MANILA, Philippines — The Supreme Court (SC) Second Division has affirmed the execution of a final arbitral award ordering the Department of Transportation (DOTr) and the Department of Information and Communications Technology (DICT) to transfer the title and ownership of various telecommunications facilities to Digital Telecommunications Philippines, Inc. (Digitel). In a Decision promulgated on April 2, 2025, and penned by Associate Justice Jhosep Y. Lopez, the Court ruled that the government cannot hide behind the “exemption of government properties from execution” to avoid its contractual obligations, especially after the private party has already paid the buy-out price in full.
A Modernization Program Turned Legal Impasse
The dispute trace back to the 1980s and 1990s when the government embarked on a modernization program to provide telephone facilities in remote areas. Digitel won the public bidding for these facilities and entered into several Financial Lease Agreements (FLAs) which were designed to eventually transfer ownership to the company. After a buy-out negotiation reached an impasse in 2004, the parties submitted to voluntary arbitration under the International Chamber of Commerce. In 2007, an arbitral tribunal declared the agreements as sales-on-installment and ordered Digitel to pay a buy-out price of approximately PHP 2.4 billion, while directing the government to execute the necessary transfer documents.
Although Digitel paid the full amount and the Regional Trial Court (RTC) confirmed the arbitral award in 2017, the government, through the Office of the Solicitor General (OSG), opposed the execution of the judgment. The OSG argued that government properties are exempt from execution and that Digitel must first file its claim before the Commission on Audit (COA). The Court of Appeals (CA) eventually dismissed the government’s petition for review, leading to the current Supreme Court challenge.
Specific Performance vs. Money Claims
The Supreme Court rejected the government’s argument that the facilities were exempt from execution, clarifying that the “universal rule” protecting government funds and properties applies primarily to the satisfaction of money judgments or the garnishment of public funds. The Court emphasized that this case is fundamentally different because it involves the enforcement of a contract where the properties have already been paid for by a private entity. The Court held that when the government enters into a commercial contract in its proprietary capacity—acting as a business partner rather than a sovereign power—it effectively waives its immunity and must comply with the terms of its agreements.
The Court also dismissed the assertion that the case should be referred to the COA for audit and approval. It ruled that the COA has no appellate power to review, modify, or disregard final and executory judgments rendered by courts or arbitral bodies. The decision noted that once a court validly acquires jurisdiction over a claim and renders a final judgment, that jurisdiction is retained to the exclusion of all other offices, including the COA. Therefore, the COA cannot interfere with the principle of immutability of final judgments, especially when the matter involves unliquidated claims or specific performance that has already been adjudicated.
Procedural Failure and Finality of Judgment
On a procedural level, the Court found that the OSG availed of the wrong remedy by filing a “Petition for Review” under the Special ADR Rules to challenge a writ of execution. The Court clarified that the Special ADR Rules provide a specific, exclusive list of appealable orders, and a writ of execution is not among them. Instead, a writ of execution is a ministerial process intended to carry out a court’s mandate. The Court reiterated that the RTC’s decision confirming the arbitral award had become final and executory years ago, and further delays in transferring the properties would result in unjust enrichment for the government.
The Supreme Court affirmed the CA’s dismissal of the government’s petition and upheld the RTC’s directive for the DOTr and DICT to comply with their obligations. The ruling underscores the judiciary’s commitment to the finality of arbitral awards and the principle that the State must act in good faith when engaging in business transactions with the private sector.
