IN MATTER OF AN ARBITRATION UNDER THE ARBITRATION RULES OF THE

PHILIPPINE DISPUTE RESOLUTION CENTER INC.

WESTERN VISAYAS

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ABC HEALTH INSTITUTION

claimant

-and-

GE PHILIPPINES, INC.
respondent

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RESPONSE TO THE DEMAND FOR ARBITRATION

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January 19, 2018

 CONTENTS

STATEMENT OF DEFENSE 3
PRELIMINARY STATEMENT 3
I. STATEMENT OF FACTS 4
A. Details of the Contract of Sale between the Involved Parties 4
B. The Prodigy PRO Bone Densitometry System 5
C. Specifications for the Installation of the Prodigy PRO Bone
Densitometry System 5
D. ABC’s allegations against GE Philippines 6
II. POINTS AT ISSUE 6
A. ABC has no legal standing 6
B. GE Philippines exercised due diligence 7
C.The damages claimed by ABC is inconsistent and has no basis 7
III. RELIEFS SOUGHT 8

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 STATEMENT OF DEFENSE
RESPONDENT GE PHILIPPINES, INC.

In accordance with Article 5 of the Arbitration Rules of The Philippine Dispute Resolution
Center, Inc., the Respondent GE Philippines Inc. respectfully submits this Statement of
Defense.

PRELIMINARY STATEMENT

1. This arbitration involves the claim of ABC Health Institution (“ABC”) against General Electric
Philippines, Inc. (“GE Philippines”) under the Philippine Dispute Resolution Center, Inc.,
Arbitration Rules, one brought in a Statement of Claims (“SOC”) dated 14 August 2017 and
received by the Respondent on 13 January 2018. The claim arise from the contract
involving the delivery and installation of the Prodigy PRO Bone Densitometry System, a
medical equipment which provides for comprehensive body composition analysis, including
bone mineral density (BMD) and lean and fat tissue mass. ABC seeks damages allegedly
resulting from the delivery and reckless actions of the employees of GE in the installation of
the product.

2. ABC’s claim amount to nothing more than an attempt to circumvent the law and conceal its
failure to perform its contractual obligations, the very reason for the defect in the delivery
and installation.

3. In Section I, GE Philippines sets forth the relevant facts of the case. In Section II, GE
Philippines discusses the points at issue in this case, and why, ABC’s claim is wholly
without merit. In Section III, GE Philippines requests that this Tribunal dismiss ABC’s claim
with prejudice and award all costs, both for this arbitration and for attorney’s fees to GE
Philippines.

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I. STATEMENT OF FACTS

A. Details of the Contract of Sale between the Involved Parties

4. Complainant ABC Health Institution, is a health care institution providing patient treatment
with specialized medical and nursing staff and medical equipment, with address at Likod
Balay Street, Jaro Iloilo City, where it may be served with notices, orders and other
processes;

5. Respondent GE Philippines, is a corporation organized and existing under Philippine laws,

doing business as a provider of transformational medical technologies and services for patient
care, with address at 8th Floor.Net Cube, 3rd Avenue corner 30th Street, E-Square Crescent
Park West, Bonifacio Global City 1634, Taguig City, Philippines where it may be served with
notices, orders and other processes;

6. On 10 August 2017, ABC and GE Philippines executed a Contract (Annex A), whereby the
latter will sell and supply the former with Prodigy PRO Bone Densitometry System, a medical
equipment which provides for comprehensive body composition analysis, including bone
mineral density (BMD) and lean and fat tissue mass.

7. The contract price is Two Million Five Hundred Thousand Pesos (P2,500,000.00). Such
payment includes Insurance and Freight from site to Manila Port. It also includes local
brokerage charges, bank and customs charges, customs taxes and import duties and
transportation costs from port to site.

Site and room preparation costs, if any, and all other associated costs and expenses shall be
borne by ABC.

8. The payment of terms agreed upon by the parties is as follows:

Downpayment - Twenty percent (20%) of the price shall be paid by dated cheque upon
signing of the contract and/or release of purchase order;

Balance - Eighty percent (80%) of the price shall be paid by dated cheque ninety (90)
days from the delivery of equipment;

9. The agreed terms of delivery of the parties is as follows:

The delivery shall be carried out within ninety (90) days after:

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 A.) Receipt of confirmed order, as evidenced by acceptance of ABC of the proposal
and/or issuance of ABC of the purchase order in acceptance hereof;
B.) Receipt of the downpayment and/or domestic letter of credit;
C.) Delivery shall be upon completion of site preparation in the manner and
specifications prescribed by the seller, GE Philippines;

B. The Prodigy PRO Bone Densitometry System

10. GE Philippines provides transformational medical technologies and services for accurate
diagnosis, preventive treatment and better patient care. It specializes in supplying medical
imaging and information technologies, medical diagnostics, patient monitoring systems, drug
discovery, biopharmaceutical manufacturing technologies, performance improvement and
performance solutions services to healthcare institutions all over the country.

11. The Prodigy PRO Bone Densitometry System is a medical equipment that uses dual-
energy X-ray absorptiometry (DXA) to determine precise data on soft tissue and bone
composition, including bone-mineral density (BMD), lean- and fat-tissue mass, and
percentage of fat. It is an advance technology trusted by thousands of medical practitioners
across the world.

12. GE has installed 11,000 units of Prodigy PRO Bone Densitometry System units in 93
countries and has hundreds of peer-review articles in leading medical journals.

C. Specifications for the Installation of the Prodigy PRO Bone Densitometry System

13. GE Philippines requires that the environmental specifications are met by the ABC prior to
the installation of the Prodigy PRO Bone Densitometry System.

14. The equipment requires the following specifications:

Minimum room dimensions: 2.4m x 3.0m for full-size bed models

2.4m x 2.3m for compact bed models

Environmental specifications:
Power:
Humidity:
Room temperature:
Console heat output:
100-120 VAC 50/60Hz 20A dedicated circuit (compact bed)
220-240 VAC 50/60Hz 10A dedicated circuit (full-size bed)
20%-80% non-condensing
18°C-27°C (65°F-81°F)
Approximately 400BTU/hr with 17” monitor

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Ventilation: All cooling vents must remain unblocked
Dust, fumes, debris: Install system in clean, ventilated area

D. ABC’s allegations against GE Philippines

15. ABC alleges that through the reckless actions of the respondent, the equipment was
damaged during the installation thus causing damages amounting to P5,000,000.00 to the
complainant.1

16. ABC further claims for damages in the amount of P7,000,000.00 plus 10% interest and
costs for shipping and installation of the product.

II. POINTS AT ISSUE

17. Below, GE Philippines sets forth its defenses on the merits of the claims of claimant ABC
regarding the delivery and installation of the Prodigy PRO Bone Densitometry System.

A. ABC has no legal standing

18. It is an oft repeated doctrine that he who pleads for equity must come to court with clean
hands. ABC is precluded from seeking reliefs for its failure to comply with its contractual
obligations in good faith.

19. Article 1159 of the Civil Code provides that “Obligations arising from contracts have the
force of law between the contracting parties and should be complied with in good faith”.
Further, Article 1306 of the same Code says, “The contracting parties may establish such
stipulations, clauses, terms and conditions as they may deem convenient, provided, they are
not contrary to law, morals, good customs, public order, or public policy”.

20. Paragraph E of the Contract between ABC and GE Philippines provides that the latter
shall provide on-site applications and operators training for Radiological technologists duly
employed and endorsed by the Buyer. This training will entail a visit by GE Application
specialists who will update the Doctors and Radiology technicians on clinical developments
and backed up by practical sessions on the equipment. This training will take two (2) days.

21. ABC failed to comply in good faith with its contractual obligations by failing to afford GE
Philippines the opportunity to provide the mandatory applications and operators training to

1
Paragraph 10, Statement of Claims
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ABC’s radiological technologists as to the proper use and maintenance of the Prodigy PRO
Bone Densitometry System.

22. ABC filed their notice for arbitration on 14 August 2017, barely four (4) days from the
execution of the contract dated 10 August 2017. In good faith, GE Philippines delivered and
installed the equipment within the four-day period, upon assurance from ABC that they will
strictly comply with the prescribed specifications required.

23. Contrary to their obligations, ABC used the equipment despite lack of technical training
from GE Philippines. The respondent was deprived of the opportunity to perform its obligation
to transfer to the buyer the technical and scientific knowledge in the use, management and
maintenance of the equipment.

The utter disregard of ABC of its contractual obligation to ensure that the equipment operators
are technically-trained to use the machine precludes it of seeking any reliefs from this Tribunal
or any court of justice.

B. GE Philippines exercised due diligence

24. GE Philippines exercised due diligence in the delivery and installation of the Prodigy PRO
Bone Densitometry System.

25. Considering the cost, sensitivity and importance the Prodigy PRO Bone Densitometry
System, and the undisputed reputation of GE Philippines in the delivery of medical imaging
and information technologies to health institutions, the equipment was subjected to a
comprehensive quality control inspection at different manufacturing stages to ensure reliability
and compliance with established product quality standards.

26. The Prodigy PRO Bone Densitometry System was defect-free when it was delivered and
installed at the site as evidenced by the Quality Control Inspection Report.

C. The damages claimed by ABC is inconsistent and has no basis

27. ABC claimed for damages amounting P5,000,000.002 and prayed for an award amounting
to P7,000,000.00.3 The amounts claimed and prayed for are inconsistent and the Statement
of Claims did not specify the legal basis supporting such claims.

2 Paragraph 10, Statement of Claims

3
Statement of Reliefs Sought
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28. ABC failed to methodically and logically provide the basis for its claims and assertions. It
should be noted that the contract price is only P2,500,000.00. ABC is claiming for an amount
more than the contract price without any acceptable reason nor legal basis.

29. ABC further failed to indicate in a plain, concise and direct statements the ultimate facts
which it relies on as basis for its cause of action against GE Philippines.

III. RELIEFS SOUGHT

30. For the foregoing reasons, GE Philippines respectfully requests that this Tribunal render
an award:

A. In favor of GE Philippines and against ABC, dismissing all claims in their entirety and with
prejudice; and
B. Ordering that ABC bear the costs of this arbitration, including GE Philippines’ costs for
legal representation and assistance.

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Date: January 19, 2018 Respectfully Submitted,

ATTY. RYAN R. MANTAC

General Manager - Region 6
GE Philippines

ATTY. IVY C. CASIANO

Suite 201-202, 2nd Flr., Centennial Building,
Fajardo St., Jaro, Iloilo City
+639178949330
ivy.casiano.law@gmail.com

ATTY. STEPHANIE ROSE C. JAVELLANA

FLD 305, 4th Flr. Rada Hall,
5000 Cor. Quezon- Gen. Luna Sts., Iloilo City
+639778833125
steph.rose.javellanalaw@gmail.com

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