adjudicated rights in a single
proceeding. While the facts of that case prompted this
court to direct the trial court to proceed to determine
the issues of that case, it did not prohibit courts from
allowing the case to proceed to arbitration, when
circumstances warrant.115

WHEREFORE, the petitions are DENIED. The
February 9, 2006 Regional Trial Court Decision and the
June 9, 2006 Regional Trial Court Order are AFFIRMED.
SO ORDERED.
Carpio (Chairperson), Brion, Del Castillo and

Mendoza, JJ., concur.
Petitions denied, judgment and order affirmed.
Notes.—Except where a compulsory arbitration is

provided by statute, the first step toward the settlement of
a difference by arbitration is the entry by the parties into a
valid agreement to arbitrate. (Ormoc Sugarcane Planters’
Association, Inc. [OSPA] vs. Court of Appeals, 596 SCRA
630 [2009])
_______________
115 Supra note 75 at p. 303, citing Heirs of Augusto Salas, Jr. v.

Laperal Realty Corporation, 378 Phil. 369, 376; 320 SCRA 610, 616 (1999)
[Per J. De Leon, Jr., Second Division].

250

Developers, Inc.
The rule allowing consolidation is designed to avoid

multiplicity of suits, to guard against oppression or abuse,
to prevent delays, to clear congested dockets, and to
simplify the work of the trial court. (Domdom vs. Third and
Fifth Divisions of the Sandiganbayan, 613 SCRA 528
[2010])

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9/10/2019 SUPREME COURT REPORTS ANNOTATED VOLUME 778

G.R. No. 173137. January 11, 2016.*

G.R. No. 173170. January 11, 2016.*

Remedial Law; Civil Procedure; Appeals; Petition for Review

VOL. 778, JANUARY 11, 2016 217

facts.” The question must involve the examination of

218 SUPREME COURT REPORTS ANNOTATED

Bases Conversion Development Authority vs. DMCI Project

agreement may be executed by contracting parties to address

VOL. 778, JANUARY 11, 2016 219

to BCDA and Northrail’s position, therefore, the agreement’s

PETITIONS for review on certiorari of the decision and

220 SUPREME COURT REPORTS ANNOTATED

Office of the Government Corporate Counsel for

1 Rollo (G.R. No. 173137), pp. 104-120.

VOL. 778, JANUARY 11, 2016 221

tration. The arbitration shall be held in whichever

5 Id., at pp. 116-117.

222 SUPREME COURT REPORTS ANNOTATED

initial seed capital of P600 million shall be infused to

[I]n order to formalize the inclusion of [DMCI

17 Id., at pp. 48 and 135.

VOL. 778, JANUARY 11, 2016 223

agreements that may be signed by the parties in

a) At the outset, DMCI-PDI/FBDC’s participation

23 Id., at pp. 137 and 139.

224 SUPREME COURT REPORTS ANNOTATED

30 Id., at pp. 151-152 and 467.

VOL. 778, JANUARY 11, 2016 225

DMCI-PDI filed before the Regional Trial Court of

The trial court ruled that the arbitration clause in the

226 SUPREME COURT REPORTS ANNOTATED

ments including the amended Joint Venture Agreement

assigned to DMCI-PDI.55 Assuming that there was such an

VOL. 778, JANUARY 11, 2016 227

assignee had no basis.57 In BCDA’s view, DMCI-PDI had

application was rendered impossible by the alleged loan

228 SUPREME COURT REPORTS ANNOTATED

sion of its application for an increase in authorized

66 Id., at pp. 317-318.

VOL. 778, JANUARY 11, 2016 229

[t]here is a question of law “when there is doubt or

processes, it is a product of the meeting of minds of parties

SEC. 2. Declaration of Policy.—It is hereby

74 Id., at p. 339, citing Central Bank of the Philippines v. Castro, 514

230 SUPREME COURT REPORTS ANNOTATED

their disputes. Towards this end, the State shall

by such rules as the Supreme Court may approve

77 Civil Code, Arts. 2028-2046.

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neering Corporation v. Capitol Industrial Construction

This manner of interpreting arbitration clauses is made

232 SUPREME COURT REPORTS ANNOTATED

ments, only the Joint Venture Agreement contains the

The Joint Venture Agreement was executed by BCDA,

KNOW ALL MEN BY THESE PRESENTS:

This Joint Venture Agreement (JVA) made and

84 Rollo (G.R. No. 173137), p. 105. The foreign corporations are

VOL. 778, JANUARY 11, 2016 233

The BASES CONVERSION DEVELOPMENT