Response-to-arbitration.pdf

IN MATTER OF AN ARBITRATION UNDER THE ARBITRATION RULES OF THE PHILIPPINE DISPUTE RESOLUTION CENTER INC. WESTERN VISAYAS ———————————————————————————————————

ABC HEALTH INSTITUTION claimant -andGE PHILIPPINES, INC. respondent

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RESPONSE TO THE DEMAND FOR ARBITRATION ——————————————————————————————————— January 19, 2018

CONTENTS STATEMENT OF DEFENSE

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PRELIMINARY STATEMENT

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I. STATEMENT OF FACTS

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

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B. The Prodigy PRO Bone Densitometry System

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

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D. ABC’s allegations against GE Philippines

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II. POINTS AT ISSUE

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A. ABC has no legal standing

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B. GE Philippines exercised due diligence

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

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III. RELIEFS SOUGHT

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STATEMENT OF DEFENSE RESPONDENT GE PHILIPPINES, INC. In accordance with Article 5 of the Arbitration Rules of The Philippine Dispute Resolution Center, Inc., the Respondent GE Philippines Inc. respectfully submits this Statement of Defense. PRELIMINARY STATEMENT 1. This arbitration involves the claim of ABC Health Institution (“ABC”) against General Electric Philippines, Inc. (“GE Philippines”) under the Philippine Dispute Resolution Center, Inc., Arbitration Rules, one brought in a Statement of Claims (“SOC”) dated 14 August 2017 and received by the Respondent on 13 January 2018. The claim arise from the contract involving the delivery and installation of the Prodigy PRO Bone Densitometry System, a medical equipment which provides for comprehensive body composition analysis, including bone mineral density (BMD) and lean and fat tissue mass. ABC seeks damages allegedly resulting from the delivery and reckless actions of the employees of GE in the installation of the product. 2. ABC’s claim amount to nothing more than an attempt to circumvent the law and conceal its failure to perform its contractual obligations, the very reason for the defect in the delivery and installation. 3. In Section I, GE Philippines sets forth the relevant facts of the case. In Section II, GE Philippines discusses the points at issue in this case, and why, ABC’s claim is wholly without merit. In Section III, GE Philippines requests that this Tribunal dismiss ABC’s claim with prejudice and award all costs, both for this arbitration and for attorney’s fees to GE Philippines.

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I. STATEMENT OF FACTS A. Details of the Contract of Sale between the Involved Parties 4. Complainant ABC Health Institution, is a health care institution providing patient treatment with specialized medical and nursing staff and medical equipment, with address at Likod Balay Street, Jaro Iloilo City, where it may be served with notices, orders and other processes; 5. Respondent GE Philippines, is a corporation organized and existing under Philippine laws, doing business as a provider of transformational medical technologies and services for patient care, with address at 8th Floor.Net Cube, 3rd Avenue corner 30th Street, E-Square Crescent Park West, Bonifacio Global City 1634, Taguig City, Philippines where it may be served with notices, orders and other processes; 6. On 10 August 2017, ABC and GE Philippines executed a Contract (Annex A), whereby the latter will sell and supply the former with Prodigy PRO Bone Densitometry System, a medical equipment which provides for comprehensive body composition analysis, including bone mineral density (BMD) and lean and fat tissue mass. 7. The contract price is Two Million Five Hundred Thousand Pesos (P2,500,000.00). Such payment includes Insurance and Freight from site to Manila Port. It also includes local brokerage charges, bank and customs charges, customs taxes and import duties and transportation costs from port to site. Site and room preparation costs, if any, and all other associated costs and expenses shall be borne by ABC. 8. The payment of terms agreed upon by the parties is as follows: Downpayment - Twenty percent (20%) of the price shall be paid by dated cheque upon signing of the contract and/or release of purchase order; Balance - Eighty percent (80%) of the price shall be paid by dated cheque ninety (90) days from the delivery of equipment; 9. The agreed terms of delivery of the parties is as follows: The delivery shall be carried out within ninety (90) days after: !4

A.) Receipt of confirmed order, as evidenced by acceptance of ABC of the proposal and/or issuance of ABC of the purchase order in acceptance hereof; B.) Receipt of the downpayment and/or domestic letter of credit; C.) Delivery shall be upon completion of site preparation in the manner and specifications prescribed by the seller, GE Philippines; B. The Prodigy PRO Bone Densitometry System 10. GE Philippines provides transformational medical technologies and services for accurate diagnosis, preventive treatment and better patient care. It specializes in supplying medical imaging and information technologies, medical diagnostics, patient monitoring systems, drug discovery, biopharmaceutical manufacturing technologies, performance improvement and performance solutions services to healthcare institutions all over the country. 11. The Prodigy PRO Bone Densitometry System is a medical equipment that uses dualenergy X-ray absorptiometry (DXA) to determine precise data on soft tissue and bone composition, including bone-mineral density (BMD), lean- and fat-tissue mass, and percentage of fat. It is an advance technology trusted by thousands of medical practitioners across the world. 12. GE has installed 11,000 units of Prodigy PRO Bone Densitometry System units in 93 countries and has hundreds of peer-review articles in leading medical journals. C. Specifications for the Installation of the Prodigy PRO Bone Densitometry System 13. GE Philippines requires that the environmental specifications are met by the ABC prior to the installation of the Prodigy PRO Bone Densitometry System. 14. The equipment requires the following specifications: Minimum room dimensions: 2.4m x 3.0m for full-size bed models 2.4m x 2.3m for compact bed models Environmental specifications: Power:

100-120 VAC 50/60Hz 20A dedicated circuit (compact bed) 220-240 VAC 50/60Hz 10A dedicated circuit (full-size bed)

Humidity:

20%-80% non-condensing

Room temperature:

18°C-27°C (65°F-81°F)

Console heat output:

Approximately 400BTU/hr with 17” monitor !5

Ventilation:

All cooling vents must remain unblocked

Dust, fumes, debris:

Install system in clean, ventilated area

D. ABC’s allegations against GE Philippines 15. ABC alleges that through the reckless actions of the respondent, the equipment was damaged during the installation thus causing damages amounting to P5,000,000.00 to the complainant.1 16. ABC further claims for damages in the amount of P7,000,000.00 plus 10% interest and costs for shipping and installation of the product. II. POINTS AT ISSUE 17. Below, GE Philippines sets forth its defenses on the merits of the claims of claimant ABC regarding the delivery and installation of the Prodigy PRO Bone Densitometry System. A. ABC has no legal standing 18. It is an oft repeated doctrine that he who pleads for equity must come to court with clean hands. ABC is precluded from seeking reliefs for its failure to comply with its contractual obligations in good faith. 19. Article 1159 of the Civil Code provides that “Obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith”. Further, Article 1306 of the same Code says, “The contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided, they are not contrary to law, morals, good customs, public order, or public policy”. 20. Paragraph E of the Contract between ABC and GE Philippines provides that the latter shall provide on-site applications and operators training for Radiological technologists duly employed and endorsed by the Buyer. This training will entail a visit by GE Application specialists who will update the Doctors and Radiology technicians on clinical developments and backed up by practical sessions on the equipment. This training will take two (2) days. 21. ABC failed to comply in good faith with its contractual obligations by failing to afford GE Philippines the opportunity to provide the mandatory applications and operators training to

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Paragraph 10, Statement of Claims

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ABC’s radiological technologists as to the proper use and maintenance of the Prodigy PRO Bone Densitometry System. 22. ABC filed their notice for arbitration on 14 August 2017, barely four (4) days from the execution of the contract dated 10 August 2017. In good faith, GE Philippines delivered and installed the equipment within the four-day period, upon assurance from ABC that they will strictly comply with the prescribed specifications required. 23. Contrary to their obligations, ABC used the equipment despite lack of technical training from GE Philippines. The respondent was deprived of the opportunity to perform its obligation to transfer to the buyer the technical and scientific knowledge in the use, management and maintenance of the equipment. The utter disregard of ABC of its contractual obligation to ensure that the equipment operators are technically-trained to use the machine precludes it of seeking any reliefs from this Tribunal or any court of justice. B. GE Philippines exercised due diligence 24. GE Philippines exercised due diligence in the delivery and installation of the Prodigy PRO Bone Densitometry System. 25. Considering the cost, sensitivity and importance the Prodigy PRO Bone Densitometry System, and the undisputed reputation of GE Philippines in the delivery of medical imaging and information technologies to health institutions, the equipment was subjected to a comprehensive quality control inspection at different manufacturing stages to ensure reliability and compliance with established product quality standards. 26. The Prodigy PRO Bone Densitometry System was defect-free when it was delivered and installed at the site as evidenced by the Quality Control Inspection Report. C. The damages claimed by ABC is inconsistent and has no basis 27. ABC claimed for damages amounting P5,000,000.002 and prayed for an award amounting to P7,000,000.00.3 The amounts claimed and prayed for are inconsistent and the Statement of Claims did not specify the legal basis supporting such claims.

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Paragraph 10, Statement of Claims

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Statement of Reliefs Sought

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28. ABC failed to methodically and logically provide the basis for its claims and assertions. It should be noted that the contract price is only P2,500,000.00. ABC is claiming for an amount more than the contract price without any acceptable reason nor legal basis. 29. ABC further failed to indicate in a plain, concise and direct statements the ultimate facts which it relies on as basis for its cause of action against GE Philippines. III. RELIEFS SOUGHT 30. For the foregoing reasons, GE Philippines respectfully requests that this Tribunal render an award: A. In favor of GE Philippines and against ABC, dismissing all claims in their entirety and with prejudice; and B. Ordering that ABC bear the costs of this arbitration, including GE Philippines’ costs for legal representation and assistance.

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Date: January 19, 2018

Respectfully Submitted,

ATTY. RYAN R. MANTAC General Manager - Region 6 GE Philippines ATTY. IVY C. CASIANO Suite 201-202, 2nd Flr., Centennial Building, Fajardo St., Jaro, Iloilo City +639178949330 [email protected] ATTY. STEPHANIE ROSE C. JAVELLANA FLD 305, 4th Flr. Rada Hall, 5000 Cor. Quezon- Gen. Luna Sts., Iloilo City +639778833125 [email protected]

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