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RCBC vs BDO (GR# 196171) and BDO vs CA (GR199238)

Facts:

This involve 2 consolidated petitions filed by the parties in an arbitration


case.
In 2000, RCBC entered into a Share Purchase Agreement (SPA) with
Equitable-PCI Bank (EPCIB) and Bankard for the sale of RCBCs shares.
Dispute arose when RCBC informed EPCIB and other selling shareholders of
an overpayment of said shares.
No settlement was reached. RCBC commenced arbitration,
Inits request for arbitration, RCBC sought the recision of share purchase
agreement (SPA) as well as payment of actual damages.
The Arbitration Tribunal was constituted. Ian Barker was appointed by the
ICC-ICA as chairman.
ICC informed the parties that they required to pay the advance costs.
BDO fied an application for separate advances on costs refusing to share
equally considering that RCBCs claim is more than 40 times higher.
The application was denied.
Pursuant to A.30(4) of the ICC Rules, RCBC requested that respondents be
declared in default.
Thereafter Chairman Baker stated in his letter, in part:
2.The tribunal has no power under the iCC rules to order the respondents to
pay the advance on costs sought by the ICC or to give the claimant any relief
against respondents refusal to pay.

4. It may be possible for a claimant in the course of the arbitral hearing to


make submissions based on the failure of the respondents to pay their share
of the costs advance. What relief, if any, would have to be then determined by
the tribunal after having heard submissions from the respondents.

On sept 2007, the arbitral tribunal rendered the first partial award In favor of
RCBC
Respondents filed a motion to vacate the same
ICC the invited RCBC to substitute respondents in paying share of BDO in the
adv. Costs. RCBC accepted.
RCBC reiterated its plea that respondents be declared as in default.
Baker states in his Dec 18 2007 letter:
The Tribunal interprets the claimants lates letter as an application by the
claimant to the tribunal for the issue of a partial award against the
respondents I respect of their failure to pay their share of the ICC requests for
advance on costs.
RCBC confirmed the tribunals interpretation that it was applying for a partial
award against respondents.
Meanwhile, RTC confirmed the first parial award.
Respondents MR was denied and thus filed a petition for Review ( GR#
182248) which affirmed RTCs ruling.
On Jan 18 2008, the tribunal set a timetable for the filing of submission by the
parties on whther it should issue a second partial award.
In compliance, RCBC filed an application for reimburesemnt of advance costs
paid.
Respondents filed their opposition saying that the tribunal has lost its
objectivity.
Baker advised the parties in his March 13 2008 letter:
The tribunal notes that neithr party has referred to an article by Mathew
Secomb on this very subject which appears in ICC Bulletin Vol.14..
The parties complied by submitting their respective comments.
RCBC refuted respondents allegation using said article.
On may 2008, the tribunal rendered the 2nd partial award. EPCIB filed a
motion to vacate such award but was denied.
Later, EPCIB filed for a petition for review ( CA-GR SP 113525)
On june 2010, the tribunal issued a final award in favor of RCBC and was
confirmed.

Issue: Whether or not there is a legal ground to vacate the second partial award

Ruling: Yes. Rule 11.4 of the special ADR rules sets forth that evident partiality or
corruption in the arbitral tribunal or any of its members is a ground for vacating an
arbitral award. The court adopts the reasonable impression of partiality standard,
which requires a showing that a reasonable person would have to conclude that an
arbitrator was partial to the other party to the arbitration. Such interest or bias,
moreover, must be direct, definite, and capable of demonstration rather than
remote, uncertain, or speculative. When a claim of arbitrators evident partiality is
made, the court msut ascertain from such record as available whether the
arbitrators conduct was so biased and prejudiced as to destroy fundamental
fairness. In the case at bar, Chairman Baker was predisposed to grant relief to RCBC
was shown by his act of interpreting RCBCs letter, which merely reiterated its plea
to declare the respondents in default and consider all counterclaims withdraw- as
what the ICC rules provide- as an application to the tribunal to issue a partial award.
Also by furnishing the parties with a copy of Secombs article, Baker armed RCBC
with supporting legal arguments under the contractual approach discussed by
secomb.