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V.

International Commercial Arbitration On May 14, 1998, PGSMC replied that the two checks it issued KOGIES were fully
funded but the payments were stopped for reasons previously made known to KOGIES.[7]
1. International Chamber of Commerce (ICC) Rules of Arbitration
2. United Nations Commission on International Trade Law (UNCITRAL) Arbitration Rules, On June 1, 1998, PGSMC informed KOGIES that PGSMC was canceling their Contract
December 15, 1976 dated March 5, 1997 on the ground that KOGIES had altered the quantity and lowered the
quality of the machineries and equipment it delivered to PGSMC, and that PGSMC would
dismantle and transfer the machineries, equipment, and facilities installed in the Carmona
Korea Technologies Co., Ltd. v. Lerma, G.R. No. 143581, January 7, 2008 plant. Five days later, PGSMC filed before the Office of the Public Prosecutor an Affidavit-
Complaint for Estafa docketed as I.S. No. 98-03813 against Mr. Dae Hyun Kang, President of
In our jurisdiction, the policy is to favor alternative methods of resolving disputes, particularly KOGIES.
in civil and commercial disputes. Arbitration along with mediation, conciliation, and
negotiation, being inexpensive, speedy and less hostile methods have long been favored by On June 15, 1998, KOGIES wrote PGSMC informing the latter that PGSMC could not
this Court.The petition before us puts at issue an arbitration clause in a contract mutually unilaterally rescind their contract nor dismantle and transfer the machineries and equipment
agreed upon by the parties stipulating that they would submit themselves to arbitration in a on mere imagined violations by KOGIES. It also insisted that their disputes should be settled
foreign country. Regrettably, instead of hastening the resolution of their dispute, the parties by arbitration as agreed upon in Article 15, the arbitration clause of their contract.
wittingly or unwittingly prolonged the controversy.
On June 23, 1998, PGSMC again wrote KOGIES reiterating the contents of its June 1,
Petitioner Korea Technologies Co., Ltd. (KOGIES) is a Korean corporation which is 1998 letter threatening that the machineries, equipment, and facilities installed in the plant
engaged in the supply and installation of Liquefied Petroleum Gas (LPG) Cylinder would be dismantled and transferred on July 4, 1998. Thus, on July 1, 1998, KOGIES instituted
manufacturing plants, while private respondent Pacific General Steel Manufacturing Corp. an Application for Arbitration before the Korean Commercial Arbitration Board (KCAB)
(PGSMC) is a domestic corporation. in Seoul, Korea pursuant to Art. 15 of the Contract as amended.

On March 5, 1997, PGSMC and KOGIES executed a Contract [1] whereby KOGIES On July 3, 1998, KOGIES filed a Complaint for Specific Performance, docketed as
would set up an LPG Cylinder Manufacturing Plant in Carmona, Cavite. The contract was Civil Case No. 98-117[8] against PGSMC before the Muntinlupa City Regional Trial Court
executed in the Philippines. On April 7, 1997, the parties executed, in Korea, an Amendment (RTC). The RTC granted a temporary restraining order (TRO) on July 4, 1998, which was
for Contract No. KLP-970301 dated March 5, 1997[2] amending the terms of payment. The subsequently extended until July 22, 1998. In its complaint, KOGIES alleged that PGSMC had
contract and its amendment stipulated that KOGIES will ship the machinery and facilities initially admitted that the checks that were stopped were not funded but later on claimed that
necessary for manufacturing LPG cylinders for which PGSMC would pay USD it stopped payment of the checks for the reason that their value was not received as the
1,224,000. KOGIES would install and initiate the operation of the plant for which PGSMC former allegedly breached their contract by altering the quantity and lowering the quality of
bound itself to pay USD 306,000 upon the plants production of the 11-kg. LPG cylinder the machinery and equipment installed in the plant and failed to make the plant operational
samples. Thus, the total contract price amounted to USD 1,530,000. although it earlier certified to the contrary as shown in a January 22, 1998
Certificate. Likewise, KOGIES averred that PGSMC violated Art. 15 of their Contract, as
On October 14, 1997, PGSMC entered into a Contract of Lease [3] with Worth amended, by unilaterally rescinding the contract without resorting to arbitration. KOGIES also
Properties, Inc. (Worth) for use of Worths 5,079-square meter property with a 4,032-square asked that PGSMC be restrained from dismantling and transferring the machinery and
meter warehouse building to house the LPG manufacturing plant. The monthly rental was PhP equipment installed in the plant which the latter threatened to do on July 4, 1998.
322,560 commencing on January 1, 1998 with a 10% annual increment clause. Subsequently,
the machineries, equipment, and facilities for the manufacture of LPG cylinders were shipped, On July 9, 1998, PGSMC filed an opposition to the TRO arguing that KOGIES was not
delivered, and installed in the Carmona plant. PGSMC paid KOGIES USD 1,224,000. entitled to the TRO since Art. 15, the arbitration clause, was null and void for being against
public policy as it ousts the local courts of jurisdiction over the instant controversy.
However, gleaned from the Certificate[4] executed by the parties on January 22,
1998, after the installation of the plant, the initial operation could not be conducted as PGSMC On July 17, 1998, PGSMC filed its Answer with Compulsory
encountered financial difficulties affecting the supply of materials, thus forcing the parties to Counterclaim[9] asserting that it had the full right to dismantle and transfer the machineries
agree that KOGIES would be deemed to have completely complied with the terms and and equipment because it had paid for them in full as stipulated in the contract; that KOGIES
conditions of the March 5, 1997 contract. was not entitled to the PhP 9,000,000 covered by the checks for failing to completely install
and make the plant operational; and that KOGIES was liable for damages amounting to PhP
For the remaining balance of USD306,000 for the installation and initial operation 4,500,000 for altering the quantity and lowering the quality of the machineries and
of the plant, PGSMC issued two postdated checks: (1) BPI Check No. 0316412 dated January equipment. Moreover, PGSMC averred that it has already paid PhP 2,257,920 in rent (covering
30, 1998 for PhP 4,500,000; and (2) BPI Check No. 0316413 dated March 30, 1998 for PhP January to July 1998) to Worth and it was not willing to further shoulder the cost of renting
4,500,000.[5] the premises of the plant considering that the LPG cylinder manufacturing plant never
became operational.
When KOGIES deposited the checks, these were dishonored for the
reason PAYMENT STOPPED. Thus, on May 8, 1998, KOGIES sent a demand letter [6] to PGSMC After the parties submitted their Memoranda, on July 23, 1998, the RTC issued an
threatening criminal action for violation of Batas Pambansa Blg. 22 in case of nonpayment. On Order denying the application for a writ of preliminary injunction, reasoning that PGSMC had
the same date, the wife of PGSMCs President faxed a letter dated May 7, 1998 to KOGIES paid KOGIES USD 1,224,000, the value of the machineries and equipment as shown in the
President who was then staying at a Makati City hotel. She complained that not only did contract such that KOGIES no longer had proprietary rights over them. And finally, the RTC
KOGIES deliver a different brand of hydraulic press from that agreed upon but it had not held that Art. 15 of the Contract as amended was invalid as it tended to oust the trial court or
delivered several equipment parts already paid for. any other court jurisdiction over any dispute that may arise between the parties. KOGIES
prayer for an injunctive writ was denied.[10] The dispositive portion of the Order stated:

In the meantime, on October 19, 1998, the RTC denied KOGIES urgent motion for
reconsideration and directed the Branch Sheriff to proceed with the inspection of the
WHEREFORE, in view of the foregoing consideration, this Court believes machineries and equipment in the plant on October 28, 1998.[19]
and so holds that no cogent reason exists for this Court to grant the writ
of preliminary injunction to restrain and refrain defendant from Thereafter, KOGIES filed a Supplement to the Petition [20] in CA-G.R. SP No. 49249
dismantling the machineries and facilities at the lot and building of informing the CA about the October 19, 1998 RTC Order. It also reiterated its prayer for the
Worth Properties, Incorporated at Carmona, Cavite and transfer the issuance of the writs of prohibition, mandamus and preliminary injunction which was not
same to another site: and therefore denies plaintiffs application for a acted upon by the CA. KOGIES asserted that the Branch Sheriff did not have the technical
writ of preliminary injunction. expertise to ascertain whether or not the machineries and equipment conformed to the
specifications in the contract and were properly installed.

On November 11, 1998, the Branch Sheriff filed his Sheriffs Report [21] finding that
On July 29, 1998, KOGIES filed its Reply to Answer and Answer to Counterclaim. the enumerated machineries and equipment were not fully and properly installed.
[11]
KOGIES denied it had altered the quantity and lowered the quality of the machinery,
equipment, and facilities it delivered to the plant. It claimed that it had performed all the The Court of Appeals affirmed the trial court and declared
undertakings under the contract and had already produced certified samples of LPG the arbitration clause against public policy
cylinders. It averred that whatever was unfinished was PGSMCs fault since it failed to procure
raw materials due to lack of funds. KOGIES, relying on Chung Fu Industries (Phils.), Inc. v. Court
of Appeals,[12]insisted that the arbitration clause was without question valid. On May 30, 2000, the CA rendered the assailed Decision [22] affirming the RTC
Orders and dismissing the petition for certiorari filed by KOGIES. The CA found that the RTC
After KOGIES filed a Supplemental Memorandum with Motion to did not gravely abuse its discretion in issuing the assailed July 23, 1998 and September 21,
Dismiss[13] answering PGSMCs memorandum of July 22, 1998 and seeking dismissal of 1998 Orders. Moreover, the CA reasoned that KOGIES contention that the total contract price
PGSMCs counterclaims, KOGIES, on August 4, 1998, filed its Motion for Reconsideration [14] of for USD 1,530,000 was for the whole plant and had not been fully paid was contrary to the
the July 23, 1998 Order denying its application for an injunctive writ claiming that the finding of the RTC that PGSMC fully paid the price of USD 1,224,000, which was for all the
contract was not merely for machinery and facilities worth USD 1,224,000 but was for the sale machineries and equipment. According to the CA, this determination by the RTC was a factual
of an LPG manufacturing plant consisting of supply of all the machinery and facilities and finding beyond the ambit of a petition for certiorari.
transfer of technology for a total contract price of USD 1,530,000 such that the dismantling
and transfer of the machinery and facilities would result in the dismantling and transfer of the On the issue of the validity of the arbitration clause, the CA agreed with the lower
very plant itself to the great prejudice of KOGIES as the still unpaid owner/seller of the court that an arbitration clause which provided for a final determination of the legal rights of
plant. Moreover, KOGIES points out that the arbitration clause under Art. 15 of the Contract as the parties to the contract by arbitration was against public policy.
amended was a valid arbitration stipulation under Art. 2044 of the Civil Code and as held by
this Court in Chung Fu Industries (Phils.), Inc.[15] On the issue of nonpayment of docket fees and non-attachment of a certificate of
non-forum shopping by PGSMC, the CA held that the counterclaims of PGSMC were
In the meantime, PGSMC filed a Motion for Inspection of Things [16] to determine compulsory ones and payment of docket fees was not required since the Answer with
whether there was indeed alteration of the quantity and lowering of quality of the counterclaim was not an initiatory pleading. For the same reason, the CA said a certificate of
machineries and equipment, and whether these were properly installed. KOGIES opposed the non-forum shopping was also not required.
motion positing that the queries and issues raised in the motion for inspection fell under the
coverage of the arbitration clause in their contract. Furthermore, the CA held that the petition for certiorari had been filed prematurely
since KOGIES did not wait for the resolution of its urgent motion for reconsideration of the
On September 21, 1998, the trial court issued an Order (1) granting PGSMCs September 21, 1998 RTC Order which was the plain, speedy, and adequate remedy
motion for inspection; (2) denying KOGIES motion for reconsideration of the July 23, 1998 available.According to the CA, the RTC must be given the opportunity to correct any alleged
RTC Order; and (3) denying KOGIES motion to dismiss PGSMCs compulsory counterclaims as error it has committed, and that since the assailed orders were interlocutory, these cannot be
these counterclaims fell within the requisites of compulsory counterclaims. the subject of a petition for certiorari.

On October 2, 1998, KOGIES filed an Urgent Motion for Reconsideration [17] of the Hence, we have this Petition for Review on Certiorari under Rule 45.
September 21, 1998 RTC Order granting inspection of the plant and denying dismissal of
PGSMCs compulsory counterclaims. The Issues

Ten days after, on October 12, 1998, without waiting for the resolution of its Petitioner posits that the appellate court committed the following errors:
October 2, 1998 urgent motion for reconsideration, KOGIES filed before the Court of Appeals a. PRONOUNCING THE QUESTION OF OWNERSHIP OVER THE
(CA) a petition for certiorari[18] docketed as CA-G.R. SP No. 49249, seeking annulment of the MACHINERY AND FACILITIES AS A QUESTION OF FACT BEYOND THE
July 23, 1998 and September 21, 1998 RTC Orders and praying for the issuance of writs of AMBIT OF A PETITION FOR CERTIORARI INTENDED ONLY FOR
prohibition, mandamus, and preliminary injunction to enjoin the RTC and PGSMC from CORRECTION OF ERRORS OF JURISDICTION OR GRAVE ABUSE OF
inspecting, dismantling, and transferring the machineries and equipment in the Carmona DISCRETION AMOUNTING TO LACK OF (SIC) EXCESS OF JURISDICTION,
plant, and to direct the RTC to enforce the specific agreement on arbitration to resolve the AND CONCLUDING THAT THE TRIAL COURTS FINDING ON THE SAME
dispute. QUESTION WAS IMPROPERLY RAISED IN THE PETITION BELOW;

Allowing appeals from NATURE. It is a responsive pleading. 2004 plain. [29] issues. DECREEING PRIVATE RESPONDENTS COUNTERCLAIMS TO Citing Gamboa v. Thus. RULING THAT THE PETITION WAS FILED PREMATURELY motion to quash required the accused to plead and to continue with the trial. [27] Thus. the remedy is certiorari. the petitioner must have filed a motion for reconsideration and said motion should have been first resolved by the court a quo. 5 [24] of substantial damage to KOGIES equipment and machineries. 1998 NOT TO BE PROPER SUBJECTS OF an adverse judgment on the merits. it was not liable to pay filing fees for said counterclaims being compulsory in nature. Sec. 8 on existing counterclaim or cross-claim states. for certiorari. however. the rule that was effective at the time the While the October 2. 2004 under Sec. interlocutory orders would result in the sorry spectacle of a case being subject of a counterproductive ping-pong to and from the appellate court f. The alleged grave abuse of discretion of the respondent court equivalent to lack of The rules on the payment of docket fees for counterclaims jurisdiction in the issuance of the two assailed orders coupled with the fact that there is no and cross claims were amended effective August 16. 1998 motion for reconsideration of KOGIES of the September Answer with Counterclaim was filed. KOGIES only As aptly ruled by the CA. and adequate remedy in the ordinary course of law amply provides the basis for allowing the resort to a petition for certiorari under Rule 65. [26] The CA erred on its reliance on Gamboa. 7. the courts a . DECLARING AS NULL AND VOID THE ARBITRATION CLAUSE IN quo did not commit reversible error in denying KOGIES motion to dismiss PGSMCs ARTICLE 15 OF THE CONTRACT BETWEEN THE PARTIES FOR BEING compulsory counterclaims. we held: e. we shall first tackle the procedural excess of jurisdiction or with grave abuse of discretion. as amended by A.M. the circumstances in this case would allow an answer shall be contained therein. b. DISMISSING THE SAME FOR interlocutory rulings. Answer with Compulsory Counterclaim dated July 17. there is an urgent necessity to resolve the issue on the dismantling of the facilities and any further delay would prejudice the As to the failure to submit a certificate of forum shopping. ITSELF. PGSMCs Answer is not an interests of KOGIES.[23] was issued with grave abuse of discretion or patently erroneous and the remedy of appeal would not afford adequate and expeditious relief. The reason behind the rule is to enable the lower court. We stress. docket fees are now required to be paid in plant. where the interlocutory order was issued without or in Before we delve into the substantive issues. there is real and imminent threat of irreparable destruction or initiatory pleading which requires a certification against forum shopping under Sec. the Court allows certiorari as a mode of redress. KOGIES strongly argues that when PGSMC filed the counterclaims. Cruz.[28] The Courts Ruling The petition is partly meritorious. CONTRARY TO PUBLIC POLICY AND FOR OUSTING THE COURTS OF JURISDICTION. We find the resort to certiorari Rule 7. to pass upon On July 17. appeals from interlocutory orders would open the floodgates to endless occasions for dilatory motions. speedy. However. A 21. equipment. and the allowance of the compulsory compulsory counterclaim or a cross-claim that a defending party has at the time he files his counterclaims has not yet been resolved.[30] counterclaims against KOGIES. 1997 Revised Rules of Civil Procedure. and whatever WITHOUT WAITING FOR THE RESOLUTION OF THE MOTION FOR objections the accused had in his motion to quash can then be used as part of his defense and RECONSIDERATION OF THE ORDER DATED SEPTEMBER 21. and facilities when he is not competent and knowledgeable on said matters compulsory counterclaim or cross-claims. is evidently flawed and devoid of any legal support. Pescarich Manufacturing Corporation. No. at the time PGSMC filed its Answer incorporating its and correct its mistakes without the intervention of the higher court. AND CERTIFICATION OF NON-FORUM SHOPPING. The general rule is that interlocutory orders cannot be challenged by an appeal. Interlocutory orders proper subject of certiorari c. in Yamaoka v. that effective August 16. INSTEAD. it should have paid docket fees and filed a certificate of non-forum shopping. where the assailed interlocutory order ALLEGEDLY WITHOUT MERIT. exception to the rule that before certiorari may be availed of. hence. 1998 RTC Order which denied the issuance of the injunctive writ had already been denied. Moreover. Gamboa involved the denial of a motion to acquit in a criminal case which was not assailable in an action for certiorari since the denial of a d.[25] the CA also pronounced that certiorari and Prohibition are BE ALL COMPULSORY NOT NECESSITATING PAYMENT OF DOCKET FEES neither the remedies to question the propriety of an interlocutory order of the trial court. and that its failure to do so was Prematurity of the petition before the CA a fatal defect. 04-2-04-SC. Also. Neither do we think that KOGIES was guilty of forum shopping in filing the petition We disagree with KOGIES. 1998 RTC Order directing the branch sheriff to inspect the 141. 1997 Revised Rules of Civil Procedure. in the first instance. Indeed. Rule The September 21. incorporating in said appeal the CERTIORARI AND PROHIBITION FOR BEING INTERLOCUTORY IN grounds for assailing the interlocutory orders. the counterclaims of PGSMC were incorporated in its remedy was to assail the RTCs interlocutory order via a petition for certiorari under Rule 65. Note that KOGIES motion for reconsideration of the July 23. Thus. 1998 OR subsequently can be raised as errors on his appeal if the judgment of the trial court is adverse WITHOUT GIVING THE TRIAL COURT AN OPPORTUNITY TO CORRECT to him. NOT GRANTING THE RELIEFS AND REMEDIES PRAYED FOR as often as a trial court is perceived to have made an error in any of its IN HE (SIC) PETITION AND. PROCLAIMING THE TWO ORDERS DATED JULY 23 The proper remedy in such cases is an ordinary appeal from AND SEPTEMBER 21. 1998 in accordance with Section 8 of Rule 11. 1998 RTC Order relating to the inspection of things. 1998.

In the 1957 case of Eastboard Navigation Ltd. especially of the commercial kind. arbitration has uniformity in its interpretation and resort may be made to the travaux been held valid and constitutional. promulgated on complied with by both parties. Arbitration[41] of the United Nations Commission on International Trade Law (UNCITRAL) in the New York Convention on June 21. Court of Appeals.[38] this Court had occasion to rule that an SEC. v. we held that [i]n this jurisdiction.[37] Commercial Arbitration. 1985. The award rendered by the arbitration(s) shall be final and alternative dispute resolution methods.. controversies. As voided. the arbitration encouraged by the Supreme Court. We find no reason why the arbitration clause should not be respected and Establish the Office for Alternative Dispute Resolution. or against morals.. It provides: dockets. Court of Appeals.) For domestic arbitration proceedings. 2004. Korea in accordance with the Commercial Arbitration Rules of the KCAB.) arbitration clauses. Climax Mining Ltd. 15 of the Contract. 19 and 20 of Chapter 4 of the Model Law are the pertinent provisions: arbitration is a contract and that a clause in a contract providing that all matters in dispute between the parties shall be referred to arbitration is a contract.. 876 was adopted to supplement the New Civil Codes provisions on arbitration. Any stipulation that the arbitrators award or decision to which we are a signatory shall be final. (Emphasis supplied. the Philippines committed itself to be bound by The arbitration clause was mutually and voluntarily agreed upon by the parties. This Court has sanctioned hereto attached as Appendix A. Brushing aside a contractual differences which may arise between the parties. the validity of arbitration clauses in a catena of cases. The contract in this case was perfected here in arbitration rules of the foreign country would govern and its award shall be final and binding. We have even incorporated the Model Law in Republic Act No. we 1998 motion for reconsideration to be proper. Adoption of the Model Law on International contract and is itself a contract. 2044 pursuant to Art. as applied to Art. arbitrationalong with mediation.INTERNATIONAL COMMERCIAL ARBITRATION Corporation-USA v. arbitration also hastens the resolution of disputes.International commercial arbitration shall be governed by the Model Law on International Commercial Arbitration Arbitration clause not contrary to public policy (the Model Law) adopted by the United Nations Commission on International Trade Law on June 21. and for Other Purposes. regard shall be had to its international origin and to the need for valid.[31] 2039. an arbitral panel will be constituted in a foreign country and the contract is made governs. It the Model Law.[32] and 2040[33] abovecited refer to instances where a disputes arising from contractual relations. It is thus regarded as the wave of the future in Article 15. we likewise ruled that [t]he provision to submit to arbitration any dispute arising therefrom and the relationship of the parties is part of that SEC. [34] may be parties. Republic Nations Commission on International Trade Law dated March 25. [36] Again in Del Monte CHAPTER 4 . without prejudice to Articles 2038. 2044 provides. 2043. 19.All disputes. In Gonzales v. Inc. shall finally backward. declared that: The Core Issue: Article 15 of the Contract Being an inexpensive. courts should liberally construe binding upon both parties concerned. we come to the question on what governs an arbitration clause specifying that in case of any dispute Established in this jurisdiction is the rule that the law of the place where the arising from the contract. In BF Corporation v. [39] And . this Court has countenanced the settlement of disputes through arbitration. Art. 2038. our laws ought to govern. Petitioner claims the RTC and the CA erred in ruling that the arbitration clause is [40] null and void. Secs. in LM Power Engineering Corporation v. Interpretation of Model Law. the Philippines. conciliation and negotiationis We now go to the core issue of the validity of Art. Lex loci contractus. rescinded. or international civil and commercial disputes. 876. (RA) 9285. 1985. or annulled. Provided such clause is susceptible of an interpretation that covers the asserted dispute. has not been shown to be contrary to any law. is valid. Art. public order. 2044 of the Civil Code sanctions the validity of mutually agreed arbitral clause or the finality and binding effect of an RA 9285 incorporated the UNCITRAL Model law arbitral award. 1985 Act No. Any doubt should be resolved in favor of arbitration. Having said that the instant arbitration clause is not against public policy.based on the gravely abusive orders of the trial court sans the ruling on the October 2. 2039 and 2040. In case a foreign arbitral body is chosen by the compromise or an arbitral award. speedy and amicable method of settling disputes. but these would not denigrate the finality of the arbitral signatory to the Arbitration Rules of the UNCITRAL Model Law on International Commercial award. Inc. an order to arbitrate should be granted. Arbitration. we have particular agencies to arbitrate Arts. is not contrary to public policy. copy of which is arbitral award is final and binding. the arbitration rules of our domestic arbitration bodies would not be applied. There has been no showing that the parties have not dealt with each other on Institutionalize the Use of an Alternative Dispute Resolution System in the Philippines and to equal footing.(Emphasis supplied.[35] we held that submission to April 2. Korea in accordance with the Commercial Arbitration Rules of the Korean Commercial Arbitration Consistent with the above-mentioned policy of encouraging Board..In interpreting the Model arbitration clause to resolve differences and breaches of mutually agreed contractual terms is Law. Juan Ysmael and Co. and that the Resolution No. Petitioner is correct. Capitol Industrial Construction Groups. 40/72 approved on December 11. Therefore. Nonetheless. good customs. 20. be settled by arbitration in Seoul. Aside from unclogging judicial clause. out of or in relation to agreement calling for arbitration between the parties would be a step or in connection with this Contract or for the breach thereof. Even before the approval on June 19. 1985 (United Nations Document The arbitration clause which stipulates that the arbitration must be done A/40/17) and recommended for enactment by the General Assembly in in Seoul. 1953 of Republic Act preparatories and the report of the Secretary General of the United No. otherwise known as the Alternative Dispute Resolution Act of 2004 entitled An Act to or public policy.

A foreign arbitral undetermined at the time of their passage. 34(2) of the UNCITRAL Model Law. shall be enforced in the same manner as final and executory decisions of courts of law of the Philippines (1) The RTC must refer to arbitration in proper cases xxxx Under Sec. thus: It is now clear that foreign arbitral awards when confirmed by the RTC are deemed not as a judgment of a foreign court but as a foreign arbitral award. and 44 relative to Secs. As a general rule. 47.Therefore. International Commercial Arbitration: Analytical Commentary on Draft Trade identified by reference number A/CN. RA 9285 incorporated these provisos to Secs. (iii) where any of the parties to the dispute resides or has his null and void. or (iv) in the National Judicial Capital Region. Foreign Arbitral Award Not Foreign Judgment. Sec. thus: and enforcement of an arbitration agreement or for vacations. if at least one party so requests not later than the pre.Proceedings for recognition arbitration in such cases. the final foreign arbitral rules shall provide that the party relying on the award or applying for its awards are similarly situated in that they need first to be confirmed by the RTC. and mandates the referral to SEC. the retroactive application of procedural laws does not violate recognized and enforced as a foreign arbitral award and not as a any personal rights because no vested right has yet attached nor arisen from them. but not immediately executory in the sense that they may procedure to be promulgated by the Supreme Court. shall be that extent. reject. 42 in relation to Sec. the Court shall Foreign arbitral awards while mutually stipulated by the parties in the arbitration send notice to the parties at their address of record in the arbitration. RA 9285 is applicable to the instant case. the RTC does not have jurisdiction over disputes that are properly the subject of arbitration pursuant to an arbitration clause. 24. Likewise. Said procedural still be judicially reviewed. the party shall supply a duly certified translation thereof into any of such languages. upon the instance of any party. Among the pertinent features of RA 9285 applying and incorporating the A foreign arbitral award. Sec. Referral to Arbitration. [42] judgment of a foreign court. 48. Well- settled is the rule that procedural laws are construed to be applicable to actions pending and SEC. it can be gleaned that the concept of a final and binding arbitral award is similar to judgments or awards given by some of our quasi-judicial bodies. or the act to be enjoined is parties to arbitration unless it finds that the arbitration agreement is located. at the option of the applicant.A court before which an action application with a court for arbitration assistance and supervision shall is brought in a matter which is the subject matter of an arbitration be deemed as special proceedings and shall be filed with the Regional agreement shall. or clause to be final and binding are not immediately enforceable or cannot be implemented if any part cannot be served notice at such address. setting aside. The notice shall be sent al least fifteen (15) days before arbitral award to be recognized by a competent court for enforcement. KOGIES filed its comity and reciprocity. inoperative or incapable of being performed. 42. refer the the asset to be attached or levied upon. and when confirmed. recognize and enforce a non-convention award as application for arbitration before the KCAB on July 1. 9/264. Thus. 35[43] of the UNCITRAL Model Law stipulates the requirement for the known address. enforcement shall file with the court the original or authenticated copy of the award and the arbitration agreement. 36 of the UNCITRAL Model Law may refuse recognition or enforcement on the grounds provided for. 47 and 48. Notice of Proceeding to Parties. entitled. If the award or agreement is (3) The RTC has jurisdiction to review foreign arbitral awards not made in any of the official languages. and any SEC. xxxx . and are deemed retroactive in that sense and to award when confirmed by a court of a foreign country. the date set for the initial hearing of the application. (2) Foreign arbitral awards must be confirmed by the RTC SEC. correction or modification of an arbitral award. 42. which court under Sec. or upon the request of both parties thereafter. Convention shall govern the recognition and enforcement of arbitral awards covered by said Convention. Application of the New York Convention. 44. are SEC.The New York enforced as final and executory decisions of our courts of law. 42 and 45 provide: arbitration award was made in party to the New York Convention. 1998 and it is still pending because no a convention award. arbitral award has yet been rendered. SEC. 45 of RA 9285 designated and vested the RTC with specific authority and jurisdiction to set aside. on grounds of since it is a procedural law which has a retroactive effect.The recognition and enforcement of foreign arbitral awards not covered by the New York Convention shall be done in accordance with procedural rules to be While RA 9285 was passed only in 2004. or vacate a foreign arbitral award on The applicant shall establish that the country in which foreign grounds provided under Art. place of business. 24. The Court may. Recognition and Enforcement of Foreign Arbitral Awards Not Covered by the New York Convention. when confirmed by the Regional UNCITRAL Model Law are the following: Trial Court. (ii) where trial conference. Venue and Jurisdiction.In a special proceeding for recognition and enforcement of an arbitral award. Trial Court (i) where arbitration proceedings are conducted. 43. 43. it nonetheless applies in the instant case promulgated by the Supreme Court. whose final judgments are be filed with the Regional Trial Court in accordance with the rules of stipulated to be final and binding. Thus. like the National The recognition and enforcement of such arbitral awards shall Labor Relations Commission and Mines Adjudication Board. Secs. at such partys last immediately.

being bound to the contract of The differences between a final arbitral award from an international or foreign arbitration. rejecting or vacating the award by the RTC are provided assailed. 34(2) of the UNCITRAL Model Law. and pursuant to Sec. vacates. and whether there was substantial compliance by KOGIES in the production of the samples.The New York Sec.). modifies. What this Court held in University of the Philippines v. which also need confirmation by the RTC or differences arising from the contract must be brought first and resolved by arbitration. Indeed.[46] The issues arising from the contract between PGSMC and KOGIES on whether the equipment and machineries delivered and installed were properly installed and operational in (5) RTC decision of assailed foreign arbitral award appealable the plant in Carmona. are matters proper for arbitration. Cavite. rules shall provide that the party relying on the award or applying for its modifying or correcting an arbitral award may be appealed to the Court enforcement shall file with the court the original or authenticated copy of Appeals in accordance with the rules and procedure to be of the award and the arbitration agreement. if it considers Thereafter. (4) Grounds for judicial review different in domestic and foreign arbitral awards Having ruled that the arbitration clause of the subject contract is valid and binding on the parties. If the application for rejection or suspension of enforcement of an award has been made. 42. based on the foregoing features of RA 9285. on those grounds enumerated under Article V of the New York Convention. 25 of RA 876. arbitration. while the RTC does not have jurisdiction over disputes governed by and without exceptions. consequently. order the party to PGSMC has remedies to protect its interests provide appropriate security. thus: The recognition and enforcement of such arbitral awards shall be filed with the Regional Trial Court in accordance with the rules of SEC. 45. given the alleged fact that PGSMC could not supply the raw materials required to produce the sample LPG cylinders. rejects. setting aside. the Regional Trial Court may. If the award or agreement is promulgated by the Supreme Court. claiming recognition or enforcement of the award. is not applicable to the instant case on account of a valid stipulation on under Art. the party shall supply a duly certified translation thereof into any of such languages. Chapter 7 of RA 9285 has made it clear that all arbitral awards. amount of the award in accordance with the rules to be promulgated by the Supreme Court. 46 of RA 9285 provides for an appeal before the CA as the remedy of an Convention shall govern the recognition and enforcement of arbitral aggrieved party in cases where the RTC sets aside. SEC.A party to a misgivings on the foreign arbitration done in Korea by the KCAB. conditions that vest jurisdiction over our courts to review the awards. petitioner is correct in its contention that an Regional Trial Court.A procedure to be promulgated by the Supreme Court. we note that on July 1. neither of the parties can unilaterally treat the contract as rescinded since whatever infractions or breaches by a party For final domestic arbitral awards. . 23 of RA 876[44] and shall be recognized as final and executory decisions of not through an extrajudicial rescission or judicial action. does not oust our courts of jurisdiction as the international arbitral award. a party may not unilaterally rescind or terminate the contract for whatever cause arbitral tribunal and an award given by a local arbitral tribunal are the specific grounds or without first resorting to arbitration. the RTC. vacating. relied upon by KOGIES is applicable insofar as Finally. vacate its decision and may also. Rejection of a Foreign Arbitral Award. arbitral award. is still judicially reviewable under certain conditions provided for by arbitration mutually agreed upon by the parties. The losing party who appeals from the judgment of the court confirming an arbitral award shall be required by the appellate court to The applicant shall establish that the country in which foreign post a counterbond executed in favor of the prevailing party equal to the arbitration award was made is party to the New York Convention. these arbitral awards are not absolute and without exceptions as they are still judicially reviewable. the award of which is not absolute Thus. While it may have SEC. it has available remedies foreign arbitration proceeding may oppose an application for under RA 9285. De Los Angeles [47] and reiterated in succeeding cases. or corrects an awards covered by said Convention. the ownership of equipment and payment of the contract price. Application of the New York Convention. judicial review by the RTC which can set aside.[45] they may only be assailed before the RTC and vacated on the grounds provided under Sec. while final and binding. the CA decision may further be appealed or reviewed before this Court it proper. Where an arbitration clause in a contract is availing. the grounds for setting aside. arbitration clause. on the application of the party through a petition for review under Rule 45 of the Rules of Court. xxxx Thus. stipulating that the arbitral award is final and binding. do not oust courts of jurisdiction since provides that the parties may dispense with the arbitration clause. 1998. Appeal from Court Decision or Arbitral Awards. still the foreign arbitral award is subject to the UNCITRAL Model Law on ICA as applied and incorporated in RA 9285. or vacate it. Said procedural decision of the Regional Trial Court confirming. not made in any of the official languages. and not contrary to public policy. it must be noted that there is nothing in the subject Contract which the foreign arbitral awards. are subject to judicial review on specific grounds provided for. Any other ground raised shall be disregarded by the With our disquisition above. Its interests are duly protected by the law which requires that the arbitral recognition and enforcement of the arbitral award in accordance with award that may be rendered by KCAB must be confirmed here by the RTC before it can be the procedures and rules to be promulgated by the Supreme Court only enforced. In this sense. whether domestic Unilateral rescission improper and illegal or foreign.[48] that the act of treating a contract as rescinded on account of For foreign or international arbitral awards which must first be confirmed by the infractions by the other contracting party is valid albeit provisional as it can be judicially RTC. reject. what this Court held in Chung Fu Industries (Phils. Inc. 46. PGSMC must submit to the foreign arbitration as it bound itself through the subject contract.

) Anent the July 23.000 was for the whole plant and its installation is beyond the ambit of a tribunal as the case may be and the party against whom the relief is Petition for Certiorari. for Inspection of Things on September 21. upon the provision of security or any act or omission specified in the order. yet the RTC under Sec. it is incumbent upon PGSMC to abide by its be observed: commitment to arbitrate. and reasonable attorney's fees. Issue on ownership of plant proper for arbitration (d) Interim or provisional relief is requested by written Petitioner assails the CA ruling that the issue petitioner raised on whether the total contract application transmitted by reasonable means to the Court or arbitral price of USD 1. written communication of said nomination and acceptance has been received by the party making the request. or refrain from taking action that is tribunal is deemed constituted when the sole arbitrator or the third likely to cause. (f) Either party may apply with the Court for assistance in implementing or enforcing an interim measure ordered by an arbitral However. protection as: Firstly. a request for an interim measure of protection. or (a) Maintain or restore the status quo pending determination of the modification thereof. that the arbitral tribunal has no power to act or is unable to act effectivity. 28 pertinently provides: (2) An interim measure is any temporary measure. the September 21. including all expenses. who has been nominated. 1998 RTC Orders pertaining to the grant of the inspection of the equipment and machineries have to be recalled (c) The order granting provisional relief may be conditioned and nullified. current or imminent harm or prejudice to the arbitral arbitrator. the party against whom the relief is requested. 17(2) of the UNCITRAL Model Law on ICA defines an interim measure of in order considering the factual milieu of the instant case. (iii) to produce or preserve any evidence. has accepted the nomination and process itself. as ordered by the trial court on October 19. (e) The order shall be binding upon the parties. may be made with the arbitral or to the extent dispute. of the equipment and machineries as installed in the plant. at any time prior to the incompatible with an arbitration agreement for a party to request. 1998.530. as the subject matter of the motion is under the primary jurisdiction of the mutually agreed arbitral body. the grounds for the relief. The RTCs determination of (g) A party who does not comply with the order shall be liable such factual issue constitutes grave abuse of discretion and must be reversed and set aside. for all damages resulting from noncompliance. what appears to constitute a grave abuse of discretion is the order of the RTC in tribunal. resolving the issue on the ownership of the plant when it is the arbitral body (KCAB) and not the RTC which has jurisdiction and authority over the said issue. 1998. we find it to be Art. Such relief may be granted: In addition. Power of arbitral tribunal to order interim measures might well be under the primary jurisdiction of the arbitral body to decide.(a) It is not of an award or in another form. the trial court gravely abused its discretion in granting PGSMCs Motion against the adverse party. 15 of the Contract as amended. The arbitral (b) Take action that would prevent. is of no worth as said Sheriff is not technically competent to ascertain the actual status (ii) to provide security for the performance of any obligation. the KCAB in Korea. Sec. whatever findings and conclusions made by the RTC Branch Sheriff from the inspection made on October 28. or . paid in obtaining the orders judicial RTC has interim jurisdiction to protect the rights of the parties enforcement. whether in the form SEC. (c) Provide a means of preserving assets out of which a subsequent award may be satisfied. 28 of RA 9285 has jurisdiction to hear and grant interim measures to protect vested xxx xxx xxx rights of the parties. issuance of the award by which the dispute is finally decided. the arbitral before constitution of the tribunal. or (iv) to compel any other appropriate act or omission. from a Court to grant such tribunal orders a party to: measure. while the issue of the proper installation of the equipment and machineries Article 17. Any party may request that provisional relief be granted Corollarily. 1998 Order denying the issuance of the injunctive writ paving the way for PGSMC to dismantle and transfer the equipment and machineries.KOGIES instituted an Application for Arbitration before the KCAB in Seoul. For these reasons. [49] Whether or not there was full payment for the machineries and equipment and installation is indeed a factual issue prohibited by Rule 65. the request may be made with the Court. Grant of interim Measure of Protection. and the Petitioners position is untenable. describing in appropriate detail the precise relief. sought. by which. 1998. 28. 1998 and October 19. (Emphasis ours. It is settled that questions of fact cannot be raised in an original action for certiorari. evidence supporting the request. After constitution of the arbitral tribunal and during arbitral proceedings. Korea pursuant to (b) The following rules on interim or provisional relief shall Art. (i) to prevent irreparable loss or injury. Thus.

R. 2000 CA Decision in CA-G. PGSMC issued two postdated checks: (1) BPI Check No. PGSMC was losing PhP322.000. 1998 increment in maintaining the plant. PGSMC paid KOGIES USD 1. and facilities for the manufacture of LPG cylinders were shipped.500. it does not have the right to convey or dispose of the measure in relation to arbitration proceedings.560 as 5. balance of USD306. while the KCAB can rule on motions or petitions relating plant.A. otherwise finality of whatever arbitral award is given in the arbitration proceedings. the award of which can be enforced in our jurisdiction through the RTC. 1997 amending the terms dismantle and transfer the equipment and machineries either for their protection and of payment. while PGSMC may have been granted the right to dismantle and transfer the A court shall have the same power of issuing an interim subject equipment and machineries. as it has in relation to parties.032-square meter warehouse building to house the LPG monthly rentals or PhP3. The contract and its amendment stipulated that KOGIES will ship the machinery preservation or for the better way to make good use of them which is ineluctably within the and facilities necessary for manufacturing LPG cylinders for which PGSMC would pay USD management discretion of PGSMC. if it had not done so. 2008 Facts: Petitioner Korea Technologies Co. gleaned from the Certificate executed by to the preservation or transfer of the equipment and machineries as an interim measure. whenever the arbitral tribunal has no power to act or to act effectively.000.. KOGIES is not unjustly prejudiced as it has already been paid a substantial resolution of the dispute. Luzon Hydro Corporation. to issue interim measures: PGSMC to preserve the subject equipment and machineries Article 17 J.224. PGSMC and KOGIES executed a Secondly. Subsequently. 1998 Order of the RTC allowing the transfer of the equipment and not be conducted as PGSMC encountered financial difficulties affecting the supply of machineries given the non-recognition by the lower courts of the arbitral clause. yet the parties on January 22. When KOGIES . after the installation of the plant. 1.000.000. 1998 RTC Orders in Civil Case No. PGSMC.000 upon the plants production of the 11-kg. 0316412 dated January 30.000 for the installation and initial operation of the plant. Besides. SP No. v. the machineries. PGSMC has the right to Korea. Ltd vs Lerma GR No. and installed in the Carmona Fourthly. the total contract price amounted to USD 1. and corollarily. and measures. WHEREFORE. PGSMC is compelled to submit to arbitration pursuant to Art. in that: In the recent 2006 case of Transfield Philippines. allows the filing of provisional or interim measures with the regular courts No pronouncement as to costs. which governs the parties arbitral dispute. PGSMC therefore must preserve and maintain the subject equipment and machineries proceedings in courts. The monthly rental was PhP 322. (PGSMC) is a domestic corporation. 98- As a fundamental point. the parties executed. has accorded materials. 876 (The Arbitration Law) recognizes the rights of any party to petition the court (4) PGSMC is hereby ALLOWED to dismantle and transfer the equipment and to take measures to safeguard and/or conserve any matter which is the machineries. For the remaining damaged. delivered.87M for 1998 alone without considering the 10% annual rent manufacturing plant. 49249 is REVERSED and SET were explicit that even the pendency of an arbitral proceeding does not foreclose resort to the ASIDE. 0316413 dated March 30. the July 23. Considering that the LPG plant was non-operational.224. Section 14 of Republic Act (R. On April 7. international arbitration. 9285. thus forcing the parties to agree that KOGIES would be deemed to have completely an interim measure of protection to PGSMC which would otherwise been irreparably complied with the terms and conditions of the March 5. 1997. 1998 for PhP 4. we (1) The May 30. in way it can. 1997. The contract was executed in the Philippines. Thus.560 commencing on January 1. LPG cylinder Thirdly.500. and (2) BPI Check No. KOGIES would install and initiate the operation of the plant for which PGSMC bound itself to pay USD 306. by our decision. Likewise. (d) Preserve evidence that may be relevant and material to the Fifth. KLP-970301 dated March 5. an Amendment for Contract No. (Worth) for use of Worths rent while the LPG plant as set-up is not operational. and ORDERED to preserve and maintain them until the subject of the dispute in arbitration. machineries in Worths property is not to the best interest of PGSMC due to the prohibitive PGSMC entered into a Contract of Lease with Worth Properties. SO ORDERED.R. and of greater import is the reason that maintaining the equipment and samples. We explicated this way: (2) The September 21. foreclose resort to the courts for provisional reliefs. (KOGIES) is a Korean corporation which is It is thus beyond cavil that the RTC has authority and jurisdiction to grant interim engaged in the supply and installation of Liquefied Petroleum Gas (LPG) Cylinder measures of protection. the pendency of arbitral proceedings does not 117 are REVERSED and SET ASIDE. Court-ordered interim measures Finally. irrespective of whether same considering the pending arbitral proceedings to settle the differences of the their place is in the territory of this State.[50] Korea Technologies Co. manufacturing plants. The Rules of the ICC. The court shall exercise such power in accordance with the diligence of a good father of a family [51] until final resolution of the arbitral with its own procedures in consideration of the specific features of proceedings and enforcement of the award. KOGIES is amply protected by the arbitral action it has instituted before the KCAB.) No. 1998 for PhP 4. while private respondent Pacific General Steel Manufacturing Corp. 1997 contract. equipment. On March 5. known as the Alternative Dispute Resolution Act of 2004. 1997. In addition. 1998 and October 19. with a 10% annual increment clause. if any.A. 17 J of UNCITRAL Model Law on ICA also grants courts power and jurisdiction the valid arbitration clause of its contract with KOGIES.530. On October 14. 143581 January 7. courts for provisional reliefs. considering that the equipment and machineries are in the possession of Contract whereby KOGIES would set up an LPG Cylinder Manufacturing Plant in Carmona. Moreover. Inc. it has the right to protect and preserve the equipment and machineries in the best Cavite. 1998. Ltd.000. amount based on the contract.079-square meter property with a 4. Inc. allows the application of a (3) The parties are hereby ORDERED to submit themselves to the arbitration of party to a judicial authority for interim or conservatory their dispute and differences arising from the subject Contract before the KCAB. However. the initial operation could on hindsight. this petition is PARTLY GRANTED.

Philippines.deposited the checks. June 29. 2007 Korea was already in a difficult situation 25 because of the failure of Sanyo Seiki and MCC to open the L/C's. to the Treasury be final and binding. 2000. policy. 2000. Chan. on June 26.18.22 Ssangyong sent a separate letter of the same date to Sanyo Seiki requesting are similarly situated in that they need first to be confirmed by the RTC. to Ssangyong. The contract in this case was perfected here in In the meantime. MCC failed to open a letter of credit. 2000. if the latter conforms thereto. Two days later. requesting an extension of time to open the L/C because MCC's credit line with the bank had been fully availed of in connection with another transaction. we likewise ruled that [t]he provision to submit to arbitration any dispute signature on the fax transmittal and returned the same.597MT of stainless steel from Korea to parties shall be referred to arbitration is a contract. Thus. Pohang Iron and Steel Corporation (POSCO). 1998 to KOGIES President who was then staying at a On April 17. and that the goods were to be shipped in from the contract. requesting that it be informed of Petitioner MCC Industrial Sales (MCC). assented and May 8.19 Chan affixed his Court of Appeals. Ssangyong reiterated its request for the facilitation of the L/C's opening. Art. August 15. that it was ready to ship 193. She complained that not only did KOGIES deliver a different brand of POSTSO40112 containing the terms and conditions of the transaction. South Korea and regional headquarters in Makati City. through its Manila Office. these were dishonored for the reason PAYMENT STOPPED. We find no reason why the arbitration clause should not be respected and complied with by both parties. we held that submission to arbitration On June 20. v. Before the Court is a petition for review on certiorari of the Decision1 of the Court of Appeals The following day. Therefore. and MCC was waiting for an additional credit line. 2000. No. October 17. a domestic corporation with office at Binondo. 2000. Ssangyong Corp. the final foreign arbitral awards thereof that day. Ssangyong. There has been no showing that the parties have not dealt with each other on equal footing. Lex loci contractus. or against morals. Ssangyong sent another facsimile letter to MCC stating that its principal in MCC Industial Sales Corp.26 On the same date. Therefore. good customs. 1998. 2039 and 2040. 6 The Ssangyong offered to negotiate with its steel manufacturer. preferably at the earliest possible time. the date when the L/C would be opened. MCC sent back by fax to hydraulic press from that agreed upon but it had not delivered several equipment parts Ssangyong the invoice bearing the conformity signature 13 of Chan. Ssangyong.18 both dated April 17.860. 2000.16 one for 110MT covered by Pro Forma Invoice No. Manila. It requested that the opening of the L/C be facilitated. G. Ssangyong forwarded to MCC Pro Forma Invoice No. 2000. 20 arising therefrom and the relationship of the parties is part of that contract and is itself a contract. its representative affixes his was sent by Ssangyong to MCC. by fax. 2000. 2044 provides. in South Korea 15 and sanctions the validity of mutually agreed arbitral clause or the finality and binding effect of an paid the same in full. on On April 13. 82983 and its Resolution2 denying the motion for reconsideration thereof. upon the instance of any party. inclusive of warehouse expenses.R. Ssangyong Manila Office informed Sanyo Seiki. the order for 220MT of steel was split The arbitration clause was mutually and voluntarily agreed upon by the parties. 2000. thru Chan. another follow-up letter29 for the opening of the L/C steel product order to MCC. Ssangyong would be compelled to cancel the contract and hold MCC liable for MCC's and Sanyo Seiki's order of 220 metric tons (MT) of hot rolled stainless steel under a damages for breach thereof amounting to US$96. a letter signed by Chan.. the goods was to be made after the L/C had been opened. Art.28 On July 6.R. whose final judgments are stipulated to Ssangyong later. arbitral award. because of its confirmed transaction with MCC. KOGIES sent a demand letter to PGSMC threatening criminal action for violation affixed his signature on the conforme portion of the letter. our laws ought to govern.11 of Batas Pambansa Blg. Established in this jurisdiction is the rule that the law of the place where the contract is made governs.23 Similar letters were transmitted by Ssangyong Manila Office on June 27. the wife of PGSMCs President faxed a letter dated May 7.00/MT for the 200MT stainless steel. 27 To suppliers is the Ssangyong Corporation (Ssangyong). head office in Seoul. 14 Following their usual practice. related interests and charges.31 . On the same date. like the National Labor Relations Commission and Mines Adjudication Board. in CA-G. again by fax. In Gonzales v.7 Ssangyong would send the pro forma invoices containing the details of the 30.00 per MT. 22 in case of nonpayment. Nonetheless. an arbitral panel will be constituted in a foreign country and the arbitration two tranches.132.. since its Steel is engaged in the business of importing and wholesaling stainless steel products. it can be gleaned that the concept of a final and binding arbitral award is similar to judgments or awards given by some of our quasi-judicial bodies. but not immediately executory in the sense that they may still be Group of Sanyo Seiki that it was looking forward to receiving the L/C details and a cable copy judicially reviewed. informed Sanyo Seiki and Chan. signature on the faxed copy and sends it back to Ssangyong. or public another for 110MT covered by ST2-POSTS0401-2. by is a contract and that a clause in a contract providing that all matters in dispute between the way of a fax transmittal. for the opening of the L/C covering payment of the first 100MT not later than June 28. ST2- Makati City hotel. forma invoice. we come to the that it was able to secure a US$30/MT price adjustment on the contracted price of question on what governs an arbitration clause specifying that in case of any dispute arising US$1. 170633. As stated in the pro already paid for. sent a letter. Any stipulation that the arbitrators award or decision shall be final. 2000. Held: Yes. 2000. without prejudice to Articles 2038. payment for the ordered steel products would be made through an irrevocable letter of credit (L/C) at sight in favor of Ssangyong.21 Thus.860. It has not into two. by fax. This was intimated in Ssangyong's June transmissions. public order. on June 22. through its Manila Office. 3 One of its Team 2 in Korea was having problems and Ssangyong was incurring warehousing costs. Having said that the instant arbitration clause is not against public policy. wrote Sanyo Seiki that if the L/C's were not MCC Manager [also the President10 of Sanyo Seiki Stainless Steel Corporation]. 2000. POSCO.24 On June 28. another US$20/MT two corporations conducted business through telephone calls and facsimile or telecopy discount on the price of the stainless steel ordered. despite Ssangyong's letters. to confirm opened. 30 Consequently. the Philippines. a letter9 addressed to Gregory Chan. Ssangyong replied. the first 100MT on that day and the second 100MT not later than June 27. Climax Mining Ltd.4 an international trading company5 with maintain their good business relationship and to support MCC in its financial predicament. by fax. on behalf of the corporations. Ssangyong Manila Office sent. Because MCC could open only a partial letter of credit. 2000 letter to MCC. through counsel. delivery of Issue: Whether or not the arbitration clause in the contract of the parties should govern. 2000. rules of the foreign country would govern and its award shall be final and binding. CV No. Ssangyong received. is valid. on preferential rate of US$1. Ssangyong placed the order the Philippines. 2044 of the Civil Code with its steel manufacturer. 8 However. Again in Del Monte Corporation-USA v. ST2-POSTS0401-117 and been shown to be contrary to any law.

2000.493. ST2-POSTS080-1 and ST2. Order41 and their admissibility finds support in Republic Act (R. among others. jointly and severally the following: POSTS0401-2). and demanding I.00 covering appearance in court.46 MCC and Chan raised before the CA the following errors of the RTC: Exasperated. if the said L/C On April 22. Ssangyong would be constrained to cancel the their Notice of Appeal.860 per MT. The appellate court ruled. MCC finally opened an L/C with PCIBank for US$170.A. Manager Chan. a civil action for damages due to breach of A. considering 3) Costs of suit. requesting for a price adjustment of the order stated in Pro Forma Invoice No.49 The dispositive portion of the appellate court's decision reads: WHEREFORE. sent a demand letter to Chan for 37 the opening of the second and last L/C of US$170. and therefore had to engage the services of a lawyer. premises considered.317. As can be gleaned from the photocopies of the said August 1) Actual damages of US$93. on September 11.) No. ST2-POSTS0401-1 and ST2- POSTS0401-2. ruling that II.00 per MT. 2) Attorney's fees in the sum of P50. filed was not opened by MCC on August 26.000. ST2-POSTS0401-1 On August 31. The trial court ruled that when plaintiff agreed to sell and defendants agreed to buy the 220MT of steel products for the price of US$1. MCC and Chan. which were later amended only in terms of reduction of volume as absolving Chan of any liability.00 per counsel's On August 17. Atty. Pro Forma Invoice Nos.000.000. INSTEAD OF ONLY 100 METRIC TONS. 2002 DAMAGES TO APPELLEE.87 representing the outstanding principal claim 16.99 (representing cost difference. 2004. In an Order dated April 24. that Pro Forma well as the price per MT. they both bear the conformity signature of MCC plus interest at the rate of 6% per annum from March 30. MCC then faxed to Ssangyong a letter dated August 22.500.34 The goods covered by the said invoice were then shipped to and received by MCC. through their counsel of record.00/MT. to pay plaintiff. contract when they refused to open the L/C in the amount of US$170. Sanyo Seiki and Gregory Chan before the Regional Trial APPELLANTS AGREED TO PURCHASE 200 METRIC TONS OF STEEL Court of Makati City. Considering that both testimonial and III. the RTC rendered its Decision43 on March 24. canceling the sales contract under ST2-POSTS0401-1 /ST2-POSTS0401-2. defendants filed a Demurrer to Evidence 40 alleging that Ssangyong failed to present the original copies of the pro forma invoices on which the civil action was based. ST2-POSTS080- reason of defendants' breach of their obligation under the subject contract. Invoice Nos. 2005. After Ssangyong rested its case. although they were mere facsimile printouts of MCC's steel evidence. THE HONORABLE COURT A QUO PLAINLY ERRED IN ADMITTING IN EVIDENCE THE PRO FORMA INVOICES WITH REFERENCE NOS.45 On June 8. 2000. 2003.00 with a warning that. excluded Sanyo Seiki from liability for lack of competent admissible in evidence. 2000. WHEREFORE. interests and charges. Chan failed to reply. ST2. 47 Ssangyong. but and ST2-POSTS0401-2. the law office of Castillo Zamora & Poblador entered contract and hold MCC liable for US$64. SO ORDERED. however.POSTS0401-1 AND ST2-POSTS0401-2. THE HONORABLE COURT A QUO PLAINLY ERRED IN FINDING APPELLANT After trial on the merits. in that the quantity was now officially 100MT per invoice and the price was reduced to US$1. of the earlier pro forma invoices (ST2-POSTSO401. 44 Ssangyong rejected the request. ST2-POSTS080-132 and ST2-POSTS080-233 dated August 16.066. on August 23. THE HONORABLE COURT A QUO PLAINLY ERRED IN AWARDING ACTUAL the documentary evidence presented had already been admitted in the December 16. warehousing expenses. In its complaint. The RTC.000. in favor of GREGORY CHAN JOINTLY AND SEVERALLY LIABLE WITH APPELLANT MCC. 2004.39Ssangyong alleged that defendants breached their PRODUCTS FROM APPELLEE. Samson.00 plus P2. interests and charges as of August 15. the Court holds: . and. following Pro Forma Invoice Nos. premises considered. Eladio B. 2001. Ssangyong through counsel wrote a letter to MCC.35 was constrained to litigate to enforce its rights and recover for the damages it sustained. Ssangyong's evidence sufficed for purposes of a prima facie case. warehousing its appearance as their collaborating counsel. the contract was perfected. THE HONORABLE COURT A QUO PLAINLY ERRED IN FINDING THAT contract against defendants MCC. The fallo of the decision reads: orders. 2001. 2000 invoices submitted to the court. 2000 signed by Chan.000. 1. The invoices slightly varied the terms defendants MCC Industrial Sales Corporation and Gregory Chan. 2000. the court denied the demurrer. Judgment is hereby rendered ordering 2000 were issued by Ssangyong and sent via fax to MCC. 2005. 2000) and other damages for breach. 2004.36 No award of exemplary damages for lack of sufficient basis. on November 16.Later. FEES TO APPELLEE.00 for the remaining 100MT of steel under Pro Forma Invoice Nos. THE HONORABLE COURT A QUO PLAINLY ERRED IN AWARDING ATTORNEY'S documentary evidence tended to substantiate the material allegations in the complaint.37 representing losses. the CA rendered its Decision48 affirming the ruling of the trial court. that the prevailing price of steel at that time was US$1. plaintiff 2.42 IV. expenses. THE HONORABLE COURT A QUO PLAINLY ERRED IN FINDING THAT payment of US$97. The subject transaction was evidenced by Pro Forma Invoice Nos. 8792.700. "E-1" and "F") were POSTS080-2. otherwise known as the Electronic Commerce Act of 2000. ST2-POSTS080-1. 38 APPELLANTS VIOLATED THEIR CONTRACT WITH APPELLEE Ssangyong then filed. ST2-POSTS0401-1 and ST2-POSTS0401-2 (Exhibits "E". and that MCC lost a lot of money due to a recent strike. the same being deemed just and equitable considering that by payment for 100MT of stainless steel coil under Pro Forma Invoice No. In their Appeal Brief filed on March 9. ST2-POSTS0401-1 and ST2.

Castillo Zamora & IV – Whether the award of actual damages and attorney's fees in favor of Ssangyong is proper Poblador. from the records of the CA.54 Ssangyong opposed the motion contending that the decision of the CA had become final and executory on account of the failure of MCC to file the It cannot be gainsaid that in Albano v.52 likewise. judicial orders. EVEN ASSUMING PETITIONER BREACHED THE SUPPOSED found that strong concerns of substantial justice warrant the relaxation of this rule. counsel to file the appeal brief and subsequent pleadings in the CA. Samson received a copy of the CA decision on September 14. a poor kind of justice if there would be justice at all. not Atty. decision by one of several counsels on record is notice to all. What should guide judicial action is the principle that a party-litigant is to be given the fullest opportunity to . Eladio B. on behalf of MCC. QUO'S DISMISSAL OF THE COMPLAINT IN CIVIL CASE NO. In this case. this Court assiduously reviewed the records and FACT THAT.50 III – Whether there was a perfected contract of sale between MCC and Ssangyong. Ssangyong sought the dismissal of the petition.87 IS SIMPLY UNCONSCIONABLE AND SHOULD HAVE BEEN AT LEAST REDUCED. MCC had only fifteen (15) days within which to file a motion for reconsideration conformably Aggrieved. the THAT: arrangement between the two counsels was for the collaborating. 2005. even as the CA denied the same. and I. 02-124 CONSIDERING Samson. in any case. on November 22. In Philippine Ports Authority v. THE COURT OF APPEALS DECIDED A LEGAL QUESTION NOT IN ACCORDANCE WITH JURISPRUDENCE AND SANCTIONED A DEPARTURE FROM THE USUAL AND ACCEPTED COURSE OF JUDICIAL PROCEEDINGS BY REVERSING THE COURT A We note. II – Whether the print-out and/or photocopies of facsimile transmissions are electronic (2) Appellant Gregory Chan is hereby ABSOLVED from any liability. Samson is deemed notice to collaborating counsel.58 we held that receipt of a copy of the said motion within the reglementary period. however. on September 14. with interest. when Atty. In In its Comment. Rule 52 of the Rules of Court. and. such a petition usually embodies arguments: that the CA decision dated 15 August 2005 is already final and executory. 2005. THE COURT OF APPEALS ERRED IN SUSTAINING THE ADMISSIBILITY they did so on October 5. which filed both MCC's and Chan's Brief and Reply Brief. Rule 45.57 In Orata v. Samson. As we held in Obut v. ruling on the procedural issue commences on such date even if the other counsel has not yet received a copy of the decision. that it was Castillo Zamora & Poblador. Court of receipt of a copy thereof. (1) The award of actual damages. attorney's fees and costs ordered I – Whether the CA decision dated 15 August 2005 is already final and executory. SO ORDERED. they received their copy of the CA decision. Apparently. DESPITE THE FACT THAT find it necessary to resolve the question of the timeliness of petitioner's motion for THE SAME WERE MERE PHOTOCOPIES OF FACSIMILE PRINTOUTS. by the lower court is hereby AFFIRMED. thus. well within the 15-day period from September 29. 8792. Atty. The period should not be reckoned from September 29. and that. because justifying circumstance which warrants our heeding to the petitioner's cry for MCC's motion for reconsideration was filed beyond the reglementary period of 15 days from justice in spite of the earlier negligence of counsel. and that MCC is liable for actual damages and attorney's fees because of administration of justice in a straight jacket for then the result would be its breach. THE COURT OF APPEALS FAILED TO APPRECIATE THE OBVIOUS Independent of this consideration though. 53 and justified. MCC filed a petition for review on certiorari56 before this Court. II. The appellate court resolved. No. Intermediate Appellate Court. nonetheless a non-compliance is to be dealt with as the circumstances The principal issues that this Court is called upon to resolve are the following: attending the case may warrant. compelling Ssangyong to litigate. THE AWARD OF ACTUAL DAMAGES IN THE AMOUNT OF US$93. Court of Appeals. this Court may relax the strict application of the rules of procedure in the exercise of its legal jurisdiction. reconsideration. that MCC breached Appeals: the contract for the purchase of the steel products when it failed to open the required letter of credit. are issued to be obeyed. such as the one subject of this petition. that the printout copies and/or photocopies of facsimile or telecopy transmissions were properly admitted by the trial court because they are considered original documents [W]e cannot look with favor on a course of action which would place the under R. if in the affirmative. 2005. 2005. it was a pro forma motion. Verily. CONTRACT. to deny the motion on its merits. however. Sargasso Construction and Development Corporation. THE FACT IS THAT PETITIONER FAILED TO PROVE THAT IT SUFFERED ANY DAMAGES AND THE AMOUNT THEREOF. imputing the with Section 1. IF NOT DELETED BY THE COURT OF APPEALS. whether MCC breached the said contract. when IN EVIDENCE OF THE PRO-FORMA INVOICES WITH REFERENCE NOS. Castillo Zamora & Poblador. filed a motion for -I- reconsideration of the said decision. On October 4.59 we ruled that: III. This could also be the reason why the CA did not ST2-POSTSO401-1 AND ST2-POSTSO401-2.51 Their collaborating counsel. and A copy of the said Decision was received by MCC's and Chan's principal counsel. evidence and admissible as such. raised. This explains why it was Castillo Zamora & Poblador which filed the motion for the reconsideration of the CA decision. and the period to appeal 2005. 2005. or to file a petition for review on certiorari in following errors to the Court of Appeals: accordance with Section 2. 2005. not the principal. 2005 (when Castillo Zamora & Poblador received their copy of the decision) because notice to Atty. we held that where strong considerations of substantive justice are manifest in the petition.A. raising the following addition to the basic merits of the main case. received a copy of the CA decision on September 19.55 without.493.

orderly administration of justice. by which a right is established or an Company. reflects the electronic data message or electronic document. 8792) vis-à-vis the Rules on Electronic Evidence. appellants argue that the said documents Moreover. in the interest of justice or for the promotion of public policy. not to shackle the hand that dispenses it. deprived of their judicial discretion. ostensibly because it merely restated the arguments previously 2. from application of the rules of procedure where the appellant failed to perfect its appeal a reading of the law and the Rules on Electronic Evidence. stored. 8792 before ruling on whether the lose life. there is a need to make its own findings in order to support its conclusions. the pro forma rule will not apply if the arguments printout or output. In Security Bank and Trust described or however represented. (Rule 4. Such facsimile printouts are considered Electronic Documents under the The other technical issue posed by respondent is the alleged pro forma nature of MCC's New Rules on Electronic Evidence. R. It provides the occasion for under the Best Evidence Rule. It includes digitally signed documents and any that its ruling was erroneous. recorded. we deem it appropriate to determine first whether the said fax . Jr. Electronic Commerce Act of 2000 (R. 01-7-01-SC). showing to reflect the data accurately. we gave due course to the petitioner's appeal despite the late filing of its Ssangyong to prove the perfection of their supposed contract of sale are inadmissible in brief in the appellate court because such appeal involved public interest. ST2-POSTS0401-1 and ST2-POSTS0401-2 (Exhibits "E".M. No. 2001. suffice it to say that the mere restatement of arguments in a motion for information. No. No. free from the constraints of technicalities. resulting in the appellate court's failure to obtain the pro forma invoice is admissible in evidence since it is an electronic document and.II - An electronic document shall be regarded as the equivalent of an original document The second issue poses a novel question that the Court welcomes. We stated evidence and do not fall within the ambit of R. as long as it is a printout or output readable by sight this Court to pronounce a definitive interpretation of the equally innovative provisions of the or other means. the term 'electronic document' may be used interchangeably with 'electronic data message'.A. honor or property on technicalities. Cuenca. rather than frustrate it. honor or property on sheer The copies of the said pro-forma invoices submitted by the appellee are admissible technicalities.A. it should be remembered that the Rules were promulgated to set guidelines in the are inadmissible (sic) being violative of the best evidence rule.M. rather than have them lose life. Furthermore. On the other hand. because the law merely admits as in the said case that the Court may exempt a particular case from a strict the best evidence the original fax transmittal. 8792. Every party-litigant must be afforded the amplest opportunity for the proper and just determination of his cause. the best evidence under the law and the Rules. 8792. Otherwise. processed. Court of Petitioner contends that the photocopies of the pro forma invoices presented by respondent Appeals.64 otherwise known as the are "electronic data messages" or "electronic documents" within the context of the Electronic Electronic Commerce Act of 2000.63 The rules of procedure are used only to secure and not override or frustrate justice. No. A movant may raise the same arguments precisely to convince the court produced electronically. A. For purposes of these Rules. reconsideration does not per se result in a pro forma motion. which accurately were not sufficiently passed upon and answered in the decision sought to be reconsidered. In Development Bank of the Philippines vs. Respondent further claims that the more leeway to exempt a case from the strictness of procedural rules when the photocopies of these fax transmittals (specifically ST2-POSTS0401-1 and ST2-POSTS0401- appellate court has already obtained jurisdiction over the appealed case. establish the merits of his complaint or defense rather than for him to transmissions are indeed within the coverage of R. "(h) 'Electronic document' refers to information or the representation of In this connection. v. . which came into effect on August 1. considers an electronic data message or an electronic Commerce Act (the petitioner merely assails as inadmissible evidence the photocopies of the document as the functional equivalent of a written document for evidentiary purposes. does not warrant the outright dismissal of the appeal. readable by sight or other means.62 we held that a motion for reconsideration may not be obligation extinguished.A. 65 The said facsimile transmissions). liberty. Section 1. A strict and rigid application of the rules must always be eschewed when it would subvert Admissibility of Pro Forma the rule's primary objective of enhancing fair trials and expediting Invoices. (Rule motion for reconsideration. Records). Breach of Contract justice.60 Turning first to the appellants' argument against the admissibility of the Pro Forma Invoices with Reference Nos. the appellate court ruled as follows: attainment of justice. A.A. "E-1" and "F". jurisdiction over the case. After all. Technicalities should never be used to defeat the substantive by Appellants rights of the other party. In any case. although they are mere electronic facsimile printouts of appellant's orders. data. this Court has ample authority to go beyond the pleadings when. the original facsimile transmittal of within the reglementary period. [T]he rules of procedure are mere tools intended to facilitate the In resolving this issue. A six-day delay in the perfection of the appeal. symbols or other modes of written expression. respondent posits that. 01-7-01-SC) Although the parties did not raise the question whether the original facsimile transmissions The ruling of the Appellate Court is incorrect. figures.61 in evidence. necessarily pro forma even if it reiterates the arguments earlier passed upon and rejected by which is received. the courts would be consigned to being mere slaves to technical rules. we also held that there is therefore. No.. photocopies thereof are covered by the law. In Republic vs. or by which a fact may be proved and affirmed. Imperial. leniency in this respect that will give the parties the fullest opportunity to ventilate the merits of their respective causes. retrieved or the appellate court. liberty. transmitted. pp. Technicalities must take a backseat to substantive rights. raised and passed upon by the CA. We 2) are admissible under the Rules on Evidence because the respondent sufficiently explained emphasize that: the non-production of the original fax transmittals. Section 1 [h]. it is circumspect The argument is untenable. No. Inc. 215-218. as in this case.

by which a right is established or an obligation extinguished. transmitted. information. recorded. symbols or other modes of written expression. retrieved or produced electronically. as follows: xxx a facsimile transmission an electronic data message or electronic document? (e) "Electronic Data Message" refers to information generated. received or stored by electronic. – For purposes of these Rules. in House Bill 9971. it does not necessarily mean that it will give rise to a Sec. which is received. stored or transmitted. sent. described stored. described or however represented. electronic mail. f. at first glance. data. received or stored by electronic. received or The definitions under the Electronic Commerce Act of 2000. 6. Throughout these Rules." (h) "Electronic Document" refers to information or the representation of And to telecopy is to send a document from one place to another via a fax machine. the following terms are defined. Trade Law (UNCITRAL). The deletion by Congress of the said phrase is significant and output readable by sight or other means. Definition of Terms. SECTION 1. which is received. telegram. recorded." Unless otherwise expressly provided for. No. Throughout these electronic data messages or electronic documents because they are sent by electronic means.70 from which majority of the provisions of R. 5. defines the document."72 In order to expedite the reconciliation of the two versions. symbols or other modes of written expression. retrieved or produced electronically. The The phrase "but not limited to. electronic data interchange (EDI). there is a document as follows: slight difference between the two terms.67 An electronic document is taken. electronic data Electronic Evidence. No. retrieved or produced electronically. telegram. processed. the term "electronic document" shall be equivalent to and be used interchangeably with "electronic data message. xxx The Rules on Electronic Evidence promulgated by this Court defines the said terms in the following manner: c. as follows: x x x x xxx (g) "Electronic data message" refers to information generated. transmitted. figures. 8792 were and is authenticated in the manner prescribed by the said Rules. by which a right is established or an obligation As further guide for the Court in its task of statutory construction. telex or telecopy." phrase "electronic data message" and the House of Representative's employment. data. we go back to the original question: Is an original printout of following terms are defined. stored.75 information. Rules. For purposes of these Rules. the technical working group of the Bicameral Conference Committee adopted The Electronic Commerce Act of 2000 defines electronic data message and electronic both terms and intended them to be the equivalent of each one. if it is a printout or drafters of the IRR reinstated it. figures. or by which a fact may be proved and affirmed. shown to reflect the data accurately. "Electronic Document" refers to information or the representation of information. its IRR and the Rules on stored by electronic. described or however represented. optical or similar means. data. the Department of other means. "Electronic Data Message" refers to information generated. by which a right is established or an obligation extinguished. of the term "electronic document. to be admissible in evidence as an electronic data message or to be considered as the The clause on the interchangeability of the terms "electronic data message" and "electronic functional equivalent of an original document under the Best Evidence Rule.74 unlike an electronic document. or by (h) "Electronic document" refers to information or the representation of which a fact may be proved and affirmed. consistent with the interchangeably with "electronic document. telex or telecopy" in the IRR's definition of "electronic data message" is copied from the Model . the following terms are right or extinguish an obligation. of the foremost be an "electronic data message" or an "electronic document. 8792. which is received. It The Implementing Rules and Regulations (IRR) of R. Thus.A." x x x x UNCITRAL Model Law. electronic data interchange (EDI). and then Governor of the Bangko Sentral ng Pilipinas.69 which was signed on July includes digitally signed documents and print-out or output. the interpretation of this Act shall give due regard to its international origin and the need to promote uniformity in its application and the observance of good faith in international trade relations. the term "electronic document" may be used terms as: interchangeably with "electronic data message. Definition of Terms. Section 37 of the Electronic extinguished. telegram. processed. Definition of Terms. further supports this theory considering that the enumeration "xxx [is] not limited to. electronic mail. readable by sight or 13. For the purposes of this Act and these Rules. 2000 by the then Secretaries of the Department of Trade and Industry. symbols or other modes of written expression. the also the equivalent of an original document under the Best Evidence Rule. Commerce Act of 2000 provides that recorded. the Given these definitions.A. sent. as follows: however. processed. 73 Be that as it may. but not limited to. defined. optical or similar means. telex or telecopy. 68 pivotal. transmitted. figures. in Senate Bill 1902." Sec. is the legislative intent to give the two terms the same construction. optical or similar means. which accurately reflects the electronic data message or electronic Budget and Management. While "data message" has reference to information electronically sent. electronic mail. Evident from the law. For the purposes of this Act. the writing must document" was the result of the Senate of the Philippines' adoption.71 While Congress deleted this phrase in the Electronic Commerce Act of 2000. as discussed hereunder. sent.Rules on Electronic Evidence66 regards an electronic document as admissible in evidence if it Law on Electronic Commerce adopted by the United Nations Commission on International complies with the rules on admissibility prescribed by the Rules of Court and related laws. the term "electronic data message" shall be equivalent to and be used The expanded definition of an "electronic data message" under the IRR. stored. or by which a fact may be proved and affirmed. or however represented. convey the impression that facsimile transmissions are interchange (EDI).

OF INFORMATION OR CONCEPTS. OF INFORMATION OR CONCEPTS. but not limited to. video records are not covered.. it will then become necessary to add certain terms in computer-generated faxes. sponsored the bill on second reading. Obviously. The next term is "ELECTRONIC RECORD. before I leave the Floor." The proposed amendment is as follows: Interestingly. the principal author of Senate Bill 1902 (the predecessor of R. Section 5. Mr. telegram. the proposed amendment is this: "DATA" MEANS REPRESENTATIONS. Jr. does not extend to all devices that create or store data in digital form. Though when the video is transferred to a website. and that tends to defeat the ends which are sought to be attained by the enactment. received or stored by electronic. We are in Part 1. these may well be admissible under other rules of law. IN ANY FORM. he proposed to adopt the term "data message" as formulated and defined in the UNCITRAL Model "ELECTRONIC RECORD" MEANS DATA THAT IS RECORDED OR STORED ON ANY Law. Furthermore. A computer or a similar device has to be involved in its creation or storage. As drafted. Mr. it would not apply to telexes or faxes. "but not limited to. the term evolved into "electronic data MEDIUM IN OR BY A COMPUTER SYSTEM OR OTHER SIMILAR DEVICE.A. telex or telecopy" in the UNCITRAL Model Law was deleted.79 During the period of amendments. Thank you." and the phrase "but not limited to. Magsaysay. I will proceed with the proposed because of the involvement of the computer. to data on magnetic strips on Section 5." though maintaining its description under the UNCITRAL Model THAT DATA. I will furnish a copy together with the record may be on any medium. Likewise. as revealed in the following proceedings: x x x x The explanation for this term and its definition is as follows: The term "ELECTRONIC RECORD" fixes the scope of our bill. the "international origin" mentioned in this section can only refer to the UNCITRAL The explanation is this: This definition of "data" or "data" as it is now fashionably Model Law. telegram. In short. whether these are figures. telex or telecopy. except my proposed amendments. things that are not recorded or preserved by or in a computer system are omitted from this bill. sent. Music recorded by a computer system on amendment on Definition of Terms. short title on the Declaration of Policy. Section 5. the amendment will read: "DATA" MEANS commerce shall likewise be considered. electronic mail. President. These are completely congruent with each other. No. not all data recorded or stored in digital form is covered. in the compatible. unlike the United Nations model law on electronic our list of terms to be defined. it would be covered If the gentleman will give me permission. electronic data interchange (EDI). This provision focuses on replacing the search for originality proving the reliability of systems At the appropriate places in the listing of these terms that have to be defined since instead of that of individual records and using standards to show systems reliability. THAT CAN message. except for the aforesaid deleted phrase. Senator Santiago." Senator Magsaysay. These are Court to make an inquiry into the true intent of the framers of the law. optical or similar means including. Please go ahead. electronic mail." we are simply reinforcing the definition of construction or interpretation of a legislative measure.76 So again." and replaced the term "data message" (as found in the UNCITRAL Model Law ) with "electronic data message. In light of the acceptance by the good Senator of cards or in Smart cards. a compact disc would be covered. Law. So. the Definition of Terms." This legislative divergence from what is assumed as the term's "international origin" has bred uncertainty and now impels the Senator Santiago. IT INCLUDES A DISPLAY. Indeed. I would like to insert the term . generally accepted principles of international law and convention on electronic DATA and its definition. documents? electronic mail. IN ANY FORM. And then finally. statute was enacted. the term SIMILAR DEVICE. electronic writings and electronic However. when Senator Ramon B. telex or telecopy. The record is the data. Yes. electronic data interchange (EDI).77 A construction should be rejected that gives to the language used in a statute a meaning that does not accomplish the purpose for which the Senator Magsaysay. and the UNCITRAL's definition of "data message": pronounced in America . I would like to add a definition on what is "data. President. facts or ideas. "Data message" means information generated. by a computer system or a similar device. PRINTOUT OR OTHER OUTPUT OF "electronic data message." the information is not recorded. electronic data interchange (EDI). When we define "data.the definition of "data" ensures that our bill applies to any form of information in an electronic record. It would apply to voice mail since the information has been recorded in or by a device similar to a computer. these are arranged alphabetically. It would also not apply to regular digital telephone conversations since what is "electronic record" and what is an "electronic record system. for example. BE READ OR PERCEIVED BY A PERSON OR A COMPUTER SYSTEM OR OTHER telegram.. however. 8792). REPRESENTATION. is substantially the same as the IRR's characterization of an "electronic data message. The Senator Santiago. It is accepted. the primary rule is to search for and what is a data message. It is electronic because it is recorded or stored in or explanation of this proposed amendment. President. Mr. The term "similar device" Senator Santiago. Senator Magsaysay. Congress deleted the phrase. conveyed a different meaning.78 Senator Santiago. may I please be allowed to go back to The amendment is intended to apply. determine the intent and spirit of the law. May I know how will this affect the definition of "Data Message" which encompasses electronic records." commerce. Although Definition of Terms.

including the amendment on the effect of error or change. The scanner converts the content of a physical mail. and using standards to show systems Senator Santiago. Thus." but verily are paper-based. 85 Thus. when the Senate consequently voted to adopt the term "electronic data message. and whose computer origin xxxx is never again called on. since the information has been recorded in or by a device similar to a computer. a modem and a computer printer and the deletion of the phrase "but not limited to. depending on whether it is black or electronic commerce. a fax of "data message. they may well be admissible under other rules of law. unlike the United Nations model law on dividing it into a grid of dots. in this sense. are treated as paper records. Photocopies of the printout would be paper record subject to telexes or faxes (except computer-generated faxes). No. Mr.86where we explained the unacceptability of filing pleadings through fax machines. It works by digitizing an image— "to telexes or faxes. but the original printout would be subject to the rules of Law on Electronic Commerce. This of the use of "Data Message" instead of "ELECTRONIC RECORD"? Act focuses on replacing the search for originality. the lady similar device has to be involved in its creation or storage. the reliability of the by a computer system on a compact disk would be covered. in effect. document into a digital image. Mr. This any session without any further intervention. In that case. printouts that are used only as paper records and whose computer origin is Web site it would be. In short. computer system that produces the record is irrelevant to its reliability. In this way. while maintaining part of the UNCITRAL Model Law's terminology bit map) that can be transmitted like normal computer data. except computer-generated faxes. President. because of the involvement of the computer. See subsection 4(2). Is that not right? transactions. The Act is intended to apply. white. being just the means of intelligible display of the "Data Message" on page 2A. telegram. The record is the data. Senator Santiago. which was first patented in 1843 by Alexander Bain. is in harmony with the Electronic Commerce Law's focus on Senator Magsaysay." So with Although things that are not recorded or preserved by or in a computer system are the new amendment of defining "ELECTRONIC RECORD. It would also not apply to regular digital telephone admissibility of this bill. Each dot is either on or off. Music recorded never again called on are treated as paper records. On the receiving side. Photocopies of the printout would be paper records subject to the usual rules about copies. earlier. we ruled that: "Electronic record" fixes the scope of the Act. Mr. in Garvida v." In explaining the term "electronic record" patterned after the E. Senator Magsaysay.84 A fax machine is essentially an image scanner. President. telex or telecopy. construction of the term "electronic data message. such as printouts. not all data recorded or stored in "digital" form is covered. As drafted." it was A facsimile machine. "paperless. RECORD" in being consistent with the UNCITRAL term of "Data Message." as drafted in the Uniform Electronic Evidence Act. proving the reliability of systems instead of that of individual records." will this affect her accepting omitted from this Act.80 Facsimile transmissions are not. In this case the reliability of the computer system that produced the record is relevant to Senator Santiago." amendment to the distinguished sponsor and then he can feel free to take it up in it intended the same meaning as the term "electronic record" in the Canada law. it would not apply to contents of the record. The term "similar Senator accepted that we use the term "Data Message" rather than "ELECTRONIC device" does not extend to all devices that create or store data in digital form. printouts that are used only as paper records. The term I would like reliability. contents of the record. though when the video is transferred to a However." Noteworthy is that the Uniform Law Conference of Canada. It would apply to voice mail." has assumed a different context. Electronically. for example. the fax machine translates a picture into a series of zeros and ones (called a message. It is "electronic" because it is recorded or stored in or by a . in a printer at the other end makes a duplicate of the original document. unlike the United Nations Model the usual rules about copies. conversations. Senator Santiago. Thank you for reminding me. Likewise video records are not covered. and reprints "electronic record" in the law of Canada. electronic combined into a highly specialized package. except computer-generated faxes. Mr. and the explains the term "electronic record. I understand from the proponent "paperless" communications and the "functional equivalent approach"82 that it espouses." Paper records that are produced directly by a computer system. Before we end. Jr." This term then. consonant with the term machine reads the incoming data. In of these amendments that these are based on the Canadian E-commerce Law of fact. However. each dot is represented by a bit that has a value of either 0 (off) or 1 Commerce Law of Canada. to which we have no objection. A computer or Senator Magsaysay. Then we are. manner strikingly similar to Sen. line 31. Paper records that are produced directly by a computer system such as printouts are computer system or similar device. this time. President. to insert is ELECTRONIC DATA MESSAGE in lieu of "ELECTRONIC RECORD. I have proposed all the amendments that I desire its reliability." which excludes telexes or faxes. Thank you.. since the information is not recorded. amending the term of the definition of are themselves electronic records. electronic data interchange (EDI). Senator Defensor-Santiago had in mind the term "electronic data (on). to themselves electronic records being just the means of intelligible display of the data on magnetic strips on cards. The record may be any medium. it will not. President. if my memory does not fail me. It accounts for the addition of the word "electronic" the picture. Santiago's explanation during the Senate deliberations: Sales. the modem sends the image data over a phone line. That is correct. or in smart cards. 83 is a device that can consonant with the explanation of Senator Miriam Defensor-Santiago that it would not apply send or receive pictures and text over a telephone line.81 to. translates the zeros and ones back into dots. but the "original" printout would be subject to the rules of admissibility of this Act. I will provide the language of the amendment together with the explanation supporting that There is no question then that when Congress formulated the term "electronic data message. the deliberations of the Legislature are replete with discussions on paperless and digital 1998.

mode. do not include a facsimile transmission. it could have easily lifted without a bit of tatter the entire wordings of the The essential elements of a contract of sale are (1) consent or meeting of the minds. and (3) cause of the obligation which is established. there is no way of as electronic evidence.101 Incidentally. and are considered as originals. contrary to the position of both the trial and the appellate courts. there is no original copy to speak of." which. if a discrepancy perfected at the moment there is a meeting of the minds upon the thing which is the object of occurs between the basic law and an implementing rule or regulation. contracts are perfected by mere consent. intended virtual or paperless writings to be the functional equivalent and to have the same legal function as paper-based documents. in a virtual or paperless . instrumentality and technology. there exists an original paper. After sifting through the Cooperation and Development's (OECD's) broad definition as it covers transactions made over records. 91 Thus. These two copies are contract of sale. Accordingly. it reproduction of printed and graphic matter by scanning an original copy.99 Sale. From that moment. households.95 In other words. electronic data interchange (EDI).98 They are." as printed record on paper referred to as a facsimile. 94 reproduce an image of the elemental area in the proper position and the correct shade. After the offer and the acceptance upon the thing and the cause which are to constitute the contract. it In an action for damages due to a breach of a contract. in all respects. (2) object certain which is the subject matter of the contract. businesses and governments conducted over computer-mediated networks through the Internet. which have an original that respondent has proven by preponderance of evidence the existence of a perfected paper-based copy as sent and a paper-based facsimile copy as received. in addition. 100 administrative agency certainly cannot amend an act of Congress. be a sham Since a facsimile transmission is not an "electronic data message" or an "electronic pleading. the Court found that these invoices are mere photocopies of their original fax any network. which are mere photocopies of the original fax transmittals.97 which is manifested by the meeting of offends a basic tenet in the exercise of the rule-making power of administrative agencies." The Task Force's proposed definition is similar to the Organization of Economic POSTS0401-1 and ST2-POSTS0401-2 (Exhibits "E" and "F"). (2) the breach thereof by the other contracting party generated faxes. it covers sale or purchase of goods and services. like telegraph.92 Had the Legislature really wanted ordinary fax transmissions to be covered by the mantle of the Electronic Commerce Act of 2000. the parties may reciprocally demand prevails. ST2- networks. in an ordinary facsimile transmission. Actori incumbit onus fax machine transmission). between individuals. at best. are not electronic receiving end. one considers any computer-mediated network and NOT limited to Internet alone. and. electronic mail. to UNCITRAL Model Law. the National Statistical Coordination Board Task Force on the Measurement of E- Commerce.96 Congress when the latter deleted the phrase "but not limited to. in fact. follows the general rule that it is the power to amend or repeal a statute is vested in the Legislature. technically. as all direct printouts of the virtual reality are the same. telex or telecopy. therefore. because the law cannot be broadened by a mere administrative issuance—an performance. the law's definition of "electronic data message. that is. the IRR went beyond the parameters of the law when it adopted verbatim the preponderance of evidence. commerce. among these documentary evidence presented by respondent. and re-printed at the and "F"). The whatever form they may have been entered into. distinct from each other." as "[a]ny commercial transaction conducted through electronic. that is. and representing the shade or tone of each area by a transactions received/placed using fax.87 document. It is not x x x A facsimile is not a genuine and authentic pleading. optical and respondent Ssangyong formally offered in evidence the testimonies of its witnesses and the similar medium. a plaintiff in a civil action must establish his case by a Clearly then." without considering the intention of than that which is offered in opposition to it. is interchangeable with Nevertheless. moreover. when it defined the term "electronic data message. transfer ownership in exchange for the price." could not have included facsimile transmissions. The transaction includes the sale or following exhibits: purchase of goods and services. telegram. it adopted the following provisions of the OECD definition: (1) . it is the former that the contract and upon the price. (4) it considers specified amount of electric current. In the present case. A facsimile or fax transmission is a process involving the transmission and for transactions. subject to the provisions of the law governing the form of contracts. The burden of proof rests on the party who advances a proposition affirmatively. electronic data interchange (EDI) and other channels through open and closed petition before this Court. and (5) it considers delivery made online (like downloading regular telephone lines or via microwave relay and is used by the receiver to of purchased books. (3) it excludes elemental area at a time. (2) for channel/network. MCC. with greater reason is a photocopy of such a fax transmission not electronic evidence. evidence that has greater weight. sent through a phone line. obligatory in statute is necessarily limited to what is found in the legislative enactment itself. assails the admissibility only of Pro Forma Invoice Nos." and cannot be considered as electronic evidence by the Court. It is. recommended a working definition of "electronic In this case. despite the pro forma invoices not being electronic evidence. and have different legal effects. which is a newer development as compared to the ordinary fax machine to and (3) the damages which he/she sustained due to such breach. being a consensual contract. this Court finds "electronic document. as validity are present." The inclusion of this phrase in the IRR In general. a facsimile transmission cannot be considered as electronic evidence. telex and telecopy (except computer- (1) the existence of a perfected contract. as aforesaid. It may. provided all the essential requisites for their implementing rules and regulations of a law cannot extend the law or expand its coverage. Accordingly. therefore. Be it noted that in enacting the Electronic Commerce Act of 2000. telephone or non-interactive mail. all. 2006. conclude that the terms "electronic data message" and "electronic document. 89 Ineluctably. music or software programs) or offline (deliveries of goods). Congress evidence. an exact copy the functional equivalent of an original under the Best Evidence Rule and is not admissible preserving all the marks of an original." probandi. or is more convincing UNCITRAL Model Law's definition of "data message. The receiver is equipped with a stylus or other device that produces a We. it is essential that the claimant proves excluded the early forms of technology. The current is transmitted as a signal over payments done online or offline. Pro Forma Invoice Nos.III - environment. mobile Significantly.88 Further. in its phones. ST2-POSTS0401-1 and ST2-POSTS0401-2 (Exhibits "E" based information or data that is scanned. the power of administrative officials to promulgate rules in the implementation of a The offer must be certain and the acceptance absolute. to establish the existence of a perfected contract of sale between the parties. Without the original. defined under the Electronic Commerce Act of 2000.93 on November 22. While Congress anticipated future developments in communications and computer technology 90 when it drafted the law. determining on its face whether the facsimile pleading is genuine and authentic and was originally signed by the party and his counsel.

which likewise bears the signature To determine whether these documents are admissible in evidence. ST2-POSTS080-1 and ST2-POSTS080-2 which were issued by open the L/C for the first half of the transaction (100MT). that it was the first of two (2) pro forma invoices 2000 and the Rules on Electronic Evidence. As already mentioned. ST2-POSTS080-1 (Exhibit "X"). in fact.108 prove the perfected contract. may prove its contents by a copy. we find that respondent failed to prove the existence of the original fax parties sufficiently established the existence of a contract of sale. started with the fair preponderance of evidence as to raise a reasonable inference of the loss or destruction of petitioner and the respondent agreeing on the sale and purchase of 220MT of stainless steel the original copy.00. loss as he has duly proven. It has been held that several extensions to pay." Furthermore. 104 Issues not raised on appeal are deemed abandoned. include the loss of profit which the seller Pro Forma Invoice No. It is hornbook doctrine that to be able to recover actual damages. despite numerous demands from Ssangyong and sent via fax to MCC.103 novating it. the conduct of both Given these norms.000. But then again. 110 In Villafuerte v. Plaintiff. Notably. finds that the award of actual damages is not in accord with the evidence on record. submitted to the court bear the conformity signature of MCC Manager Chan. along with the and are aimed at repairing the wrong done. "1-A" to "1-R") referring to Pro splitting of the original order into two.700. adjustments in the delivery dates. however. ST2POSTS080-2. both Pro Forma Invoices bear the same date admissible only upon compliance with Rule 130. This initial contract was perfected. so that the latter can apply for an L/C with greater Forma Invoice for Contract No. and the price discounted to US$1. facility. Petitioner. Plaintiff accounted for the notation "1/2" on the right upper Rules on Evidence. together with the testimonies of its witnesses. failed to explain why the originals of these documents were not presented. ST2- POSTS080-1. in the amount of US$170. were not as explicit in establishing a destruction of the originals. as gleaned from the evidence of both parties. The copies of the said August 16. it is crystal-clear that when petitioner did not are Pro Forma Invoice Nos. even if the writings of the transmissions of Exhibits E and F. and discounts in the price as where the missing document is the foundation of the action. Section 5. preponderate in favor of stipulation.00. however. Damages for failure to open a commercial credit may. thus: . Court of Appeals. and which bears the signature of Gregory Chan. paid only half of its obligation and failed to open an L/C for the other 100MT. however. Except as provided by law or by other unchallenged documentary evidence of respondent Ssangyong.700 per MT. Its admissibility. they are simply secondary evidence. which states. however. the claimant bears the onus of presenting before the court actual proof of This Court also finds merit in the following observations of the trial court: the damages alleged to have been suffered. (Exhibit "1-A"). the actions of the parties may indicate that a It is observed. the offeror of secondary no first half to speak of? evidence must prove the predicates thereof. This Court. accorded probative weight.000. upon proof transaction. Actual or compensatory damages are those awarded in order to compensate a party for an injury or loss he suffered. or cannot be produced in court. these invoices slightly varied the respondent Ssangyong. for as discussed above we cannot apply the Electronic Commerce Act of portion of the Invoice. split into two deliveries. Notable among them With our finding that there is a valid contract. as petitioner asked for search has been made for the document in the proper place or places. evidence not objected to is deemed admitted and may be validly . Observably further. on the other hand. however. in appropriate cases. 2000 invoices between buyer and seller. It also introduced in evidence a variety of other documents. which was certified be proven with a reasonable degree of certainty. as enumerated above. the seller or exporter is entitled to claim damages for such breach. the parties slightly varied the terms of their contract. Indeed. namely: (a) the loss or destruction of the original without bad faith on the part of the proponent/offeror which can be shown by circumstantial evidence of routine practices of destruction of documents. Ssangyong avers that these documents were prepared after MCC asked for the Defendants presented Letter of Credit (Exhibits "1". Defendants.00 per MT. we apply the ordinary of Gregory Chan. Petitioner MCC paid for the order stated in this invoice. and (c) it must be shown that a diligent and bona fide but unsuccessful at US$1. that respondent Ssangyong did not rely merely on Exhibits E and F to binding obligation has been undertaken. a party is entitled to an adequate compensation only for such pecuniary the claim that a contract of sale was perfected by the parties. petitioner breached its contractual obligation. on the other hand. They arise out of a sense of natural justice These invoices (ST2-POSTS0401. is not open to question. where the buyer fails to open a letter of credit as stipulated. to the effect that the original order was reduced to 200MT. or by a recital of its contents in some authentic document. Verily.860. ST2-POSTS080-2 (Exhibits "1-A" and "2-C"). without necessarily required than where the document is only collaterally involved. is a mere photocopy of its would reasonably have made had the transaction been carried out.109 original. and likewise did not sufficiently prove the loss or parties. which logically mean that they both apply to one and the same document has been lost or destroyed. presented Pro Forma Invoice referring to Contract No. Later. Exhibits E and F cannot be admitted in evidence and contract. but must As to Pro Forma Invoice No.111 we by PCIBank as a true copy of its original. petitioner MCC which introduced explained that: this document in evidence. more strictness in proof is originally agreed. the offeror. General Manager of MCC. (b) the proponent must prove by a The logical chain of events. and while there may be instances where the exchange of correspondence does not disclose the exact point at which the deal was closed. It. in the amount of US$170.00 per MT. petitioner MCC does not assail the admissibility of this document in the instant petition. "[w]hen the original and details. MCC.106 of its execution or existence and the cause of its unavailability without bad faith on his part. that is. or Indeed. because of their contested admissibility. It is axiomatic that actual or compensatory damages cannot be presumed.IV - considered by the court in arriving at its judgment.105 it was.transmittals.107 Appropriate conduct by the parties may be sufficient to establish an agreement. why would petitioner open an L/C for the second half of the transaction if there was by the testimony of witnesses in the order stated. Thus. covering the subject contract between plaintiff and the defendants. therefore. It is a well-entrenched terms of the earlier invoices such that the quantity was now officially 100MT per invoice and rule that the failure of a buyer to furnish an agreed letter of credit is a breach of the contract the price reduced to US$1. ST2-POSTS080-1 and ST2-POSTS080-2). failed to account for the notation "2/2" in its Pro Forma Invoice Because these documents are mere photocopies.

(3) Exhibit G. The phrase “but not limited to. considering that petitioner MCC's unjustified refusal to pay has compelled respondent telex or telecopy. We observed the following action was based. the original prove that the items resold at a loss were the same items ordered by the petitioner. Respondent would send the pro forma invoices containing the details of the breach are. because the law merely admits as the best evidence the original fax transmittal. fail to convince this Court of the veracity of its contents. products. The items therein are not even substantiated by official receipts.000. PREMISES CONSIDERED.A. the Regional Trial Court of Makati City. Philippines. and (4) Exhibit "V- 1. In its complaint. sent. however. The steel items indicated in After respondent rested its case. Petitioner contends that the photocopies of the pro forma invoices discrepancies: presented by respondent Ssangyong to prove the perfection of their supposed contract of sale are inadmissible in evidence and do not fall within the ambit of R.000. the appeal is PARTIALLY GRANTED. but not limited to. the Court awards nominal damages of P200. and the ATTORNEY'S FEES as awarded by the trial these damages cannot be presumed and courts.112 In the instant case. petitioner is ORDERED to pay respondent NOMINAL proved with a reasonable degree of certainty. No.118 In the instant case. In the absence of signature on the faxed copy and sends it back to the respondent.R. received or stored by electronic. optical or of the Civil Code. the sales contract and its authentication certificates.00 to showing to reflect the data accurately. "Nominal evidence and admissible as such? damages are 'recoverable where a legal right is technically violated and must be vindicated against an invasion that has produced no actual present loss of any kind or where there has Held: Electronic document shall be regarded as the equivalent of an original document under been a breach of contract and no substantial injury or actual damages whatsoever have been the Best Evidence Rule. South Korea and regional headquarters in Makati City.00 for the remaining 100MT of steel under Pro Forma Invoice Nos. petitioner filed a Demurrer to Evidence alleging that the sales contract114 with a Korean corporation are different in all respects from the items respondent failed to present the original copies of the pro forma invoices on which the civil ordered by petitioner MCC." the details of the said Statement of Account). Ssangyong to litigate and to incur expenses to protect its rights. 2007 "V. respondent From the foregoing. or can be shown. But in spite of respondent's continuous accommodation. October 17. telegram." the authentication of the resale contract from the Korean Embassy and certification from Facts: Petitioner is engaged in the business of importing and wholesaling stainless steel the Philippine Consular Office. document and.A. SO ORDERED. However. conjecture or guesswork as to the fact Respondent filed a civil action for damages due to breach of contract against petitioner before and amount of damages.R. It was respondent Ssangyong itself which prepared the said steel product order to petitioner.87 as actual damages. corroborative evidence. but must depend on competent proof that the claimant had suffered. The court cannot simply rely on speculation. message or to be considered as the functional equivalent of an original document under the Best Evidence Rule. As to the award of attorney's fees. On the other hand. but must actually be damages is DELETED. proper. Noticeably. 8792 defines the “Electronic Data fees. respondent alleged that defendants and on evidence of. Such damages. For such Issue: Whether the print-out and/or photocopies of facsimile transmissions are electronic inattention and insensitivity. 8792. the actual amount thereof. again by fax. On appeal. therefore. Respondent further claims that the photocopies of these fax transmittals (specifically ST2-POSTS0401-1 and ST2- Nonetheless. if the latter conforms thereto. the trial court awarded to respondent Ssangyong US$93. MCC must be held liable for nominal damages. the writing must foremost be an “electronic data message” or an “electronic document. A party is entitled to an adequate compensation for such pecuniary loss WHEREFORE. we find merit in the contention of MCC that Ssangyong did not adequately posits that. (2) Exhibit "U-1. We have emphasized that DAMAGES in the amount of P200. at best.'"117 Accordingly. facsimile transmittal of the pro forma invoice is admissible in evidence since it is an electronic as the claim for actual damages was not proven. it is well settled that no premium should be placed on the right to litigate and not every winning party is entitled to an automatic grant of attorney's The Implementing Rules and Regulations (IRR) of R." POSTS0401-1 and ST2-POSTS0401-2. the best evidence under the law and the Rules. electronic data interchange (EDI). the said statement of account is not sufficient basis to award actual damages. 82983 is MODIFIED in that the award of actual recoverable. Petitioner even asked sufficiently explained the non-production of the original fax transmittals. One of its suppliers is the responded. however. in making the said award. must not only be capable of proof." the contract of the alleged resale of the goods to a Korean corporation. the Court finds that petitioner knowingly breached its contractual obligation and POSTS0401-2) are admissible under the Rules on Evidence because the respondent obstinately refused to pay despite repeated demands from respondent.00. Thus. electronic data interchange (EDI). an international trading company with head office in Seoul. telex or telecopy” in the IRR’s definition of “electronic data message” is copied from the Model . from a reading of the law and the Rules on Electronic Evidence. ST2- Furthermore. electronic mail.493. the same was affirmed by the appellate court. No. The Decision actually suffered by him as he has duly proved. even in size and quantity. the Court finds the award of attorney's fees similar means. the Court cannot sanction the award. petitioner completely reneged on its contractual duty. SSANGYONG CORPORATION March 30. CV No. Therefore. must point out specific facts which could afford a basis for measuring whatever compensatory or actual damages are borne. electronic mail. allegedly evidencing the resale at a loss of the stainless steel subject of the parties' breached contract." the Statement of Account dated MCC INDUSTRIAL SALES CORPORATION vs. Exhibits "V" and "V-1. for several extensions of time for it to make good its obligation. telegram. 2001. to be of the Court of Appeals in CA-G. the trial and the appellate courts. to be admissible in evidence as an electronic data respondent Ssangyong. its representative affixes his documents. The party must show that he falls under one of the instances enumerated in Article 2208 Message” refers to information generated.000. as long as it is a printout or output readable by sight or other means. self-serving. The two corporations conducted business through telephone calls and facsimile or telecopy The statement of account and the details of the losses sustained by respondent due to the said transmissions. 170633.113 breached their contract when they refused to open the letter of credit in the amount of US$170. No. in making an award court. relied on the following documents submitted in evidence by the respondent: (1) Exhibit "U.

Thus. ordinary fax machine to fax machine transmission).” but verily are paper-based. It stemmed from the petition to compel arbitration filed by respondent Climax-Arimco before the RTC of Makati City on 31 March 2000 while the complaint for the nullification of the Addendum Contract was pending before the DENR Panel of Arbitrators. were consolidated upon the Department of Foreign Affairs v. with Judge Herminio I. This construction of the term Reconsideration and/or Clarification[3] seeking reconsideration of that part of the Decision “electronic data message. was initially raffled to Br.[13] . it supposedly conveys the idea that Gonzaless received. recommendation of the Assistant Division Clerk of Court since the cases are rooted in the 2016 same Addendum Contract. Gonzales v. Panel of Arbitrators and the timeliness of its filing. and re-printed at the receiving end.A.[6] argue that the arbitration clause in the Addendum Contract should sense..) No. or while the equivalent of an original under the Best Evidence Rule and is not admissible as electronic motions for reconsideration in G. the law’s definition of “electronic data message..1 [11] of the Addendum Contract and also in accordance with Sec.” as defined under the Gonzales filed his only on 25 July 2006. Accordingly.” it intended the same Respondents Climax Mining Ltd. is the holding in the Decision that the case should not be brought under the ambit of the interchangeable with “electronic document.” which excludes telexes or faxes. Facsimile transmissions are not. June 29. citing American jurisprudence [5] and the the “functional equivalent approach” that it espouses. No. et al.Law on Electronic Commerce adopted by the United Nations Commission on International bereft of jurisdiction. Hence. Gonzales adds that the Court failed to While Congress deleted this phrase in the Electronic Commerce Act of 2000. a facsimile transmission cannot be considered as electronic evidence. remains valid and binding and so does the arbitration clause therein.” could not have included facsimile transmissions. It held that the Addendum Contract containing the arbitration clause is void in view of Climax-Arimcos acts of DENR Panel of Arbitrators had no jurisdiction over the complaint for the annulment of the fraud. 167994. No. Pending judgment in such separate action. The deletion by Congress of the said phrase is significant and pivotal.R. it excluded the early forms of technology. wherein Gonzales challenged evidence. No. in all respects. It is not the functional On the other hand. (respondents) filed their Motion for Partial meaning as the term “electronic record” in the Canada law. G. 876. when it defined the term “electronic data message. and that a claimed rescission of the main contract does not avoid the duty to arbitrate. These two copies are distinct from each other. there exists an original paper-based information or Gonzaless argument relating to the alleged invalidity of the Addendum Contract still has to be data that is scanned.R. [4] Respondents. as all direct to compel arbitration. like telegraph. Nos. oppression and violation of the Constitution. [12] questioning the validity of entered into by the parties. Addendum Contract on grounds of fraud and violation of the Constitution and that the action contained in the Addendum Contract is also null and void ab initio and legally inexistent.1. as aforesaid. 161957 [10] were pending.R. except computer-generated faxes. Gonzales alleged that the 2005[1] denied the Rule 45 petition of petitioner Jorge Gonzales (Gonzales). reiterating its argument that the case involves a mining dispute that Trade Law (UNCITRAL). Respondent Climax-Arimco filed on 5 April 2000 a motion to set the application to compel arbitration for hearing. respondents submit that the courts holding that the case should not be it drafted the law. G. Respondents add that Ineluctably. 8792 were taken. and have different legal effects. Climax Mining Ltd. be treated as an agreement independent of the other terms of the contract. in this UNCITRAL Model Law. BCA International Corp. 167994 is a Rule 65 petition filed on 6 May 2005. No. the Addendum Contract printouts of the virtual reality are the same.” which. The petition for arbitration was subsequently filed and Climax-Arimco sought an order to compel the parties to arbitrate pursuant to the said arbitration clause.A.R. the drafters of rule on other issues he raised relating to the sufficiency of his complaint before the DENR the IRR reinstated it. that is. 210858. the two cases. January 22. 161957. No. 00-444. Climax-Arimco had sent Gonzales a Demand for Arbitration pursuant to Clause 19.. the RTC issued an order declaring Gonzaless motion to dismiss moot and Reconsideration[2] that the Court erred in holding that the DENR Panel of Arbitrators was academic in view of the filing of his Answer with Counterclaim. On 15 May 2000. No. technically. 167994. Benito as Presiding Judge. 2007 On 14 April 2000. 5 of R. The case. 161957 and 167994. sent through a phone line. Moreover. an action separate from the motion virtual or paperless environment. No. G. 876. G.[9] Electronic Commerce Act of 2000.[8] while [T]he terms “electronic data message” and “electronic document. We first tackle the more recent case which is G. telex and telecopy brought under the ambit of the Arbitration Law be understood or clarified as operative only (except computer-generated faxes.. Both parties filed separate motions for reconsideration. the orders of the Regional Trial Court (RTC) requiring him to proceed with the arbitration proceedings as sought by Climax-Arimco Mining Corporation (Climax-Arimco).” Both parties were required to file their respective comments to the other partys motion for reconsideration/clarification. which is a newer development as compared to the where the challenge to the arbitration agreement has been sustained by final judgment. should have been brought before the regular courts as it involved judicial issues. … [I]n a proven and adjudicated on in a proper proceeding. he filed an Answer with Counterclaim. do not include a facsimile transmission. 132 of the RTC of Makati City. the arbitration clause. If so. there is no original copy to speak of.R. Gonzales filed a motion to dismiss which he however failed to set for This is a consolidation of two petitions rooted in the same disputed Addendum Contract hearing.A. from which majority of the provisions of R.R. No. Clause 19. “paperless. Respondents add that [I]n an ordinary facsimile transmission. the Court in its Decision of 28 February the Addendum Contract containing the arbitration clause. On 23 March 2000. properly falls within the ambit of the Panels authority. when Congress formulated the term “electronic data message. and are considered as originals. While unilateral repudiation of the contract or mere allegation of its invalidity is all it takes to avoid Congress anticipated future developments in communications and computer technology when arbitration. Gonzales avers in his Motion for On 18 May 2000. In G. docketed as Civil Case No. is in harmony with the Electronic Commerce Law’s focus on “paperless” communications and also known as the Arbitration Law.[7] Respondents filed their Comment on 17 August 2005. On 5 June 2006. holding that the case should not be brought for arbitration under Republic Act (R.R. 161957. Arbitration Law appears to be premised on Gonzaless having impugn[ed] the existence or which have an original paper-based copy as sent and a paper-based facsimile copy as validity of the addendum contract.

6 of R.A. and shall be made summarily directing the parties to proceed with the that the court presented with an application to compel arbitration may order arbitration or arbitration in accordance with the terms thereof.A. referral of the parties to arbitration by Judge Pimentel despite the timely and properly raised issue of nullity On 23 August 2000. 9285 mandate that any issue as to the nullity. reconsideration of the 16 June 2000 Order and set the case for pre-trial on 10 August 2000.. If the finding be that a written provision for arbitration proceed with the arbitration in accordance with the terms thereof. 6 of R. they are applicable. a jurisdiction solely to comply therewith is not in issue. Hearing by court. Judge Benito issued arbitration agreement is null and void. 24. and to direct Judge Pimentel to hold a questions of law. 9285 or the Alternative Dispute Resolution being of the view that Gonzales had raised in his answer the issue of the making of the Act of 2004: arbitration agreement. 876: available only where there is no appeal or any plain. Gonzales adds that the assailed 13 February 2001 Order also violated his right to procedural due process when the trial court Gonzales moved for reconsideration on 20 March 2001 but this was denied in the Order erroneously ruled on the existence of the arbitration agreement despite the absence of a dated 7 March 2005. On 13 February 2001. [t]he court shall proceed to summarily hear such issue. 876 gives no room for any other issue to be dealt with in such a proceeding. 2000 Order.A.A. No.On 31 May 2000. 24 of R. 876 and R. The proceedings upon such an appeal. 29 of R. speedy. neglect or refusal of another to perform under an agreement in writing must be filed within 15 days from notice of the final order or resolution appealed from or of providing for arbitration may petition the court for an order directing the denial of the motion for reconsideration filed in due time. Five days notice in writing of the hearing of such certiorari.[21] hearing for the presentation of evidence on the nullity of the Addendum Contract. Appeals.A party aggrieved by the failure. The court shall hear the parties.[16] SEC. Gonzales thus filed the Rule 65 petition assailing the Orders dated 13 February Respondent Climax-Arimco. shall make an order directing the determine (a) whether or not the parties have a written contract to arbitrate. there is no default in the proceeding thereunder. [23] Climax-Arimco argues was made and there is a default in proceeding thereunder. if at least one party so requests not later than the pre-trial conference. the RTC granted Gonzaless motion for motions.A court before which an Climax-Arimco then filed a motion to resolve its pending motion to compel arbitration. They require that the trial court first determine or resolve the issue of nullity. Thus. Climax-Arimco filed a Motion to Inhibit Judge Herminio I. 6. Gonzales has also sought a temporary restraining order to prevent the enforcement of through certiorari proceedings. Referral to Arbitration. which. valid. under the Rules of Court. Gonzales has not denied that the that such arbitration proceed in the manner provided for in such relevant 15-day period for an appeal had elapsed long before he filed this petition for agreement. depending solely on its finding as to those two limited issues. Judge Pimentel granted the motion and directed the arbitration agreement must be determined by the court prior to referring them to parties to arbitration. on 7 July 2000. Climax-Arimco then points out SEC. holding that the petition for arbitration is a special proceeding that is filed under the provisions of this Act.An appeal may be taken from an order made in a Counterclaim that the Addendum Contract.A. No. petitions or applications on 16 June 2000. is null and proceeding under this Act.[20] by the trial court which has jurisdiction over the case.[22] which holds that in a proceeding to compel arbitration. but such appeals shall be limited to the assailed orders directing the parties to arbitrate. or incapability of for a motion to compel arbitration but directs the court to hear the motion summarily and performance of the arbitration clause/agreement raised by one of the parties to the alleged resolve it within ten days from hearing. Both R. The action is brought in a matter which is the subject matter of an RTC denied the same in its 24 July 2000 order.A. assails the mode of review availed of by 2001 and 7 March 2005 of Judge Pimentel. No.e. which the RTC did not follow. Gonzales asked the RTC to set the case for pre-trial. and timely raised argument in his Answer with SEC.A. and (b) if the parties to proceed to arbitration in accordance with the terms of the defendant has failed to comply with that contract. and [i]n the affirmative. and requiring Gonzales to proceed with arbitration proceedings and appointing retired CA Justice there is no other venue for this determination other than a pre-trial and hearing on the issue Jorge Coquia as sole arbitrator.A.[19] Climax-Arimco argued that R. No. No. Pimentel of According to Gonzales. and adequate remedy in the ordinary course of law against the challenged orders or acts. it Gonzales also cites Sec. inoperativeness. or that there is or there is no agreement in writing providing for arbitration. He cannot use the special civil action of certiorari as a remedy for a lost appeal. petitions. that R. refer the parties to arbitration unless it finds that the possessing the cold neutrality of an impartial judge. 29. followed in petitions to compel arbitration. [17] On 5 August 2000. No. Climax-Arimco filed a motion for reconsideration of the 24 July of the Addendum Contract was misplaced and without legal basis. Gonzales invokes Sec. arbitration agreement shall. If the finding be that arbitration law explicitly confines the courts authority only to pass upon the issue of whether no agreement in writing providing for arbitration was made. Climax-Arimco mentions that the special civil action for certiorari employed by Gonzales is In support of his argument. No. containing the arbitration clause. Judge Pimentel issued the first assailed order arbitration. No. and upon Climax-Arimco adds that an application to compel arbitration under Sec. Gonzales contends that public respondent Judge Gonzales. 876 provides for an appeal from such orders. 876 does not authorize a pre-trial or trial No. or applications have been heard by it. application shall be served either personally or by registered mail upon the party in default. i. Climax-Arimco cites Sec. 876 being satisfied that the making of the agreement or such failure to confers on the trial court only a limited and special jurisdiction. Court of Appeals. arbitration. the proceeding shall the statute ordains that the court shall issue an order summarily directing the parties to be dismissed.[18] The case was raffled to the sala of public respondent Judge Oscar B. Benito for not thereafter. including the pre-trial conference and the necessary hearings on the determination of the nullity of the judgment thereon shall be governed by the Rules of Court in so far as Addendum Contract. on the other hand. the above-quoted provisions of law outline the procedure to be Branch 148.[15] However. or from a judgment entered upon an award void. or upon the request of both parties On 28 July 2000. [14] This the RTC denied The court shall decide all motions.A. If the making of the agreement or default be in issue the Corporation v. within ten (10) days after such summary in nature. Respondent cites La Naval Drug agreement. an order that R. inoperative or incapable of an Order granting the Motion to Inhibit and ordered the re-raffling of the petition for being performed. 876: Pimentel acted with grave abuse of discretion in immediately ordering the parties to proceed with arbitration despite the proper. dismiss the same. If either of .

the alleged defect or failure of the Arbitration Law specifically provides for an appeal by certiorari. denied SPI's motion for reconsideration and ordered it to file its responsive pleading. In the latter case. enforceable and irrevocable. Corporation is not availing in the present petition. Climax-Arimco notes. 2. the appellate court had to deal first with a question of law which G. 9285 refers to an ordinary action which covers a court would eventually render a decision on the merits. 6 of alleged. 24 of R.e. 2 thereof. refer the parties to arbitration. No. 167994 first from the remedial law proposition contradicts both the trial courts limited jurisdiction and the summary nature of perspective. and appointed a sole arbitrator after making the determination that there was indeed an arbitration agreement. the arbitral proceedings may proceed even while the action is petition for certiorari. Indeed. 8 of the UNCITRAL Model Law[24] states that where a court question of existence of the arbitration clause which is one of fact. Inc.R. the court is required to conduct a summary hearing on it. x x x x agreement or the Articles of Agreement between the parties contained a clause requiring prior resort to arbitration before judicial intervention. 876 itself treats the arbitration clause or agreement as a 876 in the filing of appeals does not prohibit nor discount the filing of a petition for certiorari contract separate from the commercial. The trial court continues. Art. [26] There the party who has repudiated the main contract is not prevented from enforcing its is no merit to Gonzaless argument that the use of the permissive term may in Sec. It is elementary in remedial law that the use of an erroneous mode of appeal is cause for dismissal Climax-Arimco further notes that Gonzaless attack on or repudiation of the Addendum of the petition for certiorari and it has been repeatedly stressed that a petition for certiorari is Contract also is not a ground to deny effect to the arbitration clause in the Contract. the question is likewise a question of law which may be properly taken Thus. Sec.[27] Proper interpretation of the aforesaid provision of law shows that the term statute. Such grounds may only be raised by way of proceedings upon a finding that the Conditions of Contract were not duly executed and signed defense in the arbitration itself and cannot be used to frustrate or delay the conduct of by the parties. No. Such submission or contract shall be for collection of sum of money filed by therein petitioner BF Corporation against Shangri-la valid. It has been held that as long as a court acts within its jurisdiction and . R. The not a substitute for a lost appeal. the main issue raised in the Petition for Certiorari is whether it was proper for the RTC. among others. unless it finds that the The Court did not uphold BF Corporations argument. Corporation led to the conclusion that in order that the question of resolution of both Climax-Arimcos Motion for Partial Reconsideration and/or Clarification in jurisdiction may be resolved.A. [25] The commercial or economic transaction. which the Court of Climax-Arimco emphasizes that the summary proceeding to compel arbitration under Sec. The trial court found that an The grounds Gonzales invokes for the revocation of the Addendum Contractfraud and arbitration clause was incorporated in the Conditions of Contract appended to and deemed an oppression in the execution thereofare also not grounds for the revocation of the arbitration integral part of the Articles of Agreement. No. Gonzaless We address the Rule 65 petition in G.R. economic or other transaction to be arbitrated.F. R. No. consequently. SPI moved to suspend the proceedings alleging that the construction law for the revocation of any contract. 876. which is the prescribed remedy and at that far beyond the reglementary period.. While on its face the before which an action is brought in a matter which is subject of an arbitration agreement question of existence of the arbitration clause is a question of fact that is not proper in a refers the parties to arbitration. No. The Addendum Contract and. No. In the present case. while Sec. that the Court of Appeals should have dismissed the petition for R. in particular paragraph 1 of Sec. As its nature.Two or more persons or parties may submit to the arbitration of one or more arbitrators any Neither can BF Corporation v. Gonzaless petition raises a whether the question of validity of the Addendum Contract bears upon the applicability or question of law. Arbitration may even be ordered in the same suit brought upon a matter covered question before the Court of Appeals was whether the trial court had prematurely assumed by an arbitration agreement even without waiting for the outcome of the issue of the validity jurisdiction over the controversy. [31] in the proceeding to compel arbitration under R. it demand for arbitration within the period specified in the arbitration clause. No. on request of either or both parties. favorably acted upon. The question of jurisdiction in turn depended on the of the arbitration agreement. a petition for review main contract is not a ground to deny enforcement of the parties arbitration agreement. may.A. speedy and adequate remedy in the ordinary course of law. [29] The BF Corporation case had its origins in a complaint thereafter arising between them.The under Rule 65. In a petition for review before this Court. cognizance of in a petition for certiorari under Rule 65.F. of the arbitration clause therein as well. which decision could then be elevated matter that appears to be arbitrable or subject to arbitration under the arbitration to a higher court in an ordinary appeal. No.A. Court of Appeals[28] cited by Gonzales support his controversy existing.R. 167994 essentially turns on could be addressed in a certiorari proceeding. SPI filed a petition for certiorari under Rule 65. It deserves to be dismissed on procedural grounds. 9285. 161957 and Gonzaless Petition for Certiorari in G.A. as it was filed in lieu of appeal the proceeding itself. Judge Pimentel acted in accordance with the enforceability of the arbitration clause contained therein.A. but not a question of jurisdiction. 6 Appeals. these should be raised in a separate action for rescission. i. (SPI).A. the trial court denied the motion to suspend clause in the Contract.A. No. save upon such grounds as exist at Properties. SEC. independent contract in its own right whose enforcement may be prevented only on grounds the use of may merely reiterates the principle that the right to appeal is not part of due which legally make the arbitration agreement itself revocable. arbitration provision. No. The disquisition in B. No.these matters is disputed. 876 when he ordered Gonzales to proceed with arbitration be jointly resolved. the statute is clear that the court. The trial court also found that SPI had failed to file any written notice of arbitration proceedings. 876 should not be confused with the procedure in Sec. yet since the determination of the question obliged the Court of pending.A. it stresses. considers the arbitration stipulation an may refers only to the filing of an appeal.Instead of filing an answer. not to the mode of review to be employed.A. Still. between them at the time of the submission and theory. a petition for certiorari lies only where there is arbitration agreement is separate and severable from the contract evidencing the parties no appeal. Appeals as it did to interpret the contract documents in accordance with R. to order the parties to arbitrate even though the defendant therein has raised the twin issues of validity and nullity of the The situation in B. Hence.[30] agreement. and no plain. No. Gonzales argues that said case recognized and allowed a petition for certiorari under which may be the subject of an action. The performed. Instead. instead of trying the case. BF Corporation of R. Persons and matters subject to arbitration. the trial for arbitration. inoperative or incapable of being Court was whether SPI had taken the proper mode of appeal before the Court of Appeals. or the parties to any contract Rule 65 appealing the order of the Regional Trial Court disregarding the arbitration may in such contract agree to settle by arbitration a controversy agreement as an acceptable remedy. The two pending matters shall thus procedure prescribed in R. so the Court held. 876 refers to an application to compel arbitration where the courts authority is certiorari since the order of the trial court denying the motion to suspend proceedings is a limited to resolving the issue of whether there is or there is no agreement in writing providing resolution of an incident on the merits and upon the continuation of the proceedings. 29. Even under certiorari under Rule 45 of the Rules of Court that raises pure questions of law. The issue raised before the arbitration agreement is null and void. thus: process of law but is a mere statutory privilege to be exercised only in the manner and in accordance with law. 24 of R. 876 and existing jurisprudence.

thus: incidental. If the making of the agreement or default be in issue the accepted in our jurisdiction. thereof. independent character of the arbitration clause or agreement. enunciates that The special proceeding under Sec. Court of Appeals[37] that [t]he provision to submit to arbitration any dispute arising therefrom Implicit in the summary nature of the judicial proceedings is the separable or and the relationship of the parties is part of that contract and is itself a contract. unless the appropriate court having jurisdiction approve accordance with the terms of their agreement (Sec. petitions. 6. Since there obtains herein a written provision for A controversy cannot be arbitrated where one of the parties to the arbitration as well as failure on respondent's part to comply therewith. upon the other hand. Such submission or arbitration. controversy is an infant. giving reciprocal recognition and allowing enforcement of international an order shall be made summarily directing the parties to proceed arbitration agreements between parties of different nationalities within a contracting state. R. Foreign arbitration. or settling commercial disputes of an international character. as a system of no agreement in writing providing for arbitration was made. the Philippine Senate.does not gravely abuse its discretion in the exercise thereof. Irrespective . No. [Emphasis arbitrators decision. 876 also court shall proceed to summarily hear such issue. also referred to as directing that such arbitration proceed in the manner provided for in the container contract. shall make an order directing the parties to proceed to arbitration in accordance with the terms of the Arbitration. appraisals or other controversies which may be collateral." under the 10 May 1965 Resolution No. including arbitration.[35] that a submission should proceed to arbitration or not.[38] Appeals. v. No. "the proceeding shall be dismissed. any supposed error committed by such agreement." If the court. the petition would nevertheless be being satisfied that the making of the agreement or such failure to dismissed for failure of Gonzalez to show grave abuse of discretion. [Emphasis added. comply therewith is not in issue. within ten days after such Disputes do not go to arbitration unless and until the parties have agreed to abide by the motions. This was highlighted in the contracts are respected as the law between the contracting parties and produce effect as cases of Manila Electric Co. or a person judicially declared to be the court a quorightly ordered the parties to proceed to arbitration in incompetent. 876 recognizes the contractual an arbitration agreement is independent of the main contract. Co. or the parties to of Appeals. precedent or subsequent to any issue between the parties. or applications have been heard by it.A.[39] There it was held that R. [36] and in Del Monte Corporation-USA v.] arbitrators. Court of between them. or severability as other writers call it. Court submission and which may be the subject of an action. 876 as well as the any controversy existing.Five days notice in writing of the hearing of such it will amount to nothing more than an error of judgment reviewable by a timely appeal and application shall be served either personally or by registered mail not assailable by a special civil action of certiorari.[45] The doctrine of separability. in the settlement of disputes. 876 explicitly confines the court's authority only any contract may in such contract agree to settle by arbitration a to the determination of whether or not there is an agreement in writing providing for controversy thereafter arising between them.A. does not affect the validity of the arbitration agreement.A party aggrieved by the failure. No.] binding. the proceeding Philippines adhered to the United Nations "Convention on the Recognition and the shall be dismissed. of Florida[42] which held. v. v. x x x x[43] to arbitration is a contract. Pasay Transportation Co. 71 of arbitration was made and there is a default in proceeding thereunder.A. In the affirmative. No. [34] The enactment of R. The jurisdiction of the courts in relation to Sec. A clause in a contract providing that all matters in dispute between the parties shall be referred to arbitration is a contract. The Civil Code is explicit on the matter. The duty of the court in this case is not to resolve the merits of the parties' claims but only to determine if they Thus. The separability of the arbitration agreement is especially significant to the neglect or refusal of another to perform under an agreement in determination of whether the invalidity of the main contract also nullifies the arbitration writing providing for arbitration may petition the court for an order clause. 6 of R. If the finding be that expressly authorizes arbitration of domestic disputes.[32] Even if we overlook the employment of upon the party in default.[33] R. It provides: 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.[44] and Del Monte Corporation-USA v."[40] The cited case also stressed that the proceedings are Such submission or contract may include question arising out of summary in nature.A. the doctrine denotes that the invalidity of the main contract. They should be addressed to the the incompetent. their assigns and heirs.Two or more persons This special proceeding is the procedural mechanism for the enforcement of the contract to or parties may submit to the arbitration of one or more arbitrators arbitrate. the statute ordains that the court shall issue an order contract shall be valid. The arbitration agreement is to nature of arbitration clauses or agreements. we held in Manila Electric Co. 2. and upon the wrong remedy in the broader interests of justice. save upon "summarily directing the parties to proceed with the arbitration in accordance with the terms such grounds as exist at law for the revocation of any contract. 9285 on 2 April 2004 further institutionalized the use of alternative dispute resolution systems. as an alternative mode of settling disputes. Persons and matters subject to arbitration. Necessarily. No. Republic Act a petition for permission to submit such controversy to arbitration 876). No.[41] The same thrust was made in the earlier case of Mindanao Portland valuations. a contract is required for arbitration to take place and to be added. This proceeding is merely a summary remedy to enforce the agreement to arbitrate. Hearing by court. has long been recognized and agreement. Indeed. Pasay Trans. enforceable and irrevocable.A. McDonough Construction Co. 6 of R. petitions or applications filed under the provisions of this Act. was likewise recognized when the that there is no default in the proceeding thereunder. 6. 876 recognizes the contractual nature of the arbitration agreement. thus: SEC. finds that no such agreement exists. The court shall hear the parties. If the finding be that a written provision for Enforcement of Foreign Arbitral Awards of 1958. with the arbitration in accordance with the terms thereof.A. [46] SEC. As a rule. The court shall decide all motions. between them at the time of the nature of the proceedings therein was expounded upon in La Naval Drug Corporation v. Cement Corp. Respondent's arguments touching upon the merits of the made by the general guardian or guardian ad litem of the infant or of dispute are improperly raised herein.

therefore the opposing party to controvert the particular facts allegedly constituting the same. complaint filed before the DENR Panel of Arbitrators involves judicial issues which should properly be resolved by the regular courts. contract itself was induced by fraud.S. 876 is limited only to the resolution of the question of whether circumstances constituting the alleged fraud. whether the complaint filed before the DENR Panel of Arbitrators alleged ultimate able for perform its contract when in fact it was not and had even intended to file for facts of fraud. That being the situation coupled with the fact jurisprudence applying it. Relying on Sec. such allegations entail legal questions which are within the jurisdiction of address this argument. there because its allegations of fraudulent inducement were not directed to the arbitration clause would be no FTAA to speak of.R. as it had already been valid and enforceable. it should be clarified that the case referred for or even unnecessary. such as whether arbitration clause. Prima Paint did not make payments as provided in the consulting he had ceded his claims over the mineral deposits located within the Addendum Area of agreement. in the case of fraud. and that where no claim is made that fraud was directed to the arbitration clause The Court of Appeals likewise found that Gonzaless complaint alleged fraud but did itself. Second. or how the misrepresentation Addendum Contract means that validity or invalidity of the Addendum Contract will not affect was done. Thus. F & C moved to stay the suit pending not raise any new argument that would sway the Court even a bit to alter its holding that the arbitration.Incorporated in the body of the complaint are verbatim reproductions of the the enforceability of the agreement to arbitrate. The separability of the arbitration clause is confirmed in Art. This brings us back to G. violation of the Constitution and similar conclusions but nowhere did it give any ultimate facts or particulars relative to the allegations. Gonzales raises the same question of jurisdiction. not the regular courts. 161957.[53] embedded. and whether the action to declare the nullity of the Addendum Contract on the bankruptcy after executing the consultancy agreement. neglect. No. Flood & Conklin Manufacturing Co. seeks to avoid. 4 of the Federal Arbitration Actwhich provides that if a the courts. the circumstances constituting fraud must be stated with particularity. The adjudication of the petition in G. but only to the consulting agreement which contained the arbitration agreement. 16(1) of the UNCITRAL Model Law and Art. We add that when it was declared in G. the separability of the arbitration clause from the Arimcos financial or technical capability were misrepresented. No. through the various agreements. Perusal the arbitration clause therein is void as well.[47] determined that the case should have been brought before the regular courts involving as it did judicial issues.S. This is to enable arbitration. [52] This finding was affirmed by the Court of Appeals in its itself. contending that F & C had fraudulently misrepresented that it was solvent and Influence. [49] In that case. the time of the discovery of the alleged fraud is not clear to avoid arbitration. F & C served Prima Paint with a ground of fraud has prescribed. and only if. 5. In the motion. case of Prima Paint that the complaint for nullification of the Addendum Contract pertained to the DENR Panel of Corp. we now hold that the validity of the contract containing the agreement to voidable contract under the Civil Code.[55] Under Art. 161957 should also be denied. The parties should dated 25 June 2002. A annulment shall be brought within four years. to rule against Gonzales when he alleges that Judge Sec. [t]he court shall hear the parties. beginning from the time of contrary ruling would suggest that a partys mere repudiation of the main contract is sufficient the discovery of the same.S. the court shall make an order in the Addendum Area of Influence is a factual question which is not proper for determination directing the parties to proceed to arbitration x x x. It does not state what particulars about Climax- the arbitration agreement exists. He insists that the subject of his complaint is a mining (F & C) entered into a consulting agreement whereby F & C undertook to act as consultant to dispute since it involves a dispute concerning rights to mining areas.R. The trial court granted F & Cs motion. 161957 that this Court is not a trier of facts. that Gonzales had. v. Decision dated 30 July 2003 resolving the petition for certiorari filed by Climax-Arimco in [50] Prima Paint held that arbitration clauses are separable from the contracts in which they are regard to the 18 October 2001 Order of the DENR Panel. party [claims to be] aggrieved by the alleged failure x x x of another to arbitrate x x x. [48] The Motion for Reconsideration of Gonzales in G. is not tenable. notice of intention to arbitrate. to is the case actually filed by Gonzales before the DENR Panel of Arbitrators. and it also involves paint to these customers during the same period.The consulting agreement contained an claimowners. If the making of the arbitration agreement before this Court. No. Clearly. High Court held that the court should not order the made a factual finding in its Order dated 18 October 2001. No. any ruling on the issue of prescription would be uncalled that the case should not be brought for arbitration. Gonzaless argument that the Addendum Contract is null and void and.R. No. the proceeding in a petition of the complaint indeed shows that it failed to state with particularity the ultimate facts and for arbitration under R.R. 1391 of the Code. the court shall proceed of the DENR Panel of Arbitrators. Supreme Court did not address Prima Paints argument that it had been execution of the Addendum Contract which is a ground for the annulment of a voidable fraudulently induced by F & C to sign the consulting agreement and held that no court should contract. Prima over the mineral claims all in favor of [Climax-Arimco] as well as that without the complainant Paint was not entitled to trial on the question of whether an arbitration agreement was made [Gonzales] assigning his interest over the mineral claims in favor of [Climax-Arimco]. assigned his interest be ordered to arbitration if. Prima Paint and Flood and Conklin Arbitrators.R. or refusal to perform the same be in issue. moreover. the arbitration clause/agreement still remains the nullification of the main contract on the ground of fraud. The complaint repeatedly mentioned fraud. and the U. therefore. No.[51] oppression. correspondence and government issuances that reportedly explain the allegations be dismissed. they have contracted to submit to arbitration.S. He adds that the Court failed to rule on other issues he raised. Hence. That is exactly the situation that the separability doctrine. and upon being satisfied that the making of the agreement for The question of whether Gonzales had ceded his claims over the mineral deposits arbitration or the failure to comply therewith is not in issue. at best. evidentiary matters that should not be included in the pleading. agreement on the ground of fraudulent misrepresentation and asked for the issuance of an 161957 which were resolved against him in the Decision of 28 February 2005. a broad arbitration clause will be held to encompass arbitration of the claim that the not provide any particulars to substantiate it. Gonzaless petition for certiorari should contracts. Prima Paint sued in court for rescission of the consulting These are the same issues that Gonzales raised in his Rule 45 petition in G. sold to Prima Paint a list of its customers and promised not to sell Technical Assistance Agreement (FTAA) between the parties.of the fact that the main contract is invalid. At all events. Rule 8 of the Rules of Court specifically provides that in all averments of Pimentel acted with grave abuse of discretion in ordering the parties to proceed with fraud. No. 21(2) of the UNCITRAL Arbitration Rules. as well as from the allegations of Gonzaless complaint. Thus. attending the execution of the Addendum Contract are grounds for the annulment of a 161957. the Financial and Prima Paint for six years. more particularly The separability doctrine was dwelt upon at length in the U. As to the issue of prescription.R. of fraud and misrepresentation.A. the question is irrelevant to the issue of jurisdiction or the failure. However.[54] There is reason. It should be pointed out that the DENR Panel of Arbitrators summarily to the trial thereofthe U. an action for submit to arbitration does not affect the applicability of the arbitration clause itself. First. but these are. Gonzaless claims of fraud and misrepresentation 167994 effectively modifies part of the Decision dated 28 February 2005 in G. Supreme Court affirmed. Gonzales does order enjoining F & C from proceeding with arbitration. which was for . He alleged fraud or misrepresentation in the The U. which it reiterated in its Order parties to arbitrate if the making of the arbitration agreement is in issue.

G.R. ANZ Bank and Security Bank moved to be excused from filing a memorandum. 04-332. was preliminary injunction dated 5 November 2000. Luzon Hydro as represent the same interests in both actions. whom an adverse judgment has been rendered in one forum. CA-G. ICC Case No. Transfield Philippines. Thus.R. [13] between LHC and TPI. as well as the viability of The disposal of the forum-shopping charge is crucial to the parties to this case on account of international commercial arbitration as an alternative mode of dispute resolution in the its profound effect on the final outcome of the international arbitral proceedings which they country. for the purpose of obtaining a favorable judgment. The second stage involving the issue of forum- shopping on which the Court required the parties to submit their respective memoranda [2] is On 1 August 2005. [8] On 28 October 2005.[14] injunction. the relief being founded on the same facts. [6] The Court granted their respective specifically the question of the propriety of calling on the securities during the pendency of motions. to determine the on the securities was premature considering that the issue of primary issue of whether the delays in the construction of the project were excused delays. seeking recognition and enforcement of the said recognition and enforcement of the Third Partial Award in case 11264 award. of the Court of Appeals Decision dated 31 January 2001 in CA-G. v. Inc.00 proceeds of the 1. 2006 Meanwhile. TPI argues that LHC is relitigating in Civil Case No. for forum-shopping to exist. They claim that with the finality of the Courts Decision dated 22 November The adjudication of this case proved to be a two-stage process as its constituent parts involve 2004. b. in its appeal and petition for review asked that the same be returned and complaint was denied by the RTC. Civil Case No. TPI claims that it is LHC which is guilty of forum-shopping when it raised The Motion for Reconsideration filed by Jorge Gonzales in G. or at least such parties 3. and even DENIED WITH FINALITY. Inc. Civil Case No. the Petition for Certiorari in G. positing that the resolution of disposed of in this Resolution.. regardless certiorari with prayer for TRO/preliminary prohibitory and mandatory of which party is successful. (TPI) is guilty of forum-shopping when it filed the Reiterative Motion[9] to set the case for oral argument. 161957. The first stage relating to the merits of the case. Inc. Moreover. International Chamber of Commerce (ICC) a request for certiorari.977. either simultaneously or successively.[5] Transfield Phils. ICC Case No. the the proceeds. TPI also submitted a copy thereof with a Supplemental the Regional Trial Court (RTC) of Makati. which was an appeal by preceding particulars is such that any judgment rendered in the other action will. [3] LHC arguing that the respective memoranda of the parties are sufficient for the Court to resolve the issue of forum-shopping. WHEREFORE.730. their role as the banking entities involved are concerned. May 19. the arbitral proceedings. with have chosen as their principal dispute resolution mechanism. ICC International Court of Arbitration. SP No. and (c) the identity of the two Security Bank Corp. 11264 TE/MW. TPI moved to set the case for oral argument. seeking and possibly getting a Luzon Hydro Corporation filed before the International Court of favorable opinion in another forum.[11] TE/MW. was resolved in favor of Luzon Hydro Corporation (LHC) with the Courts Decision[1] of 22 November 2004. No. in G. Transfield Philippines. and even manifesting therein that it will present evidence earlier presented before the arbitral tribunal. Such dismissal effectively renders superfluous formal action on the Motion for Partial Reconsideration and/or Clarification filed by Climax Mining Ltd. 167994 is DISMISSED.R. However. 146717. v. [15] . et al. SO ORDERED. amount to res judicata in the action under consideration.R. filed on 5 February 2001. or the institution of two or more actions or proceedings grounded on the same arbitration dated 3 November 2000 pursuant to the Turnkey Contract cause on the supposition that one or the other court would make a favorable disposition. 04-332 filed on 19 March 2004.533.R.. v. 00-1312. TPI.[7] Said motion was opposed by LHC in its opposition filed on 2 September 2005. and Civil Case No. Luzon Hydro The essence of forum-shopping is the filing of multiple suits involving the same parties for the Corporation. Inc. Luzon Hydro Corp. Civil Case No. the petition which would consequently render valid TPIs claims for extension of time to finish the was however denied by the Court of Appeals. any resolution by the Court on the issue of forum-shopping will not materially affect two segregate but equally important issues. a.. 04-332. 61901 was a petition for review of the Decision The arbitration case. Together with the primary issue to be settled in the arbitration case is the equally important question of monetary awards to the aggrieved party. 04-332 the very same causes of action in ICC Case No.[4] same cause of action. No. project. but also in Civil Case No. wherein TPI claimed that LHCs call commenced pursuant to the Turnkey Contract between TPI and LHC. 11264/TE/MW.entitled Transfield Philippines. v. Petition[10] to the Regional Trial Court (RTC). asked for the dismissal of the other case based on this ground. the instant petition.R. 00-1312. in view of the fact that LHC collected banks from transferring or paying of the securities. TPI filed its Manifestation and LHC claims that Transfield Philippines. placed in escrow pending the resolution of the disputes before the ICC arbitral tribunal.815. the precursor of the instant petition. other than by appeal or the special civil action of Arbitration. the Court on the issue of forum-shopping may have significant implications on the interpretation of the Alternative Dispute Resolution Act of 2004. there must be (a) identity of parties. is an arbitral proceeding in Civil Case No. On the other hand. 161957 is the issue of forum-shopping not only in this case.00 (including the US$17. where it manifested that the following suits: International Chamber of Commerce (ICC) arbitral tribunal had issued its Final Award ordering LHC to pay TPI US$24. 11264/TE/MW. default has not yet been resolved with finality. SP No. 00-1312 was a complaint for injunction with prayer for temporary restraining order and/or writ of On the other hand. which sought filed to enjoin LHC from calling on the securities and respondent banks from transferring or to restrain LHC from calling on the securities and respondent paying the securities in case LHC calls on them. (b) identity of rights asserted and relief Corporation.R. Australia and New Zealand Banking Group Limitedand prayed for. There is no identity of causes of action between and among the arbitration case. No. pending before two standby letters of credit). No. No. Branch 56 for confirmation. 146717. 61901. G.[12] Forum-shopping has likewise been defined as the act of a party against 2. Inc.

among others. was captioned as one the competent court. Meanwhile. [16] Civil Case No.[21] application for enforcement. The Court agrees with contain an order for the payment of money. filed on 19 March 2004. shall be recognized as binding and. governed shall be governed by the Model Law on International Commercial Arbitration allows the application of a party to a judicial authority for interim or conservatory measures. TPI prayed: (2) The party relying on an award or applying for its enforcement shall supply the duly authenticated original award or a duly certified copy thereof. TE/MW. in Civil Case No. Paragraph 2142. the Third Partial Award used as basis of the suit does not authorize TPI to Contract. 9285. the signed original copy of which is hereto attached as translation thereof into such language.[19] made. In comparison. 04-332. Luzon Hydro Corporation (Place of arbitration: Singapore). the . also in accordance with New York Convention in the Philippines was confirmed in Section 42 of R. All other issues. in contrast. That the THIRD PARTIAL AWARD dated February 18. 04-332 is styled as an ICC case only involves TPI and LHC logically since they are the parties to the Turnkey action for money. are reserved to a future award. The applicability of the 31 of the said Third Partial Award. 04-332. Said law law. 9825 provides that international commercial arbitrations shall be courts for provisional reliefs. but merely constitute amounts which logically involves TPI and LHC only. otherwise ARTICLE 35. it did not pray for the return of TPI is entitled to the reasonable costs the proceeds of the letters of credit. upon application in writing to TPIs verified petition in Civil Case No. money and are not intended to be enforceable as such. Security Bank and ANZ Bank since these banks are not parties to the arbitration case. absent a final determination Question 32 Is TPI entitled to any acceleration costs? by the ICC Arbitral tribunal. While TPIs resort to the RTC for recognition and enforcement of the 3. No. Inc. Annex H hereof. be issued. and the original arbitration agreement referred to in article 7 or 1. The Rules of the ICC. recognized and enforced in accordance with law. LHC adds that while Civil Case No. Question 31 Is TPI entitled to have returned to it any sum wrongfully While the ICC case thus calls for a thorough review of the facts which led to the taken by LHC for liquidated damages? delay in the construction of the project. Moreover. the tribunal issued its Fifth Partial Award[29] on 30 March 2005. even the Fifth Partial Award. If the award or agreement is not made in an Case No. and allowed. the instant petition includes Security Bank and ANZ Bank. What it asked instead is that the said moneys be placed in TPI incurred after Typhoon Zeb as a escrow until the final resolution of the arbitral case. True. which governs the parties arbitral dispute. Recognition and enforcement known as the Alternative Dispute Resolution Act of 2004. on the other hand. It contains. the New York Convention. but rather the issuance of a writ of Correct. be confirmed. R. was premature. the pendency of arbitral proceedings does not foreclose resort to the R. 2004 in a duly certified copy thereof. also provides that the application for the recognition and enforcement of such awards shall be filed with the proper RTC. Transfield Philippines.A. 9285. That TPI be granted such other relief as may be deemed just Third Partial Award is sanctioned by both the New York Convention and R.[26] The UNCITRAL Model Law provides: 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.[28] Yes Meanwhile. irrespective of the country in which it was or to act effectively.[25] As a fundamental point. the party shall supply a duly certified Arbitration. 04-322. the banks seek a writ of execution for the sums drawn on the letters of credit.[20] In the said petition. to say the least. In fact.A. as well as the attendant responsibilities of the parties Yes therein.A. yet there is no order The pertinent portion of the Third Partial Award[22] relied upon by TPI were the for the payment or return of the proceeds of the said securities. reads: 2142. in accordance with law. the present petition puts in issue the propriety of drawing on the letters of credit during the pendency of the arbitral case. According to LHC. In fact.[23] execution to enforce the Third Partial Award. and of course. 9285. which answers to Questions 10 to 26. Moreover. allows the filing of provisional or interim measures with the regular courts whenever the arbitral tribunal has no power to act (1) An arbitral award. but instead has reserved the quantification of the TPI that it would be ineffectual to ask the ICC to issue writs of preliminary injunction against amounts for a subsequent determination. That the corresponding writ of execution to enforce Question governs the recognition and enforcement of foreign arbitral awards. including any issues as to quantum and Question 30 Did TPI [LHC] wrongfully draw upon the security? costs.) No. v. Recognition and Enforcement of Foreign Arbitral Award in Case 11264 article and of article 36. Said award does not even sought to be enjoined from releasing the funds of the letters of credit. the ICC Arbitral Tribunal had indeed ruled that LHC wrongfully drew upon the securities.9 Million which TPI made before the ICC Arbitral Neither is there an identity of parties between and among the three (3) cases. they being the parties to the arbitration agreement whose will be included in the Final Award and will be taken into account in determining the actual partial award is sought to be enforced. ICC International Court of Arbitration. as pointed out by TPI.A. the filing of the above case constitutes forum-shopping since it is the same claim for the return of US$17. a declaration that while LHC wrongfully drew on the securities. TPI result of LHCs 5 February 1999 Notice to no longer seeks the issuance of a provisional relief. 2.A. shall be enforced subject to the provisions of this For: Confirmation. LHC argues. does not contain such orders. (Model Law) adopted by the United Nations Commission on International Trade Law [17] Likewise. however.[27] to which the Philippines is a signatory. The Tribunal and before this Court. In addition. LHC insists that the declarations or the the ICC Arbitral tribunal would not even be able to compel LHC to obey any writ of partial awards issued by the ICC Arbitral Tribunal do not constitute orders for the payment of preliminary injunction issued from its end. 876 (The Arbitration Law) [18] recognizes the (UNCITRAL). and that [24] dated 30 March 2005. its and equitable. to wit: is the final paragraph of the Third Partial Award. Section 14 of Republic Act (R. amount payable to the prevailing party. 11264/TE/MW made by the ICC International Court of official language of this State.

(LHC).) typhoon and various disputes delaying the construction.00 for the to the justification aspect like in a commercial letter of credit or repayment standby. The Tribunal will make a number of Facts: Transfield Philippines (Transfield) entered into a turn-key contract with Luzon Hydro declarations concerning the quantum issues it has resolved in Corp. In both cases the payable to Claimant or Respondent. Transfield was given the sole responsibility for the design. the ICC Arbitral tribunal issued its Final Award. TPI. claimed by TPI in respect of the drawdown of the securities. 6.977. or (b) independence may be only as essence awarding US$24.00. 167. in underlying agreement like for instance a typical standby. the argument is incompatible with the very due to TPI had not yet been settled by the ICC Arbitral tribunal. before the beneficiary is entitled to call on the letter of by it.815. During the construction of the plant. The credit is independent from the justification aspect and is a separate obligation from the outstanding quantum issues will be determined in a underlying agreement like for instance a typical standby. that it intended to make a final determination/award as to the said issue only in the Final Award and not in the previous partial awards. Nov 22. x x x.730.drawing was made in good faith. which is awarded to each party and a determination of the net amount identical with the same obligations under the underlying agreement. namely. TPI is not parties against each other. under the mistaken assumption that the contractor. the tribunal ordered: No pronouncement as to costs.2 Declarations Issue: Whether or not LHC can collect from the letters of credit despite the pending 168. This supports LHCs position that when the Jurisprudence has laid down a clear distinction between a letter of credit and a guarantee in Third Partial Award was released and Civil Case No. as the case may be. The Benguet and Ilocos. In order to included in the Final Award and will be taken into account guarantee performance by Transfield. suffice it to say that draft and the required documents are presented to it.533. To repeat. assures the seller or the beneficiary of prompt payment independent of any breach of the main contract and precludes the issuing bank from determining whether the main contract is actually accomplished or not. made in the Third Partial Award do not constitute orders for the payment of money. the Court RESOLVES to DISMISS the charges of forum-shopping filed by both in default. 2014 LEAVE A COMMENT 166. $17. They merely constitute amounts which will be that the extension is based on justifiable grounds such as fortuitous event. or (b) independence may be only as future award.[31] (Emphasis opened. 6.815.Under the contract. The Tribunal makes the following declarations: arbitration case xxx Held: Transfield’s argument that any dispute must first be resolved by the parties. The contract provides for a period for money and are not intended to be enforceable as which the project is to be completed and also allows for the extension of the period provided such. However. the tribunal held: because of default. payment may be enjoined if in the light of the purpose of the credit the payment of the credit would constitute fraudulent abuse of the credit. in the Declarations part of the award. LHC did not give due course to the extension of the period prayed for but referred the matter to arbitration committee. Transfield were to construct a hydro-electric plants in this Award together with the outstanding liability issues. declarations do not constitute orders for the payment of commissioning. Because of the delay in the construction of the plant.[33] identical with the same obligations under the underlying agreement. on 9 August 2005.977. 04-332 was filed. GR No 146717. Order SO ORDERED. LHC called on the stand-by letters of credit Further. 2004 MARCH 15.1 General Transfield Philippines vs Luzon Hydro Electric Corp. the declarations practical and beneficial use for letters of credit in commercial transactions. TPI was not yet that the settlement of a dispute between the parties is not a pre-requisite for the release of authorized to seek the issuance of a writ of execution since the quantification of the amounts funds under a letter of credit. the tribunal ruled that while the amount drawn must be returned. banks assume no liability or responsibility . Notwithstanding the fact that nature of the letter of credit. was WHEREFORE. whether 3. Under this principle.[30] In the Fifth Partial Award. construction. which is return of the securities from LHC. LHC is liable to repay TPI the face value of the securities drawn down through negotiations or arbitration. However.[32] The independent nature of the letter of credit may be: (a) independence in toto where the credit is independent from the justification aspect and is a separate obligation from the Finally. In view of this the Tribunal will make no orders for payment in this Fifth Partial Award. If a letter of credit is drawable only after settlement of the the amount of proceeds drawn on the securities was not disputed the application for the dispute on the contract entered into by the applicant and the beneficiary. It will contain a reconciliation of the amounts to the justification aspect like in a commercial letter of credit or repayment standby. entitled to any damages or interests due to LHCsdrawing on the securities. It is not liable for any further damages credit in essence would convert the letter of credit into a mere guarantee. This Fifth Partial Award deals with many issues of The independent nature of the letter of credit may be: (a) independence in toto where the quantum. it does not resolve them all. In other words. the demand was objected by Transfield on the ground that there is still pending arbitration on their request for extension of time. The so-called “independence principle” its bare allegations are not sufficient to sustain the charge. 6. there would be no enforcement of the Third Partial Award was precipitately filed. The engagement of the issuing bank is to pay the seller or beneficiary of the credit once the Anent the claim of TPI that it was LHC which committed forum-shopping. Thus. which included TPIs claim of U$17. In both cases the payment may be enjoined if in the light of the purpose of the credit the payment of the credit The fact that the ICC Arbitral tribunal included the proceeds of the securities shows would constitute fraudulent abuse of the credit. two stand-by letters of credit were required to be in determining the actual amount payable. testing and completion of the Project. Transfield requested for extension of time citing Supplied.

Thus. 196171 & 199238. the parties submit stockholders as listed in the Share Purchase Agreement dated May 27. No. WHEREFORE. SP No. or the insurers of the goods. the RTC issued on August 22. quality. value or existence of the goods represented by The petition in G. 2000 and pray that – ("Go/Shareholders"). 199238 is a petition for certiorari under Rule 65 assailing the September 13. The Resolution or for the general and/or particular conditions stipulated in the documents or superimposed dated September 13. with the assistance of their respective counsels. 2011 and Resolution BDO and RCBC Capital likewise submit and pray in their Joint Motion and Manifestation in dated January 13. In view of the foregoing compromise between the Parties. The CA denied BDO’s petition for certiorari G. No. 2 On the other hand. submitted in evidence before the Arbitration Tribunal. Case No. Banco de Oro Unibank.R.R. Nos. costs and dismissing BDO’s counterclaims. 2010 of the any documents. BDO Unibank. counterclaims and causes of action arising. SO ORDERED. the Parties have mutually agreed that it is in their best 24. Nos. or for the good faith or acts and/or omissions. 120888 is AFFIRMED.R. demands. Branch 148 in Sp. Inc. the Parties have reached a complete. Inc. 113525 is hereby AFFIRMED. with a view to a renewal of their business relations. No. and (2) the Joint Motion and Manifestation dated October 1.R. Inc. After negotiations. In the course of arbitration conducted by the 6. No. December 10. nor do they assume any liability or responsibility for the description.1 Both RCBC Capital and BDO filed motions for partial reconsideration of the above decision. RCBC Capital BDO and Go/Shareholders respectfully pray for such other relief as may be deemed just or equitable under the premises. 2010 in CA-G. 2011 of the Court of Appeals in CA-G. 196171 is a petition for review under Rule 45 seeking to reverse the Court of Appeals (CA) Decision dated December 23. in his personal capacity and as attorney-in-fact of the individual In their Joint Motion and Manifestation filed in G.R. M-6046. 200213.for the form. 2012 in CA-G. or any other person whomsoever. G. RCBC CAPITAL CORPORATION. 2011 Resolution in CA-G. the parties have reached a complete.R. 120888 which denied BDO’s application for the issuance of a stay order and/or temporary restraining order (TRO)/preliminary injunction against the RTC of WHEREFORE. and GEORGE L. counterclaims and causes of action arising. standing of the consignor. 113525 which reversed and set 7. RCBC Capital and aside the June 24. SP No. Thus. performance or Court of Appeals in CA-G. filed on February 6. both parties were directed to submit their respective memoranda within 30 days from notice. absolute and final settlement of their Tribunal constituted and administered by the International Chamber of Commerce- claims. Proc. INC. The Decision dated December 23. RCBC Capital filed its Comment. 200213 that – and prohibition with application for issuance of a TRO and/or writ of preliminary injunction against the RTC of Makati City. the carriers. falsification or legal effect of any documents.R. claims or counterclaims in the RCBC Capital Petition All three petitions emanated from arbitration proceedings commenced by RCBC Capital and the BDO Petition.R. Branch 148 in Go/Shareholders. No. 113402. this Honorable Court order the termination and dismissal of the above-captioned cases. 199238. No.. The RTC confirmed the Second Partial Award issued by the jointly move for the termination and dismissal of the above-captioned cases with Arbitration Tribunal ordering BDO to pay RCBC Capital proportionate share in the advance prejudice. accuracy. M-6046. G. have decided to SP Proc. Inc. with 2010. packing. quantity. G. 2011 a writ of execution for the implementation of the LISTED IN THE SHARE PURCHASE AGREEMENT DATED 27 MAY 2000 respectfully pray that court’s order confirming the Final Award rendered by the Arbitration Tribunal on June 16. PRAYER G. premises considered. SP No. surrounding or arising from both all its liabilities and obligations. 2012. prejudice. the petition in G.R. No. and have agreed to jointly terminate and dismiss the same in accordance with their agreement. absolute and final settlement of their G.R. 196171 is DENIED. sufficiency. SP No. thereon. M-6046. By Order dated June 3. directly or indirectly. 2013 filed in G. access to the said source of facts or data used in preparing the accounting summaries with a view to a renewal of their business relations. Go. genuineness. Case No. SP No. interest and general benefit to settle their differences with respect to their respective causes of action. 2009 Order of the Regional Trial Court (RTC) of Makati City. Case No. claims or counterclaims in the above-captioned case. GO. directly or indirectly. in G. 200213 by BDO and RCBC Capital thru 5. is a petition for review under Rule 45 praying for the reversal of the CA’s Decision dated February 24. 199238 is DENIED. 2009. 2013 filed in G.R. By Resolution dated July 22. Acting upon RCBC Capital’s urgent PERSONAL CAPACITY AND AS ATTORNEY-IN-FACT OF THE INDIVIDUAL STOCKHOLDERS AS motion.R.R. and George L. After negotiations. pursuant to the arbitration clause under its Share Purchase Agreement (SPA) with EPCIB involving the latter’s shares in Bankard. delivery. 4. 2012 Meanwhile. Branch 148 in Sp. 2012. ("BDO"). Proc. the Parties have mutually agreed that it is in their best their respective counsel.R. solvency. to which a Reply was filed by BDO. the dispositive portion of which states: . BDO UNIBANK. 196171.R. demands.R. 2013. v. 196171 & 199238 were consolidated and a Decision was rendered by this Court on claims. Petitions.R. Nos. December 10. 200213. Before the Court are: (1) the Joint Motion and Manifestation dated October 1. RCBC Capital Corp. No. International Commercial Arbitration (ICC-ICA). weight. after Chairman Richard Ian Barker had denied BDO’s request that it be given respective causes of action. No. BDO. IN HIS Makati City. EPCIB was merged with BDO which assumed from the facts and circumstances giving rise to. condition. the RTC denied BDO’s motion for access of the computerized accounting system of interest and general benefit to settle their differences with respect to their Bankard. 196171 & 199238 by RCBC Capital Corporation ("RCBC Capital"). thru their respective counsels.

from the facts and circumstances giving rise to. .R. 196171. surrounding or arising from the WHEREFORE. INC. No. G. 200213 is ordered PRAYER consolidated with G.R. with Petition in accordance with their agreement. BDO and RCBC Capital respectfully pray for such other relief as may be deemed just or with the assistance of their respective counsels.3 the termination and dismissal of the above-captioned case with prejudice. 2013.R. 5. and RCBC CAPITAL CORPORATION respectfully pray that present Petition. BDO UNIBANK. BDO and RCBC Capital. IN VIEW OF THE FOREGOING and as prayed for. 196171 199238. Nos. G. Nos.1âwphi1 Under this Court s Resolution dated November 27. prejudice. and have agreed to jointly terminate and dismiss the present this Honorable Court order the termination and dismissal of the above-captioned case. have decided to jointly move for equitable under the premises. In view of the foregoing compromise between the Parties. 199238 and 200213 are hereby ordered DISMISSED with prejudice and are deemed CLOSED and TERMINATED.