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1. LARA VS.

DEL ROSARIO

FACTS:Manuel Lara et al were former taxi drivers of Petronilo Del Rosario, Jr. In September
1950, Del Rosario sold some of his vehicles which led to Lara et al not being needed anymore.
Eventually, their services were terminated. Because their employer did not give them their one
month’s salary in lieu of the notice required in Article 302 of the Code of Commerce, Lara et al
sued Del Rosario.

However, Del Rosario contended that the Code of Commerce was already repealed hence Lara et
al have no legal basis. Del Rosario contends that the New Civil Code took effect in August 1950
or a year after release for publication.

ISSUE: When did the New Civil Code took effect?

HELD: The Supreme Court ruled that Lara et al has no legal basis for their claims since the
provision of the COde of Commerce they are relying on was already repealed by the New Civil
Code. Their alleged dismissal from service without notice took place in September 1950 after the
New Civil Code took effect.

The Supreme Court also clarified that, in an obiter dictum, that the new Civil Code of the
Philippines took effect on August 30, 1950. This date is exactly one year after the Official
Gazette publishing the Code was released for circulation, the said release having been made on
August 30, 1949.

Chung Fu Industries vs. CA

Facts:

Chung Fu Industries (Philippines) (Chung Fu for brevity) and private respondent Roblecor Philippines,
Inc. forged a construction agreement whereby respondent contractor committed to construct and
finish on December 31, 1989, petitioner corporation's industrial/factory complex in Tanawan, Tanza,
Cavite. In the event of disputes arising from the performance of subject contract, it was stipulated
therein that the issue(s) shall be submitted for resolution before a single arbitrator chosen by both
parties.

Respondent Roblecor failed to complete the work despite the extension of time allowed it by Chung Fu.
Subsequently, the latter had to take over the construction when it had become evident that Roblecor
was not in a position to fulfill its obligation.

Claiming an unsatisfied account of P10,500,000.00 and unpaid progress billings of P2,370,179.23,


Roblecor on May 18, 1990, filed a petition for Compulsory Arbitration with prayer for Temporary
Restraining Order before respondent Regional Trial Court, pursuant to the arbitration clause in the
construction agreement. Chung Fu moved to dismiss the petition and further prayed for the quashing of
the restraining order.
Subsequent negotiations between the parties eventually led to the formulation of an arbitration
agreement which, among others, provides:

d. The parties mutually agree that they will abide by the decision of the arbitrator including any
amount that may be awarded to either party as compensation, consequential damage and/or interest
thereon;

e. The parties mutually agree that the decision of the arbitrator shall be final and unappealable.
Therefore, there shall be no further judicial recourse if either party disagrees with the whole or any part
of the arbitrator's award.

f. As an exception to sub-paragraph (e) above, the parties mutually agree that either party is
entitled to seek judicial assistance for purposes of enforcing the arbitrator's award.

Arbitrator Asuncion ordered petitioners to immediately pay respondent contractor, the sum of
P16,108,801.00. He further declared the award as final and unappealable, pursuant to the Arbitration
Agreement precluding judicial review of the award.

Consequently, Roblecor moved for the confirmation of said award. On the other hand, Chung Fu moved
to remand the case for further hearing and asked for a reconsideration of the judgment award claiming
that Arbitrator Asuncion committed twelve (12) instances of grave error by disregarding the provisions
of the parties' contract.

Issue: WON the subject arbitration award is indeed beyond the ambit of the court's power of judicial
review

Ruling:

No. It is stated explicitly under Art. 2044 of the Civil Code that the finality of the arbitrators' award is not
absolute and without exceptions. Where the conditions described in Articles 2038, 2039 and 2040
applicable to both compromises and arbitrations are obtaining, the arbitrators' award may be annulled
or rescinded. Additionally, under Sections 24 and 25 of the Arbitration Law, there are grounds for
vacating, modifying or rescinding an arbitrator's award. Thus, if and when the factual circumstances
referred to in the above-cited provisions are present, judicial review of the award is properly warranted.

After closely studying the list of errors, as well as petitioners' discussion of the same in their Motion to
Remand Case For Further Hearing and Reconsideration and Opposition to Motion for Confirmation of
Award, we find that petitioners have amply made out a case where the voluntary arbitrator failed to
apply the terms and provisions of the Construction Agreement which forms part of the law applicable as
between the parties, thus committing a grave abuse of discretion. Furthermore, in granting unjustified
extra compensation to respondent for several items, he exceeded his powers — all of which would have
constituted ground for vacating the award under Section 24 (d) of the Arbitration Law.
But the respondent trial court's refusal to look into the merits of the case, despite prima facie showing
of the existence of grounds warranting judicial review, effectively deprived petitioners of their
opportunity to prove or substantiate their allegations. In so doing, the trial court itself committed grave
abuse of discretion. Likewise, the appellate court, in not giving due course to the petition, committed
grave abuse of discretion. Respondent courts should not shirk from exercising their power to review,
where under the applicable laws and jurisprudence, such power may be rightfully exercised; more so
where the objections raised against an arbitration award may properly constitute grounds for annulling,
vacating or modifying said award under the laws on arbitration.

3. DEL MONTE CORPORATION-USA vs CA G.R. No. 136154 February 7, 2001


FACTS:
In a Distributorship Agreement in 1994, petitioner Del Monte Corporation-USA (DMC-USA)
appointed private respondent Montebueno Marketing, Inc. (MMI) as the sole and exclusive
distributor of its Del Monte products in the Philippines. In case of disputes, the agreement provided
for an arbitration clause to be resolved in the City of San Francisco. MMI later appointed Sabrosa
Foods Inc (SFI) as its marketing arm. In 1996, respondents MMI, SFI and MMI's Managing Director
Liong Liong C. Sy led a Complaint against petitioners before the RTC of Malabon Manila, predicating
their complaint on Article 20-22 of the Civil Code, claiming that DMC-USA products continued to be
brought into the country by parallel importers despite the appointment of private respondent MMI as
the sole and exclusive distributor of Del Monte products thereby causing them great embarrassment
and substantial damage. They alleged that the products brought into the country by these importers
were aged, damaged, fake or counterfeit and they went as far as doing paid advertisements in
newspapers. Private respondents claimed that they had exhausted all possible avenues for an
amicable resolution and settlement of their grievances; that as a result of the fraud, bad faith, malice
and wanton attitude of petitioners, they should be held responsible for all the actual expenses
incurred by private respondents. Petitioners filed a Motion to Suspend Proceedings invoking the
arbitration clause in their Agreement with private respondents to which both the trial court and ca
denied on the ground that the alleged damaging acts recited in the Complaint, constituting
petitioners' causes of action, required the interpretation of Art. 21 of the Civil Code and that in
determining whether petitioners had violated it "would require a full blown trial" making arbitration
"out of the question."

ISSUE: WON the dispute between the parties warrants an order compelling them to submit to
arbitration?

HELD:
No. There is no doubt that arbitration is valid and constitutional in our jurisdiction. Even
before the enactment of RA 876, this Court has countenanced the settlement of disputes through
arbitration. Unless the agreement is such as absolutely to close the doors of the courts against the
parties, which agreement would be void, the courts will look with favor upon such amicable
arrangement and will only interfere with great reluctance to anticipate or nullify the action of the
arbitrator. Moreover, as RA 876 expressly authorizes arbitration of domestic disputes, foreign
arbitration as a system of settling commercial disputes was likewise recognized when the Philippines
adhered to the United Nations "Convention on the Recognition and the Enforcement of Foreign
Arbitral Awards of 1958" under the 10 May 1965 Resolution No. 71 of the Philippine Senate, giving
reciprocal recognition and allowing enforcement of international arbitration agreements between
parties of different nationalities within a contracting state. A careful examination of the instant case
shows that the arbitration clause in the Distributorship Agreement between petitioner DMC-USA and
private respondent MMI is valid and the dispute between the parties is arbitrable. However, this
Court must deny the petition. The Agreement between petitioner DMC-USA and private
respondent MMI is a contract. The provision to submit to arbitration any dispute arising therefrom
and the relationship of the parties is part of that contract and is itself a contract. As a rule, contracts
are respected as the law between the contracting parties and produce effect as between them, their
assigns and heirs. Petitioners Daniel Collins and Luis Hidalgo, and private respondent SFI, not
parties to the Agreement and cannot even be considered assigns or heirs of the parties, are not
bound by the Agreement and the arbitration clause therein. In Salas, Jr., only parties to the
Agreement, their assigns or heirs have the right to arbitrate or could be compelled to arbitrate. The
object of arbitration is to allow the expeditious determination of a dispute. Clearly, the issue before
us could not be speedily and efficiently resolved in its entirety if we allow simultaneous arbitration
proceedings and trial, or suspension of trial pending arbitration. Accordingly, the interest of justice
would only be served if the trial court hears and adjudicates the case in a single and complete
proceeding.
4. LA NAVAL DRUG CORPORATION vs COURT OF APPEALS
236 SCRA 78 (1994)

FACTS: In 1989, a conflict between La Naval Drug Corporation and a certain Wilson Yao arose
regarding a lease contract. Yao invoked a provision in the lease contract whereby pursuant to
R.A. 876 (Arbitration Law), they should refer the matter to arbitration. Hence, the parties
agreed to refer the issue to three arbitrators however, certain complications arose when they
were choosing a third arbitrator. This prompted Yao to go to court to demand the arbitrators to
proceed with the arbitration. Yao went to the regional trial court (Angeles City) and the case
was filed as a summary proceeding case under R.A. 876. Yao also prayed for an award for
damages in his favor.

In its answer, La Naval asserted that the case should be dismissed as it was filed prematurely; La
Naval questioned Yao’s claim for damages as it averred that the same should be litigated
independently and not in the same summary proceeding case. However, La Naval also posed a
counterclaim.

The RTC resolved the matter regarding the arbitrators (it appointed a third arbitrator). The RTC
also ruled that La Naval is estopped from questioning Yao’s claim for damages for being out of
jurisdiction as La Naval itself filed a counterclaim for damages.

ISSUE: Whether or not the RTC has jurisdiction over the claims for damages between parties.

HELD: No. R.A. 876 is clear that summary proceedings under said law shall only involve the
matter of arbitration. The parties’ claims for damages must be litigated in another civil case.

The Supreme Court went on to discuss that where the court clearly has no jurisdiction over the
subject matter, in this case the claim and counterclaim for damages, the court must dismiss the
case (in this case, the claim and counterclaim for damages). Lack of jurisdiction over the subject
matter as a defense may be raised at any time. Failure to raise such defense shall not estop the
defendant from raising such defense (as opposed to the defense of lack of jurisdiction over the
person which is deemed waived if the defendant voluntarily appeared – if defendant voluntarily
appeared, then he is estopped from raising that defense).

LM Power Engineering Corporation vs Capitol


Facts:

Petitioner and respondent entered into a Subcontract Agreement involving electrical work at
the Third Port of Zamboanga. Respondent took over some work of the contracted to petitioner because
it failed to finish it because of its inability to procure materials. Upon completion of the work, petitioner
billed respondent P6,711,813.90.
Contesting the accuracy of the amount of advances and billable accomplishments listed by the
former, the latter refused to pay. Respondent also took refuge in the termination clause of the
Agreement. That clause allowed it to set off the cost of the work that petitioner had failed to undertake
-- due to termination or take-over -- against the amount it owed the latter.

Petitioner filed a complaint with the RTC for collection of amount while respondent instead of
filing an answer filed a motion to dismiss on the ground that complaint was premature, because there
was no prior recourse to arbitration. RTC denied the said motionon the ground that the dispute did not
involve the interpretation or the implementation of the Agreement and was, therefore, not covered by
the arbitral clause and ruled that take-over of some work items by respondent was not equivalent to a
termination, but a mere modification, of the Subcontract. The latter was ordered to give full payment
for the work completed by petitioner.

CA reversed the RTC and ordered the referral of the case to arbitration. It held as arbitrable the
issue of whether respondent’s take-over of some work items had been intended to be a termination of
the original contract under Letter K of the Subcontract. It ruled likewise on two other issues: whether
petitioner was liable under the warranty clause of the Agreement, and whether it should reimburse
respondent for the work the latter had taken over

Issue:

Whether or not there exist a dispute between the petitioner and respondent regarding the
interpretation and implementation of the Sub-Contract Agreement that requires prior recourse to
voluntary arbitration.

Held:

NO.

We side with respondent. Essentially, the dispute arose from the parties’ incongruent positions
on whether certain provisions of their Agreement could be applied to the facts. The instant case involves
technical discrepancies that are better left to an arbitral body that has expertise in those areas. In any
event, the inclusion of an arbitration clause in a contract does not ipso facto divest the courts of
jurisdiction to pass upon the findings of arbitral bodies, because the awards are still judicially reviewable
under certain conditions.

Being an inexpensive, speedy and amicable method of settling disputes, arbitration—along with
mediation, conciliation and negotiation—is encouraged by the Supreme Court. Aside from unclogging
judicial dockets, arbitration also hastens the resolution of disputes, especially of the commercial kind. It
is thus regarded as the “wave of the future” in international civil and commercial disputes. Brushing
aside a contractual agreement calling for arbitration between the parties would be a step backward.
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.

An arbitration clause in a construction contract or a submission to arbitration of a construction


dispute shall be deemed an agreement to submit an existing or future controversy to CIAC jurisdiction,
notwithstanding the reference to a different arbitration institution or arbitral body in such contract or
submission. When a contract contains a clause for the submission of a future controversy to arbitration,
it is not necessary for the parties to enter into a submission agreement before the claimant may invoke
the jurisdiction of CIAC.” The foregoing amendments in the Rules were formalized by CIAC Resolution
Nos. 2-91 and 3-93.

Korea Technologies Co., Ltd. v. Hon. Alberto A. Lerma and Pacific General
Steel Manufacturing Corporation,
G.R. No. 143581, Jan. 7, 2008.

Facts:

Korea Technologies Co., Ltd. [Korea Tech], a Korean corporation, entered into a contract
with Pacific General Steel Manufacturing Corporation [Pacific General], a domestic corporation,
whereby Korea Tech undertook to ship and install in Pacific General’s site in Carmona, Cavite
the machinery and facilities necessary for manufacturing LPG cylinders, and to initially operate
the plant after it is installed.

The plant, after completion of installation, could not be operated by Pacific General due
to its financial difficulties affecting the supply of materials. The last payments made by Pacific
General to Korea Tech consisted of postdated checks which were dishonored upon
presentment. According to Pacific General, it stopped payment because Korea Tech had
delivered a hydraulic press which was different in kind and of lower quality than that agreed
upon. Korea Tech also failed to deliver equipment parts already paid for by it. It threatened to
cancel the contract with Korea Tech and dismantle the Carmona plant.

Finally, Pacific General filed before the Office of the Prosecutor a Complaint-Affidavit for
estafaagainst Mr. Dae Hyun Kang, President of Korea Tech. Korea Tech informed PGSMC that it
could not unilaterally rescind the contract. Of greater importance to the present article, KOGIES
also insisted that their dispute be settled by arbitration as provided by Article 15 of their
contract — the arbitration clause.
Korea Tech initiated arbitration before the Korea Commercial Arbitration Board [KCAB]
in Seoul, Korea and, at the same time, commenced a civil action before the Regional Trial Court
[the “trial court”] where it prayed that Pacific General be restrained from dismantling the plant
and equipment. Pacific General opposed the application and argued that the arbitration clause
was null and void, being contrary to public policy as it ousts the local court of jurisdiction.

The trial court denied the application for preliminary injunction and declared the
arbitration agreement null and void. Korea Tech moved to dismiss the counterclaims for
damages.

Korea Tech filed a petition for certiorari before the Court of Appeals [CA]. The court
dismissed the petition and held that an arbitration clause which provided for a final
determination of the legal rights of the parties to the contract by arbitration was against public
policy. Further appeal was made to the Supreme Court by way of a petition for review.

ISSUE: W/N the arbitration clause is valid

Ruling:YES.

“The arbitration clause is valid. It has not been shown to be contrary to any law, or against
morals, good customs, public order or public policy. The arbitration clause stipulates that the
arbitration must be done in Seoul, Korea in accordance with the Commercial Arbitration Rules
of the KCAB, and that the award is final and binding. This is not contrary to public policy.We
find no reason why the arbitration clause should not be respected and complied with by both
parties.”

This ruling, the Court said, is consonant with the declared policy in Section 2 of the ADR Act that
“the State (shall) actively promote party autonomy in the resolution of disputes or the freedom
of the parties to make their own arrangements to resolve their disputes.” Citing Section 24 of
the ADR Act, the Court said the trial court does not have jurisdiction over disputes that are
properly the subject of arbitration pursuant to an arbitration clause. In the earlier case of BF
Corporation v. Court of Appeals and Shangri-la Properties, Inc., where the trial court refused to
refer the parties to arbitration notwithstanding the existence of an arbitration agreement
between them, the Supreme Court said the trial court had prematurely exercised its jurisdiction
over the case.

The Court further emphasized that a submission to arbitration is a contract. As a rule, contracts
are respected as the law between the contracting parties and produce effect between them,
their assigns and heirs. Courts should liberally review arbitration clauses. Any doubt should be
resolved in favor of arbitration.
EQUITABLE PCI BANKING CORPORATION v RCBC

FACTS: Petitioners Equitable PCI Bank, Inc. (EPCIB) and the individual shareholders of Bankard, Inc., as
sellers, and respondent RCBC Capital Corporation (RCBC), as buyer, executed a Share Purchase
Agreement (SPA) for the purchase of petitioners’ interests in Bankard, representing 226,460,000 shares,
for the price of PhP 1,786,769,400. To expedite the purchase, RCBC agreed to dispense with the conduct
of a due diligence audit on the financial status of Bankard.

RCBC deposited the stipulated down payment amount in an escrow account after which it was given full
management and operational control of Bankard. June 2, 2000 is also considered by the parties as the
Closing Date referred to in the SPA.

Sometime in September 2000, RCBC had Bankard’s accounts audited, creating for the purpose an audit
team and the conclusion was that the warranty, as contained in Section 5(h) of the SPA (simply Sec. 5[h]
hereinafter), was correct.

RCBC paid the balance of the contract price. The corresponding deeds of sale for the shares in question
were executed in January 2001. Thereafter RCBC informed petitioners of its having overpaid the
purchase price of the subject shares, claiming that there was an overstatement of valuation of accounts
amounting to PhP 478 million, resulting in the overpayment of over PhP 616 million. Thus, RCBC claimed
that petitioners violated their warranty, as sellers, embodied in Sec. 5(g) of the SPA (Sec. 5[g]
hereinafter).

RCBC, in accordance with Sec. 10 of the SPA, filed a Request for Arbitration dated May 12, 2004 with the
ICC-ICA. In the request, RCBC charged Bankard with deviating from, contravening and not following
generally accepted accounting principles and practices in maintaining their books.

Arbitration in the ICC-ICA proceeded after the formation of the arbitration tribunal consisting of retired
Justice Santiago M. Kapunan, nominated by petitioners; Neil Kaplan, RCBC’s nominee; and Sir Ian Barker,
appointed by the ICC-ICA.

After drawn out proceedings with each party alleging deviation and non-compliance by the other with
arbitration rules, the tribunal, with Justice Kapunan dissenting, rendered a Partial Award . On the matter
of prescription, the tribunal held that RCBC’s claim is not time-barred, the claim properly falling under
the contemplation of Sec. 5(g) and not Sec. 5(h). As such, the tribunal concluded, RCBC’s claim was filed
within the three (3)-year period under Sec. 5(g) and that the six (6)-month period under Sec. 5(h) did not
apply. The tribunal also exonerated RCBC from laches, the latter having sought relief within the three
(3)-year period prescribed in the SPA.

Notably, the tribunal considered the rescission of the SPA and ASPA as impracticable and "totally out of
the question."
RCBC filed with the RTC a Motion to Confirm Partial Award. The RTC issued the first assailed order
confirming the Partial Award and denying the adverted separate motions to vacate and to suspend and
inhibit. From this order, petitioners sought reconsideration, but their motion was denied by the RTC .

Issue: WON there is manifest disregard of the law by the ICC-ICA

Held: The petition must be denied.

As earlier recited, the ICC-ICAs Partial Award dated September 27, 2007 was confirmed by the RTC in its
first assailed order of January 8, 2008. Thereafter, the RTC, by order of March 17, 2008, denied
petitioners motion for reconsideration. Therefrom, petitioners came directly to this Court on a petition
for review under Rule 45 of the Rules of Court.

This is a procedural miscue for petitioners who erroneously bypassed the Court of Appeals (CA) in
pursuit of its appeal. While this procedural gaffe has not been raised by RCBC, still we would be remiss
in not pointing out the proper mode of appeal from a decision of the RTC confirming, vacating, setting
aside, modifying, or correcting an arbitral award.

Rule 45 is not the remedy available to petitioners as the proper mode of appeal assailing the decision of
the RTC confirming as arbitral award is an appeal before the CA pursuant to Sec. 46 of Republic Act No.
(RA) 9285, otherwise known as the Alternative Dispute Resolution Act of 2004, or completely, 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, promulgated on April 2, 2004 and
became effective on April 28, 2004 after its publication on April 13, 2004.

In Korea Technologies Co., Ltd v. Lerma, we explained, inter alia, that the RTC decision of an assailed
arbitral award is appealable to the CA and may further be appealed to this Court, thus:

Sec. 46 of RA 9285 provides for an appeal before the CA as the remedy of an aggrieved
party in cases where the RTC sets aside, rejects, vacates, modifies, or corrects an arbitral
award, thus:

SEC. 46. Appeal from Court Decision or Arbitral Awards.A decision of the Regional Trial
Court confirming, vacating, setting aside, modifying or correcting an arbitral award may
be appealed to the Court of Appeals in accordance with the rules and procedure to be
promulgated by the Supreme Court.

The losing party who appeals from the judgment of the court confirming an arbitral
award shall be required by the appellate court to post a counterbond executed in favor
of the prevailing party equal to the amount of the award in accordance with the rules to
be promulgated by the Supreme Court.
Thereafter, the CA decision may further be appealed or reviewed before this Court
through a petition for review under Rule 45 of the Rules of Court.[15]

It is clear from the factual antecedents that RA 9285 applies to the instant case. This law was already
effective at the time the arbitral proceedings were commenced by RCBC through a request for
arbitration filed before the ICC-ICA on May 12, 2004. Besides, the assailed confirmation order of the RTC
was issued on March 17, 2008. Thus, petitioners clearly took the wrong mode of appeal and the instant
petition can be outright rejected and dismissed.

Even if we entertain the petition, the outcome will be the same.

9. Insular Savings Bank vs. Far East Bank and Trust

Far East Bank and Trust Company (Respondent) filed a complaint against Home Bankers Trust
and Company (HBTC) with the Philippine Clearing House Corporation’s (PCHC) Arbitration
Committee.

Respondent sought to recover from the petitioner, the sum of P25,200,000.00 representing the
total amount of the three checks that HBTC sent to respondent for clearing by operation of the
PCHC clearing system. Thereafter, respondent dishonored the checks for insufficiency of funds
and returned the checks to HBTC. However, the latter refused to accept them since the checks
were returned by respondent after the reglementary regional clearing period.

Before the termination of the arbitration proceedings, respondent filed another complaint with
the RTC for Sum of Money and Damages with Preliminary Attachment.

RTC suspended the proceedings pending the decision of the Arbitration Committee.

PCHC Arbitration Committee rendered its decision in favor of respondent. The motion for
reconsideration was denied by the Arbitration Committee.

Petitioner filed a petition for review in the earlier case filed by respondent.

RTC directed both petitioner and respondent to file their respective memoranda. Both parties
filed several pleadings. Later, respondent filed a Motion to Dismiss Petition for Review for Lack
of Jurisdiction, which was opposed by the petitioner.

Issue: W/N RTC has jurisdiction over the case.


Ruling: No.

In the instant case, petitioner and respondent have agreed that the PCHC Rules would govern
in case of controversy. However, since the PCHC Rules came about only as a result of an
agreement between and among member banks of PCHC and not by law, it cannot confer
jurisdiction to the RTC. Thus, the portion of the PCHC Rules granting jurisdiction to the RTC to
review arbitral awards, only on questions of law, cannot be given effect.
Consequently, the proper recourse of petitioner from the denial of its motion for reconsideration
by the Arbitration Committee is to file either a motion to vacate the arbitral award with the RTC,
a petition for review with the Court of Appeals under Rule 43 of the Rules of Court, or a petition
for certiorari under Rule 65 of the Rules of Court.

Alternative dispute resolution methods or ADRs – like arbitration, mediation, negotiation and
conciliation – are encouraged by the Supreme Court. By enabling parties to resolve their
disputes amicably, they provide solutions that are less time-consuming, less tedious, less
confrontational, and more productive of goodwill and lasting relationships. It must be borne in
mind that arbitration proceedings are mainly governed by the Arbitration Law and suppletorily by
the Rules of Court.
10. MARIA LUISA PARK ASSOCIATION, INC. vs. SAMANTHA MARIE T. ALMENDRAS and PIA ANGELA T.
ALMENDRAS,

[G.R. No. 171763, June 5, 2009)

FACTS:
1. respondents Samantha Marie T. Almendras and Pia Angela T. Almendras purchased from
MRO Development Corporation a residential lot in Cebu City
2. Almendras then filed with Maria Luisa Park Association Inc an application to construct a
residential house which was approved
3. Upon ocular inspection MLPAI found out that Almendrasviolated the prohibition against multi-
dwelling
4. MLPAI sent a letter to the respondents, demanding that they rectify the structure
a. respondents, as represented by their father Ruben D. Almendras denied having
violated MLPAI’s Deed of Restriction
b. MLPAI, in its reply, pointed out respondents’ specific violations of the subdivision
rules:
i. installation of a second water meter and tapping the subdivision’s main water
pipeline
ii. construction of “two separate entrances that are mutually exclusive of each
other.”
5. Respondents filed a complaint with the RTC of Cebu for Injunction, Declatory Relief,
Annulment of Provisions of Articles and By-Laws with Prayer for Issuance of a Temporary
Restraining Order (TRO)/Preliminary Injunction.
a. MLPAI moved for dismissal of the complaint on the ground of lack of
jurisdiction and failure to comply with the arbitration clause provided for in
MLPAI’s by-laws.
b. TC dismissed the complaint holding that it was the Housing and Land Use
Regulatory Board that has original and exclusive jurisdiction over the case.
c. MR filed by respondents was denied.
6. CA declared the decision of RTC null and void, and ordering it to take cognizance of the
case

ISSUE: Whether the HLURB and not the RTC has jurisdiction over the case.

HELD: the Home Insurance and Guaranty Corporation (HIGC), now HLURB, has original and
exclusive jurisdiction over the case. Petition Granted.
1. PRESENT CASE: respondents are members of MLPAI as they have even admitted it. Therefore, as
correctly ruled by the trial court, the case involves a controversy between the homeowners’
association and some of its members. Thus, the exclusive and original jurisdiction lies with the
HLURB.
a. Sta. Clara Homeowners’ Association v. Gaston:
. . . the HIGC exercises limited jurisdiction over homeowners' disputes. The law
confines its authority to controversies that arise from any of the following intra-corporate
relations: (1) between and among members of the association; (2) between any and/or all
of them and the association of which they are members; and (3) between the association
and the state insofar as the controversy concerns its right to exist as a corporate entity.
2. under the doctrine of primary administrative jurisdiction, courts cannot or will not determine a
controversy where the issues for resolution demand the exercise of sound administrative discretion
requiring the special knowledge, experience, and services of the administrative tribunal to determine
technical and intricate matters of fact
a. the HLURB has the expertise to resolve the basic technical issue of whether the house built
by the respondents violated the Deed of Restriction, specifically the prohibition against
multi-dwelling.
3. the parties failed to abide by the arbitration agreement in the MLPAI by-laws.
(REGARDING FOR ADR)
a. Article XII of the MLPAI by-laws entered into by the parties provides that any dispute or
claim against the Association or any of its officers and governors shall first be settled
amicably.
i. If amicable settlement fails, such dispute shall be brought by the member to an
arbitration panel for final settlement. The arbitral award shall be valid and binding
between the parties unless repudiated on grounds that the same was procured
through fraud or violence, or that there are patent or gross errors in the tribunal’s
findings of facts upon which the decision was based.
ii. Respondents, being members of MLPAI, are bound by its by-laws, and are expected
to abide by it in good faith
iii. The parties in the case made no earnest effort to resolve their differences in
accordance with the arbitration clause provided for in their by-laws.
1. Mere exchange of correspondence will not suffice much less satisfy the
requirement of arbitration.
4. Arbitration being the mode of settlement between the parties expressly provided for in their by-
laws, the same should be respected.
a. Unless an arbitration agreement is such as absolutely to close the doors of the courts
against the parties, the courts should look with favor upon such amicable arrangements
b. Arbitration is one of the alternative methods of dispute resolution that is now rightfully
vaunted as “the wave of the future” in international relations, and is recognized worldwide.
c. To brush aside a contractual agreement calling for arbitration in case of disagreement
between the parties would therefore be a step backward.

13. Reyes vs Balde II 498 SCRA 186

Facts: Respondent-spouses Esquig entered into a Design-Build Construction Agreement with petitioner
for the architectural design and construction of a 2-storey residence in Paranaque City. The spouses
Esquig paid P1,050,000 as down payment, construction commenced. The respondents left for the
United States and designated their co-respondent, Papas, as their representative.

Petitioner alleged Papas meddled with the construction works by demanding changes and additional
works which entailed additional cost and refused to pay petitioner's progress billing and the salary of
the laborers. Petitioner prepared an accounting report of all the additional works and their
corresponding costs. Papas still did not pay. Papas then wrote to the Board of Directors of Tahanan
Village Homeowner's Association requesting for the cancellation of the contractor's work permit.

Petitioner filed a complaint for Accounting, Collection of Sum of Money, Rescission of Contract with
Damages against spouses Esquig and Papas with the Regional Trial Court. In the complaint, petitioner
prayed that respondents be ordered to pay the cost of the additional works done on the property; that
the Design-Build Construction Agreement be ordered rescinded because respondents breached the
same; and that respondents be ordered to pay moral and exemplary damages and litigation expenses.

Respondents filed a motion to dismiss on the ground that the court has no jurisdiction over the subject
matter of the case. They claimed that the Design-Build Construction Agreement contained an arbitration
clause, thus any dispute arising therefrom should be brought before the CIAC. Instead of submitting an
answer, petitioner filed with the CIAC a motion to dismiss on grounds of lack of jurisdiction to hear and
decide the case The CIAC denied petitioner's motion to dismiss, holding that since the Design-Build
Construction Agreement contained an arbitration clause, any dispute arising from said contract is within
CIAC's jurisdiction. Petitioner filed a motion for reconsideration which was denied by CIAC.

Issue: Whether or not jurisdiction over the present controversy is with the Regional Trial Court or the
CIAC?

Ruling: The Court has ruled that CIAC has original and exclusive jurisdiction over disputes arising from or
connected with construction contracts entered into by parties that have agreed to submit their dispute
to voluntary arbitration. Section 1, Article III of the CIAC Rules of Procedure Governing Construction
Arbitration likewise provides that recourse to the CIAC may be availed of whenever a contract contains a
clause for the submission of a future controversy to arbitrationthus: SECTION 1. Submission to CIAC
Jurisdiction.—An arbitration clause in a construction contract or a submission to arbitration of a
construction dispute shall be deemed an agreement to submit an existing or future controversy to
CIAC jurisdiction, notwithstanding the reference to a different arbitration institution or arbitral body in
such contract or submission. When a contract contains a clause for the submission of a future
controversy to arbitration, it is not necessary for the parties to enter into a submission agreement
before the claimant may invoke the jurisdiction of CIAC.

Benguet Corporation vs. DENR-MAB, 545 SCRA 196, G.R. No. 163101 February 13,
2008

FACTS: On June 1, 1987, Benguet and J.G. Realty entered into a Royalty Agreement with
Option to Purchase (RAWOP), wherein J.G. Realty was acknowledged as the owner of four
mining claims situated in Camarines Norte.

On August 9, 1989, the Executive Vice-President of Benguet, Antonio N. Tachuling, issued a


letter informing J.G. Realty of its intention to develop the mining claims. However, J.G.
Realty, through its President, Johnny L. Tan, then sent a letter to the President of Benguet
informing the latter that it was terminating the RAWOP on the following grounds:

a) The fact that your company has failed to perform the obligations set forth in the
RAWOP, i.e., to undertake development works within 2 years from the execution of
the Agreement;
b) Violation of the Contract by allowing high graders to operate on our claim.
c) No stipulation was provided with respect to the term limit of the RAWOP.
d) Non-payment of the royalties thereon as provided in the RAWOP.
J.G. Realty filed a Petition for Declaration of Nullity/Cancellation of the RAWOP with the
Legaspi City POA, Region V, docketed as a DENR Case.

DECISION OF LOWER COURTS: POA: declared the RAWOP cancelled. MAB: affirmed POA’s
decision.

The RAWOP expressly provided that “any disputes, differences or disagreements between
BENGUET and the OWNER shall, upon notice of one party to the other, first be referred to a
Board of Arbitratorsconsisting of three (3) members, one to be selected by BENGUET, another
to be selected by the OWNER and the third to be selected by the aforementioned two
arbitrators so appointed” ; and that “no action shall be instituted in court as to any matter in
dispute as hereinabove stated, except to enforce the decision of the majority of the
Arbitrators.”

Benguet contended that the issue raised by the J.G. Realty should have been raised first
with the arbitration before POA took cognizance of the case.

ISSUE: Should the controversy have first been submitted to arbitration before the POA took
cognizance of the case?

RULING: YES. In RA 9285 or the “Alternative Dispute Resolution Act of 2004,” the Congress
reiterated the efficacy of arbitration as an alternative mode of dispute resolution by stating
in Sec. 32 thereof that domestic arbitration shall still be governed by RA 876 (The
Arbitration Law).

Clearly, a contractual stipulation that requires prior resort to voluntary arbitration before
the parties can go directly to court is not illegal and is in fact promoted by the State. Thus,
petitioner correctly cites several cases whereby arbitration clauses have been upheld by
this Court.

15. KOREAN TECHNOLOGIES VS LERMA

FACTS: Petitioner (KOGIES) is a Korean corporation, while private respondent Pacific General Steel
Manufacturing Corp. (PGSMC) is a domestic corporation. PGSMC and KOGIES executed a Contract where
KOGIES would set up a plant in Cavite. An amendment on the terms of payments was made in Korea.
The contract stipulated that KOGIES will (1) ship the machinery and facilities necessary for
manufacturing and (2) install and initiate plant operations which PGSMC would pay respectively.
Subsequently,both parties fulfilled their first agreement in the contract.

For the remaining balance PGSMC issued 2 checks which were dishonored. KOGIES sent a demand
letter. PGSMC says that it informed KOGIES that their cancelling Contract due to KOGIES altering the
quantity and the quality of the equipment it delivered, and that it would dismantle and transfer the
equipment, and facilities installed in the Carmona plant. Five days later, PGSMC filed before for Estafa.

KOGIES wrote PGSMC informing the latter that PGSMC could not unilaterally rescind their contract nor
dismantle and transfer the machineries and equipment on mere imagined violations by KOGIES. It also
insisted that disputes should be settled by arbitration as agreed upon in Article 15, the contract's
arbitration clause: "all disputes, controversies, or differences which may arise between the parties, out
of or in relation to or in connection with this Contract or for the breach thereof, shall finally be settled
by arbitration in Seoul, Korea in accordance with the Commercial Arbitration Rules of the Korean
Commercial Arbitration Board. The award rendered by the arbitration(s) shall be final and binding upon
both parties concerned."

KOGIES instituted an Application for Arbitration before the Korean Commercial Arbitration Board (KCAB)
in Seoul, Korea pursuant to Art. 15 of the Contract as amended and allegiing that PGSMC had initially
admitted that the questioned checks were not funded but later on claimed that it stopped payment as
the former allegedly breached their contract.

PGSMC filed an opposition arguing that KOGIES the arbitration clause, was null and void for being
against public policy as it ousts the local courts of jurisdiction over the instant controversy.

ISSUE: Whether or not the arbitration clause is valid and binding

RULING: YES Petitioner is correct in its contention that an arbitration clause, stipulating that the arbitral
award is final and binding, does not oust our courts of jurisdiction as the international arbitral award,
the award of which is not absolute and without exceptions, is still judicially reviewable under certain
conditions provided for by the UNCITRAL Model Law on ICA as applied and incorporated in RA 9285.

For domestic arbitration proceedings, we have particular agencies to arbitrate disputes arising from
contractual relations. In case a foreign arbitral body is chosen by the parties, the arbitration rules of our
domestic arbitration bodies would not be applied. As signatory to the Arbitration Rules of the UNCITRAL
Model Law on International Commercial Arbitration[41] of the United Nations Commission on
International Trade Law (UNCITRAL) in the New York Convention on June 21, 1985, the Philippines
committed itself to be bound by the Model Law. We have even incorporated the Model Law in Republic
Act No. (RA) 9285, otherwise known as the Alternative Dispute Resolution Act of 2004 entitled 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.
Transfield Philippines, Inc. vs. Luzon Hydro Corporation

Facts:LHC claims that Transfield Philippines, Inc. (TPI) is guilty of forum shopping when it
filed the following suits:Civil Case No. 04-332 pending before the RTC of Makati, ICC Case No.
11264/TE/MW filed before the International Court of Arbitration, International Chamber of
Commerce (ICC), CA-G.R. SP No. 61901 was a petition for review of the Decision in Civil Case
No. 00-1312, wherein TPI claimed that LHC’s call on the securities was premature considering,
that the issue of default has not yet been resolved with finality; among others.After their oral
arguments, the ICC arbitral tribunal had issued its Final Award ordering LHC to pay TPI
US$24,533,730.00 (including the US$17,977,815.00 proceeds of the two standby letters of
credit).TPI’s filed a petition, which was captioned as one “For: Confirmation, Recognition and
Enforcement of Foreign Arbitral Award in Case 11264 TE/MW, ICC International Court of
Arbitration. (Place of arbitration: Singapore).”

According to LHC, the filing of the above case constitutes forum shopping since it is the same
claim for the return of US$17.9 Million which TPI made before the ICC Arbitral Tribunal and
before this Court. LHC adds that while Civil Case No. 04-332 is styled as an action for money,
the Third Partial Award used as basis of the suit does not authorize TPI to seek a writ of
execution for the sums drawn on the letters of credit. Said award does not even contain an order
for the payment of money, but instead has reserved the quantification of the amounts for a
subsequent determination, LHC argues. In fact, even the Fifth Partial Awarddoes not contain
such orders. LHC insists that the declarations or the partial awards issued by the ICC Arbitral
Tribunal do not constitute orders for the payment of money and are not intended to be
enforceable as such, but merely constitute amounts which will be included in the Final Award
and will be taken into account in determining the actual amount payable to the prevailing party.

Issue:WON the pendency of arbitral proceedings prohibitsthe parties from resorting to the courts
for provisional reliefs.

Ruling:No. As a fundamental point, the pendency of arbitral proceedings does not foreclose
resort to the courts for provisional reliefs. The Rules of the ICC, which governs the parties’
arbitral dispute, allows the application of a party to a judicial authority for interim or
conservatory measures. Likewise, Section 14 of Republic Act (R.A.) No. 876 (The Arbitration
Law) recognizes the rights of any party to petition the court to take measures to safeguard and/or
conserve any matter which is the subject of the dispute in arbitration. In addition, R.A. 9285,
otherwise known as the “Alternative Dispute Resolution Act of 2004,” allows the filing of
provisional or interim measures with the regular courts whenever the arbitral tribunal has no
power to act or to act effectively.

Moreover, the New York Convention, to which the Philippines is a signatory, governs the
recognition and enforcement of foreign arbitral awards. The applicability of the New York
Convention in the Philippines was confirmed in Section 42 of R.A. 9285. Said law also provides
that the application for the recognition and enforcement of such awards shall be filed with the
proper RTC. While TPI’s resort to the RTC for recognition and enforcement of the Third Partial
Award is sanctioned by both the New York Convention and R.A. 9285, its application for
enforcement, however, was premature, to say the least. True, the ICC Arbitral Tribunal had
indeed ruled that LHC wrongfully drew upon the securities, yet there is no order for the payment
or return of the proceeds of the said securities. (note: the court dismissed both forum shopping
charges)

UNIWIDE SALES REALTY AND RESOURCES CORPORATION v. TITAN-IKEDA


CONSTRUCTION AND DEVELOPMENT CORPORATION
511 SCRA 335 (2006)

FACTS:
This case originated from an action for a sum of money filed by Titan-Ikeda Construction
and Development Corporation (Titan) against Uniwide Sales Realty and Resources Corporation
(Uniwide). It involved Titan- Ikeda who entered into three construction agreements with
Uniwide.
Titan-Ikeda filed an action for sum of money againstUniwidebecause the latter allegedly
failed to pay certain claims billed by Titanafter the completion of the 3 projects. Uniwide moved
for the dismissal/suspension of theproceeding for them to first undergo arbitration. The
Arbitrators issued terms of reference which was signed by the parties. Titans complaint was thus
refiled with the Construction Industry Arbitration Commission (CIAC).
CIAC rejected the claim on liquidated damages and further decided that Uniwide is absolved of
any liability in its Project 1; Uniwide is absolved of any liability for VAT payment and for the
account of Titan and that the latter is absolved from liability for defective construction in Project
2; and lastly, Uniwide is held liable for unpaid balance plus 12% interest/ annum and to pay the
full VAT for the additional work where no written authorization was presented.
Uniwide then filed a petition for review with CA after the denial of motion for
reconsideration but was likewise denied. As such, Uniwide filed a petition for review under Rule
45 to seek partial reversal of the decision of CA which modified the decision of
CIAC.Uniwideclaims that CIAC should have applied procedural rules with more liberality
because it was an administrative tribunal free from all rigid technicalities of regular
courts because CA held that the issue on liquidated damages should be left
fordetermination in future proceedings.
ISSUES:
1. Whether or not CIAC can only resolve issues brought before it by the parties through the
Terms of Reference (TOR) which functions similarly as a pre-trial brief.
2. Whether or not the factual findings of CIAC are final and conclusive and not reviewable
by the Court.
RULING:
1. Yes. Arbitration has been defined as an arrangement for taking and abiding
by the judgment of selected persons in some disputed matter, instead of
carrying it to established tribunals of justice, and is intended to avoid the
formalities, the delay, the expense and vexation of ordinary litigation.
Voluntary arbitration, on the other hand, involves the reference of a dispute
to an impartial body, the members of which are chosen by the parties
themselves, which parties freely consent in advance to abide by the arbitral
award issued after proceedings where both parties had the opportunity to be
heard.
The basic objective is to provide a speedy and inexpensive method of
settling disputes by allowing the parties to avoid formalities, delay, expense,
and aggravation which commonly accompany ordinary litigation, especially
litigation which goes through the entire hierarchy of courts.
As an arbitration body, the CIAC can only resolve issues brought
before it by the parties through the TOR which functions similarly as a
pre-trial brief. Thus, if Uniwide’s claim for liquidated damages was not
raised as an issue in the TOR or in any modified or amended version of
it, the CIAC cannot make a ruling on it. The Rules of Court cannot be
used to contravene the spirit of the CIAC rules, whose policy and
objective is to provide a fair and expeditious settlement of construction
disputes through a non-judicial process which ensures harmonious and
friendly relations between or among the parties.
2. No. There are exceptions. As a rule, findings of fact of administrative agencies and quasi-
judicial bodies, which have acquired expertise because their jurisdiction is confined to
specific matters, are generally accorded not only respect, but also finality, especially
when affirmed by the CA. In particular, factual findings of construction arbitrators are
final and conclusive and not reviewable by this Court on appeal. This rule, however
admits of certain exceptions. In David v. Construction Industry and Arbitration
Commission, the Court ruled that, as exceptions, factual findings of construction
arbitrators may be reviewed by the Court when the petitioner proves affirmatively that:
(1) the award was procured by corruption, fraud or other undue means; (2) there was
evident partiality or corruption of the arbitrators or any of them; (3) the arbitrators were
guilty of misconduct in refusing to hear evidence pertinent and material to the
controversy; (4) one or more of the arbitrators were disqualified to act as such under
Section 9 of RA No. 876 and willfully refrained from disclosing such disqualifications or
of any other misbehavior by which the rights of any party have been materially
prejudiced; (5) the arbitrators exceeded their powers, or so imperfectly executed them,
that a mutual, final and definite award upon the subject matter submitted to them was not
made.

Other recognized exceptions are as follows:


1. When there is a very clear showing of grave abuse of discretion resulting in lack or
loss of jurisdiction as when a party was deprived of a fair opportunity to present its
position before the Arbitral Tribunal or when an award is obtained through fraud or
the corruption of arbitrators.
2. When the findings of the CA are contrary to those of the CIAC.
3. When a party is deprived of administrative due process.

People vs. Vanzuela, 559 SCRA 234

Facts:

Veneranda is the wife of the late Dionisio Paler, Sr.3 who is the registered owner of a parcel of irrigated
riceland, containing an area of more than four (4) hectares, situated in Barangay Mabini (Roxas),Mainit,
Surigaodel Norte. One (1) hectare of this riceland (subject property) was cultivated by the respondents
as agricultural tenants for more than ten (10) years, with an agreed lease rental of twelve and one half
(12½) cavans of palay, at 45 kilos per cavan, per harvest. The respondents allegedly failed to pay the
rentals since 1997. Initially, Veneranda brought the matter before the Department of Agrarian Reform
(DAR) Office in Mainit, Surigaodel Norte, but no amicable settlement was reached by the parties. Thus,
Veneranda filed a criminal complaint for estafa against the respondents. However, the RTC dismissed
the criminal case for lack of jurisdiction.

Issue:

Whether or not the DARAB has jurisdiction over the charge for estafasince it involves agricultural
tenants of the private complainant.

Ruling:

No. The law and the DARAB Rules are deafeningly silent on the conferment of any criminal jurisdiction in
favor of the DARAB. It is worth stressing that even the jurisdiction over the prosecution of criminal
offenses in violation of RA 6657 per se is lodged with the SACs and not with the DARAB. While indeed,
the parties admit that there is an agricultural tenancy relationship in this case, and that under the
circumstances, Veneranda as landowner could have simply filed a case before the DARAB for collection
of lease rentals and/or dispossession of respondents as tenants due to their failure to pay said lease
rentals, there is no law which prohibits landowners from instituting a criminal case for estafa, as defined
and penalized under Article 315 of the Revised Penal Code, against their tenants. Succinctly put, though
the matter before us apparently presents an agrarian dispute, the RTC cannot shirk from its duty to
adjudicate on the merits a criminal case initially filed before it, based on the law and evidence
presented, in order to determine whether an accused is guilty beyond reasonable doubt of the crime
charged.

Tijam vs. Sibonghanoy


131 PHIL 556 (1968)

FACTS:

On July 19,1948, spouses Serafin Tijam and Felicitas Tagalog filed complaint against spouses
Magdaleno Sibonghanoy and Lucia Baguio to recover the sum of money amounting P1,908.00
plus legal interest. The case was filed before the Court of First Instance of Cebu. A writ of
attachment was then issued by the Court against defendant’s properties.

On the 31st day of the same month, defendants together with the Manila Surety and Fidelity Co.,
Inc. hereinafter referred to as the Surety, filed counter-bond. After trial upon the issues thus
joined, the Court rendered judgement which was in favor of the plaintiffs. A wirt of execution
was issued against the defendant. The writ having been returned unsatisfied, the plaintiffs moved
for the issuance of a writ of execution against surety. Surety moved to quash the writ but was
denied and then appealed to CA without raising the issue of on lack of jurisdiction. CA affirmed
the appealed decision. Surety then filed motion to Dismiss on the ground of lack of jurisdiction
against CFI cebu in view of the effective of judiciary act of 1948 a month before the filing of the
petition for recovery.

ISSUE:

I-Whether or not the Motion to dismiss still meritorious on the ground of lack of jurisdiction.

II-whether or not lack of jurisdiction can be the subject matter of Alternative Dispute Resolution

RULING:

No, A party may be stopped or barred from raising a question in different ways and for different
reasons. Laches, in general sense is failure to neglect for unreasonable and unexplained length of
time to do that which by exercising due diligence, could or should have been done earlier. It has
been held that a party cannot invoke the jurisdiction of the court to secure affirmative relief
against his opponent and, after, obtaining or failing to obtain such relief, repudiate or question
that same jurisdiction. In the case cited, by way of explaining the rule, it was further said that the
question whether the court had jurisdiction either of the subject-matter of the action or of the
parties was not important in such cases because the party is barred from such conduct not
because the judgment or order of the court is valid and conclusive as an adjudication, but for the
reason that such a practice cannot be tolerated- obviously for public policy.

No, the issue on the jurisdiction of courts is not within the ambit of Alternative Dispute
Resolution.

METRO CONSTRUCTION vs CHATHAM PROPERTIES

FACTS :

Respondent Chatham Properties, Inc. (CHATHAM) and petitioner Metro Construction, Inc. (MCI)
entered into a contract for the construction of a multi-storey building known as the Chatham House. In
April 1998, MCI sought to collect from CHATHAM a sum of money for unpaid progress billings and other
charges and instituted a request for adjudication of its claims with the CIAC.

CIAC rendered JUdgement in favor of the Claimant [MCI] directing Respondent [CHATHAM] to
pay Claimant [MCI] the net sum of 16,126,922.91PESOS. Impugning the decision of the CIAC,
CHATHAM instituted a petition for review with the Court of Appeals

In upholding the decision of the CIAC, the Court of Appeals confirmed the jurisprudential principle
that absent any showing of arbitrariness, the CIAC's findings as an administrative agency and quasi-
judicial body should not only be accorded great respect but also given the stamp of finality.

Respondent argued that CA cannot review the findings of CIAC on the ground that EO. No. 1008 vest
upon the CIAC original and exclusive jurisdiction over disputes arising from, or connected with, contracts
entered into by parties involved in construction in the Philippines, whether the dispute arises before or
after the completion of the contract, or after the abandonment or breach thereof. By express provision of
Section 19 thereof, the arbitral award of the CIAC is final and unappealable, except on questions of law,
which are appealable to the Supreme Court.

The pertitioners contended that the subsequent Supreme Court issuances on appellate
procedure and R.A. No. 7902 removed from the Supreme Court its appellate jurisdiction in Section 19 of
E.O. No. 1008 and vested the same in the Court of Appeals, and whether appeals from CISC awards are
no longer confined to questions of law.

ISSUE :

WON under existing law and rules the Court of Appeals can also review findings of facts of the
Construction Industry Arbitration Commission (CIAC)

HELD :

YES.

Through Circular No. 1-91, the Supreme Court intended to establish a uniform procedure for the
review of the final orders or decisions of the Court of Tax Appeals and other quasi judicial. The Circular
designated the Court of Appeals as the reviewing body to resolve questions of fact or of law or mixed
questions of fact and law.

It is clear that Circular No. 1-91 covers the CIAC. In the first place, it is a quasi judicial agency. In
the second place, the language of Section 1 of Circular No. 1-91 emphasizes the obvious inclusion of the
CIAC even if it is not named in the enumeration of quasi-judicial agencies. In sum, under Circular No. 1-
91, appeals from the arbitral awards of the CIAC may be brought to the Court of Appeals, and not to the
Supreme Court alone. The grounds for the appeal are likewise broadened to include appeals on
questions of facts and appeals involving mixed questions of fact and law

The jurisdiction of the Court of Appeals over appeals from final orders or decisions of the CIAC is
further fortified by the amendments to B.P. Blg. 129, as introduced by RA. No. 7902. With the
amendments, the Court of Appeals is vested with appellate jurisdiction over all final judgments, decisions,
resolutions, orders or awards of Regional Trial Courts and quasi-judicial agencies, instrumentalities,
boards or commissions, except "those within the appellate jurisdiction of the Supreme Court in
accordance with the Constitution, the Labor Code of the Philippines under Presidential Decree No. 442,
as amended, the provisions of this Act, and of subparagraph (1) of the third paragraph and subparagraph
(4) of the fourth paragraph of Section 17 of the Judiciary Act of 1948.". In view of all the foregoing, The
Supreme Court rejects MCI's submission that Circular No. 1-91, B.P. Blg. 129, as amended by RA. 7902,
Revised Administrative Circular 1-95, and Rule 43 of the 1997 Rules of Civil Procedure failed to
efficaciously modify the provision on appeals in E.O. No. 1008.

21. ABS CBN broadcasting v World Interactive Network System

Facts:

On September 27, 1999, petitioner ABS-CBN Broadcasting Corporation entered into a


licensing agreement with respondent World Interactive Network Systems (WINS) Japan Co., Ltd., a
foreign corporation licensed under the laws of Japan. Under the agreement, respondent was granted
the exclusive license to distribute and sublicense the distribution of the television service known as
"The Filipino Channel" (TFC) in Japan.A dispute arose between the parties when petitioner accused
respondent of inserting nine episodes of WINS WEEKLY, a weekly 35-minute community news
program for Filipinos in Japan, into the TFC programming. Petitioner claimed that these were
"unauthorized insertions" constituting a material breach of their agreement. Consequently, on May 9,
2002, petitioner notified respondent of its intention to terminate the agreement effective June 10,
2002.

Thereafter, respondent filed an arbitration suit pursuant to the arbitration clause of its
agreement with petitioner. It contended that the airing of WINS WEEKLY was made with petitioner's
prior approval. It also alleged that petitioner only threatened to terminate their agreement because it
wanted to renegotiate the terms thereof to allow it to demand higher fees. Respondent also prayed
for damages for petitioner's alleged grant of an exclusive distribution license to another entity, NHK
(Japan Broadcasting Corporation).The parties appointed Professor Alfredo F. Tadiar to act as sole
arbitrator. The arbitrator found in favor of respondent. He held that petitioner gave its approval to
respondent for the airing of WINS WEEKLY as shown by a series of written exchanges between the
parties

Petitioner filed in the CA a petition for review under Rule 43 of the Rules of Court or, in the
alternative, a petition for certiorari under Rule 65 of the same Rules, with application for temporary
restraining order and writ of preliminary injunction.

Issue:

Whether or not an aggrieved party in a voluntary arbitration dispute may avail of, directly in the CA, a
petition for review under Rule 43 or a petition for certiorari under Rule 65 of the Rules of Court,
instead of filing a petition to vacate the award in the RTC when the grounds invoked to overturn the
arbitrator’s decision are other than those for a petition to vacate an arbitral award enumerated under
RA 876.

Ruling:

No. RA 876 itself mandates that it is the Court of First Instance, now the RTC, which has jurisdiction over
questions relating to arbitration, such as a petition to vacate an arbitral award.

Section 24 of RA 876 provides for the specific grounds for a petition to vacate an award made by an
arbitrator:

Sec. 24. Grounds for vacating award. - In any one of the following cases, the court must
make an order vacating the award upon the petition of any party to the controversy when such
party proves affirmatively that in the arbitration proceedings:

(a) The award was procured by corruption, fraud, or other undue means; or

(b) That there was evident partiality or corruption in the arbitrators or any of them; or

(c) That the arbitrators were guilty of misconduct in refusing to postpone the hearing upon
sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy;
that one or more of the arbitrators was disqualified to act as such under section nine hereof, and
willfully refrained from disclosing such disqualifications or of any other misbehavior by which the
rights of any party have been materially prejudiced; or

(d) That the arbitrators exceeded their powers, or so imperfectly executed them, that a mutual,
final and definite award upon the subject matter submitted to them was not made.
Based on the foregoing provisions, the law itself clearly provides that the RTC must issue an order
vacating an arbitral award only "in any one of the . . . cases" enumerated therein. Under the legal
maxim in statutory construction expressiouniusestexclusioalterius, the explicit mention of one thing
in a statute means the elimination of others not specifically mentioned. As RA 876 did not expressly
provide for errors of fact and/or law and grave abuse of discretion (proper grounds for a petition for
review under Rule 43 and a petition for certiorari under Rule 65, respectively) as grounds for
maintaining a petition to vacate an arbitral award in the RTC, it necessarily follows that a party may
not avail of the latter remedy on the grounds of errors of fact and/or law or grave abuse of discretion
to overturn an arbitral award.

Adamson v. Court of Appeals gave ample warning that a petition to vacate filed in the RTC which is
not based on the grounds enumerated in Section 24 of RA 876 should be dismissed. In that case,
the trial court vacated the arbitral award seemingly based on grounds included in Section 24 of RA
876 but a closer reading thereof revealed otherwise. On appeal, the CA reversed the decision of the
trial court and affirmed the arbitral award.

In Luzon Development Bank v. Association of Luzon Development Bank Employees, 249 SCRA 162
(1965), the Court held that a voluntary arbitrator is properly classified as a “quasi-judicial
instrumentality” and is, thus, within the ambit of Section 9 (3) of the Judiciary Reorganization Act, as
amended. The proper remedy from the adverse decision of a voluntary arbitrator, if errors of fact
and/or law are raised, is a petition for review under Rule 43 of the Rules of Court.

As regards the matter of agreements

It is well within the power and jurisdiction of the Court to inquire whether any instrumentality of the
Government, such as a voluntary arbitrator, has gravely abused its discretion in the exercise of its
functions and prerogatives. Any agreement stipulatingthat “the decision of the arbitrator shall be final
and unappealable” and “that no further judicial recourse if either party disagrees with the whole or
any part of the arbitrator’s award may be availed of” cannot be held to preclude in proper cases the
power of judicial review which is inherent in courts. We will not hesitate to review a voluntary
arbitrator’s award where there is a showing of grave abuse of authority or discretion and such is
properly raised in a petition for certiorari and there is no appeal, nor any plain, speedy remedy in the
course of law.

UNIWIDE SALES REALTY AND RESOURCES CORPORATION, petitioner,


vs.
TITAN-IKEDA CONSTRUCTION AND DEVELOPMENT CORPORATION, respondent.

FACTS:This case involved Titan-Ikeda who entered into 3 construction agreement/ contract
/project with Uniwide. Later Titan-Ikeda filed an action for sum of money against Uniwide with
the RTC because Uniwide allegedly failed to pay certain claims billed by Titan after the
completion of the 3 projects. Uniwide moved for the dismissal/suspension of the proceeding for
them to first undergo arbitration. The Arbitrators issued terms of reference which was signed by
the parties, (Uniwide did not attempt to modify the TOR to accommodate its belated
counterclaim on deadlines for liquidated damages.)Titan then refiled the case with CIAC.

CIAC Decision: Project 1: Uniwide is absolved of any liability.Project 2: Uniwide is absolved of


any liability for VAT payment and for the account of Titan, and Titan is absolved from liability for
defective construction.Project 3: Uniwide id held liable for unpaid balance (5,158,364.63) plus
12% interest/annum and to pay the full VAT for the additional work where no written
authorization was presented. CIAC likewise rejected the claim on liquidated damages.

After Uniwide’s motion for reconsideration was denied by CIAC, it filed a petition for review with
CA but same was denied, thus, Uniwide filed a petition for review under rule 45 to seek partial
reversal of the decision of CA which modified the decision of CIAC. Uniwide claims that CIAC
should have applied procedural rules such as section 5, Rule 10 with more liberality because it
was an administrative tribubal free from all rigid technicalities of regular courts because CA
held that the issue on liquidated damages should be left for determination in future proceedings.

ISSUE:Whether or not CIAC should have applied the Rules of Court in the arbitration
proceeding.

RULING: No .Rule of Procedure Governing Construction Arbitration promulgated by the CIAC


contains no provision on the application of the Rules of Court to arbitration proceedings, even in
a suppletory capacity.Such importation of the Rules of Court provision on amendment to
conform to evidence would contravene the spirit, if not the letter of the CIAC rules. This is for the
reason that the formulation of the Terms of Reference is done with the active participation of the
parties and their counsel themselves. The TOR is further required to be signed by all the
parties, their respective counsel and all the members of the Arbitral Tribunal. Unless the issues
thus carefully formulated in the Terms of Reference were expressly showed to be amended,
issues outside thereof may not be resolved. As already noted in the Decision, "no attempt was
ever made by the [Uniwide] to modify the TOR in order to accommodate the issues related to its
belated counterclaim" on this issue.

Arbitration has been defined as "an arrangement for taking and abiding by the
judgment of selected persons in some disputed matter, instead of carrying it to
established tribunals of justice, and is intended to avoid the formalities, the delay, the
expense and vexation of ordinary litigation.

23. Kinds of Arbitration

GR. 126619 Dec. 20, 2006

Uniwide Sales Realty and Resources Corporation v. Titan-Ikeda Construction and


Development Corporation

FACTS:Titan filed an action for a sum of money.


Project 1:Written construction contract where Titan undertook the construction of Uniwide’s
Warehouse Club & Admin. Bldg [Libis, QC] for over P120.9m.
Project 2:Titan and Uniwide entered into an agreement, where Titan agreed to construct an
additional floor and to renovate Uniwide’s warehouse located in EDSA Central Market Area
(Mandaluyong).No written contract. The cost estimate was over P21.3m, inclusive of Titan’s
20% mark up. Titan received P15m.
Project 3:Written construction contract where Titan undertook the construction of Uniwide’s
Sales Dept. Store Bldg. [Caloocan] for P118m.

Uniwide asserts that it overpaid Titan for unauthorized additional works for Projects 1 and
3, that it is not liable to pay VAT for Proj.1, and that it is entitled to liquidated damages for
the delay incurred in constructing Projs. 1 & 3, and that it should not have been found liable
for deficiencies in the defectively constructed Proj. 2.

An Arbitral Tribunal [1 chairman, 2 members] was created in accordance with the Construction
Industry Arbitration Commission (CIAC) Rules of Procedure Governing Construction
Arbitration. It conducted a preliminary conference with the parties and thereafter issued a
Terms of Reference (TOR) which was signed by the parties. The tribunal also conducted an
ocular inspection, hearings, and received the evidence of the parties consisting of affidavits
which were subject to cross-examination.

The Arbitral Tribunal held that: 1.)Uniwide is absolved of liability for Proj. 1; 2.)Uniwide is
absolved of any liability for the VAT, Titan is absolved of any liability on the counterclaim for
defective construction of Proj 2. Uniwide is liable to pay the unpaid balance w/ 12% interest;
3.)Uniwide is liable to pay unpaid balance of P5.1m w/ 12% interest and to pay the full VAT for
Proj. 3.

Uniwide filed MR, CIAC denied. Appealed to CA. Dismissed. MR also denied by CA.Uniwide
went to SC.

ISSUE: WON SC may review factual issues in matters arising from arbitration.

HELD:No.Arbitration has been defined as an arrangement for taking and abiding by the
judgment of selected persons in some disputed matter, instead of carrying it to established
tribunals of justice, and is intended to avoid the formalities, the delay, the expense and vexation
of ordinary litigation. Voluntary arbitrationinvolves the reference of a dispute to an impartial
body, the members of which are chosen by the parties themselves, which parties freely consent
in advance to abide by the arbitral award issued after proceedings where both parties had the
opportunity to be heard. The basic objective is to provide a speedy and inexpensive method of
settling disputes by allowing the parties to avoid the formalities, delay, expense and
aggravation which commonly accompany ordinary litigation, especially litigation which
goes through the entire hierarchy of courts.

As an arbitration body, the CIAC can only resolve issues brought before it by the parties through
the TOR which functions similarly as a pre-trial brief. Thus, if Uniwide’s claim for liquidated
damages was not raised as an issue in the TOR or in any modified or amended version of it, the
CIAC cannot make a ruling on it. The Rules of Court cannot be used to contravene the spirit of
the CIAC rules, whose policy and objective is to provide a fair and expeditious settlement of
construction disputes through a non-judicial process which ensures harmonious and friendly
relations between or among the parties.

The Rule of Procedure Governing Construction Arbitration promulgated by the CIAC contains
no provision on the application of the Rules of Court to arbitration proceedings, even in a
suppletory capacity. The Tribunal holds that such importation of the Rules of Court provision
on amendment to conform to evidence would contravene the spirit, if not the letter of the CIAC
rules.

The Court will not review the factual findings of an arbitral tribunal upon the artful
allegation that such body had "misapprehended facts" and will not pass upon issues which
are, at bottom, issues of fact, no matter how cleverly disguised they might be as "legal
questions." The parties here had recourse to arbitration and chose the arbitrators
themselves; they must have had confidence in such arbitrators. The Court will not,
therefore, permit the parties to relitigate before it the issues of facts previously presented
and argued before the Arbitral Tribunal, save only where a clear showing is made that, in
reaching its factual conclusions, the Arbitral Tribunal committed an error so egregious and
hurtful to one party as to constitute a grave abuse of discretion resulting in lack or loss of
jurisdiction. Prototypical examples would be factual conclusions of the Tribunal which resulted
in deprivation of one or the other party of a fair opportunity to present its position before the
Arbitral Tribunal, and an award obtained through fraud or the corruption of arbitrators. Any
other, more relaxed rule would result in setting at naught the basic objective of a voluntary
arbitration and would reduce arbitration to a largely inutile institution.

[I cannot fully grasp the case, but the ruling I placed here is focused on ADR. But here are some
facts—Uniwide claimed defects and they had an expert witness Engr. Cruz, who said that the
columns were severely damaged judging from the external cracks that was readily apparent. The
Arbitral Tribunal conducted an ocular inspection—they ripped off the plaster and found that the
column was actually still structurally sound. The alleged defective construction by Titan was in
fact an old column.Uniwide had the burden of proving that there was defective construction
in Project 2 but it failed to discharge this burden. Even the credibility of its own witness
was severely impaired.The CIAC held that the post-tensioning of the new concrete slab could
not have caused any of the defects manifested by the old columns.SCis bound by this finding of
fact by the CIAC.]

Benguet Corporation vs. Department of Environment and Natural Resources-Mines


Adjudication Board, 545 SCRA 196, G.R. No. 163101 February 13, 2008

Facts: Benguet Corporation and J.G. Realty and Mining entered into a Royalty
Agreement with Option to Purchase (RAWOP), wherein J.G. Realty was acknowledged as the
owner of four mining claims w/ total area of 288.8656 ha in Camarines Norte, covered by
Mineral Production Sharing Agreement Application No. APSA-V-0009 which was jointly filed
by J.G. Realty as claim owner and Benguet as operator. The RAWOP, among others, provide
that “any dispute x x x between Benguet and J.G. Realty] with reference to anything whatsoever
pertaining to the RAWOP x x x shall not be cause of any action x x x in any court or
administrative agency but shall x x x be referred to a Board of Arbitrators consisting of three (3)
members, one to be selected by Benguet, another to be selected by [J.G. Realty] and the third to
be selected by the aforementioned two arbitrators so appointed.”

J.G. Realty subsequently informed Benguet that it was terminating the RAWOP by reason of
Benguet’s failure to comply with its obligations thereunder. J.G. Realty sought the cancellation
of the RAWOP, filing a petition for this purpose with the Panel of Arbitrators which declared the
RAWOP cancelled. Benguet then filed a notice of appeal with the Mines Adjudication Board.
The decision was affirmed on appeal to the MAB.

Benguet contended that the issue raised by the J.G. Realty should have been raised first with the
arbitration before POA took cognizance of the case. J.G. Realty however, claims that such prior
resort to arbitration is unavailing, because it is the POA’s mandate to arbitrate disputes regarding
mineral agreements.

Issue: Should the controversy have first been submitted to arbitration before the POA
took cognizance of the case

Ruling: Yes. J.G. Realty’s contention, is misplaced. A distinction must be made


between voluntary and compulsory arbitration. Compulsory arbitration has been defined both as
the process of settlement of labor disputes by a government agency which has the authority to
investigate and to make an award which is binding on all the parties, and as a mode of arbitration
where the parties are compelled to accept the resolution of their dispute through arbitration by a
third party. While a voluntary arbitrator is not part of the governmental unit or labor
department’s personnel, said arbitrator renders arbitration services provided for under labor laws.

There is a clear distinction between compulsory and voluntary arbitration. The arbitration
provided by the POA is compulsory, while the nature of the arbitration provision in the RAWOP
is voluntary, not involving any government agency. Thus, J.G. Realty’s argument on this matter
must fail.
Availment of voluntary arbitration before resort is made to the courts or quasi-judicial agencies
of the government is a valid contractual stipulation that must be adhered to by the parties.

Korea Technologies vs Alberta Lerma


GR. No. 143581 January 7, 2008

Facts: Petitioner Korea Technologies Co., Ltd. (KOGIES) is a Korean corporation which is engaged in the
supply and installation of Liquefied Petroleum Gas (LPG) Cylinder manufacturing plants, while private
respondent Pacific General Steel Manufacturing Corp. (PGSMC) is a domestic corporation. On March 5,
1997, PGSMC and KOGIES executed a Contract whereby KOGIES would set up an LPG Cylinder
Manufacturing Plant in Carmona, Cavite. The contract was executed in the Philippines. On April 7, 1997,
the parties executed, in Korea, an Amendment for Contract No. KLP-970301 dated March 5, 1997
amending the terms of payment. The contract and its amendment stipulated that KOGIES will ship the
machinery and facilities necessary for manufacturing LPG cylinders for which PGSMC would pay USD
1,224,000. KOGIES would install and initiate the operation of the plant for which PGSMC bound itself to
pay USD 306,000 upon the plants production of the 11-kg. LPG cylinder samples. Thus, the total contract
price amounted to USD 1,530,000. On October 14, 1997, PGSMC entered into a Contract of Lease with
Worth Properties, Inc. (Worth) for use of Worths 5,079-square meter property with a 4,032-square
meter warehouse building to house the LPG manufacturing plant. The monthly rental was PhP 322,560
commencing on January 1, 1998 with a 10% annual increment clause. Subsequently, the machineries,
equipment, and facilities for the manufacture of LPG cylinders were shipped, delivered, and installed in
the Carmona plant. PGSMC paid KOGIES USD 1,224,000. However, gleaned from the Certificate executed
by the parties on January 22, 1998, after the installation of the plant, the initial operation could not be
conducted as PGSMC encountered financial difficulties affecting the supply of materials, thus forcing the
parties to agree that KOGIES would be deemed to have completely complied with the terms and
conditions of the March 5, 1997 contract. For the remaining balance of USD306,000 for the installation
and initial operation of the plant, PGSMC issued two postdated checks: (1) BPI Check No. 0316412 dated
January 30, 1998 for PhP 4,500,000; and (2) BPI Check No. 0316413 dated March 30, 1998 for PhP
4,500,000. When KOGIES deposited the checks, these were dishonored for the reason PAYMENT
STOPPED. Thus, on May 8, 1998, KOGIES sent a demand letter to PGSMC threatening criminal action for
violation of Batas Pambansa Blg. 22 in case of nonpayment. On the same date, the wife of PGSMCs
President faxed a letter dated May 7, 1998 to KOGIES President who was then staying at a Makati City
hotel. She complained that not only did KOGIES deliver a different brand of hydraulic press from that
agreed upon but it had not delivered several equipment parts already paid for.

Issues: Whether or not the arbitration clause in the contract of the parties should govern.

Held:Yes. While it is established in this jurisdiction is the rule that the law of the place where the
contract is made governs—lex loci contractus—Art. 2044 of the Civil Code sanctions the validity of
mutually agreed arbitral clause or the finality and binding effect of an arbitral award.—Established in
this jurisdiction is the rule that the law of the place where the contract is made governs. Lex loci
contractus. The contract in this case was perfected here in the Philippines. Therefore, our laws ought to
govern. Nonetheless, Art. 2044 of the Civil Code sanctions the validity of mutually agreed arbitral clause
or the finality and binding effect of an arbitral award. Art. 2044 provides, “Any stipulation that the
arbitrators’ award or decision shall be final, is valid, without prejudice to Articles 2038, 2039 and 2040.”
(Emphasis supplied.) Arts. 2038, 2039, and 2040 abovecited refer to instances where a compromise or
an arbitral award, as applied to Art. 2044 pursuant to Art. 2043, may be voided, rescinded, or annulled,
but these would not denigrate the finality of the arbitral award.
For domestic arbitration proceedings, we have particular agencies to arbitrate disputes arising from
contractual relations. In case a foreign arbitral body is chosen by the parties, the arbitration rules of our
domestic arbitration bodies would not be applied. As signatory to the Arbitration Rules of the UNCITRAL
Model Law on International Commercial Arbitration of the United Nations Commission on International
Trade Law (UNCITRAL) in the New York Convention on June 21, 1985, the Philippines committed itself to
be bound by the Model Law. We have even incorporated the Model Law in Republic Act No. (RA) 9285,
otherwise known as the Alternative Dispute Resolution Act of 2004 entitled 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, promulgated on April 2, 2004. Secs. 19 and 20
of Chapter 4 of the Model Law are the pertinent provisions.
While the RTC does not have jurisdiction over disputes governed by arbitration mutually agreed upon by
the parties, still the foreign arbitral award is subject to judicial review by the RTC which can set aside,
reject, or vacate it. In this sense, what this Court held in Chung Fu Industries (Phils.), Inc., 206 SCRA 545
(1992), relied upon by KOGIES is applicable insofar as the foreign arbitral awards, while final and
binding, do not oust courts of jurisdiction since these arbitral awards are not absolute and without
exceptions as they are still judicially reviewable. Chapter 7 of RA 9285 has made it clear that all arbitral
awards, whether domestic or foreign, are subject to judicial review on specific grounds provided for.

26. FRABELLE FISHING CORPORATION VS. PHILIPPINE LIFE INSURANCE COMPANY

FACTS

On May 8, 1996, respondents entered into a Memorandum of Agreement (1996 MOA) whereby
each agreed to contribute cash, property, and services for the construction and development of
Philamlife Tower, a 45-storey office condominium along Paseo de Roxas, Makati City.

On December 6, 1996, respondents executed a Deed of Assignment (1996 DOA) wherein they
assigned to Frabelle Properties Corporation (Frabelle) their rights and obligations under the 1996
MOA with respect to the construction, development, and subsequent ownership of Unit No. 38-B
located at the 38th floor of Philamlife Tower. The parties also stipulated that the assignee shall be
deemed as a co-developer of the construction project with respect to Unit No. 38-B.

Frabelle, in turn, assigned to Frabelle Fishing Corporation (Frabelle Fishing), petitioner herein,
its rights, obligations and interests over Unit No. 38-B.

On March 9, 1998, petitioner Frabelle Fishing and respondents executed a Memorandum of


Agreement (1998 MOA) to fund the construction of designated office floors inPhilamlife Tower.

The dispute between the parties started when petitioner found material concealment on the part
of respondents regarding certain details in the 1996 DOA and 1998 MOA and their gross
violation of their contractual obligations as condominium developers. These violations are: (a)
the non-construction of a partition wall between Unit No. 38-B and the rest of the floor area; and
(b) the reduction of the net usable floor area from four hundred sixty eight (468) square meters to
only three hundred fifteen (315) square meters.
Dissatisfied with its existing arrangement with respondents, petitioner, on October 22, 2001,
referred the matter to the Philippine Dispute Resolution Center, Inc. (PDRCI) for
arbitration. However, in a letter dated November 7, 2001, respondents manifested their refusal to
submit to PDRCI’s jurisdiction.

On February 11, 2002, petitioner filed with the Housing and Land Use Regulatory Board
(HLURB), Expanded National Capital Region Field Office a complaint for reformation of
instrument, specific performance and damages against respondents, docketed as HLURB Case
No. REM-021102-11791. Petitioner alleged, among others, that the contracts do not reflect the
true intention of the parties; and that it is a mere buyer and not co-developer and/or co-owner of
the condominium unit.

ISSUE

Whether or not the HLURB has jurisdiction over the complaint for reformation of instruments,
specific performance and damages

HELD

No. As the records show, the complaint filed by petitioner with the HLURB is one
for reformation of instruments. The instruments executed by the complainant FRABELLE
and respondent PHILAM was that of a Contract to Sell.The parties are thereby governed by
the provisions of P.D. 957 entitled, Regulating the Sale of Subdivision Lots and Condominiums,
Providing Penalties for Violations Thereof as buyer and developer, respectively, of a
condominium unit and not as co-developer and/or co-owner of the same;

We hold that being an action for reformation of instruments, petitioners complaint necessarily
falls under the jurisdiction of the Regional Trial Court pursuant to Section 1, Rule 63 of the 1997
Rules of Civil Procedure, as amended, which provides:

SECTION 1. Who may file petition. Any person interested under a deed, will, contract or other
written instrument, whose rights are affected by a statute, executive order or regulation,
ordinance, or any other governmental regulation may, before breach or violation thereof, bring
an action in the appropriate Regional Trial Court to determine any question of construction or
validity arising, and for a declaration of his rights or duties thereunder.

An action for the reformation of an instrument, to quiet title to real property or remove clouds
therefrom, or to consolidate ownership under Article 1607 of the Civil Code, may be brought
under this Rule.

As correctly held by the Court of Appeals, any disagreement as to the nature of the parties
relationship which would require first an amendment or reformation of their contract is an
issue which the courts may and can resolve without the need of the expertise and specialized
knowledge of the HLURB.
Del Monte Corporation vs. Court of Appeals

Facts:

In a Distributorship Agreement, petitioner Del Monte Corporation-USA (DMC-USA) appointed private


respondent Montebueno Marketing, Inc. (MMI) as the sole and exclusive distributor of its Del Monte
products in the Philippines for a period of five (5) years, renewable for two (2) consecutive five (5) year
periods with the consent of the parties. The agreement provided, among others, for an arbitration
clause which states –

“This Agreement shall be governed by the laws of the State of California and/or, if applicable, the United
States of America. All disputes arising out of or relating to this Agreement or the parties' relationship,
including the termination thereof, shall be resolved by arbitration in the City of San Francisco, State of
California, under the Rules of the American Arbitration Association. The arbitration panel shall consist of
three members, one of whom shall be selected by DMC-USA, one of whom shall be selected by MMI,
and third of whom shall be selected by the other two members and shall have relevant experience in the
industry.”

Private respondents MMI, SFI and MMI's Managing Director Liong Liong C. Sy (LILY SY) filed a Complaint
against petitioners DMC-USA Paul E. Derby, Jr., Daniel Collins and Luis Hidalgo, and Dewey Ltd before
the Regional Trial Court of Malabon, Metro Manila. Private respondents predicated their complaint on
the alleged violations by petitioners of Arts. 20,10 2111 and 2312 of the Civil Code. According to private
respondents, DMC-USA products continued to be brought into the country by parallel importers despite
the appointment of private respondent MMI as the sole and exclusive distributor of Del Monte products
thereby causing them great embarrassment and substantial damage.

Petitioners filed a Motion to Suspend Proceedings invoking the arbitration clause in their Agreement
with private respondents.

On appeal, the Court of appeals affirmed the decision of the trial court. It held that the alleged
damaging acts recited in the Complaint, constituting petitioners' causes of action, required the
interpretation of Art. 21 of the Civil Code and that in determining whether petitioners had violated it
"would require a full blown trial" making arbitration "out of the question.

Issue: WON the the dispute between the parties warrants an order compelling them to submit to
arbitration.

Ruling:

No. A careful examination of the instant case shows that the arbitration clause in the Distributorship
Agreement between petitioner DMC-USA and private respondent MMI is valid and the dispute between
the parties is arbitrable. However, this Court must deny the petition. The Agreement between petitioner
DMC-USA and private respondent MMI is a contract. The provision to submit to arbitration any dispute
arising therefrom and the relationship of the parties is part of that contract and is itself a contract. As a
rule, contracts are respected as the law between the contracting parties and produce effect as between
them, their assigns and heirs. Clearly, only parties to the Agreement, i.e., petitioners DMC-USA and its
Managing Director for Export Sales Paul E. Derby, Jr., and private respondents MMI and its Managing
Director LILY SY are bound by the Agreement and its arbitration clause as they are the only signatories
thereto. Petitioners Daniel Collins and Luis Hidalgo, and private respondent SFI, not parties to the
Agreement and cannot even be considered assigns or heirs of the parties, are not bound by the
Agreement and the arbitration clause therein. Consequently, referral to arbitration in the State of
California pursuant to the arbitration clause and the suspension of the proceedings in Civil Case No.
2637-MN pending the return of the arbitral award could be called for but only as to petitioners DMC-
USA and Paul E. Derby, Jr., and private respondents MMI and LILY SY, and not as to the other parties in
this case.

The object of arbitration is to allow the expeditious determination of a dispute. Clearly, the issue before
us could not be speedily and efficiently resolved in its entirety if we allow simultaneous arbitration
proceedings and trial, or suspension of trial pending arbitration. Accordingly, the interest of justice
would only be served if the trial court hears and adjudicates the case in a single and complete
proceeding.

28. METRO CONSTRUCTION vs CHATHAM PROPERTIES G.R. No. 141897 September 24, 2001
FACTS:
Respondent Chatham Properties, Inc. (CHATHAM) and petitioner Metro Construction, Inc.
(MCI) entered into a contract for the construction of a multi-storey building known as the Chatham
House in Makati. In April 1998, MCI sought to collect from CHATHAM a sum of money for unpaid
progress billings and other charges and instituted a request for adjudication of its claims with the
CIAC. The CIAC ruled in favor of MCI to which CHATHAM impugns by filing a petition for review with
the Court of Appeals alleging that the tribunal committed a grave error in failing to consider
evidences presented by them. the Court of Appeals simplified the assigned errors into one core
issue, namely, the "propriety" of the CIAC's factual findings and conclusions. In upholding the
decision of the CIAC, the Court of Appeals confirmed the jurisprudential principle that absent any
showing of arbitrariness, the CIAC's findings as an administrative agency and quasi judicial body
should not only be accorded great respect but also given the stamp of finality. However, the Court of
Appeals found exception in the CIAC's disquisition of Issue No.9 on the matter of liquidated
damages.

ISSUE: WON under existing law and rules the Court of Appeals can also review findings of facts of
the Construction Industry Arbitration Commission?

HELD:
Yes. EO. No. 1008 vest upon the CIAC original and exclusive jurisdiction over disputes
arising from, or connected with, contracts entered into by parties involved in construction in the
Philippines, whether the dispute arises before or after the completion of the contract, or after the
abandonment or breach thereof. By express provision of Section 19 thereof, the arbitral award of the
CIAC is final and unappealable, except on questions of law, which are appealable to the Supreme
Court. The parties, however, disagree on whether the subsequent Supreme Court issuances on
appellate procedure and R.A. No. 7902 removed from the Supreme Court its appellate jurisdiction in
Section 19 of E.O. No. 1008 and vested the same in the Court of Appeals, and whether appeals
from CISC awards are no longer confined to questions of law.

The SC issued in 1991 Circular 1-91 which prescribes the rules governing appeals to the CA
from final orders of…quasi-judicial agencies. It designated the CA as the reviewing body to resolve
questions of fact or of law or mixed questions of fact and law. It is clear that Circular No. 1-91 covers
the CIAC. In the first place, it is a quasi judicial agency. A quasi-judicial agency or body has been
defined as an organ of government other than a court and other than a legislature, which affects the
rights of private parties through either adjudication or rule-making. The CIAC's primary function is
that of a quasi-judicial agency, which is to adjudicate claims and/or determine rights in accordance
with procedures set forth in E.O. No. 1008. In the second place, the language of Section 1 of
Circular No. 1-91 emphasizes the obvious inclusion of the CIAC even if it is not named in the
enumeration of quasi-judicial agencies. The introductory words "[a] among these agencies are"
preceding the enumeration of specific quasi-judicial agencies only highlight the fact that the list is not
exclusive or conclusive. Further, the overture stresses and acknowledges the existence of other
quasi-judicial agencies not included in the enumeration but should be deemed included. In sum,
under Circular No. 1-91, appeals from the arbitral awards of the CIAC may be brought to the Court of
Appeals, and not to the Supreme Court alone. The jurisdiction of the Court of Appeals over appeals
from final orders or decisions of the CIAC is further fortified by the amendments to B.P. Blg. 129, as
introduced by RA. No. 7902. With the amendments, the Court of Appeals is vested with appellate
jurisdiction over all final judgments, decisions, resolutions, orders or awards of Regional Trial Courts
and quasi-judicial agencies, instrumentalities, boards or commissions, except "those within the
appellate jurisdiction of the Supreme Court in accordance with the Constitution, the Labor Code of
the Philippines under Presidential Decree No. 442, as amended, the provisions of this Act, and of
subparagraph (1) of the third paragraph and subparagraph (4) of the fourth paragraph of Section 17
of the Judiciary Act of 1948.
29. ORMOC SUGARCANE PLANTER’S ASSN. (OSPA) vs. CA
596 SCRA 630 (2009)

FACTS:Petitioners are associations organized by and whose members are individual sugar
planters (Planters). The membership of each association follows: 264 Planters were
members of OSPA; 533 Planters belong to OLFAMCA; 617 Planters joined UNIFARM; 760
Planters enlisted with ONDIMCO; and the rest belong to BAP-MPC which did not join the
lawsuit.

Respondents Hideco Sugar Milling Co., Inc. (Hideco) and Ormoc Sugar Milling Co, Inc.
(OSCO) are sugar centrals engaged in grinding and milling sugarcane delivered to them by
numerous individual sugar planters, who may or may not be members of an association
such as petitioners.Petitioners assert that the relationship between respondents and the
individual sugar planters is governed by milling contracts. To buttress this claim,
petitioners presented representative samples of the milling contracts.

Notably, Article VII of the milling contracts provides that 34% of the sugar and molasses
produced from milling the Planter's sugarcane shall belong to the centrals (respondents) as
compensation, 65% thereof shall go to the Planter and the remaining 1% shall go the
association to which the Planter concerned belongs, as aid to the said association. The 1%
aid shall be used by the association for any purpose that it may deem fit for its members,
laborers and their dependents. If the Planter was not a member of any association, then the
said 1% shall revert to the centrals. Article XIV, paragraph B[4] states that the centrals may
not, during the life of the milling contract, sign or execute any contract or agreement that
will provide better or more benefits to a Planter, without the written consent of the existing
and recognized associations except to Planters whose plantations are situated in areas
beyond thirty (30) kilometers from the mill. Article XX provides that all differences and
controversies which may arise between the parties concerning the agreement shall be
submitted for discussion to a Board of Arbitration, consisting of five (5) members--two (2)
of which shall be appointed by the centrals, two (2) by the Planter and the fifth to be
appointed by the four appointed by the parties.

On June 4, 1999, petitioners, without impleading any of their individual members, filed
twin petitions with the RTC for Arbitration under R.A. 876, Recovery of Equal Additional
Benefits, Attorney's Fees and Damages, against HIDECO and OSCO, docketed as Civil Case
Nos. 3696-O and 3697-O, respectively.

Petitioners claimed that respondents violated the Milling Contract when they gave to
independent planters who do not belong to any association the 1% share, instead of
reverting said share to the centrals. Petitioners contended that respondents unduly
accorded the independent Planters more benefits and thus prayed that an order be issued
directing the parties to commence with arbitration in accordance with the terms of the
milling contracts. They also demanded that respondents be penalized by increasing their
member Planters' 65% share provided in the milling contract by 1%, to 66%.

Respondents filed a motion to dismiss on ground of lack of cause of action because


petitioners had no milling contract with respondents. According to respondents, only some
eighty (80) Planters who were members of OSPA, one of the petitioners, executed milling
contracts. Respondents and these 80 Planters were the signatories of the milling contracts.
Thus, it was the individual Planters, and not petitioners, who had legal standing to invoke
the arbitration clause in the milling contracts. Petitioners, not being privy to the milling
contracts, had no legal standing whatsoever to demand or sue for arbitration.

On August 26, 1999, the RTC issued a Joint Order denying the motion to dismiss, declaring
the existence of a milling contract between the parties, and directing respondents to
nominate two arbitrators to the Board of Arbitrators, to wit:

When these cases were called for hearing today, counsels for the petitioners and
respondents argued their respective stand. The Court is convinced that there is an existing
milling contract between the petitioners and respondents and these planters are
represented by the officers of the associations. The petitioners have the right to sue in
behalf of the planters.

This Court, acting on the petitions, directs the respondents to nominate two arbitrators to
represent HIDECO/HISUMCO and OSCO in the Board of Arbitrators within fifteen (15) days
from receipt of this Order.

Xxx However, if the respondents fail to nominate their two arbitrators, upon proper motion
by the petitioners, then the Court will be compelled to use its discretion to appoint the two
(2) arbitrators, as embodied in the Milling Contract and R.A. 876.

Their subsequent motion for reconsideration having been denied by the RTC in its Joint
Order dated October 29, 1999, respondents elevated the case to the CA through a Petition
for Certiorari with Prayer for the Issuance of Temporary Restraining Order and/or Writ of
Preliminary Injunction.

On December 7, 2001, the CA rendered its challenged Decision, setting aside the assailed
Orders of the RTC. The CA held that petitioners neither had an existing contract with
respondents nor were they privy to the milling contracts between respondents and the
individual Planters. In the main, the CA concluded that petitioners had no legal personality
to bring the action against respondents or to demand for arbitration.

Petitioners filed a motion for reconsideration, but it too was denied by the CA in its
Resolutiondated October 30, 2002. Thus, the instant petition.At the outset, it must be noted
that petitioners filed the instant petition for certiorari under Rule 65 of the Rules of Court,
to challenge the judgment of the CA.

ISSUE:Whether or not petitioners sugar planters' associations are clothed with legal
personality to file a suit against, or demand arbitration from, respondents in their own
name without impleading the individual Planters.

RULING: No. 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. An agreement to arbitrate is a contract, the relation of the parties is
contractual, and the rights and liabilities of the parties are controlled by the law of
contracts. In an agreement for arbitration, the ordinary elements of a valid contract must
appear, including an agreement to arbitrate some specific thing, and an agreement to abide
by the award, either in express language or by implication. The requirements that an
arbitration agreement must be written and subscribed by the parties thereto were enunciated
by the Court in B.F. Corporation v. CA, 288 SCRA 267 (1998).

(ADDED NOTES)Simply put, petitioners do not have any agreement to arbitrate with
respondents. Only eighty (80) Planters who were all members of OSPA were shown to have
such an agreement to arbitrate, included as a stipulation in their individual milling
contracts. The other petitioners failed to prove that any of their members had milling
contracts with respondents, much less, that respondents had an agreement to arbitrate
with the petitioner associations themselves.

Even assuming that all the petitioners were able to present milling contracts in favor of
their members, it is undeniable that under the arbitration clause in these contracts it is the
parties thereto who have the right to submit a controversy or dispute to arbitration.
Section 4 of R.A. 876 provides:
“Section 4. Form of Arbitration Agreement.—A contract to arbitrate a controversy
thereafter arising between the parties, as well as a submission to arbitrate an existing
controversy, shall be in writing and subscribed by the party sought to be charged, or by his
lawful agent.
The making of a contract or submission for arbitration described in section two hereof,
providing for arbitration of any controversy, shall be deemed a consent of the parties to the
jurisdiction of the Court of First Instance of the province or city where any of the parties
resides, to enforce such contract of submission.”

The formal requirements of an agreement to arbitrate are therefore the following: (a) it
must be in writing and (b) it must be subscribed by the parties or their representatives.
To subscribe means to write underneath, as one’s name; to sign at the end of a document.
That word may sometimes be construed to mean to give consent to or to attest.

Petitioners would argue that they could sue respondents, notwithstanding the fact that
they were not signatories in the milling contracts because they are the
recognized representatives of the Planters.

This claim has no leg to stand on since petitioners did not sign the milling contracts at all,
whether as a party or as a representative of their member Planters. The individual Planter
and the appropriate central were the only signatories to the contracts and there is no
provision in the milling contracts that the individual Planter is authorizing the association
to represent him/her in a legal action in case of a dispute over the milling contracts.

Gonzales vs Climax Mining

Facts:

The case is a consolidation of two petitions rooted in the samedisputed Addendum


Contractentered into by the parties.

In GR No. 161957, the Court had held that the DENR Panel of Arbitrators had no jurisdiction over
the complaint for the annulment of the Addendum Contract on grounds of fraud and violation of the
Constitution and that the action should have been brought before the regular courts as it involved
judicial issues.

Both parties filed separate motions for reconsideration. Gonzales averred that the DENR Panel
of Arbitrators has jurisdiction because the case involves a mining dispute that properly falls within the
ambit of the Panel’s authority. On the other hand, Climax Mining Ltd., et al., citing American
jurisprudence and the UNCITRAL Model Law, argued that the arbitration clause in the Addendum
Contract shouldbe treated as an agreement independent of the other terms of the contract, and that a
claimedrescission of the main contract does not avoid the duty to arbitrate.

In GR No. 167994, Gonzales challenged the order of the RTC requiring him to proceed with the
arbitration proceedings which was sought by Climax-Arimcowhile the complaint for the nullification of
the Addendum Contract waspending before the DENR Panel of Arbitrators. Gonzales argued that the
Addendum Contract was void, thus the arbitration clause contained therein was likewise void ab
initio.He contended that any issue as to the nullity, inoperativeness, or incapability of performance of
the arbitration clause/agreement raised by one of the parties to the alleged arbitration agreement must
be determined by the court prior to referring them to arbitration.
However, Climax-Arimco countered that Gonzales’s attack on or repudiation of the
AddendumContract is not a ground to deny effect to the arbitration clause in the Contract. Section 2,
par. 1 of RA 876 itself considers the arbitration stipulation an independent contract in its own
rightwhose enforcement may be prevented only on grounds which legally make the
arbitrationagreement itself revocable.

Likewise, Climax-Arimco emphasized that in Sec. 24 of RA 9285, the court, instead of trying the
case, may, on request of either or bothparties, refer the parties to arbitration, unless it finds that the
arbitration agreement is null andvoid, inoperative or incapable of being performed. Arbitration may
even be ordered in the samesuit brought upon a matter covered by an arbitration agreement even
without waiting for theoutcome of the issue of the validity of the arbitration agreement. Art. 8 of the
UNCITRAL Model Law states that where a court before which an action is brought in a matter which
issubject of an arbitration agreement refers the parties to arbitration, the arbitral proceedings
mayproceed even while the action is pending.

Issue:

Whetherthe question of validity of the Addendum Contract affects the applicability or


enforceabilityof the arbitration clause contained therein

Held:

NO. The doctrine of separability, or severability as other writers call it, enunciates that an
arbitration agreement is independent of the main contract. The arbitration agreement is to be treated
as a separate agreement and the arbitration agreement does not automatically terminate when the
contract of which it is part comes to an end.

The separability of the arbitration agreement is especially significant to the determination of


whether the invalidity of the main contract also nullifies the arbitration clause. Indeed, the doctrine
denotes that the invalidity of the main contract, also referred to as the container contract, does not
affect the validity of the arbitration agreement. Irrespective of the fact that the main contract is invalid,
the arbitration clause/agreement still remains valid and enforceable.

The separability of the arbitration clause is confirmed in Art. 16(1) of the UNCITRAL Model Law
and Art. 21(2) of the UNCITRAL Arbitration Rules.

The SC held in Manila Electric Co. v. Pasay Transportation Co. that a submission toarbitration is a
contract. A clause in a contract providing that all matters in dispute between theparties shall be referred
to arbitration is a contract, and in Del Monte Corporation-USA v. Court of Appeals, that “[t]he provision
to submit to arbitration any dispute arising therefromand the relationship of the parties is part of that
contract and is itself a contract. As a rule,contracts are respected as the law between the contracting
parties and produce effect as betweenthem, their assigns and heirs.”

Cargill PH vs San Fernando

Facts: San Fernando Regala Trading filed before the trial court a complaint for rescission of
contract with damages against Cargill Philippines, Inc. In its complaint, San Fernando
Regala Trading alleged that it was engaged in buying and selling molasses and that Cargill
was one of its suppliers. San Fernando Regala Trading alleged that it purchased from
Cargill, and the latter had agreed to sell, 12,000 tons of cane blackstrap molasses
originating from Thailand at the price of $192 per metric ton, and that delivery would be
made in April or May 1997. After San Fernando Regala Trading delivered the letter of
credit, it claimed that Cargill failed to comply with its obligations under the contract, which
included an arbitration clause as follows:

"Any dispute which the Buyer and Seller may not be able to settle by mutual agreement shall
be settled by arbitration in the City of New York before the American Arbitration Association.
The Arbitration Award shall be final and binding on both parties."

Cargill moved to dismiss and/or suspend the court proceedings citing the arbitration
clause. San Fernando Regala Trading argued that since it was seeking rescission of the
contract, it was in effect repudiating the contract which included the arbitration clause.

Issue: Whether or not the validity and enforceability of the contract containing the
arbitration agreement violate any provision of the Arbitration Law.

Ruling: No.

Applying the Gonzales ruling, an arbitration agreement which forms part of the main
contract shall not be regarded as invalid or non-existent just because the main contract is
invalid or did not come into existence, since the arbitration agreement shall be treated as a
separate agreement independent of the main contract. A contrary ruling would suggest that
a party's mere repudiation of the main contract is sufficient to avoid arbitration and that is
exactly the situation that the separability doctrine sought to avoid. Thus, we find that even
the party who has repudiated the main contract is not prevented from enforcing its
arbitration clause.
The separability of the arbitration agreement is especially significant to the
determination of whether the invalidity of the main contract also nullifies the arbitration
clause. Indeed, the doctrine denotes that the invalidity of the main contract, also referred to
as the "container" contract, does not affect the validity of the arbitration agreement.
Irrespective of the fact that the main contract is invalid, the arbitration clause/agreement
still remains valid and enforceable.

PHILROCK V. CONSTRUCTION INDUSTRY ARBITRATION COMMISSION (G.R. NO. 132848-49)

Facts: The Cid spouses, herein private respondents, were purchasers of ready-mix concrete
from petitioner herein, PhilRock, Inc. The concrete delivered by the latter turned out to be of
substandard quality, and as a result the structures built using such cement developed cracks
and honey combs. Respondents, thus, filed a Complaint for Damages against petitioner with the
RTC of Quezon City, which then issued an order dismissing the case and referring the same to
CIAC because the spouses and petitioner had filed an Agreement to Arbitrate. Since no
common ground can be reached by the parties, they requested the case be remanded back
again to court, to which it had declared it no longer had jurisdiction over the case and ordered
the records of the case to be remanded back again to CIAC. Petitioner while contending the
supposed jurisdiction of CIAC, the latter rendered a decision in favor of the spouses. Thus,
petitioner filed a Petition for Review before the CA, to which the latter dismissed. Hence this
petition.

Issue: Whether or not the CIAC could take jurisdiction over the case of respondent spouses and
petitioner after it had been dismissed by both the RTC and CIAC.

Ruling: The petition has no merit. Section 4 of EO 1008 expressly vests in the CIAC original and
exclusive jurisdiction over disputes arising from or connected with construction contracts
entered into by parties that have agreed to submit their disputes to voluntary arbitration.
Further, petitioner continued participating in the arbitration even after the CIAC order has been
issued as evidenced by their concluding and signing of the Terms of Reference. The Court will
not countenance any effort of any party to subvert or defeat the objective of voluntary
arbitration for its own private motives. Petitioner is stopped from assailing the jurisdiction of
the CIAC, merely because the latter rendered an adverse decision.

34. Metro Construction vs. Construction Industry Arbitration


Respondent Chatham Properties, Inc. (CHATHAM) and petitioner Metro Construction, Inc.
(MCI) entered into a contract for the construction of a multi-storey building known as the
Chatham House. MCI sought to collect from CHATHAM a sum of money for unpaid progress
billings and other charges and instituted a request for adjudication of its claims with the CIAC.
CIAC ruled in favor of MCI.

Impugning the decision of the CIAC, CHATHAM instituted a petition for review with the Court of
Appeals. Ruled in favor of CHATHAM.

MCI filed the instant petition for review to challenge the decision of the Court of Appeals. MCI
alleges that the Court of Appeals erred in reviewing and reversing the CIAC's factual findings,
that there was an implied takeover by CHATHAM of the project, and that MCI was not in delay
in the overall schedule. In so doing, the Court of Appeals contravened Section 19 of Executive
Order (E.O.) No. 1008,18 which limits the review of an Arbitral Award to only questions of law.

Issue: W/N under existing law and rules the Court of Appeals can also review findings of facts
of the Construction Industry Arbitration Commission

Ruling: Yes.
Under Circular No. 1-91, appeals from the arbitral awards of the CIAC may be brought to the
Court of Appeals, and not to the Supreme Court alone. The grounds for the appeal are likewise
broadened to include appeals on questions of facts and appeals involving mixed questions of
fact and law.

The jurisdiction of the Court of Appeals over appeals from final orders or decisions of the CIAC
is further fortified by the amendments to B.P. Blg. 129, as introduced by RA. No. 7902.

Any remaining doubt on the procedural mutation of the provisions on appeal in E.O. No. 1008,
vis-a-vis Circular No. 1-91 and R A. No. 7902, was completely removed with the issuance by the
Supreme Court of Revised Administrative Circular No. 1-95 and the 1997 Rules of Civil
Procedure. Both categorically include the CIAC in the enumeration of quasi-judicial agencies
comprehended therein. Section 3 of the former and Section 3, Rule 43 of the latter, explicitly
expand the issues that may be raised in an appeal from quasi judicial agencies or
instrumentalities to the Court of Appeals within the period and in the manner therein provided.
Indisputably, the review of the CIAC award may involve either questions of fact, of law, or of fact
and law.

ABS-CBN V. WORLD INTERACTIVE NETWORK SYSTEMS (G.R. NO. 169332)

Facts:
Petitioner ABS-CBN Broadcasting Corporation entered into a licensing agreement with
respondent World Interactive Network Systems (WINS) Japan Co., Ltd., a foreign
corporation licensed under the laws of Japan, in that the former granted respondent the
exclusive license to distribute and sublicense the distribution of the television service
known as “The Filipino Channel” (TFC) in Japan.

By virtue thereof, petitioner undertook to transmit the TFC programming signals to


respondent which the latter received through its decoders and distributed to its
subscribers. A dispute arose between the parties when petitioner accused respondent of
inserting nine episodes of WINS WEEKLY, a weekly 35-minute community news program
for Filipinos in Japan, into the TFC programming. Petitioner claimed that these were
“unauthorized insertions” constituting a material breach of their agreement. Consequently,
petitioner notified respondent of its intention to terminate the agreement.

Thereafter, respondent filed an arbitration suit pursuant to the arbitration clause of its
agreement with petitioner. The parties appointed Professor Alfredo F. Tadiar to act as sole
arbitrator who then rendered a decision in favor of respondent holding that petitioner gave
its approval for the airing of WINS WEEKLY as shown by a series of written exchanges
between the parties and that petitioner threatened to terminate the agreement due to its
desire to compel respondent to re-negotiate the terms thereof for higher fees.

He then allowed respondent to recover temperate damages, attorney’s fees and one-half of
the amount it paid as arbitrator’s fee. Petitioner filed in the CA a petition for review under
Rule 43 of the Rules of Court or, in the alternative, a petition for certiorari under Rule 65 of
the same Rules, with application for temporary restraining order and writ of preliminary
injunction. Respondent, on the other hand, filed a petition for confirmation of arbitral
award. The CA rendered the assailed decision dismissing ABS-CBN’s petition for lack of
jurisdiction. Petitioner moved for reconsideration but the same was denied.
Issue:
Whether or not an aggrieved party in a voluntary arbitration dispute may avail of, directly
in the CA, a petition for review under Rule 43 or a petition for certiorari under Rule 65 of
the Rules of Court

Ruling:
No. RA 876 itself mandates that it is the Court of First Instance, now the RTC, which has
jurisdiction over questions relating to arbitration, such as a petition to vacate an arbitral
award. As RA 876 did not expressly provide for errors of fact and/or law and grave abuse
of discretion (proper grounds for a petition for review under Rule 43 and a petition for
certiorari under Rule 65, respectively) as grounds for maintaining a petition to vacate an
arbitral award in the RTC, it necessarily follows that a party may not avail of the latter
remedy on the grounds of errors of fact and/or law or grave abuse of discretion to overturn
an arbitral award. Adamson v. Court of Appeals gave ample warning that a petition to
vacate filed in the RTC which is not based on the grounds enumerated in Section 24 of RA
876 should be dismissed.

In cases not falling under any of the aforementioned grounds to vacate an award, the Court
has already made several pronouncements that a petition for review under Rule 43 or a
petition for certiorari under Rule 65 may be availed of in the CA. Which one would depend
on the grounds relied upon by petitioner.

Nevertheless, although petitioner’s position on the judicial remedies available to it was


correct, we sustain the dismissal of its petition by the CA. The remedy petitioner availed of,
entitled “alternative petition for review under Rule 43 or petition for certiorari under Rule
65,” was wrong. Time and again, we have ruled that the remedies of appeal and certiorari
are mutually exclusive and not alternative or successive.

A careful reading of the assigned errors reveals that the real issues calling for the CA’s
resolution were less the alleged grave abuse of discretion exercised by the arbitrator and
more about the arbitrator’s appreciation of the issues and evidence presented by the
parties. Therefore, the issues clearly fall under the classification of errors of fact and law —
questions which may be passed upon by the CA via a petition for review under Rule 43.
Petitioner cleverly crafted its assignment of errors in such a way as to straddle both judicial
remedies, that is, by alleging serious errors of fact and law (in which case a petition for
review under Rule 43 would be proper) and grave abuse of discretion (because of which a
petition for certiorari under Rule 65 would be permissible).
Wherefore, the petition is hereby denied. The decision and resolution of the CA directing
the RTC to proceed with the trial of the petition for confirmation of arbitral award is
affirmed.

38. Uniwide Sales Realty vs. Titan-Ikeda Construction 511 SCRA 335

Facts: This case involved Titan-Ikeda who entered into 3 construction agreement/ contract /project with
Uniwide. Later Titan-Ikeda filed an action for sum of money against Uniwide with the RTC because
Uniwide allegedly failed to pay certain claims billed by Titan after the completion of the 3 projects.
Uniwide moved for the dismissal/suspension of the proceeding for them to first undergo arbitration.
The Arbitrators issued terms of reference which was signed by the parties, (Uniwide did not attempt to
modify the TOR to accommodate its belated counterclaim on deadlines for liquidated damages.)Titan
then refiled the case with CIAC.

CIAC Decision: Project 1: Uniwide is absolved of any liability.Project 2: Uniwide is absolved of


any liability for VAT payment and for the account of Titan, and Titan is absolved from liability for
defective construction.Project 3: Uniwide id held liable for unpaid balance (5,158,364.63) plus 12%
interest/annum and to pay the full VAT for the additional work where no written authorization was
presented.

CIAC likewise rejected the claim on liquidated damages.

After Uniwide’s motion for reconsideration was denied by CIAC, it filed a petition for review with
CA but same was denied, thus, Uniwide filed a petition for review under rule 45 to seek partial reversal
of the decision of CA which modified the decision of CIAC. Uniwide claims that CIAC should have applied
procedural rules such as section 5, Rule 10 with more liberality because it was an administrative
tribubal free from all rigid technicalities of regular courts because CA held that the issue on liquidated
damages should be left for determination in future proceedings.

Issue: Whether or not the award given by CIAC is final


Ruling: Yes. As a rule, findings of fact of administrative agencies and quasi-judicial bodies, which have
acquired expertise because their jurisdiction is confined to specific matters, are generally accorded not
only respect, but also finality, especially when affirmed by the Court of Appeals. In particular, factual
findings of construction arbitrators are final and conclusive and not reviewable by this Court on appeal.
This rule, however admits of certain exceptions.

In David v. Construction Industry and Arbitration Commission, we ruled that, as exceptions, factual
findings of construction arbitrators may be reviewed by this Court when the petitioner proves
affirmatively that:
(1) the award was procured by corruption, fraud or other undue means;
(2) there was evident partiality or corruption of the arbitrators or of any of them;
(3) the arbitrators were guilty of misconduct in refusing to hear evidence pertinent and material to the
controversy;
(4) one or more of the arbitrators were disqualified to act as such under Section nine of Republic Act No.
876 and willfully refrained from disclosing such disqualifications or of any other misbehavior by which
the rights of any party have been materially prejudiced; or
(5) the arbitrators exceeded their powers, or so imperfectly executed them, that a mutual, final and
definite award upon the subject matter submitted to them was not made.

Other recognized exceptions are as follows:


(1) when there is a very clear showing of grave abuse of discretion resulting in lack or loss of jurisdiction
as when a party was deprived of a fair opportunity to present its position before the Arbitral Tribunal or
when an award is obtained through fraud or the corruption of arbitrators,
(2) when the findings of the Court of Appeals are contrary to those of the CIAC, and
(3) when a party is deprived of administrative due process.

Benguet Corporation vs. DENR-MAB, 545 SCRA 196, G.R. No. 163101 February 13,
2008

FACTS: On June 1, 1987, Benguet and J.G. Realty entered into a Royalty Agreement with
Option to Purchase (RAWOP), wherein J.G. Realty was acknowledged as the owner of four
mining claims situated in Camarines Norte.

On August 9, 1989, the Executive Vice-President of Benguet, Antonio N. Tachuling, issued a


letter informing J.G. Realty of its intention to develop the mining claims. However, J.G.
Realty, through its President, Johnny L. Tan, then sent a letter to the President of Benguet
informing the latter that it was terminating the RAWOP on the following grounds:

e) The fact that your company has failed to perform the obligations set forth in the
RAWOP, i.e., to undertake development works within 2 years from the execution of
the Agreement;
f) Violation of the Contract by allowing high graders to operate on our claim.
g) No stipulation was provided with respect to the term limit of the RAWOP.
h) Non-payment of the royalties thereon as provided in the RAWOP.
J.G. Realty filed a Petition for Declaration of Nullity/Cancellation of the RAWOP with the
Legaspi City POA, Region V, docketed as a DENR Case.

DECISION OF LOWER COURTS: POA: declared the RAWOP cancelled. MAB: affirmed POA’s
decision.

The RAWOP expressly provided that “any disputes, differences or disagreements between
BENGUET and the OWNER shall, upon notice of one party to the other, first be referred to a
Board of Arbitratorsconsisting of three (3) members, one to be selected by BENGUET, another
to be selected by the OWNER and the third to be selected by the aforementioned two
arbitrators so appointed” ; and that “no action shall be instituted in court as to any matter in
dispute as hereinabove stated, except to enforce the decision of the majority of the
Arbitrators.”

Benguetcontended that the issue raised by the J.G. Realty should have been raised first with
the arbitration before POA took cognizance of the case.

ISSUE:W/N availment of voluntary arbitration before resort is made to the courts or quasi-
judicial agencies of the government is a valid contractual stipulation that must be adhered
to by the parties

RULING:YES. As stated in Secs. 6 and 7 of RA 876:

“Section 6. Hearing by court.—A party aggrieved by the failure, neglect or refusal of


another to perform under an agreement in writing providing for arbitration may
petition the court for an order directing that such arbitration proceed in the manner
provided for in such agreement. Five days notice in writing of the hearing of such
application shall be served either personally or by registered mail upon the party in
default. The court shall hear the parties, and upon being satisfied that the making of
the agreement or such failure to comply therewith is not in issue, shall make an
order directing the parties to proceed to arbitration in accordance with the terms of
the agreement. If the making of the agreement or default be in issue the court shall
proceed to summarily hear such issue. If the finding be that no agreement in writing
providing for arbitration was made, or that there is no default in the proceeding
thereunder, the proceeding shall be dismissed. If the finding be that a written
provision for arbitration was made and there is a default in proceeding thereunder,
an order shall be made summarily directing the parties to proceed with the
arbitration in accordance with the terms thereof.

Section 7. Stay of civil action.—If any suit or proceeding be brought upon an issue arising
out of an agreement providing for the arbitration thereof, the court in which such suit or
proceeding is pending, upon being satisfied that the issue involved in such suit or
proceeding is referable to arbitration, shall stay the action or proceeding until an
arbitration has been had in accordance with the terms of the agreement: Provided, That the
applicant, for the stay is not in default in proceeding with such arbitration.”

Besides, in BF Corporation v. Court of Appeals, we already ruled:

“In this connection, it bears stressing that the lower court has not lost its jurisdiction
over the case. Section 7 of Republic Act No. 876 provides that proceedings therein
have only been stayed. After the special proceeding of arbitration has been pursued
and completed, then the lower court may confirm the award made by the
arbitrator.”

ADDITIONAL:

The last paragraph of Section 79 of Republic Act No. (RA) 7942 or the “Philippine Mining
Act of 1995” states, “A petition for review by certiorari and question of law may be filed by
the aggrieved party with the Supreme Court within thirty (30) days from receipt of the
order or decision of the [MAB].”

40. AGAN VS PHILIPPINE INTERNATIONAL AIR TERMINAL CO.

FACTS: The DOTC engaged the services of Aeroport de Paris (ADP) to conduct a comprehensive study of
the Ninoy Aquino International Airport (NAIA) and determine whether the present airport can cope with
the traffic development up to the year 2010. Some time in 1993, 6 business leaders met with then
President Ramos to explore the possibility of investing in the construction and operation of a new
international airport terminal. To signify their commitment to pursue the project, they formed the Asias
Emerging Dragon Corp. (AEDC). AEDC submitted an unsolicited proposal to the Government through the
DOTC/MIAA for the development of NAIA International Passenger Terminal III (NAIA IPT III) under a
build-operate-and-transfer arrangement pursuant to RA 6957 as amended by RA 7718 (BOT Law).

A bidding was conducted by AEDC and PAIRCARGO Consortium won. PAIRCARGO changed its name to
Philippine International Air Terminal Co. (PIATCO)

Government and PIATCO signed the Concession Agreement for the Build-Operate-and-Transfer
Arrangement of the Ninoy Aquino International Airport Passenger Terminal III (1997 Concession
Agreement). The Government granted PIATCO the franchise to operate and maintain the said terminal
during the concession period and to collect the fees, rentals and other charges in accordance with the
rates or schedules stipulated in the 1997 Concession Agreement. The Agreement provided that the
concession period shall be for twenty-five (25) years commencing from the in-service date, and may be
renewed at the option of the Government for a period not exceeding twenty-five (25) years. At the end
of the concession period, PIATCO shall transfer the development facility to MIAA.Subsequently, the
Government and PIATCO signed three Supplements to the ARCA.
On November 26, 1998, the Government and PIATCO signed an Amended and Restated Concession
Agreement (ARCA). MIAA which is charged with the maintenance and operation of the NAIA Terminals I
and II.

Subsequently, the workers of the international airline service providers, claiming that they stand to lose
their employment upon the implementation of the questioned agreements, filed before this Court a
petition for prohibition to enjoin the enforcement of said agreements.

During the pendency of the case before this Court, President Gloria Macapagal Arroyo in her speech at
the 2002 Golden Shell Export Awards at Malacaang Palace, stated that she will not honor (PIATCO)
contracts which the Executive Branchs legal offices have concluded (as) null and void.

ISSUE: Whether or not the court is ousted of its jurisdiction over the case.

RULING: NO The Court is aware that arbitration proceedings pursuant to Section 10.02 of the ARCA have
been filed at the instance of respondent PIATCO. Again, we hold that the arbitration step taken by
PIATCO will not oust this Court of its jurisdiction over the cases at bar.

Even after finding that the arbitration clause in the Distributorship Agreement in question is valid and
the dispute between the parties is arbitrable, this Court affirmed the trial courts decision denying
petitioners Motion to Suspend Proceedings pursuant to the arbitration clause under the contract. In so
ruling, this Court held that as contracts produce legal effect between the parties, their assigns and heirs,
only the parties to the Distributorship Agreement are bound by its terms, including the arbitration
clause stipulated therein. This Court ruled that arbitration proceedings could be called for but only with
respect to the parties to the contract in question. Considering that there are parties to the case who are
neither parties to the Distributorship Agreement nor heirs or assigns of the parties thereto, this Court,
citing its previous ruling in Salas, Jr. v. Laperal Realty Corporation, held that to tolerate the splitting of
proceedings by allowing arbitration as to some of the parties on the one hand and trial for the others on
the other hand would, in effect, result in multiplicity of suits, duplicitous procedure and unnecessary
delay.[22] Thus, we ruled that the interest of justice would best be served if the trial court hears and
adjudicates the case in a single and complete proceeding.

It is established that petitioners in the present cases who have presented legitimate interests in the
resolution of the controversy are not parties to the PIATCO Contracts. Accordingly, they cannot be
bound by the arbitration clause provided for in the ARCA and hence, cannot be compelled to submit to
arbitration proceedings. A speedy and decisive resolution of all the critical issues in the present
controversy, including those raised by petitioners, cannot be made before an arbitral tribunal. The
object of arbitration is precisely to allow an expeditious determination of a dispute. This objective would
not be met if this Court were to allow the parties to settle the cases by arbitration as there are certain
issues involving non-parties to the PIATCO Contracts which the arbitral tribunal will not be equipped to
resolve.
ABS-CBN Broadcasting Corporation vs. World Interactive Network Systems (WINS)
Japan Cp., Ltd.

Facts:Petitioner ABS-CBN Broadcasting Corporation entered into a licensing agreement with


respondent World Interactive Network Systems (WINS) Japan Co., Ltd., a foreign corporation
licensed under the laws of Japan, in that the former granted respondent the exclusive license to
distribute and sublicense the distribution of the television service known as “The Filipino
Channel” (TFC) in Japan. By virtue thereof, petitioner undertook to transmit the TFC
programming signals to respondent which the latter received through its decoders and distributed
to its subscribers. A dispute arose between the parties when petitioner accused respondent of
inserting nine episodes of WINS WEEKLY, a weekly 35-minute community news program for
Filipinos in Japan, into the TFC programming. Petitioner claimed that these were “unauthorized
insertions” constituting a material breach of their agreement. Consequently, petitioner notified
respondent of its intention to terminate the agreement.

Thereafter, respondent filed an arbitration suit pursuant to the arbitration clause of its agreement
with petitioner. The parties appointed Professor Alfredo F. Tadiar to act as sole arbitrator who
then rendered a decision in favor of respondent holding that petitioner gave its approval for the
airing of WINS WEEKLY as shown by a series of written exchanges between the parties and
that petitioner threatened to terminate the agreement due to its desire to compel respondent to re-
negotiate the terms thereof for higher fees. He then allowed respondent to recover temperate
damages, attorney’s fees and one-half of the amount it paid as arbitrator’s fee. Petitioner filed in
the CA a petition for review under Rule 43 of the Rules of Court or, in the alternative, a petition
for certiorari under Rule 65 of the same Rules, with application for temporary restraining order
and writ of preliminary injunction. Respondent, on the other hand, filed a petition for
confirmation of arbitral award in the RTC. The CA rendered the assailed decision dismissing
ABS-CBN’s petition for lack of jurisdiction. Petitioner moved for reconsideration but the same
was denied.

Issue:WON an aggrieved party in a voluntary arbitration dispute may avail of, directly in the
CA, a petition for review under Rule 43 or a petition for certiorari under Rule 65 of the Rules of
Court, instead of filing a petition to vacate the award in the RTC when the grounds invoked to
overturn the arbitrator’s decision are other than those for a petition to vacate an arbitral award
enumerated under RA 876.

Ruling:Yes. RA 876 mandates that it is the CFI, now the RTC, which has jurisdiction over
questions relating to arbitration, such as a petition to vacate an arbitral award. As RA 876 did not
expressly provide for errors of fact and/or law and grave abuse of discretion (proper grounds for
a petition for review under Rule 43 and a petition for certiorari under Rule 65, respectively) as
grounds for maintaining a petition to vacate an arbitral award in the RTC, it necessarily follows
that a party may not avail of the latter remedy on the grounds of errors of fact and/or law or
grave abuse of discretion to overturn an arbitral award.

In cases not falling under any of the grounds under RA 876 to vacate an award, a petition for
review under Rule 43 or a petition for certiorari under Rule 65 may be availed of in the CA.
Which one would depend on the grounds relied upon by petitioner.Nevertheless, although
petitioner’s position on the judicial remedies available to it was correct, we sustain the dismissal
of its petition by the CA. The remedy petitioner availed of, entitled “alternative petition for
review under Rule 43 or petition for certiorari under Rule 65,” was wrong. Time and again, we
have ruled that the remedies of appeal and certiorari are mutually exclusive and not alternative or
successive.Petitioner’s attempt to avail of two remedies---that under Rule 43 and Rule 65--- is
impermissible. It is not the duty of the Court to identify which rule the petition should fall.

TRANSFIELD PHILIPPINES, INC. vs LUZON HYDRO CORPORATION


490 SCRA 14 (2006)

FACTS:
This case involved two segregate but equally important issues. The first stage relating to
the merits of the case, specifically the question of the propriety of calling on the securities during
the pendency of the arbitral proceedings, was resolved in favor of Luzon Hydro Corporation
(LHC). The second stage involving the issue of forum-shopping on which the Court required the
parties to submit their respective memoranda is disposed of in this Resolution.

Transfield Philippines entered into a turn-key contract with Luzon Hydro Corp (LHC)
wherein the former were to construct a hydro-electric plants in Benguet and Ilocos and given the
sole responsibility for the design, construction, commissioning, testing and completion of the
Project.

The contract provides for a period for which the project is to be completed and allows
extension of period based on justifiable grounds. Transfield requested for extension of time due to
typhoon and various disputes delaying the construction. However, LHC did not give due course to
the extension, instead it referred the matter to arbitration committee.

LHC called on the stand-by letters of credit because of default. Transfiled objected on the
ground that there is still pending arbitration on their request for extension of time. The disposal of
the forum-shopping charge is crucial to the parties on account of its profound effect on the final
outcome of the international arbitral proceedings which they have chosen as their principal dispute
resolution mechanism.

The petition, was filed to enjoin LHC from calling on the securities and respondent banks
from transferring or paying the securities in case LHC calls on them. However, in view of the
fact that LHC collected the proceeds, TPI, in its appeal and Petition for Review asked that the
same be returned and placed in escrow pending the resolution of the disputes before the ICC
arbitral tribunal.The present petition puts in issue the propriety of drawing on the letters of credit
during the pendency of the arbitral case, and of course, absent a final determination by the ICC
Arbitral tribunal. Moreover, TPI asked that the said moneys be placed in escrow until the final
resolution of the arbitral case.
The ICC case only involves TPI and LHC. The banks sought to be enjoined from
releasing the funds of the letters of credit. The Court agrees with TPI that it would be ineffectual
to ask the ICC to issue writs of preliminary injunction against Security Bank and ANZ Bank
since these banks are not parties to the arbitration case, and that the ICC Arbitral tribunal would
not even be able to compel LHC to obey any writ of preliminary injunction issued from its end

ISSUE:
Whether or not the pendency of arbitral proceedings foreclose resort to the courts for provisional
reliefs.

RULING:
No. As a fundamental point, the pendencyof arbitral proceedings does not foreclose resort to the
courts for provisional reliefs. The Rules of the ICC, whichgoverns the parties'arbitral dispute,
allows the applicationof a party to a judicial authority for interim or conservatorymeasures.
Likewise, Section14 of Republic Act (R.A.) No. 876 (The Arbitration Law) recognizes the rights
ofanypartyto petitionthe court to take measures to safeguard and/or conserve anymatter whichis
the subject of the dispute inarbitration. Inaddition, R.A. 9285, otherwise knownas the
"Alternative Dispute Resolution Act of 2004," allows the filing of provisional or
interimmeasures with the regular courts whenever the arbitraltribunal has nopower to act or to
act effectively.

BF Corporation vs. Manila International Airport Authority, 556 SCRA 684

Facts:

Mitsubishi Corporation (Mitsubishi), Tokyu Construction Co., Ltd. (Tokyu), A.M. Oreta& Co., Inc. (Oreta),
and BF formed themselves into the MTOB Consortium (Consortium) to participate in the bidding for the
construction of the Ninoy Aquino International Airport Terminal II (NAIA II) Project. MIAA awarded the
contract to the Consortium, recognizing that the Consortium was a distinct and separate entity from the
four member corporations.

Unfortunately, the four members had serious business differences, including the division of the contract
price, forcing BF to file with the Regional Trial Court (RTC) in Pasig City, an action for Specific
Performance, Rescission, and Damages with application for a Temporary Restraining Order (TRO). The
RTC served a TRO on Tokyu, the lead partner of the Consortium. During the hearing on the preliminary
injunction, MIAA stressed its position that it should not be dragged into the dispute since it was a
consortium internal matter. Thereafter, in an amended complaint, BF dropped MIAA as a party-
defendant.

When the project was nearing completion, BF filed a second amended complaint. In it, BF pleaded
causes of action against Tokyu, Mitsubushi, and Oreta which have all submitted themselves to the
jurisdiction of the court, and also MIAA who had possession of money to be paid to Tokyu. BF claimed it
was entitled to a proportionate share of the money based on the Consortium agreement. Thus, BF asked
that MIAA be re-impleaded as a party-defendant so it could obtain complete relief.4
In an Order dated May 24, 2001, the RTC directed that MIAA be re-impleaded as a party-defendant. It
said that BF’s earlier move to drop MIAA as a party-defendant should not preclude it from re-impleading
MIAA which still has the obligation to pay the remainder of the contract price.

Issue:

Whether or not the MIAA can still be re-impleaded as a party-defendant.

Ruling:

No. As to the issue of estoppel, we agree with the CA that BF is now estopped from re-impleading MIAA.
While the Rules allow amendments to pleadings by leave of court, in our view, in this case, it would be
an affront to the judicial process to first include a party as defendant, then voluntarily drop the party off
from the complaint, only to ask that it be re-impleaded. When BF dropped MIAA as defendant in its first
amended complaint, it had performed an affirmative act upon which MIAA based its subsequent
actions, e.g. payments to Tokyu, on the faith that there was no cause of action against it, and so on. BF
cannot now deny that it led MIAA to believe BF had no cause of action against it only to make a
complete turn-about and renege on the effects of dropping MIAA as a party-defendant months after, to
the prejudice of MIAA. MIAA had all reasons to rely on the CA’s decision that it was no longer a party to
the suit. Under the doctrine of estoppel, an admission or representation is conclusive on the person
making it and cannot be denied or disproved as against the person relying on it. A person, who by deed
or conduct has induced another to act in a particular manner, is barred from adopting an inconsistent
position, attitude, or course of conduct that thereby causes loss or injury to another.

DEVELOPMENT BANK OF THE PHILIPPINES v. ROMEO TESTON

By virtue of a Deed of Conditional Sale, Romeo Teston purchased, on installmentbasis,


two (2) parcels of land situated in Masbate, Teston from Development Bank of the Philippines
(DBP). Teston defaulted in the payment of his amortizations. Consequently, DBP rescinded
their contract of conditional sale. DBP thereafter transferred the two (2) parcels of land to the
government. It was subsequently found out that Teston had also voluntarily offered the two
parcels of land for inclusion in the Comprehensive Agrarian Reform Program (CARP) under the
Voluntary Offer to Sell. Teston filed before the Department of Agrarian Reform Adjudication
Board (DARAB) a Petition against DBP alleging that under the Comprehensive Agrarian Reform
Law, Republic Act No. 6657, DBP‘s right to rescind the sale was extinguished by operation of
law. The DARAB Regional Adjudicator dismissed Teston‘s petition on the ground that Teston
has never been the owner of the land, hence could not have validly offered the property under
the Voluntary Offer to Sell scheme. On appeal, the DARAB affirmed the Regional Adjudicators
decision. The Court of Appeals modified the Trial Court‘s decision by ordering DBP to return to
Teston the P1,000,000 downpayment paid by Teston without requiring the latter to present
evidence. Hence, this petition.

ISSUE:

Whether or not the Court of Appeals erred in modifying DARAB‘s decision ordering DBP to
return to Teston the P1,000,000 downpayment allegedly paid by Teston
HELD:

YES.

It is elementary that a judgment must conform to, and be supported by, both the
pleadings and the evidence, and must be in accordance with the theory of the action on
which the pleadings are framed and the case was tried. The judgment must be
secudumallegataetprobata. Due process considerations justify this requirement. It is improper to
enter an order which exceeds the scope of relief sought by the pleadings, absent notice
which affords the opposing party an opportunity to be heard with respect to the proposed relief.
The fundamental purpose of the requirement that allegations of a complaint must provide the
measure of recovery is to prevent surprise to the defendant. To require DBP to return the
alleged P1,000,000 without first giving it an opportunity to present evidence would violate
the Constitutional provision that no person shall be deprived of life, liberty,or property
without due process of law. The essence of due process is to be found in the reasonable
opportunity to be heard and submit any evidence one may have in support of ones
defense.

46. Equitable PCI Banking Corporation v RCBC Capital Corporation

Facts

On May 24, 2000, petitioners Equitable PCI Bank, Inc. (EPCIB) and the individual shareholders of
Bankard, Inc., as sellers, and respondent RCBC Capital Corporation (RCBC), as buyer, executed a Share
Purchase Agreement(SPA) for the purchase of petitioners interests in Bankard, representing 226,460,000
shares, for the price of PhP 1,786,769,400. Thereafter, in a letter of May 5, 2003, RCBC informed
petitioners of its having overpaid the purchase price of the subject shares, claiming that there was an
overstatement of valuation of accounts amounting to PhP 478 million, resulting in the overpayment of
over PhP 616 million. Thus, RCBC, in accordance with Sec. 10 of the SPA, filed a Request for
Arbitration dated May 12, 2004with the International Chamber of Commerce-International Court of
Arbitration (ICC-ICA). In the request, RCBC charged Bankard with deviating from, contravening and not
following generally accepted accounting principles and practices in maintaining their books, hence,
violated the representations and warranties of petitioners in the SPA. Per RCBC, its overpayment
amounted to PhP 556 million. It thus prayed for the rescission of the SPA, restitution of the purchase
price.

To the Request for Arbitration, petitioners filed an Answer dated July 28, 2004 denying RCBCs
inculpatory averments stating also that the period for filing of the asserted claim had already lapsed.
Arbitration in the ICC-ICA proceeded after the formation of the arbitration tribunal with Justice Kapunan
dissenting, rendered a Partial Award On the matter of prescription, the tribunal held thatRCBC’s claim is
not timebarred. Assuch, the tribunal concluded, RCBC’s claim was filed within the three (3)-year period.
The tribunal also exonerated RCBC from laches, the latter having sought reliefwithin the three (3)-year
period prescribed in the SPA. Petitioners came directly to this Court on a petition for review under Rule
45 of the Rules of Court.

Issue:
Whether or not the Court canOverturn an Arbitral Award rendered by the ICA
Ruling :

No. As a rule, the award of an arbitrator cannot be set aside for mere errors of judgment either as to the
law or as to the facts. Courts are without power to amend or overrule merely because of disagreement
with matters of law or facts determined by the arbitrators. They will not review the findings of law and
fact contained in an award, and will not undertake to substitute their judgment for that of the
arbitrators, since any other rule would make an award the commencement, not the end, of litigation.
Errors of law and fact, or an erroneous decision of matters submitted to the judgment of the arbitrators,
are insufficient to invalidate an award fairly and honestly made. Judicial review of an arbitration is, thus,
more limited than judicial review of a trial. Nonetheless, the arbitrators’ awards is not absolute and
without exceptions. The arbitrators cannot resolve issues beyond the scope of the submission
agreement. The parties to such an agreement are bound by the arbitrators’ award only to the extent
and in the manner prescribed by the contract and only if the award is rendered in conformity thereto.
Thus, Sections 24 and 25 of the Arbitration Law provide grounds for vacating, rescinding or modifying an
arbitration award. Where the conditions described in Articles 2038, 2039 and 2040 of the Civil Code
applicable to compromises and arbitration are attendant, the arbitration award may also be annulled.
x x x x Finally, it should be stressed that while a court is precluded from overturning an award for errors
in determination of factual issues, nevertheless, if an examination of the record reveals no support
whatever for the arbitrators’ determinations, their award must be vacated. In the same manner, an
award must be vacated if it was made in “manifest disregard of the law."

A party asking for the vacation of an arbitral award must show that any of the grounds for vacating,
rescinding, or modifying an award are present or that the arbitral award was made in manifest disregard
of the law. Otherwise, the Court is duty-bound to uphold an arbitral award.To justify the vacation of an
arbitral award on account of “manifest disregard of the law,” the arbiter’s findings must clearly and
unequivocally violate an established legal precedent. Anything less would not suffice.

Section 15. Hearing by arbitratorsThe arbitrators shall be the sole judge of the relevancy and
materiality of the evidence offered or produced, and shall not be bound to conform to the Rules of
Court pertaining to evidence. Arbitrators shall receive as exhibits in evidence any document which the
parties may wish to submit and the exhibits shall be properly identified at the time of submission.

As to the Appeal to this COURT


This is a procedural miscue for petitioners who erroneously bypassed the Court of Appeals (CA) in
pursuit of its appeal. While this procedural gaffe has not been raised by RCBC, still we would be remiss
in not pointing out the proper mode of appeal from a decision of the RTC confirming, vacating, setting
aside, modifying, or correcting an arbitral award.

Rule 45 is not the remedy available to petitioners as the proper mode of appeal assailing the decision of
the RTC confirming as arbitral award is an appeal before the CA pursuant to Sec. 46 of Republic Act No.
(RA) 9285, otherwise known as the Alternative Dispute Resolution Act of 2004, or completely, 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, promulgated on April 2, 2004 and
became effective on April 28, 2004 after its publication on April 13, 2004.Even if we entertain the
petition, the outcome will be the same.

Gomez vs Montalban

Facts: Lita Montalban obtained a loan from Elmer Gomez in the amount of P40,000 with a
voluntary proposal on her part to pay 15% interest per month. Montalban failed to comply with
her obligation so Gomez filed a complaint in the RTC for sum of money. Summons was served
but despite her receipt, she still failed to file an Answer. She was declared in default and upon
motion, Gomez was allowed to present evidence ex parte. The RTC rendered a decision
ordering Montalban to pay Gomez.
Thereafter, respondent filed a Petition for Relief from Judgment alleging that there was no
proper service of summons since there was no personal service. She alleged that one Mrs.
Alicia Dela Torre was not authorized to receive summons and that her failure to file an Answer
was due to fraud, accident, mistake, excusable negligence (FAME). The Petition was set for
hearing but counsel for respondent failed to appear before the court hence the dismissal of the
Petition.
Montalban filed for a Motion for Reconsideration of the dismissal of the Petition stating that
counsel’s failure to appeal was unintentional to which the RTC granted. To this instance, Gomez
filed a Petition for Reconsideration.

Issue: WON the RTC has jurisdiction

Held: Yes. it is irrelevant that during the course of the trial, it was proven that
respondent is only liable to petitioner for the amount of P40,000.00 representing the principal
amount of the loan; P57,000.00 as interest thereon at the rate of 24% per annum reckoned from
26 August 1998 until the present; and P15,000.00 as attorney's fees.
Contrary to respondent's contention, jurisdiction can neither be made to depend on the amount
ultimately substantiated in the course of the trial or proceedings nor be affected by proof
showing that the claimant is entitled to recover a sum in excess of the jurisdictional amount fixed
by law. Jurisdiction is determined by the cause of action as alleged in the complaint and not by
the amount ultimately substantiated and awarded.
Basic as a hornbook principle is that jurisdiction over the subject matter of a case is
conferred by law and determined by the allegations in the complaint which comprise a concise
statement of the ultimate facts constituting the plaintiff's cause of action. The nature of an
action, as well as which court or body has jurisdiction over it, is determined based on the
allegations contained in the complaint of the plaintiff, irrespective of whether or not the plaintiff is
entitled to recover upon all or some of the claims asserted therein. The averments in the
complaint and the character of the relief sought are the ones to be consulted. Once vested by
the allegations in the complaint, jurisdiction also remains vested irrespective of whether or not
the plaintiff is entitled to recover upon all or some of the claims asserted therein.
48. Jurisdiction of Arbitral Tribunal in ICA

GR. 161957 Feb. 28, 2005

Jorge Gonzales v. Climax Mining Ltd., et al.

FACTS:As claimowner of mineral deposits located w/in the Addendum Area of Influence in
Didipio, in the provinces of Quirino and Nueva Vizcaya, Gonzales entered into a co-production,
joint venture and/or product-sharing agreement w/ Geophilippines, Inc, and Inmex Ltd. Under
the agreement, Gonzales granted Geophilippines exclusive right to explore and survey the
mining claims for a period of 36 months within which the latter could decide to take an operating
agreement on the mining claims and/or develop, operate, mine and otherwise exploit the mining
claims and market any and all minerals that may be derived therefrom. The period was extended
for 3 more years. Gonzales and respondent mining companies applied for a Financial and
Technical Assistance Agreement (FTAA). Respondents executed the Operating and Financial
Accommodation Contract(OFAC)[Climax-Arimco and Climax Mining Ltd. As first parties and
Australasian Philippine Mining as 2nd party.] Climax Mining and Australasian entered into a
memorandum of agreement—Climax transferred the FTAA to Australasian.

Gonzales filed before the Panel of Arbitrators, Region II of the MGB of DENR, seeking the
nullity/termination of the Addendum Contract, the FTAA, and the OFAC on the ground of fraud
and oppressionand/or VIOLATION of Section 2, Article XII of the CONSTITUTION
perpetrated by these foreign RESPONDENTS, conspiring and confederating with one another
and with each other. The Panel of Arbitrators dismissed the complaint for lack of jurisdiction.
Gonzales filed MR, it was granted because the Panel believed that the case involved a dispute
involving rights to mining areas and a dispute involving surface owners, occupants and claim
owners/concessionaires.Although the Panel opined that the issues raised were civil in nature, and
should be w/in the jurisdiction of regular courts. Thus, while the Panel granted the MR, it held
that it had no jurisdiction regarding the constitutionality of the Addendum Agreement and the
FTAA.

Respondent filed MR. Denied. Appealed to CA. CA granted appeal, declaring that the Panel of
Arbitrators did not have jurisdiction over the petitioner’s complaint.The jurisdiction of the Panel
of Arbitrators, said the Court of Appeals, is limited only to the resolution of mining disputes,
defined as those which raise a question of fact or matter requiring the technical knowledge and
experience of mining authorities.

It was found that the complaint alleged fraud, oppression and violation of the Constitution, which
called for the interpretation and application of laws, and did not involve any mining dispute. The
CA also observed that there were no averments relating to particular acts constituting fraud and
oppression. It added that since the Addendum Contract was executed in 1991, the action to annul
it should have been brought not later than 1995, as the prescriptive period for an action for
annulment is four years from the time of the discovery of the fraud. When petitioner filed his
complaint before the Panel in 1999, his action had already prescribed. Also, the CA noted that
fraud and duress only make a contract voidable, not inexistent, hence the contract remains valid
until annulled. The CA was of the opinion that the petition should have been settled through
arbitration under Republic Act No. 876 (The Arbitration Law) as stated in Clause 19.1 of the
Addendum Contract. The CAs declared the Panel of Arbitrators’ decision invalid. CA denied
Gonzales’ MR.

ISSUE:WON the dispute between the parties should be brought for arbitration under Rep. Act
No. 876.

HELD:No.Arbitration before the Panel of Arbitrators is proper only when there is a


disagreement between the parties as to some provisions of the contract between them, which
needs the interpretation and the application of that particular knowledge and expertise possessed
by members of that Panel. It is not proper when one of the parties repudiates the existence or
validity of such contract or agreement on the ground of fraud or oppression as in this case. The
validity of the contract cannot be subject of arbitration proceedings. Allegations of fraud and
duress in the execution of a contract are matters within the jurisdiction of the ordinary courts of
law. These questions are legal in nature and require the application and interpretation of laws and
jurisprudence which is necessarily a judicial function.

Petitioner also disagrees with the CA ruling that the case should be brought for arbitration under
Rep. Act 876, pursuant to the arbitration clause in the Addendum Contract which states that all
disputes arising out of or in connection with the Contract, which cannot be settled amicably
among the Parties, shall finally be settled under R.A. 876. He points out that respondents Climax
and APMI are not parties to the Addendum Contract and are thus not bound by the arbitration
clause in said contract.

We agree that the case should not be brought under the ambit of the Arbitration Law, but for a
different reason. The question of validity of the contract containing the agreement to submit
to arbitration will affect the applicability of the arbitration clause itself. A party cannot
rely on the contract and claim rights or obligations under it and at the same time impugn
its existence or validity. Indeed, litigants are enjoined from taking inconsistent positions. As
previously discussed, the complaint should have been filed before the regular courts as it
involved issues which are judicial in nature.Whether the case involves void or voidable contracts
is still a judicial question.

“It is only in the event that the arbitration agreement or clause is itself void, inexistent, or
inoperative that the arbitral tribunal’s jurisdiction may be questioned.”
Fraud and duress = only makes the contract voidable

Sales v Barro (2008)

Facts: This case originated from the ejectment complaint filed by the petitioners against
the respondent, before Br. 28 of the MeTC of Manila. Petitioners alleged that (1) they are owners
of the lot described in TCT No. 262237 of the Registry of Deeds of the City of Manila; (2) the
respondent constructed a shanty thereon without their consent; (3) the respondent and his co-
defendants have not been paying any rent to the petitioners for their occupation thereof; (4) the
respondent and his co-defendants refused the formal demand made by the petitioners for them to
vacate the subject lot; and (5) the Office of the Barangay Captain of Barangay464, Zone 46, 4 th
District, Manila issued the necessary Certification to File Action.

In his answer, the respondent denied the allegations of the complaint, and claimed that (1) his
construction was tolerated by the petitioners, and (2) he does not remember receiving any
demand letter and summons from the barangay

MeTC found in favor of the petitioners. The respondent appealed to the RTC which affirmed in
toto the assailed MeTC decision.

The Court of Appeals reversed the RTC decision and accordingly dismissed the petitioners
complaint. First of all, not all elements of Unlawful Detainer were present to grant MeTC
jurisdiction over the case. The complaint, if any, was really one of forcible entry, but even so, it
was still defective because there was no showing of any prior physical possession by petitioners.
(As required by law)

Petitioner claims that respondent is, nevertheless estopped from questioning the jurisdiction of
the MeTC.

Issue: Can respondent still question the jurisdiction?

Ruling: Yes. The petitioners argue that the respondent is already estopped because
the respondent failed to assail the jurisdiction of the MeTC at the earliest opportunity and
actively participated in the proceedings before it. The respondent counters that he could not be
held guilty of estoppel because he questioned in his answer and pleadings petitioner’s allegation
that he was served a demand letter.

By questioning the veracity of the allegation of the existence of a jurisdictional requirement, he,
in effect, questioned the jurisdiction of the MeTC in trying the case.
It is well-settled that a courts jurisdiction may be raised at any stage of the proceedings, even on
appeal. The reason is that jurisdiction is conferred by law, and lack of it affects the very authority
of the court to take cognizance of and to render judgment on the action.The rule remains that
estoppel does not confer jurisdiction on a tribunal that has none over the cause of action or
subject matter of the case.In any event, even if respondent did not raise the issue of jurisdiction,
the reviewing court is not precluded from ruling that it has no jurisdiction over the case. In this
sense, dismissal for lack of jurisdiction may even be ordered by the court motu proprio.
Tijam vs Sibonghanoy
GR. No. L-21450, April 15, 1968

Facts: The action at bar, which is a suit for collection of a sum of money in the sum of exactly P
1,908.00, exclusive of interest filed by Serafin Tijam and Felicitas Tagalog against Spouses Magdaleno
Sibonghanoy and Lucia Baguio, was originally instituted in the Court of First Instance of Cebu on July
19, 1948. A month prior to the filing of the complaint, the Judiciary Act of 1948 (R.A. 296) took effect
depriving the Court of First Instance of original jurisdiction over cases in which the demand, exclusive of
interest, is not more than P 2,000.00 (Secs. 44[c] and 86[b], R.A. 296.). As prayed for in the complaint, a
writ of attachment was issued by the court against defendants’ properties, but the same was soon
dissolved upon the filing of a counter-bond by defendants and the Manila Surety and Fidelity Co., Inc.
hereinafter referred to as the Surety, on the 31st of the same month.
After trial upon the issues thus joined, the Court rendered judgment in favor of the plaintiffs and, after the
same had become final and executory, upon motion of the latter, the Court issued a writ of execution
against the defendants. The writ having been returned unsatisfied, the plaintiffs moved for the issuance of
a writ of execution against the Surety’s bond (Rec. on Appeal, pp. 46–49), against which the Surety filed
a written opposition (Id. pp. 49) upon two grounds, namely, (1) Failure to prosecute and (2) Absence of a
demand upon the Surety for the payment of the amount due under the judgment. Upon these grounds the
Surety prayed the Court not only to deny the motion for execution against its counter-bond but also the
following affirmative relief: “to relieve the herein bonding company of its liability, if any, under the bond
in question”
Not one of the assignment of errors raises the question of lack of jurisdiction. neither directly nor
indirectly on the lower courts.
The case has already been pending now for almost 15 years, and throughout the entire proceeding the
appellant never raised the question of jurisdiction until the receipt of the Court of Appeals' adverse
decision.
Issues: Whether or not the surety is estopped from questioning the jurisdiction of the coutrt
Held: Yes. The rule is that jurisdiction over the subject matter is conferred upon the courts exclusively by
law, and as the lack of it affects the very authority of the court to take cognizance of the case, the
objection may be raised at any stage of the proceedings. However, considering the facts and
circumstances of the present case, a party may be barred by laches from invoking this plea for the first
time on appeal for the purpose of annulling everything done in the case with the active participation of
said party invoking the plea. Laches, in a general sense, is failure or neglect, for an unreasonable and
unexplained length of time, to do that which, by exercising due diligence, could or should have been done
earlier; it is negligence or omission to assert a right within a reasonable time, warranting a presumption
that the party entitled to assert it either has abandoned it or declined to assert it. The doctrine of laches or
of “stale demands” is based upon grounds of public policy which requires, for the peace of society, the
discouragement of stale claims and, unlike the statute of limitations, is not a mere question of time but is
principally a question of the inequity or unfairness of permitting a right or claim to be enforced or
asserted. It is not right for a party who has affirmed and invoked the jurisdiction of a court in a particular
matter to secure an affirmative relief, to afterwards deny that same jurisdiction to escape penalty. Upon
this same principle is what we said in the three cases mentioned in the resolution of the Court of Appeals
of May 20, 1963, supra, to the effect that we frown upon the “undesirable practice” of a party submitting
his case for decision and then accepting the judgment, only if favorable, and attacking it for lack of
jurisdiction, when adverse. Tijam vs. Sibonghanoy, 23 SCRA 29, No. L-21450 April 15, 1968