Adr Compiled Cases.docx

1. CHUNG FU INDUSTRIES (PHILIPPINES) INC., its Directors and Officers namely: HUANG KUO-CHANG, HUANG AN-CHUNG, 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: Petitioner Chung Fu Industries (Philippines) and private respondent Roblecor Philippines, Inc. forged a construction agreement whereby respondent contractor committed to construct and finish petitioner corporation’s industrial/factory complex.  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. Roblecor filed a petition for Compulsory Arbitration with prayer for TRO before respondent RTC to claim the unsatisfied account and unpaid progress billings.  Chung Fu moved to dismiss the petition and further prayed for the quashing of the restraining order.  Subsequent negotiations between the parties eventually led to the formulation of an arbitration agreement which, among others, provides: o The parties mutually agree that the decision of the arbitrator shall be final and unappealable. o Therefore, there shall be no further judicial recourse if either party disagrees with the whole or any part of the arbitrator’s award. Respondent RTC approved the arbitration agreement and thereafter, Engr. Willardo Asuncion was appointed as the sole arbitrator.  Arbitrator Asuncion ordered petitioner to immediately pay respondent contractor and further declared the award as final and unappealable.  Roblecor then moved for the confirmation of said award which was accordingly confirmed and a writ of execution granted to it. Meanwhile, Chung Fu moved to remand the case for further hearing and asked for a reconsideration of the judgment award claiming that Arbitrator Asuncion committed twelve (12) instances of grave error by disregarding the provisions of the parties’ contract.  Chung Fu’s Motion was denied and similarly its motion for reconsideration. Chung Fu elevated the case via a petition for certiorari to respondent CA.  The respondent appellate court concurred with the findings and conclusions of respondent trial court. A motion for reconsideration of said resolution was filed by petitioner, but was similarly denied.

This is where the proper remedy is certiorari under Rule 65 of the Revised Rules of Court. It is to be borne in mind, however, that this action will lie only where a grave abuse of discretion or an act without or in excess of jurisdiction on the part of the voluntary arbitrator is clearly shown. Voluntary arbitrators by the nature of their functions act in a quasi-judicial capacity.  It should be stressed too, that voluntary arbitrators, by the nature of their functions, act in a quasi-judicial capacity. It stands to reason, therefore, that their decisions should not be beyond the scope of the power of judicial review of this Court. In the case at bar, petitioners assailed the arbitral award on the following grounds, most of which allege error on the part of the arbitrator in granting compensation for various items which apparently are disputed by said petitioners.  After closely studying the list of errors, as well as petitioners’ discussion of the same in their Motion to Remand Case For Further Hearing and Reconsideration and Opposition to Motion for Confirmation of Award,  we find that petitioners have amply made out a case where the voluntary arbitrator failed to apply the terms and provisions of the Construction Agreement which forms part of the law applicable as between the parties, thus committing a grave abuse of discretion.  Furthermore, in granting unjustified extra compensation to respondent for several items, he exceeded his powers — all of which would have constituted ground for vacating the award under Section 24 (d) of the Arbitration Law. Wherefore, the petition is granted. The Resolutions of the CA as well as the Orders of respondent RTC 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.

2. BF CORPORATION, petitioner, vs. COURT OF APPEALS, SHANGRI-LA PROPERTIES, COLAYCO, ALFREDO C. RAMOS, INC., RUFO B. MAXIMO G.LICAUCO III and BENJAMIN C. RAMOS, respondents. ROMERO, J.: FACTS:  BF Corporation (BF) and respondent Shangri-La Properties, Inc. (Shang) entered into the 1ST AGREEMENT whereby Shang engaged BF to construct the main structure of the EDSA Plaza Project – the EDSA Shangri-La Mall – in Mandaluyong City. While the construction work was in progress Shang once again hired BF for the expansion of the project, the 2ND AGREEMENT. 

BF incurred delay in the construction work that SPI considered as serious and substantial. BF contended that they had faithfully complied with the first agreement until a fire broke out on [Nov 30, 1990] damaging phase 1 of the project, Hence SPI proposed the renegotiation of the agreement between them.

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Parties entered into another agreement named “Agreement for the Execution of Builders Work for the EDSA Plaza Project” (3RD AGREEMENT) that would cover the construction work on said project as of May 1, 1991 until its eventual completion.

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BF filed with the RTC of Pasig a complaint for the collection of the balance due under the construction agreement. Named Defendants therein were Shang and members of its BOD – A. Ramos, Colayco, Obles, Lanuza Jr., Licauco & B.Ramos.

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Shang and its co-defendants filed a motion to suspend proceedings instead of filing an answer. Motion was anchored on the defendants allegation that the formal trade contract of the the construction project provided

ISSUE: Whether or not petitioners are estopped from questioning the arbitration award allegedly in view of the stipulations in the parties’ arbitration agreement that “the decision of the arbitrator shall be final and unappealable” and that “there shall be no further judicial recourse if either party disagrees with the whole or any part of the arbitrator’s award.” – NO RULING: Civil Law; Arbitration; The finality of the arbitrator’s award is not absolute and without exceptions.—  It is stated explicitly under Art. 2044 of the Civil Code that the finality of the arbitrators’ award is not absolute and without exceptions.  Where the conditions described in Articles 2038, 2039 and 2040 applicable to both compromises and arbitrations are obtaining, the arbitrators’ award may be annulled or rescinded.  Additionally, under Sections 24 and 25 of the Arbitration Law, there are grounds for vacating, modifying or rescinding an arbitrator’ award.  Thus, if and when the factual circumstances referred to in the above-cited provisions are present, judicial review of the award is properly warranted.

for a clause requiring prior resort to arbitration before judicial intervention. 

Shang submitted a copy of the condition of the contract containing arbitration clause that it failed to attach its motion to suspend proceedings.

BF OPPOSITION:  BF opposed said motion stating that there was no formal contract between the parties although they entered into an agreement. They emphasized that the agreement did not provide for an arbitration thus cannot deprive the court of its jurisdiction. SHANG CONTENTION:  Shang insisted that there was an arbitration clause in the existing contract between them. It alleged that the suspension would not deprive the court of its jurisdiction and would expedite the settlement proceedings rather than delay it. BF REJOINDER  In a rejoinder, BF reiterated that there was no arbitration clause in the contract between the parties.  It averred that if there was an arbitration clause, suspension of the proceedings was no longer proper and that defendants should be declared in default for failure to answer within the reglementary period. SHANG SUR-REJOINDER  In its sur-rejoinder, Shang pointed out the significance of the petitioner’s admission of the due execution of the Articles of Agreement.  It was shown that the Signature of Colayco (Shang President) and Bayani Fernando (BF President) was in such agreement and was even duly notarized. RTC: found that the arbitration clause did exist, however the lower court denied motion to suspend proceedings and ruled in favor of BF  This was because despite the fact there was an arbitration agreement, the Conditions of Contract only the initials of Bayani Fernando was present, while no signature on the part of Shang.  There were no signed documents to prove Shang’s claims thus there is serious doubt to the validity of the arbitration clause found in the Conditions of Contract  Assuming that the arbitration clause was valid and binding, it was too late for Shang to invoke arbitration because: the demand should have been made before the time of final payment except as otherwise expressly stipulated in the contract the court found that the project was to be completed on Oct 31, 1991 and any delays would incur 80K for each day of delay from Nov 1,1991 with liquefied damages up to a maximum of 5% of the total contract price the court found out that the project was completed in accordance with the agreement and Shang had took possession and started operations thereof by opening the same to the public in Nov, 1911. BF billed Shang the total amount of P110,883,101.52 contained in a demand letter sent on Feb 17, 1993. Instead of paying the amound demanded, SPI set up its own claim of P220,000,000.00 and scheduled a conference on that claim for July 12, 1993. The conference took place but was futile. 

Shang filed MR - denied because of lack of merit and directed the other defendants to file their responsive pleading within the reglementary period. Instead of filing an answer to the complaint, SPI filed a petition for Certiorari under Rule 65 before the Court of appeals.

CA: granted the petition and annulled and set aside the orders and stayed the proceedings in the lower court.  According to the contract the project manager and the contractor should coordinate with the owner, should there be failure to resolve differences, dispute shall be submitted for arbitration.  Although it was only the initials of Bayani Fernando and De La Cruz present and none from Shang, it does not affect its effectivity. BF categorically admitted that the document is the agreement bewtween the parties, the initial signature of BF representative to signify conformity to arbitration is no longer necessary. The parties should be allowed to submit their dispute to arbitration in accordance with their agreement.  Demand for arbitration was made within a reasonable time after the dispute has arisen and attempts to settle amicably has failed. This was

evidenced by the fact that such demands were acted upon only months. Jul 12 conference - Jul 14 Shang complaint against BF - Aug 13 Request for arbitration.

ISSUE: WON the parties entered into an arbitrary agreement RULING:  Yes, according to Sec 4 of R.A. 876 a contract to arbitrate a controversy thereafter arising between the parties, as well as a submission to arbitrate an existing controversy, shall be in writing and subscribed by the party sought to be charged, or by his lawful agent.  The making of a contract or submission for arbitration described in section 2 hereof, providing for arbitration of any controversy, shall be deemed a consent of the parties of the province or city where any of the parties resides, to enforce such contract of submission. Contracts; Arbitration; Words and Phrases; Formal Requirements of an Agreement to Arbitrate; To “subscribe” means to write underneath, as one’s name; to sign at the end of a document.—  The formal requirements of an agreement to arbitrate are therefore the following: a) it must be in writing and b) it must be subscribed by the parties or their representatives.  There is no denying that the parties entered into a written contract that was submitted in evidence before the lower court.  To “subscribe” means to write underneath, as one’s name; to sign at the end of a document. That word may sometimes be construed to mean to give consent to or to attest. The failure of a party to initial the ‘Conditions of Contract’ does not affect compliance with the formal requirements for arbitration agreements where that particular portion of the covenants between the parties is included by reference in the Articles of Agreement. –  The Court finds that, upon a scrutiny of the records of this case, these requisites were complied with in the contract in question. The Articles of Agreement, which incorporates all the other contracts and agreements between the parties, was signed by representatives of both parties and duly notarized. A contract may be encompassed in several instruments even though every instrument is not signed by the parties, since it is sufficient if the unsigned instruments are clearly identified or referred to and made part of the signed instrument or instruments.—  Petitioner’s contention that there was no arbitration clause because the contract incorporating said provision is part of a “hodgepodge” document, is therefore untenable.  A contract need not be contained in a single writing. It may be collected from several different writings which do not conflict with each other and which, when connected, show the parties, subject matter, terms and consideration, as in contracts entered into by correspondence.  Similarly, a written agreement of which there are two copies, one signed by each of the parties, is binding on both to the same extent as though there had been only one copy of the agreement and both had signed it. The subscription of the principal agreement effectively covers the other documents incorporated by reference therein.—  The flaw in petitioner’s contentions therefore lies in its having segmented the various components of the whole contract between the parties into several parts.  This notwithstanding, petitioner ironically admits the execution of the Articles of Agreement.  Notably, too, the lower court found that the said Articles of Agreement “also provides that the ‘Contract Documents’ therein listed ‘shall be deemed an integral part of this Agreement,’ and one of the said documents is the ‘Conditions of Contract’ which contains the Arbitration Clause.’  It is this Articles of Agreement that was duly signed by Rufo B. Colayco, president of private respondent SPI, and Bayani F. Fernando, president of petitioner corporation. The same agreement was duly subscribed before notary public Nilberto R. Briones.

“Reasonableness” is a relative term and the question of whether the time within which an act has to be done is reasonable depends on attendant circumstances.—  The arbitration clause provides for a “reasonable time” within which the parties may avail of the relief under that clause.  This Court finds that under the circumstances obtaining in this case, a one-month period from the time the parties held a conference on July 12, 1993 until private respondent SPI notified petitioner that it was invoking the arbitration clause, is a reasonable time. Indeed, petitioner may not be faulted for resorting to the court to claim what was due it under the contract. However, we find its denial of the existence of the arbitration clause as an attempt to cover up its misstep in hurriedly filing the complaint before the lower court. RA 876; The potentials of arbitration as one of the alternative dispute resolution methods that are now rightfully vaunted as “the wave of the future” in international relations, is recognized worldwide.—  It should be noted that in this jurisdiction, arbitration has been held valid and constitutional.  Even before the approval on June 19, 1953 of RA No. 876, this Court has countenanced the settlement of disputes through arbitration.  RA. 876 was adopted to supplement the New Civil Code’s provisions on arbitration.  To brush aside a contractual agreement calling for arbitration in case of disagreement between the parties would therefore be a step backward. CIVIL PROCEDURAL ISSUES: The special civil action of certiorari may not be invoked as a substitute for the remedy of appeal.—  This is reiterated in Ongsitco v. Court of Appeals as follows: “Countless times in the past, this Court has held that ‘where appeal is the proper remedy, certiorari will not lie.’  The writs of certiorari and prohibition are remedies to correct lack or excess of jurisdiction or grave abuse of discretion equivalent to lack of jurisdiction committed by a lower court.  ‘Where the proper remedy is appeal, the action for certiorari will not be entertained. Certiorari is not a remedy for errors of judgment. Errors of judgment are correctible by appeal, errors of jurisdiction are reviewable by certiorari.’  Rule 65 is very clear. The extraordinary remedies of certiorari, prohibition and mandamus are available only when ‘there is no appeal or any plain, speedy and adequate remedy in the ordinary course of law.’ That is why they are referred to as ‘extraordinary.’ 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 amount to nothing more than errors of judgment which are reviewable by timely appeal and not by a special civil action of certiorari.” If a lower court prematurely assumes jurisdiction over a case, then it becomes an error of jurisdiction which is a proper subject of a petition for certiorari. —  This is not exactly so in the instant case. While this Court does not deny the eventual jurisdiction of the lower court over the controversy, the issue posed basically is whether the lower court prematurely assumed jurisdiction over it. If the lower court indeed prematurely assumed jurisdiction over the case, then it becomes an error of jurisdiction which is a proper subject of a petition for certiorari before the Court of Appeals. And if the lower court does not have jurisdiction over the controversy, then any decision or order it may render may be annulled and set aside by the appellate court. Where the issue posed is a question of law, the special civil action of certiorari may be rightfully invoked.—  The CA found that an Arbitration Clause does in fact exist. In resolving said question of fact, the CA interpreted the construction of the subject contract documents containing the Arbitration Clause in accordance with RA 876 (Arbitration Law) and existing jurisprudence which will be extensively discussed hereunder.  In effect, the issue posed before the CA was likewise a question of law. Being a question of law, the private respondents rightfully invoked the special civil action of certiorari. Where a rigid application of the rule that certiorari cannot be a substitute for appeal will result in a manifest failure or miscarriage of justice, the provisions of the Rules of Court which are technical rules may be relaxed.—  As we shall show hereunder, had the Court of Appeals dismissed the petition for certiorari, the issue of whether or not an arbitration clause exists in the contract would not have been resolved in accordance with evidence extant

in the record of the case. Consequently, this would have resulted in a judicial rejection of a contractual provision agreed by the parties to the contract.

3. HI-PRECISION STEEL CENTER, INC., vs. LIM KIM STEEL BUILDERS, INC., and CONSTRUCTION INDUSTRY ARBITRATION COMMISSION || G.R. No. 110434 December 13, 1993 || FELICIANO, J.: FACTS:  Petitioner Hi-Precision entered into a contract with private respondent Steel Builders under which the latter as Contractor was to complete a P21 Million construction project owned by the former within a period of 153 days, i.e. from 8 May 1990 to 8 October 1990. The project completion date was first moved to 4 November 1990. On that date, however, only 75.8674% of the project was actually completed. Petitioner attributed this non-completion to Steel Builders which allegedly had frequently incurred delays during the original contract period and the extension period. Upon the other hand, Steel Builders insisted that the delays in the project were either excusable or due to Hi-Precision's own fault and issuance of change orders. The project was taken over on 7 November 1990, and eventually completed on February 1991, by Hi-Precision.  Steel Builders filed a "Request for Adjudication" with public respondent CIAC. In its Complaint filed with the CIAC, Steel Builders sought payment of its unpaid progress buildings, alleged unearned profits and other receivables. Hi-Precision, upon the other hand, in its Answer and Amended Answer, claimed actual and liquidated damages, reimbursement of alleged additional costs it had incurred in order to complete the project and attorney's fees. The CIAC formed an Arbitral Tribunal with three (3) members, two (2) being appointed upon nomination of Hi-Precision and Steel Builders, respectively; the third member (the Chairman) was appointed by the CIAC as a common nominee of the two (2) parties. On the Chairman was a lawyer. Arbitral Tribunal: petitioner Hi-Precision] is ordered to pay the Contractor [private respondent Steel Builders] the amount of P6,400,717.83 and all other claims of the parties against each other are deemed compensated and offset.  In its Award, the Arbitral Tribunal stated that it was guided by Articles 1169, 1192 and 2215 of the Civil Code. With such guidance, the arbitrators concluded that (a) both parties were at fault, though the Tribunal could not point out which of the parties was the first infractor; and (b) the breaches by one party affected the discharge of the reciprocal obligations of the other party. 

Petitioner Hi-Precision now asks this Court to set aside the Award, contending basically that it was the contractor Steel Builders who had defaulted on its contractual undertakings and so could not be the injured party and should not be allowed to recover any losses it may have incurred in the project. Petitioner Hi-Precision insists it is still entitled to damages, and claims that the Arbitral Tribunal committed grave abuse of discretion when it allowed certain claims by Steel Builders and offset them against claims of Hi-Precision.

ISSUES: W/N Petitioner is correct in asking this Court to correct legal errors committed by the Arbitral Tribunal, which at the same time constitute grave abuse of discretion amounting to lack of jurisdiction on the part of the Arbitral Tribunal HELD: No, questions of fact cannot be raised in proceedings before the Supreme Court — which is not a trier of facts — in respect of an arbitral award rendered under the aegis of the CIAC. Executive Order No. 1008, as amended, provides, in its Section 19, as follows: Sec. 19. Finality of Awards. — The arbitral award shall be binding upon the parties. It shall be final and inappealable except on questions of law which shall be appealable to the Supreme Court. Section 19 makes it crystal clear that questions of fact cannot be raised in proceedings before the Supreme Court — which is not a trier of facts — in respect of an arbitral award rendered under the aegis of the CIAC. Consideration of the animating purpose of voluntary arbitration in general, and arbitration under the aegis of the CIAC in particular, requires us to apply rigorously the above principle embodied in Section 19 that the

Arbitral Tribunal's findings of fact shall be final and inappealable. 

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Voluntary arbitration involves the reference of a dispute to an impartial body, the members of which are chosen by the parties themselves, which parties freely consent in advance to abide by the arbitral award issued after proceedings where both parties had the opportunity to be heard. The basic objective is to provide a speedy and inexpensive method of settling disputes by allowing the parties to avoid the formalities, delay, expense and aggravation which commonly accompany ordinary litigation, especially litigation which goes through the entire hierarchy of courts. Executive Order No. 1008 created an arbitration facility to which the construction industry in the Philippines can have recourse. The Executive Order was enacted to encourage the early and expeditious settlement of disputes in the construction industry, a public policy the implementation of which is necessary and important for the realization of national development goals. 21 Aware of the objective of voluntary arbitration in the labor field, in the construction industry, and in any other area for that matter, the Court will not assist one or the other or even both parties in any effort to subvert or defeat that objective for their private purposes. The Court will not review the factual findings of an arbitral tribunal upon the artful allegation that such body had "misapprehended the facts" and will not pass upon issues which are, at bottom, issues of fact, no matter how cleverly disguised they might be as "legal questions." The parties here had recourse to arbitration and chose the arbitrators themselves; they must have had confidence in such arbitrators. The Court will not, therefore, permit the parties to relitigate before it the issues of facts previously presented and argued before the Arbitral Tribunal, save only where a very clear showing is made that, in reaching its factual conclusions, the Arbitral Tribunal committed an error so egregious and hurtful to one party as to constitute a grave abuse of discretion resulting in lack or loss of jurisdiction. We consider that in asking this Court to go over each individual claim submitted by it and each individual countering claim submitted by Steel Builders to the Arbitral Tribunal, petitioner HiPrecision is asking this Court to pass upon claims which are either clearly and directly factual in nature or require previous determination of factual issues. Upon the other hand, the Court considers that petitioner HiPrecision has failed to show any serious errors of law amounting to grave abuse of discretion resulting in lack of jurisdiction on the part of the Arbitral Tribunal, in either the methods employed or the results reached by the Arbitral Tribunal, in disposing of the detailed claims of the respective parties.

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Reynaldo Senson, alias Eduardo Bacea, opened an account with defendant Real Bank by presenting an identification card bearing Mabuhay Electronics Company, the alias name Eduardo Bacea identifying him as the General Manager of Mabuhay Electronics Company, and the photograph of Reynaldo Senson. Reynaldo Senson and Eduardo Bacea are one and the same person as shown in the identification card issued by Samsung Mabuhay Corporation to Reynaldo Senson. Reynaldo Senson, alias Eduardo Bacea, through the negligence of defendant Real Bank, indorsed the checks and then deposited all the three checks in the account of Mabuhay Electronics Company.

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Defendant, Real Bank, then sent 3 checks for clearing and for payment thru FEBTC, Malolos, Bulacan Branch after stamping at the back of the checks the ususal endorsements: “ALL PRIOR ENDORSEMENT and/or LACK OF ENDORSEMENT GUARANTEED.” Copinco Trading’s account with the drawee bank, UCPB, was eventually debited for the value of the 3 checks and Mabuhay Electronics Company’s account with the defendant Real Bank was credited for the same account although it was not the payee nor the person authorized by the payee. Subsequently, Reynaldo Seson, alias Eduardo CBacea, was able to withdraw the amount of P1,563,750. The value of the 3 checks were negligently credited by defendant to the account of Mabuhay Electronics Company, although the check was payable only to Mabuhay Electronics Corporation and to no one else Despite plaintiffs’, Samsung Mabihay Corporation’s, demands, defendant ignored and refused to reimburse them with the value of 3 checks. Thus, plaintiffs were constrained to hire the legal services of the law firm of V.E. Del Rosario and Partners Real Bank Inc filed its Answer and Samsung filed a Reply. On 12 March 1998, Samsung filed an Ex-Parte Motion to Set Case for Pre-Trial, asking that the case be set for pre-trial. In a notice, Judge Amelia Tria-Infante of RTC Manila, set the case fro pre-trial.

Petition DISMISSED.

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5. REAL BANK VS SAMSUNG MABUHAY CORP. FACTS:  Plaintiff SAMSUNG MABUHAY ELECTRONIC CORPORATION is a joint venture corporation between SAMSUNG ELECTRONICS CO. LTD., a foreign corporation duly organized and existing under Korean laws, and plaintiff MABUHAY ELECTRONICS COR PORATION, a corporation organized and existing under Philippine laws.  As a result of the joint venture Agreement, Samsung Mabuhay El ectronics Corporation became the exclusive distributor for Samsung products in the Philippines.  Sometime in December of 1996, Conpinco Trading, a regular dealer of respondent Samsung Mabuhay Corporation in Davao City, issued five postdated UCPB checks payable to the order of Samsung Mabuhay Corporation, to wit These five checks were picked up by Reynaldo Senson, former Collection Supervisor of Samsung Mabuhay Corporation for Visayas and Mindanao, at Conpinco Trading’s

place of business at J.P. Laurel Avenue, Bajada Drive, Davao City last 14 December 1996. All of the five 5 checks were denominated to the PAYEE’S ACCOUNT only, the payee being Mabuhay Electronics Corporation although the proceeds of the checks were actually intended for Samsung Mabuhay Corporation. After the Joint Venture Agreement, Samsung dealers were duly requested by Samsung Mabuhay Corporation to make all checks payable to the order of Samsung Mabuhay Corporation instead of Mabuhay Electronics Corporation. Nevertheless, sole dealers, like Conpinco Trading, still made out checks payable to Mabuhay Electronics Corporation Plaintiff Samsung Mabuhay Corporation continued to receive checks from its local dealers payable to the order of Mabuhay Electronics Corporation. Plaintiff Samsung Mabuhay Corporation deposited the said checks to its bank account with Far East Bank and Trust Company (FEBTC), Adriatico Branch. FEBTC accepted for deposit into Samsung Mabuhay Corporation’s accou nt therein all checks payable to Mabuhay Electronics Corporation. Two of the five checks picked-up by Reynaldo Senson were remitted to Samsung Mabuhay Corporation, were cleared by the drawee Bank, UCPB, and the amount credited to the account of Samsung Mabuhay Corporation with FEBTC However, the three remaining UCPB checks were not remitted by Reynaldo Senson to Samsung Mabuhay Corporation. Instead, Reynaldo Senson, using an alias name, Eduardo Bacea, opened an account with defendant Real BanK, Malolos, Bulacan branch under the account name of one Mabuhay Electronics Company, a business entity in no way related to plaintiff Mabuhay Electronics Corporation. Mabuhay Electronics Company is a single proprietorship owned and managed by Reynaldo Senson, alias Eduardo Bacea.

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RTC issued an Order requiring both petitioner Real Bank and respondent Samsung to appear in mediation proceeding. This Order was sent to respondent Samsung’s former counsel, V.E. Del Rosario and Partners which had at that time already filed a notice of withdrawal of appearance.

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The mediation proceedings took place as scheduled and Mediator Tammy Ann C. Reyes, who handled the mediation proceedings

submitted her report to the Court stating therein that no action was taken on the case referred for mediation because respondent Samsung failed to appear.

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.

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On 04 June 2001, the new counsel of respondent, Ortega, Del Castillo, Bacorro, Odulio, Calma and Carbonell, entered its appearancce. This was filed and received by the Court on 06 June 2001.

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.

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Subsequently, RTC Branch 9 of Manila, where the case was pending was designated as a Family Court. Hence the case was re-raffle to RTC Judge Marivic Balisi-Umali, RTC Branch 20.

Due to the inability of the petitioner to procure materials, Capitol Industial took over some of the work contracted to the former.

RTC: issued an Order, dismissed the complaint of respondent Samsung for failure to appear at the mediation conference previously scheduled by the trial judge.  Samsung’s new counsel challenged the Order in a Motion for Reconsideration alleging that the dismissal as improper and inappropriate as it was not notified of the scheduled mediation conference. Besides, the notice of the scheduled mediation was sent to the previous counsel who had already withdrawn.  Judge Umali denied the MR.

After the completion of the contract, petitioner billed respondent in the amount of P6, 711,813.90 but the respondent refused to pay.

CA: Respondent Judge did not even peruse or verify the records of the case. Has she done so, she would have discovered that the former counsel of petitioner to whom she sent the Notice of the Order would have already withdrawn and that a new counsel for petitioner had already entered their appearance. Likewise, she should have discovered that at that time the Order was issued, petitioner was no longer holding Office at its given address. Clearly, respondent Judge committed a grave abuse of discretion in issue such Order Petitioner Real Bank;s Motion for Reconsideration was denied by the CA ISSUE: a) WON CA erred in setting aside theo0rder of the trial court dismissing the case before it due to the failure of respondent and its counsel to attend the mediation conference b) WON the CA erred in holding that respondent was not notified of the mediation conference HELD: a) NO. Mediation is part of pre-trial and failure of the plaintiff to appear threat merits sanction on the part of the absent party. The Second Revised Guidelines for the Implementation of Mediation Proceedings and Section 5, Rule 18 of the ROC grant judges the discretion to dismiss an action for failure of the plaintiff to appear at mediation proceedings. b) NO. Under Rule 138, Section 26 of the ROC, the withdrawal of counsel with the conformity of the client is completed once the same is filed in court. No further action thereon by the court is needed other than the mechanical act of the Clerk of Court of entering the name of the new counsel in the docket and of giving written notice thereof to the adverse party. 

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In this case, it is uncontroverted that the withdrawal of respondent Samsung’s original counsel, V.E. Del Rosario and Partners was with the client’s consent. Thus no approval thereof by the trial court was required because a court’s approval is indispensable only if the withdrawal is without the client’s consent. It being daylight clear that the withdrawal of respondent Samsung’s original counsel was sufficient as the same carried the stamp of approval of the client, the notice of mediation sent to respondent Samsung’s original counsel was ineffectual as the same was sent at the time when such counsel had already validly withdrawn its representation. Corollarily, the absence of respondent Samsung during the scheduled mediation conference was excusable and justified. Therefore, the trial court erroneously dismissed the case.

6. LM POWER vs. CAPITOL INDUSTRIAL Alternative dispute resolution methods or ADRs -- like arbitration, mediation, negotiation and conciliation -- are encouraged by the Supreme Court. By enabling parties to resolve their disputes amicably, they provide solutions that are less time-consuming, less tedious, less confrontational, and more productive of goodwill and lasting relationships. Facts:

Petitioner filed with the RTC 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 CA, the latter reversed the decision of the RTC and ordered the referral of the case to arbitration. Hence, this Petition. ISSUE: WON there is a need for the prior arbitration before filing of the complaint with the court. RULING: AFFIRMATIVE. SC 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 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.

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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.

7. RIZAL COMMERCIAL BANKING CORPORATION, petitioner, vs. MAGWIN MARKETING CORPORATION, NELSON TIU, BENITO SY and ANDERSON UY, respondents. G.R. No. 152878 | May 5, 2003 Petitioner RCBC filed a complaint for recovery of a sum of money against Magwin Marketing Corporation, Nelson Tiu, Benito Sy and Anderson Uy.  Discussions between petitioner and respondents were undertaken to restructure the indebtedness of respondent.  Petitioner approved a debt payment scheme for the corporation which was communicated to the latter by means of a letter for the conformity of its officers and respondent.  Only respondent Nelson Tiu affixed his signature on the letter to signify his agreement to the terms and conditions of the restructuring. The TRIAL COURT dismissed the case for failure to prosecute its action for an unreasonable length of time.  Petitioner moved for reconsideration and filed a Manifestation and Motion to Set Case for Pre-Trial. Conference alleging that only defendant Nelson Tiu had affixed his signature on the letter which informed the defendants that petitioner already approved defendant Magwin Marketing Corporations request for restructuring of its loan obligations. The trial court denied petitioner's motion to calendar the Case for pretrial. ISSUE: Whether or not failure to compromise warrants procedural sanction. RULING: A compromise agreement or amicable settlement is a remedy strongly encouraged under our jurisdiction.  However, the failure to consummate one does not warrant any procedural sanction, much less provide an authority for the court to jettison the case. This Court's ruling is pursuant to the case of Goldloop Properties, Inc. v. Court of Appeals, where it was held that the trial court cannot dismiss a complaint for failure of the parties to submit a compromise agreement. Alternative Dispute Resolution; Compromise Agreements  As also explained therein, the proper course of action that should have been taken by the court a quo, upon manifestation of the parties of their willingness to discuss a settlement, was to suspend the proceedings and allow them reasonable time to come to terms  (a) If willingness to discuss a possible compromise is expressed by one or both parties; or (b) If it appears that one of the parties, before the commencement of the action or proceeding, offered to discuss a possible compromise but the other party refused the offer, pursuant to Art. 2030 of the Civil Code.  If despite efforts exerted by the trial court and the parties the negotiations still fail, only then should the action continue as if no suspension had taken place. Ostensibly, while the rules allow the trial court to suspend its proceedings consistent with the policy to encourage the use of alternative mechanisms of dispute resolution, in the instant case, the trial court only gave the parties fifteen (15) days to conclude a deal.  This was, to say the least, a passive and paltry attempt of the court a quo in its task of persuading litigants to agree upon a reasonable concession.



Hence, if only to inspire confidence in the pursuit of a middle ground between petitioner and respondents, we must not interpret the trial court’s Ordersas dismissing the action on its own motion because the parties, specifically petitioner, were anxious to litigate their case as exhibited in their several manifestations and motions.