Professional Documents
Culture Documents
169332
February 11, 2008
ABS-CBN vs. WORLD INTERACTIVE NETWORK SYSTEMS (WINS) JAPAN CO., LTD.
FACTS: Petitioner ABS-CBN entered into an agreement with respondent World Interactive
Network Systems (WINS). Under the agreement, respondent was granted the exclusive license to
distribute and sublicense the distribution of the television service known as "The Filipino Channel"
(TFC) in Japan.
A dispute arose when petitioner accused respondent of inserting nine episodes of WINS
WEEKLY, into the TFC programming from March to May 2002, claiming that such insertions were
unauthorized thus constituting a material breach of their agreement. As a result, petitioner notified
respondent of its intention to terminate their licensing agreement.
Thereafter, respondent filed an arbitration suit pursuant to the arbitration clause of its agreement
with petitioner and contended that the airing of WINS WEEKLY was made with petitioner's prior
approval. It also alleged that petitioner only threatened to terminate their agreement because it
wanted to renegotiate the terms thereof to allow it to demand higher fees. Respondent also prayed
for damages for petitioner's alleged grant of an exclusive distribution license to another entity,
NHK (Japan Broadcasting Corporation).
The parties appointed a sole arbitrator in the person of Professor Alfredo F. Tadiar and the latter
reached a decision in favor of respondent.
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.
The CA rendered the assailed decision dismissing ABS-CBNs petition for lack of jurisdiction. 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.
ISSUE: 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.
RULING: The CAs decision is sound. A petition for review under Rule 43 or a petition for certiorari
under Rule 65 directly in the CA is NOT the proper remedy.
RA 876 itself mandates that it is the Court of First Instance, now 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 that errors of fact and/or law and grave abuse of discretion,
which is the proper grounds for a petition for review under Rule 43 and a petition for certiorari
under Rule 65, This means that such ground is not acceptable for maintaining a petition to vacate
an arbitral award in the RTC. Thus, it follows that a party may not avail of the remedies under Rule
43 and Rule 65 on the grounds of errors of fact and/or law or grave abuse of discretion to overturn
an arbitral award.
The Court Will Not Overturn an Arbitral Award Unless It Was Made in Manifest Disregard of
the law. 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 uphold 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:
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 arbiters findings must clearly and unequivocally violate an established legal precedent.
Anything less would not suffice.