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. Facts: Respondent Titan-Ikeda Construction and Development Corp. (TitanIkeda for brevity) filed an action for rum of money against petitioner Uniwide Sales Realty and Resources Corp. (Uniwide Sales for brevity) before the RTC on the ground of Uniwides non-payment of certain claims billed by Titan-Ikeda after the 3 projects were completed. Thereafter, Uniwide filed a motion to dismiss/suspend proceedings and that Titan agreed to the suspension of the abovementioned case to undergo arbitration. Titan-Ikedas complaint was refiled with the Construction Industry Arbitration Commission (CIAC). The CIAC found out in the first agreement (Project 1) between Uniwide and TitanIkeda that the Warehouse Club and Administration Bldg. was finished less than 2 months of the agreed date of completion and was turned over to Uniwide. Further, the parties entered into the second agreement (Project 2) whereby Titan-Ikeda agreed to construct additional floor and to renovate Uniwides warehouse however, it was not made in writing. The project was then completed. Furthermore, the parties entered the third agreement (Project 3) for the construction of the building of Uniwide in kalookan City. Likewise it was completed and turned over to the latter. After the parties submitted their respective memoranda, the Arbitral Tribunal rendered its decision. With respect to Project 1 and Project 2, Uniwide is absolved of any liability against Titan, for VAT payment and on counterclaim for defective construction but liable for the unpaid balance. Regarding Project 3, Uniwide is liable for the unpaid balance and for the payment of VAT. Uniwide alleged that the ruling of the Court of Appeals on the issue of liquidated damages goes against the established judicial policy that a court should always strive to settle in one proceeding the entire controversy leaving no root or branch to bear the seeds of future litigations. Uniwide claims that the required evidence for an affirmative ruling on its claim is already on the record. It cites the pertinent provisions of the written contracts which contained deadlines for liquidated damages. Uniwide also noted that the evidence show that Project 1 was completed either on 15 February 1992, as found by the CIAC, or 12 March 1992, as shown by Titans own evidence, while Project 3, according to Uniwides President, was completed in June 1993. Furthermore, Uniwide asserts, the CIAC should have applied procedural rules such as Section 5, Rule 10 with more liberality because it was an administrative tribunal free from the rigid technicalities of regular courts. The CIAC and the Court of Appeals denied the motion for reconsideration of Uniwide. Hence this petition for review. Issue: Whether or not the Rules of Court is applicable with the CIAC rules.

Held: Arbitration has been defined as an arrangement for taking and abiding by the judgment of selected persons in some disputed matter, instead of carrying it to established tribunals of justice, and is intended to avoid the formalities, the delay, the expense and vexation of ordinary litigation. Voluntary arbitration, on the other hand, 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. As an arbitration body, the CIAC can only resolve issues brought before it by the parties through the TOR which functions similarly as a pre-trial brief. Thus, if Uniwides claim for liquidated damages was not raised as an issue in the TOR or in any modified or amended version of it, the CIAC cannot make a ruling on it. The Rules of Court cannot be used to contravene the spirit of the CIAC rules, whose policy and objective is to provide a fair and expeditious settlement of construction disputes through a non-judicial process which ensures harmonious and friendly relations between or among the parties. Further, a party may not be deprived of due process of law by an amendment of the complaint as provided in Section 5, Rule 10 of the Rules of Court. In this case, as noted by the Court of Appeals, Uniwide only introduced and quantified its claim for liquidated damages 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 Uniwides claim for liquidated damages.

BENGUET CORPORATION, Petitioner, - versus DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES-MINES ADJUDICATION BOARD and J.G. REALTY AND MINING CORPORATION, Respondents. Facts: Benguet Corporation (Benguet) and J.G. Realty and Mining Corporation (J.G. Realty) entered into a Royalty Agreement with Option to Purchase (RAWOP) wherein the latter was the owner of the 4 mining claims: Bonito-I, Bonito-II, Bonito-III, and Bonito-IV, respectively, with a total area of 288.8656 hectares. They entered in an agreement that mining claims were covered by MPSA Application jointly filed by J.G. Realty as claim owner and Benguet as operator. Benguet through its Executive Vice-President, Antonio N. Tachuling, informed J.G. Realty of its intention to develop the mining claims. However, J.G. Realty, through its President, Johnny L. Tan, answered to the President of Benguet informing the latter that it was terminating the RAWOP. In response, Benguets Manager for Legal Services, Reynaldo P. Mendoza, wrote J.G. Realty that there was no valid ground for the termination of the RAWOP. And that in 1994, J.G. Realty allegedly refused to collect checks for the royalties due from Benguet. It also reminded J.G. Realty that it should submit the disagreement to arbitration rather than unilaterally terminating the RAWOP. On June 2000, J.G. Realty filed a Petition for Declaration of Nullity/Cancellation of the RAWOP with the Legaspi City Panel of Arbitrators (POA), DENR Case No. 2000-01 and entitled J.G. Realty v. Benguet. The POA issued a Decision that the RAWOP and its Supplemental Agreement was declared cancelled and without effect. And that Benguet was excluded from joint MPSA Application, dwelling upon the issue of whether the arbitrators had jurisdiction over the case. Therefrom, Benguet filed a Notice of Appeal with the MAB on docketed as Mines Administrative Case No. R-M-2000-01. The MAB issued the assailed Decision. Benguet then filed a Motion for Reconsideration of the assailed Decision which was denied in the Resolution of the MAB. Hence, Benguet filed the instant petition. J.G. Realty reiterated the above rulings of the POA and MAB. It argued that RA 7942 or the Philippine Mining Act of 1995 is a special law which should prevail over the stipulations of the parties and over a general law, such as RA 876. It also argued that the POA cannot be considered as a court under the contemplation of RA 876 and that jurisprudence saying that there must be prior resort to arbitration before filing a case with the courts is inapplicable to the instant case as the POA is itself already engaged in arbitration.

Issue: Whether or not the controversy has first been submitted to arbitration before the POA took cognizance of the case. Held: The case should have first been brought to voluntary arbitration before the POA. Secs. 11.01 and 11.02 of the RAWOP pertinently provide: 11.01 Arbitration. Any disputes, differences or disagreements between BENGUET and the OWNER with reference to anything whatsoever pertaining to this Agreement that cannot be amicably settled by them shall not be cause of any action of any kind whatsoever in any court or administrative agency but shall, upon notice of one party to the other, be referred to a Board of Arbitrators consisting of three (3) members, one to be selected by BENGUET, another to be selected by the OWNER and the third to be selected by the aforementioned two arbitrators so appointed. 11.02 Court Action. No action shall be instituted in court as to any matter in dispute as hereinabove stated, except to enforce the decision of the majority of the Arbitrators. Thus, Benguet argues that the POA should have first referred the case to voluntary arbitration before taking cognizance of the case, citing Sec. 2 of RA 876 on persons and matters subject to arbitration. Moreover, the MAB ruled that the contractual provision on arbitration merely provides for an additional forum or venue and does not divest the POA of the jurisdiction to hear the case Regarding the allegation of J.G. Realty, RA 9285 or the Alternative Dispute Resolution Act of 2004, the Congress reiterated the efficacy of arbitration as an alternative mode of dispute resolution by stating in Sec. 32 thereof that domestic arbitration shall still be governed by RA 876. Clearly, a contractual stipulation that requires prior resort to voluntary arbitration before the parties can go directly to court is not illegal and is in fact promoted by the State. Thus, petitioner correctly cites several cases whereby arbitration clauses have been upheld by this Court. Moreover, the contention that RA 7942 prevails over RA 876 presupposes a conflict between the two laws. Such is not the case here. To reiterate, availment of voluntary arbitration before resort is made to the courts or quasi-judicial agencies of the government is a valid contractual stipulation that must be adhered to by the par

KOREA TECHNOLOGIES CO., LTD., Petitioner, - versus HON. ALBERTO A. LERMA, in his capacity as Presiding Judge of Branch 256 of Regional Trial Court of Muntinlupa City, and PACIFIC GENERAL STEEL MANUFACTURING CORPORATION, Respondents. Facts: Korea Technologies Co., Ltd. [KOGIES], a Korean corporation, entered into a contract with Pacific General Steel Manufacturing Corporation [Pacific General], a domestic corporation, whereby KOGIES undertook to ship and install in Pacific Generals site in Carmona, Cavite the machinery and facilities necessary for manufacturing LPG cylinders, and to initially operate the plant after it is installed. The plant, after completion of installation, could not be operated by Pacific General due to its financial difficulties affecting the supply of materials. The last payments made by Pacific General to KOGIES consisted of postdated checks which were dishonored upon presentment. According to Pacific General, it stopped payment because KOGIES had delivered a hydraulic press which was different in kind and of lower quality than that agreed upon. KOGIES also failed to deliver equipment parts already paid for by it. It threatened to cancel the contract with KOGIES and dismantle the Carmona plant. KOGIES initiated arbitration before the Korea Commercial Arbitration Board [KCAB] in Seoul, Korea and, at the same time, commenced a civil action before the Regional Trial Court where it prayed that Pacific General be restrained from dismantling the plant and equipment. Pacific General opposed the application and argued that the arbitration clause was null and void, being contrary to public policy as it ousts the local court of jurisdiction. It also alleged that KOGIES was not entitled to the payment of the amount covered by the two checks, and that the latter was liable for damages. The trial court denied the application for preliminary injunction and declared the arbitration agreement null and void. KOGIES moved to dismiss the counterclaims for damages. Meanwhile, Pacific General filed a motion for inspection of things to determine whether there was indeed alteration of the quantity and lowering of quality of the machineries and equipment and whether these were properly installed. KOGIES opposed the motion arguing that these issues were proper for determination in the arbitration proceeding. The court denied the motion to dismiss and granted the motion for inspection of things. The court also directed the Branch Sheriff to proceed with the inspection of the machineries and equipment in the plant. The Branch Sheriff later reported his finding that the enumerated machineries and equipment were not fully and properly installed. KOGIES filed a petition for certiorari before the Court of Appeals [CA]. The court dismissed the petition and held that an arbitration clause which provided for a final determination of the legal rights of the parties to the contract by arbitration was against public policy. Issue: Whether or not the arbitration clause is contrary to public policy.

Held: The arbitration clause which stipulates that the arbitration must be done in Seoul, Korea in accordance with the Commercial Arbitration Rules of the KCAB, and that the arbitral award is final and binding, is not contrary to public policy. This Court has sanctioned the validity of arbitration clauses in a catena of cases. In the 1957 case of Eastboard Navigation Ltd. v. Juan Ysmael and Co., Inc., this Court had occasion to rule that an arbitration clause to resolve differences and breaches of mutually agreed contractual terms is valid. In BF Corporation v. Court of Appeals, we held that [i]n this jurisdiction, arbitration has been held valid and constitutional. Even before the approval on June 19, 1953 of Republic Act No. 876, this Court has countenanced the settlement of disputes through arbitration. Republic Act No. 876 was adopted to supplement the New Civil Codes provisions on arbitration. And in LM Power Engineering Corporation v. Capitol Industrial Construction Groups, Inc., we declared that: Being an inexpensive, speedy and amicable method of settling disputes, arbitrationalong with mediation, conciliation and negotiationis encouraged by the Supreme Court. Aside from unclogging judicial dockets, arbitration also hastens the resolution of disputes, especially of the commercial kind. It is thus regarded as the wave of the future in international civil and commercial disputes. Brushing aside a contractual agreement calling for arbitration between the parties would be a step backward. Consistent with the above-mentioned policy of encouraging alternative dispute resolution methods, courts should liberally construe arbitration clauses. Provided such clause is susceptible of an interpretation that covers the asserted dispute, an order to arbitrate should be granted. Any doubt should be resolved in favor of arbitration. Having said that the instant arbitration clause is not against public policy, the question on what governs an arbitration clause specifying that in case of any dispute arising from the contract, an arbitral panel will be constituted in a foreign country and the arbitration rules of the foreign country would govern and its award shall be final and binding.

ORMOC SUGARCANE PLANTERS ASSOCIATION, INC. (OSPA), OCCIDENTAL LEYTE FARMERS MULTI-PURPOSE COOPERATIVE, INC. (OLFAMCA), UNIFARM MULTI-PURPOSE COOPERATIVE, INC. (UNIFARM) and ORMOC NORTH DISTRICT IRRIGATION MULTI-PURPOSE COOPERATIVE, INC. (ONDIMCO), Petitioners, -versusTHE COURT OF APPEALS (Special Former Sixth Division), HIDECO SUGAR MILLING CO., INC., and ORMOC SUGAR MILLING CO., INC., Respondents. Facts: Petitioners Ormoc Sugarcane Planters Association, Inc. (OSPA), Occidental Leyte Farmers Multi-Purpose Cooperative, Inc. (OLFAMCA), Unifarm Multi-Purpose Cooperative, Inc. (UNIFARM) And Ormoc North District Irrigation Multi-Purpose Cooperative, Inc. (ONDIMCO) are associations organized by and whose members are individual sugar planters (Planters) while respondents Hideco Sugar Milling Co., Inc. (Hideco) and Ormoc Sugar Milling Co, Inc. (OSCO) are sugar centrals engaged in grinding and milling sugarcane delivered to them by numerous individual sugar planters, who may or may not be members of an association such as petitioners. According to petitioners, the relationship between the respondents and individual planters is governed by milling contract. In their contract specifically Article XX provides that all differences and controversies which may arise between the parties concerning the agreement shall be submitted for discussion to a Board of Arbitration, consisting of five (5) memberstwo (2) of which shall be appointed by the centrals, two (2) by the Planter and the fifth to be appointed by the four appointed by the parties. Petitioners filed 2 petitions with the RTC for Arbitration under R.A. 876 for Recovery of Equal Additional Benefits, Attorneys Fees and Damages, against respondents HIDECO and OSCO without impleading any of their individual members. They argued that respondents unduly accorded the independent Planters more benefits and thus prayed that an order be issued directing the parties to enter upon with arbitration in accordance with the terms of the milling contracts. Respondents argued that there was no milling contract entered into. It was only the individual Planters, and not petitioners, who had legal standing to invoke the arbitration clause in the milling contracts. Petitioners had no legal standing whatsoever to demand or sue for arbitration. The RTC held that there was an existing milling contract and that the petitioners have the right to sue in behalf of the planters. However, upon appeal of the respondents, the CA reversed the decision of the trial court. Hence, this petition. Issue: Whether or not petitioners sugar planters association demand arbitration from respondents in their own name without impleading the individual Planters. Held: There are two modes of arbitration: (a) an agreement to submit to arbitration some future dispute, usually stipulated upon in a civil contract

between the parties, and known as an agreement to submit to arbitration, and (b) an agreement submitting an existing matter of difference to arbitrators, termed the submission agreement. Article XX of the milling contract is an agreement to submit to arbitration because it was made in anticipation of a dispute that might arise between the parties after the contracts execution. In an agreement for arbitration, the ordinary elements of a valid contract must appear, including an agreement to arbitrate some specific thing, and an agreement to abide by the award, either in express language or by implication. In the case at bar, there were more than two thousand (2,000) Planters in the district at the time the case was commenced at the RTC in 1999. Only eighty (80) Planters who were all members of OSPA were shown to have such an agreement to arbitrate, included as a stipulation in their individual milling contracts. Petitioners do not have any agreement to arbitrate with respondents. The other petitioners failed to prove that any of their members had milling contracts with respondents, much less, that respondents had an agreement to arbitrate with the petitioner associations themselves. Assuming arguendo that all the petitioners were able to present milling contracts in favor of their members, it is nonetheless undeniable that under the arbitration clause in these contracts it is the parties thereto who have the right to submit a controversy or dispute to arbitration. Moreover, even assuming that petitioners are indeed representatives of the member Planters who have milling contracts with the respondents and assuming further that petitioners signed the milling contracts as representatives of their members, petitioners could not initiate arbitration proceedings in their own name as they had done in the present case. As mere agents, they should have brought the suit in the name of the principals that they purportedly represent. Even if Section 4 of R.A. No. 876 allows the agreement to arbitrate to be signed by a representative, the principal is still the one who has the right to demand arbitration.

CARGILL PHILIPPINES, INC., Petitioner, vs. SAN FERNANDO REGALA TRADING, INC., Respondent. Facts: Respondent was engaged in buying and selling of molasses and petitioner was one of its various sources from whom it purchased molasses. The parties entered into a contract wherein they agreed upon that respondent would purchase from petitioner 12,000 metric tons of Thailand origin cane blackstrap molasses at the price of US$192 per metric ton; that the delivery of the molasses was to be made in January/February 1997 and payment was to be made by means of an Irrevocable Letter of Credit payable at sight, to be opened by September 15, 1996; that sometime prior to September 15, 1996, the parties agreed that instead of January/February 1997, the delivery would be made in April/May 1997 and that payment would be by an Irrevocable Letter of Credit payable at sight, to be opened upon petitioner's advice. In their contract, they agreed that any dispute which the Buyer and Seller may not be able to settle by mutual agreement shall be settled by arbitration in the City of New York before the American Arbitration Association. The Arbitration Award shall be final and binding on both parties. And that respondent must first comply with the arbitration clause before resorting to court, thus, the RTC must either dismiss the case or suspend the proceedings and direct the parties to proceed with arbitration. Petitioner, as seller, failed to comply with its obligations under the contract, despite demands from respondent, thus, respondent San Fernando Regala Trading, Inc. filed with the Regional Trial Court (RTC) a Complaint for Rescission of Contract with Damages against petitioner Cargill Philippines, Inc. Petitioner filed a Motion to Dismiss/Suspend Proceedings and to Refer Controversy to Voluntary Arbitration, wherein he alleged that the contract between the parties was never consummated because respondent never returned the proposed agreement bearing its written acceptance or conformity nor did respondent open the Irrevocable Letter of Credit at sight. Respondent argued that the RTC has jurisdiction over the action for rescission of contract and could not be changed by the subject arbitration clause. Further, respondent argued that the arbitration clause relied upon by petitioner is invalid and unenforceable, considering that the requirements imposed by the provisions of the Arbitration Law had not been complied with. The RTC denied the motion of respondent and found that the arbitration clause in question contravened with the procedures, i.e., the arbitration clause contemplated an arbitration proceeding in New York before a non-resident arbitrator (American Arbitration Association); that the arbitral award shall be final and binding on both parties. Upon appeal, the CA held that the case cannot be brought under the Arbitration Law for the purpose of suspending the proceedings before the RTC, since in its Motion to Dismiss/Suspend proceedings, petitioner alleged, as one of the grounds thereof, that the subject contract between the parties did not exist or it was invalid; that the said contract bearing the arbitration clause was never consummated by the parties,

thus, it was proper that such issue be first resolved by the court through an appropriate trial; that the issue involved a question of fact that the RTC should first resolve. Arbitration is not proper when one of the parties repudiated the existence or validity of the contract. Issue: Whether the CA erred in finding that this case cannot be brought under the arbitration law for the purpose of suspending the proceedings in the RTC. Held: A contract is required for arbitration to take place and to be binding. Submission to arbitration is a contract and a clause in a contract providing that all matters in dispute between the parties shall be referred to arbitration is a contract. The provision to submit to arbitration any dispute arising therefrom and the relationship of the parties is part of the contract and is itself a contract. Arbitration before the Panel of Arbitrators is proper only when there is a disagreement between the parties as to some provisions of the contract between them, which needs the interpretation and the application of that particular knowledge and expertise possessed by members of that Panel. It is not proper when one of the parties repudiates the existence or validity of such contract or agreement on the ground of fraud or oppression as in this case. The validity of the contract cannot be subject of arbitration proceedings. Allegations of fraud and duress in the execution of a contract are matters within the jurisdiction of the ordinary courts of law. These questions are legal in nature and require the application and interpretation of laws and jurisprudence which is necessarily a judicial function.

G.R. No. 161957 January 22, 2007 JORGE GONZALES and PANEL OF ARBITRATORS, Petitioners, vs. CLIMAX MINING LTD., CLIMAX-ARIMCO MINING CORP., and AUSTRALASIAN PHILIPPINES MINING INC.,Respondents. x--------------------------------------------------------------------------------- x G.R. No. 167994 January 22, 2007 JORGE GONZALES, Petitioner, vs. HON. OSCAR B. PIMENTEL, in his capacity as PRESIDING JUDGE of BR. 148 of the REGIONAL TRIAL COURT of MAKATI CITY, and CLIMAXARIMCO MINING CORPORATION, Respondents. Facts: Gonzales as a claimowner of mineral deposit, entered into a jointventure via Production-Sharing Letter-Agreement(First Contract) with Geophil Inc. (Geo) and Inmex Ltd. (Inmex) giving Geo and Inmex 36 months (which was thereafter extended), to develop, operate, mine and exploit the mining claims of Gonzales. Thereafter, Gonzales, Armico, Geo, Inmex and Aumex signed an Addendum Contract (Second Contract) allowing Armico to apply for FTAA. Climax, Climax-Armico and Australasian then executed a Financial Accomodation Contract (Third Contract) and Assignment Accession Agreement (Fourth Contract) between Climax-Armico and Australasian and Memorandum of Agreement (Fifth Contract) between Climax-Armico and Australasian transferring the mining claim to Australasian. Gonzales sought the nullity of the the Second Contract, FTAA, Third Contract, Fourth Contract, and Fifth Contract with preliminary injunction with the Mines and Geosciences BureauDENR (MGB-DENR). Two cases, G.R. Nos. 161957 and 167994, were consolidated since the cases are rooted in the same Addendum Contract.In the first case which is G.R. No. 167994, a petition to compel arbitration filed by respondent Climax-Arimco before the RTC on 31 March 2000 while the complaint for the nullification of the Addendum Contract was pending before the DENR Panel of Arbitrators. Climax-Arimco had sent Gonzales a Demand for Arbitration pursuant to Clause 19.1 of the Addendum Contract and also in accordance with Sec. 5 of R.A. No. 876. The petition for arbitration was subsequently filed and ClimaxArimco sought an order to compel the parties to arbitrate pursuant to the said arbitration clause. Respondent Climax-Arimco filed a motion to set the application to compel arbitration for hearing. On the other hand, Gonzales filed an Answer with Counterclaim, questioning the validity of the Addendum Contract containing the arbitration clause alleging that the it is void in view of Climax-Arimcos acts of fraud, oppression and violation of the Constitution. Thus, the arbitration clause, Clause 19.1, contained in the Addendum Contract is also null and void ab initio and legally Issue: issue raised in the Petition for Certiorari is whether it was proper for the RTC, in the proceeding to compel arbitration under R.A. No. 876, to order the

parties to arbitrate even though the defendant therein has raised the twin issues of validity and nullity of the Addendum Contract and, consequently, of the arbitration clause therein as well. The resolution of both Climax-Arimcos Motion for Partial Reconsideration and/or Clarification in G.R. No. 161957 and Gonzaless Petition for Certiorari in G.R. No. 167994 essentially turns on whether the question of validity of the Addendum Contract bears upon the applicability or enforceability of the arbitration clause contained therein. The two pending matters shall thus be jointly resolved. Held: The doctrine of separability, or severability as other writers call it, enunciates that an arbitration agreement is independent of the main contract. The arbitration agreement is to be treated as a separate agreement and the arbitration agreement does not automatically terminate when the contract of which it is part comes to an end.46 The separability of the arbitration agreement is especially significant to the determination of whether the invalidity of the main contract also nullifies the arbitration clause. Indeed, the doctrine denotes that the invalidity of the main contract, also referred to as the "container" contract, does not affect the validity of the arbitration agreement. Irrespective of the fact that the main contract is invalid, the arbitration clause/agreement still remains valid and enforceable. There is reason, therefore, to rule against Gonzales when he alleges that Judge Pimentel acted with grave abuse of discretion in ordering the parties to proceed with arbitration. Gonzaless argument that the Addendum Contract is null and void and, therefore the arbitration clause therein is void as well, is not tenable. First, the proceeding in a petition for arbitration under R.A. No. 876 is limited only to the resolution of the question of whether the arbitration agreement exists. Second, the separability of the arbitration clause from the Addendum Contract means that validity or invalidity of the Addendum Contract will not affect the enforceability of the agreement to arbitrate. Thus, Gonzaless petition for certiorari should be dismissed. This brings us back to G.R. No. 161957. The adjudication of the petition in G.R. No. 167994 effectively modifies part of the Decision dated 28 February 2005 in G.R. No. 161957. Hence, we now hold that the validity of the contract containing the agreement to submit to arbitration does not affect the applicability of the arbitration clause itself. A contrary ruling would suggest that a partys mere repudiation of the main contract is sufficient to avoid arbitration. That is exactly the situation that the separability doctrine, as well as jurisprudence applying it, seeks to avoid. We add that when it was declared in G.R. No. 161957 that the case should not be brought for arbitration, it should be clarified that the case referred to is the case actually filed by Gonzales before the DENR Panel of Arbitrators, which was for the nullification

of the main contract on the ground of fraud, as it had already been determined that the case should have been brought before the regular courts involving as it did judicial issues.




Promulgated: February 11, 2008

Facts: petitioner ABS-CBN Broadcasting Corporation entered into a licensing agreement with respondent World Interactive Network Systems (WINS) Japan Co., Ltd., a foreign corporation licensed under the laws of Japan. 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. By virtue thereof, petitioner undertook to transmit the TFC programming signals to respondent which the latter received through its decoders and distributed to its subscribers. A dispute arose between the parties when petitioner accused respondent of inserting nine episodes of WINS WEEKLY, a weekly 35-minute community news program for Filipinos in Japan, into the TFC programming from March to May 2002.[3] Petitioner claimed that these were unauthorized insertions constituting a material breach of their agreement. Consequently, on May 9, 2002,[4] petitioner notified respondent of its intention to terminate the agreement effective June 10, 2002. respondent filed an arbitration suit pursuant to the arbitration clause of its agreement with petitioner. It 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. The arbitrator found in favor of respondent.[7] He held that petitioner gave its approval to respondent for the airing of WINS WEEKLY as shown by a series of written exchanges between the parties. He also ruled that, had there really been a material breach of the agreement, petitioner should have terminated the same instead of sending a mere notice to terminate said agreement. The arbitrator found that petitioner threatened to terminate the agreement due to its desire to compel respondent to re-negotiate the terms thereof for higher fees. He further stated that even if respondent committed a breach of the agreement, the same was seasonably cured. He then allowed respondent to recover temperate damages, attorney's fees and one-half of the amount it paid as arbitrator's fee. 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. It was docketed as CA-G.R. SP No. 81940. It alleged serious errors of fact and law and/or grave abuse of discretion amounting to lack or excess of jurisdiction on the part of the arbitrator. Respondent, on the other hand, filed a petition for confirmation of arbitral award before the Regional Trial Court (RTC) of Quezon City, Branch 93, docketed as Civil Case No. Q-04-51822. CA

rendered the assailed decision dismissing ABS-CBNs petition for lack of jurisdiction. It stated that as the TOR itself provided that the arbitrator's decision shall be final and unappealable and that no motion for reconsideration shall be filed, then the petition for review must fail. It ruled that it is the RTC which has jurisdiction over questions relating to arbitration. It held that the only instance it can exercise jurisdiction over an arbitral award is an appeal from the trial court's decision confirming, vacating or modifying the arbitral award. It further stated that a petition for certiorari under Rule 65 of the Rules of Court is proper in arbitration cases only if the courts refuse or neglect to inquire into the facts of an arbitrator's award. Issue: before us is whether or not an aggrieved party in a voluntary arbitration dispute may avail of, directly in the CA, a petition for review under Rule 43 or a petition for certiorari under Rule 65 of the Rules of Court, instead of filing a petition to vacate the award in the RTC when the grounds invoked to overturn the arbitrators decision are other than those for a petition to vacate an arbitral award enumerated under RA 876. Held: RA 876 itself mandates that it is the Court of First Instance, now the RTC, which has jurisdiction over questions relating to arbitration,[9] such as a petition to vacate an arbitral award.

Section 24 of RA 876 provides for the specific grounds for a petition to vacate an award made by an arbitrator: Sec. 24. Grounds for vacating award. - In any one of the following cases, the court must make an order vacating the award upon the petition of any party to the controversy when such party proves affirmatively that in the arbitration proceedings: (a) The award was procured by corruption, fraud, or other undue means; or (b) That there was evident partiality or corruption in the arbitrators or any of them; or (c) That the arbitrators were guilty of misconduct in refusing to postpone the hearing upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; that one or more of the arbitrators was disqualified to act as such under section nine hereof, and willfully refrained from disclosing such disqualifications or of any other misbehavior by which the rights of any party have been materially prejudiced; or

(d) That the arbitrators exceeded their powers, or so imperfectly executed them, that a mutual, final and definite award upon the subject matter submitted to them was not made. Nevertheless, although petitioners position on the judicial remedies available to it was correct, we sustain the dismissal of its petition by the CA. The remedy petitioner availed of, entitled alternative petition for review under Rule 43 or petition for certiorari under Rule 65, was wrong. Proper issues that may be raised in a petition for review under Rule 43 pertain to errors of fact, law or mixed questions of fact and law.[21] While a petition for certiorari under Rule 65 should only limit itself to errors of jurisdiction, that is, grave abuse of discretion amounting to a lack or excess of jurisdiction.[22] Moreover, it cannot be availed of where appeal is the proper remedy or as a substitute for a lapsed appeal. issues calling for the CA's resolution were less the alleged grave abuse of discretion exercised by the arbitrator and more about the arbitrators appreciation of the issues and evidence presented by the parties. Therefore, the issues clearly fall under the classification of errors of fact and law questions which may be passed upon by the CA via a petition for review under Rule 43. Petitioner cleverly crafted its assignment of errors in such a way as to straddle both judicial remedies, that is, by alleging serious errors of fact and law (in which case a petition for review under Rule 43 would be proper) and grave abuse of discretion (because of which a petition for certiorari under Rule 65 would be permissible).

G.R. No. 146717

November 22, 2004