Alternative Dispute Resolution: Case Digests

San Beda College Alabang
School of Law
Alternative Dispute Resolution:

CASE DIGESTS
Alternative Dispute Resolution
Alternative Learning Program

Amid the Corona Virus Disease
(CoViD-2019) Pandemic
Submitted To:
Atty. J-Vit B. Capellan
Submitted By:
TALACTAC, Aira Rowena A.
Section / Class Schedule:

3B / Wednesday 2:30 pm - 4:30 pm
Date Submitted:
April 15, 2020
TALACTAC ADR CASE DIGEST
1. TOYOTA MOTOR PHILIPPINES CORPORATION v. COURT OF APPEALS, Hon.

Fernando V. Gorospe, Jr., and Sun Valley Manufacturing & Development Corporation
G.R. No. 102881 December 7, 1992
FACTS: Both Toyota and Sun Valley are the registered owners of two (2) adjoining parcels of
land situated in La Huerta, Parañaque, Metro Manila which they purchased from the Asset
Privatization Trust (APT). The properties in question formerly belonged to Delta Motors
Corporation (DMC). They were foreclosed by the Philippine National Bank (PNB) and later
transferred to the national government through the APT for disposition. APT then proceeded to
classify the DMC properties according to the existing improvements. After this classification,
APT parcelled out and catalogued the properties for bidding and sale.
Part of the duly parcelled Delta I property (Lot 2) was sold to Toyota through public
bidding on May 12, 1988 for the amount of P95,385,000.00. After its purchase, Toyota
constructed a concrete hollow block (CHB) perimeter fence around its alleged property. On
October 5, 1990, another part of the parcelled Delta I (Lot 1) covering an area of 55,236 square
meters was purchased by Sun Valley from APT for the bid price of P124,349,767.00.
Sun Valley claimed that Toyota's perimeter fence overlaps Sun Valley's property along
corners 11 to 15 by 322 square meters and corners 19 to 1 by 401 square meters for a total of 723
square meters. (Rollo, p. 841) Negotiations between the two (2) corporations for a possible
settlement of the dispute bogged down. In pursuing the resolution of the dispute, both Toyota
and Sun Valley opted to file separate actions.
1. TOYOTA - On September 11, 1991, Toyota filed a case against APT and Sun Valley was
for the reformation of the Deed of Sale executed between Toyota and APT. Toyota
alleges that the instrument failed to reflect the true intention of the parties, as evidenced
by the failure of the title to include the 7.23 square meters strip of land. Toyota alleges
that the discrepancy came about because of the serious flaw in the
classification/cataloguing of properties bidded out for sale by APT. Toyota was made to
understand that included in its perimeter fence is the disputed strip of land. Thus, Toyota
sought the resurvey of the property to correct this error in the title.
 Sun Valley filed a motion to dismiss, on the ground that the Toyota complaint
failed to state a cause of action against it (1) since it was not a party to the
contract of the deed of sale between Toyota and APT and; (2) the complaint was
in effect a collateral attack on its title.
2. SUN VALLEY - On September 16, 1991, Sun Valley, on the other hand, filed a case for
recovery of possession of the disputed 723 square meters boundary. On September 23,
1991, Toyota filed a motion to dismiss on the ground that the RTC has no jurisdiction
over the case since the complaint was a simple ejectment case cognizable by the
Metropolitan Trial Court (MTC). On September 27, 1991, Sun Valley filed an amended
complaint to incorporate an allegation that Toyota's possession of the alleged disputed
area began in September, 1988 when Toyota purchased the property.
 Toyota was later prompted to file two supplemental petitions, before the Court of
Appeals as a result of Judge Gorospe's alleged hasty issuance of four (4) Orders,
all dated October 1, 1992. These are: (1) First supplemental petition dated
October 4, 1991 which sought to nullify the Order denying Toyota's motion to
dismiss the amended complaint and; (2) Second supplemental petition dated
October 23, 1991 which sought the nullification of the orders granting Sun
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Valley's application for preliminary prohibitory and mandatory injunction and

denying Toyota's motion to cross-examine Sun Valley's witnesses on the latter's
injunction application.
ISSUE: Whether or not the petitioner availed of the proper mode of elevating the case to this
Court?
HELD: YES.
Toyota was correct in impleading Sun Valley as party defendant. However, these
principles are not applicable under the particular circumstances of this case. Under the facts of
the present case, Toyota's action for reformation is dismissible as against Sun Valley. Attention
must first be brought to the fact that the contract of sale executed between APT and Toyota
provides an arbitration clause which states that:
xxx xxx xxx
"5. In case of disagreement or conflict arising out of this
Contract, the parties hereby undertake to submit the matter for
determination by a committee of experts, acting as arbitrators,
the composition of which shall be as follows:
a) One member to be appointed by the VENDOR;
b) One member to be appointed by the VENDEE;
c) One member, who shall be a lawyer, to be appointed by
both of the aforesaid parties;
"The members of the Arbitration Committee shall be
appointed not later than three (3) working days from receipt of
a written notice from either or both parties. The Arbitration
Committee shall convene not later than three (3) weeks after
all its members have been appointed and proceed with the
arbitration of the dispute within three (3) calendar months
counted therefrom. By written mutual agreement by the parties
hereto, such time limit for the arbitration may be extended for
another calendar month. The decision of the Arbitration
Committee by majority vote of at least two (2) members shall
be final and binding upon both parties hereto. The cost of
arbitration shall be borne equally by both the VENDOR and
the VENDEE; (Rollo, pp. 816- 817)
xxx xxx xxx
The contention that the arbitration clause has become dysfunctional because of the
presence of third parties is untenable. Contracts are respected as the law between the contracting
parties As such, the parties are thereby expected to abide with good faith in their contractual.
Toyota is therefore bound to respect the provisions of the contract it entered into with APT.
Toyota filed an action for reformation of its contract with APT, the purpose of which is to look
into the real intentions/agreement of the parties to the contract and to determine if there was
really a mistake in the designation of the boundaries of the property as alleged by Toyota. Such
questions can only be answered by the parties to the contract themselves. This is a controversy
which clearly arose from the contract entered into by APT and Toyota. Inasmuch as this
concerns more importantly the parties APT and Toyota themselves, the arbitration committee is
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therefore the proper and convenient forum to settle the matter as clearly provided in the deed of
sale. Having been apprised of the presence of the arbitration clause in the motion to dismiss filed
by APT, Judge Tensuan should have at least suspended the proceedings and directed the parties
to settle their dispute by arbitration. Judge Tensuan should not have taken cognizance of the
case.
2. CHUNG FU INDUSTRIES (PHILIPPINES), INC., its Directors and Officers namely:

Huang Kuo-Chang, Huang An-Chung, James J.R. Chen, Tristan A. Catindig, Vicente B.
Amador, Rock A.C. Huang, Jem S.C. Huang, Maria Teresa Soliven and Virgilio M. Del
Rosario v. COURT OF APPEALS, Hon. Francisco X. Velez (Presiding Judge, Regional
Trial Court of Makati [Branch 57]) and Roblecor Philippines Inc.
G.R. No. 96283 February 25, 1992
FACTS: Petitioner Chung Fu Industries (Philippines) (Chung Fu for brevity) and private
respondent Roblecor Philippines, Inc. (Roblecor for short) forged a construction agreement 1
whereby respondent contractor committed to construct and finish on December 31, 1989,
petitioner corporation's industrial/factory complex in Tanawan, Tanza, Cavite for and in
consideration of P42,000,000.00. In the event of disputes arising from the performance of subject
contract, it was stipulated therein that the issue(s) shall be submitted for resolution before a
single arbitrator chosen by both parties. Apart from the aforesaid construction agreement, Chung
Fu and Roblecor entered into two (2) other ancillary contracts, to wit: one dated June 23, 1989,
for the construction of a dormitory and support facilities with a contract price of P3,875,285.00,
to be completed on or before October 31, 1989; 2 and the other dated August 12, 1989, for the
installation of electrical, water and hydrant systems at the plant site, commanding a price of
P12.1 million and requiring completion thereof one month after civil works have been finished. 3
However, respondent Roblecor failed to complete the work despite the extension of time allowed
it by Chung Fu. Subsequently, the latter had to take over the construction when it had become
evident that Roblecor was not in a position to fulfill its obligation.
Claiming an unsatisfied account of P10,500,000.00 and unpaid progress billings of
P2,370,179.23, Roblecor on May 18, 1990, filed a petition for Compulsory Arbitration with
prayer for Temporary Restraining Order before respondent Regional Trial Court, pursuant to the
arbitration clause in the construction agreement. Chung Fu moved to dismiss the petition and
further prayed for the quashing of the restraining order. Subsequent negotiations between the
parties eventually led to the formulation of an arbitration agreement which, among others,
provides:
"2. The parties mutually agree that the arbitration shall proceed in
accordance with the following terms and conditions: —
xxx xxx xxx
'd. The parties mutually agree that they will abide by the decision of the
arbitrator including any amount that may be awarded to either party as
compensation, consequential damage and/or interest thereon;
'e. The parties mutually agree that the decision of the arbitrator shall be
final and unappealable. Therefore, there shall be no further judicial
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recourse if either party disagrees with the whole or any part of the
arbitrator's award;
'f. As an exception to sub-paragraph (e), above, the parties mutually
agree that either party is entitled to seek judicial assistance for purposes
of enforcing the arbitrator's award;
xxx xxx xxx"
Respondent Regional Trial Court approved the arbitration agreement thru its Order of
May 30, 1990. Thereafter, Engr. Willardo Asuncion was appointed as the sole arbitrator. On
June 30, 1990, Arbitrator Asuncion ordered petitioners to immediately pay respondent
contractor, the sum of P16,108,801.00. He further declared the award as final and unappealable,
pursuant to the Arbitration Agreement precluding judicial review of the award. Consequently,
Roblecor moved for the confirmation of said award. On the other hand, Chung Fu moved to
remand the case for further hearing and asked for a reconsideration of the judgment award
claiming that Arbitrator Asuncion committed twelve (12) instances of grave error by
disregarding the provisions of the parties' contract.
ISSUE: Whether subject arbitration award is indeed beyond the ambit of the court's power of
judicial review?
HELD: NO.
It is stated explicitly under Art. 2044 of the Civil Code that the finality of the arbitrators'
award is not absolute and without exceptions. Where the conditions described in Articles 2038,
2039 and 2040 applicable to both compromises and arbitrations are obtaining, the arbitrators'
award may be annulled or rescinded. Additionally, under Sections 24 and 25 of the Arbitration
Law, there are grounds for vacating, modifying or rescinding an arbitrator's award. Thus, if and
when the factual circumstances referred to in the above-cited provisions are present, judicial
review of the award is properly warranted. It is to be borne in mind, however, that this action
will lie only where a grave abuse of discretion or an act without or in excess of jurisdiction on
the part of the voluntary arbitrator is clearly shown. For "the writ of certiorari is an extra-
ordinary remedy and that certiorari jurisdiction is not to be equated with appellate jurisdiction. In
a special civil action of certiorari, the Court will not engage in a review of the facts found nor
even of the law as interpreted or applied by the arbitrator unless the supposed errors of fact or of
law are so patent and gross and prejudicial as to amount to a grave abuse of discretion or an
excess de pouvoir on the part of the arbitrator." Even decisions of administrative agencies which
are declared "final" by law are not exempt from judicial review when so warranted. It should be
stressed too, that voluntary arbitrators, by the nature of their functions, act in a quasi- judicial
capacity. It stands to reason, therefore, that their decisions should not be beyond the scope of the
power of judicial review of this Court.
After closely studying the list of errors, as well as petitioners' discussion of the same in
their Motion to Remand Case For Further Hearing and Reconsideration and Opposition to
Motion for Confirmation of Award, the Court find that petitioners have amply made out a case
where the voluntary arbitrator failed to apply the terms and provisions of the Construction
Agreement which forms part of the law applicable as between the parties, thus committing a
grave abuse of discretion. Furthermore, in granting unjustified extra compensation to respondent
for several items, he exceeded his powers - all of which would have constituted ground for
vacating the award under Section 24(d) of the Arbitration Law. But the respondent trial court's
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refusal to look into the merits of the case, despite prima facie showing of the existence of
grounds warranting judicial review, effectively deprived petitioners of their opportunity to prove
or substantiate their allegations. In so doing, the trial court itself committed grave abuse of
discretion. Likewise, the appellate court, in not giving due course to the petition, committed
grave abuse of discretion. Respondent courts should not shirk from exercising their power to
review, where under the applicable laws and jurisprudence, such power may be rightfully
exercised; more so where the objections raised against an arbitration award may properly
constitute grounds for annulling, vacating or modifying said award under the laws on arbitration.
3. PUROMINES, INC. v. COURT OF APPEALS and Philipp Brothers Oceanic, Inc.

G.R. No. 91228 March 22, 1993
FACTS: Puromines, Inc. (Puromines for brevity) and Makati Agro Trading, Inc. (not a party in
this case) entered into a contract with private respondents Philipp Brothers Oceanic, Inc. for the
sale of prilled Urea in bulk. The Sales Contract No. S151.8.01018 provided, among others an
arbitration clause which states, thus:
"9.Arbitration
"Any disputes arising under this contract shall be settled by arbitration in
London in accordance with the Arbitration Act 1950 and any statutory
amendment or modification thereof. Each party is to appoint an
Arbitrator, and should they be unable to agree, the decision of an Umpire
appointed by them to be final. The Arbitrators and Umpire are all to be
commercial men and resident in London. This submission may be made a
rule of the High Court of Justice in England by either party."
The shipment covered by Bill of Lading No. 2 was discharged in Iloilo City complete
and in good order and condition. However, the shipments covered by Bill of Lading Nos. 1 and 3
were discharged in Manila in bad order and condition, caked, hardened and lumpy, discolored
and contaminated with rust and dirt. Damages were valued at P683,056. 29 including additional
discharging expenses.
Petitioner filed a complaint with the trial court for breach of contract of carriage against
Maritime Factors Inc. (which was not included as respondent in this petition) as ship-agent in the
Philippines for the owners of the vessel MV "Liliana Dimitrova," while private respondent,
Philipp Brothers Oceanic Inc., was impleaded as charterer of the said vessel and proper party to
accord petitioner complete relief. Maritime Factors, Inc. filed its Answer to the complaint, while
private respondent filed a motion to dismiss, dated February 9, 1989, on the grounds that the
complaint states no cause of action; that it was prematurely filed; and that petitioner should
comply with the arbitration clause in the sales contract.
The motion to dismiss was opposed by petitioner contending the inapplicability of the
arbitration clause inasmuch as the cause of action did not arise from a violation of the terms of
the sales contract but rather for claims of cargo damages where there is no arbitration agreement.
Petitioner states in its complainants that Philipp Brothers "was the charterer of the vessel MV
'Liliana Dimitrova' which transported the shipment from Yuzhny USSR to Manila." Petitioner
argues that the sales contract does not include the contract of carriage which is a different
contract entered into by the carrier with the cargo owners. That it was an error for the respondent
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court to touch upon the arbitration provision of the bills lading in its decision inasmuch as the
same was not raised as an issue by private respondent who was not a party in the bills of lading.
Petitioner contradicts itself.
ISSUE: Whether the phrase "any dispute arising under this contract" in the arbitration clause of
the sales contract covers a cargo claim against the vessel (owner and/or charterers) for breach of
contract of carriage
HELD: YES.
Arbitration has been held valid and constitutional. Even before the enactment of Republic
Act No. 876, this Court has countenanced the settlement of disputes through arbitration. The rule
now is that unless the agreement is such as absolutely to close the doors of the courts against the
parties, which agreement would be void, the courts will look with favor upon such amicable
arrangements and will only interfere with great reluctance to anticipate or nullify the action of
the arbitrator.
4. HI-PRECISION STEEL CENTER, INC. v. LIM KIM STEEL BUILDERS, INC., AND
CONSTRUCTION INDUSTRY ARBITRATION
G.R. No. 110434 December 13, 1993
FACTS: Petitioner Hi-Precision entered into a contract with private respondent Steel Builders
under which the latter as Contractor was to complete a P21 Million construction project owned
by the former within a period of 153 days, i.e. from 8 May 1990 to 8 October 1990. The project
completion date was first moved to 4 November 1990. On that date, however, only 75.8674% of
the project was actually completed. Petitioner attributed this non-completion to Steel Builders
which allegedly had frequently incurred delays during the original contract period and the
extension period. Upon the other hand, Steel Builders insisted that the delays in the project were
either excusable or due to Hi-Precision's own fault and issuance of change orders. The project
was taken over on 7 November 1990, and eventually completed on February 1991, by Hi-
Precision.
Steel Builders filed a "Request for Adjudication" with public respondent CIAC. In its
Complaint filed with the CIAC, Steel Builders sought payment of its unpaid progress billings,
alleged unearned profits and other receivables. Hi-Precision, upon the other hand, in its Answer
and Amended Answer, claimed actual and liquidated damages, reimbursement of alleged
additional costs it had incurred in order to complete the project and attorney's fees.
Petitioner Hi-Precision now asks this Court to set aside the Award, contending basically
that it was the contractor Steel Builders who had defaulted on its contractual undertakings and so
could not be the injured party and should not be allowed to recover any losses it may have
incurred in the project. Petitioner Hi-Precision insists it is entitled to damages, and claims that
the Arbitral Tribunal committed grave abuse of discretion when it allowed certain claims by
Steel Builders and offset them against claims of Hi-Precision. Petitioner asks this Court to
correct legal errors committed by the Arbitral Tribunal, which at the same time constitute grave
abuse of discretion amounting to lack of jurisdiction on the part of the Arbitral Tribunal; and
should the supposed errors petitioner asks us to correct be characterized as errors of fact, such
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factual errors should nonetheless be reviewed because there was "grave abuse of discretion" in
the appreciation of facts and because there was misapprehension of facts on the part of the
Arbitral Tribunal.
ISSUE: Whether or not the Arbitral Tribunal committed grave abuse of discretion amounting to
lack of jurisdiction in reaching its factual and legal conclusions?
HELD: NO.
It is essentially an attempt to re-assert and re-litigate before this Court the detailed or
itemized factual claims made before the Arbitral Tribunal under a general averment that the
Arbitral Tribunal under a general averment that the Arbitral Tribunal had "misapprehended the
facts" submitted to it.
This was clearly a finding of fact on the part of the Tribunal, supported by the
circumstance that per the record, petitioner had offered no proof that it had complied with such
15-day notice required under Article 28.01 of the General Conditions of Contract forming part of
the Contract Documents. Petitioner Hi-Precision's argument is that a written Agreement dated 16
November 1990 with Steel Builders concerning the take over of the project by Hi- Precision,
constituted waiver on the part of the latter of its right to a 15-day notice of contract termination.
Whether or not that Agreement dated 16 November 1990 (a document not submitted to this
Court) is properly characterized as constituting waiver on the part of Steel Builders, may be
conceded to be prima facie a question of law; but, if it is, and assuming arguendo that the
Arbitral Tribunal had erred in resolving it, that error clearly did not constitute a grave abuse of
discretion resulting in lack or loss of jurisdiction on the part of the Tribunal.
The "law between that parties" here involved is the "Technical Specifications" forming
part of the Contract Documents. The Arbitral Tribunal resolved Hi-Precision's claim by finding
that Steel Builders had complied substantially with the Technical Specifications. This Court will
not pretend that it has the technical and engineering capability to review the resolution of that
factual issue by the Arbitral Tribunal.
Upon the other hand, the Court considers that petitioner Hi- Precision has failed to show
any serious errors of law amounting to grave abuse of discretion resulting in lack of jurisdiction
on the part of the Arbitral Tribunal, in either the methods employed or the results reached by the
Arbitral Tribunal, in disposing of the detailed claims of the respective parties.
5. ASSOCIATED BANK v. Hon. COURT OF APPEALS, Hon. Marina L. Buzon, as

Presiding Judge of RTC, Quezon City, MM, Br. 91, Vistacion Serra Flores, RTC, Quezon
City, MM, Br. 91, Ma. Asuncion Flores, Philippine Commercial International Bank, Far
East Bank & Trust Co., Security Bank & Trust Co. and Citytrust Banking Corporation
G.R. No. 107918 June 14, 1994
FACTS: Plaintiffs seek the recovery of the amount of P900,913.60 which defendant bank 2
charged against their current account by virtue of the sixteen (16) checks drawn by them despite
the apparent alterations therein with respect to the name of the payee, that is, the name Filipinas
Shell was erased and substituted with Ever Trading and DBL Trading by their supervisor
Jeremias Cabrera, without their knowledge and consent. Defendant bank claimed that the
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subject checks appeared to have been regularly issued and free from any irregularity which
would excite or arouse any suspicion or warrant their dishonor when the same were negotiated
and honored by it; that it observed and exercised the required diligence, care and the prescribed
standard verification procedures before finally accepting and honoring the subject checks and
that the proximate cause of plaintiff's loss, if any, was their own laxity, negligence and lack of
control, due care and diligence in the conduct of their business affairs. Defendant bank filed a
Third-Party Complaint against Philippine Commercial International Bank, Far East Bank &
Trust Company, Security Bank and Trust Company and Citytrust Banking Corporation for
reimbursement, contribution, indemnity from said third- party defendants for being the collecting
banks of the subject checks and by virtue of their bank guarantee for all checks sent for clearing
to the Philippine Clearing House Corporation (PCHC), as provided for in Section 17, (PCHC), as
provided for in Section 17, PCHC Clearing House Rules and Regulations.
Citytrust Banking Corporation averred that the subject checks appeared to be complete
and regular on their face with no indication that an original payee's name was erased and
superimposed with another; that plaintiffs' fault and negligence in failing to examine their
monthly bank statements, together with the returned checks and their own check stubs, put them
under estoppel and cannot recover the proceeds of the checks against it, an innocent third-party,
and plaintiff must suffer the loss as their negligence was the proximate cause thereof; and that
third party plaintiff is barred from recovering from it based on the provisions of Sections 20 and
21 of the Philippine Clearing Rules and Regulations.
Philippine Commercial International Bank alleged that the subject check was complete
and regular on its face and was paid by it only upon presentment to the drawee bank for clearing
who, upon examination thereof, found the same to be complete and regular on its face; that it
was only after said check was cleared by third-party plaintiff for payment that it allowed the
payee to withdraw the proceeds of the check from its account; that the cause of action of the
third-party plaintiff is barred by estoppel and/or laches for its failure to return the check to it
within the period provided for under Clearing House Rules and Regulations; that this Court has
no jurisdiction over the suit as it and third-party plaintiff are members of the Philippine Clearing
House and bound by the Rules and Regulations thereof providing for arbitration.
A Motion to Dismiss was filed by Security Bank and Trust Company on the grounds that
third-party plaintiff failed to resort to arbitration as provided for in Section 36 of the Clearing
House Rules and Regulations of the Philippine Clearing House Corporation, and that it was
released from any liability with the acceptance by third-party plaintiff of the subject check.
ISSUE: Whether or not the respondent court of appeals erred in holding that petitioner drawee
bank’s third party complaint against private respondent collecting banks fall within the
jurisdiction of the PCHC and not the regular court?
HELD: NO.
The Clearing House Rules and Regulations on Arbitration of the Philippine Clearing
House Corporation are clearly applicable to petitioner and private respondents, third party
plaintiff and defendants, respectively, in the court below. Petitioner Associated Bank's third party
complaint in the trial court was one for reimbursement, contribution and indemnity against the
Philippine Commercial and Industrial Bank (PCIB), the Far East Bank and Trust, Co. (FEBTC),
Security Bank and Trust Co. (SBTC), and the Citytrust Banking Corporation (CTBC), in
connection with petitioner's having honored sixteen checks which said respondent banks
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supposedly endorsed to the former for collection in 1989. Under the rules and regulations of the
Philippine Clearing House Corporation (PCHC), the mere act of participation of the parties
concerned in its operations in effect amounts to a manifestation of agreement by the parties to
abide by its rules and regulations. As a consequence of such participation, a party cannot invoke
the jurisdiction of the courts over disputes and controversies which fall under the PCHC Rules
and Regulations without first going through the arbitration processes laid out by the body. Since
claims relating to the regularity of checks cleared by banking institutions are among those claims
which should first be submitted for resolution by the PCHC's Arbitration Committee, petitioner
Associated Bank, having voluntarily bound itself to abide by such rules and regulations, is
estopped from seeking relief from the Regional Trial Court on the coattails of a private claim and
in the guise of a third party complaint without first having obtained a decision adverse to its
claim from the said body. It cannot bypass the arbitration process on the basis of its averment
that its third party complaint is inextricably linked to the original complaint in the Regional Trial
Court.
Pursuant to its function involving the clearing of checks and other clearing items, the
PCHC has adopted rules and regulations designed to provide member banks with a procedure
whereby disputes involving the clearance of checks and other negotiable instruments undergo a
process of arbitration prior to submission to the courts below. This procedure not only ensures a
uniformity of rulings relating to factual disputes involving checks and other negotiable
instruments but also provides a mechanism for settling minor disputes among participating and
member banks which would otherwise go directly to the trial courts. While the PCHC Rules and
Regulations allow appeal to the Regional Trial Courts only on questions of law, this does not
preclude out lower courts from dealing with questions of fact already decided by the PCHC
arbitration when warranted and appropriate.
Thus, not only do the parties manifest by mere participation their consent to these rules,
but such participation is deemed (their) written and subscribed consent to the binding effect of
arbitration agreements under the PCHC rules. Moreover, a participant subject to the Clearing
House Rules and Regulations of the PCHC may go on appeal to any of the Regional Trial Courts
in the National Capital Region where the head office of any of the parties is located only after a
decision or award has been rendered by the arbitration committee or arbitrator on questions of
law.
Clearly therefore, petitioner Associated Bank, by its voluntary participation and its
consent to the arbitration rules cannot go directly to the Regional Trial Court when it finds it
convenient to do so. The jurisdiction of the PCHC under the rules and regulations is clear,
undeniable and is particularly applicable to all the parties in the third party complaint under their
obligation to first seek redress of their disputes and grievances with the PCHC before going to
the trial court.
6. Dr. Lucas G. ADAMSON and Adamson Management Corporation v. Hon. COURT OF

APPEALS and APAC Holdings Limited
G.R. No. 106879 May 27, 1994
FACTS: Adamson Management Corporation and Lucas Adamson on the one hand, and APAC
Holdings Limited on the other, entered into a contract whereby the former sold 99.97% of
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outstanding common shares of stocks of Adamson and Adamson, Inc. to the latter for
P24,384,600.00 plus the Net Asset Value (NAV) of Adamson and Adamson, Inc. as of June 19,
1990. But the parties failed to agree on a reasonable Net Asset Value. This prompted them to
submit the case for arbitration in accordance with Republic Act No. 876, otherwise known as the
Arbitration Law.
The Arbitration Committee rendered a decision finding the Net Asset Value of the
Company to be P167,118.00. The basis for this ruling was Clause 3(B) of the Agreement which
fixed the said amount; Clause 1(A) which defined NAV and provided that it should be computed
in accordance with Clause 7(A); Clause 7(A) which directed the auditors to prepare in
accordance with good accounting principles a balance sheet as of cut-off date which would
include the goodwill and intangible assets (P19,116,000.00), the value of tangible assets
excluding the land as per Cuervo appraisal, the adjustment agreed upon by the parties, and the
cost of redeeming preferred shares; and Clause 5(E). In the computation of the NAV, the
Committee deemed it proper to appreciate in favor of petitioners the 1987 tax savings because as
of the date of the proceedings, no assessment was ever made by the BIR and the three-year
prescriptive period had already expired. However, it did not consider the estimated net income
for the period beginning February 28, 1990 to June 19, 1990 as part of the NAV because it found
that as of June 1990, the books of the company carried a net loss of P4,678,627.00 which
increased to P8,547,868.00 after the proposed adjustments were included in the computation of
the NAV. The Committee pointed out that although petitioners herein contested the adjustments,
they were, however, not able to prove that these were not valid, except with respect to the tax
savings. Aside from deciding the amount of NAV, the Committee also held that any ambiguity in
the contract should not necessarily be interpreted against herein private respondents because the
parties themselves had stipulated that the draft of the agreement was submitted to petitioners for
approval and that the latter even proposed changes which were eventually incorporated in the
final form of the Agreement.
APAC Holdings Ltd. filed a petition for confirmation of the arbitration award before the
Regional Trial Court of Makati. Herein petitioners opposed the petition and prayed for the
nullification, modification and/or correction of the same, alleging that the arbitrators committed
evident partiality and grave abuse of discretion as shown by the following errors: (1) In creating
an entirely new contract for the parties that contradicts the essence of their agreement and results
in the absurd situation where a seller incurs enormous expense to sell his property; (2) In treating
the provisions in the Agreement independently of one another and thereby nullifying the simple,
clear and express stipulations therein; (3) In interpreting the Agreement although it is couched in
plain, simple and clear language, contrary to the well-established principle that if the terms of a
contract are clear, the literal meaning of its stipulations shall control; (4) In accepting SGV's
proposed adjustments, contrary to the parties' stipulation that the final adjustment items shall
pertain to a specific period and subject to their agreement; and in giving full reliance on SGV
report despite SGV's disclosure of its lack of independence because it acted solely to assist
petitioner and its report was intended solely for petitioner's information; (5) In not applying the
"suppressed evidence" rule against petitioner inspite of its refusal to present the Company's
income statement or any other similar report for the adjustment period; and in disregarding
respondent's estimate of the net income for the period as "Adjustment" using SGV's figures and
ratios; (6) In not awarding damages and attorney's fee to respondents despite petitioner's bad
faith in violating the contract.
10
ISSUE: Whether or not the Court of Appeals erred in affirming the arbitration award and in
reversing the decision of the trial court?
HELD: NO.
Petitioners herein failed to prove their allegation of partiality on the part of the
arbitrators. Proofs other than mere inferences are needed to establish evident partiality. That they
were disadvantaged by the decision of the Arbitration Committee does not prove evident
partiality. It is clear therefore, that the award was vacated not because of evident partiality of the
arbitrators but because the latter interpreted the contract in a way which was not favorable to
herein petitioners and because it considered that herein private respondents, by submitting the
controversy to arbitration, was seeking to renege on its obligations under the contract. That the
award was unfavorable to petitioners herein did not prove evident partiality. The arbitrators
resorted to contract interpretation neither constituted a ground for vacating the award because
under the circumstances, the same was necessary to settle the controversy between the parties
regarding the amount of the NAV. The interpretation made by the arbitrators did not create a
new contract, as alleged by herein petitioners but was a faithful application of the provisions of
the Agreement. Neither was the award arbitrary for it was based on the statements prepared by
the SGV which was chosen by both parties to be the "auditors." During the arbitration
proceedings, the parties agreed that the contract as prepared by private respondent, was
submitted to petitioners for approval. Petitioners, therefore, are presumed to have studied the
provisions of the Agreement and agreed to its import when they approved and signed the same.
When it was submitted to arbitration to settle the issue regarding the computation of the NAV,
petitioners agreed to be bound by the judgment of the arbitration committee,
except in cases where the grounds for vacating the award existed. Petitioners cannot now refuse
to perform its obligation after realizing that it had erred in its understanding of the Agreement. It
is clear then that the Court of Appeals reversed the trial court not because the latter reviewed the
arbitration award involved herein, but because the respondent appellate court found that the trial
court had no legal basis for vacating the award.
7. CHINA CHANG JIANG ENERGY CORPORATION (PHILIPPINES) v. ROSAL

INFRASTRUCTURE BUILDERS, represented by its General Manager, Alberto S. Surla,
Construction Industry Arbitration Commission, Prudencio F. Baranda, and the Court of
Appeals
G.R. No. 125706 September 30, 1996
FACTS: Petitioner engaged the services of respondent Rosal Infrastructure Builders ("RIB") as
sub-contractor, executing a contract for the construction of Check Dam No. 1 along Sadyo River,
Binga, Itogon, Benguet. In this contract, the parties agreed to submit disputes arising therefrom
to arbitration before the Arbitration of the International Chamber of Commerce. When a dispute
arose between the parties, respondent RIB filed a complaint before respondent CIAC for
arbitration. Petitioner filed its answer with compulsory counterclaim and raised therein the issue
of lack of jurisdiction on the part of CIAC. In its order dated August 1, 1995, respondent CIAC
considered the question of jurisdiction merely as a special defense which can be included as part
of the issues in the Terms of Reference. Petitioner filed a motion for reconsideration which was
11
denied by respondent CIAC in its order dated October 4, 1995. Petitioner contends that this
Court had already interpreted this particular provision of the law in the case of Tesco Service,
Incorporated vs. Vera, 209 SCRA 440 [1992] to mean that respondent CIAC can acquire
jurisdiction over the dispute only when the parties have agreed to submit their dispute to
voluntary arbitration before respondent CIAC itself. Petitioner submits that CIAC Resolution
No. 3-93 is null and void insofar as it prohibits the parties from submitting the dispute for
arbitration to an arbitral body other than respondent CIAC because, so it is contended, it goes
beyond the basic law it seeks to implement, E.O. No. 1008
ISSUE: Whether or not respondent CIAC can acquire jurisdiction over the dispute only when the
parties have agreed to submit their dispute to voluntary arbitration before respondent CIAC
itself?
HELD: YES.
The Court finds no meritorious basis in the petition to sustain a reversal of the ruling of
respondent court upholding the jurisdiction of the CIAC in this case. The ruling of the Court in
the above-cited Tesco case must be read in the light of facts obtaining and the governing law in
relation to the applicable rules in force during that period. When the Court ruled in Tesco that
CIAC had no jurisdiction over the dispute, we were applying the prevailing rules of procedure
duly promulgated by the CIAC pursuant to its rule-making power provided in Section 21 of its
enabling law. Section 1 of the said rules specifically required that a party to a construction
contract wishing to have recourse to arbitration by the CIAC shall submit its Request for
Arbitration in sufficient copies to the Secretariat of the CIAC. Since the Court found that there
was no Request for Arbitration filed with the Secretariat of the CIAC because private respondent
LAROSA in the case filed a petition for injunction with the Regional Trial Court of Quezon
City, the inevitable conclusion had to be that CIAC did not acquire jurisdiction over the disputes
arising from the sub-contract agreement between TESCO and LAROSA in said case.
Accordingly, the Court sustained the jurisdiction of the regular court in that particular instance.
The Tesco ruling is not binding in the case at bench.
What the law merely requires for a particular construction contract to fall within the
jurisdiction of CIAC is for the parties to agree to submit the same to voluntary arbitration. Unlike
in the original version of Section 1, as applied in the Tesco case, the law does not mention that
the parties should agree to submit disputes arising from their agreement specifically to the CIAC
for the latter to acquire jurisdiction over such disputes. Rather, it is plain and clear that as long as
the parties agree to submit to voluntary arbitration, regardless of what forum they may choose,
their agreement will fall within the jurisdiction of the CIAC, such that, even if they specifically
choose another forum, the parties will not be precluded from electing to submit their dispute
before the CIAC because this right has been vested upon each party by law, i.e., E.O. No. 1008.
8. OIL AND NATURAL GAS COMMISSION v. COURT OF APPEALS AND PACIFIC

CEMENT COMPANY, INC.
G.R. No. 114323 July 23, 1998
12
FACTS: The present conflict between the petitioner and the private respondent has its roots in a
contract entered into by and between both parties on February 26, 1983 whereby the private
respondent undertook to supply the petitioner FOUR THOUSAND THREE HUNDRED (4,300)
metric tons of oil well cement. In consideration therefor, the petitioner bound itself to pay the
private respondent the amount of FOUR HUNDRED SEVENTY-SEVEN THOUSAND THREE
HUNDRED U.S. DOLLARS ($477,300.00) by opening an irrevocable, divisible, and confirmed
letter of credit in favor of the latter. The oil well cement was loaded on board the ship MV
SURUTANA NAVA at the port of Surigao City, Philippines for delivery at Bombay and
Calcutta, India. However, due to a dispute between the shipowner and the private respondent, the
cargo was held up in Bangkok and did not reach its point of destination. Notwithstanding the fact
that the private respondent had already received payment and despite several demands made by
the petitioner, the private respondent failed to deliver the oil well cement. Thereafter,
negotiations ensued between the parties and they agreed that the private respondent will replace
the entire 4,300 metric tons of oil well cement with Class "G" cement cost free at the petitioner's
designated port. However, upon inspection, the Class "G" cement did not conform to the
petitioner's specifications. The petitioner then informed the private respondent that it was
referring its claim to an arbitrator pursuant to Clause 16 of their contract which stipulates:
"Except where otherwise provided in the supply order/contract all
questions and disputes, relating to the meaning of the specification
designs, drawings and instructions herein before mentioned and as to
quality of workmanship of the items ordered or as to any other question,
claim, right or thing whatsoever, in any way arising out of or relating to
the supply order/contract design, drawing, specification, instruction or
these conditions or otherwise concerning the materials or the execution or
failure to execute the same during stipulated/extended period or after the
completion/abandonment thereof shall be referred to the sole arbitration
of the persons appointed by Member of the Commission at the time of
dispute. It will be no objection to any such appointment that the arbitrator
so appointed is a Commission employer (sic) that he had to deal with the
matter to which the supply or contract relates and that in the course of his
duties as Commission's employee he had expressed views on all or any of
the matter in dispute or difference.
"The arbitrator to whom the matter is originally referred being
transferred or vacating his office or being unable to act for any reason the
Member of the Commission shall appoint another person to act as
arbitrator in accordance with the terms of the contract/supply order. Such
person shall be entitled to proceed with reference from the stage at which
it was left by his predecessor. Subject as aforesaid the provisions of the
Arbitration Act, 1940, or any Statutory modification or re- enactment
there of and the rules made there under and for the time being in force
shall apply to the arbitration proceedings under this clause.
"The arbitrator may with the consent of parties enlarge the time, from
time to time, to make and publish the award.
"The venue for arbitration shall be at Dehra Dun." 1*
Despite notice sent to the private respondent of the foregoing order and several demands
by the petitioner for compliance therewith, the private respondent refused to pay the amount
13
adjudged by the foreign court as owing to the petitioner. Accordingly, the petitioner filed a
complaint with Branch 30 of the Regional Trial Court (RTC) of Surigao City for the enforcement
of the aforementioned judgment of the foreign court. The private respondent moved to dismiss
the complaint on the following grounds: (1) plaintiff's lack of legal capacity to sue; (2) lack of
cause of action; and (3) plaintiffs claim or demand has been waived, abandoned, or otherwise
extinguished. The petitioner filed its opposition to the said motion to dismiss, and the private
respondent, its rejoinder thereto.
ISSUE: Whether or not the arbitrator had jurisdiction over the dispute between the petitioner and
the private respondent under Clause 16 of the contract
HELD: YES.
The Court agrees with the appellate court in its ruling that the non-delivery of the oil well
cement is a matter properly cognizable by the regular courts as stipulated by the parties in Clause
15 of their contract. A perusal of Clause 16 shows that the parties did not intend arbitration to be
the sole means of settling disputes. This is manifest from Clause 16 itself which is prefixed with
the proviso, "Except where otherwise provided in the supply order/contract ...",thus indicating
that the jurisdiction of the arbitrator is not all encompassing, and admits of exceptions as maybe
provided elsewhere in the supply order/contract. The correct interpretation to give effect to both
stipulations in the contract is for Clause 16 to be confined to all claims or disputes arising from
or relating to the design, drawing, instructions, specifications or quality of the materials of the
supply order/contract, and for Clause 15 to cover all other claims or disputes.
9. ASSET PRIVATIZATION TRUST v. COURT OF APPEALS, Jesus S. Cabarrus, Sr.,

Jesus S. Cabarrus, Jr., Jaime T. Cabarrus, Jose Miguel Cabarrus, Alejandro S. Pastor, Jr.
Antonio U. Miranda, and Miguel M. Antonio, as minority stock-holders of Marinduque
Mining and Industrial Corporation
G.R. No. 121171 December 29, 1998
FACTS: The Republic of the Philippines thru the Surigao Mineral Reservation Board, granted
MMIC the exclusive right to explore, develop and exploit nickel, cobalt and other minerals in the
Surigao mineral reservation. The Philippine Government undertook to support the financing of
MMIC by purchase of MMIC debenture bonds and extension of guarantees. Further, the
Philippine Government obtained a firm commitment from the DBP and/or other government
financing institutions to subscribe in MMIC and issue guarantee/s for foreign loans or deferred
payment arrangements secured from the US Eximbank, Asian Development Bank Kobe Steel, of
amount not exceeding US$100 Million. DBP approved guarantees in favor of MMIC and
subsequent requests for guarantees were based on the unutilized portion of the Government
commitment. Thereafter, the Government extended accommodations to MMIC in various
amounts. MMIC, PNB and DBP executed a Mortgage Trust Agreement 3 whereby MMIC, as
mortgagor, agreed to constitute a mortgage in favor of PNB and DBP as mortgagees, over all
MMIC's assets; subject of real estate and chattel mortgage executed by the mortgagor, and
additional assets described and identified, including assets of whatever kind, nature or
14
description, which the mortgagor may acquire whether in substitution of, in replenishment, or in
addition thereto.
By 1984, DBP and PNB's financial exposure both in loans and in equity in MMIC had
reached tremendous proportions, and MMIC was having a difficult time meeting its financial
obligations MMIC had an outstanding loan with DBP in the amount of P13,792,607,565.92 as of
August 31, 1984 and with PNB in the amount of P8,789,028,249.38 as of July 15, 1984 or a total
Government exposure of Twenty Two Billion Six Hundred Sixty- Eight Million Five Hundred
Thirty-Seven Thousand Seven Hundred Seventy and 05/100 (P22,668,537,770.05), Philippine
Currency. In August and September 1984, as the various loans and advances made by DBP and
PNB to MMIC had become overdue and since any restructuring program relative to the loans
was no longer feasible, and in compliance with the directive of Presidential Decree No. 385,
DBP and PNB as mortgagees of MMIC assets, decided to exercise their right to extrajudicially
foreclose the mortgages in accordance with the Mortgage Trust Agreement. The foreclosed
assets were sold to PNB as the lone bidder and were assigned to three newly formed
corporations, namely. Nonoc Mining Corporation, Maricalum Mining and Industrial
Corporation, and Island Cement Corporation. In 1986, these assets were transferred to the Asset
Privatization Trust (APT). Jesus S Cabarrus, Sr., together with the other stockholders of MMIC,
filed a derivative suit against DBP and PNB before the RTC of Makati, Branch 62, for
Annulment of Foreclosures, Specific Performance and Damages. 12 The suit, docketed as Civil
Case No. 9900, prayed that the court: (1) annul the foreclosures, restore the foreclosed assets to
MMIC, and require the banks to account for their use and operation in the interim; (2) direct the
banks to honor and perform their commitments under the alleged FRP, and (3) pay moral and
exemplary damages, attorney's fees, litigation expenses and costs.
In the course of the trial, private respondents and petitioner APT, as successor of the DBP
and the PNB's interest in MMIC, mutually agreed to submit the case to arbitration by entering
into a "Compromise and Arbitration Agreement." stipulating, inter alia:
NOW, THEREFORE, for and in consideration of the foregoing premises
and the mutual covenants contained herein, the parties agree as follows:
1. Withdrawal and Compromise. — The parties have agreed to withdraw
their respective claims from the Trial Court and to resolve their dispute
through arbitration by praying to the Trial Court to issue a Compromise
Judgment based on this Compromise and Arbitration Agreement.
In withdrawing their dispute from the court and in choosing to resolve
it through arbitration, the parties have agreed that:
(a) their respective money claims shall be reduced to purely
money claims; and
(b) as successor and assignee of the PNB and DBP interests in
MMIC and the MMIC accounts, APT shall likewise succeed to the rights
and obligations of PNB and DBP in respect of the controversy subject of
Civil Case No. 9900 to be transferred to arbitration and any arbitral
award/order against either PNB and/or DBP shall be the responsibility of,
be discharged by and be enforceable against APT, the parties having
agreed to drop PNB and DBP from the arbitration.
2. Submission. — The parties hereby agree that (a) the controversy in
Civil Case No. 9900 shall be submitted instead to arbitration under RA
876 and (b) the reliefs prayed for in Civil Case No. 9900 shall, with the
15
approval of the Trial Court of this Compromise and Arbitration

Agreement, be transferred and reduced to pure pecuniary/money claims
with the parties waiving and foregoing all other forms of reliefs which
they prayed for or should have prayed for in Civil Case No. 9900.
The Compromise and Arbitration Agreement limited the issues to the following:
5. Issues. — The issues to be submitted for the Committee's resolution
shall be (a) Whether PLAINTIFFS have the capacity or the personality to
institute this derivative suit in behalf of the MMIC or its directors; (b)
Whether or not the actions leading to, and including, the PNB-DBP
foreclosure of the MMIC assets were proper, valid and in good faith.
ISSUE: Whether or not the arbitrators came out with an award in excess of their powers and
palpably devoid of factual and legal basis?
HELD: YES.
As a rule, the award of an arbitrator cannot be set aside for mere errors of judgment either
as to the law or as to the facts. Courts are without power to amend or overrule merely because of
disagreement with matters of law or facts determined by the arbitrators. Judicial review of an
arbitration is, thus, more limited than judicial review of a trial. Nonetheless, the arbitrators'
award is not absolute and without exceptions. The arbitrators cannot resolve issues beyond the
scope of the submission agreement. The parties to such an agreement are bound by the arbitrators
award only to the extent and in the manner prescribed by the contract and only if the award is
rendered in conformity thereto. Finally, it should be stressed that while a court is precluded from
overturning an award for errors in the determination of factual issues, nevertheless, if an
examination of the record reveals no support whatever for the arbitrators determinations, their
award must be vacated. In the same manner, an award must be vacated if it was made in
"manifest disregard of the law." The arbitrators came out with an award in excess of their powers
and palpably devoid of factual and legal basis.
The arbitrators in making the award went beyond the arbitration agreement. The arbiters
overstepped their powers by declaring as valid the proposed Financial Restructuring Program.
The Arbitration committee went beyond its mandate and thus acted in excess of its powers when
it ruled on the validity of, and gave effect to, the proposed FRP. In submitting the case to
arbitration, the parties had mutually agreed to limit the issue to the "validity of the foreclosure"
and to transform the reliefs prayed for therein into pure money claims. There is absolutely no
evidence that the DBP and PNB agreed, expressly or impliedly, to the proposed FRP. It cannot
be overemphasized that a FRP, as a contract, requires the consent of the parties thereto. The
contract must bind both contracting parties. Private respondents even by their own admission
recognized that the FRP had yet not been carried out and that the loans of MMIC had not yet
been converted into equity. However, the Arbitration Committee not only declared the FRP valid
and effective, but also converted the loans of MMIC into equity raising the equity of DBP to
87%. The arbiters exceeded their authority in awarding damages
to MMIC, which is not impleaded as a party to the derivative suit.
16
10. NATIONAL STEEL CORPORATION VS. REGIONAL TRIAL COURT LANAO

DEL NORTE, BRANCH 2, ILIGAN CITY and E. Willkom Enterprises, Inc.
G.R. No. 127004 March 11, 1999
FACTS: On Nov. 18, 1992, petitioner-defendant Edward Wilkom Enterprises Inc. (EWEI for
brevity) together with one Ramiro Construction and respondent-petitioner National Steel
Corporation (NSC for short) executed a contract whereby the former jointly undertook the
Contract for Site Development for the latter's Integrated Iron and Steel Mills Complex to be
established at Iligan City. The services of Ramiro Construction was terminated and on March 7,
1983, petitioner-defendant EWEI took over Ramiro's contractual obligation. Due to this and to
other causes deemed sufficient by EWEI, extensions of time for the termination of the project,
initially agreed to be finished on July 17, 1983, were granted by NSC. Plaintiff-defendant EWEI
filed Civil Case No. 1615 before the Regional Trial Court of Lanao del Norte, Branch 06,
praying essentially for the payments of P458,381.00 with interest from the time of delay; the
price adjustment as provided by PD 1594; and exemplary damages in the amount of P50,000.00
and attorney's fees. Defendant-petitioner NSC filed an answer with counterclaim to plaintiff's
complaints on May 18, 1990.
ISSUE: Whether or not the lower court acted with grave abuse of discretion in not vacating the
arbitrator's award?
HELD: NO.
The parties in the present case, upon entering into a Contract for Site Development,
mutually agreed that any dispute arising from the said contract shall be submitted for arbitration.
Thereunder, if a dispute should arise from the contract, the Arbitration Board shall assume
jurisdiction and conduct hearings. After the Board comes up with a decision, the parties may
immediately implement the same by treating it as an amicable settlement. However, if one of the
parties refuses to comply or is dissatisfied with the decision, he may file a Petition to Vacate the
Arbitrator's decision before the trial court. On the other hand, the winning party may ask the trial
court's confirmation to have such decision enforced. As the Petitioner has availed of Rule 65, the
Court will not review the facts found nor even of the law as interpreted or applied by the
arbitrator unless the supposed errors of facts or of law are so patent and gross and prejudicial as
to amount to a grave abuse of discretion or an excess de pouvoir on the part of the arbitrators.
11. NATIONAL IRRIGATION ADMINISTRATION (NIA) v. HONORABLE COURT OF

APPEALS (4TH DIVISION), CONSTRUCTION INDUSTRY ARBITRATION
COMMISSION, AND HYDRO RESOURCES CONTRACTORS CORPORATION
G.R. No. 129169 November 17, 1999
FACTS: Hydro Resources Contractors Corporation (hereafter HYDRO) was awarded Contract
MPI-C-2 for the construction of the main civil works of the Magat River Multi-Purpose Project.
The contract provided that HYDRO would be paid partly in Philippine pesos and partly in U.S.
dollars. HYDRO substantially completed the works under the contract in 1982 and final
acceptance by NIA was made in 1984. HYDRO thereafter determined that it still had an account
17
receivable from NIA representing the dollar rate differential of the price escalation for the
contract. HYDRO, on 7 December 1994, filed with the CIAC a Request for Adjudication of the
aforesaid claim. NIA filed its Answer wherein it questioned the jurisdiction of the CIAC alleging
lack of cause of action, laches and estoppel in view of HYDRO's alleged failure to avail of its
right to submit the dispute to arbitration within the prescribed period as provided in the contract.
At the preliminary conference, NIA through its counsel Atty. Joy C. Legaspi of the Office of the
Government Corporate Counsel, manifested that it could not admit the genuineness of HYDRO's
evidence since NIA's records had already been destroyed. NIA requested an opportunity to
examine the originals of the documents which HYDRO agreed to provide. On 13 March 1995,
NIA filed a Motion to Dismiss alleging lack of jurisdiction over the disputes. NIA contended that
there was no agreement with HYDRO to submit the dispute to CIAC for arbitration considering
that the construction contract was executed in 1978 and the project completed in 1982, whereas
the Construction Industry Arbitration Law creating CIAC was signed only in 1985; and that
while they have agreed to arbitration as a mode of settlement of disputes, they could not have
contemplated submission of their disputes to CIAC. NIA further argued that records show that it
had not voluntarily submitted itself to arbitration by CIAC citing TESCO Services, Inc. v. Hon.
Abraham Vera, et al., wherein it was ruled:
ISSUE: Whether or not CIAC has jurisdiction over the controversy?
HELD: YES.
Contrary to the claim of NIA, the CIAC has jurisdiction over the controversy. Executive
Order No. 1008, otherwise known as the "Construction Industry Arbitration Law" which was
promulgated on 4 February 1985, vests upon CIAC original and exclusive jurisdiction over
disputes arising from, or connected with contracts entered into by parties involved in
construction in the Philippines, whether the dispute arises before or after the completion of the
contract, or after the abandonment or breach thereof. The disputes may involve government or
private contracts. For the Board to acquire jurisdiction, the parties to a dispute must agree to
submit the same to voluntary arbitration. The complaint of HYDRO against NIA on the basis of
the contract executed between them was filed on 7 December 1994, during the effectivity of E.O.
No. 1008. Hence, it is well within the jurisdiction of CIAC. The jurisdiction of a court is
determined by the law in force at the time of the commencement of the action.
It is undisputed that the contracts between HYDRO and NIA contained an arbitration
clause wherein they agreed to submit to arbitration any dispute between them that may arise
before or after the termination of the agreement. Consequently, the claim of HYDRO having
arisen from the contract is arbitrable. NIA's reliance with the ruling on the case of Tesco Services
Incorporated v. Vera, 30 is misplaced.
12. HEIRS OF AUGUSTO L. SALAS, JR, namely: Teresita D. Salas for herself and as
legal guardian of the minor Fabrice Cyrill D. Salas, Ma. Cristina S. Lesaca, and Karina
Teresa D. Salas v. LAPERAL REALTY CORPORATION, Rockway Real Estate
Corporation, South Ridge Village, Inc. Maharami Development Corporation, Spouse
Thelma D. Abrajano and Gregorio Abrajano, Oscar Dacillo, Spouses Virgini D. Lava and
18
Rodel Lava, Eduardo A. Vacuna, Florante De La Cruz, Jesus Vicente B. Capellan, and the
Register of Deeds for Lipa City
G.R. No. 135362 December 13, 1999
FACTS: Salas, Jr. was the registered owner of a vast tract of land in Lipa City, Batangas
spanning 1,484,354 square meters. He entered into an Owner-Contractor Agreement (hereinafter
referred to as the Agreement) with respondent Laperal Realty Corporation (hereinafter referred
to as Laperal Realty) to render and provide complete (horizontal) construction services on his
land. Salas, Jr. executed a Special Power of Attorney in favor of respondent Laperal Realty to
exercise general control, supervision and management of the sale of his land, for cash or on
installment basis. Salas, Jr. left his home in the morning for a business trip to Nueva Ecija. He
never returned.
On August 6, 1996, Teresita Diaz Salas filed with the Regional Trial Court of Makati
City a verified petition for the declaration of presumptive death of her husband, Salas, Jr., who
had then been missing for more than seven (7) years. It was granted on December 12, 1996. 5
Laperal Realty subdivided the land of Salas, Jr. and sold subdivided portions thereof to
respondents Rockway Real Estate Corporation and South Ridge Village, Inc. on February 22,
1990; to respondent spouses Abrajano and Lava and Oscar Dacillo on June 27, 1991; and to
respondents Eduardo Vacuna, Florante de la Cruz and Jesus Vicente Capellan on June 4, 1996
(all of whom are hereinafter referred to as respondent lot buyers).
On February 3, 1998, petitioners as heirs of Salas, Jr. filed in the Regional Trial Court of
Lipa City a Complaint for declaration of nullity of sale, reconveyance, cancellation of contract,
accounting and damages against herein respondents which was docketed as Civil Case No. 98-
0047. On April 24, 1998, respondent Laperal Realty filed a Motion to Dismiss 7 on the ground
that petitioners failed to submit their grievance to arbitration as required under Article VI of the
Agreement
ISSUE: Whether. or not the petitioners’ cause of action for cancellation of contract and
accounting are covered by the exception under the Arbitration Law?
HELD: YES.
A submission to arbitration is a contract. As such, the Agreement, containing the
stipulation on arbitration, binds the parties thereto, as well as their assigns and heirs. But only
they. Petitioners, as heirs of Salas, Jr., and respondent Laperal Realty are certainly bound by the
Agreement. If respondent Laperal Realty had assigned its rights under the Agreement to a third
party, making the former, the assignor, and the latter, the assignee, such assignee would also be
bound by the arbitration provision since assignment involves such transfer of rights as to vest in
the assignee the power to enforce them to the same extent as the assignor could have enforced
them against the debtor or in this case, against the heirs of the original party to the Agreement.
However, respondents Rockway Real Estate Corporation, South Ridge Village, Inc., Maharami
Development Corporation, spouses Abrajano, spouses Lava, Oscar Dacillo, Eduardo Vacuna,
Florante de la Cruz and Jesus Vicente Capellan are not assignees of the rights of respondent
Laperal Realty under the Agreement to develop Salas, Jr.'s land and sell the same. They are,
rather, buyers of the land that respondent Laperal Realty was given the authority to develop and
sell under the Agreement. As such, they are not "assigns" contemplated in Art. 1311 of the New
19
Civil Code which provides that "contracts take effect only between the parties, their assigns and
heirs".
13. A.D. GOTHONG MANUFACTURING CORPORATION EMPLOYEES UNION-ALU

v. HON. NIEVES CONFESSOR, SECRETARY OF DOLE AND A.D. GOTHONG
MANUFACTURING CORPORATION, Subangdaku, Mandaue City
G.R. No. 113638 November 16, 1999
FACTS: A. D. Gothong Manufacturing Corporation Employees Union-ALU ("Union") filed a

petition for certification election in its bid to represent the unorganized regular rank-and- file
employees of respondent A. D. Gothong Manufacturing Corporation ("Company") excluding its
office staff and personnel. Respondent Company opposed the petition as it excluded office
personnel who are rank and file employees. In the inclusion-exclusion proceedings, the parties
agreed to the inclusion of Romulo Plaza and Paul Michael Yap in the list of eligible voters on
condition that their votes are considered challenged on the ground that they were supervisory
employees. Both Plaza and Yap argued that they are rank-and-file employees. Plaza claimed that
he was a mere salesman based in Cebu, and Yap argued that he is a mere expediter whose job
includes the facilitation of the processing of the bills of lading of all intended company
shipments.
ISSUE: Whether in the light of the evidence submitted by both parties, Plaza and Yap are
managerial employees or rank-and-file employees
HELD: NO.
The Court is not a trier of facts. It is not the function of this Court to examine and
evaluate the probative value of all evidence presented to the concerned tribunal which formed the
basis of its impugned decision or resolution. Following established precedents, it is inappropriate
to review that factual findings of the Med-Arbiter regarding the issue whether Romulo Plaza and
Paul Michael Yap are or are not rank-and-file employees considering that these are matters
within their technical expertise. They are binding on the Court as they are satisfied that they are
supported by substantial evidence, and we find no capricious exercise of judgment warranting
reversal by certiorari.
14. HOME BANKERS SAVINGS AND TRUST COMPANY v. COURT OF APPEALS

AND FAR EAST BANK & TRUST COMPANY
G.R. No. 115412 November 19,1999
FACTS: Victor Tancuan, one of the defendants in Civil Case No. 92-145, issued Home Bankers
Savings and Trust Company (HBSTC) check No. 193498 for P25,250,000.00 while Eugene
Arriesgado issued Far East Bank and Trust Company (FEBTC) check Nos. 464264, 464272 and
464271 for P8,600,000.00, P8,500,000.00 and P8,100,000.00, respectively, the three checks
20
amounting to P25,200,000.00. Tancuan and Arriesgado exchanged each other's checks and
deposited them with their respective banks for collection. When FEBTC presented Tancuan's
HBSTC check for clearing, HBSTC dishonored it for being "Drawn Against Insufficient Funds."
On October 15, 1991, HBSTC sent Arriesgado's three (3) FEBTC checks through the Philippine
Clearing House Corporation (PCHC) to FEBTC but was returned on October 18, 1991 as
"Drawn Against Insufficient Funds." HBSTC received the notice of dishonor on October 21,
1991 but refused to accept the checks and on October 22, 1991, returned them to FEBTC through
the PCHC for the reason "Beyond Reglementary Period," implying that HBSTC already treated
the three (3) FEBTC checks as cleared and allowed the proceeds thereof to be withdrawn. 4
FEBTC demanded reimbursement for the returned checks and inquired from HBSTC whether it
had permitted any withdrawal of funds against the unfunded checks and if so, on what date.
HBSTC, however, refused to make any reimbursement and to provide FEBTC with the needed
information.
Thus, on December 12, 1991, FEBTC submitted the dispute for arbitration before the
PCHC Arbitration Committee, under the PCHC's Supplementary Rules on Regional Clearing to
which FEBTC and HBSTC are bound as participants in the regional clearing operations
administered by the PCHC. On January 17, 1992, while the arbitration proceeding was still
pending, FEBTC filed an action for sum of money and damages with preliminary attachment
against HBSTC, Robert Young, Victor Tancuan and Eugene Arriesgado with the Regional Trial
Court of Makati, Branch 133. A motion to dismiss was filed by HBSTC claiming that the
complaint stated no cause of action and accordingly "...should be dismissed because it seeks to
enforce an arbitral award which as yet does not exist."
In the instant petition, petitioner contends that first,"no party litigant can file a non-
existent complaint," arguing that "...one cannot file a complaint in court over a subject that is
undergoing arbitration." Second, petitioner submits that "[s]ince arbitration is a special
proceeding by a clear provision of law, the civil suit filed below is, without a shadow of doubt,
barred by litis pendentia and should be dismissed de plano insofar as HBSTC is concerned."
Third, petitioner insists that "[w]hen arbitration is agreed upon and suit is filed without
arbitration having been held and terminated, the case that is filed should be dismissed.”
Private respondent FEBTC, on the other hand, contends that ". . . the cause of action for
collection [of a sum of money] can coexist in the civil suit and the arbitration [proceeding]"
citing Section 7 of the Arbitration Law which provides for the stay of the civil action until an
arbitration has been had in accordance with the terms of the agreement providing for arbitration.
Private respondent further asserts that following Section 4(3), Article VIII of the 1987
Constitution, the subsequent case of Puromines does not overturn the ruling in the earlier cases
of National Union Fire Insurance Company of Pittsburg vs.Stolt-Nielsen Philippines,Inc.,
andBengson vs. Chan, hence, private respondent concludes that the prevailing doctrine is that the
civil action must be stayed rather than dismissed pending arbitration.
ISSUE: Whether or not private respondent which commenced an arbitration proceeding under
the auspices of the Philippine Clearing House Corporation may subsequently file a separate case
in court over the same subject matter of arbitration despite the pendency of that arbitration,
simply to obtain the provisional remedy of attachment against the bank, the adverse party in the
arbitration proceeding?
HELD: NO.
21
Section 14 of Republic Act 876, otherwise known as the Arbitration Law, allows any
party to the arbitration proceeding to petition the court to take measures to safeguard and/or
conserve any matter which is the subject of the dispute in arbitration. Petitioner's exposition of
the foregoing provision deserves scant consideration. Section 14 simply grants an arbitrator the
power to issue subpoena and subpoena duces tecum at any time before rendering the award. The
exercise of such power is without prejudice to the right of a party to file a petition in court to
safeguard any matter which is the subject of the dispute in arbitration. In the case at bar, private
respondent filed an action for a sum of money with prayer for a writ of preliminary attachment.
Undoubtedly, such action involved the same subject matter as that in arbitration, i.e., the sum of
P25,200,000.00 which was allegedly deprived from private respondent in what is known in
banking as a "kiting scheme." However, the civil action was not a simple case of a money claim
since private respondent has included a prayer for a writ of preliminary attachment, which is
sanctioned by Section 14 of the Arbitration Law.
15. CALIFORNIA AND HAWAIIAN SUGAR COMPANY, PACIFIC GULF MARINE,

INC. and C.F. SHARP & COMPANY v. PIONEER INSURANCE AND SURETY
CORPORATION
G.R. No. 139273 November 28, 2000
FACTS: The vessel MV "SUGAR ISLANDER" arrived at the port of Manila carrying a cargo of
soybean meal in bulk consigned to several consignees, one of which was the Metro Manila Feed
Millers Association (Metro for [b]revity). From the barges, the cargo was allegedly offloaded,
rebagged and reloaded on consignee's delivery trucks. Respondent, however, claims that when
the cargo [was] weighed on a licensed truck scale a shortage of 255.051 metric tons valued at
P1,621,171.16 was discovered. The above-mentioned shipment was insured with private
respondent against all risk in the amount of P19,976,404.00. Due to the alleged refusal of
petitioners to settle their respective liabilities, respondent, as insurer, paid the consignee Metro
Manila Feed Miller's Association. On March 26, 1992, as alleged subrogee of Metro, private
respondent filed a complaint for damages against herein petitioners. Within the reglementary
period to file an Answer, petitioners filed a Motion to Dismiss the complaint on the ground that
respondent's claim is premature, the same being arbitrable. Private respondent filed its
Opposition thereto and petitioners filed their Reply to Opposition. Petitioners filed their Answer
with Counterclaim and Crossclaim alleging therein that plaintiff, herein respondent, did not
comply with the arbitration clause of the charter party; hence, the complaint was allegedly
prematurely filed. Petitioners filed a Motion to Defer Pre-Trial and Motion to Set for Preliminary
Hearing the Affirmative Defense of Lack of Cause of Action for Failure to comply with
Arbitration Clause, respectively. Private respondent did not file an Opposition to the said Motion
to Set for Preliminary Hearing.
ISSUE: Whether or not the motion to dismiss should be granted on the ground that a condition
precedent has not been complied with, based on the arbitration clause incorporated in the bill of
lading?
HELD: YES.
22
The CA also erred when it held that the arbitration clause was not binding on respondent. We
reiterate that the crux of this case is whether the trial court committed grave abuse of discretion
in denying the aforecited Motion. There was neither need nor reason to rule on the applicability
of the arbitration clause. Be that as it may, the CA's reasoning on this point faulty. Citing Pan
Malayan Insurance Corporation v. CA 17 it ruled that the right of respondent insurance company
as subrogee was not based on the charter party or any other contract; rather, it accrued upon the
payment of the insurance claim by private respondent to the insured consignee. There was
nothing in Pan Malayan, however, that prohibited the applicability of the arbitration clause to the
subrogee. That case merely discussed, inter alia, the accrual of the right of subrogation and the
legal basis therefor. 18 This issue is completely different from that of the consequences of such
subrogation; that is, the rights that the insurer acquires from the insured upon payment of the
indemnity.
16. DEL MONTE CORPORATION-USA, Paul E. Derby, Jr., Daniel Collins and Luis
Hidalgo v. COURT OF APPEALS, Judge Bienvenido L. Reyes in his capacity as Presiding
Judge, RTC-Br. 74, Malabon, Metro Manila, Montebueno Marketing, Inc., Liong Liong C.
Sy and Sarbosa Foods, Inc.
G.R. No. 136154 February 7, 2001
FACTS: Del Monte Corporation-USA (DMC-USA) appointed private respondent Montebueno

Marketing, Inc. (MMI) as the sole and exclusive distributor of its Del Monte products in the
Philippines for a period of five (5) years, renewable for two (2) consecutive five (5) year periods
with the consent of the parties. The Agreement provided, among others, for an arbitration clause
which states —
12. GOVERNING LAW AND ARBITRATION
This Agreement shall be governed by the laws of the State of California
and/or, if applicable, the United States of America. All disputes arising
out of or relating to this Agreement or the parties' relationship, including
the termination thereof, shall be resolved by arbitration in the City of San
Francisco, State of California, under the Rules of the American
Arbitration Association. The arbitration panel shall consist of three
members, one of whom shall be selected by DMC-USA, one of whom
shall be selected by MMI, and third of whom shall be selected by the
other two members and shall have relevant experience in the
industry . . . .
MMI, SFI and MMI's Managing Director Liong Liong C. Sy (LILY SY) filed a Complaint
against petitioners DMC-USA, Paul E. Derby, Jr., Daniel Collins and Luis Hidalgo, and Dewey
Ltd. 9 before the Regional Trial Court of Malabon, Metro Manila. Private respondents predicated
their complaint on the alleged violations by petitioners of Arts. 20, 10 21 11 and 23 12 of the
Civil Code. According to private respondents, DMC-USA products continued to be brought into
the country by parallel importers despite the appointment of private respondent MMI as the sole
and exclusive distributor of Del Monte products thereby causing them great embarrassment and
substantial damage. They alleged that the products brought into the country by these importers
were aged, damaged, fake or counterfeit, so that in March 1995 they had to cause, after prior
23
consultation with Antonio Ongpin, Market Director for Special Markets of Del Monte
Philippines, Inc., the publication of a "warning to the trade" paid advertisement in leading
newspapers. Petitioners DMC-USA and Paul E. Derby, Jr., apparently upset with the publication,
instructed private respondent MMI to stop coordinating with Antonio Ongpin and to
communicate directly instead with petitioner DMC-USA through Paul E. Derby, Jr.
Private respondents further averred that petitioners knowingly and surreptitiously continued to
deal with the former in bad faith by involving disinterested third parties and by proposing
solutions which were entirely out of their control. Private respondents claimed that they had
exhausted all possible avenues for an amicable resolution and settlement of their grievances; that
as a result of the fraud, bad faith, malice and wanton attitude of petitioners, they should be held
responsible for all the actual expenses incurred by private respondents in the delayed shipment of
orders which resulted in the extra handling thereof, the actual expenses and cost of money for the
unused Letters of Credit (LCs) and the substantial opportunity losses due to created out-of-stock
situations and unauthorized shipments of Del Monte-USA products to the Philippine Duty Free
Area and Economic Zone; that the bad faith, fraudulent acts and willful negligence of petitioners,
motivated by their determination to squeeze private respondents out of the outstanding and
ongoing Distributorship Agreement in favor of another party, had placed private respondent
LILY SY on tenterhooks since then; and, that the shrewd and subtle manner with which
petitioners concocted imaginary violations by private respondent MMI of the Distributorship
Agreement in order to justify the untimely termination thereof was a subterfuge. For the
foregoing, private' respondents claimed, among other reliefs, the payment of actual damages,
exemplary damages, attorney's fees and litigation expenses.
On 21 October 1996 petitioners filed a Motion to Suspend Proceedings nvoking the arbitration
clause in their Agreement with private respondents.
Petitioners contend that the subject matter of private respondents' causes of action arises
out of or relates to the Agreement between petitioners and private respondents. Thus, considering
that the arbitration clause of the Agreement provides that all disputes arising out of or relating to
the Agreement or the parties' relationship, including the termination thereof, shall be resolved by
arbitration, they insist on the suspension of the proceedings in Civil Case No. 2637-MN.
Private respondents claim, on the other hand, that their causes of action are rooted in
Arts. 20, 21 and 23 of the Civil Code, the determination of which demands a full blown trial, as
correctly held by the Court of Appeals. Moreover, they claim that the issues before the trial court
were not joined so that the Honorable Judge was not given the opportunity to satisfy himself that
the issue involved in the case was referable to arbitration. They submit that, apparently,
petitioners filed a motion to suspend proceedings instead of sending a written demand to private
respondents to arbitrate because petitioners were not sure whether the case could be a subject of
arbitration. They maintain that had petitioners done so and private respondents failed to answer
the demand, petitioners could have filed with the trial court their demand for arbitration that
would warrant a determination by the judge whether to refer the case to arbitration. Accordingly,
private respondents assert that arbitration is out of the question.' Private respondents further
contend that the arbitration clause centers more on venue rather than on arbitration. They finally
allege that petitioners filed their motion for extension of time to file this petition on the same
date 20 petitioner DMC-USA filed a petition to compel private respondent MMI to arbitrate
before the United States District Court in Northern California, docketed as Case No. C-98-4446.
They insist that the filing of the petition to compel arbitration in the United States made the
petition filed before this Court an alternative remedy and, in a way, an abandonment of the cause
24
they are fighting for here in the Philippines, thus warranting the dismissal of the present petition
before this Court.
ISSUE: Whether the dispute between the parties warrants an order compelling them to submit to
arbitration?
HELD: YES.
There is no doubt that arbitration is valid and constitutional in our jurisdiction. Even
before the enactment of RA 876, this Court has countenanced the settlement of disputes through
arbitration. Unless the agreement is such as absolutely to close the doors of the courts against the
parties, which agreement would be void, the courts will look with favor upon such amicable
arrangement and will only interfere with great reluctance to anticipate or nullify the action of the
arbitrator. Moreover, as RA 876 expressly authorizes arbitration of domestic disputes, foreign
arbitration as a system of settling commercial disputes was likewise recognized when the
Philippines adhered to the United Nations "Convention on the Recognition and the Enforcement
of Foreign Arbitral Awards of 1958" under the 10 May 1965 Resolution No. 71 of the Philippine
Senate, giving reciprocal recognition and allowing enforcement of international arbitration
agreements between parties of different nationalities within a contracting state.
A careful examination of the instant case shows that the arbitration clause in the
Distributorship Agreement between petitioner DMC-USA and private respondent MMI is valid
and the dispute between the parties is arbitrable. However, this Court must deny the petition. The
Agreement between petitioner DMC-USA and private respondent MMI is a contract. The
provision to submit to arbitration any dispute arising therefrom and the relationship of the parties
is part of that contract and is itself a contract. As a rule, contracts are respected as the law
between the contracting parties and produce effect as between them, their assigns and heirs.
Clearly, only parties to the Agreement, i.e., petitioners DMC-USA and its Managing Director for
Export Sales Paul E. Derby, Jr., and private respondents MMI and its Managing Director LILY
SY are bound by the Agreement and its arbitration clause as they are the only signatories thereto.
Petitioners Daniel Collins and Luis Hidalgo, and private respondent SFI, not parties to the
Agreement and cannot even be considered assigns or heirs of the parties, are not bound by the
Agreement and the arbitration clause therein. Consequently, referral to arbitration in the State of
California pursuant to the arbitration clause and the suspension of the proceedings in Civil Case
No. 2637-MN pending the return of the arbitral award could be called for but only as to
petitioners DMC-USA and Paul E. Derby, Jr., and private respondents MMI and LILY SY, and
not as to the other parties in this case, in accordance with the recent case of Heirs of Augusto L.
Salas, Jr. v. Laperal Realty Corporation, which superseded that of Toyota Motor Philippines
Corp. v. Court of Appeals.
17. MAGELLAN CAPITAL MANAGEMENT CORPORATION AND MAGELLAN

HOLDINGS CORPORATION v. ROLAND M. ZOSA AND HON. JOSE P. SOBERANO,
JR., in his capacity as Presiding Judge of Branch 58 of the Regional Trial Court of Cebu,
7th Judicial Region
G.R. No. 129916 March 26, 2001
25
FACTS: Magellan Capital Holdings Corporation [MCHC] appointed Magellan Capital

Management Corporation [MCMC] as manager for the operation of its business and affairs.
Pursuant thereto, on the same month, MCHC, MCMC, and private respondent Rolando M. Zosa
entered into an "Employment Agreement" designating Zosa as President and Chief Executive
Officer of MCHC. Under the "Employment Agreement", the term of respondent Zosa's
employment shall be co-terminous with the management agreement, or until March 1996, unless
sooner terminated pursuant to the provisions of the Employment Agreement. The grounds for
termination of employment are also provided in the Employment Agreement. The majority of
MCHC's Board of Directors decided not to re-elect respondent Zosa as President and Chief
Executive Officer of MCHC on account of loss of trust and confidence 4 arising from alleged
violation of the resolution issued by MCHC's board of directors and of the non-competition
clause of the Employment Agreement. Nevertheless, respondent Zosa was elected to a new
position as MCHC's Vice-Chairman/Chairman for New Ventures Development.
On September 26, 1995, respondent Zosa communicated his resignation for good reason
from the position of Vice-Chairman under paragraph 7 of the Employment Agreement on the
ground that said position had less responsibility and scope than President and Chief Executive
Officer. He demanded that he be given termination benefits as provided for in Section 8 (c) (i)
(ii) and (iii) of the Employment Agreement. MCHC communicated its non-acceptance of
respondent Zosa's resignation for good reason, but instead informed him that the Employment
Agreement is terminated for cause, effective November 19, 1995, in accordance with Section 7
(a) (v) of the said agreement, on account of his breach of Section 12 thereof. Respondent Zosa
was further advised that he shall have no further rights under the said Agreement or any claims
against the Manager or the Corporation except the right to receive within thirty (30) days from
November 19, 1995, the amounts stated in Section 8 (a) (i) (ii) of the Agreement. 8
Disagreeing with the position taken by petitioners, respondent Zosa invoked the Arbitration
Clause of the Employment Agreement, to wit:
"23. Arbitration. In the event that any dispute, controversy or claim arises
out of or under any provisions of this Agreement, then the parties hereto
agree to submit such dispute, controversy or claim to arbitration as set
forth in this Section and the determination to be made in such arbitration
shall be final and binding. Arbitration shall be effected by a panel of
three arbitrators. The Manager, Employee and Corporation shall
designate one (1) arbitrator who shall, in turn, nominate and elect who
among them shall be the chairman of the committee. Any such
arbitration, including the rendering of an arbitration award, shall take
place in Metro Manila. The arbitrators shall interpret this Agreement in
accordance with the substantive laws of the Republic of the Philippines.
The arbitrators shall have no power to add to, subtract from or otherwise
modify the terms of Agreement or to grant injunctive relief of any nature.
Any judgment upon the award of the arbitrators may be entered in any
court having jurisdiction thereof, with costs of the arbitration to be borne
equally by the parties, except that each party shall pay the fees and
expenses of its own counsel in the arbitration."
Petitioner filed a motion to dismiss 13 arguing that (1) the trial court has no jurisdiction
over the instant case since respondent Zosa's claims should be resolved through arbitration
pursuant to Section 23 of the Employment Agreement with petitioners; and (2) the venue is
26
improperly laid since respondent Zosa, like the petitioners, is a resident of Pasig City and thus,
the venue of this case, granting without admitting that the respondent has a cause of action
against the petitioners cognizable by the RTC, should be limited only to RTC-Pasig City.
ISSUE: Whether the Arbitration Clause is valid and effective between the parties?
HELD: YES.
Petitioners, therefore, are barred from challenging anew, through another remedial
measure and in any other forum, the authority of the regional trial court to resolve the validity of
the arbitration clause, lest they be truly guilty of forum-shopping which the courts consistently
consider as a contumacious practice that derails the orderly administration of justice. And,
finally, respondent Zosa never submitted himself to arbitration proceedings (as there was none
yet) before bewailing the composition of the panel of arbitrators. He in fact, lost no time in
assailing the "arbitration clause" upon realizing the inequities that may mar the arbitration
proceedings if the existing line-up of arbitrators remained unchecked. Arbitration proceedings
are designed to level the playing field among the parties in pursuit of a mutually acceptable
solution to their conflicting claims. Any arrangement or scheme that would give undue
advantage to a party in the negotiating table is anathema to the very purpose of arbitration and
should, therefore, be resisted.
18. RUBEN N. BARRAMEDA, Elvis L. Espiritu, Merardo G. Enero, Jr., Marcelito B.

Abbas and Reynaldo V. Abundo v. ROMEO ATIENZA, Edgardo Dasco, Bernardo
Diezmo, Jesus Fernandez, Milagros Estrellado, Artemio Indias, Raul Carranceja, Mary
Ann Asor and Antonio Obias
G.R. No. 129175 November 19, 2001
FACTS: Electrification Administration (NEA) and CANORECO entered into a Contract of Loan
and First Mortgage 2 of CANORECO properties for the improvement of the cooperative's
electrification program. On March 10, 1990, Congress enacted into law Republic Act No. 6938
(the Cooperative Code of the Philippines) and Republic Act No. 6939 (creating the Cooperative
Development Authority [CDA]). The latter act vested the power to register cooperatives solely
on CDA. One of the signatories to the loan contract was petitioner Reynaldo V. Abundo, the
general manager of CANORECO at that time. During Abundo's incumbency, he failed to pay the
loan obligations as they fell due. Thus, as of March 31, 1995, CANORECO's outstanding loan
with NEA amounted to seventy four (74) million pesos. In 1995, NEA enforced the provisions of
the mortgage contract by designating an acting general manager of CANORECO to protect state
funds invested therein. Shortly, the group of Reynaldo V. Abundo contested the authority of
NEA to supervise and control CANORECO, filing with CDA several cases, including CDA-CO
Case No. 95-910. CDA declared the board meeting of May 28, 1995, void ab initio because there
was no quorum considering that there were only three (3) incumbent board members who were
present. Abundo resigned as general manager of CANORECO.
In turn, NEA recognized the appointment of acting general manager Felix Rolando G. Zaldua.
Juanito M. Irabon replaced Rolando G. Zaldua. On September 26, 1996, CDA issued a writ of
execution and order to vacate thereby enabling petitioners to resume control of CANORECO.
27
ISSUE: Whether or not petitioners are the rightful directors of Camarines Norte Electric
Cooperative (CANORECO) as against respondents, who were elected in a general assembly of
members called by a presidential ad hoc committee?
HELD: YES.
Executive Order No. 386, creating the Municipality of Balabagan was declared
unconstitutional. M.O. No. 409 "created no office." The existence of M.O. No. 409 is "an
operative fact which cannot justly be ignored." Therefore, M.O. No. 409 conferred no rights. The
board of directors, elected through the ad hoc committee's exercise of its functions while the law
was in force, did not exist, as if no election was held. While the Court declared M.O. No. 409
unconstitutional, the election of respondents before such event is presumed valid until nullified.
The law expressly confers on the board of directors the power to manage the affairs of the
cooperative, according to the Cooperative Code.
19. LM POWER ENGINEERING CORPORATION v. CAPITOL INDUSTRIAL

CONSTRUCTION GROUPS, INC.
G.R. No. 141833 March 26, 2003
FACTS: Petitioner LM Power Engineering Corporation and Respondent Capitol Industrial

Construction Groups Inc. entered into a "Subcontract Agreement" involving electrical work at
the Third Port of Zamboanga. Respondent took over some of the work contracted to petitioner.
Allegedly, the latter had failed to finish it because of its inability to procure materials. Upon
completing its task under the Contract, petitioner billed respondent in the amount of
P6,711,813.90. Contesting the accuracy of the amount of advances and billable accomplishments
listed by the former, the latter refused to pay. Respondent also took refuge in the termination
clause of the Agreement. That clause allowed it to set off the cost of the work that petitioner had
failed to undertake — due to termination or take-over — against the amount it owed the latter.
Petitioner filed with the Regional Trial Court (RTC) of Makati (Branch 141) a Complaint for the
collection of the amount representing the alleged balance due it under the Subcontract. Instead of
submitting an Answer, respondent filed a Motion to Dismiss, alleging that the Complaint was
premature, because there was no prior recourse to arbitration.
Petitioner claims that there is no conflict regarding the interpretation or the
implementation of the Agreement. Thus, without having to resort to prior arbitration, it is entitled
to collect the value of the services it rendered through an ordinary action for the collection of a
sum of money from respondent. According to petitioner, assuming arguendo that the dispute is
arbitrable, the failure to file a formal request for arbitration with the Construction Industry
Arbitration Commission (CIAC) precluded the latter from acquiring jurisdiction over the
question. On the other hand, the latter contends that there is a need for prior arbitration as
provided in the Agreement. This is because there are some disparities between the parties'
positions regarding the extent of the work done, the amount of advances and billable
accomplishments, and the set off of expenses incurred by respondent in its take-over of
petitioner's work.
28
ISSUE:
1. Whether or not there exist[s] a controversy/dispute between petitioner and respondent
regarding the interpretation and implementation of the Sub-Contract Agreement dated February
22, 1983 that requires prior recourse to voluntary arbitration
2. In the affirmative, whether or not the requirements provided in Article III [1] of
CIAC Arbitration Rules regarding request for arbitration ha[ve] been complied with[.]" 17
HELD:
1. YES.
The instant case involves technical discrepancies that are better left to an arbitral body
that has expertise in those areas. In any event, the inclusion of an arbitration clause in a contract
does not ipso facto divest the courts of jurisdiction to pass upon the findings of arbitral bodies,
because the awards are still judicially reviewable under certain conditions. Clearly, the resolution
of the dispute between the parties herein requires a referral to the provisions of their Agreement.
Within the scope of the arbitration clause are discrepancies as to the amount of advances and
billable accomplishments, the application of the provision on termination, and the consequent
set-off of expenses.
2. NO.
There is no more need to file a request with the CIAC in order to vest it with jurisdiction
to decide a construction dispute. The arbitral clause in the Agreement is a commitment on the
part of the parties to submit to arbitration the disputes covered therein. Because that clause is
binding, they are expected to abide by it in good faith. And because it covers the dispute between
the parties in the present case, either of them may compel the other to arbitrate. Since petitioner
has already filed a Complaint with the RTC without prior recourse to arbitration, the proper
procedure to enable the CIAC to decide on the dispute is to request the stay or suspension of
such action, as provided under RA 876 [the Arbitration Law].
20. DEMOSTHENES P. AGAN, JR. Joseph B. Catahan, Jose Mari B. Reunilla, Manuel
Antonio B. Boñe, Mamerto S. Clara, Reuel E. Dimalanta, Mory V. Domalaon, Conrado G.
Dimaano, Lolita R. Hizon, Remedios P. Adolfo, Bienvenido C. Hilario, Miascor Workers
Union-National Labor Union (MWU-NLU) and Philippine Airlines Employees Association
(PALEA) v. PHILIPPINE INTERNATIONAL AIR TERMINALS CO., INC., Manila
International Airport Authority, Department of Transportation and Communications and
Secretary Leandro M. Mendoza, in his capacity as Head of the Department of
Transportation and Communications
G.R. No. 155001 May 5, 2003
FACTS: DOTC engaged the services of Aeroport de Paris (ADP) to conduct a comprehensive
study of the Ninoy Aquino International Airport (NAIA) and determine whether the present
airport can cope with the traffic development up to the year 2010. Some time in 1993, six
business leaders consisting of John Gokongwei, Andrew Gotianun, Henry Sy, Sr., Lucio Tan,
George Ty and Alfonso Yuchengco met with then President Fidel V. Ramos to explore the
29
possibility of investing in the construction and operation of a new international airport terminal.
To signify their commitment to pursue the project, they formed the Asia's Emerging Dragon
Corp. (AEDC) which was registered with the Securities and Exchange Commission (SEC) on
September 15, 1993.
On October 5, 1994, AEDC submitted an unsolicited proposal to the Government through
the DOTC/MIAA for the development of NAIA International Passenger Terminal III (NAIA IPT
III) under a build-operate-and-transfer arrangement pursuant to RA 6957 as amended by RA
7718 (BOT Law). The Bid Documents issued by the PBAC provided among others that the
proponent must have adequate capability to sustain the financing requirement for the detailed
engineering, design, construction, operation, and maintenance phases of the project. The
proponent would be evaluated based on its ability to provide a minimum amount of equity to the
project, and its capacity to secure external financing for the project. On August 29, 1996, the
Second Pre-Bid Conference was held where certain clarifications were made. Upon the request
of prospective bidder People's Air Cargo & Warehousing Co., Inc (Paircargo), the PBAC
warranted that based on Sec. 11.6, Rule 11 of the Implementing Rules and Regulations of the
BOT Law, only the proposed Annual Guaranteed Payment submitted by the challengers would
be revealed to AEDC, and that the challengers' technical and financial proposals would remain
confidential.
On September 20, 1996, the consortium composed of People's Air Cargo and
Warehousing Co., Inc. (Paircargo), Phil. Air and Grounds Services, Inc. (PAGS) and Security
Bank Corp. (Security Bank) (collectively, Paircargo Consortium) submitted their competitive
proposal to the PBAC. On September 23, 1996, the PBAC opened the first envelope containing
the prequalification documents of the Paircargo Consortium. On the following day, September
24, 1996, the PBAC prequalified the Paircargo Consortium. The PBAC gave its reply on October
2, 1996, informing AEDC that it had considered the issues raised by the latter, and that based on
the documents submitted by Paircargo and the established prequalification criteria, the PBAC
had found that the challenger, Paircargo, had prequalified to undertake the project. The Secretary
of the DOTC approved the finding of the PBAC. On October 3, 1996, AEDC reiterated its
objections, particularly with respect to Paircargo's financial capability, in view of the restrictions
imposed by Section 21-B of the General Banking Act and Sections 1380 and 1381 of the Manual
Regulations for Banks and Other Financial Intermediaries. On October 7, 1996, AEDC again
manifested its objections and requested that it be furnished with excerpts of the PBAC meeting
and the accompanying technical evaluation report where each of the issues they raised were
addressed.
Thus, the PBAC formally informed AEDC that it had accepted the price proposal
submitted by the Paircargo Consortium, and gave AEDC 30 working days or until November 28,
1996 within which to match the said bid, otherwise, the project would be awarded to Paircargo.
As AEDC failed to match the proposal within the 30-day period, then DOTC Secretary Amado
Lagdameo, on December 11, 1996, issued a notice to Paircargo Consortium regarding AEDC's
failure to match the proposal. On April 16, 1997, AEDC filed with the Regional Trial Court of
Pasig a Petition for Declaration of Nullity of the Proceedings, Mandamus and Injunction against
the Secretary of the DOTC, the Chairman of the PBAC, the voting members of the PBAC and
Pantaleon D. Alvarez, in his capacity as Chairman of the PBAC Technical Committee. On April
17, 1997, the NEDA-ICC conducted an ad referendum to facilitate the approval, on a no-
objection basis, of the BOT agreement between the DOTC and PIATCO. As the ad referendum
gathered only four (4) of the required six (6) signatures, the NEDA merely noted the agreement.
30
On July 12, 1997, the Government, through then DOTC Secretary Arturo T. Enrile, and
PIATCO, through its President, Henry T. Go, signed the "Concession Agreement for the Build-
Operate-and-Transfer Arrangement of the Ninoy Aquino International Airport Passenger
Terminal III" (1997 Concession Agreement). The Government granted PIATCO the franchise to
operate and maintain the said terminal during the concession period and to collect the fees,
rentals and other charges in accordance with the rates or schedules stipulated in the 1997
Concession Agreement.
On December 10, 2002, the Court heard the case on oral argument. After the oral
argument, the Court then resolved in open court to require the parties to file simultaneously their
respective Memoranda in amplification of the issues heard in the oral arguments within 30 days
and to explore the possibility of arbitration or mediation as provided in the challenged contracts.
In their consolidated Memorandum, the Office of the Solicitor General and the Office of the
Government Corporate Counsel prayed that the present petitions be given due course and that
judgment be rendered declaring the 1997 Concession Agreement, the ARCA and the
Supplements thereto void for being contrary to the Constitution, the BOT Law and its
Implementing Rules and Regulations. On March 6, 2003, respondent PIATCO informed the
Court that on March 4, 2003 PIATCO commenced arbitration proceedings before the
International Chamber of Commerce, International Court of Arbitration (ICC) by filing a
Request for Arbitration with the Secretariat of the ICC against the Government of the Republic
of the Philippines acting through the DOTC and MIAA.
ISSUE: Whether or not the contracts produce legal effect between the parties, their assigns and
heirs, only the parties to the Distributorship Agreement are bound by its terms, including the
arbitration clause?
HELD: YES.
There is one more procedural obstacle which must be overcome. The Court is aware that
arbitration proceedings pursuant to Section 10.02 of the ARCA have been filed at the instance of
respondent PIATCO. Again, we hold that the arbitration step taken by PIATCO will not oust this
Court of its jurisdiction over the cases at bar. The Court held that as contracts produce legal
effect between the parties, their assigns and heirs, only the parties to the Distributorship
Agreement are bound by its terms, including the arbitration clause stipulated therein. The
arbitration proceedings could be called for but only with respect to the parties to the contract in
question. Considering that there are parties to the case who are neither parties to the
Distributorship Agreement nor heirs or assigns of the parties thereto It is established that
petitioners in the present cases who have presented legitimate interests in the resolution of the
controversy are not parties to the PIATCO Contracts. Accordingly, they cannot be bound by the
arbitration clause provided for in the ARCA and hence, cannot be compelled to submit to
arbitration proceedings. A speedy and decisive resolution of all the critical issues in the present
controversy, including those raised by petitioners, cannot be made before an arbitral tribunal.
The object of arbitration is precisely to allow an expeditious determination of a dispute. This
objective would not be met if this Court were to allow the parties to settle the cases by arbitration
as there are certain issues involving non-parties to the PIATCO Contracts which the arbitral
tribunal will not be equipped to resolve.
31
21. SPOUSES ROBERTO & EVELYN DAVID AND COORDINATED GROUP, INC. v.
CONSTRUCTION INDUSTRY AND ARBITRATION COMMISSION AND SPOUSES
NARCISO & AIDA QUIAMBAO
G.R. No. 159795 July 30, 2004
FACTS: Narciso and Aida Quiambao engaged the services of petitioner CGI to design and
construct a five-storey concrete office/residential building on their land in Tondo, Manila. The
Design/Build Contract of the parties provided that: (a) petitioner CGI shall prepare the working
drawings for the construction project; (b) respondents shall pay petitioner CGI the sum of Seven
Million Three Hundred Nine Thousand Eight Hundred Twenty-One and 51/100 Pesos
(P7,309,821.51) for the construction of the building, including the costs of labor, materials and
equipment, and Two Hundred Thousand Pesos (P200,000.00) for the cost of the design; and (c)
the construction of the building shall be completed within nine (9) months after securing the
building permit. The completion of the construction was initially scheduled on or before July 16,
1998 but was extended to November 15, 1998 upon agreement of the parties. It appears,
however, that petitioners failed to follow the specifications and plans as previously agreed upon.
Respondents demanded the correction of the errors but petitioners failed to act on their
complaint. Consequently, respondents rescinded the contract on October 31, 1998, after paying
74.84% of the cost of construction. Respondents then engaged the services of another contractor,
RRA and Associates, to inspect the project and assess the actual accomplishment of petitioners
in the construction of the building. It was found that petitioners revised and deviated from the
structural plan of the building without notice to or approval by the respondents. Respondents
filed a case for breach of contract against petitioners before the Regional Trial Court (RTC) of
Manila. At the pre-trial conference, the parties agreed to submit the case for arbitration to the
Construction Industry Arbitration Commission (CIAC). Respondents filed a request for
arbitration with the CIAC and nominated Atty. Custodio O. Parlade as arbitrator. Atty. Parlade
was appointed by the CIAC as sole arbitrator to resolve the dispute. With the agreement of the
parties, Atty. Parlade designated Engr. Loreto C. Aquino to assist him in assessing the technical
aspect of the case.
ISSUE: Whether or not the factual findings of construction arbitrators are final and conclusive?
HELD: YES.
Section 19 of E.O. No. 1008 provides that its arbitral award shall be appealable to the
Supreme Court only on questions of law. There is a question of law when the doubt or difference
in a given case arises as to what the law is on a certain set of facts, and there is a question of fact
when the doubt arises as to the truth or falsity of the alleged facts. Thus, for a question to be one
of law, it must not involve an examination of the probative value of the evidence presented by
the parties and there must be no doubt as to the veracity or falsehood of the facts alleged. In the
case at bar, it is readily apparent that petitioners are raising questions of fact. The claims of
petitioners are refuted by the evidence on record These are technical findings of fact made by
expert witnesses and affirmed by the arbitrator. They were also affirmed by the Court of
Appeals. The Court find no reason to revise them. Clearly, the case at bar does not raise any
genuine issue of law. The Court reiterate the rule that factual findings of construction arbitrators
are final and conclusive and not reviewable by this Court on appeal, except when the petitioner
32
proves affirmatively that: (1) the award was procured by corruption, fraud or other undue means;
(2) there was evident partiality or corruption of the arbitrators or of any of them; (3) the
arbitrators were guilty of misconduct in refusing to postpone the hearing upon sufficient cause
shown, or in refusing to hear evidence pertinent and material to the controversy; (4) one or more
of the arbitrators were disqualified to act as such under section nine of Republic Act No. 876 and
willfully refrained from disclosing such disqualifications or of any other misbehavior by which
the rights of any party have been materially prejudiced; or (5) the arbitrators exceeded their
powers, or so imperfectly executed them, that a mutual, final and definite award upon the subject
matter submitted to them was not made. Petitioners failed to show that any of these exceptions
applies to the case at bar. The Court will not review the factual findings of an arbitral tribunal
upon the artful allegation that such body had "misapprehended facts" and will not pass upon
issues which are, at bottom, issues of fact, no matter how cleverly disguised they might be as
"legal questions." The parties here had recourse to arbitration and chose the arbitrators
themselves; they must have had confidence in such arbitrators. The Court will not, therefore,
permit the parties to relitigate before it the issues of facts previously presented and argued before
the Arbitral Tribunal, save only where a clear showing is made that, in reaching its factual
conclusions, the Arbitral Tribunal committed an error so egregious and hurtful to one party as to
constitute a grave abuse of discretion resulting in lack or loss of jurisdiction. Prototypical
examples would be factual conclusions of the Tribunal which resulted in deprivation of one or
the other party of a fair opportunity to present its position before the Arbitral Tribunal, and an
award obtained through fraud or the corruption of arbitrators. Any other more relaxed rule would
result in setting at naught the basic objective of a voluntary arbitration and would reduce
arbitration to a largely inutile institution.
22. EUROPEAN RESOURCES AND TECHNOLOGIES, INC and Delfin J. Wenceslao. v.

INGENIEUBURON BIRKHAN + NOLTE, Ingeniurgesellschaft mbh and Heers &
Brockstedt GMBH & Co.
G.R. No. 159586 July 26, 2004
FACTS: The German Consortium tendered and submitted its bid to the Clark Development
Corporation ("CDC") to construct, operate and manage the Integrated Waste Management Center
at the Clark Special Economic Zone ("CSEZ"). The Contract for Services provides that the
German Consortium shall be empowered to enter into a contract or agreement for the use of the
integrated waste management center by corporations, local government units, entities, and
persons not only within the CSEZ but also outside. For waste collected within the CSEZ, the
German Consortium may impose a "tipping fee" per ton of waste collected from locators and
residents of the CSEZ, which fees shall be subject to the schedule agreed upon by the parties and
specified in the Contract for Services. For its operations outside of the CSEZ, the German
Consortium shall pay CDC US$1.50 per ton of non-hazardous solid waste collected. The CDC
shall guarantee that nineteen thousand eighteen hundred (19,800) tons per year of solid waste
volume shall be collected from inside and outside the CSEZ. The contract has a term of twenty-
five (25) years, 5 during which time the German Consortium shall operate the waste
management center on a day-to-day basis.
33
On August 1, 2000, without the Shareholders' Agreement having been executed, the
German Consortium and petitioner ERTI entered into a Memorandum of Agreement (MOA) 9
whereby the German Consortium ceded its rights and obligations under the Contract for Services
in favor of ERTI and assigned unto ERTI, among others, "its license from CDC to engage in the
business of providing environmental services needed in the CSEZ in connection with the waste
management within the CSEZ and other areas." Likewise, the parties agreed that should there be
a disagreement between or among them relative to the interpretation or implementation of the
MOA and the collateral documents including but not limited to the Contract for Services
between the German Consortium and CDC, the dispute shall be referred to a panel of arbitrators.
On December 11, 2000, ERTI received a letter from BN Consultants Philippines, Inc.,
signed by Mr. Holger Holst for and on behalf of the German Consortium, stating that the German
Consortium's contract with DMWAI, LBV&A and ERTI has been terminated or extinguished on
the following grounds: (a) the CDC did not give its approval to the Consortium's request for the
approval of the assignment or transfer by the German Consortium in favor of ERTI of its rights
and interests under the Contract for Services; (b) the parties failed to prepare and finalize the
Shareholders' Agreement pursuant to the provision of the MOU; (c) there is no more factual or
legal basis for the joint venture to continue; and (d) with the termination of the MOU, the MOA
is also deemed terminated or extinguished.
On February 20, 2001, petitioner ERTI, through counsel, sent a letter to CDC requesting
for the reconsideration of its disapproval of the agreement between ERTI and the German
Consortium. Before CDC could act upon petitioner ERTI's letter, the German Consortium filed a
complaint for injunction against herein petitioners before the Regional Trial Court of Angeles
City, Branch 61, docketed as Civil Case No. 10049. The German Consortium claimed that
petitioner ERTI's continued misrepresentation as to their right to accept solid wastes from third
parties for processing at the waste management center will cause irreparable damage to the
Consortium and its exclusive right to operate the waste management center at the CSEZ.
Moreover, petitioner ERTI's acts destroy the Consortium's credibility and undermine customer
confidence in it. Hence, the German Consortium prayed that a writ of temporary restraining
order be issued against petitioner ERTI and, after hearing, a writ of preliminary injunction be
likewise issued ordering petitioner ERTI to cease and desist from misrepresenting to third parties
or the public that it has any right or interest in the waste management center at CSEZ.
Petitioners filed their Opposition to the application for preliminary injunction on
February 7, 2001. The following day, February 8, 2001, petitioners sent respondents, through
Mr. Holger Holst, a letter demanding that the parties proceed to arbitration in accordance with
Section 17 of the MOA. At the hearings on the application for injunction, petitioners objected to
the presentation of evidence on the ground that the trial court had no jurisdiction over the case
since the German Consortium was composed of foreign
corporations doing business in the country without a license. Moreover, the MOA between the
parties provides that the dispute should be referred to arbitration.
Hence, this petition arguing that the Court of Appeals committed reversible error in:
(a) Ruling that petitioners are estopped from assailing the capacity of the respondents to institute
the suit for injunction
(b) Ruling that respondents are entitled to an injunctive writ.
(c) Not holding that the dispute is covered by the arbitration clause in the memorandum of
agreement.
34
(d) Issuing the writ of preliminary injunction that is tantamount to a decision of the case on the
merits.
ISSUE: Whether or not the instant case should be referred to arbitration pursuant to the provision
of the MOA?
HELD: NO.
We have ruled in several cases that arbitration agreements are valid, binding, enforceable
and not contrary to public policy such that when there obtains a written provision for arbitration
which is not complied with, the trial court should suspend the proceedings and order the parties
to proceed to arbitration in accordance with the terms of their agreement. Indeed, to brush aside a
contractual agreement calling for arbitration in case of disagreement between parties would be a
step backward. But there are exceptions to this rule. Even if there is an arbitration clause, there
are instances when referral to arbitration does not appear to be the most prudent action. The
object of arbitration is to allow the expeditious determination of a dispute. Clearly, the issue
before us could not be speedily and efficiently resolved in its entirety if we allow simultaneous
arbitration proceedings and trial, or suspension of trial pending arbitration.
As discussed earlier, the dispute between respondent German Consortium and petitioners
involves the disapproval by the CDC of the assignment by the German Consortium of its rights
under the Contract for Services to petitioner ERTI. Admittedly, the arbitration clause is
contained in the MOA to which only the German Consortium and petitioner ERTI were parties.
Even if the case is brought before an arbitration panel, the decision will not be binding upon
CDC who is a non-party to the arbitration agreement. What is more, the arbitration panel will not
be able to completely dispose of all the issues of this case without including CDC in its
proceedings. Accordingly, the interest of justice would only be served if the trial court hears and
adjudicates the case in a single and complete proceeding.
23. EDUARDO J. MARINO, JR., Ma. Melvyn P. Alamis, and UST Facultry Union., v. GIL
GAMILLA, Dupont Aseron and Justino Cardenas
G.R. No. 132400 January 31, 2005
FACTS: Sometime in May 1986, the UST Faculty Union (USTFU) entered into an initial
collective bargaining agreement with the University of Santo Tomas (UST) wherein UST
undertook to provide USTFU with a free office space at Room 302 of its Health Center Building.
The officers and directors of USTFU scheduled a general membership meeting on 5 October
1996 for the election of the union officers. However, respondent Gamilla and some faculty
members filed a Petition with the Med-Arbitration Unit of the Department of Labor and
Employment (DOLE) seeking to stop the holding of the USTFU election.
Meanwhile, on 2 October 1996, Rev. Fr. Rodel Aligan, O.P., Secretary General of the
UST, issued a Memorandum to the Deans, Regents, Principals and Heads of Departments
regarding the holding of a faculty convocation on 4 October 1996. On 4 October 1996, Med-
Arbiter Tomas Falconitin issued a temporary restraining order (TRO) in Case No. NCR-OD-M-
9610-001, enjoining the holding of the election of the USTFU officers and directors.
35
However, denying the TRO they themselves sought, Gamilla and some of the faculty
members present in the 4 October 1996 faculty convocation proceeded with the election of the
USTFU officers. On the other hand, the scheduled election for 5 October 1996 did not push
through by virtue of the TRO. In the succeeding week, on 11 October 1996, petitioners filed with
the DOLE a petition for prohibition, injunction, with prayer for preliminary injunction and
temporary restraining order, seeking to invalidate the election held on 4 October 1996. Two
months later, on 4 December 1996, UST and USTFU, represented by Gamilla and his co-
officers, entered into a collective bargaining agreement (CBA) for a period of five (5) years from
1 June 1996 up to 31 May 2001. The CBA was ratified on 12 December 1996. 9
In another front, the Med-Arbiter issued a TRO dated 11 December 1996, enjoining
Gamilla and his fellow officers to "cease and desist from performing any and all acts pertaining
to the duties and functions of the officers and directors" of USTFU. On 27 January 1997, at
around eleven in the morning (11:00 a.m.), respondents Gamilla, Cardenas and Aseron, with
some other persons, served a letter of even date on petitioners Mariño and Alamis, demanding
that the latter vacate the premises located at Room 302, Health Center Building, UST — the
Office of USTFU. However, only the office messenger was in the office at the time. After
coercing the office messenger to step out of the office, Gamilla and company padlocked the door
leading to the union's office.
On 5 February 1997, petitioners filed with the Regional Trial Court (RTC) of Manila a
Complaint 12 for injunction and damages with a prayer for preliminary injunction and temporary
restraining order over the use of the USTFU office.
Petitioners assert that the RTC has jurisdiction to decide Civil Case No. 97-81928, as the
determination of the legality and propriety of padlocking the doors of the USTFU office and
preventing the free and unhampered ingress to and egress from the said premises, as alleged in
the complaint, are matters incapable of pecuniary estimation. 27 Moreover, they claim that the
civil case was premised on causes of action belonging to the USTFU which are to be resolved
not by reference to the Labor Code or other labor relations statutes. They stress that the causes of
action involve a tortious act and the corresponding claim for damages that are both governed by
the civil law and fall under the jurisdiction of regular courts. Petitioners add that not all
controversies involving members of the same union are to be decided by the labor tribunal. They
add that in the instant case, the pendency of the labor case should not militate against the civil
case they filed since the criminal and civil aspects of a violation of Article 241 of the Labor Code
can be litigated separately and independently from the administrative aspect of a breach of the
rights and conditions of membership.
On the other hand, respondents maintain that the regional trial court had no jurisdiction
over the issue as to who has the right to use the union office because the same is inextricably
linked and intertwined with the issue as to who are the legitimate and duly elected officers of the
USTFU, which was then the subject of another case before the DOLE. Furthermore, respondents
insist that the trial court violated their right to due process when it refused to determine the issue
of jurisdiction before issuing its assailed orders. Respondents submit that the only issue in the
instant petition is whether the RTC has jurisdiction over Civil Case No. 97-81928.
ISSUE: Whether or not the RTC has jurisdiction over the case?
HELD: NO.
36
The trial court has no jurisdiction over the case insofar as the prayer for the removal of
the padlocks and the issuance of an injunctive writ is concerned. It is a settled rule that
jurisdiction, once acquired, continues until the case is finally terminated. The petition with the
Med-Arbiter was filed ahead of the complaint in the civil case before the RTC. As such, when
the petitioners filed their complaint a quo, jurisdiction over the injunction and restraining order
prayed for had already been lodged with the Med-Arbiter. The removal of padlocks and the
access to the office premises is necessarily included in petitioners' prayer to enjoin respondents
from performing acts pertaining to union officers and on behalf of the union. In observance of
the principle of adherence of jurisdiction, it is clear that the RTC should not have exercised
jurisdiction over the provisional reliefs prayed for in the complaint. A review of the complaint
shows that petitioners disclosed the existence of the petition pending before the Med-Arbiter and
even attached a copy thereof. 51 The trial court was also aware of the decision of the Med-
Arbiter dated 11 February 1997, declaring the supposed union officers' election void ab initio
and ordering respondents to cease and desist from discharging the duties and functions of the
legitimate officers of the USTFU. The trial court even obtained a copy of the said decision two
(2) days after its promulgation. Still, it continued the hearing on the application for injunction
and eventually issued the assailed orders.
Administrative agencies are tribunals of limited jurisdiction and as such, can exercise
only those powers which are specifically granted to them by their enabling statutes.
Consequently, matters over which they are not granted authority are beyond their competence.
While the trend is towards vesting administrative bodies with the power to adjudicate matters
coming under their particular specialization, to ensure a more knowledgeable solution of the
problems submitted to them, this should not deprive the courts of justice their power to decide
ordinary cases in accordance with the general laws that do not require any particular expertise or
training to interpret and apply. In their complaint in the civil case, petitioners do not seek any
relief under the Labor Code but the payment of a sum of money as damages on account of
respondents' alleged tortuous conduct. The action is within the realm of civil law and, hence,
jurisdiction over the case belongs to the regular courts.
24. JORGE GONZALES and Panel of Arbitrators v. CLIMAX MINING LTD., Climax-
Arimco Mining Corp., and Australasian Philippines Mining Inc.
G.R. No.161957 February 28, 2005
FACTS: Petitioner Jorge Gonzales, as claimowner of mineral deposits located within the
Addendum Area of Influence in Didipio, in the provinces of Quirino and Nueva Vizcaya, entered
into a co-production, joint venture and/or production-sharing letter-agreement designated as the
May 14, 1987 Letter of Intent with Geophilippines, Inc, and Inmex Ltd. Under the agreement,
petitioner, as claimowner, granted to Geophilippines, Inc. and Inmex Ltd. collectively, the
exclusive right to explore and survey the mining claims for a period of thirty-six (36) months
within which the latter could decide to take an operating agreement on the mining claims and/or
develop, operate, mine and otherwise exploit the mining claims and market any and all minerals
that may be derived therefrom.
On 8 November 1999, petitioner Gonzales filed before the Panel of Arbitrators, Region
II, Mines and Geosciences Bureau of the Department of Environment and Natural Resources,
37
against respondents Climax-Arimco Mining Corporation (Climax-Arimco), Climax, and APMI,

a Complaint seeking the declaration of nullity or termination of theAddendum Contract, the
FTAA, the Operating and Financial Accommodation Contract, the Assignment, Accession
Agreement, and the Memorandum of Agreement.
On 21 February 2001, the Panel of Arbitrators dismissed the Complaint for lack of
jurisdiction. Petitioner moved for reconsideration and this was granted on 18 October 2001, the
Panel believing that the case involved a dispute involving rights to mining areas and a dispute
involving surface owners, occupants and claim owners/concessionaires. According to the Panel,
although the issue raised in the Complaint appeared to be purely civil in nature and should be
within the jurisdiction of the regular courts, a ruling on the validity of the assailed contracts
would result to the grant or denial of mining rights over the properties; therefore, the question on
the validity of the contract amounts to a mining conflict or dispute. Hence, the Panel granted the
Motion for Reconsideration with regard to the issues of nullity, termination, withdrawal or
damages, but with regard to the constitutionality of the Addendum Agreement and FTAA, it held
that it had no jurisdiction.
Respondents filed their motion for reconsideration but this was denied on 25 June 2002.
The Panel of Arbitrators maintained that there was a mining dispute between the parties since the
subject matter of the Complaint arose from contracts between the parties which involve the
exploration and exploitation of minerals over the disputed area.
ISSUE: Whether the dispute between the parties should be brought for arbitration under Rep. Act
No. 876?
HELD: NO.
It is apparent that the Panel of Arbitrators is bereft of jurisdiction over the Complaint
filed by petitioner. The basic issue in petitioner's Complaint is the presence of fraud or
misrepresentation allegedly attendant to the execution of the Addendum Contract and the other
contracts emanating from it, such that the contracts are rendered invalid and not binding upon the
parties. It avers that petitioner was misled by respondents into agreeing to the Addendum
Contract. This constitutes fraud which vitiated petitioner's consent, and under Article 1390 of the
Civil Code, is one of the grounds for the annulment of a voidable contract. Voidable or
annullable contracts, before they are set aside, are existent, valid, and binding, and are effective
and obligatory between the parties. They can be ratified.
The Complaint is not exclusively within the jurisdiction of the Panel of Arbitrators just
because, or for as long as, the dispute involves an FTAA. The Complaint raised the issue of the
constitutionality of the FTAA, which is definitely a judicial question. The question of
constitutionality is exclusively within the jurisdiction of the courts to resolve as this would
clearly involve the exercise of judicial power. The Panel of Arbitrators does not have jurisdiction
over such an issue since it does not involve the application of technical knowledge and expertise
relating to mining. Arbitration before the Panel of Arbitrators is proper only when there is a
disagreement between the parties as to some provisions of the contract between them, which
needs the interpretation and the application of that particular knowledge and expertise possessed
by members of that Panel. It is not proper when one of the parties repudiates the existence or
validity of such contract or agreement on the ground of fraud or oppression as in this case. The
question of validity of the contract containing the agreement to submit to arbitration will affect
the applicability of the arbitration clause itself. A party cannot rely on the contract and claim
38
rights or obligations under it and at the same time impugn its existence or validity. Indeed,
litigants are enjoined from taking inconsistent positions. As previously discussed, the complaint
should have been filed before the regular courts as it involved issues which are judicial in nature.
25. COCA-COLA BOTTLERS PHILIPPINES, INC., SALES FORCE UNION-PTGWO-

BALAIS v. COCA-COLA BOTTLERS PHILIPPINES, INC.
G.R. No. 155651 July 28, 2005
FACTS: In January 1989, the UNION filed a Notice of Strike with the National Conciliation and
Mediation Board raising certain issues for conciliation. As a result of said dispute, the UNION
staged a strike. Subsequently, the Board succeeded in making the parties agree to a voluntary
settlement of the case via a Memorandum of Agreement signed by them on February 9, 1989.
Since then, the management granted to each covered employee every December of the year a
certain percentage of his basic pay and an amount equivalent to fifty (50%) percent of his
average commission for the last six months prior to the grant. However, in December 1999, the
respondent granted a fixed amount of P4,000.00 only, eliminating thereby the said 50%
employee's average commission for the last six months for members of the union. Thus, claiming
the same as violation of the MOA, the union submitted its grievance to the respondent. No
settlement was reached, hence, the case was then referred to a Panel of Voluntary Arbitrators.
Petitioner claimed that the MOA establishes the company's obligation to pay additionally
50% of the average commission whenever it decides to grant a bonus and that the fixed amount
of P4,000.00 granted in December 1999, although denominated as "ex- gratia" was actually a
Christmas bonus. In support of its stand, the Union submitted sample payslips for the prior years
wherein the company granted a "performance grant" or "one time grant" computed as a
percentage of the employee's basic salary. An illustrative example was that given to Jose
Manalusan. His payslip dated December 6, 1996 shows his basic rate at P5,080.00 and an item
"SPL GRNT" in the amount of P4,786.41. On top of the payslip (sic) appear the words "80%
performance grant". According to the Union, this amount of P4,786. is P722.41 more than 80%
of Manalusan's then basic rate (80% of P5,080.00 being PhP4,064.00). Thus, the Union
concludes that the difference of P722.41 represents additional 50% of average commission. In
sum, the Union asseverates that the grant of the additional 50% of the average commission has
become a practice since 1989 and has ripened into a contractual obligation.
On the other hand, the respondent company countered that in 1999 it suffered its worst
financial performance in its history; that its sales volume was twenty percent (20%) behind plan
and ten percent (10%) below the sales in 1998, as a result, it suffered an abnormal loss of Two
Billion Five Hundred Million Pesos (P2,500,000,000.00); that faced with tremendous losses, the
management decided not to grant bonuses to its employees in 1999; that through Memorandum
99010 dated December 14, 1999, its President, Mr. Peter Baker explained to the employees the
company's financial situation and the decision not to grant bonuses; that in the same memo
however, the company granted a special ex gratia payment of Four Thousand Pesos (P4,000.00)
to all its permanent employees, . . .
The Coca-cola Amatil Board has announced that it expects an abnormal loss of PhP2.5
Billion (AUD100 million) before tax at CCBPI in 1999 and that reported "on-going" results will
be below everyone's expectations. In these circumstances the CCBPI Executive Committee has
39
decided that the CCBPI is not able to pay bonuses to any staff in 1999. As your new president, it
disappoints me greatly to have to inform you of this situation.
The petitioner filed an "Urgent Ex-Parte Manifestation with Motion" where it essentially
questioned the validity of the decision, opining that "the Panel's decision without such dissenting
and separate opinion attached thereto makes the decision incomplete and prematurely issued." It
consequently prayed that "the questioned Decision be held in abeyance and for the Panel to
immediately issue an order to the effect that the prescriptive period available to any of the parties
to seek any legal remedy or relief be suspended in the meantime." The Panel did not directly act
on this motion. Instead, on 02 March 2001, petitioner received a Notice of Transmittal from the
NCMB furnishing it a copy of Atty. Dolendo's separate opinion together with the 21 January
2001 Decision.
THE HONORABLE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR WHEN
IT DISMISSED THE PETITION ON MERE TECHNICALITY CONTRARY TO
SETTLED JURISPRUDENCE, AFTER FAVORABLY RULING ON THE MERITS IN
FAVOR OF PETITIONER
ISSUE: Whether or not CA erred when it dismissed the petition on mere technicality contrary to
settled jurisprudence, after favorably ruling on the merits in favor of petitioner?
HELD: YES.
The resolution of the present controversy hinges for the most part on the correct
disposition of petitioner's argument that the Panel's Decision sans the dissenting opinion of one
of its members was irregularly issued; hence, did not toll the running of the prescriptive period
within which to file a motion for reconsideration. To sustain petitioner's argument would mean
that the subject Decision could still be reviewed by the Court of Appeals. A contrary resolution
would stamp the subject decision with finality rendering it impervious to review pursuant to the
doctrine of finality of judgments.
In herein case, the Decision of the Panel was in the form of a dismissal of petitioner's
complaint. Naturally, this dismissal was contained in the main decision and not in the dissenting
opinion. Thus, under Section 6, Rule VII of the same guidelines implementing Article 262-A of
the Labor Code,this Decision, as a matter of course, would become final and executory after ten
(10) calendar days from receipt of copies of the decision by the parties even without receipt of
the dissenting opinion unless, in the meantime, a motion for reconsideration 5 or a petition for
review to the Court of Appeals
under Rule 43 of the Rules of Court is filed within the same 10-day period. As correctly pointed
out by the Court of Appeals, a dissenting opinion is not binding on the parties as it is a mere
expression of the individual view of the dissenting member from the conclusion held by the
majority of the Court, following our ruling in Garcia v. Perez as reiterated in National Union of
Workers in Hotels, Restaurants and Allied Industries v. NLRC.
26. CAPITOL MEDICAL CENTER, INC. v. NATIONAL LABOR RELATIONS

COMMISSION, Jaime Ibabao, Jose Ballesteros, Ronald Centeno, Narciso Sarmiento,
Eduardo Canaveral, Sherlito Dela Cruz, Sofronio Comandao, Mariano Galicia, Ramon
Molod, Carmencita Sarmiento, Helen Molod, Rosa Comandao, Angelito Cuizon, Alex
40
Marasigan, Jesus Cedro, Enrico Roque, Jay Perilla, Helen Mendoza, Mary Gladys
Gemperoso, Nini Bautista, Elena Macarubbo, Mustiola Salvacion Dapito, Alexander
Manabe, Michael Eustaquio, Rose Azares, Fernando Manzano, Henry Vera Cruz, Chito
Mendoza, Fredelita Tomayao, Isabel Brucal, Mahalko Layacan, Rainier Manacsa, Karen
Villarente, Frances Acacio, Lamberto Conti, Lorena Beach, Judilah Ravalo, Deborah
Nave, Marilen Cabalquinto, Emiliana Rivera, Ma. Rosario Urbano, Rowena Arilla, Capitol
Medical Center Employees Association-Afw, Gregorio Del Prado, Ariel Araja, And Jesus
Sta. Barbara, Jr.
G.R. No. 147080 April 26, 2005
FACTS: The petitioner's refusal to negotiate for a collective bargaining agreement (CBA)
resulted in a union-led strike on April 15, 1993. The Union had to contend with another union —
the Capitol Medical Center Alliance of Concerned Employees (CMC-ACE) — which demanded
for a certification election among the rank-and-file employees of the petitioner. Med-Arbiter
Brigida Fadrigon granted the petition, and the matter was appealed to the Secretary of Labor and
Employment (SOLE). Undersecretary Bienvenido E. Laguesma rendered a Resolution on
November 18, 1994 granting the appeal. He, likewise, denied the motion filed by the petitioner
and the CMC-ACE. The latter thereafter brought the matter to the Court which rendered
judgment on February 4, 1997 affirming the resolution of Undersecretary Laguesma
The decision of the Court became final and executory. Thereafter, in a Letter dated October 3,
1997 addressed to Dr. Thelma N. Clemente, the President and Director of the petitioner, the
Union requested for a meeting to discuss matters pertaining to a negotiation for a CBA,
conformably with the decision of the Court. However, in a Letter to the Union dated October 10,
1997, Dr. Clemente rejected the proposed meeting, on her claim that it was a violation of
Republic Act No. 6713 and that the Union was not a legitimate one. On October 15, 1997, the
petitioner filed a Petition for the Cancellation of the Union's Certificate of Registration with the
Department of Labor and Employment (DOLE) on the following grounds: Respondent has failed
for several years to submit annually its annual financial statements and other documents as
required by law. For this reason, respondent has long lost its legal personality as a union and
respondent also engaged in a strike which has been declared illegal by the National Labor
Relations Commission.
Instead of filing a motion with the SOLE for the enforcement of the resolutions of
Undersecretary Laguesma as affirmed by this Court, the Union filed a Notice of Strike on
October 29, 1997 with the National Conciliation and Mediation Board (NCMB), serving a copy
thereof to the petitioner. The Union alleged as grounds for the projected strike the following acts
of the petitioner: (a) refusal to bargain; (b) coercion on employees; and (c) interference/restraint
to self-organization. On November 20, 1997, the Union submitted to the NCMB the minutes of
the alleged strike vote purportedly held on November 10, 1997 at the parking lot in front of the
petitioner's premises, at the corner of Scout Magbanua Street and Panay Avenue, Quezon City. It
appears that 178 out of the 300 union members participated therein, and the results were as
follows: 156 members voted to strike; 14 members cast negative votes; and eight votes were
spoiled.
On November 28, 1997, the officers and members of the Union staged a strike.
Subsequently, on December 1, 1997, the Union filed an ex parte motion with the DOLE, praying
for its assumption of jurisdiction over the dispute. The Union likewise prayed for the imposition
41
of appropriate legal sanctions, not limited to contempt and other penalties, against the hospital
director/president and other responsible corporate officers for their continuous refusal, in bad
faith, to bargain collectively with the Union, to adjudge
the same hospital director/president and other corporate officers guilty of unfair labor practices,
and for other just, equitable and expeditious reliefs in the premises.
For its part, the petitioner filed a petition to declare the strike illegal with the National
Labor Relations Commission (NLRC), docketed as NLRC NCR Case No. 00-12-08644-97. In its
position paper, the petitioner appended the affidavit of Erwin Barbacena, the overseer of the
property across the hospital which was being used as a parking lot, at the corner of Scout
Magbanua Street and Panay Avenue, Quezon City. Also included were the affidavits of Simon J.
Tingzon and Reggie B. Barawid, the petitioner's security guards assigned in front of the hospital
premises. They attested to the fact that no secret balloting took place at the said parking lot from
6:00 a.m. to 7:00 p.m. of November 10, 1997. 14 The petitioner also appended the affidavit of
Henry V. Vera Cruz, who alleged that he was a member of the Union and had discovered that
signatures on the Statements of Cash Receipt Over Disbursement submitted by the Union to the
DOLE purporting to be his were not his genuine signatures; 15 the affidavits of 17 of its
employees, who declared that no formal voting was held by the members of the Union on the
said date, were also submitted. The latter employees also declared that they were not members of
any union, and yet were asked to sign documents purporting to be a strike vote attendance and
unnumbered strike vote ballots on different dates from November 8 to 11, 1997. In their position
paper, the respondents appended the joint affidavit of the Union president and those members
who alleged that they had cast their votes during the strike vote held on November 10, 1997.
ISSUE: Whether or not CA erred in upholding the NLRC’s finding that respondents complied
with the legal requirements for staging the subject strike?
HELD: NO.
The respondent Union failed to comply with the second paragraph of Section 10, Rule
XXII of the Omnibus Rules of the NLRC. Aside from the mandatory notices embedded in
Article 263, paragraphs (c) and (f) of the Labor Code, a union intending to stage a strike is
mandated to notify the NCMB of the meeting for the conduct of strike vote, at least twenty-four
(24) hours prior to such meeting. Unless the NCMB is notified of the date, place and time of the
meeting of the union members for the conduct of a strike vote, the NCMB would be unable to
supervise the holding of the same, if and when it decides to exercise its power of supervision. A
union is mandated to notify the NCMB of an impending dispute in a particular bargaining unit
via a notice of strike. Thereafter, the NCMB, through its conciliator-mediators, shall call the
parties to a conference at the soonest possible time in order to actively assist them in exploring
all possibilities for amicable settlement. In the event of the failure in the conciliation/mediation
proceedings, the parties shall be encouraged to submit their dispute for voluntary arbitration.
However, if the parties refuse, the union may hold a strike vote, and if the requisite number of
votes is obtained, a strike may ensue.
In this case, the respondent Union failed to comply with the 24-hour prior notice
requirement to the NCMB before it conducted the alleged strike vote meeting on November 10,
1997. As a result, the petitioner complained that no strike vote meeting ever took place and
averred that the strike staged by the respondent union was illegal. Conformably to Article 264 of
the Labor Code of the Philippines and Section 7, Rule XXII of the Omnibus Rules Implementing
42
the Labor Code, no labor organization shall declare a strike unless supported by a majority vote
of the members of the union obtained by secret ballot in a meeting called for that purpose. The
requirement is mandatory and the failure of a union to comply therewith renders the strike
illegal. he union is thus mandated to allege and prove compliance with the requirements of the
law.
27. GAMMON PHILIPPINES., INC. v. METRO RAIL TRANSIT DEVELOPMENT

CORPORATION
G.R. No. 144792 January 31, 2006
FACTS: In 1996, MRTDC was awarded a government contract by way of a Build Lease and
Transfer Agreement to undertake the MRT 3 North Triangle Development Project (Project).
Among the major components of the Project was the construction of a four (4)-level podium
superstructure. Shortly thereafter, MRTDC sent a letter to Gammon on September 12, 1997,
notifying the latter of the suspension of all the undertakings stipulated in the August 27, 1997
NOA/NTP ostensibly because of the currency crisis at that time. According to Gammon,
however, after the issuance of the August 27, 1997 NOA/NTP, it proceeded to de-water and
clean up the Project site. On the other hand, MRTDC claims that before any construction activity
could proceed, it formally served Gammon a notice confirming the "temporary suspension of all
requirements under the terms of the contract until such time as clarification of scope has been
received from the owner. The only exception to this suspension is the re-design of the projects
floor slabs and the site de- watering and clean up." As a result of its analysis of the impact of the
currency crisis, MRTDC decided to downsize the podium structure to two (2) levels. Again, the
parties are in disagreement whether bid proposals for the redesigned two-level podium were
solicited. MRTDC claims that bidding took place, while Gammon insists that it merely submitted
a proposal to undertake the redesigned Project and was issued a NOA/NTP on February 18,
1998. Gammon then submitted a proposal reducing the contract price from P1,401,672,095.00 to
P1,062,988,607.00. This proposal was accepted by MRTDC for which it issued a NOA/NTP
dated April 2, 1998.
On May 7, 1998, MRTDC rescinded the NOA/NTP dated April 2, 1998. In its place,
MRTDC offered another NOA/NTP dated June 10, 1998 whose terms reduced the original
construction period and increased the stipulated liquidated damages in case of delay. Gammon
qualifiedly accepted the offer but manifested its willingness to consider revisions to the terms
and conditions of the NOA/NTP. On June 22, 1998, MRTDC notified Gammon that it was
awarding the contract to Filipinas (Prefab Building) Systems, Inc. (Filsystems) since Gammon
did not accept the terms and conditions of the June 10, 1998 NOA/NTP. Consequently, Gammon
sought reimbursement of the direct and indirect costs it incurred in relation to the Project
amounting to P118,391,218.43. MRTDC signified its willingness to reimburse Gammon but
rejected the latter's computation and instead offered a fixed cap of five percent (5%) of
Gammon's total claims, or approximately P6,000,000.00 only. Dissatisfied with this figure,
Gammon filed its claim with the CIAC invoking the arbitration clause of the General Conditions
of Contract (GCC) which provides that the arbitration of all disputes, claims or questions under
the contract shall be in accordance with CIAC rules.
43
The CIAC issued another Order on August 4, 1999, directing Gammon "to file its
Comment (on the request) — and/or produce the duly signed copies of the contract and
agreement, and furnish copies thereof to Respondent." Gammon filed a Comment dated August
16, 1999, asking that MRTDC's request be denied on the grounds that: (1) the rules on discovery
are not applicable to arbitration; (2) the request is premature because MRTDC has not filed its
Answer; and (3) since MRTDC has its own records and files which are available to it, the request
is not proper. Gammon avers that the novation of the August 27, 1997 NOA/NTP cannot be used
as basis for ruling that the CIAC has no jurisdiction over the dispute because novation was never
raised as an issue by MRTDC, which did not even invoke novation as basis for assailing the
orders of the CIAC. Further, Gammon maintains that the contract between the parties was not
novated. This contract, designated as Contract No. 4.241.001, in fact, contemplates that changes
could be made without novating or invalidating the contract. The redesign of the podium
structure, with the concomitant reduction in the contract price therefor, is allegedly a mere minor
modification which does not render the old obligation entirely incompatible with the new one.
Even assuming that the contract between the parties had been extinguished by novation or
rescission, Gammon asserts that the provision for arbitration in the contract survives and the
CIAC's jurisdiction over the dispute remains unaffected. Gammon also claims that MRTDC has
no legal capacity to sue since it has not been incorporated under Philippine laws. Moreover, it
allegedly cannot raise the issue that Gammon's claims for damages did not arise from a
construction contract as this issue was neither raised before the CIAC nor before the Court of
Appeals. Besides, Gammon does not claim damages incident to its participation in the bidding
process but those incurred in the performance of the contract after the issuance of the NOA/NTP
dated August 27, 1997.
For its part, MRTDC filed a Memorandum 13 dated May 29, 2001, contending that while
novation was not directly raised as an issue in its petition before the Court of Appeals, the latter
could not have avoided applying the law on novation in resolving the correctness of the CIAC's
position that its jurisdiction over Gammon's claim was supported by its examination of the
various NOA's/NTP's issued by MRTDC. MRTDC insists that the contract between the parties
evidenced by the August 27, 1997 NOA/NTP was novated by the April 2, 1998 NOA/NTP
because of the incompatibility between the two (2) contracts in terms of subject matter and price
or consideration. In turn, the April 2, 1998 NOA/NTP was rescinded. On the other hand, the June
10, 1998 NOA/NTP did not materialize because MRTDC's offer was only qualifiedly accepted
by Gammon. MRTDC further asserts that the cancellation of the main construction contract
necessarily resulted in the extinguishment of the arbitration clause, which is a mere adjunct of
the main contract.
ISSUE: Whether or not the CIAC’s jurisdiction is properly invoked?
HELD: YES.
At any rate, the termination of the contract prior to a demand for arbitration will generally
have no effect on such demand, provided that the dispute in question either arose out of the terms
of the contract or arose when a broad contractual arbitration clause was still in effect. The Court
of Appeals, therefore, erred in ruling that there must be a subsisting contract before the
jurisdiction of the CIAC may properly be invoked. The jurisdiction of the CIAC is not over the
contract but the disputes which arose therefrom, or are connected thereto, whether such disputes
arose before or after the completion of the contract, or after the abandonment or breach thereof.
44
Relevantly, while the above-quoted provision of the Rules of Procedure Governing Construction
Arbitration lists as non-arbitrable issues claims for opportunity/business losses and attorney's
fees, this provision was not carried over to the Revised Rules of Procedure Governing
Construction Arbitration which was approved on November 19, 2005. Such omission is not
without good reason. EO 1008 itself excludes from the coverage of the law only those disputes
arising from employer-employee relationships which are covered by the Labor Code, conveying
an intention to encompass a broad range of arbitrable issues within the jurisdiction of the
CIAC.The arbitration clause in the GCC submits to the jurisdiction of the CIAC all disputes,
claims or questions subject to arbitration under the contract. The language employed in the
arbitration clause is such as to indicate the intent to include all controversies that may arise from
the agreement as determined by the CIAC Rules. It is broad enough to encompass all issues save
only those which EO 1008 itself excludes, i.e., employer-employee relationship issues. Under
these Rules, the amount of damages and penalties is a general category of arbitrable issues under
which Gammon's claims may fall.
28. TRANSFIELD PHILIPPINES, INC., v. LUZON HYDRO CORPORATION,

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED AND SECURITY
BANK CORPORATION
G.R. No. 146717 May 19, 2006
FACTS: LHC claims that Transfield Philippines, Inc. (TPI) is guilty of forum-shopping when it
filed different suits. On the other hand, TPI claims that it is LHC which is guilty of forum-
shopping when it raised the issue of forum-shopping not only in this case, but also in Civil Case
No. 04-332, and even asked for the dismissal of the other case based on this ground. Moreover,
TPI argues that LHC is relitigating in Civil Case No. 04-332 the very same causes of action in
ICC Case No. 11264/TE/MW, and even manifesting therein that it will present evidence earlier
presented before the arbitral tribunal. Meanwhile, ANZ Bank and Security Bank moved to be
excused from filing a memorandum. They claim that with the finality of the Court's Decision
dated 22 November 2004, any resolution by the Court on the issue of forum-shopping will not
materially affect their role as the banking entities involved are concerned. The Court granted
their respective motions. On 1 August 2005, TPI moved to set the case for oral argument,
positing that the resolution of the Court on the issue of forum-shopping may have significant
implications on the interpretation of the Alternative Dispute Resolution Act of 2004, as well as
the viability of international commercial arbitration as an alternative mode of dispute resolution
in the country. Said motion was opposed by LHC in its opposition filed on 2 September 2005,
with LHC arguing that the respective memoranda of the parties are sufficient for the Court to
resolve the issue of forum-shopping. On 28 October 2005, TPI filed its Manifestation and
Reiterative Motion 9 to set the case for oral argument, where it manifested that the International
Chamber of Commerce (ICC) arbitral tribunal had issued its Final Award ordering LHC to pay
TPI US$24,533,730.00 (including the US$17,977,815.00 proceeds of the two standby letters of
credit). TPI also submitted a copy thereof with a Supplemental Petition 10 to the Regional Trial
Court (RTC), seeking recognition and enforcement of the said award.
ISSUE: Whether or not the case is arbitrable?
45
HELD: YES.
The arbitration case, ICC Case No. 11264 TE/MW, is an arbitral proceeding commenced
pursuant to the Turnkey Contract between TPI and LHC, to determine the primary issue of
whether the delays in the construction of the project were excused delays, which would
consequently render valid TPI's claims for extension of time to finish the project. Together with
the primary issue to be settled in the arbitration case is the equally important question of
monetary awards to the aggrieved party.
Neither is there an identity of parties between and among the three (3) cases. The ICC case only
involves TPI and LHC logically since they are the parties to the Turnkey Contract. In
comparison, the instant petition includes Security Bank and ANZ Bank, the banks sought to be
enjoined from releasing the funds of the letters of credit. The Court agrees with TPI that it would
be ineffectual to ask the ICC to issue writs of preliminary injunction against Security Bank and
ANZ Bank since these banks are not parties to the arbitration case, and that the ICC Arbitral
tribunal would not even be able to compel LHC to obey any writ of preliminary injunction issued
from its end. Civil Case No. 04-322, on the other hand, logically involves TPI and LHC only,
they being the parties to the arbitration agreement whose partial award is sought to be enforced.
As a fundamental point, the pendency of arbitral proceedings does not foreclose resort to
the courts for provisional reliefs. The Rules of the ICC, which governs the parties' arbitral
dispute, allows the application of a party to a judicial authority for interim or conservatory
measures. 17 Likewise, Section 14 of Republic Act (R.A.) No. 876 (The Arbitration Law) 18
recognizes the 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. In addition, R.A. 9285,
otherwise known as the "Alternative Dispute Resolution Act of 2004," allows the filing of
provisional or interim measures with the regular courts whenever the arbitral tribunal has no
power to act or to act effectively. The fact that the ICC Arbitral tribunal included the proceeds of
the securities shows 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. This supports LHC's position that
when the Third Partial Award was released and Civil Case No. 04-332 was filed, TPI was not yet
authorized to seek the issuance of a writ of execution since the quantification of the amounts due
to TPI had not yet been settled by the ICC Arbitral tribunal. Notwithstanding the fact that the
amount of proceeds drawn on the securities was not disputed the application for the enforcement
of the Third Partial Award was precipitately filed. To repeat, the declarations made in the Third
Partial Award do not constitute orders for the payment of money.
29. INSULAR SAVINGS BANK, v. FAR EAST BANK AND TRUST COMPANY
G.R. No. 141818 June 22, 2006
FACTS: On December 11, 1991, Far East Bank and Trust Company (Respondent) filed a
complaint against Home Bankers Trust and Company (HBTC) with the Philippine Clearing
House Corporation's (PCHC) Arbitration Committee docketed as Arbicom Case No. 91-069.
Respondent sought to recover from the petitioner, the sum of P25,200,000.00 representing the
total amount of the three checks drawn and debited against its clearing account. HBTC sent these
checks to respondent for clearing by operation of the PCHC clearing system. Thereafter,
46
respondent dishonored the checks for insufficiency of funds and returned the checks to HBTC.
However, the latter refused to accept them since the checks were returned by respondent after the
reglementary regional clearing period. Meanwhile, on January 17, 1992, before the termination
of the arbitration proceedings, respondent filed another complaint but this time with the Regional
Trial Court (RTC) in Makati City docketed as Civil Case No. 92-145 for Sum of Money and
Damages with Preliminary Attachment. The complaint was filed not only against HBTC but also
against Robert Young, Eugene Arriesgado and Victor Tancuan (collectively known as
Defendants), who were the president and depositors of HBTC respectively. Aware of the
arbitration proceedings between respondent and petitioner, the RTC, in an Omnibus Order dated
April 30, 1992, suspended the proceedings in the case against all the defendants pending the
decision of the Arbitration Committee. The motion for reconsideration filed by petitioner was
denied by the Arbitration Committee. Consequently, to appeal the decision of the Arbitration
Committee in Arbicom Case No. 91- 069, petitioner filed a petition for review in the earlier case
filed by respondent in Branch 135 of the RTC of Makati and docketed as Civil Case No. 92-145.
In an order dated January 20, 1999, the RTC directed both petitioner and respondent to file their
respective memoranda, after which, said petition would be deemed submitted for resolution.
Both parties filed several pleadings. On February 8, 1999, respondent filed a Motion to Dismiss
Petition for Review for Lack of Jurisdiction, which was opposed by the petitioner. Respondent
then filed its Reply to the opposition, to which petitioner filed a Rejoinder. 20 On August 16,
1999, respondent submitted its Surrejoinder.
Petitioner contends that Civil Case No. 92-145 was merely suspended to await the
outcome of the arbitration case pending before the PCHC. Thus, any petition questioning the
decision of the Arbitration Committee must be filed in Civil Case No. 92-145 and should not be
docketed as a separate action. Likewise, petitioner avers that had it filed a separate action, "this
would have resulted in a multiplicity of suits, which is abhorred in procedure." Meanwhile
respondent avers that the RTC correctly dismissed the appeal from the award of private
arbitrators since there is no statutory basis for such appeal. Respondent argues that petitioner's
claim that the parties by agreement had conferred on the RTC appellate jurisdiction over
decisions of private arbitrators is erroneous because they cannot confer a non-existent
jurisdiction on the RTC or any court. Furthermore, the petition for review filed by petitioner
violated the rule on commencing an original action under Section 5, Rule 1, and the raffle of
cases under Section 2, Rule 20 of the Rules of Court,when it filed the same in Branch 135 of the
RTC of Makati where there was already a pending original action, i.e.,Civil Case No. 92-145.
ISSUE: Whether or not the case lacks jurisdiction on the ground that it should have been
docketed as a separate case?
HELD: NO.
The PCHC has its own Rules of Procedure for Arbitration (PCHC Rules). However, this
is governed by Republic Act No. 876, also known as The Arbitration Law and supplemented by
the Rules of As provided in the PCHC Rules, the findings of facts of the decision or award
rendered by the Arbitration Committee shall be final and conclusive upon all the parties in said
arbitration dispute. Under Article 2044 of the New Civil Code, the validity of any stipulation on
the finality of the arbitrators' award or decision is recognized. However, where the conditions
described in Articles 2038, 2039 and 2040 applicable to both compromises and arbitrations are
obtaining, the arbitrators' award may be annulled or rescinded. Consequently, the decision of the
47
Arbitration Committee is subject to judicial review. Furthermore, petitioner had several judicial
remedies available at its disposal after the Arbitration Committee denied its Motion for
Reconsideration. It may petition the proper RTC to issue an order vacating the award on the
grounds provided for under Section 24 of the Arbitration Law. Petitioner likewise has the option
to file a petition for review under Rule 43 of the Rules of Court with the Court of Appeals on
questions of fact, of law, or mixed questions of fact and law. Lastly, petitioner may file a petition
for certiorari under Rule 65 of the Rules of Court on the ground that the Arbitrator Committee
acted without or in excess of its jurisdiction or with grave abuse of discretion amounting to lack
or excess of jurisdiction. Since this case involves acts or omissions of a quasi-judicial agency,
the petition should be filed in and cognizable only by the Court of Appeals. In this instance,
petitioner did not avail of any of the abovementioned remedies available to it. Instead it filed a
petition for review with the RTC where Civil Case No. 92-145 is pending pursuant to Section 13
of the PCHC Rules to sustain its action. Clearly, it erred in the procedure it chose for judicial
review of the arbitral award.
In the instant case, petitioner and respondent have agreed that the PCHC Rules would
govern in case of controversy. However, since the PCHC Rules came about only as a result of an
agreement between and among member banks of PCHC and not by law, it cannot confer
jurisdiction to the RTC. Thus, the portion of the PCHC Rules granting jurisdiction to the RTC to
review arbitral awards, only on questions of law, cannot be given effect. Consequently, the
proper recourse of petitioner from the denial of its motion for reconsideration by the Arbitration
Committee is to file either a motion to vacate the arbitral award with the RTC, a petition for
review with the Court of Appeals under Rule 43 of the Rules of Court, or a petition for certiorari
under Rule 65 of the Rules of Court. In the case at bar, petitioner filed a petition for review with
the RTC when the same should have been filed with the Court of Appeals under Rule 43 of the
Rules of Court. Thus, the RTC of Makati did not err in dismissing the petition for review for lack
of jurisdiction but not on the ground that petitioner should have filed a separate case from Civil
Case No. 92-145 but on the necessity of filing the correct petition in the proper court. It is
immaterial whether petitioner filed the petition for review in Civil Case No. 92-145 as an appeal
of the arbitral award or whether it filed a separate case in the RTC, considering that the RTC will
only have jurisdiction over an arbitral award in cases of motions to vacate the same. Otherwise,
as elucidated herein, the Court of Appeals retains jurisdiction in petitions for review or in
petitions for certiorari. Consequently, petitioner's arguments, with respect to the filing of separate
action from Civil Case No. 92-145 resulting in a multiplicity of suits, cannot be given due
course.
30. CHARLES BERNARD H. REYES doing business under the name and style CBH
Reyes Architects v. ANTONIO YULO BALDE II, Paulino M. Noto and Ernesto J. Battad,
Sr., in their capacities as Arbitrators of the Construction Industry Arbitration
Commission, Spouses Cesar and Carmelita Esquig and Rosemarie Paras
G.R. No. 168384 August 7, 2006
FACTS: On October 20, 2002, respondent-spouses Cesar and Carmelita Esquig entered into a
Design-Build Construction Agreement with petitioner Charles Bernard H. Reyes, doing business
48
under the name and style of CBH Reyes Architects, for the architectural design and construction
of a 2-storey residence in Tahanan Village, Parañaque City.
In accordance with the contract, spouses Esquig paid the amount of P1,050,000 as down
payment. The relationship between petitioner and respondent spouses went on smoothly until
sometime in January 2003 when the latter left for the United States and designated their co-
respondent, Rosemarie Papas, as their representative. According to petitioner, Papas meddled
with the construction works by demanding changes and additional works which entailed
additional cost. Papas also refused to pay petitioner's progress billing and the salary of the
laborers. Petitioner thereafter prepared an accounting report of all the additional works and their
corresponding costs, however, Papas denied all the items in the list and refused to pay the same.
Worse, on May 8, 2003, Papas wrote the Board of Directors of Tahanan Village Homeowner's
Association requesting for the cancellation of the contractor's work permit.
Thus, on May 26, 2003, petitioner filed a complaint for Accounting, Collection of Sum of
Money, Rescission of Contract with Damages against spouses Esquig and Rosemarie Papas with
the Regional Trial Court of Muntinlupa City which was docketed as Civil Case No. 03-110. In
the complaint, petitioner prayed that an accounting be rendered to determine the cost of the
materials purchased by Papas; that respondents be ordered to pay the cost of the additional works
done on the property; that the Design- Build Construction Agreement be ordered rescinded
because respondents breached the same; and that respondents be ordered to pay moral and
exemplary damages and litigation expenses. On July 15, 2003, respondents filed a motion to
dismiss Civil Case No. 03-110 on the ground that the court has no jurisdiction over the subject
matter of the case. They claimed that the Design-Build Construction Agreement contained an
arbitration clause, thus any dispute arising therefrom should be brought before the CIAC.
On even date, respondents also filed a complaint before the CIAC against the petitioner,
docketed as CIAC Case No. 13-2003. Respondents alleged that petitioner unreasonably delayed
the construction and refused to finish the project. Thus, they prayed that petitioner be ordered to
finish the project or, in the alternative, to pay the cost to finish the same; to reimburse the
overpayments made by respondents; and to pay liquidated damages, attorney's fees and costs of
the suit. Instead of submitting an answer, petitioner filed with the CIAC a motion to dismiss on
grounds of lack of jurisdiction to hear and decide the case as well as the pendency of the case
before the trial court involving the same subject matter. Petitioner contends that the CIAC has no
jurisdiction to entertain the case because it is purely civil in nature and does not involve
construction dispute nor require the resolution of highly technical issues. Moreover, petitioner
alleges that the trial court acquired jurisdiction prior to the CIAC since petitioner's complaint was
filed earlier thus, rendering the arbitration clause moot, unenforceable and revocable.
ISSUE: Whether or not Regional Trial Court has jurisdiction over the controversy?
HELD: NO.
Clearly, the presence of the arbitration clause in the parties' contract vests jurisdiction on
the CIAC on all controversies arising from such contract. The arbitral clause in the agreement is
a commitment by the parties to submit to arbitration the disputes covered therein. Because that
clause is binding, they are expected to abide by it in good faith. Where the jurisdiction of CIAC
is properly invoked, the failure or refusal of herein petitioner to arbitrate shall not affect the
proceedings. Arbitration proceedings shall continue notwithstanding the absence or lack of
participation of petitioner, and the award shall be made after receiving the evidence of the
49
claimant. With respect to petitioner's contention that the action is purely civil in nature hence,
jurisdiction rests with the Regional Trial Court, the same must fail. Since the action is rooted on
alleged violations of the agreement, it is embraced by the term "construction dispute". Besides,
Section 23 of E.O. No. 1008 expressly provides that all provisions of existing laws,
proclamations, decrees, letters of instructions and executive orders contrary to or inconsistent
with E.O. No. 1008 are repealed or modified accordingly. E.O. No. 1008 which vests jurisdiction
to the CIAC over construction disputes is a special law; hence, it takes precedence over Batas
Pambansa Blg. 129 or the Judiciary Reorganization Act of 1980, a general law which vests
jurisdiction to the Regional Trial Courts over civil actions in which the subject of the litigation is
incapable of pecuniary estimation.
31. FIESTA WORLD MALL CORPORATION v. LINBERG PHILIPPINES, INC.

G.R. No. 152471 August 18, 2006
FACTS: On January 19, 2000, respondent filed with the Regional Trial Court (RTC), Branch
267, Pasig City, a Complaint for Sum of Money against petitioner, docketed as Civil Case No.
67755. The complaint alleges that on November 12, 1997, petitioner and respondent executed a
build-own-operate agreement, entitled "Contract Agreement for Power Supply Services, 3.8 MW
Base Load Power Plant" (the Contract). Under this Contract, respondent will construct, at its own
cost, and operate as owner a power plant, and to supply petitioner power/electricity at its
shopping mall in Lipa City. Petitioner, on the other hand, will pay respondent "energy fees" to be
computed in accordance with the Seventh Schedule of the Contract. The complaint further
alleges that respondent constructed the power plant in Lipa City at a cost of about
P130,000,000.00. In November 1997, the power plant became operational and started supplying
power/electricity to petitioner's shopping mall in Lipa City. In December 1997, respondent
started billing petitioner. As of May 21, 1999, petitioner's unpaid obligation amounted to
P15,241,747.58, exclusive of interest. However, petitioner questioned the said amount and
refused to pay despite respondent's repeated demands.
In its Answer with Compulsory Counterclaim, petitioner specifically denied the
allegations in the complaint, claiming that respondent failed to fulfill its obligations under the
Contract by failing to supply all its power/fuel needs. From November 10, 1998 until May 21,
1999, petitioner personally shouldered the cost of fuel. Petitioner also disputed the amount of
energy fees specified in the billings made by respondent because the latter failed to monitor,
measure, and record the quantities of electricity delivered by taking photographs of the electricity
meter reading prior to the issuance of its invoices and billings, also in violation of the Contract. 5
Moreover, in the computation of the electrical billings, the minimum off-take of energy (E2) was
based solely on the projected consumption as computed by respondent. However, based on
petitioner's actual experience, it could not consume the energy pursuant to the minimum off-take
even if it kept open all its lights and operated all its machinery and equipment for twenty-four
hours a day for a month. This fact was admitted by respondent. While both parties had
discussions on the questioned billings, however, "there were no earnest efforts to resolve the
differences in accordance with the arbitration clause provided for in the Contract." Finally, as a
special affirmative defense in its answer, petitioner alleged that respondent's filing of the
complaint is premature and should be dismissed on the ground of non-compliance with
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paragraph 7.4 of the Contract. Thereafter, petitioner filed a Motion to Set Case for Preliminary
Hearing on the ground that respondent violated the arbitration clause provided in the Contract,
thereby rendering its cause of action premature. This was opposed by respondent, claiming that
paragraph 7.4 of the Contract on arbitration is not the provision applicable to this case; and that
since the parties failed to settle their dispute, then respondent may resort to court action pursuant
to paragraph 17.2 of the same Contract. The parties hereto submit to the exclusive jurisdiction of
the proper courts of Pasig City, Republic of the Philippines for the hearing and determination of
any action or proceeding arising out of or in connection with this Agreement.
ISSUE: Whether or not the CA erred in disregarding the arbitration clause in the parties’
contract?
HELD: YES.
It is clear from the records that petitioner disputed the amount of energy fees demanded
by respondent. However, respondent, without prior recourse to arbitration as required in the
Contract, filed directly with the trial court its complaint, thus violating the arbitration clause in
the Contract. Thus, it is well within petitioner's right to demand recourse to arbitration. The
Court cannot agree with respondent that it can directly seek judicial recourse by filing an action
against petitioner simply because both failed to settle their differences amicably. Suffice it to
state that there is nothing in the Contract providing that the parties may dispense with the
arbitration clause. Article XXI on jurisdiction cited by respondent, i.e., that "the parties hereto
submit to the exclusive jurisdiction of the proper courts of Pasig City" merely provides for the
venue of any action arising out of or in connection with the stipulations of the parties in the
Contract. Moreover, the computation of the energy fees disputed by petitioner also involves
technical matters that are better left to an arbitration panel who has expertise in those areas.
Alternative dispute resolution methods or ADRs — like arbitration, mediation, negotiation and
conciliation — are encouraged by this Court. By enabling the parties to resolve their disputes
amicably, they provide solutions that are less time-consuming, less tedious, less confrontational,
and more productive of goodwill and lasting relationships. To brush aside such agreement
providing for arbitration in case of disputes between the parties would be a step backward. In this
connection, since respondent has already filed a complaint with the trial court without prior
recourse to arbitration, the proper procedure to enable an arbitration panel to resolve the parties'
dispute pursuant to their Contract is for the trial court to stay the proceedings. After the
arbitration proceeding has been pursued and completed, then the trial court may confirm the
award made by the arbitration panel.
32. JORGE GONZALES AND PANEL OF ARBITRATORS v. CLIMAX MINING LTD.,

Climax-Arimco Mining Corp., and Australasian Philippines Mining Inc.
G.R. No. 161957 January 22, 2007
FACTS: G.R. No. 167994. 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. On 23 March 2000, Climax-Arimco had sent Gonzales a Demand for Arbitration
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pursuant to Clause 19.1 11 of the Addendum Contract and also in accordance with Sec. 5 of R.A.
No. 876. 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. The case, docketed as
Civil Case No. 00-444, was initially raffled to Br. 132 of the RTC of Makati City, with Judge
Herminio I. Benito as Presiding Judge. Respondent Climax-Arimco filed on 5 April 2000 a
motion to set the application to compel arbitration for hearing. On 14 April 2000, Gonzales filed
a motion to dismiss which he however failed to set for hearing. On 15 May 2000, he filed an
Answer with Counterclaim, questioning the validity of the Addendum Contract containing the
arbitration clause. Gonzales alleged that the Addendum Contract containing the arbitration clause
is void in view of Climax-Arimco's acts of fraud, oppression and violation of the Constitution.
Thus, the arbitration clause, Clause 19.1, contained in the Addendum Contract is also null and
void ab initio and legally inexistent. Climax-Arimco argued that R.A. No. 876 does not authorize
a pre-trial or trial for a motion to compel arbitration but directs the court to hear the motion
summarily and resolve it within ten days from hearing. Judge Pimentel granted the motion and
directed the parties to arbitration. On 13 February 2001, Judge Pimentel issued the first assailed
order requiring Gonzales to proceed with arbitration proceedings and appointing retired CA
Justice Jorge Coquia as sole arbitrator. assailing the Orders dated 13 February 2001 and 7 March
2005 of Judge Pimentel. Gonzales contends that public respondent Judge Pimentel acted with
grave abuse of discretion in immediately ordering the parties to proceed with arbitration despite
the proper, valid, and timely raised argument in his Answer with Counterclaim that the
Addendum Contract, containing the arbitration clause, is null and void. Gonzales has also sought
a temporary restraining order to prevent the enforcement of the assailed orders directing the
parties to arbitrate, and to direct Judge Pimentel to hold a pre-trial conference and the necessary
hearings on the determination of the nullity of the Addendum Contract. Climax-Arimco
mentions that the special civil action for certiorari employed by Gonzales is available only where
there is no appeal or any plain, speedy, and adequate remedy in the ordinary course of law
against the challenged orders or acts. Climax-Arimco then points out that R.A. No. 876 provides
for an appeal from such orders, which, under the Rules of Court, must be filed within 15 days
from notice of the final order or resolution appealed from or of the denial of the motion for
reconsideration filed in due time. Gonzales has not denied that the relevant 15-day period for an
appeal had elapsed long before he filed this petition for certiorari. He cannot use the special civil
action of certiorari as a remedy for a lost appeal.
Climax-Arimco adds that an application to compel arbitration under Sec. 6 of R.A. No. 876
confers on the trial court only a limited and special jurisdiction, i.e., a jurisdiction solely to
determine (a) whether or not the parties have a written contract to arbitrate, and (b) if the
defendant has failed to comply with that contract. Climax-Arimco further notes that Gonzales's
attack on or repudiation of the Addendum Contract also is not a ground to deny effect to the
arbitration clause in the Contract. The arbitration agreement is separate and severable from the
contract evidencing the parties' commercial or economic transaction, it stresses. Hence, the
alleged defect or failure of the main contract is not a ground to deny enforcement of the parties'
arbitration agreement. Even the party who has repudiated the main contract is not prevented from
enforcing its arbitration provision. R.A. No. 876 itself treats the arbitration clause or agreement
as a contract separate from the commercial, economic or other transaction to be arbitrated.
Climax-Arimco emphasizes that the summary proceeding to compel arbitration under Sec. 6 of
R.A. No. 876 should not be confused with the procedure in Sec. 24 of R.A. No. 9285. Sec. 6 of
R.A. No. 876 refers to an application to compel arbitration where the court's authority is limited
52
to resolving the issue of whether there is or there is no agreement in writing providing for
arbitration, while Sec. 24 of R.A. No. 9285 refers to an ordinary action which covers a matter
that appears to be arbitrable or subject to arbitration under the arbitration agreement. In the latter
case, the statute is clear that the court, instead of trying the case, may, on request of either or
both parties, refer the parties to arbitration, unless it finds that the arbitration agreement is null
and void, inoperative or incapable of being performed. Arbitration may even be ordered in the
same suit brought upon a matter covered by an arbitration agreement even without waiting for
the outcome of the issue of the validity of the arbitration agreement. Art. 8 of the UNCITRAL
Model Law states that where a court before which an action is brought in a matter which is
subject of an arbitration agreement refers the parties to arbitration, the arbitral proceedings may
proceed even while the action is pending.
ISSUE: Whether or not it was proper for the RTC, in the proceeding to compel arbitration under
R.A. No. 876, to order the parties to arbitrate even though the defendant therein has raised the
twin issues of validity and nullity of the Addendum Contract and, consequently, of the arbitration
clause therein as well?
HELD: YES.
In the present case, Gonzales's petition raises a question of law, but not a question of
jurisdiction. Judge Pimentel acted in accordance with the procedure prescribed in R.A. No. 876
when he ordered Gonzales to proceed with arbitration and appointed a sole arbitrator after
making the determination that there was indeed an arbitration agreement. It has been held that as
long as a court acts within its jurisdiction and does not gravely abuse its discretion in the exercise
thereof, any supposed error committed by it will amount to nothing more than an error of
judgment reviewable by a timely appeal and not assailable by a special civil action of certiorari.
Even if we overlook the employment of the wrong remedy in the broader interests of justice, the
petition would nevertheless be dismissed for failure of Gonzalez to show grave abuse of
discretion.
Disputes do not go to arbitration unless and until the parties have agreed to abide by the
arbitrator's decision. Necessarily, a contract is required for arbitration to take place and to be
binding. A controversy cannot be arbitrated where one of the parties to the controversy is an
infant, or a person judicially declared to be incompetent, unless the appropriate court having
jurisdiction approve a petition for permission to submit such controversy to arbitration made by
the general guardian or guardian ad litem of the infant or of the incompetent. The doctrine of
separability, or severability as other writers call it, enunciates that an arbitration agreement is
independent of the main contract. The arbitration agreement is to be treated as a separate
agreement and the arbitration agreement does not automatically terminate when the contract of
which it is part comes to an end. There is reason, therefore, to rule against Gonzales when he
alleges that Judge Pimentel acted with grave abuse of discretion in ordering the parties to
proceed with arbitration. Gonzales's argument that the Addendum Contract is null and void and,
therefore the arbitration clause therein is void as well, is not tenable. First, the proceeding in a
petition for arbitration under R.A. No. 876 is limited only to the resolution of the question of
whether the arbitration agreement exists. Second, the separability of the arbitration clause from
the Addendum Contract means that validity or invalidity of the Addendum Contract will not
affect the enforceability of the agreement to arbitrate. Thus, Gonzales's petition for certiorari
should be dismissed.
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33. ROSARIA LUPITAN PANG-ET v. CATHERINE MANACNES-DAO-AS, HEIR OF

LEONCIO MANACNES AND FLORENTINA MANACNES
G.R. No. 167261 March 2, 2007
FACTS: The instant petition draws its origin from an Action for recovery of possession of real
property situated in Sitio Abatan, Barrio Dagdag, Sagada filed by herein petitioner before the
MCTC of Besao-Sagada, Mountain Province on 9 November 1994, against the spouses Leoncio
and Florentina Manacnes, the predecessors-in-interest of herein respondent. On 23 February
1995, during the course of the pre-trial, the parties, through their respective counsels, agreed to
refer the matter to the Barangay Lupon (Lupon) of Dagdag, Sagada for arbitration in accordance
with the provisions of the Katarungang Pambarangay Law. 5 Consequently, the proceedings
before the MCTC were suspended, and the case was remanded to the Lupon for resolution.
Thereafter, the Lupon issued a Certification to File Action on 26 February 1995 due to the
refusal of the Manacnes spouses to enter into an Agreement for Arbitration and their insistence
that the case should go to court. On 8 March 1995, the Certification, as well as the records of the
case, were forwarded to the MCTC. An Order was issued by the MCTC on 7 April 1995, once
more remanding the matter for conciliation by the Lupon and ordering the Lupon to render an
Arbitration Award thereon. According to the MCTC, based on the records of the case, an
Agreement for Arbitration was executed by the parties concerned; however, the Lupon failed to
issue an Arbitration Award as provided under the Katarungang Pambarangay Law, so that, the
case must be returned to the Lupon until an Arbitration Award is rendered. In compliance with
the MCTC Order, the Lupon rendered an Arbitration Award on 10 May 1995 ordering herein
petitioner to retrieve the land upon payment to the spouses Manacnes of the amount of P8,000.00
for the improvements on the land. Aggrieved, Leoncio's widow,7Florentina Manacnes,
repudiated the Arbitration Award but her repudiation was rejected by the Lupon. Thereafter, the
MCTC was furnished with copies of the Arbitration Award. On 1 June 1995, herein petitioner
filed with the Lupon a Motion for Execution of the Arbitration Award. On the other hand,
Florentina Manacnes filed a Motion with the MCTC for the resumption of the proceedings in the
original case for recovery of possession and praying that the MCTC consider her repudiation of
the Arbitration Award issued by the Lupon. Subsequently, the MCTC heard the Motion of
Florentina Manacnes notwithstanding the latter's failure to appear before the court despite notice.
The MCTC denied Florentina Manacnes' Motion to repudiate the Arbitration Award elucidating
that since the movant failed to take any action within the 10- day reglementary period provided
for under the Katarungang Pambarangay Law, the arbitration award has become final and
executory. Furthermore, upon motion of herein petitioner Pang-et, the MCTC issued an Order
remanding the records of the case to the Lupon for the execution of the Arbitration Award. On
31 August 1995, the then incumbent Punong Barangay of Dagdag issued a Notice of Execution
of the Award. Said Notice of Execution was never implemented. Thus, on 16 October 2001,
herein petitioner Pang- et filed with the MCTC an action for enforcement of the Arbitration
Award which was sought to be dismissed by the heir of the Manacnes spouses. The heir of the
Manacnes spouses argues that the Agreement for Arbitration and the Arbitration Award are void,
the Agreement for Arbitration not having been personally signed by the spouses Manacnes, and
54
the Arbitration Award having been written in English — a language not understood by the
parties.
Vehemently disagreeing with the Decision of the Court of Appeals, petitioner Pang-et
filed the instant petition. Petitioner maintains that the appellate court overlooked material facts
that resulted in reversible errors in the assailed Decision. According to petitioner, the Court of
Appeals overlooked the fact that the original parties, as represented by their respective counsels
in Civil Case No. 83, mutually agreed to submit the case for arbitration by the Lupon ng
Tagapamayapa of Barangay Dagdag. Petitioner insists that the parties must be bound by the
initial agreement by their counsels during pre-trial to an amicable settlement as any
representation made by the lawyers are deemed made with the conformity of their clients.
Furthermore, petitioner maintains that if indeed the spouses Manacnes did not want to enter into
an amicable settlement, then they should have raised their opposition at the first instance, which
was at the pre-trial on Civil Case No. 83 when the MCTC ordered that the case be remanded to
the Lupon ng Tagapamayapa for arbitration.
ISSUE: Whether or not the Court of Appeals overlooked the fact that the original parties, as
represented by their respective counsels in Civil Case No. 83, mutually agreed to submit the case
for arbitration by the Lupon ng Tagapamayapa of Barangay Dagdag?
HELD: NO.
First and foremost, in order to resolve the case before us, it is pivotal to stress that, during
the initial hearing before the Lupon ng Tagapamayapa, the spouses Manacnes declined to sign
the Agreement for Arbitration and were adamant that the proceedings before the MCTC in Civil
Case No. 83 must continue. As reflected in the Minutes of the Arbitration Hearing held on 26
February 1995, the legality of the signature of Catherine Manacnes, daughter of the Manacnes
spouses, who signed the Agreement for Arbitration on behalf of her parents, was assailed on the
ground that it should be the spouses Manacnes themselves who should have signed such
agreement. To resolve the issue, the Pangkat Chairman then asked the spouses Manacnes that if
they wanted the arbitration proceedings to continue, they must signify their intention in the
Agreement for Arbitration form. However, as stated earlier, the Manacnes spouses did not want
to sign such agreement and instead insisted that the case go to court.
At this juncture, it must be stressed that the object of the Katarungang Pambarangay Law
is the amicable settlement of disputes through conciliation proceedings voluntarily and freely
entered into by the parties. Through this mechanism, the parties are encouraged to settle their
disputes without enduring the rigors of court litigation. Nonetheless, the disputing parties are not
compelled to settle their controversy during the barangay proceedings before the Lupon or the
Pangkat, as they are free to instead find recourse in the courts 16 in the event that no true
compromise is reached.
The key in achieving the objectives of an effective amicable settlement under the Katarungang
Pambarangay Law is the free and voluntary agreement of the parties to submit the dispute for
adjudication either by the Lupon or the Pangkat, whose award or decision shall be binding upon
them with the force and effect of a final judgment of a court. Absent this voluntary submission
by the parties to submit their dispute to arbitration under the Katarungang Pambarangay Law,
there cannot be a binding settlement arrived at effectively resolving the case. Hence, we fail to
see why the MCTC further remanded the case to the Lupon ng Tagapamayapa and insisted that
55
the arbitration proceedings continue, despite the clear showing that the spouses Manacnes
refused to submit the controversy for arbitration.
What is compulsory under the Katarungang Pambarangay Law is that there be a
confrontation between the parties before the Lupon Chairman or the Pangkat and that a
certification be issued that no conciliation or settlement has been reached, as attested to by the
Lupon or Pangkat Chairman, before a case falling within the authority of the Lupon may be
instituted in court or any other government office for adjudication. In other words, the only
necessary pre-condition before any case falling within the authority of the Lupon or the Pangkat
may be filed before a court is that there has been personal confrontation between the parties but
despite earnest efforts to conciliate, there was a failure to amicably settle the dispute. It should be
emphasized that while the spouses Manacnes appeared before the Lupon during the initial
hearing for the conciliation proceedings, they refused to sign the Agreement for Arbitration
form, which would have signified their consent to submit the case for arbitration. Therefore,
upon certification by the Lupon ng Tagapamayapa that the confrontation before the Pangkat
failed because the spouses Manacnes refused to submit the case for arbitration and insisted that
the case should go to court, the MCTC should have continued with the proceedings in the case
for recovery of possession which it suspended in order to give way for the possible amicable
resolution of the case through arbitration before the Lupon ng Tagapamayapa.
Petitioner's assertion that the parties must be bound by their respective counsels'
agreement to submit the case for arbitration and thereafter enter into an amicable settlement is
imprecise. What was agreed to by the parties' respective counsels was the remand of the case to
the Lupon ng Tagapamayapa for conciliation proceedings and not the actual amicable settlement
of the case. As stated earlier, the parties may only be compelled to appear before the Lupon ng
Tagapamayapa for the necessary confrontation, but not to enter into any amicable settlement, or
in the case at bar, to sign the Agreement for Arbitration. Thus, when the Manacnes spouses
personally appeared during the initial hearing before the Lupon ng Tagapamayapa, they had
already complied with the agreement during the pre-trial to submit the case for conciliation
proceedings. Their presence during said hearing is already their acquiescence to the order of the
MCTC remanding the case to the Lupon for conciliation proceedings, as there has been an actual
confrontation between the parties despite the fact that no amicable settlement was reached due to
the spouses Manacnes' refusal to sign the Agreement for Arbitration.
34. FRABELLE FISHING CORPORATION v. THE PHILIPPINE AMERICAN LIFE

INSURANCE COMPANY, PHILAM PROPERTIES CORPORATION AND PERF
REALITY CORPORATION
G.R. No. 158560 August 17, 2007
FACTS: On May 8, 1996, respondents entered into a Memorandum of Agreement (1996 MOA)
whereby each agreed to contribute cash, property, and services for the construction and
development of Philamlife Tower, a 45-storey office condominium along Paseo de Roxas,
Makati City. On December 6, 1996, respondents executed a Deed of Assignment (1996 DOA)
wherein they assigned to Frabelle Properties Corporation (Frabelle) their rights and obligations
under the 1996 MOA with respect to the construction, development, and subsequent ownership
of Unit No. 38-B located at the 38th floor of Philamlife Tower. The parties also stipulated that
56
the assignee shall be deemed as a co-developer of the construction project with respect to Unit
No. 38-B. Frabelle, in turn, assigned to Frabelle Fishing Corporation (Frabelle Fishing),
petitioner herein, its rights, obligations and interests over Unit No. 38-B.
The dispute between the parties started when petitioner found material concealment on
the part of respondents regarding certain details in the 1996 DOA and 1998 MOA and their gross
violation of their contractual obligations as condominium developers. These violations are: (a)
the non-construction of a partition wall between Unit No. 38-B and the rest of the floor area; and
(b) the reduction of the net usable floor area from four hundred sixty eight (468) square meters to
only three hundred fifteen (315) square meters. Dissatisfied with its existing arrangement with
respondents, petitioner, on October 22, 2001, referred the matter to the Philippine Dispute
Resolution Center, Inc. (PDRCI) for arbitration. However, in a letter dated November 7, 2001,
respondents manifested their refusal to submit to PDRCI's jurisdiction.
On February 11, 2002, petitioner filed with the Housing and Land Use Regulatory Board
(HLURB), Expanded National Capital Region Field Office a complaint 8 for reformation of
instrument, specific performance and damages against respondents, docketed as HLURB Case
No. REM-021102-11791. Petitioner alleged, among others, that the contracts do not reflect the
true intention of the parties; and that it is a mere buyer and not co-developer and/or co-owner of
the condominium unit.
ISSUE: Whether or not the parties should initially resort to arbitration?
HELD: YES.
Paragraph 4.2 of the 1998 MOA mandates that any dispute between or among the parties
"shall finally be settled by arbitration conducted in accordance with the Rules of Conciliation
and Arbitration of the International Chamber of Commerce." Petitioner referred the dispute to
the PDRCI but respondents refused to submit to its jurisdiction.
It bears stressing that such arbitration agreement is the law between the parties. They are,
therefore, expected to abide by it in good faith. The Court has previously held that arbitration is
one of the alternative methods of dispute resolution that is now rightfully vaunted as "the wave
of the future" in international relations, and is recognized worldwide. To brush aside a
contractual agreement calling for arbitration in case of disagreement between the parties would
therefore be a step backward.
35. MCC INDUSTRIAL SALES CORPORATION v. SSANGYONG CORPORATION

G.R. No. 170633 October 17, 2007
FACTS: On April 13, 2000, Ssangyong Manila Office sent, by fax, a letter addressed to Gregory
Chan, MCC Manager [also the President 10 of Sanyo Seiki Stainless Steel Corporation], to
confirm MCC's and Sanyo Seiki's order of 220 metric tons (MT) of hot rolled stainless steel
under a preferential rate of US$1,860.00 per MT. Chan, on behalf of the corporations, assented
and affixed his signature on the conforme portion of the letter. On April 17, 2000, Ssangyong
forwarded to MCC Pro Forma Invoice No. ST2-POSTSO401 containing the terms and
conditions of the transaction. MCC sent back by fax to Ssangyong the invoice bearing the
conformity signature of Chan. As stated in the pro forma invoice, payment for the ordered steel
57
products would be made through an irrevocable letter of credit (L/C) at sight in favor of
Ssangyong. Following their usual practice, delivery of the goods was to be made after the L/C
had been opened.
Two days later, on June 22, 2000, Ssangyong Manila Office informed Sanyo Seiki, thru
Chan, that it was able to secure a US$30/MT price adjustment on the contracted price of
US$1,860.00/MT for the 200MT stainless steel, and that the goods were to be shipped in two
tranches, the first 100MT on that day and the second 100MT not later than June 27, 2000.
Ssangyong reiterated its request for the facilitation of the L/C's opening. Ssangyong later,
through its Manila Office, sent a letter, on June 26, 2000, to the Treasury Group of Sanyo Seiki
that it was looking forward to receiving the L/C details and a cable copy thereof that day.
Ssangyong sent a separate letter of the same date to Sanyo Seiki requesting for the opening of the
L/C covering payment of the first 100MT not later than June 28, 2000. Similar letters were
transmitted by Ssangyong Manila Office on June 27, 2000. 24 On June 28, 2000, Ssangyong sent
another facsimile letter to MCC stating that its principal in Korea was already in a difficult
situation because of the failure of Sanyo Seiki and MCC to open the L/C's. The following day,
June 29, 2000, Ssangyong received, by fax, a letter signed by Chan, 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, and MCC was waiting for an additional credit line. On the
same date, Ssangyong replied, requesting that it be informed of the date when the L/C would be
opened, preferably at the earliest possible time, since its Steel Team in Korea was having
problems and Ssangyong was incurring warehousing costs. To maintain their good business
relationship and to support MCC in its financial predicament, Ssangyong offered to negotiate
with its steel manufacturer, POSCO, another US$20/MT discount on the price of the stainless
steel ordered. This was intimated in Ssangyong's June 30, 2000 letter to MCC. On July 6, 2000,
another follow-up letter for the opening of the L/C was sent by Ssangyong to MCC.
However, despite Ssangyong's letters, MCC failed to open a letter of credit. 30
Consequently, on August 15, 2000, Ssangyong, through counsel, wrote Sanyo Seiki that if the
L/C's were not opened, Ssangyong would be compelled to cancel the contract and hold MCC
liable for damages for breach thereof amounting to US$96,132.18, inclusive of warehouse
expenses, related interests and charges. Later, Pro Forma Invoice Nos. ST2-POSTS080-1 and
ST2-POSTS080-2 dated August 16, 2000 were issued by Ssangyong and sent via fax to MCC.
The invoices slightly varied the terms of the earlier pro forma invoices (ST2-POSTSO401, ST2-
POSTS0401-1 and ST2-POSTS0401-2), in that the quantity was now officially 100MT per
invoice and the price was reduced to US$1,700.00 per MT. As can be gleaned from the
photocopies of the said August 16, 2000 invoices submitted to the court, they both bear the
conformity signature of MCC Manager Chan.
MCC then faxed to Ssangyong a letter dated August 22, 2000 signed by Chan, requesting
for a price adjustment of the order stated in Pro Forma Invoice No. ST2-POSTS080-1,
considering that the prevailing price of steel at that time was US$1,500.00/MT, and that MCC
lost a lot of money due to a recent strike. Ssangyong rejected the request, and, on August 23,
2000, sent a demand letter to Chan for the opening of the second and last L/C of US$170,000.00
with a warning that, if the said L/C was not opened by MCC on August 26, 2000, Ssangyong
would be constrained to cancel the contract and hold MCC liable for US$64,066.99 (representing
cost difference, warehousing expenses, interests and charges as of August 15, 2000) and other
damages for breach. Chan failed to reply. Exasperated, Ssangyong through counsel wrote a letter
to MCC, on September 11, 2000, canceling the sales contract under ST2-POSTS0401-1/ST2-
58
POSTS0401-2, and demanding payment of US$97,317.37 representing losses, warehousing

expenses, interests and charges.
Ssangyong then filed, on November 16, 2001, a civil action for damages due to breach of
contract against defendants MCC, Sanyo Seiki and Gregory Chan before the Regional Trial
Court of Makati City. In its complaint, 39 Ssangyong alleged that defendants breached their
contract when they refused to open the L/C in the amount of US$170,000.00 for the remaining
100MT of steel under Pro Forma Invoice Nos. ST2-POSTS0401- 1 and ST2-POSTS0401-2.
After Ssangyong rested its case, defendants filed a Demurrer to Evidence alleging that
Ssangyong failed to present the original copies of the pro forma invoices on which the civil
action was based. In an Order dated April 24, 2003, the court denied the demurrer, ruling that the
documentary evidence presented had already been admitted in the December 16, 2002 Order and
their admissibility finds support in Republic Act (R.A.) No. 8792, otherwise known as the
Electronic Commerce Act of 2000. Considering that both testimonial and documentary evidence
tended to substantiate the material allegations in the complaint, Ssangyong's evidence sufficed
for purposes of a prima facie case.
In its Comment, Ssangyong sought the dismissal of the petition, raising the following
arguments: that the CA decision dated 15 August 2005 is already final and executory, because
MCC's motion for reconsideration was filed beyond the reglementary period of 15 days from
receipt of a copy thereof, and that, in any case, it was a pro forma motion; that MCC breached
the contract for the purchase of the steel products when it failed to open the required letter of
credit; 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 under R.A.
No. 8792; and that MCC is liable for actual damages and attorney's fees because of its breach,
thus, compelling Ssangyong to litigate. Petitioner contends that the photocopies of the pro forma
invoices 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.A. No. 8792, because the
law merely admits as the best evidence the original fax transmittal. On the other hand,
respondent posits that, from a reading of the law and the Rules on Electronic Evidence, the
original facsimile transmittal of the pro forma invoice is admissible in evidence since it is an
electronic document and, therefore, the best evidence under the law and the Rules. Respondent
further claims that the photocopies of these fax transmittals (specifically ST2-POSTS0401-1 and
ST2-POSTS0401-2) are admissible under the Rules on Evidence because the respondent
sufficiently explained the non-production of the original fax transmittals.
ISSUE: Whether the print-out and/or photocopies of facsimile transmissions are electronic
evidence and admissible as such?
HELD: YES.
The copies of the said pro-forma invoices submitted by the appellee are admissible in
evidence, although they are mere electronic facsimile printouts of appellant's orders. Such
facsimile printouts are considered Electronic Documents under the New Rules on Electronic
Evidence, which came into effect on August 1, 2001. The ruling of the Appellate Court is
incorrect. R.A. No. 8792, 64 otherwise known as the Electronic Commerce Act of 2000,
considers an electronic data message or an electronic document as the functional equivalent of a
written document for evidentiary purposes. The Rules on Electronic Evidence 66 regards an
electronic document as admissible in evidence if it complies with the rules on admissibility
59
prescribed by the Rules of Court and related laws, and is authenticated in the manner prescribed
by the said Rules. An electronic document is also the equivalent of an original document under
the Best Evidence Rule, if it is a printout or output readable by sight or other means, shown to
reflect the data accurately. Thus, to be admissible in evidence as an electronic data message or to
be considered as the functional equivalent of an original document under the Best Evidence
Rule, the writing must foremost be an "electronic data message" or an "electronic document."
The phrase "but not limited to, electronic data interchange (EDI), electronic mail,
telegram, telex or telecopy" in the IRR's definition of "electronic data message" is copied from
the Model Law on Electronic Commerce adopted by the United Nations Commission on
International Trade Law (UNCITRAL), from which majority of the provisions of R.A. No. 8792
were taken. While Congress deleted this phrase in the Electronic Commerce Act of 2000, the
drafters of the IRR reinstated it. The deletion by Congress of the said phrase is significant and
pivotal, as discussed hereunder. The definitions under the Electronic Commerce Act of 2000, its
IRR and the Rules on Electronic Evidence, at first glance, convey the impression that facsimile
transmissions are electronic data messages or electronic documents because they are sent by
electronic means. The expanded definition of an "electronic data message" under the IRR,
consistent with the UNCITRAL Model Law, further supports this theory considering that the
enumeration ". . . [is] not limited to, electronic data interchange (EDI), electronic mail, telegram,
telex or telecopy." And to telecopy is to send a document from one place to another via a fax
machine.
There is no question then that when Congress formulated the term "electronic data
message," it intended the same meaning as the term "electronic record" in the Canada law. This
construction of the term "electronic data message," which excludes telexes or faxes, except
computer-generated faxes, is in harmony with the Electronic Commerce Law's focus on
"paperless" communications and the "functional equivalent approach" 82 that it espouses. In fact,
the deliberations of the Legislature are replete with discussions on paperless and digital
transactions. Facsimile transmissions are not, in this sense, "paperless," but verily are paper-
based.
Clearly then, the IRR went beyond the parameters of the law when it adopted verbatim
the UNCITRAL Model Law's definition of "data message," without considering the intention of
Congress when the latter deleted the phrase "but not limited to, electronic data interchange
(EDI), electronic mail, telegram, telex or telecopy." The inclusion of this phrase in the IRR
offends a basic tenet in the exercise of the rule-making power of administrative agencies. After
all, the power of administrative officials to promulgate rules in the implementation of a statute is
necessarily limited to what is found in the legislative enactment itself. The implementing rules
and regulations of a law cannot extend the law or expand its coverage, as the power to amend or
repeal a statute is vested in the Legislature. Thus, if a discrepancy occurs between the basic law
and an implementing rule or regulation, it is the former that prevails, because the law cannot be
broadened by a mere administrative issuance — an administrative agency certainly cannot
amend an act of Congress. Had the Legislature really wanted ordinary fax transmissions to be
covered by the mantle of the Electronic Commerce Act of 2000, it could have easily lifted
without a bit of tatter the entire wordings of the UNCITRAL Model Law.
60
36. KOREA TECHNOLOGIES CO., LTD., v. HON. ALBERTO A. LERMA, PACIFIC

GENERAL STEEL MANUFACTURING CORP.
G.R. No. 143581 January 7, 2008
FACTS: On March 5, 1997, PGSMC and KOGIES executed a Contract whereby KOGIES
would set up an LPG Cylinder Manufacturing Plant in Carmona, Cavite. On April 7, 1997, the
parties executed, in Korea, an Amendment for Contract No. KLP-970301 dated March 5, 1997
amending the terms of payment. The contract and its amendment stipulated that KOGIES will
ship the machinery and facilities necessary for manufacturing LPG cylinders for which PGSMC
would pay USD 1,224,000. KOGIES would install and initiate the operation of the plant for
which PGSMC bound itself to pay USD 306,000 upon the plant's production of the 11-kg. LPG
cylinder samples. On October 14, 1997, PGSMC entered into a Contract of Lease with Worth
Properties, Inc. (Worth) for use of Worth's 5,079-square meter property with a 4,032-square
meter warehouse building to house the LPG manufacturing plant. The monthly rental was
PhP322,560 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,
delivered, and installed in the Carmona plant. PGSMC paid KOGIES USD 1,224,000.
However, gleaned from the Certificate executed by the parties on January 22, 1998, after
the installation of the plant, the initial operation could not be conducted as PGSMC encountered
financial difficulties affecting the supply of materials, thus forcing the parties to agree that
KOGIES would be deemed to have completely complied with the terms and conditions of the
March 5, 1997 contract. When KOGIES deposited the checks, these were dishonored for the
reason "PAYMENT STOPPED." Thus, on May 8, 1998, KOGIES sent a demand letter to
PGSMC threatening criminal action for violation of Batas Pambansa Blg. 22 in case of
nonpayment. On the same date, the wife of PGSMC's President faxed a letter dated May 7, 1998
to KOGIES' President who was then staying at a Makati City hotel. She complained that not only
did KOGIES deliver a different brand of hydraulic press from that agreed upon but it had not
delivered several equipment parts already paid for. 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. On June 1, 1998, PGSMC informed KOGIES that PGSMC
was canceling their Contract 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 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 KOGIES. On June 15, 1998, KOGIES wrote PGSMC informing the latter that
PGSMC could not unilaterally rescind their contract nor dismantle and transfer the machineries
and equipment on mere imagined violations by KOGIES. It also insisted that their disputes
should be settled by arbitration as agreed upon in Article 15, the arbitration clause of their
contract.
On June 23, 1998, PGSMC again wrote KOGIES reiterating the contents of its June 1,
1998 letter threatening that the machineries, equipment, and facilities installed in the plant would
be dismantled and transferred on July 4, 1998. Thus, on July 1, 1998, KOGIES instituted an
Application for Arbitration before the Korean Commercial Arbitration Board (KCAB) in Seoul,
Korea pursuant to Art. 15 of the Contract as amended. On July 3, 1998, KOGIES filed a
Complaint for Specific Performance, docketed as Civil Case No. 98- 117 against PGSMC before
61
the Muntinlupa City Regional Trial Court (RTC). The RTC granted a temporary restraining order
(TRO) on July 4, 1998, which was subsequently extended until July 22, 1998. In its complaint,
KOGIES alleged that PGSMC had initially admitted that the checks that were stopped were not
funded but later on claimed that it stopped payment of the checks for the reason that "their value
was not received" as the former allegedly breached their contract by "altering the quantity and
lowering the quality of the machinery and equipment" installed in the plant and failed to make
the plant operational 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
amended, by unilaterally rescinding the contract without resorting to arbitration. KOGIES also
asked that PGSMC be restrained from dismantling and transferring the machinery and equipment
installed in the plant which the latter threatened to do on July 4, 1998.
On July 9, 1998, PGSMC filed an opposition to the TRO arguing that KOGIES was not
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. On July 17,
1998, PGSMC filed its Answer with Compulsory Counterclaim asserting that it had the full right
to dismantle and transfer the machineries and equipment because it had paid for them in full as
stipulated in the contract; that KOGIES was not entitled to the PhP9,000,000 covered by the
checks for failing to completely install and make the plant operational; and that KOGIES was
liable for damages amounting to PhP4,500,000 for altering the quantity and lowering the quality
of the machineries and equipment. Moreover, PGSMC averred that it has already paid
PhP2,257,920 in rent (covering January to July 1998) to Worth and it was not willing to further
shoulder the cost of renting the premises of the plant considering that the LPG cylinder
manufacturing plant never became operational.
On July 29, 1998, KOGIES filed its Reply to Answer and Answer to Counterclaim.
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 undertakings under
the contract and had already produced certified samples of LPG cylinders. It averred that
whatever was unfinished was PGSMC's 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, insisted
that the arbitration clause was without question valid. After KOGIES filed a Supplemental
Memorandum with Motion to Dismiss answering PGSMC's memorandum of July 22, 1998 and
seeking dismissal of PGSMC's counterclaims, KOGIES, on August 4, 1998, filed its Motion for
Reconsideration 14 of the July 23, 1998 Order denying its application for an injunctive writ
claiming that the contract was not merely for machinery and facilities worth USD 1,224,000 but
was for the sale of an "LPG manufacturing plant" consisting of "supply of all the machinery and
facilities" and "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 very plant itself to the great prejudice of KOGIES as the still unpaid owner/seller
of the plant. Moreover, KOGIES points out that the arbitration clause under Art. 15 of the
Contract as 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.
ISSUE: Whether or not Article 15 of the Contract is valid?
HELD: YES.
62
Established in this jurisdiction is the rule that the law of the place where the contract is
made governs. Lex loci contractus. The contract in this case was perfected here in the
Philippines. Therefore, our laws ought to govern. Nonetheless, Art. 2044 of the Civil Code
sanctions the validity of mutually agreed arbitral clause or the finality and binding effect of an
arbitral award. The arbitration clause which stipulates that the arbitration must be done in Seoul,
Korea in accordance with the Commercial Arbitration Rules of the KCAB, and that the arbitral
award is final and binding, is not contrary to public policy. Having said that the instant
arbitration clause is not against public policy, the Court comes to the question on what governs
an arbitration clause specifying that in case of any dispute arising from the contract, an arbitral
panel will be constituted in a foreign country and the arbitration rules of the foreign country
would govern and its award shall be final and binding. 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 when confirmed, are enforced as final and executory decisions of our courts
of law. Thus, 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, like the National Labor
Relations Commission and Mines Adjudication Board, whose final judgments are stipulated to
be final and binding, but not immediately executory in the sense that they may still be judicially
reviewed, upon the instance of any party. Therefore, the final foreign arbitral awards are
similarly situated in that they need first to be confirmed by the RTC.
37. HEUNGHWA INDUSTRY CO., LTD. v. DJ BUILDERS CORPORATION

G.R. No. 169095 December 8, 2008
FACTS: Petitioner entered into a subcontract agreement with respondent to do earthwork, sub
base course and box culvert of said project in the amount of Php113,228,918.00. The agreement
contained an arbitration clause. The agreed price was not fully paid; hence, on January 19, 2000,
respondent filed before the Regional Trial Court (RTC) of Puerto Princesa, Branch 51, a
Complaint for "Breach of Contract, Collection of Sum of Money with Application for
Preliminary Injunction, Preliminary Attachment, and Prayer for Temporary Restraining Order
and Damages" docketed as Civil Case No. 3421. Petitioner's Amended Answer averred that it
was not obliged to pay respondent because the latter caused the stoppage of work. Petitioner
further claimed that it failed to collect from the DPWH due to respondent's poor equipment
performance. The Amended Answer also contained a counterclaim for Php24,293,878.60.
On September 27, 2000, parties through their respective counsels, filed a "Joint Motion to
Submit Specific Issues To The Construction Industry Arbitration Commission" (CIAC). On the
same day, the RTC issued an Order granting the motion. On October 9, 2000, petitioner, through
its counsel, filed an "Urgent Manifestation" praying that additional matters be referred to CIAC
for arbitration. On October 24, 2000, respondent filed with CIAC a Request for Adjudication
accompanied by a Complaint. Petitioner, in turn filed a "Reply/Manifestation" informing the
CIAC that it was abandoning the submission to CIAC and pursuing the case before the RTC. In
respondent's Comment on petitioner's Manifestation, it prayed for CIAC to declare petitioner in
default.
CIAC then issued an Order 12 dated November 27, 2000 ordering respondent to move for the
dismissal of Civil Case No. 3421 pending before the RTC of Palawan and directing petitioner to
63
file anew its answer. The said Order also denied respondent's motion to declare petitioner in
default.
Respondent filed a Motion for Partial Reconsideration of the November 27, 2000 Order while
petitioner moved to suspend the proceeding before the CIAC until the RTC had dismissed Civil
Case No. 3421. On January 8, 2000, CIAC issued an Order 13 setting aside its Order of
November 27, 2000 by directing the dismissal of Civil Case No. 3421 only insofar as the five
issues referred to it were concerned. It also directed respondent to file a request for adjudication.
In compliance, respondent filed anew a "Revised Complaint" which increased the amount of the
claim from Php23,391,654.22 to Php65,393,773.42. On February 22, 2001, petitioner, through
its new counsel, filed with the RTC a motion to withdraw the Order dated September 27, 2000
which referred the case to the CIAC, claiming it never authorized the referral. Respondent
opposed the motion contending that petitioner was already estopped from asking for the recall of
the Order. Petitioner filed in the CIAC its opposition to the second motion to declare it in default,
with a motion to dismiss informing the CIAC that it was abandoning the submission of the case
to it and asserting that the RTC had original and exclusive jurisdiction over Civil Case No. 3421,
including the five issues referred to the CIAC. In other words, petitioner is questioning the
jurisdiction of the CIAC; while respondent is questioning the jurisdiction of the RTC over the
case.
ISSUE: Whether or not the denial by the CIAC of the motion to dismiss constitute a patent grave
abuse of discretion?
HELD: NO.
Records show that the CIAC acted within its jurisdiction and it did not commit patent
grave abuse of discretion when it issued the assailed Order denying petitioner's motion to
dismiss. Based on law and jurisprudence, the CIAC has jurisdiction over the present dispute. In
the case at bar, the RTC was indecisive of its authority and capacity to hear the case. Respondent
first sought redress from the RTC for its claim against petitioner. Thereafter, upon motion by
both counsels for petitioner and respondent, the RTC allowed the referral of five specific issues
to the CIAC. However, the RTC later recalled the case from the CIAC because of the alleged
lack of authority of the
counsel for petitioner to submit the case for arbitration. The RTC recalled the case even if it
already admitted its lack of expertise to deal with the intricacies of the construction business.
Based on the foregoing, there are two acts which may vest the CIAC with jurisdiction
over a construction dispute. One is the presence of an arbitration clause in a construction
contract, and the other is the agreement by the parties to submit the dispute to the CIAC. The
first act is applicable to the case at bar. The bare fact that the parties incorporated an arbitration
clause in their contract is sufficient to vest the CIAC with jurisdiction over any construction
controversy or claim between the parties. The rule is explicit that the CIAC has jurisdiction
notwithstanding any reference made to another arbitral body. It is well-settled that jurisdiction is
conferred by law and cannot be waived by agreement or acts of the parties. Thus, the contention
of petitioner that it never authorized its lawyer to submit the case for arbitration must likewise
fail. Petitioner argues that notwithstanding the presence of an arbitration clause, there must be a
subsequent consent by the parties to submit the case for arbitration. To stress, the CIAC was
already vested with jurisdiction the moment both parties agreed to incorporate an arbitration
clause in the sub-contract agreement. Thus, a subsequent consent by the parties would be
64
superfluous and unnecessary. The foregoing notwithstanding, CIAC has jurisdiction over the
construction dispute because of the mere presence of the arbitration clause in the subcontract
agreement. Thus, the CIAC did not commit any patent grave abuse of discretion, nor did it act
without jurisdiction when it issued the assailed Order denying petitioner's motion to dismiss.
Accordingly, there is no compelling reason for this Court to deviate from the rule that a denial of
a motion to dismiss, absent a showing of lack of jurisdiction or grave abuse of discretion
amounting to lack of or excess jurisdiction, being an interlocutory order, is not the proper subject
of a petition for certiorari.
38. SUMMA KUMAGAI, INC. - KUMAGAI, GUMI CO., LTD. JOINT VENTURE v.
ROMAGO, INCORPORATED
G.R. No. 177210 April 7, 2009
FACTS: SK-KG engaged the services of respondent Romago, Incorporated (Romago), under a
Sub-Contract Agreement, for electrical works needed in the construction of The New Medical
City Superstructure Project, the original date of completion of which was set on 18 September
2003. As the implementation of the contract progressed, SK-KG issued change orders through
Project Management Instructions (PMI), Contractor's Instructions and oral instructions. Romago
complied with the specified changes, although they were allegedly outside the scope of the Sub-
Contract Agreement. From the early part of the project, SK-KG incurred delays in its payment to
Romago. SK-KG also incurred delays in the delivery of equipment to Romago, prompting the
latter to do crash programs. The changes in the specified contracted works led to an extension of
101 days. These complications resulted in additional expenses on the part of Romago. Also
according to Romago, it encountered so much difficulty resulting from an alleged extraction of
arbitrary back charges and illegal deductions on the part of SK-KG. Romago eventually
completed the contracted works. SK-KG though refused to pay its obligations to Romago, and
did not issue a certificate of completion for the works it subcontracted to Romago.
After efforts to reach an amicable settlement between SK-KG and Romago failed,
Romago filed a complaint with the CIAC on 18 August 2004. The case was docketed as CIAC
Case No. 28-2004. On 20 September 2004, SK-KG filed its Answer with Counterclaim. Romago
did not file a Reply. After the issues were joined, an Arbitration Panel was constituted by the
CIAC to hear the case. During the hearings, Romago tried to present evidence to controvert the
counterclaims of SK-KG. However, the Arbitration Panel did not allow Romago to do so on the
ground that the failure of Romago to file a Reply to the Answer was deemed an admission of the
counterclaims of SK-KG. Romago filed a Motion to Submit Additional Evidence on 21 April
2005, but was denied by the Officer-in-Charge of the CIAC. SK-KG insists that there was no
violation of due process on the part of the CIAC in granting its counterclaims against Romago,
arguing that due process in administrative hearings require only that the parties be given an
opportunity to be heard. SK-KG then proceeds to enumerate the opportunities granted to
Romago in presenting its evidence, from the filing of the Complaint to the termination of the
proceedings before the CIAC.
65
ISSUE: Whether or not the due process rights of Romago were violated by CIAC that would
warrant the reversal by the Court of Appeals of the monetary awards of CIAC rendered in favor
of SK-KG?
HELD: YES.
The CIAC is completely mistaken in denying the attempt of Romago to present evidence
against the counterclaims of the SK-KG on the ground that the failure of Romago to file a Reply
to the Answer of SK-KG was deemed an admission of the counterclaims in said Answer. There
is no basis for such a conclusion.It is true that the Rules of Procedure Governing Construction
Arbitration (CIAC Rules) does not mention any suppletory application of the Rules of Court to
CIAC proceedings. However, rules of procedure of courts are stricter than those of quasi-judicial
bodies. Administrative tribunals exercising quasi-judicial powers are unfettered by the rigidity of
certain procedural requirements, subject to the observance of fundamental and essential
requirements of due process in justiciable cases presented before them. In administrative
proceedings, technical rules of procedure and evidence are not strictly applied and administrative
due process cannot be fully equated with due process in its strict judicial sense. Hence, it is
completely unreasonable for an administrative body such as CIAC to be even more severe than
the courts when it comes to requiring the filing of a reply. It does well for the CIAC Arbitrators
to remember that the CIAC Rules explicitly direct them to use every and all reasonable means to
ascertain the facts in each case speedily and objectively without regard to technicalities of law
and procedure, all in the interest of substantive due process.
Accordingly, the Court of Appeals was correct in finding the judgment of the CIAC with
respect to the counterclaims of SK-KG to have been rendered in disregard of the right of
Romago to due process. Considering the amounts involved in the case at bar, the CIAC should
have been more circumspect in its admission or rejection of evidence presented before it. CIAC
should not have taken the evidence of SK- KG hook, line and sinker, and should have used all
means to ascertain the facts in the interest of substantial justice. This Court has held that where
the denial of the fundamental right of due process is apparent, a decision rendered in disregard of
that right is void for lack of jurisdiction. In the case at bar, the Court is constrained to affirm the
Decision of the Court of Appeals annulling the awards for the counterclaims of SK-KG granted
by the CIAC for having been clearly rendered in disregard of the right of Romago to due process.
39. HUTAMA-RSEA JOINT OPERATIONS, INC., VS. CITRA METRO MANILA

TOLLWAYS CORP.
G.R. No. 180640 April 24, 2009
FACTS: On 25 September 1996, petitioner and respondent entered into an Engineering

Procurement Construction Contract (EPCC) whereby petitioner would undertake the
construction of Stage 1 of the Skyway Project, which stretched from the junction of Buendia
Avenue, Makati City, up to Bicutan Interchange, Taguig City. As consideration for petitioner's
undertaking, respondent obliged itself under the EPCC to pay the former a total amount of
US$369,510,304.00. During the construction of the Skyway Project, petitioner wrote respondent
on several occasions requesting payment of the former's interim billings, pursuant to the
66
provisions of the EPCC. Respondent only partially paid the said interim billings, thus, prompting
petitioner to demand that respondent pay the outstanding balance thereon, but respondent still
failed to do so. After informing respondent that the construction of the Skyway Project was
already complete, petitioner reiterated its demand that respondent pay the outstanding balance on
the interim billings, as well as the "Early Completion Bonus" agreed upon in the EPCC.
Respondent refused to comply with petitioner's demands.
On 24 May 2004, petitioner, through counsel, sent a letter to respondent demanding
payment of the following: (1) the outstanding balance on the interim billings; (2) the amount of
petitioner's final billing; (3) early completion bonus; and (4) interest charges on the delayed
payment. Thereafter, petitioner and respondent, through their respective officers and
representatives, held several meetings to discuss the possibility of amicably settling the dispute.
Despite several meetings and continuous negotiations, lasting for a period of almost one year,
petitioner and respondent failed to reach an amicable settlement. Petitioner finally filed with the
Construction Industry Arbitration Commission (CIAC) a Request for Arbitration, seeking to
enforce its money claims against respondent. Petitioner's Request was docketed as CIAC Case
No. 17-2005. In its Answer ad cautelam with Motion to Dismiss, respondent averred that the
CIAC had no jurisdiction over CIAC Case No. 17-2005. Respondent argued that the filing by
petitioner of said case was premature because a condition precedent, i.e., prior referral by the
parties of their dispute to the Dispute Adjudication Board (DAB), required by Clause 20.4 of the
EPCC, had not been satisfied or complied with. Respondent asked the CIAC to dismiss
petitioner's Request for Arbitration in CIAC Case No. 17-2005 and to direct the parties to
comply first with Clause 20.4 of the EPCC. After submission by the parties of the necessary
pleadings on the matter of jurisdiction, the CIAC issued on 30 August 2005, an Order in CIAC
Case No. 17-2005, favoring petitioner. The CIAC ruled that it had jurisdiction over CIAC Case
No. 17-2005, and that the determination of whether petitioner had complied with Clause 20.4 of
the EPCC was a factual issue that may be resolved during the trial. It then ordered respondent to
file an Answer to petitioner's Request for Arbitration.
ISSUE: Whether or not CIAC has jurisdiction over CIAC Case No. 17-2005?
HELD: YES.
Based on the foregoing provisions, the CIAC shall have jurisdiction over a dispute
involving a construction contract if said contract contains an arbitration clause (notwithstanding
any reference by the same contract to another arbitration institution or arbitral body); or, even in
the absence of such a clause in the construction contract, the parties still agree to submit their
dispute to arbitration. It is undisputed that in the case at bar, the EPCC contains an arbitration
clause in which the petitioner and respondent explicitly agree to submit to arbitration any dispute
between them arising from or connected with the EPCC. It is true that Clause 20.4 of the EPCC
states that a dispute between petitioner and respondent as regards the EPCC shall be initially
referred to the DAB for decision, and only when the parties are dissatisfied with the decision of
the DAB should arbitration commence. This does not mean, however, that the CIAC is barred
from assuming jurisdiction over the dispute if such clause was not complied with. Under Section
1, Article III of the CIAC Rules, an arbitration clause in a construction contract shall be deemed
as an agreement to submit an existing or future controversy to CIAC jurisdiction,
"notwithstanding the reference to a different arbitration institution or arbitral body in such
contract . . . ." Elementary is the rule that when laws or rules are clear, it is incumbent on the
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court to apply them. When the law (or rule) is unambiguous and unequivocal, application, not
interpretation thereof, is imperative.
Hence, the bare fact that the parties herein incorporated an arbitration clause in the EPCC
is sufficient to vest the CIAC with jurisdiction over any construction controversy or claim
between the parties. The arbitration clause in the construction contract ipso facto vested the
CIAC with jurisdiction. This rule applies, regardless of whether the parties specifically choose
another forum or make reference to another arbitral body. Since the jurisdiction of CIAC is
conferred by law, it cannot be subjected to any condition; nor can it be waived or diminished by
the stipulation, act or omission of the parties, as long as the parties agreed to submit their
construction contract dispute to arbitration, or if there is an arbitration clause in the construction
contract. The parties will not be precluded from electing to submit their dispute to CIAC,
because this right has been vested in each party by law.
40. ROMAGO, INC v. SIEMENS BUILDING TECHNOLOGIES, INC.

G.R. No. 181969 October 2, 2009
FACTS: On June 11, 1999, petitioner ROMAGO entered into a Consortium Agreement with
respondent Siemens Building Technologies, Inc. (SBTI). Under the agreement, ROMAGO
undertook to jointly bid with SBTI for the Mechanical and Electrical Requirements of the Insular
Life Corporate Center (the project) to be constructed at the Corporate City in Alabang. SBTI
would provide and supply the equipment requirements and components of the project, while
ROMAGO would supply and perform all the technical service requirements of the project.
However, Insular Life Assurance Company, Ltd. (Insular Life), the project owner, was not keen
on dealing with a consortium of companies. Ultimately, only ROMAGO bidded and was
awarded the Sub- contract for the Building Services-Electrical Package of the project. On
December 3, 1999, ROMAGO entered into an Equipment Supply Sub-Contract Agreement
(ESSA) with SBTI. For the contract price of P100,000,000.00, SBTI undertook to deliver the
needed electrical equipment for the project. SBTI made deliveries, but ROMAGO failed to pay
in full. As of March 2001, ROMAGO's unpaid billings amounted to P6,807,400.92. SBTI
demanded payment, but the demand just fell on deaf ears, prompting SBTI to withhold further
deliveries of equipment to the jobsite. Consequently, ROMAGO took over all the contractual
activities of SBTI. Later, however, SBTI resumed its deliveries under the ESSA. As of July 25,
2001, it had already delivered 99.81% of all the necessary equipment. ROMAGO, however,
refused to pay for the deliveries which, by then, already amounted to P16,937,612.68, unless
SBTI compensates ROMAGO for the total expenses it allegedly incurred in taking over SBTI's
contractual obligations. Demands to pay were made but were not heeded.
Hence, on June 4, 2003, SBTI filed a Request for Arbitration with the Philippine Dispute
Resolution Center, Inc. (PDRCI), docketed as PDRCI Case No. 20-2003/SSP. On July 16, 2003,
ROMAGO, through its Vice-President for Operations, Ramon Lorenzo R. Arel, Sr., signed the
Agreement to Submit Dispute to Arbitration. In its Answer filed on May 4, 2004, ROMAGO
admitted that the agreed contract price was P67,734,457.27, but averred that it made substantial
payments. It further alleged that it had claims against SBTI, which should be deducted from the
former's liability. Specifically, ROMAGO claimed the cost of installation of transformer and
temporary generator sets amounting to P184,208.15 and P5,040,408.44, respectively. It added
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that it paid damages amounting to P3,627,226.37 to Insular Life and to some of its tenants when
the generator sets supplied by SBTI malfunctioned on May 1, 2001. ROMAGO further claimed
payments for the miscellaneous items amounting to P106,694.49, and for liquidated damages of
P3,493,223.72 for SBTI's delay in the delivery of the equipment. According to ROMAGO, these
items and the P300,000.00 cost of arbitration must be deducted from SBTI's claim, thus, leaving
a balance of only P2,127,471.97.
Meanwhile, on February 16, 2005, SBTI filed a petition for confirmation of the
Arbitrator's decision 14 with the Regional Trial Court (RTC) of Makati City, docketed as Special
Proclamation No. M- 6039. On March 30, 2005, ROMAGO, through its collaborating counsel,
Atty. Jose A.V. Evangelista, filed an answer, 16 praying for the denial of the petition and for the
setting aside of the Arbitrator's decision. ROMAGO argued that the Arbitrator displayed
partiality in hearing the arbitration case and in rendering the decision. It pointed out that the
Arbitrator considered SBTI's claims as gospel truth and granted the same in toto, but denied
ROMAGO's counterclaims despite the preponderance of evidence in support of its claim.
ROMAGO, thus, contended that SBTI could not ask for the confirmation and execution of the
Arbitrator's decision. In the main, ROMAGO seeks the nullification of all the proceedings before
the PDRCI, RTC and CA, and the setting aside of all the decisions and orders rendered against it
on grounds of lack of jurisdiction, grave abuse of discretion and reversible error. Specifically,
ROMAGO asserts that SBTI's claim arose from a construction contract. As such, it is a
construction dispute that falls within the jurisdiction of the CIAC. It, thus, insists on a new trial
before the CIAC.
ISSUE: Whether or not the controversy falls within the jurisdiction of the CIAC?
HELD: YES.
The Consortium Agreement between ROMAGO and SBTI contained an arbitration
clause, wherein the parties agreed to submit any dispute between them for arbitration under the
Philippine Chamber of Commerce and Industry (PCCI), such as the PDRCI. It is well settled that
the arbitral clause in the agreement is a commitment by the parties to submit to arbitration the
disputes covered therein. Because that clause is binding, they are expected to abide by it in good
faith. The CA, therefore, correctly rejected ROMAGO's assertion that the PDRCI had no
jurisdiction over the suit in the first instance. Records show that ROMAGO's Vice-President for
Operations, Ramon Lorenzo R. Arel, Sr., signed an Agreement to Submit Dispute to Arbitration
before the PDRCI. ROMAGO also concluded and signed the TOR and the Amended TOR
confirming its intention and agreement to submit the dispute to PDRCI. It actively participated in
the discussion on the merits of the case, even going to the extent of seeking affirmative relief.
The issue of jurisdiction may be raised by any of the parties or may be reckoned by the
court at any stage of the proceedings, even on appeal, and is not lost by waiver or by estoppel.
However, this case falls within the exception. To repeat, ROMAGO actively participated in the
proceedings before the PDRCI; even after an adverse judgment had been rendered by the
Arbitrator, it did not assail the PDRCI's jurisdiction over the dispute. In fact, during the
proceedings for the confirmation of the Arbitrator's award, ROMAGO's opposition zeroed in on
the alleged bias and partiality of the Arbitrator in rendering the decision. Even in its petition for
relief from judgment filed with the RTC, the PDRCI's alleged lack of jurisdiction was never
raised as an issue. It was only in its petition for certiorari with the CA, and after a writ of
execution had been issued, that ROMAGO raised the issue of lack of jurisdiction.
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41. ORMOC SUGARCANE PLANTERS’ ASSOCIATION, INC. (OSPA), Occidental

Leyte Farmers Multi-purpose Cooperative, Inc. (OLFAMCA), Unifarm Multi-purpose
Cooperative, Inc. (UNIFARM) and Ormoc North District Irrigation Multi-Purpose
Cooperative, Inc. (ONDIMCO) v. COURT OF APPEALS (Special Former Sixth Division),
Hideco Sugar Milling Co., Inc., and Ormoc Sugar Milling Co., Inc.
G.R. No. 156660 August 24, 2009
FACTS: Petitioners are associations organized by and whose members are individual sugar
planters (Planters). Petitioners assert that the relationship between respondents and the individual
sugar planters is governed by milling contracts. To buttress this claim, petitioners presented
representative samples of the milling contracts. On June 4, 1999, petitioners, without impleading
any of their individual members, filed twin petitions with the RTC for Arbitration under R.A.
876, Recovery of Equal Additional Benefits, Attorney's Fees and Damages, against HIDECO
and OSCO, docketed as Civil Case Nos. 3696-O and 3697-O, respectively. Petitioners claimed
that respondents violated the Milling Contract when they gave to independent planters who do
not belong to any association the 1% share, instead of reverting said share to the centrals.
Petitioners contended that respondents unduly accorded the independent Planters more benefits
and thus prayed that an order be issued directing the parties to commence with arbitration in
accordance with the terms of the milling contracts. They also demanded that respondents be
penalized by increasing their member Planters' 65% share provided in the milling contract by
1%, to 66%.
Respondents filed a motion to dismiss on ground of lack of cause of action because
petitioners had no milling contract with respondents. According to respondents, only some eighty
(80) Planters who were members of OSPA, one of the petitioners, executed milling contracts.
Respondents and these 80 Planters were the signatories of the milling contracts. Thus, it was the
individual Planters, and not petitioners, who had legal standing to invoke the arbitration clause in
the milling contracts. Petitioners, not being privy to the milling contracts, had no legal standing
whatsoever to demand or sue for arbitration.
ISSUE: Whether or not petitioners — sugar planters' associations — are clothed with legal
personality to file a suit against, or demand arbitration from, respondents in their own name
without impleading the individual Planters?
HELD: YES.
By their own allegation, petitioners are associations duly existing and organized under
Philippine law, i.e., they have juridical personalities separate and distinct from that of their
member Planters. It is likewise undisputed that the eighty (80) milling contracts that were
presented were signed only by the member Planter concerned and one of the Centrals as parties.
In other words, none of the petitioners were parties or signatories to the milling contracts. This
circumstance is fatal to petitioners' cause since they anchor their right to demand arbitration from
the respondent sugar centrals upon the arbitration clause found in the milling contracts. There is
no legal basis for petitioners' purported right to demand arbitration when they are not parties to
the milling contracts, especially when the language of the arbitration clause expressly grants the
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right to demand arbitration only to the parties to the contract. Simply put, petitioners do not have
any agreement to arbitrate with respondents. Only eighty (80) Planters who were all members of
OSPA were shown to have such an agreement to arbitrate, included as a stipulation in their
individual milling contracts. The other petitioners failed to prove that any of their members had
milling contracts with respondents, much less, that respondents had an agreement to arbitrate
with the petitioner associations themselves. Even assuming that all the petitioners were able to
present milling contracts in favor of their members, it is undeniable that under the arbitration
clause in these contracts it is the parties thereto who have the right to submit a controversy or
dispute to arbitration. The formal requirements of an agreement to arbitrate are therefore the
following: (a) it must be in writing and (b) it must be subscribed by the parties or their
representatives. To subscribe means to write underneath, as one's name; to sign at the end of a
document. That word may sometimes be construed to mean to give consent to or to attest.
Petitioners would argue that they could sue respondents, notwithstanding the fact that they were
not signatories in the milling contracts because they are the recognized representatives of the
Planters.
The main cause of action of petitioners in their request for arbitration with the RTC is the
alleged violation of the clause in the milling contracts involving the proportionate sharing in the
proceeds of the harvest. Petitioners essentially demand that respondents increase the share of the
member Planters to 66% to equalize their situation with those of the non-member Planters.
Verily, from petitioners' own allegations, the party who would be injured or benefited by a
decision in the arbitration proceedings will be the member Planters involved and not petitioners.
In sum, petitioners are not the real parties in interest in the present case. Assuming petitioners
had properly brought the case in the name of their members who had existing milling contracts
with respondents, petitioners must still prove that they were indeed authorized by the said
members to institute an action for and on the members' behalf. In the same manner that an officer
of the corporation cannot bring action in behalf of a corporation unless it is clothed with a board
resolution authorizing an officer to do so, an authorization from the individual member planter is
a sine qua non for the association or any of its officers to bring an action before the court of law.
The mere fact that petitioners were organized for the purpose of advancing the interests and
welfare of their members does not necessarily mean that petitioners have the authority to
represent their members in legal proceedings, including the present arbitration proceedings.
42. CARGILL PHILIPPINES INC. v. SAN FERNANDO REGALA TRADING INC.

G.R. No. 175404 January 31, 2011
FACTS: On June 18, 1998, respondent San Fernando Regala Trading, Inc. filed with the
Regional Trial Court (RTC) of Makati City a Complaint for Rescission of Contract with
Damages 3 against petitioner Cargill Philippines, Inc. In its Complaint, respondent alleged that it
was engaged in buying and selling of molasses and petitioner was one of its various sources from
whom it purchased molasses. Respondent alleged that it entered into a contract dated July 11,
1996 with petitioner, wherein it was agreed upon that respondent would purchase from petitioner
12,000 metric tons of Thailand origin cane blackstrap molasses at the price of US$192 per metric
ton; that the delivery of the molasses was to be made in January/February 1997 and payment was
to be made by means of an Irrevocable Letter of Credit payable at sight, to be opened by
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September 15, 1996; that sometime prior to September 15, 1996, the parties agreed that instead
of January/February 1997, the delivery would be made in April/May 1997 and that payment
would be by an Irrevocable Letter of Credit payable at sight, to be opened upon petitioner's
advice. Petitioner, as seller, failed to comply with its obligations under the contract, despite
demands from respondent, thus, the latter prayed for rescission of the contract and payment of
damages.
On July 24, 1998, petitioner filed a Motion to Dismiss/Suspend Proceedings and to Refer
Controversy to Voluntary Arbitration, wherein it argued that the alleged contract between the
parties, dated July 11, 1996, was never consummated because respondent never returned the
proposed agreement bearing its written acceptance or conformity nor did respondent open the
Irrevocable Letter of Credit at sight. Petitioner contended that the controversy between the
parties was whether or not the alleged contract between the parties was legally in existence and
the RTC was not the proper forum to ventilate such issue. Respondent filed an Opposition,
wherein it argued that the RTC has jurisdiction over the action for rescission of contract and
could not be changed by the subject arbitration clause. It cited cases wherein arbitration clauses,
such as the subject clause in the contract, had been struck down as void for being contrary to
public policy since it provided that the arbitration award shall be final and binding on both
parties, thus, ousting the courts of jurisdiction. In its Reply, petitioner maintained that the cited
decisions were already inapplicable, having been rendered prior to the effectivity of the New
Civil Code in 1950 and the Arbitration Law in 1953.
In its Rejoinder, respondent argued that the arbitration clause relied upon by petitioner is
invalid and unenforceable, considering that the requirements imposed by the provisions of the
Arbitration Law had not been complied with. By way of Sur-Rejoinder, petitioner contended that
respondent had even clarified that the issue boiled down to whether the arbitration clause
contained in the contract subject of the complaint is valid and enforceable; that the arbitration
clause did not violate any of the cited provisions of the Arbitration Law.
Petitioner alleges that the CA committed an error of law in ruling that arbitration cannot
proceed despite the fact that: (a) it had ruled, in its assailed decision, that the arbitration clause is
valid, enforceable and binding on the parties; (b) the case of Gonzales v. Climax Mining Ltd. 11
is inapplicable here; (c) parties are generally allowed, under the Rules of Court, to adopt several
defenses, alternatively or hypothetically, even if such defenses are inconsistent with each other;
and (d) the complaint filed by respondent with the trial court is premature. Petitioner alleges that
the CA adopted inconsistent positions when it found the arbitration clause between the parties as
valid and enforceable and yet in the same breath decreed that the arbitration cannot proceed
because petitioner assailed the existence of the entire agreement containing the arbitration clause.
Petitioner claims the inapplicability of the cited Gonzales case decided in 2005, because in the
present case, it was respondent who had filed the complaint for rescission and damages with the
RTC, which based its cause of action against petitioner on the alleged agreement dated July 11,
2006 between the parties; and that the same agreement contained the arbitration clause sought to
be enforced by petitioner in this case. Thus, whether petitioner assails the genuineness and due
execution of the agreement, the fact remains that the agreement sued upon provides for an
arbitration clause; that respondent cannot use the provisions favorable to him and completely
disregard those that are unfavorable, such as the arbitration clause. Petitioner contends that as the
defendant in the RTC, it presented two alternative defenses, i.e., the parties had not entered into
any agreement upon which respondent as plaintiff can sue upon; and, assuming that such
agreement existed, there was an arbitration clause that should be enforced, thus, the dispute must
72
first be submitted to arbitration before an action can be instituted in court. Petitioner argues that
under Section 1 (j) of Rule 16 of the Rules of Court, included as a ground to dismiss a complaint
is when a condition precedent for filing the complaint has not been complied with; and that
submission to arbitration when such has been agreed upon is one such condition precedent.
Petitioner submits that the proceedings in the RTC must be dismissed, or at least suspended, and
the parties be ordered to proceed with arbitration.
In its Comment, respondent argues that certiorari under Rule 65 is not the remedy against
an order denying a Motion to Dismiss/Suspend Proceedings and To Refer Controversy to
Voluntary Arbitration. It claims that the Arbitration Law which petitioner invoked as basis for its
Motion prescribed, under its Section 29, a remedy, i.e., appeal by a petition for review on
certiorari under Rule 45. Respondent contends that the Gonzales case, which was decided in
2007, is inapplicable in this case, especially as to the doctrine of separability enunciated therein.
Respondent argues that even if the existence of the contract and the arbitration clause is
conceded, the decisions of the RTC and the CA declining referral of the dispute between the
parties to arbitration would still be correct. Respondent contends that Section 8 of the Rules of
Court, which allowed a defendant to adopt in the same action several defenses, alternatively or
hypothetically, even if such defenses are inconsistent with each other refers to allegations in the
pleadings, such as complaint, counterclaim, cross-claim, third-party complaint, answer, but not
to a motion to dismiss. Finally, respondent claims that petitioner's argument is premised on the
existence of a contract with respondent containing a provision for arbitration. However, its
reliance on the contract, which it repudiates, is inappropriate.
In its Reply, petitioner insists that respondent filed an action for rescission and damages
on the basis of the contract, thus, respondent admitted the existence of all the provisions
contained thereunder, including the arbitration clause; that if respondent relies on said contract
for its cause of action against petitioner, it must also consider itself bound by the rest of the terms
and conditions contained thereunder notwithstanding that respondent may find some provisions
to be adverse to its position; that respondent's citation of the Gonzales case, decided in 2005, to
show that the validity of the contract cannot be the subject of the arbitration proceeding and that
it is the RTC which has the jurisdiction to resolve the situation between the parties herein, is not
correct since in the resolution of the Gonzales' motion for reconsideration in 2007, it had been
ruled that an arbitration agreement is effective notwithstanding the fact that one of the parties
thereto repudiated the main contract which contained it.
ISSUE: Whether or not the CA erred in finding that this case cannot be brought under the
arbitration law
HELD: YES.
Applying the Gonzales ruling, an arbitration agreement which forms part of the main
contract shall not be regarded as invalid or non-existent just because the main contract is invalid
or did not come into existence, since the arbitration agreement shall be treated as a separate
agreement independent of the main contract. To reiterate a contrary ruling would suggest that a
party's mere repudiation of the main contract is sufficient to avoid arbitration and that is exactly
the situation that the separability doctrine sought to avoid. Thus, the Court find that even the
party who has repudiated the main contract is not prevented from enforcing its arbitration clause.
Moreover, it is worthy to note that respondent filed a complaint for rescission of contract and
damages with the RTC. In so doing, respondent alleged that a contract exists between respondent
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and petitioner. It is that contract which provides for an arbitration clause which states that "any
dispute which the Buyer and Seller may not be able to settle by mutual agreement shall be settled
before the City of New York by the American Arbitration Association. The arbitration agreement
clearly expressed the parties' intention that any dispute between them as buyer and seller should
be referred to arbitration. It is for the arbitrator and not the courts to decide whether a contract
between the parties exists or is valid.
43. NATIONAL HOUSING AUTHORITY v. FIRST CONSTRUCTORS CORPORATION

G.R. No. 176535 September 7, 2011
FACTS: The Freedom Valley Resettlement (FVR) Project was a proposed resettlement site for
informal settlers of Metro Manila. Conceived in May 1996, it was the subject of a Memorandum
of Agreement entered into by and among the Housing & Urban Development Coordinating
Council (HUDCC), the Department of Environment & Natural Resources (DENR), the Metro
Manila Development Authority (MMDA) and the Marilaque Commission. FUCC won the public
bidding for the works contract of the FVR Project conducted by NHA on 26 February 1998 with
a bid price of P568,595,780.00. On 10 March 1998, NHA and FUCC entered into a "Contract for
Land Development of Freedom Valley Resettlement Project, Phase I, Sitio Boso-Boso, Bgy. San
Jose, Antipolo, Rizal" (the "Contract") that covered the terms of the agreement between the
parties for the works contract of Phase I of the FVR Project. FUCC commenced actual contract
works on 16 March 1998. Counting 365 days, the original contract expiration date was 15 March
1999. Unfortunately, the FVR Project suffered various work suspensions and delays, so much so
that the project was not completed on 15 March 1999. There were also changes in the scope of
work that necessitated the issuance of variation orders, specifically Variation Order No. 1, and
Variation Order No. 2, which delayed the completion of the project further. Because of the
delays engendered by the suspension orders and the changes in the scope of the contract works,
NHA granted time extensions to FUCC, to wit: an additional 279 calendar days under Time
Extension No. 1; 27 another extension of 200 calendar days in conjunction with the issuance of
Variation Order No. 2; 28 and finally, 200 more calendar days under Resumption Order No. 2.
The FVR Project was never completed as envisioned and planned because NHA
abandoned the original concept of the Project. In a Resolution passed on 25 September 2001, 36
the Board of Directors of NHA reclassified the FVR Project from a resettlement site of informal
settlers into a mixed-market site and services type of project, and terminated the Contract. In a
letter dated 17 October 2001, 38 NHA formally advised FUCC of the termination of the
Contract. NHA terminated the Contract under the "Contractor Not at Fault" clause of the General
Conditions of the Contract. At the time the Contract was terminated, FUCC had various claims
pending with NHA in connection with
the FVR Project. It appears that over a period of almost five (5) years, FUCC pleaded and
negotiated with various NHA officials for the payment of these claims but its pleas fell on deaf
ears. This impelled FUCC to pursue its claims before the CIAC pursuant to Article XVII of the
Contract by filing a Complaint against NHA on 17 July 2003. The case was docketed as CIAC
Case No. 14-2003 entitled "First United Constructors Corporation vs. National Housing
Authority." NHA initially filed a Motion to Dismiss, claiming that FUCC had failed to exhaust
all administrative remedies, which was opposed by FUCC. In an Order dated 8 September 2003,
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the CIAC Arbitral Tribunal denied the motion and ordered NHA to file its answer to FUCC's
Complaint.
In its Answer, NHA raised the following defenses, viz.: FUCC had no right of action
since its recourse to arbitration was premature; there was no actual suspension of contract works
notwithstanding the suspension orders issued by NHA; the Contract was not unilaterally
terminated by NHA; FUCC's Progress Billing No. 6 should only be for the amount of
P6,496,926.29; FUCC's claim for Price Escalation for Progress Billings Nos. 1 to 5 came too late
in the day, and that the amount that should be paid is only P26,297,951.62 and payable only after
FUCC procured the required surety bond; and the claims for Payment for Cost of Materials,
Equipment and Facilities, Disengagement Cost, Cost of Idle Equipment and interests thereon, are
non-arbitrable issues. By way of counterclaim, NHA prayed that it be allowed to recover from
FUCC the amount of P38 Million, which represents the remaining balance or unliquidated
portion of the P85.2 Million that NHA had advanced to FUCC at the start of the FVR Project.
The issues having been joined, the CIAC Arbitral Tribunal called the parties to a Preliminary
Conference. The parties subsequently agreed upon a Terms of Reference and a Supplemental
Terms of Reference to guide the CIAC Arbitral Tribunal in the arbitration process and in the
resolution of the case. The parties also submitted to the CIAC Arbitral Tribunal their "Joint
Stipulations," which were incorporated in the Supplemental Terms of Reference as "Admitted
Facts."
ISSUE: Whether or not the claims are non-arbitrable at the time of the filing of the complaint?
HELD: NO.
After ruling that there was actual or physical suspension of contract works in the FVR
Project that left idle the large complement of hardware, machinery, tools and equipment
mobilized by FUCC, the CIAC Arbitral Tribunal then proceeded to derive the value of the award
for Idle Equipment. It cannot be gainsaid that the CIAC Arbitral Tribunal sifted through the
evidence presented by both parties before making the finding of fact that there was actual or
physical suspension of the contract works that rendered the huge complement of FUCC's
machineries and equipment idle and unproductive during the period 10 June 1998 up to 15
March 1999. Further, the CIAC Arbitral Tribunal painstakingly scrutinized the documents
submitted by FUCC to support its claim for Idle Equipment before arriving at the amount of
P131,948,674.56 as its award for Idle Equipment, which is less than FUCC's claim of
P142,780,800.00. Clearly, the factual findings of the CIAC are based on substantial evidence on
record, which are referred to in the CIAC Decision.
In Gammon Philippines, Inc. versus Metro Rail Transit (G.R. No. 144792, January 31,
2006), the Supreme Court held that there is no basis for the exclusion of claims for business
losses from the jurisdiction of CIAC. It explained: Relevantly, while the above-quoted provision
of the Rules of Procedure Governing Construction Arbitration lists as non-arbitrable issues
claims for opportunity/business losses and attorney’s fees, this provision was not carried over to
the Revised Rules of Procedure Governing Construction Arbitration which was approved on
November 19, 2005. Such omission is not without good reason. EO 1008 itself excludes from the
coverage of the law only those disputes arising from employer-employee relationships which are
covered by the Labor Code, conveying an intention to encompass a broad range of arbitrable
issues within the jurisdiction of CIAC.
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Moreover, as pointed out by respondent, the second paragraph of Sec. 2 allows claims for
unrealized expected profits and those arising from the rescission or termination of a contract.
Certainly, the claims sought to be satisfied in this case arose from the early termination of the
Contract which deprived respondent of the prospect to make profit out of the investment it had
already poured into the venture. It makes sense that respondent should be allowed to recover
what opportunity it may have lost, especially when it was not to blame for the aborted contract.
As the appellate court correctly points out, we have already categorically ruled in
Gammon Philippines, Inc. vs. Metro Rail Transit, that there is no basis for the exclusion of
claims for business losses from the jurisdiction of CIAC because Executive Order No. 1008 (EO
1008), the law that created the CIAC, "excludes from the coverage of the law only those disputes
arising from employer-employee relationships which are covered by the Labor Code, conveying
an intention to encompass a broad range of arbitrable issues within the jurisdiction of CIAC.”
The CIAC has jurisdiction over a broad range of issues and claims arising from
construction disputes, including but not limited to claims for unrealized profits and opportunity
or business losses. What EO 1008 emphatically excludes is only disputes arising from employer-
employee relationships.
44. CHINA NATIONAL MACHINERY & EQUIPMENT CORP. (GROUP) v. HON.

CESAR D. SANTAMARIA, in his official capacity as Presiding Judge of Branch 145,
Regional Trial Court of Makati City, Herminio Harry L. Roque, Jr., Joel R. Butuyan,
Roger R. Rayel, Romel R. Bagares, Christopher Francisco C. Bolastig, League of Urban
Poor for Action (LUPA), Kilusan ng Maralita sa Meycauayan (KMM-LUPA Chapter),
Danilo M. Calderon, Vicente C. Alban, Merlyn M. Vaal, Lolita S. Quinones, Ricardo D.
Lanozo, Jr., Conchita G. Gozo, Ma. Teresa D. Zepeda, Josepina A. Lanozo, and Sergio C.
Legaspi, Jr., Kalipunan ng Damayang Mahihirap (KADAMAY), Edy Clerigo, Rammil
Dingan, Nelson B. Terrado, Carmen Deunida, and Eduardo Legson
G.R. No. 185572 February 7, 2012
FACTS: On China National Machinery & Equipment Corp. (Group) (CNMEG), represented by
its chairperson, Ren Hongbin, entered into a Memorandum of Understanding with the North
Luzon Railways Corporation (Northrail), represented by its president, Jose L. Cortes, Jr. for the
conduct of a feasibility study on a possible railway line from Manila to San Fernando, La Union.
On 30 August 2003, the Export Import Bank of China (EXIM Bank) and the Department of
Finance of the Philippines (DOF) entered into a Memorandum of Understanding (Aug 30 MOU),
wherein China agreed to extend Preferential Buyer's Credit to the Philippine government to
finance the Northrail Project. The Chinese government designated EXIM Bank as the lender,
while the Philippine government named the DOF as the borrower. Under the Aug 30 MOU,
EXIM Bank agreed to extend an amount not exceeding USD400,000,000 in favor of the DOF,
payable in 20 years, with a 5-year grace period, and at the rate of 3% per annum.
On 1 October 2003, the Chinese Ambassador to the Philippines, Wang Chungui (Amb.
Wang), wrote a letter to DOF Secretary Jose Isidro Camacho (Sec. Camacho) informing him of
CNMEG's designation as the Prime Contractor for the Northrail Project. On 30 December 2003,
Northrail and CNMEG executed a Contract Agreement for the construction of Section I, Phase I
of the North Luzon Railway System from Caloocan to Malolos on a turnkey basis (the Contract
76
Agreement). The contract price for the Northrail Project was pegged at USD421,050,000. On 26
February 2004, the Philippine government and EXIM Bank entered into a counterpart financial
agreement — Buyer Credit Loan Agreement No. BLA 04055 (the Loan Agreement). In the Loan
Agreement, EXIM Bank agreed to extend Preferential Buyer's Credit in the amount of
USD400,000,000 in favor of the Philippine government in order to finance the construction of
Phase I of the Northrail Project.
On 13 February 2006, respondents filed a Complaint for Annulment of Contract and
Injunction with Urgent Motion for Summary Hearing to Determine the Existence of Facts and
Circumstances Justifying the Issuance of Writs of Preliminary Prohibitory and Mandatory
Injunction and/or TRO against CNMEG, the Office of the Executive Secretary, the DOF, the
Department of Budget and Management, the National Economic Development Authority and
Northrail. In the Complaint, respondents alleged that the Contract Agreement and the Loan
Agreement were void for being contrary to (a) the Constitution; (b) Republic Act No. 9184 (R.A.
No. 9184), otherwise known as the Government Procurement Reform Act; (c) Presidential
Decree No. 1445, otherwise known as the Government Auditing Code; and (d) Executive Order
No. 292, otherwise known as the Administrative Code. 12
ISSUE: Whether or not the Contract Agreement is an executive agreement, such that it cannot be
questioned by or before a local court?
HELD: NO.
Despite these differences, to be considered an executive agreement, the following three
requisites provided under the Vienna Convention must nevertheless concur: (a) the agreement
must be between states; (b) it must be written; and (c) it must governed by international law. The
first and the third requisites do not obtain in the case at bar.
CNMEG is neither a government nor a government agency. The Contract Agreement was
not concluded between the Philippines and China, but between Northrail and CNMEG. 51 By the
terms of the Contract Agreement, Northrail is a government-owned or - controlled corporation,
while CNMEG is a corporation duly organized and created under the laws of the People's
Republic of China. Thus, both Northrail and CNMEG entered into the Contract Agreement as
entities with personalities distinct and separate from the Philippine and Chinese governments,
respectively. Neither can it be said that CNMEG acted as agent of the Chinese government. As
previously discussed, the fact that Amb. Wang, in his letter dated 1 October 2003, described
CNMEG as a "state corporation" and declared its designation as the Primary Contractor in the
Northrail Project did not mean it was to perform sovereign functions on behalf of China. That
label was only descriptive of its nature as a state-owned corporation, and did not preclude it from
engaging in purely commercial or proprietary ventures.
The Contract Agreement is to be governed by Philippine law. Since the Contract
Agreement explicitly provides that Philippine law shall be applicable, the parties have effectively
conceded that their rights and obligations thereunder are not governed by international law. It is
therefore clear from the foregoing reasons that the Contract Agreement does not partake of the
nature of an executive agreement. It is merely an ordinary commercial contract that can be
questioned before the local courts.
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45. TUNA PROCESSING, INC. v. PHILIPPINE KINGFORD, INC.

G.R. No. 185582 February 29, 2012
FACTS: On 14 January 2003, Kanemitsu Yamaoka (hereinafter referred to as the "licensor"), co-
patentee of U.S. Patent No. 5,484,619, Philippine Letters Patent No. 31138, and Indonesian
Patent No. ID0003911 (collectively referred to as the "Yamaoka Patent"), and five (5) Philippine
tuna processors, namely, Angel Seafood Corporation, East Asia Fish Co., Inc., Mommy Gina
Tuna Resources, Santa Cruz Seafoods, Inc., and respondent Kingford (collectively referred to as
the "sponsors"/"licensees") entered into a Memorandum of Agreement (MOA). Due to a series of
events not mentioned in the petition, the licensees, including respondent Kingford, withdrew
from petitioner TPI and correspondingly reneged on their obligations. Petitioner submitted the
dispute for arbitration before the International Centre for Dispute Resolution in the State of
California, United States and won the case against respondent. To enforce the award, petitioner
TPI filed on 10 October 2007 a Petition for Confirmation, Recognition, and Enforcement of
Foreign Arbitral Award before the RTC of Makati City. At Branch 150, respondent Kingford
filed a Motion to Dismiss. After the court denied the motion for lack of merit, respondent sought
for the inhibition of Judge Alameda and moved for the reconsideration of the order denying the
motion. Judge Alameda inhibited himself notwithstanding "[t]he unfounded allegations and
unsubstantiated assertions in the motion." Judge Cedrick O. Ruiz of Branch 61, to which the case
was re-raffled, in turn, granted respondent's Motion for Reconsideration and dismissed the
petition on the ground that the petitioner lacked legal capacity to sue in the Philippines.
Petitioner TPI now seeks to nullify, in this instant Petition for Review on Certiorari under Rule
45, the order of the trial court dismissing its Petition for Confirmation, Recognition, and
Enforcement of Foreign Arbitral Award.
ISSUE: Whether or not a foreign corporation licensed to do business in the Philippines, but
which collects royalties from entities in the Philippines, can sue here to enforce a foreign arbitral
award?
HELD: YES.
Rule 13.1 of the Special Rules provides that "[a]ny party to a foreign arbitration may
petition the court to recognize and enforce a foreign arbitral award." The contents of such
petition are enumerated in Rule 13.5. 32 Capacity to sue is not included. Oppositely, in the Rule
on local arbitral awards or arbitrations in instances where "the place of arbitration is in the
Philippines," it is specifically required that a petition "to determine any question concerning the
existence, validity and enforceability of such arbitration agreement" available to the parties
before the commencement of arbitration and/or a petition for "judicial relief from the ruling of
the arbitral tribunal on a preliminary question upholding or declining its jurisdiction" after
arbitration has already commenced should state "[t]he facts showing that the persons named as
petitioner or respondent have legal capacity to sue or be sued." Clearly, on the matter of capacity
to sue, a foreign arbitral award should be respected not because it is favored over domestic laws
and procedures, but because Republic Act No. 9285 has certainly erased any conflict of law
question.
Finally, even assuming, only for the sake of argument, that the court a quo correctly
observed that the Model Law, not the New York Convention, governs the subject arbitral award,
petitioner may still seek recognition and enforcement of the award in Philippine court, since the
78
Model Law prescribes substantially identical exclusive grounds for refusing recognition or
enforcement. Premises considered, petitioner TPI, although not licensed to do business in the
Philippines, may seek recognition and enforcement of the foreign arbitral award in accordance
with the provisions of the Alternative Dispute Resolution Act of 2004.
46. METROPOLITAN CEBU WATER DISTRICT v. MACTAN ROCK INDUSTRIES,

INC. G.R. No. 172438 July 4, 2012
FACTS: On May 19, 1997, MCWD entered into a Water Supply Contract (the Contract) with
MRII wherein it was agreed that the latter would supply MCWD with potable water, in
accordance with the World Health Organization (WHO) standard or the Philippine national
standard, with a minimum guaranteed annual volume. MRII filed a Complaint 9 against MCWD
with the Construction Industry Arbitration Commission (CIAC), citing the arbitration clause
(Clause 18) of the Contract. In the said complaint, MRII sought the reformation of Clause 17 of
the Contract, or the Price Escalation/De-Escalation Clause, in order to include Capital Cost
Recovery in the price escalation formula, and to have such revised formula applied from 1996
when the bidding was conducted, instead of from the first day when MRII started selling water to
MCWD. It also sought the payment of the unpaid price escalation/adjustment, and the payment
of unpaid variation/extra work order and interest/cost of money up to December 31, 2003.
On May 7, 2002, MCWD filed its Answer dated April 27, 2004, which included a motion
to dismiss the complaint on the ground that the CIAC had no jurisdiction over the case, as the
Contract was not one for construction or infrastructure. The CIAC thereafter issued an order
denying MCWD's motion to dismiss, and calling the parties to a preliminary conference for the
review and signing of the Terms of Reference. MCWD, thus, filed a petition for certiorari under
Rule 65 with the CA, questioning the jurisdiction of the CIAC.
ISSUE: Whether or not the CIAC could proceed with the case even if the MCWD refused to
participate in the arbitration proceedings?
HELD: YES.
Though one party can refuse to participate in the arbitration proceedings, this cannot
prevent the CIAC from proceeding with the case and issuing an award in favor of one of the
parties. In such a case, all is not lost for the party who did not participate. Even after failing to
appear, a respondent is still given the opportunity, under the CIAC Rules, to have the
proceedings reopened and be allowed to present evidence, although with the qualification that
this is done before an award is issued. Thus, under the CIAC Rules, even without the
participation of one of the parties in the proceedings, the CIAC is still required to proceed with
the hearing of the construction dispute. This Court has held that the CIAC has jurisdiction over a
dispute arising from a construction contract even though only one of the parties requested for
arbitration.
In this case, there being a valid arbitration clause mutually stipulated by the parties, they
are both contractually bound to settle their dispute through arbitration before the CIAC. MCWD
refused to participate, but this should not affect the authority of the CIAC to conduct the
proceedings, and, thereafter, issue an arbitral award. The general rule is that where there is a
79
conflict between the fallo, or the dispositive part, and the body of the decision or order, the fallo
prevails on the theory that the fallo is the final order and becomes the subject of execution, while
the body of the decision merely contains the reasons or conclusions of the court ordering
nothing. However, where one can clearly and unquestionably conclude from the body of the
decision that there was a mistake in the dispositive portion, the body of the decision will prevail.
47. DEPARTMENT OF FOREIGN AFFAIRS AND BANGKO SENTRAL NG PILIPINAS

v. HON. FRANCO T. FALCON, IN HIS CAPACITY AS THE PRESIDING JUDGE OF
RTC BR. 71 OF PASIG CITY and BCA International Corporation
G.R. No. 176657 September 1, 2010
FACTS: On February 8, 2001, a Build-Operate-Transfer Agreement (BOT Agreement) between

the DFA and PPC was signed by DFA Acting Secretary Lauro L. Baja, Jr. and PPC President
Bonifacio Sumbilla. To place matters in the proper perspective, it should be pointed out that both
the DFA and BCA impute breach of the Amended BOT Agreement against each other.
According to the DFA, delays in the completion of the phases permeated the MRP/V Project due
to the submission of deficient documents as well as intervening issues regarding BCA/PPC's
supposed financial incapacity to fully implement the project. On the other hand, BCA contends
that the DFA failed to perform its reciprocal obligation to issue to BCA a Certificate of
Acceptance of Phase 1 within 14 working days of operation purportedly required by Section
14.04 of the Amended BOT Agreement. BCA bewailed that it took almost three years for the
DFA to issue the said Certificate allegedly because every appointee to the position of DFA
Secretary wanted to review the award of the project to BCA. BCA further alleged that it was the
DFA's refusal to approve the location of the DFA Central Facility which prevented BCA from
proceeding with Phase 2 of the MRP/V Project.
Thus, on February 22, 2005, DFA sent a letter 16 to BCA, through its project company
PPC, invoking BCA's financial warranty under Section 5.02 (A) of the Amended BOT
Agreement. The DFA required BCA to submit (a) proof of adequate capitalization (i.e., full or
substantial payment of stock subscriptions); (b) a bank guarantee indicating the availability of a
credit facility of P700 million; and (c) audited financial statements for the years 2001 to 2004. In
reply to DFA's letter, BCA, through PPC, informed the former of its position that its financial
capacity was already passed upon during the prequalification process and that the Amended BOT
Agreement did not call for any additional financial requirements for the implementation of the
MRP/V Project. Nonetheless, BCA submitted its financial statements for the years 2001 and
2002 and requested for additional time within which to comply with the other financial
requirements which the DFA insisted on. According to the DFA, BCA's financial warranty is a
continuing warranty which requires that it shall have the necessary capitalization to finance the
MRP/V Project in its entirety and not on a "per phase" basis as BCA contends. Only upon
sufficient proof of its financial capability to complete and implement the whole project will the
DFA's obligation to choose and approve the location of its Central Facility arise. The DFA
asserted that its approval of a Central Facility site was not ministerial and upon its review, BCA's
proposed site for the Central Facility was purportedly unacceptable in terms of security and
facilities. Moreover, the DFA allegedly received conflicting official letters and notices from
BCA and PPC regarding the true ownership and control of PPC. The DFA implied that the
80
disputes among the shareholders of PPC and between PPC and BCA appeared to be part of the
reason for the hampered implementation of the MRP/V Project. BCA, in turn, submitted various
letters and documents to prove its financial capability to complete the MRP/V Project. However,
the DFA claimed these documents were unsatisfactory or of dubious authenticity. Then on
August 1, 2005, BCA terminated its Assignment Agreement with PPC and notified the DFA that
it would directly implement the MRP/V Project. BCA further claims that the termination of the
Assignment Agreement was upon the instance, or with the conformity, of the DFA, a claim
which the DFA disputed.
On December 9, 2005, the DFA sent a Notice of Termination to BCA and PPC due to
their alleged failure to submit proof of financial capability to complete the entire MRP/V Project
in accordance with the financial warranty under Section 5.02 (A) of the Amended BOT
Agreement. On December 14, 2005, BCA sent a letter to the DFA demanding that it immediately
reconsider and revoke its previous notice of termination, otherwise, BCA would be compelled to
declare the DFA in default pursuant to the Amended BOT Agreement. When the DFA failed to
respond to said letter, BCA issued its own Notice of Default dated December 22, 2005 against
the DFA, stating that if the default is not remedied within 90 days, BCA will be constrained to
terminate the MRP/V Project and hold the DFA liable for damages. BCA's request for mutual
discussion under Section 19.01 of the Amended BOT Agreement was purportedly ignored by the
DFA and left the dispute unresolved through amicable means within 90 days. Consequently,
BCA filed its Request for Arbitration dated April 7, 2006 27 with the Philippine Dispute
Resolution Center, Inc. (PDRCI), pursuant to Section 19.02 of the Amended BOT Agreement.As
alleged in BCA's Request for Arbitration, PDRCI is a non-stock, non-profit organization
composed of independent arbitrators who operate under its own Administrative Guidelines and
Rules of Arbitration as well as under the United Nations Commission on the International Trade
Law (UNCITRAL) Model Law on International Commercial Arbitration and other applicable
laws and rules. According to BCA, PDRCI can act as an arbitration center from whose pool of
accredited arbitrators both the DFA and BCA may select their own nominee to become a
member of the arbitral tribunal which will render the arbitration award. BCA's Request for
Arbitration filed with the PDRCI.
ISSUE: Whether or not the Respondent Judge acted with grave abuse of discretion amounting to
lack or excess of jurisdiction in granting respondent BCA’s "interim relief" inasmuch as: (i)
respondent BCA has not established a clear right that can be protected by an injunction; and (ii)
respondent BCA has not shown that it will sustain grave and irreparable injury that must be
protected by an injunction. On the contrary, it is the filipino people, who petitioners protect, that
will sustain serious and severe injury by the injunction?
HELD: NO.
Under Section 28, Republic Act No. 9285 or the Alternative Dispute Resolution Act of
2004, the grant of an interim measure of protection by the proper court before the constitution of
an arbitral tribunal is allowed. Section 3 (h) of the same statute provides that the "Court" as
referred to in Article 6 of the Model Law shall mean a Regional Trial Court. Republic Act No.
9285 is a general law applicable to all matters and controversies to be resolved through
alternative dispute resolution methods. This law allows a Regional Trial Court to grant interim or
provisional relief, including preliminary injunction, to parties in an arbitration case prior to the
constitution of the arbitral tribunal. This general statute, however, must give way to a special law
81
governing national government projects, Republic Act No. 8975 which prohibits courts, except
the Supreme Court, from issuing TROs and writs of preliminary injunction in cases involving
national government projects. However, as discussed above, the prohibition in Republic Act No.
8975 is inoperative in this case, since petitioners failed to prove that the e-Passport Project is
national government project as defined therein. Thus, the trial court had jurisdiction to issue a
writ of preliminary injunction against the e-Passport Project.
48. THE MANILA INSURANCE COMPANY, INC. v. SPOUSES ROBERTO AND AIDA
AMURAO
G.R. No. 179628 January 16, 2013
FACTS: On March 7, 2000, respondent-spouses Roberto and Aida Amurao entered into a
Construction Contract Agreement (CCA) with Aegean Construction and Development
Corporation (Aegean) for the construction of a six- storey commercial building in Tomas Morato
corner E. Rodriguez Avenue, Quezon City. To guarantee its full and faithful compliance with the
terms and conditions of the CCA, Aegean posted performance bonds secured by petitioner The
Manila Insurance Company, Inc. (petitioner) and Intra Strata Assurance Corporation (Intra
Strata).
On November 15, 2001, due to the failure of Aegean to complete the project, respondent
spouses filed with the Regional Trial Court (RTC) of Quezon City, Branch 217, a Complaint,
docketed as Civil Case No. Q-01-45573, against petitioner and Intra Strata to collect on the
performance bonds they issued in the amounts of P2,760,000.00 and P4,440,000.00,
respectively. Intra Strata, for its part, filed an Answer and later, a Motion to Admit Third Party
Complaint, with attached Third Party Complaint against Aegean, Ronald D. Nicdao, and Arnel
A. Mariano. Petitioner, on the other hand, filed a Motion to Dismiss on the grounds that the
Complaint states no cause of action and that the filing of the Complaint is premature due to the
failure of respondent-spouses to implead the principal contractor, Aegean.
Petitioner contends that the CA erred in ruling that the parties may resort to arbitration
only when there is difference in the interpretation of the contract documents stated in Article I of
the CCA. Petitioner insists that under Section 4 of E.O. No. 1008, it is the CIAC that has original
and exclusive jurisdiction over construction disputes, such as the instant case. Petitioner likewise
imputes error on the part of the CA in treating petitioner as a solidary debtor instead of a solidary
guarantor. Petitioner argues that while a surety is bound solidarily with the obligor, this does not
make the surety a solidary co-debtor. A surety or guarantor is liable only if the debtor is himself
liable. In this case, since respondent-spouses and Aegean agreed to submit any dispute for
arbitration before the CIAC, it is imperative that the dispute between respondent-spouses and
Aegean must first be referred to arbitration in order to establish the liability of Aegean. In other
words, unless the liability of Aegean is determined, the filing of the instant case is premature.
Respondent-spouses, on the other hand, maintain that the CIAC has no jurisdiction over the case
because there is no ambiguity in the provisions of the CCA. Besides, petitioner is not a party to
the CCA. Hence, it cannot invoke Article XVII of the CCA, which provides for arbitration
proceedings.
ISSUE: Whether or not the CIAC has jurisdiction over the case?
82
HELD: YES.
Based on the foregoing, in order for the CIAC to acquire jurisdiction two requisites must
concur: "first, the dispute must be somehow connected to a construction contract; and second,
the parties must have agreed to submit the dispute to arbitration proceedings." The parties agreed
to submit to arbitration proceedings "[a]ny dispute arising in the course of the execution and
performance of [the CCA] by reason of difference in interpretation of the Contract Documents . .
. which [the parties] are unable to resolve amicably between themselves." The fact that petitioner
is not a party to the CCA cannot remove the dispute from the jurisdiction of the CIAC because
the issue of whether respondent-spouses are entitled to collect on the performance bond, as we
have said, is a dispute arising from or connected to the CCA.
49. J PLUS ASIA DEVELOPMENT CORPORATION v. UTILITY ASSURANCE

CORPORATION
G.R. No. 199650 June 26, 2013
FACTS: On December 24, 2007, petitioner J Plus Asia Development Corporation represented by
its Chairman, Joo Han Lee, and Martin E. Mabunay, doing business under the name and style of
Seven Shades of Blue Trading and Services, entered into a Construction Agreement whereby the
latter undertook to build the former's 72-room condominium/hotel (Condotel Building 25)
located at the Fairways & Bluewaters Golf & Resort in Boracay Island, Malay, Aklan. The
project, costing P42,000,000.00, was to be completed within one year or 365 days reckoned from
the first calendar day after signing of the Notice of Award and Notice to Proceed and receipt of
down payment (20% of contract price). The P8,400,000.00 down payment was fully paid on
January 14, 2008. Mabunay commenced work at the project site on January 7, 2008. Petitioner
paid up to the 7th monthly progress billing sent by Mabunay. As of September 16, 2008,
petitioner had paid the total amount of P15,979,472.03 inclusive of the 20% down payment.
However, as of said date, Mabunay had accomplished only 27.5% of the project.
On November 19, 2008, petitioner terminated the contract and sent demand letters to
Mabunay and respondent surety. As its demands went unheeded, petitioner filed a Request for
Arbitration before the Construction Industry Arbitration Commission (CIAC). Petitioner prayed
that Mabunay and respondent be ordered to pay the sums of P8,980,575.89 as liquidated
damages and P2,379,441.53 corresponding to the unrecouped down payment or overpayment
petitioner made to Mabunay. In his Answer, Mabunay claimed that the delay was caused by
retrofitting and other revision works ordered by Joo Han Lee. He asserted that he actually had
until April 30, 2009 to finish the project since the 365 days period of completion started only on
May 2, 2008 after clearing the retrofitted old structure. Hence, the termination of the contract by
petitioner was premature and the filing of the complaint against him was baseless, malicious and
in bad faith.
Respondent, on the other hand, filed a motion to dismiss on the ground that petitioner has
no cause of action and the complaint states no cause of action against it. The CIAC denied the
motion to dismiss. Respondent's motion for reconsideration was likewise denied. In its Answer
Ex Abundante Ad Cautelam With Compulsory Counterclaims and Cross- claims, respondent
argued that the performance bond merely guaranteed the 20% down payment and not the entire
83
obligation of Mabunay under the Construction Agreement. Since the value of the project's
accomplishment already exceeded the said amount, respondent's obligation under the
performance bond had been fully extinguished. As to the claim for alleged overpayment to
Mabunay, respondent contended that it should not be credited against the 20% down payment
which was already exhausted and such application by petitioner is tantamount to reviving an
obligation that had been legally extinguished by payment. Respondent also set up a cross-claim
against Mabunay who executed in its favor an Indemnity Agreement whereby Mabunay
undertook to indemnify respondent for whatever amounts it may be adjudged liable to pay
petitioner under the surety bond. Both petitioner and respondent submitted their respective
documentary and testimonial evidence. Mabunay failed to appear in the scheduled hearings and
to present his evidence despite due notice to his counsel of record.
ISSUE: Whether or not CA seriously erred in not holding that the Alternative Dispute Resolution
Act and the Special Rules on Alternative Dispute Resolution have stripped the CA jurisdiction to
review arbitral awards?
HELD: NO.
The CA was divested of jurisdiction to review the decisions or awards of the CIAC.
Petitioner erroneously relied on the provision in said law allowing any party to a domestic
arbitration to file in the Regional Trial Court (RTC) a petition either to confirm, correct or vacate
a domestic arbitral award. R.A. No. 9285 did not confer on regional trial courts jurisdiction to
review awards or decisions of the CIAC in construction disputes. However, the confirmation by
the RTC is not required. Executive Order (EO) No. 1008 vests upon the CIAC original and
exclusive jurisdiction over disputes arising from, or connected with, contracts entered into by
parties involved in construction in the Philippines, whether the dispute arises before or after the
completion of the contract, or after the abandonment or breach thereof. By express provision of
Section 19 thereof, the arbitral award of the CIAC is final and unappealable, except on questions
of law, which are appealable to the Supreme Court. With the amendments introduced by R.A.
No. 7902 and promulgation of the 1997 Rules of Civil Procedure, as amended, the CIAC was
included in the enumeration of quasi-judicial agencies whose decisions or awards may be
appealed to the CA in a petition for review under Rule 43. Such review of the CIAC award may
involve either questions of fact, of law, or of fact and law.
Petitioner misread the provisions of A.M. No. 07-11-08-SC (Special ADR Rules)
promulgated by this Court and which took effect on October 30, 2009. Since R.A. No. 9285
explicitly excluded CIAC awards from domestic arbitration awards that need to be confirmed to
be executory, said awards are therefore not covered by Rule 11 of the Special ADR Rules, as
they continue to be governed by EO No. 1008, as amended and the rules of procedure of the
CIAC. The CIAC Revised Rules of Procedure Governing Construction Arbitration provide for
the manner and mode of appeal from CIAC decisions or awards in Section 18 thereof.
50. KOPPEL, INC., v. MAKATI ROTARY CLUB, FOUNDATION, INC.

G.R. No. 198075 September 4, 2013
84
FACTS: In 1975, Fedders Koppel, Incorporated (FKI) bequeathed the subject land (exclusive of
the improvements thereon) in favor of herein respondent Makati Rotary Club Foundation,
Incorporated by way of a conditional donation. The respondent accepted the donation with all of
its conditions. On 26 May 1975, FKI and the respondent executed a Deed of Donation
evidencing their consensus. One of the conditions of the donation required the respondent to
lease the subject land back to FKI under terms specified in their Deed of Donation. With the
respondent's acceptance of the donation, a lease agreement between FKI and the respondent was,
therefore, effectively incorporated in the Deed of Donation. The Deed of Donation also
stipulated that the lease over the subject property is renewable for another period of twenty-five
(25) years "upon mutual agreement" of FKI and the respondent. 12 In which case, the amount of
rent shall be determined in accordance with item 2 (g) of the Deed of Donation. In October 1976,
FKI and the respondent executed an Amended Deed of Donation that reiterated the provisions of
the Deed of Donation, including those relating to the lease of the subject land. Verily, by virtue
of the lease agreement contained in the Deed of Donation and Amended Deed of Donation, FKI
was able to continue in its possession and use of the subject land.
Two (2) days before the lease incorporated in the Deed of Donation and Amended Deed
of Donation was set to expire, or on 23 May 2000, FKI and respondent executed another contract
of lease (2000 Lease Contract) 15 covering the subject land. In this 2000 Lease Contract, FKI
and respondent agreed on a new five-year lease to take effect on the 26th of May 2000, with
annual rents ranging from P4,000,000 for the first year up to P4,900,000 for the fifth year. The
2000 Lease Contract also contained an arbitration clause enforceable in the event the parties
come to disagreement about the "interpretation, application and execution" of the lease.
After the 2000 Lease Contract expired, FKI and respondent agreed to renew their lease
for another five (5) years. This new lease (2005 Lease Contract) 18 required FKI to pay a fixed
annual rent of P4,200,000. 19 In addition to paying the fixed rent, however, the 2005 Lease
Contract also obligated FKI to make a yearly "donation" of money to the respondent. Such
donations ranged from P3,000,000 for the first year up to P3,900,000 for the fifth year.
From 2005 to 2008, FKI faithfully paid the rentals and "donations" due it per the 2005
Lease Contract. But in June of 2008, FKI sold all its rights and properties relative to its business
in favor of herein petitioner Koppel, Incorporated. On 29 August 2008, FKI and petitioner
executed an Assignment and Assumption of Lease and Donation 25 — wherein FKI, with the
conformity of the respondent, formally assigned all of its interests and obligations under the
Amended Deed of Donation and the 2005 Lease Contract in favor of petitioner. The following
year, petitioner discontinued the payment of the rent and "donation" under the 2005 Lease
Contract.
According to petitioner, the Deed of Donation and Amended Deed of Donation actually
established not only one but two (2) lease agreements between FKI and respondent, i.e., one
lease for the first twenty- five (25) years or from 1975 to 2000, and another lease for the next
twenty-five (25) years thereafter or from 2000 to 2025. Both leases are material conditions of the
donation of the subject land. Petitioner points out that while a definite amount of rent for the
second twenty-five (25) year lease was not fixed in the Deed of Donation and Amended Deed of
Donation, both deeds nevertheless prescribed rules and limitations by which the same may be
determined. Such rules and limitations ought to be observed in any succeeding lease agreements
between petitioner and respondent for they are, in themselves, material conditions of the
donation of the subject land.
85
On 22 September 2009, petitioner sent a reply 34 to respondent expressing its

disagreement over the rental stipulations of the 2005 Lease Contract — calling them "severely
disproportionate," "unconscionable" and "in clear violation to the nominal rentals mandated by
the Amended Deed of Donation." In lieu of the amount demanded by the respondent, which
purportedly totaled to P8,394,000.00, exclusive of interests, petitioner offered to pay only
P80,502.79, in accordance with the rental provisions of the Deed of Donation and Amended
Deed of Donation. Respondent refused this offer. On 25 September 2009, respondent sent
another letter (Second Demand Letter) to petitioner, reiterating its demand for the payment of the
obligations already due under the2005 Lease Contract. The Second Demand Letter also
contained a demand for petitioner to "immediately vacate the leased premises" should it fail to
pay such obligations within seven (7) days from its receipt of the letter. The respondent warned
of taking "legal steps" in the event that petitioner failed to comply with any of the said demands.
Petitioner received the Second Demand Letter on 26 September 2009.
Petitioner refused to comply with the demands of the respondent. Instead, on 30
September 2009, petitioner filed with the Regional Trial Court (RTC) of Parañaque City a
complaint for the rescission or cancellation of the Deed of Donation and Amended Deed of
Donation against the respondent. On 5 October 2009, respondent filed an unlawful detainer case
against the petitioner before the Metropolitan Trial Court (MeTC) of Parañaque City.
ISSUE: Whether or not the present dispute is arbitrable under the arbitration clause of the 2005
Lease Agreement Contract?
HELD: YES.
First. As highlighted in the previous discussion, the disagreement between the petitioner
and respondent falls within the all-encompassing terms of the arbitration clause of the 2005
Lease Contract. While it may be conceded that in the arbitration of such disagreement, the
validity of the 2005 Lease Contract, or at least, of such contract's rental stipulations would have
to be determined, the same would not render such disagreement non-arbitrable. Second.
Petitioner may still invoke the arbitration clause of the 2005 Lease Contract notwithstanding the
fact that it assails the validity of such contract. This is due to the doctrine of separability. Under
the doctrine of separability, an arbitration agreement is considered as independent of the main
contract. Being a separate contract in itself, the arbitration agreement may thus be invoked
regardless of the possible nullity or invalidity of the main contract. Third. The operation of the
arbitration clause in this case is not at all defeated by the failure of the petitioner to file a formal
"request" or application therefor with the MeTC. The filing of a "request" pursuant to Section 24
of R.A. No. 9285 is not the sole means by which an arbitration clause may be validly invoked in
a pending suit. Fourth. The fact that the petitioner and respondent already underwent through
JDR proceedings before the RTC, will not make the subsequent conduct of arbitration between
the parties unnecessary or circuitous. The JDR system is substantially different from arbitration
proceedings. The JDR framework is based on the processes of mediation, conciliation or early
neutral evaluation which entails the submission of a dispute before a "JDR judge" who shall
merely "facilitate settlement" between the parties in conflict or make a "non-binding evaluation
or assessment of the chances of each party's case." Thus in JDR, the JDR judge lacks the
authority to render a resolution of the dispute that is binding upon the parties in conflict. In
arbitration, on the other hand, the dispute is submitted to an arbitrator/s — a neutral third person
or a group of thereof — who shall have the authority to render a resolution binding upon the
86
parties. Clearly, the mere submission of a dispute to JDR proceedings would not necessarily
render the subsequent conduct of arbitration a mere surplusage. The failure of the parties in
conflict to reach an amicable settlement before the JDR may, in fact, be supplemented by their
resort to arbitration where a binding resolution to the dispute could finally be achieved. This
situation precisely finds application to the case at bench. Neither would the summary nature of
ejectment cases be a valid reason to disregard the enforcement of the arbitration clause of the
2005 Lease Contract. Notwithstanding the summary nature of ejectment cases, arbitration still
remains relevant as it aims not only to afford the parties an expeditious method of resolving their
dispute.
51. ABOITIZ TRANSPORT SYSTEM CORPORATION and Aboitiz Shipping

Corporation v. CARLOS A. GOTHONG LINES, INC. AND VICTOR S. CHIONGBIAN
G.R. No. 198226 July 18, 2014
FACTS: ASC, CAGLI, and William Lines, Inc. (WLI), principally owned by the Aboitiz,
Gothong, and Chiongbian families, respectively, entered into an Agreement dated January 8,
1996, which was signed by Jon Ramon Aboitiz for ASC, Benjamin D. Gothong (Gothong) for
CAGLI, and respondent Chiongbian for WLI. In the said Agreement, ASC and CAGLI agreed to
transfer their shipping assets to WLI in exchange for the latter's shares of capital stock. The
parties likewise agreed that WLI would run the merged shipping business and be renamed
"WG&A, Inc." Pertinently, Section 11.06 of the Agreement provides that all disputes arising out
of or in connection with the Agreement shall be finally settled by arbitration in accordance with
Republic Act No. (RA) 876, otherwise known as "The Arbitration Law," and that each of the
parties shall appoint one arbitrator, and the three arbitrators would then appoint the fourth
arbitrator who shall act as Chairman. Sometime in 2002, the Chiongbian and Gothong families
decided to sell their respective interests in WLI/WG&A to the Aboitiz family. This resulted in
the execution of a Share Purchase Agreement whereby Aboitiz Equity Ventures (AEV) agreed to
purchase and acquire the WLI/WG&A shares of the Chiongbian and Gothong families.
Thereafter, the corporate name of WLI/WG&A was changed to ATSC.
Six (6) years later, or in 2008, CAGLI sent a letter dated February 14, 2008 to ATSC
demanding that the latter pay the excess inventory it delivered to WLI amounting to
PhP158,399,700.00. CAGLI likewise demanded AEV and respondent Chiongbian that they refer
their dispute to arbitration. In response, AEV countered that the excess inventory had already
been returned to CAGLI and that it should not be included in the dispute, considering that it is an
entity separate and distinct from ATSC. Thus, CAGLI was constrained to file a complaint before
the RTC against Chiongbian, ATSC, ASC, and AEV to compel them to submit to arbitration. For
their part, ATSC and AEV moved for the dismissal of the case, contending that CAGLI did not
have a cause of action for arbitration since its claim had already been paid or otherwise,
extinguished, and, in any event, said action had already prescribed.
ISSUE: Whether or not respondent Chiongbian should be excluded from the arbitration
proceedings?
HELD: YES.
87
The three parties to the Agreement and necessarily to the arbitration agreement embodied
therein are: (a) ASC, (b) CAGLI, and (c) WLI/WG&A/ATSC. Contracts, like the subject
arbitration agreement, take effect only between the parties, their assigns and heirs. 42
Respondent Chiongbian, having merely physically signed the Agreement as a representative of
WLI, is not a party thereto and to the arbitration agreement contained therein. Neither is he an
assignee or an heir of any of the parties to the arbitration agreement. Hence, respondent
Chiongbian cannot be included in the arbitration proceedings.
52. GERARDO LANUZA, JR. AND ANTONIO O. OLBES v. BF CORPORATION,

SHANGRI-LA PROPERTIES, INC., ALFREDO C. RAMOS, RUFO B. COLAYCO,
MAXIMO G. LICAUCO III, AND BENJAMIN C. RAMOS
G.R. No. 174938 October 1, 2014
FACTS: In 1993, BF Corporation filed a collection complaint with the Regional Trial Court
against Shangri-La and the members of its board of directors: Alfredo C. Ramos, Rufo B.
Colayco, Antonio O. Olbes, Gerardo Lanuza, Jr., Maximo G. Licauco III, and Benjamin C.
Ramos. BF Corporation alleged in its complaint that on December 11, 1989 and May 30, 1991, it
entered into agreements with Shangri-La wherein it undertook to construct for Shangri-La a mall
and a multilevel parking structure along EDSA. Shangri-La had been consistent in paying BF
Corporation in accordance with its progress billing statements. However, by October 1991,
Shangri-La started defaulting in payment. BF Corporation alleged that Shangri-La induced BF
Corporation to continue with the construction of the buildings using its own funds and credit
despite Shangri-La's default. According to BF Corporation, Shangri-La misrepresented that it
had funds to pay for its obligations with BF Corporation, and the delay in payment was simply a
matter of delayed processing of BF Corporation's progress billing statements. BF Corporation
eventually completed the construction of the buildings. Shangri-La allegedly took possession of
the buildings while still owing BF Corporation an outstanding balance.
On August 3, 1993, Shangri-La, Alfredo C. Ramos, Rufo B. Colayco, Maximo G.
Licauco III, and Benjamin C. Ramos filed a motion to suspend the proceedings in view of BF
Corporation's failure to submit its dispute to arbitration, in accordance with the arbitration clause
provided in its contract. On August 19, 1993, BF Corporation opposed the motion to suspend
proceedings. On December 8, 1993, petitioners filed an answer to BF Corporation's complaint,
with compulsory counterclaim against BF Corporation and cross-claim against Shangri-La. They
alleged that they had resigned as members of Shangri-La's board of directors as of July 15, 1991.
Another issue arose after BF Corporation had initiated arbitration proceedings. BF
Corporation and Shangri-La failed to agree as to the law that should govern the arbitration
proceedings. On October 27, 1998, the trial court issued the order directing the parties to conduct
the proceedings in accordance with Republic Act No. 876. Shangri-La filed an omnibus motion
and BF Corporation an urgent motion for clarification, both seeking to clarify the term, "parties,"
and whether Shangri-La's directors should be included in the arbitration proceedings and served
with separate demands for arbitration. Petitioners filed their comment on Shangri-La's and BF
Corporation's motions, praying that they be excluded from the arbitration proceedings for being
non-parties to Shangri-La's and BF Corporation's agreement.
88
ISSUE: Whether or not petitioners should be made parties to the arbitration proceedings,
pursuant
to the arbitration clause provided in the contract between BF Corporation and Shangri-La?
HELD: YES.
Petitioners may be compelled to submit to the arbitration proceedings in accordance with
Shangri-La and BF Corporation's agreement, in order to determine if the distinction between
Shangri-La's personality and their personalities should be disregarded. This jurisdiction adopts a
policy in favor of arbitration. Arbitration allows the parties to avoid litigation and settle disputes
amicably and more expeditiously by themselves and through their choice of arbitrators. If there
is an interpretation that would render effective an arbitration clause for purposes of avoiding
litigation and expediting resolution of the dispute, that interpretation shall be adopted.
Petitioners' main argument arises from the separate personality given to juridical persons
vis-à-vis their directors, officers, stockholders, and agents. Since they did not sign the arbitration
agreement in any capacity, they cannot be forced to submit to the jurisdiction of the Arbitration
Tribunal in accordance with the arbitration agreement. Moreover, they had already resigned as
directors of Shangri-La at the time of the alleged default. Indeed, as petitioners point out, their
personalities as directors of Shangri-La are separate and distinct from Shangri-La. A corporation
is an artificial entity created by fiction of law. This means that while it is not a person, naturally,
the law gives it a distinct personality and treats it as such. A corporation, in the legal sense, is an
individual with a personality that is distinct and separate from other persons including its
stockholders, officers, directors, representatives, and other juridical entities.
89

Alternative Dispute Resolution: Case Digests

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Alternative Dispute Resolution: Case Digests

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San Beda College Alabang

Alternative Dispute Resolution:

Alternative Dispute Resolution

Alternative Learning Program

Atty. J-Vit B. Capellan

TALACTAC, Aira Rowena A.

Section / Class Schedule:

1. TOYOTA MOTOR PHILIPPINES CORPORATION v. COURT OF APPEALS, Hon.

Valley's application for preliminary prohibitory and mandatory injunction and

2. CHUNG FU INDUSTRIES (PHILIPPINES), INC., its Directors and Officers namely:

3. PUROMINES, INC. v. COURT OF APPEALS and Philipp Brothers Oceanic, Inc.

5. ASSOCIATED BANK v. Hon. COURT OF APPEALS, Hon. Marina L. Buzon, as

6. Dr. Lucas G. ADAMSON and Adamson Management Corporation v. Hon. COURT OF

7. CHINA CHANG JIANG ENERGY CORPORATION (PHILIPPINES) v. ROSAL

8. OIL AND NATURAL GAS COMMISSION v. COURT OF APPEALS AND PACIFIC

9. ASSET PRIVATIZATION TRUST v. COURT OF APPEALS, Jesus S. Cabarrus, Sr.,

approval of the Trial Court of this Compromise and Arbitration

10. NATIONAL STEEL CORPORATION VS. REGIONAL TRIAL COURT LANAO

11. NATIONAL IRRIGATION ADMINISTRATION (NIA) v. HONORABLE COURT OF

ISSUE: Whether or not CIAC has jurisdiction over the controversy?

13. A.D. GOTHONG MANUFACTURING CORPORATION EMPLOYEES UNION-ALU

FACTS: A. D. Gothong Manufacturing Corporation Employees Union-ALU ("Union") filed a

14. HOME BANKERS SAVINGS AND TRUST COMPANY v. COURT OF APPEALS

15. CALIFORNIA AND HAWAIIAN SUGAR COMPANY, PACIFIC GULF MARINE,

FACTS: Del Monte Corporation-USA (DMC-USA) appointed private respondent Montebueno

17. MAGELLAN CAPITAL MANAGEMENT CORPORATION AND MAGELLAN

FACTS: Magellan Capital Holdings Corporation [MCHC] appointed Magellan Capital

18. RUBEN N. BARRAMEDA, Elvis L. Espiritu, Merardo G. Enero, Jr., Marcelito B.

19. LM POWER ENGINEERING CORPORATION v. CAPITOL INDUSTRIAL

FACTS: Petitioner LM Power Engineering Corporation and Respondent Capitol Industrial

22. EUROPEAN RESOURCES AND TECHNOLOGIES, INC and Delfin J. Wenceslao. v.

against respondents Climax-Arimco Mining Corporation (Climax-Arimco), Climax, and APMI,

25. COCA-COLA BOTTLERS PHILIPPINES, INC., SALES FORCE UNION-PTGWO-

26. CAPITOL MEDICAL CENTER, INC. v. NATIONAL LABOR RELATIONS

G.R. No. 147080 April 26, 2005

27. GAMMON PHILIPPINES., INC. v. METRO RAIL TRANSIT DEVELOPMENT

ISSUE: Whether or not the CIAC’s jurisdiction is properly invoked?

28. TRANSFIELD PHILIPPINES, INC., v. LUZON HYDRO CORPORATION,

ISSUE: Whether or not the case is arbitrable?

31. FIESTA WORLD MALL CORPORATION v. LINBERG PHILIPPINES, INC.

32. JORGE GONZALES AND PANEL OF ARBITRATORS v. CLIMAX MINING LTD.,

33. ROSARIA LUPITAN PANG-ET v. CATHERINE MANACNES-DAO-AS, HEIR OF

34. FRABELLE FISHING CORPORATION v. THE PHILIPPINE AMERICAN LIFE

ISSUE: Whether or not the parties should initially resort to arbitration?

35. MCC INDUSTRIAL SALES CORPORATION v. SSANGYONG CORPORATION

POSTS0401-2, and demanding payment of US$97,317.37 representing losses, warehousing

36. KOREA TECHNOLOGIES CO., LTD., v. HON. ALBERTO A. LERMA, PACIFIC

ISSUE: Whether or not Article 15 of the Contract is valid?

37. HEUNGHWA INDUSTRY CO., LTD. v. DJ BUILDERS CORPORATION

39. HUTAMA-RSEA JOINT OPERATIONS, INC., VS. CITRA METRO MANILA

FACTS: On 25 September 1996, petitioner and respondent entered into an Engineering

40. ROMAGO, INC v. SIEMENS BUILDING TECHNOLOGIES, INC.

41. ORMOC SUGARCANE PLANTERS’ ASSOCIATION, INC. (OSPA), Occidental

42. CARGILL PHILIPPINES INC. v. SAN FERNANDO REGALA TRADING INC.

43. NATIONAL HOUSING AUTHORITY v. FIRST CONSTRUCTORS CORPORATION

44. CHINA NATIONAL MACHINERY & EQUIPMENT CORP. (GROUP) v. HON.

45. TUNA PROCESSING, INC. v. PHILIPPINE KINGFORD, INC.

46. METROPOLITAN CEBU WATER DISTRICT v. MACTAN ROCK INDUSTRIES,

47. DEPARTMENT OF FOREIGN AFFAIRS AND BANGKO SENTRAL NG PILIPINAS

FACTS: On February 8, 2001, a Build-Operate-Transfer Agreement (BOT Agreement) between

49. J PLUS ASIA DEVELOPMENT CORPORATION v. UTILITY ASSURANCE

50. KOPPEL, INC., v. MAKATI ROTARY CLUB, FOUNDATION, INC.

On 22 September 2009, petitioner sent a reply 34 to respondent expressing its