Adr-cases Briefs.docx

National Union Fire Insurance Company of Pittburgh, et.al.,Petitioners, vs. Stolt-Nielsen Phils., Inc. and Court of Appeals, Respondents. GR No. 87958; April 26, 1990 United Coconut Chemicals (SHIPPER) shipped distilled fatty acid on board MT “StoltSceptre” (CARRIER). The shipment was insured under a marine cargo policy with National Union Fire Insurance Co (INSURER). Upon receipt of the cargo by the consignee in Netherlands, it was totally contaminated. Hence, claim was made on the INSURER of the cargo. The INSURER as subrogee filed a claim for damages against the CARRIER with RTC Manila. The CARRIER invoked that arbitration must be done pursuant to the Charter. The INSURER opposed, arguing that the provision on arbitration was not included in the Bill of Lading. SC: The INSURER cannot avoid the binding effect of the arbitration clause. By subrogation, it became privy to the Charter Party as fully as the SHIPPER before the latter was indemnified, because as subrogee it stepped into the shoes of the SHIPPER and is subrogated merely to the latter's rights.

FACTS:  On 9 January 1985, United Coconut Chemicals, Inc. shipped 404.774 metric tons of distilled C6-C18 fatty acid on board MT "StoltSceptre," a tanker owned by Stolt-Nielsen Philippines Inc., from Bauan, Batangas, Philippines, consigned to "NieuweMatex" at Rotterdam, Netherlands, covered by Tanker Bill of Lading BL No. BAT-1.  The shipment was insured under a marine cargo policy with Petitioner National Union Fire Insurance Company of Pittsburg (hereinafter referred to as INSURER), a non-life American insurance corporation, through its settling agent in the Philippines, the American International Underwriters (Philippines), Inc., the other petitioner herein.  Upon receipt of the cargo by the consignee in the Netherlands, it was found to be discoloured and totally contaminated. Hence, a claim was made on the Insurer of the cargo. The insurer as subrogee filed a claim for damages against the carrier with the RTC of Manila.  The carrier filed a motion to dismiss on the ground that the case was arbritrable and pursuant to the charter party as embodied in the bill of lading, arbitration must be done. The insurer opposed the motion by arguing that the provision on arbitration 1

was not included in the bill of lading and even if it was included, it was nevertheless unjust and unreasonable.  The RTC denied the motion but upon reconsideration, the resolution on the motion to dismiss was suspended or deferred.  The carrier then filed a petition for review on certiorari with preliminary injunction/TRO which was granted by the CA. ISSUE: Are the terms of the Charter Party, particularly the provision on arbitration, binding on the INSURER?

HELD: Yes. The pertinent portion of the Bill of Lading in issue provides in part: xxx [A]ll the terms whatsoever of the said Charter except the rate and payment of freight specified therein apply to and govern the rights of the parties concerned in this shipment.xxx The provision on arbitration in the Charter Party reads: 4. Arbitration. Any dispute arising from the making, performance or termination of this Charter Party shall be settled in New York, Owner and Charterer each appointing an arbitrator, who shall be a merchant, broker or individual experienced in the shipping business; the two thus chosen, if they cannot agree, shall nominate a third arbitrator who shall be an admiralty lawyer. Such arbitration shall be conducted in conformity with the provisions and procedure of the United States arbitration act, and a judgment of the court shall be entered upon any award made by said arbitrator. Nothing in this clause shall be deemed to waive Owner's right to lien on the cargo for freight, deed of freight, or demurrage. Clearly, the Bill of Lading incorporates by reference the terms of the Charter Party. It is settled law that the charter may be made part of the contract under which the goods are carried by an appropriate reference in the Bill of Lading. As the respondent Appellate Court found, the INSURER "cannot feign ignorance of the arbitration clause since it was already charged with notice of the existence of the charter party due to an appropriate reference thereof in the bill of lading and, by the exercise of ordinary diligence, it could have easily obtained a copy thereof either from the shipper or the charterer. We hold, therefore, that the INSURER cannot avoid the binding effect of the arbitration clause. By subrogation, it became privy to the Charter Party as fully as the SHIPPER before the latter was indemnified, because as subrogee it stepped into the shoes of the SHIPPER-ASSURED and is subrogated merely to the latter's rights. 2

It can recover only the amount that is recoverable by the assured. And since the right of action of the SHIPPER-ASSURED is governed by the provisions of the Bill of Lading, which includes by reference the terms of the Charter Party, necessarily, a suit by the INSURER is subject to the same agreements. It has not been shown that the arbitral clause in question is null and void, inoperative, or incapable of being performed. Nor has any conflict been pointed out between the Charter Party and the Bill of Lading. HEIRS OF AUGUSTO L. SALAS, JR., Petitioners, vs. LAPERAL REALTY CORPORATION, et.al.,Respondents. G.R. No. 135362,December 13, 1999 (320 SCRA 610) FACTS: Petitioner Salas Jr. and Respondent Laperal Realty Corporation entered into an agreement for the latter to develop and provide complete construction services on formers land. Petitioner executed a special power of attorney in favor of Respondent Corporation to exercise general control, supervision and management of the sale of his land. On June 10, 1989 Petitioner left his home for a business trip in Nueva Ecija but never returned again. Petitioner’s wife filed a petition for presumptive death of her husband after seven years of absence. The trial court granted her petition. On the other hand, Respondent Corporation already subdivided the property owned by Salas Jr. to different lot buyers. The heirs of Salas Jr. filed in the RTC of Lipa City a Complaint for nullity of sale, reconveyance, cancellation of contract and damages against Laperal Realty Corporation and lot buyers. Laperal Realty Corporation filed a motion to dismiss on the ground that the heirs of Salas Jr. failed to submit their grievance to arbitration as stated in the agreement executed by Salas Jr. and Laperal Realty Corporation. The lot buyers also filed a motion to dismiss based on the same ground. ISSUE: (1) Whether or not the arbitration clause in the agreement between Salas Jr. and Laperal Realty binds the heirs of the former. (2) Whether or not the trial court must dismiss the case or must hear the case simultaneously.

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HELD: (1) A submission to arbitration is a contract. As such, the Agreement, containing the stipulation on arbitration, binds the parties thereto, as well as their assigns and heirs. But only they. Petitioners, as heirs of Salas Jr., and respondent Laperal Realty Corporation are certainly bound by the agreement. (2) The arbitration agreement is valid, binding and enforceable and not contrary to public policy so much so when there obtains a written provision for arbitration which is not complied with, the trial court should suspend the proceedings and order the parties to proceed to arbitration in accordance with the terms of their agreement. However it would be in the interest of justice if the trial court hears the complaint against all herein respondents and adjudicates petitioners rights as against theirs in a singles and complete proceeding. The petition is granted the trial court must proceed with the hearing of the case.

DEL MONTE CORPORATION-USA, PAUL E. DERBY, JR., DANIEL COLLINS and LUIS HIDALGO, Petitioners, vs. COURT OF APPEALS, JUDGE BIENVENIDO L. REYES in his capacity as Presiding Judge, RTC-Br. 74, Malabon, Metro Manila, MONTEBUENO MARKETING, INC., LIONG LIONG C. SY and SABROSA FOODS, INC., Respondents. G.R. No. 136154. February 7, 2001 FACTS: On July 1, 1994 - in a Distributorship Agreement, Del Monte Corporation-USA (DMC-USA) appointed 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. Said agreement provided 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. 4

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 October 1994 -appointment of MMI as the sole and exclusive distributor of Del Monte products in the Philippines was published in several newspapers in the country. Immediately after its appointment, MMI appointed Sabrosa Foods, Inc. (SFI), with the approval of DMC-USA, as MMI’s marketing arm to concentrate on its marketing and selling function as well as to manage its critical relationship with the trade. On October 3 1996 -MMI, SFI and MMI’s Managing Director LiongLiong C. Sy (LILY SY) filed a Complaint against DMC-USA, Managing Director of Del Monte Corporation’s Export Sales Department Paul E. Derby, Jr., Regional Director of Del Monte Corporation’s Export Sales Department Daniel Collins, Head of Credit Services Department of Del Monte Corporation Luis Hidalgo and Dewey Ltd. before Malabon RTC. MMI et al. predicated their complaint on the alleged violations by Del Monte et al. of Articles 201, 212and 233 of the Civil Code. According to them, DMC-USA products continued to be brought into the country by parallel importers despite the appointment of 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, so that in March 1995 they had to cause, after prior consultation with Antonio Ongpin, Market Director for Special Markets of Del Monte Philippines, Inc., the publication of a "warning to the trade" paid advertisement in leading newspapers. DMC-USA and Paul E. Derby, Jr., apparently upset with the publication, instructed private respondent MMI to stop coordinating with Antonio Ongpin and to communicate directly instead with DMC-USA through Paul E. Derby, Jr. MMI et al. further averred that: 1. DMC-USA et al. knowingly and surreptitiously continued to deal with the former in bad faith by involving disinterested third parties and by proposing solutions which were entirely out of their control 2. They had exhausted all possible avenues for an amicable resolution and settlement of their grievances 3. As a result of the fraud, bad faith, malice and wanton attitude of DMC-USA et al., they should be held responsible 5

for all the actual expenses incurred by MMI et al. in the delayed shipment of orders which resulted in the extra handling thereof, the actual expenses and cost of money for the unused Letters of Credit (LCs) and the substantial opportunity losses due to created out-of-stock situations and unauthorized shipments of Del Monte-USA products to the Philippine Duty Free Area and Economic Zone 4. The bad faith, fraudulent acts and willful negligence of DMC-USA et al., motivated by their determination to squeeze MMI et al. out of the outstanding and on-going Distributorship Agreement in favor of another party, had placed Lily Sy on tenterhooks since then 5. The shrewd and subtle manner with which DMC-USA et al. concocted imaginary violations by MMI of the Distributorship Agreement in order to justify the untimely termination thereof was a subterfuge On October 21 1996 –DMC-USA et al. filed a Motion to Suspend Proceedings, invoking the arbitration clause. The RTC deferred consideration of DMC-USA et al.’s Motion to Suspend Proceedings as the grounds alleged therein did not constitute the suspension of the proceedings considering that the action was for damages with prayer for the issuance of Writ of Preliminary Attachment and not on the Distributorship Agreement DMC-USA et al. filed a MR to which MMI et al. filed their comment/opposition. DMC-USA et al. filed a reply. They later on filed a Motion to Admit Supplemental Pleading. Said motion was admitted. As a result of the admission of the Supplemental Complaint, DMC-USA et al. filed on 22 July 1997 a Manifestation adopting their Motion to Suspend Proceedings of 17 October 1996 and Motion for Reconsideration of 14 January 1997. On November 11 1997 –the Motion to Suspend Proceedings was denied by the trial court on the ground that it will not serve the ends of justice and to allow said suspension will only delay the determination of the issues, frustrate the quest of the parties for a judicious determination of their respective claims, and/or deprive and delay their rights to seek redress. On appeal, the CA affirmed the RTC decision. Hence, this petition.

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

HELD: 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 DMC-USA and MMI is valid and the dispute between the parties is arbitrable. However, this Court must deny the petition. The Agreement between DMC-USA and MMI is a contract. The provision to submit to arbitration any dispute arising there from 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., DMC-USA and its Managing Director for Export Sales Paul E. Derby, Jr., and MMI and its Managing Director LILY SY are bound by the Agreement and its arbitration clause as they are the only signatories thereto. Daniel Collins and Luis Hidalgo, and 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 7

DMC-USA and Paul E. Derby, Jr., and MMI and LILY SY, and not as to the other parties in this case, in accordance with the recent case of Heirs of Augusto L. Salas, Jr. v. Laperal Realty Corporation, which superseded that of Toyota Motor Philippines Corp. v. Court of Appeals. In Toyota, the Court ruled that "[t]he contention that the arbitration clause has become dysfunctional because of the presence of third parties is untenable ratiocinating that "[c]ontracts are respected as the law between the contracting parties" and that "[a]s such, the parties are thereby expected to abide with good faith in their contractual commitments." However, in Salas, Jr., only parties to the Agreement, their assigns or heirs have the right to arbitrate or could be compelled to arbitrate. The Court went further by declaring that in recognizing the right of the contracting parties to arbitrate or to compel arbitration, the splitting of the proceedings to arbitration as to some of the parties on one hand and trial for the others on the other hand, or the suspension of trial pending arbitration between some of the parties, should not be allowed as it would, in effect, result in multiplicity of suits, duplicitous procedure and unnecessary delay. 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.

NATIONAL STEEL CORPORATION, Petitioner, vs. THE RTC OF LANAO DEL NORTE, BRANCH 2, ILIGAN CITY AND E. WILLKOM ENTERPRISES, INC.,Respondents. G.R. No. 127004, March 11, 1999 FACTS: On November 18, 1992, Edward Wilkom Enterprises Inc. (EWEI) together with Ramiro Construction and National Steel Corporation (NSC) executed a Contract for Site Development. In the said contract EWEI and Ramiro Construction jointly undertook to develop NSC’s Integrated Iron and Steel Mills Complex which is to be established at Iligan City and to be finished on July 17, 1983.

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But sometime in the year 1983, the services of Ramiro Construction was terminated thus, EWEI took over Ramiro's contractual obligation. Due to this and to other causes deemed sufficient by EWEI, extensions of time for the termination of the project were granted by NSC. Differences later arose, EWEI then filed Civil Case No. 1615 before the RTC of Lanao del Norte, Branch 06, praying essentially for the payments of P458,381.00 with interest from the time of delay; the price adjustment as provided by PD 1594; and exemplary damages in the amount of P50,000.00 and attorney's fees. NSC filed an answer with counterclaim. On August 21, 1990, upon joint motion of both parties, the RTC issued an order dismissing the said complaint and counterclaim in view of the desire of both parties to implement Paragraph 19 of the contract, providing for a resolution of any conflict by arbitration. Thereafter, in accordance with the order of the RTC and pursuant to Paragraph 19 of the contract, EWEI and NSC constituted an Arbitration Board. And after series of hearings, the Arbitrators rendered a decision directing NSC to pay EWEI P458, 381.00 representing EWEI's last billing No. 16 with interest thereon at the rate of 1-1/4% per month from January 1, 1985 to actual date of payment; P1,335,514.20 representing price escalation adjustment under PD No. 1594, with interest thereon at the rate of 1-1/4 % per month from January 1, 1985 to actual date of payment; P50,000 as and for exemplary damages; P350,000 as and for attorney's fees.; and P35,000.00 as and for cost of arbitration. Aggrieved, the NSC filed a petition praying that the arbitrator’s award be vacated. The NSC posited therein that there was evident partiality in the aforesaid decision of the Arbitrators and that there was mistaken appreciation of the facts and application of the law by the Arbitrators. However, the RTC affirmed the award of the Board of Arbitrators "entoto" and ordered that an entry of judgment be entered pursuant to R.A. No. 876. Further, theRTC dismissed the petition of NSC praying that the arbitrator’s award be vacated. NSC filed a Motion for Reconsideration but the same was denied, thus the NSC elevated the case to the Supreme Court.

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ISSUE: Whether or not the lower court acted with grave abuse of discretion in not vacating the arbitrator’s award.

HELD: Thus, in a Petition to Vacate Arbitrator’s Decision before the trial court, regularity in the performance of official functions is presumed and the complaining party has the burden of proving the existence of any of the grounds for vacating the award, as provided for by Sections 24 of the Arbitration Law, to wit: (a) The award was procured by corruption, fraud or other undue means; (b) That there was evident partiality or corruption in the arbitrators of 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 wilfully refrained from disclosing such disqualification 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. . . . The grounds relied upon by the petitioner were the following (a) That there was evident partiality in the assailed decision of the Arbitrators in favor of the respondent; and (b) That there was mistaken appreciation of the facts and application of the law by the Arbitrators. Petitioner’s allegation that there was evident partiality is untenable. It is anemic of evidentiary support. In the case of Adamson vs. Court of Appeals, in upholding the decision of the Board of Arbitrators, this Court ruled that the fact that a party was disadvantaged by the decision of the Arbitration Committee does not prove evident partiality. Proofs other than mere inference are needed to establish evident partiality. Here, petitioner merely averred evident partiality without any proof to back it up. Petitioner was never deprived of the right to present evidence nor was there any showing that the Board showed signs of any bias in favor of EWEI. Parenthetically, and in the light of the record above-mentioned, this Court hereby holds that the Board of Arbitrators did not commit any “evident partiality” imputed by petitioner NSC. Above all, this Court must sustain the said decision for it is a well-settled rule that 10

the actual findings of an administrative body should be affirmed if there is substantial evidence to support them and the conclusions stated in the decision are not clearly against the law and jurisprudence, similar to the instant case, Henceforth, every reasonable intendment will be indulged to give effect such proceedings and in favor of the regulatory and integrity of the arbitrators act. Indeed, the allegation of evident partiality is not welltaken because the petitioner failed to substantiate the same. WHEREFORE, the awards made by the Board of Arbitrators which the trial court adopted in its decision are modified.

ASSET PRIVATIZATION TRUST, Petitioner, vs. COURT OF APPEALS, et.al.,Respondents. G.R. No. 121171,December 29, 1998

FACTS: Pursuant to a Mortgage Trust Agreement, the Development Bank of the Philippines and the Philippine National Bank foreclosed the assets of the Marinduque Mining and Industrial Corporation. The assets were sold to Philippine National Bank and later transferred to the Asset Privatization Trust (APT). In February 1985, Jesus Cabarrus, Sr., together with other stockholders of Marinduque Mining and Industrial Corporation, filed a derivative suit against Development Bank of the Philippines and Philippine National Bank before the Regional Trial Court of Makati for Annulment of Foreclosures, Specific Performance and Damages. In the course of the trial, Marinduque Mining and Industrial Corporation and Asset Privatization Trust as successor in interest of Development Bank of the Philippines and Philippine National Bank, agreed to submit the case to arbitration by entering into a Compromise and Arbitration Agreement. This agreement was approved by the trial court and the complaint was corollarily dismissed. Thereafter, the Arbitration Committee rendered a decision ordering Asset Privatization Trust to pay Marinduque Mining and 11

Industrial Corporation damages and arbitration costs in the amount of P2.5 Billion, P13,000,000.00 of which is for moral and exemplary damages. On motion of Cabarrus and the other stockholders of Marinduque Mining and Industrial Corporation, the trial court confirmed the Arbitration Committee’s award. Its motion for reconsideration having been denied, Asset Privatization Trust filed a special civil action for certiorari with the Court of Appeals. It was likewise denied. Hence, this petition for review on certiorari. ISSUE: Whether or not the Marinduque Mining and Industrial Corporation is entitled to moral damages? HELD: No. How could the MMIC be entitled to a big amount of moral damages when its credit reputation was not exactly something to be considered sound and wholesome. Under Article 2217 of the Civil Code, moral damages include besmirched reputation which a corporation may possibly suffer. A corporation whose overdue and unpaid debts to the Government alone reached a tremendous amount of P22 Billion Pesos cannot certainly have a solid business reputation to brag about. Besides, it is not yet a well settled jurisprudence that corporations are entitled to moral damages. While the Supreme Court may have awarded moral damages to a corporation for besmirched reputation in Mambulao vs. PNB, 22 SCRA 359, such ruling cannot find application in this case. It must be pointed out that when the supposed wrongful act of foreclosure was done, MMIC’s credit reputation was no longer a desirable one. The company then was already suffering from serious financial crisis which definitely projects an image not compatible with good and wholesome reputation. So it could not be said that there was a “reputation” besmirched by the act of foreclosure. 12

As a rule, a corporation exercises its powers, including the power to enter into contracts, through its board of directors. While a corporation may appoint agents to enter into a contract in its behalf, the agent should not exceed his authority. 54 In the case at bar, there was no showing that the representatives of PNB and DBP in MMIC even had the requisite authority to enter into a debt-for-equity swap. And if they had such authority, there was no showing that the banks, through their board of directors, had ratified the FRP. WHEREFORE, the petition is GRANTED NATIONAL IRRIGATION ADMINISTRATION (NIA), Petitioner, VS. HONORABLE COURT OF APPEALS (4TH Division), CONSTRUCTION INDUSTRY ARBITRATION COMMISSIN, AND HYDRO RESOURCES CONTRACTORS CORPORATION, Respondents. G.R. No. 129169, November 17, 1999

FACTS: Hydro Resources Contractors Corporation (hereafter HYDRO) was awarded Contract MPI-C-2 for the construction of the main civil works of the Magat River Multi-Purpose Project. HYDRO substantially completed the works under the contract and final acceptance by NIA. HYDRO thereafter determined that it still had an account receivable from NIA representing the dollar rate differential of the price escalation for the contract. After unsuccessful pursuing its case with NIA, HYDRO, filed with CIAC a Request for Adjudication of the aforesaid claim. NIA questioned the jurisdiction of the CIAC alleging lack of cause of action, laches and estoppel in view of HYDRO’s alleged failure to avail its right to submit the dispute to arbitration within the prescribed period as provided in the contract.

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ISSUE: Whether or not there was grave abuse of discretion on the part of the CIAC when it dismissed the petition.

HELD: The CIAC has no grave abuse of discretion. It has jurisdiction over the controversy. It is undisputed that the contracts between HYDRO and NIA contained an arbitration clause wherein they agreed to submit to arbitration any dispute between them that may arise before or after the termination of the agreement. Consequently, the claim of HYDRO having arisen from the contract is arbitrable. It is undeniable that NIA agreed to submit the dispute for arbitration to the CIAC. NIA through its counsel actively participated in the arbitration proceedings by filing an answer with counterclaim, as well as its compliance wherein it nominated arbitrators to the proposed panel, participating in the deliberations on, and the formulation of, the Terms of Reference of the arbitration proceeding, and examining the documents submitted by HYDRO after NIA asked for the originals of the said documents. As to the defenses of laches and prescription, they are evidentiary in nature which could not be established by mere allegations in the pleadings and must not be resolved in a motion to dismiss. Those issues must be resolved at the trial of the case on the merits where both parties will be given ample opportunity to prove their respective claims and defenses. In the instant case, the issue of prescription and laches cannot be resolved on the basis solely of the complaint. The court may either grant the motion to dismiss, deny it, or order the amendment of the pleading.

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DEMOSTHENES AGAN, JR., et.al.Petitioners, VS. PHIL. INTL. AIR TERMINALS CO., INC (PIATCO)et.al.,Respondents. G.R. NO. 155001, MAY 5, 2013

FACTS: On October 5, 1994, AEDC submitted an unsolicited proposal to the Government through the DOTC/MIAA for the development of NAIA International Passenger Terminal III (NAIA IPT III). DOTC constituted the Prequalification Bids and Awards Committee (PBAC) for the implementation of the project and submitted with its endorsement proposal to the NEDA, which approved the project. On June 7, 14, and 21, 1996, DOTC/MIAA caused the publication in two daily newspapers of an invitation for competitive or comparative proposals on AEDC’s unsolicited proposal, in accordance with Sec. 4-A of RA 6957, as amended. On September 20, 1996, the consortium composed of People’s Air Cargo and Warehousing Co., Inc. (Paircargo), Phil. Air and Grounds Services, Inc. (PAGS) and Security Bank Corp. (Security Bank) (collectively, Paircargo Consortium) submitted their competitive proposal to the PBAC. PBAC awarded the project to Paircargo Consortium. Because of that, it was incorporated into Philippine International Airport Terminals Co., Inc. AEDC subsequently protested the alleged undue preference given to PIATCO and reiterated its objections as regards the prequalification of PIATCO. On July 12, 1997, the Government and PIATCO signed the “Concession Agreement for the Build-Operate-and-Transfer Arrangement of the NAIA 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 15

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. Meanwhile, the MIAA which is charged with the maintenance and operation of the NAIA Terminals I and II, had existing concession contracts with various service providers to offer international airline airport services, such as in-flight catering, passenger handling, ramp and ground support, aircraft maintenance and provisions, cargo handling and warehousing, and other services, to several international airlines at the NAIA. On September 17, 2002, the workers of the international airline service providers, claiming that they would lose their job upon the implementation of the questioned agreements, filed a petition for prohibition. Several employees of MIAA likewise filed a petition assailing the legality of the various agreements. During the pendency of the cases, PGMA, on her speech, stated that she will not “honor (PIATCO) contracts which the Executive Branch’s legal offices have concluded (as) null and void.”

ISSUE: Whether or not the State can temporarily take over a business affected with public interest.

RULING: Yes. PIATCO cannot, by mere contractual stipulation, contravene the Constitutional provision on temporary government takeover and obligate the government to pay “reasonable cost for the use of the Terminal and/or Terminal Complex.” Article XII, Section 17 of the 1987 Constitution provides: Section 17. In times of national emergency, when the public interest so requires, the State may, during the emergency and under reasonable terms prescribed by it, temporarily take over or direct the operation of any privately owned public utility or business affected with public interest. 16

The above provision pertains to the right of the State in times of national emergency, and in the exercise of its police power, to temporarily take over the operation of any business affected with public interest. The duration of the emergency itself is the determining factor as to how long the temporary takeover by the government would last. The temporary takeover by the government extends only to the operation of the business and not to the ownership thereof. As such the government is not required to compensate the private entityowner of the said business as there is no transfer of ownership, whether permanent or temporary. The private entity-owner affected by the temporary takeover cannot, likewise, claim just compensation for the use of the said business and its properties as the temporary takeover by the government is in exercise of its police power and not of its power of eminent domain. Article XII, section 17 of the 1987 Constitution envisions a situation wherein the exigencies of the times necessitate the government to “temporarily take over or direct the operation of any privately owned public utility or business affected with public interest.” It is the welfare and interest of the public which is the paramount consideration in determining whether or not to temporarily take over a particular business. Clearly, the State in effecting the temporary takeover is exercising its police power. Police power is the “most essential, insistent, and illimitable of powers.” Its exercise therefore must not be unreasonably hampered nor its exercise be a source of obligation by the government in the absence of damage due to arbitrariness of its exercise. Thus, requiring the government to pay reasonable compensation for the reasonable use of the property pursuant to the operation of the business contravenes the Constitution.

LM POWER ENGINEERING CORPORATION, Petitioner, vs. CAPITOL INDUSTRIAL CONSTRUCTION GROUPS, INC., Respondent. G.R. NO. 141833, March 26, 2003

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FACTS: This is a Petition for Review on Certiorari filed by the petitioner LM Power against Respondent Capitol Industrial seeking to set aside the decision of CA. Petitioner LM Power Engineering Corporation and Respondent Capitol Industrial Construction Groups Inc. entered into a Subcontract Agreement involving electrical work at the Third Port of Zamboanga. Due to the inability of the petitioner to procure materials, Capitol IndustrialConstruction Groups, Inc. took over some of the work contracted to the former. After the completion of the contract, petitioner billed respondent in the amount of P6, 711,813.90 but the respondent refused to pay. Petitioner filed with the RegionalTrialCourt of Makati a Complaint for the collection of the amount representing the alleged balance due it under the subcontract. Respondent filed a Motion to Dismiss, alleging that the Complaint was premature, due to the absence of prior recourse to arbitration. RTC denied the Motion on the ground that the dispute did not involve the interpretation or the implementation of the Agreement and was not covered by the arbitral clause and ruled in favor of the petitioner. Respondent appealed to the Court of Appeals, the latterreversed the decision of the RTC and ordered the referral of the case to arbitration. Hence, this Petition.

ISSUE: WhetherOr Not there is a need for the prior arbitration before filing of the complaint with the court.

HELD: The Court Ruled in the AFFIRMATIVE. SupremeCourt ruled that in the case at hand it involves technical discrepancies that are better left to an arbitral body that has expertise in the subject matter. Moreover, the agreement between the parties contains arbitral clause that “any dispute or conflict as regards to interpretation and implementation of this agreement which cannot be settled between respondent and petitioner amicably shall be 18

settled by means of arbitration”. The resolution of the dispute between the parties herein requires a referral to the provisions of their agreement. Within the scope of the arbitration clause are discrepancies as to the amount of advances and billable accomplishments, the application of the provision on termination, and the consequent set-off of expenses. With respect to the disputes on the take-over/termination and the expenses incurred by respondent in the take-over, the SC ruled that the agreement provides specific provisions that any delay, expenses and any other acts in violation to such agreement, the respondent can terminate and can set off the amount it incurred in the completion of the contract. SC tackled also that there’s no need for the prior request for arbitration by the parties with the Construction Industry Arbitration Commission (CIAC) in order for it to acquire jurisdiction. Because pursuant to Section 1 of Article III of the new Rules of Procedure Governing Construction Arbitration, 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. Furthermore, the arbitral clause in the agreement is a commitment on the part of the parties to submit to arbitration the disputes covered therein. Because that clause is binding, they are expected to abide by it in good faith. Since a complaint with the RTC has been filed without prior recourse to arbitration, under RA 876 (Arbitration Law) the proper procedure is to request the stay or suspension of such action in order to settle the dispute with the CIAC.

LM POWER ENGINEERING COPORATION v CAPITOL INDUSTRIAL CONSTRUCTIONGROUPS G.R No. 141833 March 26 2003 FACTS: LM Power Engineering Corporation (Petitioner) and Capitol IndustrialConstruction Groups(Respondent) entered into a Subcontract Agreement involving electrical work at the Port ofZamboanga. Respondent then took over some of the work contracted to Petitioner, It wasalleged that the petitioner failed to finish it because of its inability to procure materials. 19

Upon completion of the task, Petitioner billed the respondent the amount of 6,711,813.90pesos. Respondent refused to pay and contested the accuracy of the amount of advances and billable accomplishments listed by thepetitioner. Respondent also took refuge in the terminationclause agreement which allowed it to set off the cost of the work that petitioner had failed to undertake (due to termination of takeover).Because of the dispute, the Petitioner filed a complaint foe collection of the balance dueunder the subcontract agreement. However, instead of filing an answer, the respondent filed aMotion to Dismiss, alleging that the complaint was premature because there was no priorrecourse to arbitration. RTC denied the motion on the ground that the dispute did not involve theinterpretation or implementation of the agreement and was, therefore, not covered by thearbitral clause. Also, the RTC ruled that the takeover of some work items by the respondentwas not equivalent to termination but a mere modification of the subcontract. ISSUE: Whether or not there exists a dispute between petitioner and respondent regarding theinterpretation and implementation of the Sub-Contract Agreement that requires prior recourse tovoluntary arbitration? RULING: Yes. The instant case involves technical discrepancies that are better left to an arbitralbody that has expertise on those areas. The Subcontract has theArbitral clause stating that theparties agree that “Any dispute or conflict as regards to interpretation and implementation of thisagreement which cannot be settled between the parties amicably shall be settled by means ofarbitration.” Within the scope of the Arbitration clause are discrepancies as to the amount ofadvances and billable accomplishments, the application of the provision on termination, and theconsequent set-off expenses. Also, there is no need for prior request for arbitration. As long asthe parties agree to submit to voluntary arbitration, regardless of what forum they may choose, their agreement will fall within the jurisdiction of the CIAC, such that, even if they specificallychoose another forum, the parties will not be precluded from electing to submit their dispute before the CIAC because this right has been vested upon each party by the law.

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CHARLES BERNARD H. REYES doing business under the name and style CBHREYES ARCHITECTS,vs.ANTONIO YULO BALDE II, PAULINO M. NOTO and ERNESTO J. BATTAD, SR., intheir capacities as Arbitrators of the CONSTRUCTION INDUSTRY ARBITRATIONCOMMISSION, SPOUSES CESAR and CARMELITA ESQUIG and ROSEMARIEPAPAS, G.R. No. 168384 August 18, 2006 YNARES-SANTIAGO, Before the Court is a "Motion to Inhibit the Honorable Chief Justice and Motion to Refer Case to the Court En Banc," dated August 4, 2006, filed by Atty. Francisco I. Chavez.I. According to the movant, the Motion to Inhibit the Chief Justice "is not an accusation of wrongdoing on the part of the Honorable Chief Justice. Rather it is impelled by Atty.Chavez’s perception that in this case, the Honorable Chief Justice has not acted in anobjective, impartial and neutral manner in disposing of incidental issues and motionspresented by the parties."The movant adds that "the dizzying pace by which private respondents’ motions havebeen received and favorably acted upon in record time supports Atty. Chavez’sperception that private respondents’ motions – without as much as requiring petitioner to respond thereto – have been granted special attention and favor by the HonorableChief Justice." (Bold types in original) Atty. Chavez’s perception about the alleged "closeness and the good relationshipbetween Atty. Ordoñez and the Chief Justice" to impair the latter’s objectivity andimpartiality has no basis, for the following reasons :(1) The actions taken on the various motions and incidents enumerated by the movantwere made by the entire membership of the First Division. Not being the ponente, theChief Justice did not initiate or propose any of the actions and rulings made by theCourt. Like the three other Division members, he merely concurred with theactions/rulings proposed by the ponente. While some orders and actions, especiallytemporary restraining orders, are issued in the name of the Division chairman (who inthis case is the Chief Justice), they are really collective actions of the entire Division, notmerely those of the Chair. This is the normal procedure in all Divisions, not just in theFirst.

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MARIA LUISA PARK ASSOCIATION, INC., Petitioner, vs. SAMANTHA MARIE T. ALMENDRAS and PIA ANGELA T. ALMENDRAS, Respondents. G.R. No. 171763, June 5, 2009 Nature of the Case: Petition for review on certiorari FACTS: The respondents Samantha Marie T. Almendras and Pia Angela T. Almendras purchased from MRO Development Corporation a residential lot in Cebu City.They then filed with Maria Luisa Park Association Inc. an application to construct a residential house which was approved and construction commenced. Upon ocular inspection MLPAI found out that Almendras violated the prohibition against multi-dwelling as stated in the Deed of Restriction of MLPAI.MLPAI sent a letter to the respondents, demanding that they rectify the structure. Respondents, as represented by their father Ruben D. Almendras denied having violated MLPAI’s Deed of Restriction. MLPAI, in its reply, pointed out respondents’ specific violations of the subdivision rules:installation of a second water meter and tapping the subdivision’s main water pipeline; and construction of “two separate entrances that are mutually exclusive of each other.” Respondents filed a complaint with the RTC of Cebu for Injunction, Declaratory Relief, Annulment of Provisions of Articles and By-Laws with Prayer for Issuance of a Temporary Restraining Order (TRO)/Preliminary Injunction.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. RTC dismissed the complaint holding that it was the Housing and Land Use Regulatory Board that has original and exclusive jurisdiction over the case. MR filed by respondents was denied. 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. Did the parties failed to abide the arbitration agreement in the by-laws?

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HELD: The Home Insurance and Guaranty Corporation (HIGC), now HLURB, has original and exclusive jurisdiction over the case since it is vested with the quasi-judicial authority to hear and decided matters over the homeowners’ associations and its members and settle their disputes and controversies. Petition Granted. The parties failed to abide by the arbitration agreement in the MLPAI by-laws. 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. 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. Respondents, being members of MLPAI, are bound by its bylaws, and are expected to abide by it in good faith. The parties in the case made no earnest effort to resolve their differences in accordance with the arbitration clause provided for in their bylaws. Mere exchange of correspondence will not suffice much less satisfy the requirement of arbitration. The Court also pointed out that arbitration being the mode of settlement between the parties expressly provided for in their bylaws, the same should be respected.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. 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. To brush aside a contractual agreement calling for arbitration in case of disagreement between the parties would therefore be a step backward.

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FORT BONIFACIO DEVELOPMENT CORPORATION, Petitioner, vs. MANUEL N. DOMINGO, Respondent. GR No. 180765, Feb. 27, 2009

Nature of the Case: Petition for review on certiorari FACTS:

Petitioner, a domestic corporation duly organized under Philippine laws, is engaged in the real estate development business. Respondent is the assignee of L and M Maxco Specialist Engineering Construction (LMM Construction) of its receivables from petitioner.

Petitioner entered into a Trade Contract with LMM Construction for partial structural and architectural works on one of its projects, the Bonifacio Ridge Condominium. According to the said Contract, petitioner had the right to withhold the retention money equivalent to 5% of the contract price for a period of one year after the completion of the project.

Due to the defect and delay in the work of LMM Construction on the condominium project, petitioner unilaterally terminated the Trade Contract and hired another contractor to finish the rest of the work left undone by LMM Construction. Despite the pre-termination of the Trade Contract, petitioner was liable to pay LMM Construction a fraction of the contract price in proportion to the works already performed by the latter. On 30 April 2005, petitioner received a letter dated 18 April 2005 from respondent inquiring on the retention money supposedly due to LMM Construction and informing petitioner that a portion of the amount receivable by LMM Construction therefrom was already assigned to him as evidenced by the Deed of Assignment executed by LMM Construction in respondent’s favor on 28 February 2005. LMM Construction assigned its receivables from petitioner to respondent to settle the alleged unpaid obligation of LMM Construction to respondent amounting to P804,068.21. Petitioner 24

acknowledged that LMM Construction did have receivables still with petitioner, however it still failed to pay the said amount to respondent. This prompted respondent to file a Complaint for collection of sum of money, against both LMM Construction and petitioner, docketed as Civil Case No. 06-0200-CFM before the RTC of Pasay City, Branch 109. Instead of filing an Answer, petitioner filed a Motion to Dismiss Civil Case No. 06-0200-CFM on the ground of lack of jurisdiction over the subject matter. Petitioner argued that since respondent merely stepped into the shoes of LMM Construction as its assignor, it was the Construction Industry Arbitration Commision (CIAC) and not the regular courts that had jurisdiction over the dispute as provided in the Trade Contract. RTC denied the Motion to Dismiss, CA affirmed said order. ISSUE: Whether the RTC has jurisdiction over Civil Case No. 060200-CFM. RULING: RTC has jurisdiction over civil case no. 06-0200-CFM. According to the Court, it is an elementary rule of procedural law that jurisdiction of the court over the subject matter is determined by the allegations of the complaint, irrespective of whether or not the plaintiff is entitled to recover upon all or some of the claims asserted therein. As a necessary consequence, the jurisdiction of the court cannot be made to depend upon the defenses set up in the answer or upon the motion to dismiss; for otherwise, the question of jurisdiction would almost entirely depend upon the defendant. What determines the jurisdiction of the court is the nature of the action pleaded as appearing from the allegations in the complaint. The averments therein and the character of the relief sought are the ones to be consulted. The Court pointed out that a scrupulous examination of the aforementioned allegations in respondent’s Complaint unveils the fact that his cause of action springs not from a violation of the provisions 25

of the Trade Contract, but from the non-payment of the monetary obligation of LMM Construction to him. What respondent puts in issue before the RTC is the purportedly arbitrary exercise of discretion by the petitioner in giving preference to the claims of the other creditors of LMM Construction over the receivables of the latter. The Court said that respondent’s claim is not even constructionrelated at all. Petitioner’s insistence on the application of the arbitration clause of the Trade Contract to respondent is clearly anchored on an erroneous premise that respondent is seeking to enforce a right under the same. Again, the right to the receivables of LMM Construction from petitioner under the Trade Contract is not being impugned herein. In fact, petitioner readily conceded that LMM Construction still had receivables due from petitioner, and respondent did not even have to refer to a single provision in the Trade Contract to assert his claim. What respondent is demanding is that a portion of such receivables amounting to P804, 068.21 should have been paid to him first before the other creditors of LMM Construction, which, clearly, does not require the CIAC’s expertise and technical knowledge of construction.

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FORT BONIFACIO DEVELOPMENT vs. CORPORATION HON. EDWIN D. SORONGON and VALENTIN FONG G.R. NO. 176709MAY 8, 2009, 587 SCRA 613

FACTS: Petitioner Fort Bonifacio Development Corp is a corporation registered under Philippine laws and is engaged in the business of real estate development. Respondent, Valentin Fong (respondent) doing business under the name VF Industrial Sales is the assignee of L & M Maxco Specialist Constructions (Maxco) retention money from the Bonifacio Ridge Condominium Phase 1 (BRCP 1). On July 2000, Petitioner entered into a trade contract with Maxco wherein Maxco would undertake the structural and partial architectural package of the BRCP 1. Later petitioner accused Maxco of delay in completion of its work and on August 24, 2004 sent the latter a notice of termination. o Petitioner also instructed Maxco to perform remedial measures prior to the contract expiration pursuant to Clause 23.1 of the contract. Subsequently, Maxco was sued by its creditors including respondent for debts unrelated to BRCP 1.In order to settle the collection suit, on February 28, 2005, Maxco assigned its receivables representing its retention money from the BRCP 1 in the amount of one million five hundred seventy seven thousand one hundred fifteen pesos and ninety centavos (P1, 577,115.90). On April 18, 2005, respondent (a CREDITOR of MAXCO) wrote to petitioner, informing the latter of Maxcos assignment in his favor and asking the latter to confirm the validity of Maxcos receivables. Petitioner replied, informing the respondent that Maxco did have receivables, however these were not due and demandable until January of next year, moreover the amount had to be ascertained and liquidated.A subsequent exchange of correspondence failed to settle the matter petitioner wrote respondent informing the latter that there is no more amount due to Maxco from petitioner after the rectification of defect as well as the satisfaction of notices of garnishment dated July 30, 2004 and January 26, 2006. Respondent filed a complaint for a sum of money against petitioner and Maxco RTC Mandaluyong City. Respondent claimed that there were sufficient residual amounts to pay the receivables of Maxco at the time he served notice of the assignment. The subsequent notices of garnishment should not adversely affect the receivables assigned 27

to him. The retention money was over due in January 2006 and despite demand, petitioner did not pay the amount subject of the deed of assignment. Petitioner however, paid out the retention money to other garnishing creditors of Maxco to the detriment of respondent petitioner filed a Motion to Dismiss on the ground of lack of jurisdiction over the subject matter. Petitioner argued that since respondent merely stepped into the shoes of Maxco as its assignee, it was the CIAC and not the regular courts that had jurisdiction over the dispute as provided in the Trade Contract. RTC: Judge Edwin Sorongon: DENIED petitioners motion to dismiss. MR also DENIED. Petitioner filed a petition for certiorari and prohibition with the Court of Appeals. Court of Appeals: DENIED petition for certiorari and prohibition for lack of merit appellate court held that it was the trial court and not the Construction Industry Arbitration Commission (CIAC) that had jurisdiction over the claims of Valentin Fong. The claim could not be construed as related to the construction industry as it is for enforcement of Maxcos deed of assignment over its retention money. MR to CA DENIED.

ISSUE: Which has jurisdiction: RTC or CIAC?

RULING: RTC. The adjudication of Civil Case necessarily involves the application of pertinent statutes and jurisprudence to matters of assignment and preference of credits. As this Court held in Fort Bonifacio Development Corporation v. Domingo, this task more suited for a trial court to carry out after a full-blown trial, than an arbitration body specifically devoted to construction contracts. RATIO: Jurisdiction is defined as the authority to try, hear and decide a case. Moreover, that jurisdiction of the court over the subject matter is determined by the allegations of the complaint without regard to whether or not the plaintiff is entitled to recover upon all or some of the claims asserted therein is a well-entrenched principle. In this regard, the jurisdiction of the court does not depend upon the defenses pleaded in the answer or in the motion to dismiss, lest the question of jurisdiction would almost entirely depend upon the defendant. 28

An examination of the allegations in Fongs complaint reveals that his cause of action springs NOT from a violation of the provisions of the Trade Contract, but from the assignment of Maxcos retention money to him and failure of petitioner to turn over the retention money. The allegations in Fongs Complaint are clear and simple: (1) That Maxco had an outstanding obligation to respondent; (2) Maxco assigned to Fong its retention from petitioner in payment of the said obligation, (3) Petitioner as early as April 18, 2005 was notified of the assignment; (4) Despite due notice of such assignment, petitioner still refused to deliver the amount assigned to respondent, giving preference, instead, to the 2 other creditors of Maxco; (5) At the time petitioner was notified of the assignment, there were only one other notice of garnishment and there were sufficient residual amounts to satisfy Fongs claim; and (6) Uncertain over which one between Maxco and petitioner he may resort to for payment, respondent named them both as defendants in Civil Case No. 06-0200-CFM. While it is true that respondent, as the assignee of the receivables of Maxco from petitioner under the Trade Contract, merely stepped into the shoes of Maxco. However, the right of Maxco to the retention money from petitioner under the trade contract is not even in dispute in Civil Case No. 06-0200-CFM. Respondent raises as an issue before the RTC is the petitioners alleged unjustified preference to the claims of the other creditors of Maxco over the retention money. Although the jurisdiction of the CIAC is not limited to the instances enumerated in Section 4 of E. O. No. 10081, Fongs claim is not even construction-related at all. This court has held that: Construction is defined as referring to all on-site works on buildings or altering structures, from land clearance through completion including excavation, erection and assembly and installation of components and equipment. Thus, petitioner’s insistence on the application of the arbitration clause of the Trade Contract to Fong is clearly anchored on an erroneous premise that the latter is seeking to enforce a right under the trade contract. This premise cannot stand since the right to the retention money of Maxco under the Trade Contract is not being impugned herein. It bears mentioning that petitioner readily conceded the existence of the retention money. 29

Fongs demand that the portion of retention money should have been paid to him before the other creditors of Maxco clearly, does not require the CIACs expertise and technical knowledge of construction. The adjudication of Civil Case necessarily involves the application of pertinent statutes and jurisprudence to matters of assignment and preference of credits. As this Court held in Fort Bonifacio Development Corporation v. Domingo, this task more suited for a trial court to carry out after a full-blown trial, than an arbitration body specifically devoted to construction contracts.

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HUTAMA-RSEA Joint Operations, Inc. v. Citra Metro Manila Tollways Corporation GR No.180640, April 24, 2009

In this case, the Court declared that “the bare fact that the parties incorporated an arbitration clause in [their contract] is sufficient to vest the CIAC with jurisdiction over any construction controversy or claim between the parties. The arbitration clause in the construction contract ipso facto vested the CIAC with jurisdiction.”

FACTS: The ruling was rendered in G.R. No. 180640, entitled HUTAMA-RSEA Joint Operations, Inc. vs. Citra Metro Manila Tollways Corporation. The case stemmed from a dispute over money claims of HUTAMARSEA Joint Operations, Inc. (HUTAMA), an engineering and construction subcontractor, against Citra Metro Manila Tollways Corporation (Citra), the general contractor and operator of the South Metro Manila Skyway Project (Skyway Project). On September 25, 1996, Citra and HUTAMA entered into an Engineering Procurement Construction Contract (EPCC), whereby HUTAMA would construct Stage 1 of the Skyway Project, and Citra agreed to pay HUTAMA the total amount US$369,510,304.00 for the construction. Thereafter, HUTAMA made several demands on Citra for the payment of various balances, charges and other amounts. Despite several meetings and negotiations, the parties failed to amicably settle their dispute. HUTAMA filed a Request for Arbitration with CIAC to enforce its money claims. In its Answer Ad Cautelam with Motion to Dismiss, Citra argued that the case was premature because the parties had not complied with a condition precedent in the EPCC requiring referral of their dispute to the DAB prior to arbitration. CIAC ruled that it had jurisdiction over the case, and the issue raised by Citra was factual and should be resolved during the trial. After the parties signed the Terms of Reference, Citra urgently moved that CIAC refrain from proceeding with the arbitration until it resolved the issue of whether prior resort by the parties to the DAB was a condition precedent to the submission of the dispute to CIAC. When CIAC denied Citra’s motion, it appealed the CIAC ruling to the Court of Appeals. The appellate court ruled in favor of Citra and enjoined CIAC from proceeding with the arbitration until the parties’ dispute 31

was first referred to and resolved by the DAB. HUTAMA moved for reconsideration, but this was denied by the Court of Appeals. HUTAMA then filed a petition for review on certiorari with the Supreme Court. CIAC Jurisdiction The Supreme Court granted HUTAMA’s petition and held that CIAC had jurisdiction over a dispute involving a contraction contract if it contained an arbitration clause, notwithstanding any reference by the same agreement to another arbitration institution or arbitral body. ISSUE: Whether prior resort by the parties to the Dispute Adjudication Board (DAB) was a condition precedent to the submission of the dispute to CIAC?

RULING: In a Decision promulgated last April 24, 2009, the Philippine Supreme Court’s Third Division ruled that the Construction Industry Arbitration Commission (CIAC) may assume jurisdiction of a dispute even if the parties had not previously referred it to the Dispute Adjudication Board (DAB) as stipulated in their construction agreement. Although the Supreme Court noted that the EPCC stipulated that the parties should first refer their dispute to the DAB prior to commencing arbitration, the Tribunal held that this did not bar CIAC from assuming jurisdiction over the dispute if such condition was not complied with. According to the Supreme Court, since the jurisdiction of CIAC was conferred by law, it could not be subjected to any condition nor can it be waived or diminished by the stipulation, act or omission of the parties, as long as the parties agreed to submit their dispute to arbitration or agreed to an arbitration clause in their construction contract. In other words, the arbitration clause in the EPCC ipso facto vested CIAC with jurisdiction over the dispute between HUTAMA and Citra. The Supreme Court also considered the factual milieu of the parties. It noted that the dispute between them had been lingering for almost five years, and no amicable settlement was reached despite numerous meetings and negotiations. The Tribunal believed that it would be circuitous and dilatory, and would entail unnecessary delays and expenses on both parties, to refer the dispute to the DAB. This would be contrary to the intent of Executive Order No. 1008 (1985), which mandated CIAC to expeditiously settle construction industry disputes. Role of the DAB The Tribunal’s Decision did not discuss the important role played by the DAB in alternative dispute resolution. A DAB created at the commencement of the construction work plays a key role in resolving disputes between the parties to the contract 32

while the work is in progress, even if the resolution of the dispute is only provisional. However, where no party had taken any step to constitute the DAB within the agreed period and construction is completed, the utility of creating a DAB at such late stage may be questionable. It can hardly be said that it is the intention of the parties to submit their dispute – which remained unresolved at that stage – to a two-tiered process, first the DAB which is a less formal dispute resolution procedure, and then to arbitration. The exception, which is highly unlikely, is when the parties agree to accept the resolution of the dispute by the DAB. However, perhaps in anticipation of the Tribunal’s resolution of the issue raised by HUTAMA, Rule 3, Section 3.2.2 of the CIAC Revised Rules of Procedure Governing Construction Arbitration now provides that in case of noncompliance with a condition precedent, absent a showing of justifiable reasons, exemption, or a waiver thereof, CIAC shall suspend arbitration proceedings pending compliance therewith within a reasonable period directed by the arbitral tribunal.

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Equitable PCI Banking Corp. vs. RCBC Capital Corp. December 18, 2008 G.R. No. 182248

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 Agreement5(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. Under the SPA, RCBC undertakes, on the date of contract execution, to deposit, as down payment, 20% of the purchase price, or PhP 357,353,880, in an escrow account. The escrowed amount, the SPA stated, should be released to petitioners on an agreed-upon release date and the balance of the purchase price shall be delivered to the share buyers upon the fulfillment of certain conditions agreed upon, in the form of a manager’s check. 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. RCBC had Bankard’s accounts audited, creating for the purpose an audit team led by a certain Rubio, the Vice-President for Finance of RCBC at the time. Rubio’s 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, in a letter, RCBC informed petitioners of its having overpaid the purchase price ofthe 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). Following unsuccessful attempts at settlement, RCBC, in accordance with Sec. 10 of the SPA, filed a Request for Arbitration dated May 12, 20048 with the ICC-ICA. In the request, RCBC charged Bankard with deviating from, contravening and not following generally accepted 34

accounting principles and practices in maintaining their books. Due to these improper accounting practices, RCBC alleged that both the audited and unaudited financial statements of Bankard prior to the stock purchase were far from fair and accurate and, hence, violated their presentations 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, payment of actual damages in the amount of PhP 573,132,110, legal interest on the purchase price until actual restitution, moral damages, and litigation and attorney’s fees. As alternative to rescission and restitution, RCBC prayed for damages in the amount of at least PhP 809,796,092 plus legal interest. 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. RCBC filed with the RTC a Motion to Confirm Partial Award. On the same day, petitioners countered with a Motion to Vacate the 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 in the equally assailed second order. ISSUE: WON the trial court acted contrary to law and judicial authority in refusing to vacate the arbitral award, notwithstanding it was rendered in plain disregard of the parties’ contract and applicable Philippine law, under which the claim in arbitration was indubitably time-barred.

RULING: The petition must be denied. The Court Will Not Overturn an Arbitral Award Unless It Was Made in Manifest Disregard of the Law. In Asset Privatization Trust v. Court of Appeals, 16 the Court passed on similar issues as the ones tendered in the instant petition. In that case, the arbitration committee issued an arbitral award which the trial court, upon due proceedings, confirmed despite the opposition of the losing party. Motions for reconsideration by the losing party were denied. An appeal 35

interposed by the losing party to the CA was denied due course. On appeal to this Court, we established the parameters by which an arbitral award may be set aside, to wit: 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 Articles2038, 2039 and 2040 of the Civil Code applicable to compromises and arbitration are attendant, the arbitration award may also be annulled. 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." Following Asset Privatization Trust, errors in law and fact would not generally justify the reversal of an arbitral award. 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 up hold an arbitral award. The instant petition dwells on the alleged manifest disregard of the law by the ICC-ICA. The US case of Merrill Lynch, Pierce, Fenner& Smith, Inc. v. Jaros18 expounded on the phrase" manifest disregard of the law" in the following wise: 36

This court has emphasized that manifest disregard of the law is a very narrow standard of review. Anaconda Co. v. District Lodge No. 27, 693 F.2d 35 (6th Cir.1982). A mere error in interpretation or application of the law is insufficient. Anaconda, 693 F.2d at 37-38. Rather, the decision must fly in the face of clearly established legal precedent. When faced with questions of law, an arbitration panel does not act in manifest disregard of the law unless (1) the applicable legal principle is clearly defined and not subject to reasonable debate; and (2) the arbitrators refused to heed that legal principle. Thus, 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. In the present case, petitioners, in a bid to establish that the arbitral award was issued in manifest disregard of the law, allege that the Partial Award violated the principles of prescription, due process, and estoppel. A review of petitioners’ arguments would, however, show that their arguments are bereft of merit. Thus, the Partial Award dated September 27, 2007 cannot be vacated.

Empire East Land Holdings, Inc. v. Capitol Industrial Construction Groups, Inc., G.R. No.168074, September 26, 2008 Facts: Capitol Industrial Corporation Groups, Inc. (CICG) and Empire East Land Holdings, Inc.(EELH) entered into a construction contract. Later CICG filed a request for adjudication with the Construction Industry Arbitration Commission (CIAC) praying that be EELH made to pay CICG. EELH filed a counterclaim for payroll assistance and materials accommodation. Issue: whether EELH’s claim for payroll assistance and materials accommodation be allowed Ruling: Yes. In administrative or quasi-judicial bodies like the CIAC, a fact may be established if supported by substantial evidence, or that amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion.

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CIAC’s conclusion was based on substantial evidence as can be gleaned on the petition and annexes, as against the Comment of respondent. ABS-CBN Broadcasting Corporation v. World Interactive Network Systems [WINS] Japan Co., Ltd., G.R. No. 169332, February 11, 2008 FACTS: Petitioner ABS-CBN Broadcasting Corporation entered into a licensing agreement with respondent World Interactive Network System (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 “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. 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 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. 38

RULING: RA 876 itself mandates that it is the CFI, now RTC, which has jurisdiction over questions relating to arbitration, such as petition to vacate an arbitral award. As RA 876 did not expressly provide 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 error 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 petition for certiorari under Rule 65 may be availed of in the CA. Which one would depend on the grounds relied upon by the 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. 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.

DIESEL CONSTRUCTION CO. INC., G.R. No. 154885 Petitioner,- versus -UPSI PROPERTY HOLDINGS, INC., Respondent. x------------------------------------------------x UPSI PROPERTY HOLDINGS, INC., G.R. No. 154937Petitioner, - versus -DIESEL CONSTRUCTION CO., INC.and FGU INSURANCE CORP.,Respondents. March 24, 2008 FACTS: That on Aug 26, 1995, Diesel and UPSI entered into a Construction Agreement for the interior architectural construction works of the 14 th to the 16th floors of UPSI Building 3 Meditel/Condotel Project. The 12.7M covers provisions on contract works and completion, extension of contract period, change or extra work orders as well as to take the project payable by progress billing. Part of the agreement is, in case 39

of unjustifiable delay, Diesel is obliged to pay the owner liquidated damages in the amount equivalent to 1/5 of 1% of the total project cost for every calendar day of delay. The project supposedly starts on Aug 2, 1999 to run for a period of 90 days until Nov. 8, 1999 but later agreed to move the commencement date to Aug 21 until Nov 20, 1999. March 16, 2000, Diesel’s project manager, sent a letter of notice completion to UPSI, as of same date. Disregarded and refused to accept the delivery by UPSI because during project implementation, change orders and extensions were sought because of the several delaying factors, putting Diesel in a state of default and assessed for liquidated damages, deducting from his progress payments. Diesel filed a complaint before CIAC (Construction Industry Arbitration Commission), praying that UPSI be compelled to pay the balance plus damages and attorney’s fees. UPSI’s counterclaim denied liability and prayed for the repayment of expenses it incurred for completing the project and for a declaration that the deductions it made for liquidated damages were proper. CIAC rendered a judgment ordering UPSI to pay Diesel about 4M covering the unpaid balance and attorney’s fees, dismissing UPSI’s counterclaim. Both parties sought reconsideration. CA modified the ruling of CIAC, granting the claim of UPSI for liquidated damages (1.3M) representing 45days of delay. CA also ruled that Diesel complied with the contract and is entitled to 100% payment of contract price (2.4M unpaid balance). In sum, UPSI is held liable to Diesel in the amount of 1.1M. Parties filed separate petitions before the SC. ISSUE: Whether or not Diesel can be entitled to full payment of the contract amount. HELD: SC resolve to modify the assailed CA Decision. 40

The CIAC found Diesel not to have incurred delay, thus negating UPSI’s entitlement to liquidated damages. The CA, on the other hand, found Diesel to have been in delay for 45 days. In determining whether or not Diesel was in delay, they considered the fact that Diesel had the Project period extended beyond 90-day completion period. Both agreed that there were factors that gave Diesel the right to an extension but differed on the matter of length of the extension, and on the nature of the delay, that is, whether the delay is excusable or not. There were provisions on the agreement on excusable delays for which the contractor shall inform the owner in a timely manner. This includes: acts of god, civil disturbance, government acts, wars, delays initiated by owner or his personnel. The delaying event should be unforeseeable and beyond the control of Diesel. The lack of location for the hoisting machine can be hardly tagged as foreseeable event. The CA completely failed to factor in the change orders of UPSI to Diesel––the directives effectively extending the Project completion time at the behest of UPSI. -UPSI issued Change Order (CO) Nos. 1 to 4 on February 3, 2, 8, and 9, 2000 respectively. Thereafter, Diesel submitted a Schedule of Completion of Additional Works under which Diesel committed to undertake CO No. 1 for 30 days from February 10, 2000; CO No. 2 for 21 days from January 6, 2000; CO No. 3 for 15 days, subject to UPSI’s acceptance of Diesel’s proposal; and CO No. 4 for 10 days after the receipt of the items from UPSI. Thus, as correctly held by the CIAC, UPSI, no less, effectively moved the completion date, through the various COs, to April 7, 2000. Moreover, as evidenced by UPSI’s Progress Report No. 19 for the period ending March 22, 2000, Diesel’s scope of work, as of that date, was already 97.56% complete. Such level of work accomplishment would, by any rational norm, be considered as substantial to warrant full payment of the contract amount, less actual damages suffered by UPSI. Article 1234 of the Civil Code says as much, “If the obligation had been substantially performed in good faith, the obligor may recover as though there had been a strict and complete fulfillment, less damages suffered by the obligee.” Diesel was not strictly in delay in the completion of the Project. No valid reason, therefore, obtains for UPSI to withhold the retention money or to refuse to pay the unpaid balance of the contract price. Indeed, the retention and nonpayment were, to us, as was to the CIAC, resorted to by UPSI out of whim, thus forcing the hand of 41

Diesel to sue to recover what is rightfully due. Thus, the grant of attorney’s fees would be justifiable under Art. 2208 of the Civil Code. In all, Diesel cannot be considered as in delay and, hence, is not amenable under the Agreement for liquidated damages Korea Technologies co., ltd. v. Hon. Alberto A. Lerma and Pacific General Steel Manufacturing Corporation 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, 42

1998, KOGIES sent a demand letter to PGSMC threatening criminal action for violation of Batas PambansaBlg. 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. Issue: Whether or not the arbitration clause in the contract of the parties should govern. Held: Yes. 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. The arbitration clause was mutually and voluntarily agreed upon by the parties. It has not been shown to be contrary to any law, or against morals, good customs, public order, or public policy. There has been no showing that the parties have not dealt with each other on equal footing. We find no reason why the arbitration clause should not be respected and complied with by both parties. In Gonzales v. Climax Mining Ltd., we held that submission to arbitration is a contract and that a clause in a contract providing that all matters in dispute between the parties shall be referred to arbitration is a contract. Again in Del Monte Corporation-USA v. Court of Appeals, we likewise ruled that [t]he 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. Having said that the instant arbitration clause is not against public policy, we come to the question on what governs an arbitration clause specifying that in case of any dispute arising from the contract, an arbitral panel will be constituted in a foreign country and the arbitration rules of the foreign country would govern and its award shall be final and binding. Thus, it can be gleaned that the concept of a final and binding arbitral award is similar to judgments or awards given by some of our quasijudicial bodies, like the National Labor Relations Commission and Mines Adjudication Board, whose final judgments are stipulated to be final and binding, but not immediately executory in the sense that they may still be judicially reviewed, upon the instance of any party. Therefore, the final foreign arbitral awards are similarly situated in that they need first to be confirmed by the RTC. 43

Insular Savings Bank vs. Far East Bank And Trust Company, G.R. No. 141818, June 22, 2006 Facts: Respondent filed a complaint against Home Bankers Trust and Company (HBTC) with the Philippine Clearing House Corporation’s (PCHC) Arbitration Committee, seeking recovery from the petitioner, the sum of P25,200,000.00 representing the total amount of the three checks drawn and debited against its clearing account. Before the termination of the arbitration proceedings, respondent filed another complaint but this time with the Regional Trial Court (RTC) for Sum of Money and Damages with Preliminary Attachment. The RTC suspended the proceedings pending the decision of the Arbitration Committee.

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The PCHC Arbitration Committee rendered its decision in favor of respondent. Petitioner motion for reconsideration was denied. It then filed a petition for review in the earlier case filed by respondent in the RTC. The RTC dismissed the petition for review, for lack of jurisdiction. Issue: Whether or not the petitioner availed the proper remedy contesting the decision rendered by the Arbitration Committee. Ruling: Negative. Petitioner had several judicial remedies available at its disposal after the Arbitration Committee denied its Motion for Reconsideration. It may petition the proper RTC to issue an order vacating the award on the grounds provided for under Section 24 of the Arbitration Law. Petitioner likewise has the option to file a petition for review under Rule 43 of the Rules of Court with the Court of Appeals on questions of fact, of law, or mixed questions of fact and law. Lastly, petitioner may file a petition for certiorari under Rule 65 of the Rules of Court on the ground that the Arbitrator Committee acted without or in excess of its jurisdiction or with grave abuse of discretion amounting to lack or excess of jurisdiction. Since this case involves acts or omissions of a quasi-judicial agency, the petition should be filed in and cognizable only by the Court of Appeals.

LM Power Engineering Corporation vs. Capitol Industrial Construction Groups, Inc. G.R. No. 141833 March 26, 2003) FACTS: LM Power Engineering Corporation and Capitol Industrial Construction Groups, Inc. entered into a “Subcontract Agreement” involving electrical work at the Third Port of Zamboanga. Two years thereafter, Respondent took over some of the work contracted to Petitioner. Allegedly, the latter had failed to finish it because of its inability to procure materials. When task was completed Petitioner billed Respondent in the amount of P6.7M. Respondent, however, refused to pay and contested the accuracy of the amount of advances and billable accomplishments listed by Petitioner. Respondent also took refuge in the termination 45

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 with the RTC of Makati a Complaint for Collection of the amount representing the alleged balance due it under the Subcontract. Instead of submitting an Answer, Respondent filed a Motion to Dismiss, alleging that the Complaint was premature because there was no prior recourse to arbitration. RTC denied the Motion to Dismiss on 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. The RTC ruled that the 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 on appeal the RTC ruling and ordered the referral of the case to arbitration. The CA 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. Petitioner elevated the case to SC. ISSUES: 1. Whether or not there exists a controversy/dispute between Petitioner and Respondent regarding the interpretation and implementation of the Subcontract Agreement that requires prior recourse to voluntary arbitration?; 2. In the affirmative, whether or not there is a need to file a request first with the CIAC in order to vest it with jurisdiction to decide a construction dispute? 3.

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RULING: The Petition is unmeritorious; hence, DENIED. Decision of the CA is AFFIRMED.

The assailed

1. YES. SC sides with Respondent. The instant case involves technical discrepancies that are better left to an arbitral body that has expertise in those areas. 2. NO. SC is not persuaded with Petitioner’s contention. Section 1 of Article III of the NEW Rules of Procedure Governing Construction Arbitration has dispensed with the requirement to submit a request for arbitration. Recourse to the CIAC may now be availed of whenever a contract “contains a clause for the submission of a future controversy to arbitration.” In the instant case, the Subcontract has the following arbitral clause: “6. The Parties hereto agree that any dispute or conflict as regards to interpretation and implementation of this Agreement which cannot be settled between [respondent] and [petitioner] amicably shall be settled by means of arbitration x xx.” Clearly, the resolution of the dispute between the parties herein requires a referral to the provisions of their Agreement. Within the scope of the arbitration clause are discrepancies as to the amount of advances and billable accomplishments, the application of the provision on termination, and the consequent set-off of expenses. A review of the factual allegations of the parties reveals that they differ on the following questions, the resolutions of which lies in the interpretation of the provisions of the Subcontract Agreement: 1. Did a take-over/termination occur? 2. May the expenses incurred by Respondent in the take-over be set off against the amounts it owed Petitioner? 3. How much were the advances and billable accomplishments?

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Being an inexpensive, speedy and amicable method of settling disputes, arbitration — along with mediation, conciliation and negotiation — is encouraged by the SC. 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. Section 1 of Article III of the NEW Rules of Procedure Governing Construction Arbitration provides: “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.” As clearly explained in China Chang Jiang Energy Corporation (Philippines) v. Rosal Infrastructure Builders et al. (an extended unsigned Resolution) and reiterated in National Irrigation Administration v. Court of Appeals [1999], from which SC quote thus:

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“Under the present Rules of Procedure, for a particular construction contract to fall within the jurisdiction of CIAC, it is merely required that the parties agree to submit the same to voluntary arbitration unlike in the original version of Section 1, as applied in the Tesco case, the law as it now stands does not provide that the parties should agree to submit disputes arising from their agreement specifically to the CIAC for the latter to acquire jurisdiction over the same. Rather, it is plain and clear that as long as the parties agree to submit to voluntary arbitration, regardless of what forum they may choose, their agreement will fall within the jurisdiction of the CIAC, such that, even if they specifically choose another forum, the parties will not be precluded from electing to submit their dispute before the CIAC because this right has been vested upon each party by law, i.e., E.O. No. 1008.” Clearly, there is no more need to file a request with the CIAC in order to vest it with jurisdiction to decide a construction dispute. The arbitral clause in the Agreement is a commitment on the part of the parties to submit to arbitration the disputes covered therein. Because that clause is binding, they are expected to abide by it in good faith. And because it covers the dispute between the parties in the present case, either of them may compel the other to arbitrate. JORGE GONZALES and PANEL OF ARBITRATORS vs. CLIMAX MINING LTD., CLIMAX-ARIMCO MINING CORP. and AUSTRALASIAN PHILIPPINES MINING INC., G.R. No. 161957, January 22, 2007 Facts: This is a consolidation of two petitions rooted in the same disputed Addendum Contract entered into by the parties. In one case, the Court 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. 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.

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Respondents Climax Mining Ltd., et al., on the other hand, seek reconsideration/clarification on the decision holding that the case should not be brought for arbitration under R.A. No. 876. They argued that the arbitration clause in the Addendum Contract should be treated as an agreement independent of the other terms of the contract, and that a claimed rescission of the main contract does not avoid the duty to arbitrate. On another case, Gonzales challenged the order of the RTC requiring him to proceed with the arbitration proceedings while the complaint for the nullification of the Addendum Contract was pending before the DENR Panel of Arbitrators. 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. While Climax-Arimco contended that an application to compel arbitration under Sec. 6 of R.A. No. 876 confers on the trial court only a limited and special jurisdiction, i.e., a jurisdiction solely to determine (a) whether or not the parties have a written contract to arbitrate, and (b) if the defendant has failed to comply with that contract. Issue: Whether or not arbitration is proper even though issues of validity and nullity of the Addendum Contract and, consequently, of the arbitration clause were raised. Ruling: Positive. In La Naval Drug Corporation v. Court of Appeals, the Court held that R.A. No. 876 explicitly confines the court's authority only to the determination of whether or not there is an agreement in writing providing for arbitration. In the affirmative, the statute ordains that the court shall issue an order "summarily directing the parties to proceed with the arbitration in accordance with the terms thereof." If the court, upon the other hand, finds that no such agreement exists, "the proceeding shall be dismissed." The cited case also stressed that the proceedings are summary in nature. Implicit in the summary nature of the judicial proceedings is the separable or independent character of the arbitration clause or agreement. The doctrine of separability or severability 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. 50

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 validity of the contract containing the agreement to submit to arbitration does not affect the applicability of the arbitration clause itself. A contrary ruling would suggest that a party’s mere repudiation of the main contract is sufficient to avoid arbitration. That is exactly the situation that the separability doctrine, as well as jurisprudence applying it, seeks to avoid. The Court added that when it declared that the case should not be brought for arbitration, it should be clarified that the case referred to is the case actually filed by Gonzales before the DENR Panel of Arbitrators, which was for the nullification of the main contract on the ground of fraud, as it had already been determined that the case should have been brought before the regular courts involving as it did judicial issues.

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CALIFORNIA AND HAWAIIAN SUGAR vs. PIONEER INSURANCE GR No. 139273 Nov 28, 2000 Facts: ♣ Nov 27, 1990 - the vessel MV “SUGAR ISLANDER” arrived at the port of Manila carrying a cargo of soybean meal in bulk consigned to several consignees, one of which was the Metro Manila Feed Millers Association. ♣ Nov 30, 1990 – discharging of cargo from vessel to barges commenced. From the barges, the cargo was allegedly offloaded, rebagged and reloaded on consignee’s delivery trucks. ♣ Pioneer Insurance, however, claims that when the cargo was weighed on a licensed truck scale a shortage of 255.051 metric tons valued at P1,621,171.16 was discovered. The abovementioned shipment was insured with Pioneer Insurance against all risk in the amount of P19,976,404.00. ♣ Due to the alleged refusal of California and Hawaiian et al. to settle their respective liabilities, Pioneer, as insurer, paid the consignee Metro Manila Feed Miller’s Association. ♣ March 26, 1992 - as alleged subrogee of Metro, Pioneer filed a complaint for damages against California and Hawaiian et al. ♣ Within the reglementary period to file an Answer, California and Hawaiian et al. filed a Motion to Dismiss the complaint on the ground that Pioneer’s claim is premature, the same being arbitrable. ♣ Pioneer filed its Opposition thereto and California and Hawaiian et al. filed their Reply to Opposition. ♣ RTC: issued an Order deferring the hearing on the Motion to Dismiss until the trial and directing petitioners to file their Answer. ♣ California and Hawaiian et al. then moved to reconsider said Order which was, however, denied by the RTC on the ground that the reason relied upon by California and Hawaiian et al. in its Motion to Dismiss and Motion for Reconsideration was a matter of defense which they must prove with their evidence. ♣ California and Hawaiian et al. filed their Answer with Counterclaim and Cross-claim alleging therein that Pioneer did not comply with the arbitration clause of the charter party; hence, the complaint was allegedly prematurely filed. ♣ The trial court set the case for pre-trial on November 26, 1993. ♣ Nov 15 & 16, 1993 – California and Hawaiian et al. filed a Motion to Defer Pre-Trial and Motion to Set for Preliminary Hearing the Affirmative Defense of Lack of Cause of Action for Failure to comply with Arbitration Clause, respectively. 52

♣ Pioneer did not file an Opposition to the said Motion to Set for Preliminary Hearing. ♣ RTC: denied the motion to set for preliminary hearing ♣ California and Hawaiian et al.’s MR was denied by the RTC. ♣ California and Hawaiian et al. filed a petition for certiorari with the CA. ♣ CA: ruled that the arbitration clause did not bind Pioneer Insurance, which is a mere subrogee of Metro Manila Feed Millers Association citing Pan Malayan Insurance vs. CA ♣ Hence, this petition. Issue: 1. WON the RTC erred in denying California and Hawaiian et al.’s Motion to set for preliminary hearing [YES] 2. WON the arbitration clause is binding to Pioneer Insurance [YES] Ruling: 1. True, Section 6, Rule 16 of the 1997 Rules, [11] specifically provides that a preliminary hearing on the affirmative defenses may be allowed only when no motion to dismiss has been filed. Section 6, however, must be viewed in the light of Section 3 of the same Rule,[12] which requires courts to resolve a motion to dismiss and prohibits them from deferring its resolution on the ground of indubitability. Clearly then, Section 6 disallows a preliminary hearing of affirmative defenses once a motion to dismiss has been filed because such defense should have already been resolved. In the present case, however, the trial court did not categorically resolve petitioners’ Motion to Dismiss, but merely deferred resolution thereof. Indeed, the present Rules are consistent with Section 5, Rule 16 of the pre-1997 Rules of Court, because both presuppose that no motion to dismiss had been filed; or in the case of the pre-1997 Rules, if one has been filed, it has not been unconditionally denied. Hence, the ground invoked may still be pleaded as an affirmative defense even if the defendant’s Motion to Dismiss has been filed but not definitely resolved, or if it has been deferred as it could be under the pre-1997 Rules. A preliminary hearing is not mandatory, but subject to the discretion of the trial court. We note that the trial court deferred the resolution of petitioners’ Motion to Dismiss because of a single issue. It was apparently unsure whether the charter party that the bill of lading referred to was indeed the Baltimore Berth Grain Charter Party submitted by petitioners.

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Considering that there was only one question, which may even be deemed to be the very touchstone of the whole case, the trial court had no cogent reason to deny the Motion for Preliminary Hearing. Indeed, it committed grave abuse of discretion when it denied a preliminary hearing on a simple issue of fact that could have possibly settled the entire case. Verily, where a preliminary hearing appears to suffice, there is no reason to go on to trial. 2. There was nothing in Pan Malayan, however, that prohibited the applicability of the arbitration clause to the subrogee. That case merely discussed, inter alia, the accrual of the right of subrogation and the legal basis therefor.This issue is completely different from that of the consequences of such subrogation; that is, the rights that the insurer acquires from the insured upon payment of the indemnity. Dispositive: Petition granted, CA decision reversed. Case remanded to the RTC for preliminary hearing of California and Hawaiian et al.’s affirmative defense. ASSOCIATED BANK V CA 233 SCRA 137 (1994)

FACTS:

In a complaint for Violation of the NIL and damages, Visitacion and Asuncion Flores seek there covery of the amount of P900,913.60 which petitioner charged against their& current account by virtue of the 16 checks drawn by them despite the apparent alterations therein with respect to the name of the payee, that is, the name Filipinas Shell was erased and substituted with Ever trading and DBL Trading by their supervisor Jeremias Cabrera, without their knowledge and consent.

Petitioner claimed that the subject checks appeared to have been regularly issued and free from any irregularity which would excite or arouse any suspicion or warrant their dishonor when the same were negotiated and honored by it. Petitioner filed a TPC against PCIB. Far East Bank and City Trust for reimbursement, contribution,indemnity for being the collecting banks of the subject checks and by virtue of their bank guarantee for all checks sent for clearing to the Philippine Clearing House Corporation (PCHC), as provided for in Section 17, 54

(PCHC), as provided for in Section 17, PCHC Clearing House Rules and Regulations. Citytrust and PCIB claimed that the checks were complete and regular on their face.

A motion to dismiss was filed by Security Bank on the &rounds that petitioner failed to resort to arbitration as provided for in Section 36 of the Clearing House Rules and Regulations of the Philippine Clearing House Corporation. Petitioner maintains that this Court has jurisdiction over the suit as provisions of the Clearing House Rules and Regulations are applicable only if the suit or action is between participating member banks,whereas the Floreses are private persons and the third party complaint between participating member banks is only a consequence of the original action initiated the plaintiffs. The trial court dismissed the TCP for the lack of jurisdiction citing Section 36 of the ClearingHouse Rules and Regulations of the PCHC providing for settlement of disputes and controversies involving any check or item cleared through the body with the PCHC.

.It ruled--citing the Arbitration Rules of Procedure -- that the decision or award of the PCHC through its arbitration committee/arbitrator is appealable only on questions of law to any of the Regional Trial Courts in the National Capital Region where the head office of any of the parties is located. The CA affirmed.

ISSUE: Whether or not the case should be dismissed for failure to arbitrate.

HELD:

YES.

Under the rules and regulations of the Philippine Clearing House Corporation (PCHC), the mere act of participation of the parties concerned in its operations in effect amounts to a manifestation of agreement by the parties to abide by its rules and regulations. 7 As a consequence of such participation, a party cannot invoke the jurisdiction of the courts over disputes and controversies which fall 55

under the PCHC Rules and Regulations without first going through the arbitration processes laid out by the body. Since claims relating to the regularity of checks cleared by banking institutions are among those claims which should first be submitted for resolution by the PCHC’s Arbitration Committee, petitioner Associated Bank, having voluntarily bound itself to abide by such rules and regulations, is estopped from seeking relief from the Regional Trial Court on the coattails of a private claim and in the guise of a third party complaint without first having obtained a decision adverse to its claim from the said body. It cannot bypass the arbitration process on the basis of its averment that its third party complaint is inextricably linked to the original complaint in the Regional Trial Court.

Under its Articles of Incorporation, the PCHC provides "an effective, convenient, efficient, economical and relevant exchange and facilitate service limited to check processing and sorting by way of assisting member banks, entities in clearing checks and other clearing items as defined and existing in future Central Bank of the Philippines Circulars, memoranda, circular letters rules and regulations and policies in pursuance of Section 107 of RA 265." Pursuant to its function involving the clearing of checks and other clearing items, the PCHC has adopted rules and regulations designed to provide member banks with a procedure whereby disputes involving the clearance of checks and other negotiable instruments undergo a process of arbitration prior to submission to the courts below. This procedure not only ensures a uniformity of rulings relating to factual disputes involving checks and other negotiable instruments but also provides a mechanism for settling minor disputes among participating and member banks which would otherwise go directly to the trial courts. While the PCHC Rules and Regulations allow appeal to the Regional Trial Courts only on questions of law, this does not preclude our lower courts from dealing with questions of fact already decided by the PCHC arbitration when warranted and appropriate.

Thus, not only do the parties manifest by mere participation their consent to these rules, but such participation is deemed (their) written and subscribed consent to the binding effect of arbitration agreements under the PCHC rules. Moreover, a participant subject to the Clearing House Rules and Regulations of the PCHC may go on appeal to any of the Regional Trial Courts in the National Capital Region where the head office of any of the parties is located only after a decision or award has been rendered by the arbitration committee or arbitrator on questions of law. 56

Clearly therefore, petitioner Associated Bank, by its voluntary participation and its consent to the arbitration rules cannot go directly to the Regional Trial Court when it finds it convenient to do so. The jurisdiction of the PCHC under the rules and regulations is clear, undeniable and is particularly applicable to all the parties in the third party complaint under their obligation to first seek redress of their disputes and grievances with the PCHC before going to the trial court. Finally, the contention that the third party complaint should not have been dismissed for being a necessary and inseparable offshoot of the main case over which the court a quo had already exercised jurisdiction misses the fundamental point about such pleading. A third party complaint is a mere procedural device which under the Rules of Court is allowed only with the court’s permission. It is an action "actually independent of, separate and distinct from the plaintiffs’ complaint" (s)uch that, were it not for the Rules of Court, it would be necessary to file the action separately from the original complaint by the defendant against the third party.

BLOOMFIEL ACADEMY V CA 237 SCRA 43 (1994)

Facts: Private respondent, the association of parents and guardians of students enrolled in petitioner Bloomfield Academy, a non-stock, nonprofit educational institution, filed a complaint for injunction against the latter. The complaint alleged that petitioner decided to increase its tuition fees in lieu of RA 6727 granting mandatory increase of minimum wage of the teachers without prior consultation to the parents which is a requirement before any increase should be made effective. Respondent court ordered the issuance of writ of preliminary injunction. In the petition for certiorari attributing to the court a quo grave abuse of discretion in the issuance of the writ, the appellate court held the petition to be without merit.

Issue:

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Whether or not the court a quo has acted within its jurisdiction in issuing the questioned order and, in the affirmative, whether or not it has committed grave abuse of discretion specifically in granting private respondent’s application for a writ of preliminary injunction.

Ruling: We see merit in the petition. The pertinent provisions of Republic Act No. 6728, also commonly known as “An Act Providing Government Assistance to Students and Teachers in Private Education, And Appropriating Funds Therefor,” provide: Sec. 10. Consultation. — In any proposed increase in the rate of tuition fee, there shall be appropriate consultations conducted by the school administration with the duly organized parents and teachers associations and faculty associations with respect to secondary schools, and with students governments or councils, alumni and faculty associations with respect to colleges. For this purpose, audited financial statements shall be made available to authorized representatives of these sectors. Every effort shall be exerted to reconcile possible differences. In case of disagreement, the alumni association of the school or any other impartial body of their choosing shall act as arbitrator. In passing, we also observe that the parties have both remained silent on the provisions of Republic Act No. 6728 to the effect that in case of disagreement on tuition fee increases (in this instance by herein private parties), the issue should be resolved through arbitration. Although the matter has not been raised by the parties, it is an aspect, nevertheless, in our view that could have well been explored by them instead of immediately invoking, such as they apparently did, the administrative and judicial relief to resolve the controversy. All told, we hold that the court a quo has been bereft of jurisdiction in taking cognizance of private respondent’s complaint. We see no real justification, on the basis of the factual and case settings here obtaining, to permit a deviation from the long standing rule that the issue of jurisdiction may be raised at any time even on appeal. Wherefore, conformably with our above opinion, the instant petition is granted and the questioned ordered of the court a quo and the decision of the appellate court was set aside.

MINDANAO PORTLAND CEMENT CORPORATION V MCDONOUGH CONSTRUCTION CO. OF FLORIDA, 58

90 SCRA 808 (1967)

FACTS a.) February 13, 1962, Mindanao Portland Cement Corporation & respondent Mc Donough Construction Company of Florida USA executed a contract for the construction by the respondent for the petitioner of a dry portland cement plan at Iligan city. b.) Turbull incorporated was engaged to design and manage the construction of the plant, supervise the construction, schedule deliveries amd the construction work as well as check and certify ill contractors progress and fiscal request for payments. c.) Extensions of time for the termination of the project, initially agreed to be furnished on December 17, 1961were granted. d.) October 22, 1962, respondent finally completed the project and November 14, 1962, the delivery flood lamps were complied. e.) Petitioner claimed from respondent in damages in the amount of more thanP2,000,000 allegedly occasioned by the delay in the projects completion and respondent in turn asked for more than P450,000 from petitioner for alleged losses due top cost of extra work and overhead as of April 1962. f.) August 8, 1962, petitioner sent respondent and on September 24, 1962 written invitation to arbitrate, invoking a provision in their contract regarding arbitration of disputes. g.) November 14, 1962, respondent with Turnbull Inc.’s approval , asking for P403,700 as unpaid balance of the consideration of contract. h.) January 29, 1963, petitioner filed the present action in the Court of First Instance of Manila to compel respondent to arbitrate with it concerning alleged disputes arising from their contract. i.) February 23, 1963, respondent filed an answer denied the alleged existence of disagreement between parties, that claims and and damages should be resolved by Turnbull Inc.. J.) May 13, 1964, court rendered decision with respect to their rights and obligations under their contract and the same should be submitted for arbitration pursuant to paragraph 39 of contract and the arbitration clause – to R.A. 876- The Arbitration Law. ISSUE:

Whether or not disputes arises between parties should be subjected to arbitration.

HELD 59

Yes, since there obtain a written provision for arbitration as well as failure on respondent’s part to comply therewith, the court quo rightly ordered the parties to proceed to arbitration in accordance with the terms of the agreement (sec. 6, R.A. 876). respondent’s arguments touching upon the merits of the dispute are improperly raised herein. They should be addressed to the arbitrators. This proceeding is merely a summary remedy to enforce the agreement to arbitrate. The duty of the court in this case is not to resolve the merits of parties claims but only to determine if they should proceed to arbitration or not. Frivolous/patently baseless claim should not be ordered to arbitration, defense exist against a claim, does not make it frivolous or baseless. Judgment rendered is affirmed with cost against appellant.

GONZALES V CLIMAX MINING LTD. 512 SCRA 148 (2007)

Facts:

This is a consolidation of two petitions rooted in the same disputed Addendum Contract entered into by the parties. In G.R. No. 161957, the Court in its Decision of 28 February 2005 denied the Rule 45 petition of petitioner Jorge Gonzales (Gonzales). It 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 avers in his Motion for Reconsideration that the Court erred in holding that the DENR Panel of Arbitrators was bereft of jurisdiction, reiterating its argument that the case involves a mining dispute that properly falls within the ambit of the Panels authority. Gonzales adds that the Court failed to rule on other issues he raised relating to the sufficiency of his complaint before the DENR Panel of Arbitrators and the timeliness of its filing. Respondents Climax Mining Ltd., et al., (respondents) filed their Motion for Partial Reconsideration and/or Clarification seeking reconsideration of that part of the 60

Decision holding that the case should not be brought for arbitration under Republic Act (R.A.) No. 876, also known as the Arbitration Law. Respondents, citing American jurisprudence and the UNCITRAL Model Law, argue that the arbitration clause in the Addendum Contract should be treated as an agreement independent of the other terms of the contract, and that a claimed rescission of the main contract does not avoid the duty to arbitrate. Respondents add that Gonzales argument relating to the alleged invalidity of the Addendum Contract still has to be proven and adjudicated on in a proper proceeding; that is, an action separate from the motion to compel arbitration. Pending judgment in such separate action, the Addendum Contract remains valid and binding and so does the arbitration clause therein. Respondents add that the holding in the Decision that the case should not be brought under the ambit of the Arbitration Law appears to be premised on Gonzales having impugn[ed] the existence or validity of the addendum contract. If so, it supposedly conveys the idea that Gonzales unilateral repudiation of the contract or mere allegation of its invalidity is all it takes to avoid arbitration. Hence, respondents submit that the courts holding that the case should not be brought under the ambit of the Arbitration Law be understood or clarified as operative only where the challenge to the arbitration agreement has been sustained by final judgment.

Issue: Whether or not it was proper for the RTC, in the proceeding to compel arbitration under R.A. No. 876, to order the parties to arbitrate even though the defendant therein has raised the twin issues of validity and nullity of the Addendum Contract and, consequently, of the arbitration clause therein as well

Held: Yes. Disputes do not go to arbitration unless and until the parties have agreed to abide by the arbitrators decision. Necessarily, a contract is required for arbitration to take place and to be binding. R.A. No. 876 recognizes the contractual nature of the arbitration agreement.

The doctrine of separability, or severability as other writers call it, enunciates that an arbitration agreement is independent of the main 61

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 proceeding in a petition for arbitration under R.A. No. 876 is limited only to the resolution of the question of whether the arbitration agreement exists. Second, the separability of the arbitration clause from the Addendum Contract means that validity or invalidity of the Addendum Contract will not affect the enforceability of the agreement to arbitrate. Thus, Gonzales petition for certiorari should be dismissed.

This brings us back to G.R. No. 161957. The adjudication of the petition in G.R. No. 167994 effectively modifies part of the Decision dated 28 February 2005 in G.R. No. 161957. Hence, we now hold that the validity of the contract containing the agreement to submit to arbitration does not affect the applicability of the arbitration clause itself.

A contrary ruling would suggest that a parties mere repudiation of the main contract is sufficient to avoid arbitration. That is exactly the situation that the separability doctrine, as well as jurisprudence applying it, seeks to avoid. We add that when it was declared in G.R. No. 161957 that the case should not be brought for arbitration, it should be clarified that the case referred to is the case actually filed by Gonzales before the DENR Panel of Arbitrators, which was for the nullification of the main contract on the ground of fraud, as it had already been determined that the case should have been brought before the regular courts involving as it did judicial issues.

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OIL AND NATURAL GAS COMMISSION V CA 293 SCRA 26 (1998)

FACTS:

Petitioner is a foreign cor&oration owned and controlled by the Government of Indi. While the respondent is a private cor&oration duly organized and existing under Philippine law. Both parties entered into a contract obligating Pacific Company to supply Oil and Natural Gas wit $,300 metric tons of oil well cement. Pacific failed to deliver the cargo to Oil and Natural Gas Commission after he received payment and several demands. Oil and Natural Gas won in the Arbitral causing him to pay $899,603.77. Pacific refused to pay the amount adjudged by the foreign court. Oil and Natural Gas then filed a complaint with the RTC of Surigao City.

The private respondent moved to dismiss the complaint on the following grounds:

O Plaintiffs lacks of legal capacity to sue O lack of cause of action; and O Plaintiff claim or demand has been waived, abandoned, or otherwise extinguished.

RTC ruled in favor of Pacific for jurisdiction over the case

CA affirmed the RTC’s decision saying that the foreign court could not validly adopt the arbitrator’s award.

ISSUE:

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Whether or not the arbitrator has jurisdiction over the dispute between the petition and the private respondent under Clause 16under the. contract.

HELD:

No. The constitutional mandate that no decision shall be rendered by any court without expressing therein dearly and distinctly the facts and the law on which it is based does not preclude the validity of “memorandum decision” which adopt by reference the fact and conclusions of law contained in the decisions of inferior tribunals. In Francisco v. Permskul, this Court held that the following memorandum decision of the Regional Trial Court of Makati did not transgress the requirements of Section 14, Article VIII of the Constitution.

MAGELLAN CAPITAL MGT. CORP. V ZOSA 355 SCRA 157 (2001)

Facts: Under a management agreement entered into, MCHC appointed MCMC as manager for the operation of its business and affairs. Pursuant thereto, petitioners and private respondent Rolando Zosa entered into “Employment Agreement” designating the latter as President and CEO of MCHC. Respondent Zosa then was elected to a new position as MCHC’s Vice-Chairman/Chairman New Ventures Development to which he communicated his resignation on the ground that it had less responsibility and scope and demanded that he be given termination benefits as provided in the Employment Agreement. MCHC communicated its non-acceptance to the resignation and advised respondent that the agreement is terminated on account of the latter’s breach thereof. Respondent invoked the Arbitration Clause of the agreement and both parties designated their arbitrators in the panel. However, instead of submitting the dispute to arbitration, respondent filed an action for damages against petitioners before the RTC. Petitioners’s motion to dismiss was denied. Petitioners filed a petition for certiorari and prohibition in the CA to which it was given due course. The RTC in compliance with the 64

decision, declared the arbitration clause in the agreement partially void and of no effect insofar as it concerns the composition of arbitrators. Petitioners then filed this petition for review on certiorari.

Issue: Whether or not the arbitration clause in the Employment Agreement is partially void and of no effect.

Ruling: We rule against the petitioners.

Even if procedural rules are disregarded, and a scrutiny of the merits of the case is undertaken, this Court finds the trial court’s observations on why the composition of the panel of arbitrators should be voided, incisively correct so as to merit our approval. Thus, “From the memoranda of both sides, the Court is of the view that the defendants [petitioner] MCMC and MCHC represent the same interest. There is no quarrel that both defendants are entirely two different corporations with personalities distinct and separate from each other and that a corporation has a personality distinct and separate from those persons composing the corporation as well as from that of any other legal entity to which it may be related. But as the defendants [herein petitioner] represent the same interest, it could never be expected, in the arbitration proceedings, that they would not protect and preserve their own interest, much less, would both or either favor the interest of the plaintiff. The arbitration law, as all other laws, is intended for the good and welfare of everybody. In fact, what is being challenged by the plaintiff herein is not the law itself but the provision of the Employment.Agreement based on the said law, which is the arbitration clause but only as regards the composition of the panel of arbitrators.

“From the foregoing arbitration clause, it appears that the two (2) defendants [petitioners] (MCMC and MCHC) have one (1) arbitrator each to compose the panel of three (3) arbitrators. As the defendant MCMC is the Manager of defendant MCHC, its decision or vote in the arbitration proceeding would naturally and certainly be in favor of its employer and the defendant MCHC would have to protect and preserve its own interest; hence, the two (2) votes of both defendants 65

(MCMC and MCHC) would certainly be against the lone arbitrator for the plaintiff [herein defendant]. Hence, apparently, plaintiff [defendant] would never get or receive justice and fairness in the arbitration proceedings from the panel of arbitrators as provided in the aforequoted arbitration clause. In fairness and justice to the plaintiff [defendant], the two defendants (MCMC and MCHC) [herein petitioners] which represent the same interest should be considered as one and should be entitled to only one arbitrator to represent them in the arbitration proceedings. Accordingly, the arbitration clause, insofar as the composition of the panel of arbitrators is concerned should be declared void and of no effect, because the law says, “Any clause giving one of the parties power to choose more arbitrators than the other is void and of no effect” (Article 2045, Civil Code). “The dispute or controversy between the defendants (MCMC and MCHC) [herein petitioners] and the plaintiff [herein defendant] should be settled in the arbitration proceeding in accordance with the Employment Agreement, but under the panel of three (3) arbitrators, one (1) arbitrator to represent the plaintiff, one (1) arbitrator to represent both defendants (MCMC and MCHC) [herein petitioners] and the third arbitrator to be chosen by the plaintiff [defendant Zosa] and defendants [petitioners].

We need only to emphasize in closing that arbitration proceedings are designed to level the playing field among the parties in pursuit of a mutually acceptable solution to their conflicting claims. Any arrangement or scheme that would give undue advantage to a party in the negotiating table is anathema to the very purpose of arbitration and should, therefore, be resisted. Wherefore, premises considered, the petition is hereby dismissed and the decision of the trial court is affirmed.

BF CORPORATION V CA 288 SCRA 267 (1998) 66

Facts:

Petitioner and respondent Shangri-la Properties, Inc. entered into an agreement whereby the latter engaged the former to construct the main structure of the "EDSA Plaza Project," a shopping mall complex in Mandaluyong. Petitioner incurred delay in the construction work that SPI considered as "serious and substantial."

On the other hand, according to petitioner, the construction works "progressed in faithful compliance with the First Agreement until a fire broke out damaging Phase I" of the Project.

Hence, SPI proposed the re-negotiation of the agreement between them.Petitioner and SPI entered into a written agreement denominated as "Agreement for the Execution of Builder's Work for the EDSA Plaza Project." Said agreement would cover the construction work on said project as of May 1, 1991 until its eventual completion. According to SPI, petitioner "failed to complete the construction works and abandoned the project."

This resulted in disagreements between the parties as regards their respective liabilities under the contract.Petitioner filed with the RTC of Pasig a complaint for collection of the balance due under the construction agreement. SPI and its co-defendants filed a motion to suspend proceedings instead of filing an answer. The motion was anchored on defendants' allegation that the formal trade contract for the construction of the project provided for a clause requiring prior resort to arbitration before judicial intervention could be invoked in any dispute arising from the contract.Petitioner opposed said motion claiming that there was no formal contract between the parties although they entered into an agreement defining their rights and obligations in undertaking the project.Thereafter, upon a finding that an arbitration clause indeed exists, the lower court denied the motion to suspend proceedings as the Conditions of Contract was not duly executed or signed by the parties, and the failure of the defendants to submit any signed copy of the said document,.The lower court then ruled that, assuming that the arbitration clause was valid and binding, still, it was "too late in the day for defendants to invoke arbitration. Considering the fact that under the supposed Arbitration Clause 67

invoked by defendants, it is required that "Notice of the demand for arbitration of a dispute shall be filed in writing with the other party in no case later than the time of final payment "which apparently, had elapsed because defendants have failed to file any written notice of any demand for arbitration during the said long period of one year and eight months. The CA annulled the orders of the RTC.

Issue: WON a petition for certiorari is proper

Held: Yes. The rule that the special civil action of certiorari may not be invoked as a substitute for the remedy of appeal. The Court has likewise ruled that "certiorari will not be issued to cure errors in proceedings or correct erroneous conclusions of law or fact. As long as a court acts within its jurisdiction, any alleged errors committed in the exercise of its jurisdiction will amountto nothing more than errors of judgment which are reviewable by timely appeal and not by a special civil action of certiorari ."

LUZON DEVELOPMENT BANK V LUZON DEVELOPMENT BANK EMPLOYEES 249 SCRA 162 (1995)

FACTS: From a submission agreement of the LDB and the Association of Luzon Development Bank Employees (ALDBE) arose an arbitration case to resolve the following issue: Whether or not the company has violated the CBA provision and the MOA on promotion. At a conference, the parties agreed on the submission of their respective Position Papers. Atty. Garcia, in her capacity as Voluntary Arbitrator, received ALDBE’s Position Paper ; LDB, on the other hand, failed to submit its Position Paper despite a letter from the Voluntary Arbitrator reminding them to do so. As of May 23, 1995 no Position Paper had been filed by LDB.

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Without LDB’s Position Paper, the Voluntary Arbitrator rendered a decision disposing as follows: WHEREFORE, finding is hereby made that the Bank has not adhered to the CBA provision nor the MOA on promotion. Hence, this petition for certiorari and prohibition seeking to set aside the decision of the Voluntary Arbitrator and to prohibit her from enforcing the same.

ISSUE: WON a voluntary arbiter’s decision is appealable to the CA and not the SC

HELD: The Court resolved to REFER this case to the Court of Appeals.

YES The jurisdiction conferred by law on a voluntary arbitrator or a panel of such arbitrators is quite limited compared to the original jurisdiction of the labor arbiter and the appellate jurisdiction of the NLRC for that matter. The “(d)ecision, awards, or orders of the Labor Arbiter are final and executory unless appealed to the Commission …” Hence, while there is an express mode of appeal from the decision of a labor arbiter, Republic Act No. 6715 is silent with respect to an appeal from the decision of a voluntary arbitrator. Yet, past practice shows that a decision or award of a voluntary arbitrator is, more often than not, elevated to the SC itself on a petition for certiorari, in effect equating the voluntary arbitrator with the NLRC or the CA. In the view of the Court, this is illogical and imposes an unnecessary burden upon it.

In Volkschel Labor Union, et al. v. NLRC, et al., 8 on the settled premise that the judgments of courts and awards of quasi-judicial agencies must become final at some definite time, this Court ruled that the awards of voluntary arbitrators determine the rights of parties; hence, their decisions have the same legal effect as judgments of a court. In Oceanic Bic Division (FFW), et al. v. Romero, et al., this Court ruled that “a voluntary arbitrator by the nature of her functions acts in a quasi-judicial capacity.” Under these rulings, it 69

follows that the voluntary arbitrator, whether acting solely or in a panel, enjoys in law the status of a quasi-judicial agency but independent of, and apart from, the NLRC since his decisions are not appealable to the latter. Section 9 of B.P. Blg. 129, as amended by Republic Act No. 7902, provides that the Court of Appeals shall exercise: (B) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders or awards of RTC s and quasi-judicial agencies, instrumentalities, boards or commissions, including the Securities and Exchange Commission, the Employees Compensation Commission and the Civil Service Commission, except those falling 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. Assuming arguendo that the voluntary arbitrator or the panel of voluntary arbitrators may not strictly be considered as a quasi-judicial agency, board or commission, still both he and the panel are comprehended within the concept of a “quasi-judicial instrumentality.”

Toyota Motor Philippines Corporation, petitioner, vs The Court of Appeals, Hon. Fernando V. Gorospe, Jr. and Sun Valley Manufacturing and Development Corporation, respomdents. G.R. No. 102881

December 7,1992

Facts: This case involves a boundary dispute between petitioner Toyota Motor Phil. Corporation (Toyota) and private respondent Sun Valley Manufacturing and Development Corporation (Sun Valley). Both Toyota and Sun Valley are the registered owners of two (2) adjoining parcels of land which they purchased from the Asset Privatization Trust (APT). The properties in question formerly belonged to Delta Motors Corporation (DMC) which were foreclosed by the Philippine National Bank (PNB) and later transferred to the national government through the APT for disposition. APT then proceeded to classify the DMC properties, called the GC III-Delta Motors Corporation, and divided into Delta I, Delta II, and Delta III. Further subdivisions for the 70

separate catalogues were made for each division e.g. Delta I into Lots 1, 2 and 3. After this classification, APT parcelled out and catalogued the properties for bidding and sale. Part of the duly parcelled Delta I property (Lot 2) was sold to Toyota through public bidding. After its purchase, Toyota constructed a concrete hollow block (CHB) perimeter fence around its alleged property. Another part of the parcelled Delta I (Lot 1) was purchased by Sun Valley from APT. Petitioner then filed a case against APT for the reformation of the Deed of Sale executed between them alleging that the instrument failed to reflect the true intention of the parties as the title failed to include 723 square meters strip of land. On the other hand, Sun Valley, filed a case for recovery of possession of the disputed 723 square meters relying upon the title description of its property and the surveys it has commissioned. Through legal maneuverings, the parties have succeeded in muddling up the vital issues of the case and getting the lower courts embroiled in numerous appeals over technicalities. Hence, the three appellate decisions/resolutions before the Court for review and conflicting orders issued by lower courts as a result of the separate cases filed by the parties. Issue: Whether or not Judge Tensuan had jurisdiction to take cognizance of the case for reformation of instrument. Ruling: Attention must first be brought to the fact that the contract of sale executed between APT and Toyota provides an arbitration clause which states that: In case of disagreement or conflict arising out of this Contract, the parties hereby undertake to submit the matter for determination by a committee of experts, acting as arbitrators, the composition of which shall be as follows: a) One member to be appointed by the VENDOR; b) One member to be appointed by the VENDEE; c) One member, who shall be a lawyer, to be appointed by both of the aforesaid parties; The contention that the arbitration clause has become dysfunctional because of the presence of third parties is untenable. Toyota filed an action for reformation of its contract with APT, the purpose of which is to look into the real intentions/agreement of the parties to the contract and to determine if there was really a mistake in the designation of the boundaries of the property as alleged by Toyota. Such questions can only be answered by the parties to the 71

contract themselves. This is a controversy which clearly arose from the contract entered into by APT and Toyota. Inasmuch as this concerns more importantly the parties APT and Toyota themselves, the arbitration committee is therefore the proper and convenient forum to settle the matter as clearly provided in the deed of sale. Having been apprised of the presence of the arbitration clause in the motion to dismiss filed by APT, Judge Tensuan should have at least suspended the proceedings and directed the parties to settle their dispute by arbitration. Judge Tensuan should have not taken cognizance of the case. In view of all the foregoing, the petition is hereby dismissed for failure to show reversible error, much less grave abuse of discretion, on the part of the respondent court. Heirs of Augusto L. Salas, Jr., Vs Laperal Realty Corporation 302 SCRA 620

Nature of the Case: This is a petition for review on certiorari of the Order of Branch 85 of the Regional Trial Court of Lipa dismissing petitioners complaint for rescission of several sale transactions involving land owned by Augusto L. Salas, Jr., their predecessor-in-interest, on the ground that they failed to first resort to arbitration. Facts of the Case: Augusto Salas, Jr., owner of a vast tract of land in Lipa City, Batangas entered into an Owner-Contractor Agreement with Laperal Realty Corporation to provide complete construction services on his land. Salas Jr., executed a Special Power of Attorney in favor of Laperal Realty to exercise general control, supervision and management of the sale of his land in cash or installment basis. On June 10, 198 Salas Jr., left for a business trip to NueveEcija and never returned. His wife filed with the Regional Trial Court of Lipa a verified petition for declaration of presumptive death of her husband who has been missing for more than seven years. The RTC granted the petition. 72

Laperal Realty subdivided the land of Salas, Jr., and sold portions of it to Rockway Real Estate Corporation, South Ridge Village, Inc. and to spouses Abrajano and Lava and Oscar Dacillo and to Eduardo Vacuna, Florante de la Cruz and Jesus Vicente Capalan. Petitioners as heirs of Salas Jr., filed in the RTC of Lipa City a Complaint for Declaration of nullity of sale, reconveyance, cancellation of contract, accounting and damages against the respondents. Respondent Laperal Realty filed a Motion to Dismiss on the ground that the petitioners failed to submit to arbitration. Respondent Spouses Abrajano and Lava and Dacillo also filed Motion to Dismiss on the same ground. Order dismissing the petitioners Complaint for non-compliance with the arbitration clause was issued by the court. Hence this petition. Issue: Whether or not the petitioners cause of action for cancellation of contract and accounting are covered by the Arbitration Law. Held: The Court recognizes arbitration agreements between the parties as well as their assigns and heirs as valid, binding, enforceable and not contrary to public policy. Written provisions for arbitration which is not complied with shall cause the court to suspend the proceedings and order the parties to proceed to arbitration in accordance with the terms of the agreement. In the case presented, the terms of the agreement in the arbitration is only valid and binding among the parties but not to the respondents of Rockway Real Estate Corporation, South Ridge Village Inc., Marahami Development Corporation, spouses Abrajano, Lava, Oscar, DacilloVacuna de la Cruz and Capellan being not assignees of Laperal Realty. They are rather buyers of the land that the respondent Laperal Realty was given the authority to develop and sell under an Agreement. Respondent Laperal Realty, being a party to the Agreement has the right to compel the petitioners first to arbitrate before seeking judicial relief.

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Wherefore, the instant petition is hereby GRANTED. The Order dated August 19, 1998 of Branch 85 of the Regional Trial Court of Lipa City is hereby NULLIFIED and SET ASIDE. Said court is hereby ordered to proceed with the hearing of the Civil Case.

HOME BANKERS SAVINGS AND TRUST COMPANY, petitioner vs. COURT OF APPEALS and FAR EAST BANK & TRUST COMPANY, respondents. G.R. No. 115412. November 19, 1999 FACTS: Victor Tancuan issued Home Bankers Savings and Trust Company (HBSTC) check No. 193498 for P25,250,000.00 while Eugene Arriesgado issued Far East Bank and Trust Company (FEBTC) check Nos. 464264, 464272 and 464271 for P8,600,000.00, P8,500,000.00 and P8,100,000.00, respectively, the three checks amounting to P25,200,000.00. Tancuan and Arriesgado exchanged each other's checks and deposited them with their respective banks for collection. When FEBTC presented Tancuan's HBSTC check for clearing, HBSTC dishonored it for being "Drawn Against Insufficient Funds." On October 15, 1991, HBSTC sent Arriesgado's three (3) FEBTC checks through the Philippine Clearing House Corporation (PCHC) to FEBTC but was returned on October 18, 1991 as "Drawn Against Insufficient Funds." HBSTC received the notice of dishonor on October 21, 1991 but refused to accept the checks and on October 22, 1991, returned them to FEBTC through the PCHC for the reason "Beyond Reglementary Period," implying that HBSTC already treated the three (3) FEBTC checks as cleared and allowed the proceeds thereof to be withdrawn.FEBTC demanded reimbursement for the returned checks and inquired from HBSTC whether it had permitted any withdrawal of funds against the unfunded checks and if so, on what date. HBSTC, however, refused to make any reimbursement and to provide FEBTC with the needed information. Thus, on December 12, 1991, FEBTC submitted the dispute for arbitration before the PCHC Arbitration Committee,under the PCHC's Supplementary Rules on Regional Clearing to which FEBTC and HBSTC are bound as participants in the regional clearing operations administered by the PCHC. On January 17, 1992, while the arbitration proceedings was still pending, FEBTC filed an action for sum of money and damages with 74

preliminary attachment against HBSTC, Robert Young, Victor Tancuan and Eugene Arriesgado. The trial court issued an omnibus order dated April 30, 1992 denying the motion to dismiss and an order dated October 1, 1992 denying the motion for reconsideration. On December 16, 1992, HBSTC filed a petition for certiorari with the respondent Court of Appeals and dismissed the petition for lack of merit and held that "FEBTC can reiterate its cause of action before the courts which it had already raised in the arbitration case" after finding that the complaint filed by FEBTC "seeks to collect a sum of money from HBT [HBSTC] and not to enforce or confirm an arbitral award." ISSUE: WHETHER OR NOT PRIVATE RESPONDENT WHICH COMMENCED AN ARBITRATION PROCEEDING UNDER THE AUSPICES OF THE PHILIPPINE CLEARING HOUSE CORPORATION (PCHC) MAY SUBSEQUENTLY FILE A SEPARATE CASE IN COURT OVER THE SAME SUBJECT MATTER OF ARBITRATION DESPITE THE PENDENCY OF THAT ARBITRATION, SIMPLY TO OBTAIN THE PROVISIONAL REMEDY OF ATTACHMENT AGAINST THE BANK, THE ADVERSE PARTY IN THE ARBITRATION PROCEEDINGS." RULING: We find no merit in the petition. Section 14 of Republic Act 876, otherwise known as the Arbitration Law, allows any party to the arbitration proceeding to petition the court to take measures to safeguard and/or conserve any matter which is the subject of the dispute in arbitration, thus: Section 14. Subpoena and subpoena duces tecum. - Arbitrators shall have the power to require any person to attend a hearing as a witness. They shall have the power to subpoena witnesses and documents when the relevancy of the testimony and the materiality thereof has been demonstrated to the arbitrators. Arbitrators may also require the retirement of any witness during the testimony of any other witness.All of the arbitrators appointed in any controversy must attend all the hearings in that matter and hear all the allegations and proofs of the parties; but an award by the majority of them is valid unless the concurrence of all of them is expressly required in the submission or contract to arbitrate. The arbitrator or arbitrators shall have the power at any time, before rendering the award, without prejudice to the rights of any party to petition the court to take measures to safeguard and/or conserve any matter

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which is the subject of the dispute in arbitration. (emphasis supplied) Simply put, participants in the regional clearing operations of the Philippine Clearing House Corporation cannot bypass the arbitration process laid out by the body and seek relief directly from the courts. In the case at bar, undeniably, private respondent has initiated arbitration proceedings as required by the PCHC rules and regulations, and pending arbitration has sought relief from the trial court for measures to safeguard and/or conserve the subject of the dispute under arbitration, as sanctioned by section 14 of the Arbitration Law, and otherwise not shown to be contrary to the PCHC rules and regulations. At this point, we emphasize that arbitration, as an alternative method of dispute resolution, is encouraged by this Court. Aside from unclogging judicial dockets, it also hastens solutions especially of commercial disputes. The Court looks with favor upon such amicable arrangement and will only interfere with great reluctance to anticipate or nullify the action of the arbitrator. WHEREFORE, premises considered, the petition is hereby DISMISSED and the decision of the court a quo is AFFIRMED. SO ORDERED.

CHUNG FU INDUSTRIES (PHILIPPINES) INC., its Directors and Officers namely: HUANG KUO-CHANG, HUANG AN-CHUNG, 76

JAMES J.R. CHEN, TRISTAN A. CATINDIG, VICENTE B. AMADOR, ROCK A.C. HUANG, JEM S.C. HUANG, MARIA TERESA SOLIVEN and VIRGILIO M. DEL ROSARIO, petitioners, vs. COURT OF APPEALS, HON. FRANCISCO X. VELEZ (Presiding Judge, Regional Trail Court of Makati [Branch 57]) and ROBLECOR PHILIPPINES, INC., respondents. G.R. No. 96283 February 25, 1992

FACTS: Chung Fu Industries 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 for and in consideration of P42,000,000.00. 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. Apart from the aforesaid construction agreement, Chung Fu and Roblecor entered into two (2) other ancillary contracts. However, respondent Roblecor failed to complete the work despite the extension of time allowed it by Chung Fu. 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. Respondent Regional Trial Court approved the arbitration agreement thru its Order of May 30, 1990. Thereafter, Engr. Willardo Asuncion was appointed as the sole arbitrator. Chung Fu elevated the case via a petition for certiorari to respondent Court of Appeals.

ISSUE: Whether or not the Court of Appeals and trial Judge gravely abused their discretion and/or exceeded their jurisdiction, as well as denied due process and substantial justice to petitioners by refusing to 77

exercise their judicial authority and legal duty to review the arbitration award. RULING: 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 provision s 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. WHEREFORE, the petition is GRANTED. The Resolutions of the Court of Appeals dated October 22, 1990 and December 3, 1990 as well as the Orders of respondent Regional Trial Court dated July 31, 1990 and August 23, 1990, including the writ of execution issued pursuant thereto, are hereby SET ASIDE. Accordingly, this case is REMANDED to the court of origin for further hearing on this matter. All incidents arising therefrom are reverted to the status quo ante until such time as the trial court shall have passed upon the merits of this case. No costs. SO ORDERED.

Lucas Adamson vs. Court of Appeals 232 SCRA 602, 1994 78

Facts:

A deficiency tax assessment was issued against Petitioners relating to their payment of capital gains tax and VAT on their sale of shares of stock and parcels of land. Subsequent to the preliminary conference, the CIR filed with the Department of Justice her Affidavit of Complaint against Petitioners. The Court of Appeals ultimately ruled that, in a criminal prosecution for tax evasion, assessment of tax deficiency is not required because the offense of tax evasion is complete or consummated when the offender has knowingly and willfully filed a fraudulent return with intent to evade the tax.

Issues:

(1) Dis the CIR issue an assessment? (2) Must a criminal prosecution for tax evasion be preceded by a deficiency tax assessment? (3) Does the CTA have jurisdiction on the case?

Held:

(1) NO.

The recommendation letter of the Commissioner cannot be considered a formal assessment as (a) it was not addressed to the taxpayers; (b) there was no demand made on the taxpayers to pay the tax liability, nor a period for payment set therein; (c) the letter was never mailed or sent to the taxpayers by the Commissioner. It was only an affidavit of the computation of the alleged liabilities and thus merely served as prima facie basis for filing criminal informations. (2) YES. 79

When fraudulent tax returns are involved as in the cases at bar, a proceeding in court after the collection of such tax may be begun without assessment considering that upon investigation of the examiners of the BIR, there was a preliminary finding of gross discrepancy in the computation of the capital gains taxes due from the transactions. The Tax Code is clear that the remedies may proceed simultaneously. (3) NO.

While the laws governing the CTA have expanded the jurisdiction of the Court, they did not change the jurisdiction of the CTA to entertain an appeal only from a final decision of the Commissioner, or in cases of inaction within the prescribed period. Since in the cases at bar, the Commissioner has not issued an assessment of the tax liability of the Petitioners, the CTA has no jurisdiction.

NATIONAL STEEL CORPORATION V. RTC OF LANAO DEL NORTE (G.R. No. 127004. March 11, 1999)

Facts:

Respondent Edward Willkom Enterprises Inc. (EWEI) and Ramiro Construction executed a contract with petitioner National Steel Corporation (NSC) whereby the former jointly undertook the Contract for Site Development for the latter’s Integrated Iron and Steel Mills 80

Complex. Sometime in 1983, the services of Ramiro Construction was terminated and EWEI took over the contractual obligation. Due to this and to other causes deemed sufficient by EWEI, extensions of time for the termination of the project were granted by NSC. Differences later arose, EWEI filed a case before the RTC praying essentially for payments with interest from the time of delay; the price adjustment as provided by PD 1594; and exemplary damages and attorney’s fees. NSC filed an answer with counterclaim to plaintiffs complaints. The court upon joint motion of both parties had issued an order dismissing the said complaint and counterclaim in view of the desire of both parties to implement Sec. 19 of the contract, providing for a resolution of any conflict by arbitration. In accordance with the aforesaid order and pursuant to Sec. 19 of the Contract, herein parties constituted an Arbitration Board after which of a series of hearings, rendered the decision directing NSC to pay EWEI. The RTC affirmed and confirmed the award of the arbitrators. NSC’s Motion for Reconsideration was denied, hence has come to this court via the present petition.

Issue: Whether or not the lower court acted with grave abuse of discretion in not vacating the arbitrator’s award.

Ruling: Thus, in a Petition to Vacate Arbitrator’s Decision before the trial court, regularity in the performance of official functions is presumed and the complaining party has the burden of proving the existence of any of the grounds for vacating the award, as provided for by Sections 24 of the Arbitration Law, to wit: (a) The award was procured by corruption, fraud or other undue means; (b) That there was evident partiality or corruption in the arbitrators of 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 wilfully refrained from disclosing such disqualification 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. . . . 81

The grounds relied upon by the petitioner were the following (a) That there was evident partiality in the assailed decision of the Arbitrators in favor of the respondent; and (b) That there was mistaken appreciation of the facts and application of the law by the Arbitrators.

Petitioner’s allegation that there was evident partiality is untenable. It is anemic of evidentiary support. In the case of Adamson vs. Court of Appeals, in upholding the decision of the Board of Arbitrators, this Court ruled that the fact that a party was disadvantaged by the decision of the Arbitration Committee does not prove evident partiality. Proofs other than mere inference are needed to establish evident partiality. Here, petitioner merely averred evident partiality without any proof to back it up. Petitioner was never deprived of the right to present evidence nor was there any showing that the Board showed signs of any bias in favor of EWEI.

Parentethically, and in the light of the record above-mentioned, this Court hereby holds that the Board of Arbitrators did not commit any “evident partiality” imputed by petitioner NSC. Above all, this Court must sustain the said decision for it is a well-settled rule that the actual findings of an administrative body should be affirmed if there is substantial evidence to support them and the conclusions stated in the decision are not clearly against the law and jurisprudence, similar to the instant case, Henceforth, every reasonable intendment will be indulged to give effect such proceedings and in favor of the regulatory and integrity of the arbitrators act. Indeed, the allegation of evident partiality is not well-taken because the petitioner failed to substantiate the same.

WHEREFORE, the awards made by the Board of Arbitrators which the trial court adopted in its decision are modified.

CHINA CHIANG JIANG ENERGY CORP (PHILS) V. ROSAL INFRASTRUCTURE BUILDERS G.R. 125706 September 30, 1996 FACTS: 82

China Chang is the operator of the Binga Hydroelectric Plant in Itogon, Benguet, which is undera Rehabilitate Operate and Leaseback Contract with the National Power Corporation ( N A PO CO R) a n d wa s en gag ed i n t h e r eh ab il it at i on of t he p o we r p l a n t , i n c lu d in g t h e construction of check dams. On February 1994, petitioner China Chang engaged the services of Rosal Infrastructure Builders for the construction of a Dam in Itogon, Benguet. In this contract, the parties agreed to submit disputes arising there from to arbitration before the Arbitration of the International Chamber of Commerce. When a dispute arose between the parties, Rosal filed a complaint before the Construction Industry Arbitration Commission (CIAC) for arbitration. China Chang filed its answer with compulsory counterclaim and raised therein the issue of lack of jurisdiction on the part of CIAC. In August 1995, the CIAC considered the question of jurisdiction merely as a special defense which can be included as part of the issues of the Terms of Reference. China Chang filed a motion for reconsideration which was denied by CIAC in October 1995. China Chang raised the issue of lack of jurisdiction with the CA. In February 1996, the CA dismissed the petition. China Chang filed a Motion for Reconsideration, but was denied by the CA. China Chang now questions the validity of Construction Industry Arbitration Commission (CIAC) Resolution 3- 93 amending Section 1, Article III of CIAC Rules of Procedure Governing Construction Arbitration promulgated by the CIAC pursuant to its rule-making power granted under Section 21 of Executive Order No. 1008, which pertinently provides as follows: Article III Effect of the Agreement to Arbitrate 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 the CIAC jurisdiction, notwithstanding the reference to a different arbitral institution or arbitral body in such contract or submission. ISSUES: 1. W/N the CIAC has acquired jurisdiction over the dispute. 2. W/N the parties in the case at bar can agree to submit to arbitration their construction dispute under the CIAC. HELD: 1. YES. There is no restriction whatsoever on any party from submitting a dispute for arbitration to an arbitral body other than the CIAC. On the contrary, the new rule, as amended merely 83

implements the letter and the spirit of its enabling law, E.O. No. 1008, which vests jurisdiction upon the CIAC: SECTION 4. Jurisdiction. - The CIAC shall have original and exclusive jurisdiction over disputes arising from, or connected with, contracts entered into by parties involved in construction in the Philippines, whether the disputes arises before or after the completion of the contract, or after the abandonment or breach thereof. These disputes may involve government or private contracts. For the Board to acquire jurisdiction, the parties to a dispute must agree to submit the same to voluntary arbitration. The jurisdiction of the CIAC may include but is not limited to violation of specifications for materials and workmanship; violation of the terms of agreement; interpretation and/or application of contractual provisions; amount of damages and penalties; commencement time and delays; maintenance and defects; payment default of employer or contractor and changes in contract cost. Excluded from the coverage of this law are disputes arising from employer-employee relationships which shall continue to be covered by the Labor Code of the Philippines. 2. YES. Section 1, Article III of the CIAC Rules of Procedure Governing Construction Arbitration[19] (CIAC Rules), provides: 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. An arbitration agreement or a submission to arbitration shall be in writing, but it need not be signed by the parties, as long as the intent is clear that the parties agree to submit a present or future controversy arising from a construction contract to arbitration. 84

It may be in the form of exchange of letters sent by post or by telefax, telexes, telegrams or any other modes of communication.

Based on the foregoing provisions, the CIAC shall have jurisdiction over a dispute involving a construction contract if said contract contains an arbitration clause (notwithstanding any reference by the same contract to another arbitration institution or arbitral body); or, even in the absence of such a clause in the construction contract, the parties still agree to submit their dispute to arbitration. It is undisputed that in the case at bar, the EPCC contains an arbitration clause in which the petitioner and respondent explicitly agree to submit to arbitration any dispute between them arising from or connected with the EPCC, under the following terms and conditions HI-PRECISION STEEL CENTER INC. v LIM KIM STEEL BUILDERS INC. December 13, 1993 G.R No. 110434 FACTS: Hi-Precision (Petitioner) entered into a contract with Steel Builders (Private Respondent) under which the latter as Contractor was to complete a 21 Million Pesos construction project owned by Hi-Precision with a period of 153 days. The said completion of the project was then moved, however, when the date came, only 75.8674% of the project was actually completed. Petitioner attributed this non-completion to Steel Builders which allegedly incurred delays both during the original contract and period of extension. On the other hand, the Steel Builders claimed that the said non-completion of the project was either excusable or was due to Hi-Precision’s own fault and issuance of change orders. The said project was taken over and completed by Hi-Precision. Steel Builders requested for adjudication with CIAC (Public Respondent) and sought payment of its unpaid billings, alleged unearned profits and other receivables. Hi-Precision on the other hand claimed for damages and reimbursement of alleged additional costs. The CIAC formed an Arbitral Tribunal with 3 members and such tribunal rendered a decision in favor of Steel Builders Inc. ordering Hi-Precision to pay Steel Builders their claim. Hi-Precision then asks the court to set aside the award on the basis of misapprehension of facts. 85

ISSUE: Whether or not it was correct should set aside the rulin o" the Arbitral Tribunal? RULING: No. The court said that it will not assist one or the other or even both parties in an effort to subvert or defeat the objective for their private purposes and also' that it will not review the factual findings of an arbitral tribunal upon the allegation that such body misapprehended facts. 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 very clear showing is made that, in reaching its factual conclusions, the Arbitral Tribunal committed an error so hurtful to one party as to constitute a brave abuse of discretion resulting on lack or loss of jurisdiction. ABS-CBN vs. World Interactive Network Systems 544 SCRA 308, February 11, 2008 CORONA, J.: Facts: On September 7, 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, 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. A dispute arose between the parties when petitioner accused respondent of inserting nine episodes of a weekly 35-minute community news program. 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. He then allowed respondent to recover temperate damages, attorney’s fees and one-half of the amount it paid as arbitrator’s fee.

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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.It stated that as the Terms of Reference (TOR) itself provided that the arbitrator's decision shall be final and unappealable and that no motion for reconsideration shall be filed, then the petition for review must fail. It ruled that it is the RTC which has jurisdiction over questions relating to arbitration. It held that the only instance it can exercise jurisdiction over an arbitral award is an appeal from the trial court's decision confirming, vacating or modifying the arbitral award. It further stated that a petition for certiorari under Rule 65 of the Rules of Court is proper in arbitration cases only if the courts refuse or neglect to inquire into the facts of an arbitrator's award. Petitioner moved for reconsideration but the same was denied. Issue: The issue before us is 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: RA 876 itself mandates that it is 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. 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. 87

However, in cases not falling under any of the grounds in Section 24 of RA 876 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. In Luzon Development Bank v. Association of Luzon Development Bank Employees,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. As such, decisions handed down by voluntary arbitrators fall within the exclusive appellate jurisdiction of the CA. 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 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 (petition for review under Rule 43) and grave abuse of discretion (petition for certiorari under Rule 65). Petitioner's ploy was fatal to its cause. An appeal taken either to this Court or the CA by the wrong or inappropriate mode shall be dismissed. Thus, the alternative petition filed in the CA, being an inappropriate mode of appeal, should have been dismissed outright by the CA. 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.

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