Prelims Reviewer.docx

WHAT IS 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.

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“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.

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HI-PRECISION vs LIM KIM STEEL BUILDERS

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Hi-Precision entered in to contract with Steel Builders for construction project however incurred numerous delays. Steel Builders sought for payment of unpaid and filed Request for Arbitration. The Arbitral Tribunal gave an award and ordered Hi-Precision to pay Steel Builders. Hi-Precision asks the SC to correct legal errors committed by Arbitral Tribunal which at the same time constitutive of GADALEJ on the part of the Arbitral Tribunal

OBJECTIVE: 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. (1)

CHUNG FU vs CA

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Chung Fu and Roblecor entered into a construction agreement wherevy Roblecor construct factory complex. Agreed that in the event of dispute, stipulated that the issue shall be submitted for resolution before a single arbitrator chose by parties. Dispute arose: formed arbitration agreement which provides “final and unappealable” and “no further judicial recourse if either party disagrees with the whole or part of the award”

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WON estopped from question arbitration award based on the stipulations in arbitration agreement – NO. RULING: IF factual circumstances under these provisions are present – SUBJECT TO JUDICIAL REVIEW OF AWARD  Art. 2044 NCC - the finality of the arbitrator’s award is not absolute and without exceptions.  conditions described in Articles 2038, 2039 and 2040 applicable to both compromises and arbitrations are obtaining, the arbitrators’ award may be annulled or rescinded  Sections 24 and 25 of the Arbitration Law, there are grounds for vacating, modifying or rescinding an arbitrator’ award 

Even decisions of administrative agencies which are declared “final” by law are NOT EXEMPT from judicial review when so warranted

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Voluntary arbitrators by the nature of their functions act in a quasijudicial capacity, therefore, that their decisions should not be beyond the scope of the power of judicial review of this Court -

We find that the voluntary arbitrator committed grave abuse of discretion and exceeded his powers in granted unjustified extra compensation to respondent – all of which are ground for vacating award in Sec. 24(d) of Arbitration Law.

(2)

BF CORP vs CA

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Several agreements were entered and made for EDSA Shangri La Mall however BF Corp incurred delay thus this dispute. Bayani Fernando and Shang President agreed on the Articles of Agreement and was even duly notarized. Shangri La filed motion to suspend and submitted a copy of the condition of the contract containing arbitration clause. BF contends that no arbitration clause in the contract between the parties

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RULING:  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 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. 

The subscription of the principal agreement effectively covers the other documents incorporated by reference therein

Articles of Agreement which was signed by all parties and notarized “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.”

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RULING:  In a petition for review of an arbitration award, the Arbitral Tribunal should be impleaded We note that the Arbitral Tribunal has not been impleaded as a respondent in the Petition at bar. The CIAC has indeed been impleaded; however, the Arbitral Award was not rendered by the CIAC, but rather by the Arbitral Tribunal.  Moreover, under Section 20 of EO 1008, it is the Arbitral Tribunal, or the single Arbitrator, with the concurrence of the CIAC, which issues the writ of execution requiring any sheriff or other proper officer to execute the award.  Questions of fact cannot be raised in proceedings before the SC  EO 1008 created an arbitration facility to which the construction industry in the Philippines can have recourse. Supreme Court will review issues of facts previously presented before the Arbitral Tribunal only where there is a very clear showing that, in reaching its factual conclusions, the Tribunal committed an error so egregious as to constitute a grave abuse of discretion (4)

ABSCBN vs WINS

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ABSCBN entered into agreement with WINS and was granted exclusive license to distribute TFC. However WINS inserted 9 episodes which constituted material breach so ABSCBN wanted to terminate and thus the arbitration suit. Arbitral award was in favor of WINS so ABS filed in the CA petition for review under Rule 42 OR in the alternative a petition for certiorari under Rule 65. WON ABS may avail of such instead of filing a petition to vacate the award

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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.  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.  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.

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The proper remedy from the adverse decision of a voluntary arbitrator, if errors of fact and/or law are raised, is a petition for review under Rule 43 of the Rules of Court Any agreement stipulating that “the decision of the arbitrator shall be final and unappealable” and “that no further judicial recourse if either party disagrees with the whole or any part of the arbitrator’s award may be availed of” cannot be held to preclude in proper cases the power of judicial review which is inherent in courts.

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Ostensibly, while the rules allow the trial court to suspend its proceedings to encourage use of alternative mechanisms of dispute resolution, in the instant case, the TC only gave the parties 15 days to conclude a deal. This was, to say the least, a passive and paltry attempt of the court in its task of persuading litigants to agree upon a reasonable concession

(8) CAPITOL vs NLRC (5) REAL BANK VS SAMSUNG  

TRIAL COURT dismiss cases failure to appear in mediation Samsung Mabuhay was not notified of mediation conference – sent to counsel who had validly withdrawn already

RULING: Mediation is part of pre-trial and failure of plaintiff to appear, grants judges the discretion to dismiss (6) LM POWER vs CAPITOL  

Petitioner filed with RTC complaint for collection of money Respondent filed M2D: complaint was premature absence of recourse to arbitration

RULING: Respondent’s correct.  When a contract contains a clause for the submission of a future controversy to arbitration, it is not necessary for the parties to enter into a submission agreement before the claimant may invoke the jurisdiction of CIAC  The instant case involves technical discrepancies that are better left to any arbitral body that has expertise in the areas  The inclusion of the arbitration clause in a contract does not ipso facto divest the courts of jurisdiction to pass upon the findings of the arbitral bodies – because awards are still JUDICIALLY REVIEWABLE  Being an inexpensive, speedy and amicable method of settling disputes, arbitration—along with mediation, conciliation and negotiation—is encouraged by the Supreme Court  Recourse to the CIAC may now be availed of whenever a contract contains a clause for the submission of a future controversy to arbitration, notwithstanding the reference to a different arbitration institution or arbitral body in such contract or submission. (7) RCBC vs MAGWIN  

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TRIAL COURT: Reconsidered RCBC’s contention and issued an order which directed the parties to submit within 15 days a compromise agreement. However, failed to compromise since only one party affixed his signature, filed Manifestation and Motion to Set Case for Pre-Trial – denied by TC RULING: Failure to compromise does not warrant a procedural sanction. 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, is 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 b) If it appears that one of the parties before commencement of the proceeding offered to discuss a possible compromise but other party refused.

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Despite efforts of the TC and parties the negotiations still fail, only then should the action continue as if no suspension had taken place.

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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, the grant to the parties of only 15 days to conclude a deal is, 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.

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Union filed a Notice of Strike with the NCMB – serving a copy thereof. Petitioner contends that submission of notice of strike vote to NCMB is required by the Omnibus Rules of the Labor Code.

RULING: We agree with Petitioner.  Respondent union failed to comply with Sec. 10 of Rule 22 of the Omnibus Rules of NLRC to a union intending to stage a strike is mandated to notify the NCMB of the meeting for the conduct of strike vote, at least 24 hours prior to such meeting  A union is mandated to notify the NCMB of the impending dispute via a notice of strike. Thereafter, the NCMB through its conciliatormediators  The failure of a union to comply with the requirement of the giving of notice to the National Conciliation and Mediation Board (NCMB) at least 24 hours prior to the holding of a strike vote meeting will render the subsequent strike staged by the union illegal  Unless and until the NCMB is notified at least 24 hours of the union’s decision to conduct a strike vote, and the date, place, and time thereof, the NCMB cannot determine for itself whether to supervise a strike vote meeting or not and insure its peaceful and regular conduct. (9) POSITOS VS CHUA  

Unlawful detainer case referred to the Lupon. Chua did not appear during the proceedings but sent a representative on his behalf. No settlement reached. Petitioner contends that failure to appear personally during the proceedings is equivalent to non-compliance with RA 7160 (Lupon proceedings) rendering case dismissable

RULING:  Non-compliance with conciliation requirement under the LGC (RA 7160) affects the sufficiency of a party’s cause of action and renders the complaint susceptible to dismissal on the ground of prematurity. (10) UNIWIDE vs TITAN-IKEDA  

Nonpayment of claims billed after completion of 3 projects. Uniwide claims that it is entitled to the liquidated damages for delay incurred – CIAC rejected. Petitioner insists that the CIAC should have applied Section 5 Rule 10 of the ROC which provides that issues not raised in the pleadings but tried w/ consent of parties, treated as if been raised in the pleadings.

RULING: Petitioner wrong  As an arbitration body, the Construction Industry Arbitration Commission (CIAC) can only resolve issues brought before it by the parties through the Terms of Reference (TOR) which functions similarly as a pre-trial brief. Uniwide’s claim for liquidated damages was not raised as an issue in the TOR or any modified or amended version of it, the CIAC cannot make a ruling on it.  A party may not be deprived of due process of law by an amendment of the complaint as provided in ROC, Uniwide introduced the claim for liquidated damages only in its memorandum submitted to the CIAC at the end of the arbitration proceeding. Verily Titan was not given a chance to present evidence to counter claim of LD.  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

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any effort to subvert or defeat that objective for their private purposes; Court will not permit the parties to relitigate before it the issues of facts previously presented and argued before the Arbitral Tribunal, save only where a clear showing is made that, 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.

(11) PHILROCK vs CIAC (RTC – CIAC – RTC – CIAC)    

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Sps. Cid filed complaint against Philrock and 7 other officers in RTC - dismissed and referred to CIAC because the parties filed an Agreement to Arbitrate with the CIAC. No common ground reached in the CIAC both parties requested the case be remanded to the TC. RTC declared it no longer had jurisdiction over the case and ordered to be remanded to CIAC Philrock requested to suspend – true reason for withdrawal of the case from CIAC due to inclusion of 7 other officers who did not give consent to arbitration Sps. Cid excluded the Arbitral tribunal denied suspension and finalized TOR Philrock contends CIAC has lost jurisdiction to hear arbitration case due to party’s withdrawal to arbitrate.

RULING: CIAC did not lose jurisdiction over the case.  Section 4 of Executive Order (EO) 1008 expressly vests in the CIAC original and exclusive jurisdiction over disputes arising from or connected with construction contracts entered into by parties that have agreed to submit their dispute to voluntary arbitration It is undisputed that the parties submitted themselves to the jurisdiction of the CIAC by virtue of their Agreement to Arbitrate.  Philrock claims the Agreeement was withdrawn because of exclusion of 7 officers, however such is untenable. Sps. Cid removed the obstacle to the continuation Philrock continued participating in the arbitration and concluded and signed TOR The document clearly confirms both parties intention and agreement to submit to voluntary arbitration.  The Supreme Court will not countenance the effort of any party to subvert or defeat the objective of voluntary arbitration for its own private motives.  Voluntary arbitrators, by the nature of their functions, act in quasijudicial capacity, such that their decisions are within the scope of judicial review. factual findings of quasi-judicial bodies that have acquired expertise are generally accorded great respect and even finality, if they are supported by substantial evidence. (12) AGAN vs PIATCO 

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DOTC bidding process for development of NAIA 3 thru BuildOperate-Transfer Agreement. AEDC submitted unsolicited proposal. PIATCO won the bidding and signed the 1987 Concession Agreement, at the end of the period PIATCO will transfer the airport to MIAA. Government and PIATCO signed ARCA (amended and restated concession agreement) which included an arbitration agreement. Meanwhile, the MIAA which is charged with the maintenance and operation of the NAIA 1 and 2, had existing concession contracts with various service providers to offer international airline airport services workers of the international airline service providers filed before the SC a petition for prohibition enjoining the enforcement of the agreements. They said the transfer to NAIA 3 could cost them their jobs, since under the agreements, PIATCO is not required to honor MIAA’s existing concession contracts with various service providers for international airline airport services.

RULING:  Where petitioners are not parties to a contract with an arbitration clause, they cannot be compelled to submit to arbitration proceedings; It is established that petitioners in the present cases who have presented legitimate interests in the resolution of the controversy are not parties to the PIATCO Contracts. Accordingly, they cannot be bound by the arbitration clause provided for in the ARCA and hence, cannot be compelled to submit to arbitration proceedings. 

A speedy and decisive resolution of all the critical issues in the present controversy, including those raised by petitioners, cannot be made before an arbitral tribunal. The object of arbitration is precisely to allow an expeditious determination of a dispute. This objective would not be met if this Court were to allow the parties to settle the cases by arbitration as there are certain issues involving nonparties to the PIATCO Contracts which the arbitral tribunal will not be equipped to resolve.

(13) DFA and BSP vs Falcon    

DFA and BCA entered in agreement for implementation of machine-readable passport and visa project however dispute arose when they imputed breach against one another. DFA and BSP entered into MOA for BSP to provide DFA Epassports. BCA filed a Petition for Interim Relief under Sec. 28 of ADR Act (RA 9285) with RTC praying for the issuance of TRO restrating DFA and BSP. DFA contends that BCA has no cause of action since RTC is prohibited from issuing a TRO against national government projects such as E-Passport, pursuant to Sec. 3 RA 8975.

RULING: TC had jurisdiction to issue a WPI against the e-Passport Project  RA 9285 general law applicable to all matters and controversies to be resolved through ADR methods. This law allows RTC to grant interim or provisional relief, including preliminary injunction, to parties in an arbitration case prior to the constitution of the arbitral tribunal.  However, must give way to a special law governing national government projects, RA 8975 which prohibits courts, except the SC, from issuing TROs and WPI in cases involving national government projects prohibition in RA8975 is inoperative in this case, since DFA failed to prove that the e-Passport Project is national government project as defined therein. Hence, e-Passport is not covered by the Build-Operate-Transfer law. (14) TRANSFIELD vs LUZON HYDRO CORP (2004 CASE)  Transfield entered into a turn-key contract with Luzon Hydro Corp (LHC). Under the contract, Transfield were to construct a hydroelectric plants in Benguet and Ilocos.  The contract provides for a period for which the project is to be completed and also allows for the extension of the period provided that the extension is based on justifiable grounds such as fortuitous event.  In order to guarantee performance by Transfield, two stand-by LOC were required to be opened.  During the construction of the plant, Transfield requested for extension of time citing typhoon and various disputes delaying the construction. LHC did not give due course to the extension of the period prayed for but referred the matter to arbitration committee  Because of the delay in the construction of the plant, LHC called on the stand-by LOC because of default.  However, the demand was objected by Transfield on the ground that there is still pending arbitration on their request for extension of time. RULING:

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Transfield’s argument that any dispute must first be resolved by the parties, whether through negotiations or arbitration, before the beneficiary is entitled to call on the letter of credit in essence would convert the letter of credit into a mere guarantee. Jurisprudence has laid down a clear distinction between a letter of credit and a guarantee in that the settlement of a dispute between the parties is not a pre-requisite for the release of funds under a LOC. It is premature and absurd to conclude that the draws on the Securities were outright fraudulent where the International Chamber of Commerce and the Construction Industry Authority Commission have not ruled with finality on the existence of default. The pendency of the arbitration proceedings would not per se make LHC’s draws on the Securities wrongful or fraudulent for there was nothing in the Contract which would indicate that the parties intended that all disputes regarding delay should first be settled through arbitration before LHC would be allowed to call upon the Securities.

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The Company and the Union agree that in case of dispute or conflict in the interpretation or application of any of the provisions of this Agreement, or enforcement of Company policies, the same shall be settled through negotiation, conciliation or voluntary arbitration. From the foregoing, it is clear that the parties, in the first place, really intended to bring to conciliation or voluntary arbitration any dispute or conflict in the interpretation or application of the provisions of their CBA

It is only in the absence of a CBAthat parties may opt to submit the dispute to either the NLRC or to voluntary arbitration

(27) AGBAYANI VS CA  

Court stenographer filed a criminal complaint for grave oral defamation against Legal Researcher. DOJ Usec and CA: dismissed the case for non-compliance with the Katarungang Brgy Law under RA 7160 (LGC)

(2006 CASE)  

The adjudication of the case proved to be a 2 stage process, 1) forum shopping and 2) question of propriety of calling on the securities during the pendency of the arbitral proceedings. LHC claims there is forum shopping in the 4 cases: 1) Civil case for Confirmation, Recognition and Enforcement of 3rd Partial Award 2) ICC Case – request for arbitration 3) Petition for review – TPI claimed that calling on LOC premature 4) Civil case - Complaint for Injunction with prayer for TRO/WPI against LHC from calling on securities

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

Applicability of NY Convention in PH is confimed by Sec. 42 of RA 9285 for said law also provides that the application for recognition and enforcement of such awards shall be filed with the RTC. TPI’s resort to RTC for Recognition of 3rd partial Award for although it was proper, was premature. The ICC Arbitral Tribunal ruled that LHC wrongfully drew upon securities, however since there is no order of payment or return of proceeds provided in the Award, TPI is not entitled to any damages or interests due to LHC’s drawing on the securities.

RULING:  Undeniably, both are residents of Las Piñas City and both work at the RTC, and the incident which is the subject matter of the case happened in their workplace.  Agbayani’s complaint should have undergone the mandatory barangay conciliation for possible amicable settlement with respondent Genabe, pursuant to Sections 408 and 409 of LGC. The compulsory process of arbitration is a pre-condition for the filing of the complaint in court. Where the complaint a) Did not state that it is one of excepted cases, or b) it did not allege prior availment of said conciliation process, or c) did not have a certification that no conciliation had been reached by the parties, the case should be dismissed. GR: All disputes are subject to Barangay conciliation pursuant to the Revised Katarungang Pambarangay Law and prior recourse thereto is a pre-condition before filing a complaint in court or any government offices. XPNS: 1)

Where one party is the or instrumentality thereof;

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Where one party is a public officer or employee o and the dispute relates to the performance of his official functions;

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Where the dispute involves real properties located in different cities and municipalities, o unless the parties thereto agree to submit their difference to amicable settlement by an appropriate Lupon;

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Any complaint by or against corporations, partnerships or juridical entities, o since only individuals shall be parties to Barangay conciliation proceedings either as complainants or respondents

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Disputes involving parties who actually reside in barangays of different cities or municipalities, o except where such barangay units adjoin each other and the parties thereto agree to submit their differences to amicable settlement by an appropriate Lupon;

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Offenses for which the law prescribes a maximum penalty of imprisonment exceeding 1 year or a fine of over P5K

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Offenses where there is no private offended party

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Disputes where urgent legal action is necessary to prevent injustice from being committed or further continued, specifically the following: a) Criminal cases where accused is under police custody or detention b) Petitions for habeas corpus by a person illegally deprived of his rightful custody over another or a person illegally deprived of or on acting in his behalf; c) Actions coupled with provisional remedies such as preliminary injunction, attachment, delivery of personal property and support during the pendency of the action; and d) Actions which may be barred by the Statute of Limitations.

(26) ESTATE OF DULAY vs ABOITIZ    

Widow claiming for death benefits of $90k pursuant to Art. 20(A) 1 of the CBA. The NLRC granted the deceased’s brother P20K pursuant to Art. 20(A) 2 of the CBA. – Widow claim it is considered only as advance payment of total claim of S90k. Aboitiz contends that NLRC has no jurisdiction. CA referred the case to the NCMB for it involves the interpretation and application of the provisions of the CBA. As such jurisdiction belongs to the Voluntary Arbitrator and not the Labor Arbiter.

RULING: CA did not commit error.  It is settled that when the parties have validly agreed on a procedure for resolving grievances and to submit a dispute to voluntary arbitration then that procedure should be strictly observed

government,

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any

subdivision

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Any class of disputes which the President may determine in the interest of justice or upon the recommendation of the SOJ

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Where the dispute arises from the Comprehensive Agrarian Reform Law (CARL)

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Labor disputes or controversies arising from ER-EE relations [Art. 226, Labor Code, which grants original and exclusive jurisdiction over conciliation and mediation of disputes, grievances or problems to certain offices of the DOLE];

12)

Actions to annul judgment upon a compromise which may be filed directly in court

(28) METROPOLITAN CEBU WATER DISTRICT vs MACTAN ROCK INDUSTRIES INC. 

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MCWD entered into a Water Supply Contract with Respondent MRII wherein it was agreed that the MRII would supply MCWD with potable water, in accordance with the WHO standard or the PH national standard, with a minimum guaranteed annual volume. MRII filed complaint against MCWD with CIAC reformation of Clause 17 of the Contract, or the Price Escalation/De-Escalation Clause MCWD contends that CIAC has no jurisdiction for contract was NOT one for construction or infrastructure

RULING: NOTE: Contract was not limited to a water supply contract. IF it was merely a water supply contract not considered as construction contract falling under CIAC’s jurisdiction. 

The jurisdiction of the CIAC as a quasi-judicial body is confined to construction disputes, that is, those arising from, or connected to, contracts involving “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.” The CIAC has jurisdiction over all such disputes whether the dispute arises before or after the completion of the contract.

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CIAC has jurisdiction over the dispute: YES When the MR in the First Petition was denied and MCWD never appealed the case, the decision of the became final and executory. Had the parties been of the mutual understanding that the Contract was not of construction, they could have instead referred the matter to arbitration citing RA 876, or The Arbitration Law

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CIAC had jurisdiction to order the reformation of the Water Supply Contract: YES The text of Section 4 of E.O. No. 1008 is broad enough to cover any dispute arising from, or connected with, construction contracts, whether these involve mere contractual money claims or execution of the works. Thus, unless specifically excluded, all incidents and matters relating to construction contracts are deemed to be within the jurisdiction of the CIAC.

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The Court held that the CIAC retained jurisdiction even if both parties had withdrawn their consent to arbitrate MCWD can validly refuse to participate in the arbitration proceeding