HEIRS OF AUGUSTO L. SALAS, JR. vs. LAPERAL REALTY CORPORATIONG.R. No.

135362December 13,
1999(320 SCRA 610)

FACTS:

Petitioner Salas Jr. and Respondent Laperal Realty Corporation entered into anagreement for the latter
to develop and provide complete construction services on formersland. Petitioner executed a special
power of attorney in favor of Respondent Corporation to exercise general control, supervision and
management of the sale of his land. On June 10,1989 Petitioner left his home for a business trip in
Nueva Ecija but never returned again.

Petitioner’s wife filed a petition for presumptive death of her husband after seven years of absence. The
trial court granted her petition. On the other hand, Respondent Corporation already subdivided the
property owned by Salas Jr. to different lot buyers. The heirs of Salas Jr. filed in the RTC of Lipa City a
Complaint for nullity of sale, reconveyance, cancellation of contract and damages against Laperal Realty
Corporation and lot buyers. Laperal Realty Corporation filed a motion to dismiss on the ground that the
heirs of Salas Jr. failed to submit their grievance to arbitration as stated int he agreement executed by
Salas Jr. and Laperal Realty Corporation. The lot buyers alsofiled a motion to dismiss based on the same
ground.

ISSUE:

(1) Whether or not the arbitration clause in the agreement between Salas Jr. andLaperal Realty binds
the heirs of the former.(2) Whether or not the trial court must dismiss the case or must hear the
casesimultaneously.

HELD:

(1) 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 Corporation are certainly bound by the agreement. The
buyers are not the assignees of Laperal under 1311 and such are not binding under the contract of
arbitration.
Home Bankers Savings and Trust Company v. CA (G.R.
No. 115412)
Facts:

Victor Tancuan issued Petitioner Home Bankers Savings and Trust Company a check
while Eugene Arriesgado issued Private Respondent Far East Bank and Trust
Company three checks; both checks totaling the amount of P25,250,000.00. 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, it was dishonored for being DAIF. Meanwhile, HBSTC sent Arriesgado’s 3
FEBTC checks through the Philippine Clearing House Corporation (PCHC) to FEBTC
but was returned for being DAIF. HBSTC receive the notice of dishonor but refused to
accept the checks and returned them to FEBTC through the PCHC for the reason
“Beyond Reglementary Period,” implying that HBSTC already treated the 3 checks as
cleared and allowed the proceeds thereof to be withdrawn. FEBTC demanded
reimbursement for the returned checks and inquired from HBSTC whether it had
permitted any withdrawal of funds against the unfunded checks. HBSTC, however
refused to make any reimbursement and to provide FEBTC with the needed
information. Thus, FEBTC submitted the dispute for arbitration before the PCHC
Arbitration Committee, under its Supplementary Rules on Regional Clearing to which
FEBTC and HBSTC are bound as participants in the regional clearing operations
administered by the PCHC. While the arbitration proceeding was still pending, FEBTC
filed an action for sum of money and damages with preliminary attachment against
HBSTC. HBSTC moved to dismiss on the ground that there is no cause of action and
because it seeks to enforce an arbitral award which as yet does not exist. The trial court
denied the motion to dismiss and the motion for reconsideration. Petitioner then filed a
petition for certiorari with respondent CA to which it had dismissed.

Issue:

Whether or not private respondent which commenced an arbitration proceeding under

the auspices of the PCHC may subsequently file a separate case in court over the same
subject matter despite the pendency of that arbitration, simply to obtain the provisional
remedy of attachment against the adverse party in the arbitration proceeding.

Ruling:

We find no merit in the petition. 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.

Simply put, participants in the regional clearing operations of the Philippine Clearing
House Corporation cannot bypass the arbitration process laid out by the body and seek
relief directly from the courts. In the case at bar, undeniably, private respondent has
initiated arbitration proceedings as required by the PCHC rules and regulations, and
pending arbitration has sought relief from the trial court for measures to safeguard
and/or conserve the subject of the dispute under arbitration, as sanctioned by section
14 of the Arbitration Law, and otherwise not shown to be contrary to the PCHC rules
and regulations.

At this point, we emphasize that arbitration, as an alternative method of dispute

resolution, is encouraged by this Court. Aside from unclogging judicial dockets, it also
hastens solutions especially of commercial disputes. The Court looks with favor upon
such amicable arrangement and will only interfere with great reluctance to anticipate or
nullify the action of the arbitrator. Wherefore, premises considered, the petition is
hereby dismissed and the decision of the court a quo is affirmed.
LM POWER vs. CAPITOL INDUSTRIAL

Facts:

This is a Petition for Review on Certiorari filed by the petitioner LM Power against Respondent Capitol
Industrial seeking to set aside the decision of CA.

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. Due to the
inability of the petitioner to procure materials, Capitol Industial took over some of the work contracted to the
former. After the completion of the contract, petitioner billed respondent in the amount of P6, 711,813.90 but
the respondent refused to pay.

Petitioner filed with the RTC of Makati a Complaint for the collection of the amount representing the alleged
balance due it under the subcontract. Respondent filed a Motion to Dismiss, alleging that the Complaint was
premature, due to the absence of prior recourse to arbitration.

RTC denied the Motion on the ground that the dispute did not involve the interpretation or the
implementation of the Agreement and was not covered by the arbitral clause and ruled in favor of the
petitioner.

Respondent appealed to the CA, the latter reversed the decision of the RTC and ordered the referral of the
case to arbitration.

Hence, this Petition.

ISSUE:

WON there is a need for the prior arbitration before filing of the complaint with the court.

HELD:

AFFIRMATIVE.

SC ruled that in the case at hand it involves technical discrepancies that are better left to an arbitral body that
has expertise in the subject matter. Moreover, the agreement between the parties contains arbitral clause that
“any dispute or conflict as regards to interpretation and implementation of this agreement which cannot be
settled between respondent and petitioner amicably shall be settled by means of arbitration”. 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.
With respect to the disputes on the take-over/termination and the expenses incurred by respondent in the
take-over, the SC ruled that the agreement provides specific provisions that any delay, expenses and any
other acts in violation to such agreement, the respondent can terminate and can set off the amount it incurred
in the completion of the contract.

SC tackled also that there’s no need for the prior request for arbitration by the parties with the Construction
Industry Arbitration Commission (CIAC) in order for it to acquire jurisdiction. Because pursuant to Section 1
of Article III of the new Rules of Procedure Governing Construction Arbitration , when a contract
contains a clause for the submission of a future controversy to arbitration, it is not necessary for the parties to
enter into a submission agreement before the claimant may invoke the jurisdiction of CIAC. Furthermore, 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.

Since a complaint with the RTC has been filed without prior recourse to arbitration, under RA 876
(Arbitration Law) the proper procedure is to request the stay or suspension of such action in order to settle
the dispute with the CIAC.
 G.R. No. 126212. March 2, 2000
SEA-LAND SERVICE, INC., petitioner, vs. COURT OF APPEALS, A.P. MOLLER/MAERSK LINE and MAERSK-TABACALERA
SHIPPING AGENCY (FILIPINAS), INC., respondents.

FACTS: Petitioner Sea-Land Services, Inc. and private respondent A.P. Moller/Maersk Line (hereinafter referred to as "AMML"),
both carriers of cargo in containerships as well as common carriers, entered into a contract entitled, "Co-operation in the Pacific"
(hereinafter referred to as the "Agreement"), a vessel sharing agreement whereby they mutually agreed to purchase, share and
exchange needed space for cargo in their respective containerships. Under the Agreement, they could be, depending on the
occasion, either a principal carrier (with a negotiable bill of lading or other contract of carriage with respect to cargo) or a
containership operator (owner, operator or charterer of containership on which the cargo is carried).

During the lifetime of the said Agreement, Florex International, Inc. (hereinafter referred to as "Florex") delivered to private
respondent AMML cargo of various foodstuffs, with Oakland, California as port of discharge and San Francisco as place of delivery.
Pursuant to the Agreement, respondent AMML loaded the subject cargo on MS Sealand Pacer, a vessel owned by petitioner. Under
this arrangement, therefore, respondent AMML was the principal carrier while petitioner was the containership operator. The
consignee refused to pay for the cargo, alleging that delivery thereof was delayed.

Thus, Florex filed a complaint against respondent Maersk-Tabacalera Shipping Agency (Filipinas), Inc. for reimbursement of the
value of the cargo and other charges. Respondent AMML filed its Answer alleging that even on the assumption that Florex was
entitled to reimbursement; it was petitioner who should be liable. Accordingly, respondent AMML filed a Third Party Complaint
against petitioner averring that whatever damages sustained by Florex were caused by petitioner, which actually received and
transported Florexs cargo on its vessels and unloaded them.

Petitioner filed a Motion to Dismiss the Third Party Complaint on the ground of failure to state a cause of action and lack of
jurisdiction. Petitioner also prayed either for dismissal or suspension of the Third Party Complaint on the ground that there exists an
arbitration agreement between it and respondent AMML. The lower court issued an Order denying petitioners Motion to Dismiss.
Petitioners Motion for Reconsideration was likewise denied so they subsequently filed a petition for certiorari with the Court of
Appeals. Meanwhile, petitioner also filed its Answer to the Third Party Complaint in the trial court. Respondent CA rendered the
assailed Decision dismissing the petition for certiorari. With the denial of its Motion for Reconsideration, petitioner filed the instant
petition for review.

ISSUES:
(1) Whether CA erred in holding that arbitration is a condition precedent to suit where such an agreement to arbitrate exists.
(2) Whether CA erred in refusing to have the third-party complaint dismissed for failure to state a cause of action and for ruling that the
failure to state a cause of action may be remedied by reference to its attachments.

RULING:
(1) YES, the terms of the contract requires arbitration as a condition precedent to judicial action is erroneous. It is clear that arbitration
is the mode provided by which respondent AMML as Principal Carrier can seek damages and/or indemnity from petitioner, as
Containership Operator. Stated differently, respondent AMML is barred from taking judicial action against petitioner by the clear
terms of their Agreement.

All told, when the text of a contract is explicit and leaves no doubt as to its intention, the court may not read into it any other intention
that would contradict its plain import. Arbitration being the mode of settlement between the parties expressly provided for by their
Agreement, the Third Party Complaint should have been dismissed. This 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.

(2) NO, the pertinent clauses of the "Co-operation in the Pacific" contract entered into by the parties provide that the Principal Carrier
shall have the right to seek damages and/or an indemnity from the Containership Operator by arbitration pursuant to Clause 32
hereof. The Principal Carrier shall be entitled to commence such arbitration at any time until one year after its liability has been
finally determined by agreement, arbitration award or judgment, such award or judgment not being the subject of appeal, provided
that the Containership Operator has been given notice of the said claim in writing by the Principal Carrier within three months of the
Principal Carrier receiving notice in writing of the claim.

From the foregoing, it is clear: First, disputes between the Principal Carrier and the Containership Operator arising from contracts of
carriage shall be governed by the provisions of the bills of lading issued to the Principal Carrier by the Containership Operator.
Second, the Principal Carrier shall use its best efforts to defend or settle all suits against it for loss of or damage to cargo pursuant
to bills of lading issued by it. Third, the Principal Carrier shall have the right to seek damages and/or indemnity from the
Containership Operator by arbitration, pursuant to Clause 32 of the agreement. Fourth, the Principal Carrier shall have the right to
commence such arbitration any time until one year after its liability has been finally determined by agreement, arbitration award or
judgment, provided that the Containership Operator was given notice in writing by the Principal Carrier within three months of the
Principal Carrier receiving notice in writing of said claim.
Based from the foregoing matters, we find that both the trial court and the Court of Appeals erred in denying petitioners prayer for
arbitration. To begin with, allowing respondent AMMLs Third Party Claim against petitioner to proceed would be in violation of
Clause 16.2 of the Agreement. The Court of Appeals ruled that the terms of the Agreement "explicitly required that the principal
carriers claim against the containership operator first be finally determined by, among others, a court judgment, before the right to
arbitration accrues." However, the Court of Appeals failed to consider that, precisely, arbitration is the mode by which the liability of
the Containership Operator may be finally determined. This is clear from the mandate of Clause 16.3 that "(T)he Principal Carrier
shall have the right to seek damages and/or an indemnity from the Containership Operator by arbitration" and that it "shall be
entitled to commence such arbitration at any time until one year after its liability has been finally determined by agreement,
arbitration award or judgment".
 Magellan Capital v. Zosa
[G.R. No. 129916. March 26, 2001]
Buena, J.

Facts:
 Magellan Capital Holdings Corporation [MCHC], Magellan Capital Management Corporation
[MCMC], and private respondent Rolando M. Zosa entered into an "Employment Agreement"
designating Zosa as President and Chief Executive Officer of MCHC.
 The term of respondent Zosa's employment shall be co-terminous with the management
agreement, unless sooner terminated pursuant to the provisions of the Employment
Agreement.
 Later on, the majority of MCHC’s Board of Directors decided not to re-elect respondent Zosa on
account of loss of trust and confidence 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.
 Zosa resigned as the Vice-and demanded that he be given termination benefits as provided for
in the Employment Agreement. MCHC did not accept Zosa’s resignation on account of his
breach of the agreement. Zosa then invoked the arbitration clause of the agreement.
 The parties (Zosa, MCHC, and MCMC) designated their respective representatives in the
arbitration panel. However, instead of submitting the dispute to arbitration, respondent Zosa,
filed an action for damages against petitioners before the RTC Cebu to enforce his benefits
under the EA.
 Petitioners filed a motion to dismiss arguing that the trial court has no jurisdiction over the
instant case since respondent Zosa's claims should be resolved through arbitration pursuant to
the EA; and (2) the venue is 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.
 RTC denied petitioner’s motion to dismiss upon the findings that the validity and legality of the
arbitration provision can only be determined after trial on the merits. MR denied.
 CA rendered a decision declaring the arbitration clause in the EA partially void and of no effect
only insofar as it concerns the composition of the panel of arbitrators.

Issue: Whether the arbitration clause regarding the composition of the panel of arbitrators should be
voided.

Held: Yes. Petition dismissed.

 From the memoranda of both sides, the Court is of the view that the defendants [petitioner]
MCMC and MCHC represent the same interest. It could never be expected, in the arbitration
proceedings, that they would not protect and preserve their own interest, much less, would
both or either favor the interest of the plaintiff. The arbitration law, as all other laws, is
intended for the good and welfare of everybody.
 From the foregoing arbitration clause, it appears that the two (2) defendants [petitioners]
(MCMC and MCHC) have one (1) arbitrator each to compose the panel of three (3) arbitrators.
 As the defendant MCMC is the Manager of defendant MCHC, its decision or vote in the
arbitration proceeding would naturally and certainly be in favor of its employer and the
defendant MCHC would have to protect and preserve its own interest; hence, the two (2) votes
of both defendants (MCMC and MCHC) would certainly be against the lone arbitrator for the
plaintiff [herein defendant]. Hence, apparently, plaintiff [defendant] would never get or receive
justice and fairness in the arbitration proceedings from the panel of arbitrators as provided in
the aforequoted arbitration clause.
 In fairness and justice to the plaintiff [defendant], the two defendants (MCMC and MCHC)
[herein petitioners] which represent the same interest should be considered as one and should
be entitled to only one arbitrator to represent them in the arbitration proceedings.
 Accordingly, the arbitration clause, insofar as the composition of the panel of arbitrators is
concerned should be declared void and of no effect, because the law says, “Any clause giving
one of the parties power to choose more arbitrators than the other is void and of no effect”
(Article 2045, Civil Code).
 The dispute or controversy between the defendants (MCMC and MCHC) [herein petitioners] and
the plaintiff [herein defendant] should be settled in the arbitration proceeding in accordance
with the Employment Agreement, but under the panel of three (3) arbitrators, one (1) arbitrator
to represent the plaintiff, one (1) arbitrator to represent both defendants (MCMC and MCHC)
[herein petitioners] and the third arbitrator to be chosen by the plaintiff [defendant Zosa] and
defendants [petitioners].
Del Monte Corporation USA vs CA
FACTS: in a Distributorship Agreement, petitioner 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.
It included an arbitration clause stating that “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.”
Private respondents MMI, SFI and MMI's Managing Director LiongLiong C. Sy (LILY SY) filed a
Complaint5 against petitioners DMC-USA, Paul E. Derby, Jr., Daniel Collins and Luis Hidalgo, and Dewey
Ltd. before the Regional Trial Court of Malabon, Metro Manila.
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.
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.
Petitioners filed a Motion to Suspend Proceedings invoking the arbitration clause in their Agreement
with private respondents.
Motion to Suspend Proceedings was denied by the trial court on the ground that it "will not serve the
ends of justice and to allow said suspension will only delay the determination of the issues, frustrate the
quest of the parties for a judicious determination of their respective claims, and/or deprive and delay their
rights to seek redress.
ISSUE: WON the dispute between the parties warrants an order compelling them to submit to arbitration.
HELD: NEGATIVE. 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.
G.R. No. 175404, January 31, 2011 CARGILL PHILIPPINES, INC., petitioner, vs. SAN FERNANDO REGALA
TRADING, INC., respondent. PERALTA, J.:

FACTS: Respondent San Fernando Regala Trading filed with the RTC of Makati City a Complaint for
Rescission of Contract with Damages against petitioner Cargill. It alleged that it agreed that it would
purchase from Cargill 12,000 metric tons of Thailand origin cane blackstrap molasses and that the
payment would be by an Irrevocable Letter of Credit payable at sight. The parties agreed that the
delivery would be made in April/May. Cargill failed to comply with its obligations despite demands from
respondent. The respondent then filed for rescission. The petitioner filed a Motion to Dismiss/Suspend
proceeding, arguing that they must first resort to arbitration as stated in their agreement before going
to court. However, the RTC ruled in favor of the respondent. The CA affirmed the RTC decision, adding
that the case cannot be brought under the Arbitration Law for the purpose of suspending the
proceedings before the RTC, since in its Motion to Dismiss/Suspend proceedings, petitioner alleged, as
one of the grounds thereof that the subject contract between the parties did not exist or it was invalid;
that the said contract bearing the arbitration clause was never consummated by the parties, thus, it was
proper that such issue be first resolved by the court through an appropriate trial; that the issue involved
a question of fact that the RTC should first resolve.

ISSUE: Whether the CA erred in finding that this case cannot be brought under the arbitration law for
the purpose of suspending the proceedings in the RTC.

HELD: The petition is meritorious. CIVIL LAW - Arbitration; alternative dispute resolution; contracts
Arbitration, as an alternative mode of settling disputes, has long been recognized and accepted in our
jurisdiction. R.A. No. 876 authorizes arbitration of domestic disputes. Foreign arbitration, as a system of
settling commercial disputes of an international character, is likewise recognized. The enactment of R.A.
No. 9285 on April 2, 2004 further institutionalized the use of alternative dispute resolution systems,
including arbitration, in the settlement of disputes. A contract is required for arbitration to take place
and to be binding. Submission to arbitration is a contract and a clause in a contract providing that all
matters in dispute between the parties shall be referred to arbitration is a contract. The provision to
submit to arbitration any dispute arising therefrom and the relationship of the parties is part of the
contract and is itself a contract. The validity of the contract containing the agreement to submit to
arbitration does not affect the applicability of the arbitration clause itself. A contrary ruling would
suggest that a party's mere repudiation of the main contract is sufficient to avoid arbitration. That is
exactly the situation that the separability doctrine the arbitration agreement is treated as a separate
agreement and does not automatically terminate when the main contract is nullified, as well as
jurisprudence applying it, seeks to avoid. Petition is GRANTED.
RCBC vs BDO

FACTS:

All three petitions emanated from arbitration proceedings commenced by RCBC Capital pursuant to the
arbitration clause under its Share Purchase Agreement (SPA) with EPCIB involving the latter’s shares in
Bankard, Inc. In the course of arbitration conducted by the Tribunal constituted and administered by the
International Chamber of Commerce-International Commercial Arbitration (ICC-ICA), EPCIB was
merged with BDO which assumed all its liabilities and obligations.

RCBC entered into a Share Purchase Agreement (SPA) with Equitable-PCI Bank, Inc. (EPCIB), George
L. Go and the individual shareholders of Bankard, Inc. (Bankard) for the sale to RCBC of 226,460,000
shares (Subject Shares) of Bankard.
RCBC informed EPCIB and the other selling shareholders of an overpayment of the subject shares,
claiming there was an overstatement of valuation of accounts amounting to P478 million and that the
sellers violated their warranty.

RCBC commenced arbitration proceedings with the ICC-ICA in accordance with Section 10 of the SPA.

ICC asked them to advance cost of $350K. RCBC paid. But respondent did not pay assailing
disproportionate share because RCBC has way greater claim. RCBC paid the share of BDO in the cost.

RCBC filed an Application for Reimbursement of Advance on Costs Paid, praying for the issuance of a
partial award directing the Respondents to reimburse its payment in the amount of US$290,000
representing Respondents’ share in the Advance on Costs and to consider Respondents’ counterclaim for
actual damages in the amount of US$300,000, and moral and exemplary damages as withdrawn for their
failure to pay their equal share in the advance on costs.

BDO Opposed on the ground that the Arbitration Tribunal has lost its objectivity in an unnecessary
litigation over the payment of Respondents’ share in the advance costs. They pointed out that RCBC’s
letter merely asked that Respondents be declared as in default for their failure to pay advance costs as that
RCBC had no intention of litigating for the advance costs.

Respondents reiterated their position that Article 30(3) envisions a situation whereby a party would refuse
to pay its share on the advance on costs and provides a remedy therefor – the other party "shall be free to
pay the whole of the advance on costs." Such party’s reimbursement for payments of the defaulting
party’s share depends on the final arbitral award where the party liable for costs would be determined.
This is the only remedy provided by the ICC Rules

Arbitration Tribunal rendered the Second Partial Award

EPCIB filed a Motion to Vacate Second Partial Award and RCBC filed in the same court a Motion to
Confirm Second Partial Award. Makati City RTC confirmed the Second Partial Award and denied
EPCIB’s motion to vacate the same. EPCIB appealed to CA.

Acting on a petition for certiorari, the Court of Appeals reversed the order of the lower court and set aside
the second partial award.
ISSUE:

WHETHER THERE IS LEGAL GROUND TO VACATE THE SECOND PARTIAL AWARD?

RULING:

YES.

The Supreme Court upheld the Court of Appeals' ruling that in treating the letter of the claimant as an
application for a partial award and in furnishing the parties with a copy of Secomb's article 1 - which
favoured the claimant by advancing its cause - the chairman acted with partiality.

“SEC. 41. Vacation Award. – A party to a domestic arbitration may question the arbitral award with the
appropriate regional trial court in accordance with the rules of procedure to be promulgated by the
Supreme Court only on those grounds enumerated in Section 25 of Republic Act No. 876. Any other
ground raised against a domestic arbitral award shall be disregarded by the regional trial court.”

Rule 11.4 of the Special ADR Rules sets forth the grounds for vacating an arbitral award:

Rule 11.4. Grounds.—(A) To vacate an arbitral award. – The arbitral award may be vacated on the
following grounds:

a. The arbitral award was procured through corruption, fraud or other undue means;
b. There was evident partiality or corruption in the arbitral tribunal or any of its members;
c. The arbitral tribunal was guilty of misconduct or any form of misbehavior that has materially
prejudiced the rights of any party such as refusing to postpone a hearing upon sufficient cause shown or
to hear evidence pertinent and material to the controversy;
d. One or more of the arbitrators was disqualified to act as such under the law and willfully refrained
from disclosing such disqualification; or
e. The arbitral tribunal exceeded its powers, or so imperfectly executed them, such that a complete, final
and definite award upon the subject matter submitted to them was not made.

The award may also be vacated on any or all of the following grounds:
a. The arbitration agreement did not exist, or is invalid for any ground for the revocation of a contract or
is otherwise unenforceable; or
b. A party to arbitration is a minor or a person judicially declared to be incompetent.
In deciding the petition to vacate the arbitral award, the court shall disregard any other ground than those
enumerated above. (Emphasis supplied)

Evident partiality in its common definition thus implies "the existence of signs and indications that must
lead to an identification or inference" of partiality

1
Secomb's article, "Awards and Orders Dealing with the Advance on Costs in ICC Arbitration: Theoretical Questions and Practical Problems", states:

"As we can see, the Rules have certain mechanisms to deal with defaulting parties. Occasionally, however, parties have sought to use other methods to tackle the
problem of a party refusing to pay its part of the advance on costs. These have included seeking an order or award from the arbitral tribunal condemning the
defaulting party to pay its share of the advance on costs. Such applications are the subject of this article."
Although RCBC had repeatedly asked for reimbursement and the withdrawal of BDO’s counterclaims
prior to Chairman Barker’s December 18, 2007 letter, it is baffling why it is only in the said letter that
RCBC’s prayer was given a complexion of being an application for a partial award. To the Court,
the said letter signaled a preconceived course of action that the relief prayed for by RCBC will be
granted.

That there was an action to be taken beforehand is confirmed by Chairman Barker’s furnishing the parties
with a copy of the Secomb article. This article ultimately favored RCBC by advancing its cause.
Chairman Barker makes it appear that he intended good to be done in doing so but due process
dictates the cold neutrality of impartiality.

Tuna Processing, Inc. v. Philippine Kingford, Inc.

G.R. No. 185582, 29 February 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). The parties likewise
executed a Supplemental Memorandum of Agreement dated 15 January 2003 and an Agreement to
Amend Memorandum of Agreement dated 14 July 2003.

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. The petition
was raffled to Branch 150 presided by Judge Elmo M. Alameda.

At Branch 150, respondent Kingford filed a Motion to Dismiss.16 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 not licensed to do business in the Philippines have the legal
capacity to sue under the provisions of the Alternative Dispute Resolution Act of 2004?

RULING:

Yes.

In the present case, enforcement has been effectively refused on a ground not found in the the
[Alternative Dispute Resolution Act of 2004], New York Convention, or Model Law.. It is for this
reason that TPI has brought this matter before this most Honorable Court, as it [i]s imperative to
clarify whether the Philippines’ international obligations and State policy to strengthen arbitration as
a means of dispute resolution may be defeated by misplaced technical considerations not found in
the relevant laws.

In several cases, this Court had the occasion to discuss the nature and applicability of
the Corporation Code of the Philippines, a general law, viz-a-viz other special laws. Thus, in Koruga
v. Arcenas, Jr., this Court rejected the application of the Corporation Code and applied the New
Central Bank Act. It ratiocinated:
Koruga’s invocation of the provisions of the Corporation Code is misplaced. In an earlier case with
similar antecedents, we ruled that:

“The Corporation Code, however, is a general law applying to all types of corporations, while the
New Central Bank Act regulates specifically banks and other financial institutions, including the
dissolution and liquidation thereof. As between a general and special law, the latter shall prevail
– generalia specialibus non derogant.” (Emphasis supplied)

Without doubt, the Corporation Code is the general law providing for the formation, organization and
regulation of private corporations. On the other hand, RA 6657 is the special law on agrarian reform.
As between a general and special law, the latter shall prevail— generalia specialibus non derogant.
Following the same principle, the Alternative Dispute Resolution Act of 2004 shall apply in this case
as the Act, as its title –An Act to Institutionalize the Use of an Alternative Dispute Resolution System
in the Philippines and to to Establish the Office for Alternative Dispute Resolution, and for Other
Purposes – would suggest, is a law especially enacted “to actively promote party autonomy in the
resolution of disputes or the freedom of the party to make their own arrangements to resolve their
disputes.” It specifically provides exclusive grounds available to the party opposing an application for
recognition and enforcement of the arbitral award.

Indeed, it is in the best interest of justice that in the enforecement of a foreign arbitral award, we
deny availment by the losing party of the rule that bars foreign corporations not licensed to do
business in the Philippines from maintaining a suit in our courts. When a party enters into a contract
containing a foreign arbitration clause and, as in this case, in fact submits itself to arbitration, it
becomes bound by the contract, by the arbitration and by the result of arbitration, conceding thereby
the capacity of the other party to enter into the contract, participate in the arbitration and cause the
implementation of the result. Although not on all fours with the instant case, also worthy to consider
is the wisdom of then Associate Justice Flerida Ruth P. Romero in her Dissenting Opinion in Asset
Privatization Trust v. Court of Appeals, to wit:

xxx Arbitration, as an alternative mode of settlement, is gaining adherents in legal and judicial circles
here and abroad. If its tested mechanism can simply be ignored by an aggrieved party, one who, it
must be stressed, voluntarily and actively participated in the arbitration proceedings from the very
beginning, it will destroy the very essence of mutuality inherent in consensual contracts.

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 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.
ABS-CBN v. World Interactive Network
Systems (G.R. No. 169332)
Facts:

Petitioner ABS-CBN Broadcasting Corporation entered into a licensing agreement with

respondent World Interactive Network Systems (WINS) Japan Co., Ltd., a foreign
corporation licensed under the laws of Japan, in that the former granted respondent the
exclusive license to distribute and sublicense the distribution of the television service
known as “The Filipino Channel” (TFC) in Japan. By virtue thereof, petitioner undertook
to transmit the TFC programming signals to respondent which the latter received
through its decoders and distributed to its subscribers. A dispute arose between the
parties when petitioner accused respondent of inserting nine episodes of WINS
WEEKLY, a weekly 35-minute community news program for Filipinos in Japan, into the
TFC programming. Petitioner claimed that these were “unauthorized insertions”
constituting a material breach of their agreement. Consequently, petitioner notified
respondent of its intention to terminate the agreement. Thereafter, respondent filed an
arbitration suit pursuant to the arbitration clause of its agreement with petitioner. The
parties appointed Professor Alfredo F. Tadiar to act as sole arbitrator who then
rendered a decision in favor of respondent holding that petitioner gave its approval for
the airing of WINS WEEKLY as shown by a series of written exchanges between the
parties and that petitioner threatened to terminate the agreement due to its desire to
compel respondent to re-negotiate the terms thereof for higher fees. He then allowed
respondent to recover temperate damages, attorney’s fees and one-half of the amount it
paid as arbitrator’s fee. Petitioner filed in the CA a petition for review under Rule 43 of
the Rules of Court or, in the alternative, a petition for certiorari under Rule 65 of the
same Rules, with application for temporary restraining order and writ of preliminary
injunction. Respondent, on the other hand, filed a petition for confirmation of arbitral
award. The CA rendered the assailed decision dismissing ABS-CBN’s petition for lack
of jurisdiction. Petitioner moved for reconsideration but the same was denied.

Issue:

The issue before us is whether or not an aggrieved party in a voluntary arbitration

dispute may avail of, directly in the CA, a petition for review under Rule 43 or a petition
for certiorari under Rule 65 of the Rules of Court, instead of filing a petition to vacate the
award in the RTC when the grounds invoked to overturn the arbitrator’s decision are
other than those for a petition to vacate an arbitral award enumerated under RA 876.

Ruling:

RA 876 itself mandates that it is the Court of First Instance, now the RTC, which has
jurisdiction over questions relating to arbitration, such as a petition to vacate an arbitral
award. As RA 876 did not expressly provide for errors of fact and/or law and grave
abuse of discretion (proper grounds for a petition for review under Rule 43 and a
petition for certiorari under Rule 65, respectively) as grounds for maintaining a petition
to vacate an arbitral award in the RTC, it necessarily follows that a party may not avail
of the latter remedy on the grounds of errors of fact and/or law or grave abuse of
discretion to overturn an arbitral award.  Adamson v. Court of Appeals gave ample
warning that a petition to vacate filed in the RTC which is not based on the grounds
enumerated in Section 24 of RA 876 should be dismissed.

In cases not falling under any of the aforementioned grounds to vacate an award, the
Court has already made several pronouncements that a petition for review under Rule
43 or a petition for certiorari under Rule 65 may be availed of in the CA. Which one
would depend on the grounds relied upon by petitioner.

Nevertheless, although petitioner’s position on the judicial remedies available to it was

correct, we sustain the dismissal of its petition by the CA. The remedy petitioner availed
of, entitled “alternative petition for review under Rule 43 or petition for certiorari under
Rule 65,” was wrong. Time and again, we have ruled that the remedies of appeal and
certiorari are mutually exclusive and not alternative or successive.

A careful reading of the assigned errors reveals that the real issues calling for the CA’s
resolution were less the alleged grave abuse of discretion exercised by the arbitrator
and more about the arbitrator’s appreciation of the issues and evidence presented by
the parties. Therefore, the issues clearly fall under the classification of errors of fact and
law — questions which may be passed upon by the CA via a petition for review under
Rule 43. Petitioner cleverly crafted its assignment of errors in such a way as to straddle
both judicial remedies, that is, by alleging serious errors of fact and law (in which case a
petition for review under Rule 43 would be proper) and grave abuse of discretion
(because of which a petition for certiorari under Rule 65 would be permissible).

Wherefore, the petition is hereby denied. The decision and resolution of the CA
directing the RTC to proceed with the trial of the petition for confirmation of arbitral
award is affirmed.

November 23, 2016

G.R. No. 204197

FRUEHAUF ELECTRONICS PHILIPPINES CORPORATION, Petitioner, 

vs.
TECHNOLOGY ELECTRONICS ASSEMBLY AND MANAGEMENT PACIFIC CORPORATION, Respondent.

FACTS:

In 1978, Fruehauf Electronics Philippines Corp. (Fruehauf) leased several parcels of land in Pasig City to Signetics
Filipinas Corporation (Signetics) for a period of 25 years (until May 28, 2003). Signetics constructed a
semiconductor assembly factory on the land on its own account.

In 1983, Signetics ceased its operations and in 1986, Team Holdings Limited (THL) bought Signetics. THL later
changed its name to Technology Electronics Assembly and Management Pacific Corp. (TEAM)
In March 1987, Fruehauf filed an unlawful detainer case against TEAM. In an effort to amicably settle the dispute,
both parties executed a Memorandum of Agreement (MOA) where TEAM undertook to pay Fruehauf 14.7 million
pesos as unpaid rent (for the period of December 1986 to June 1988).

They also entered a 15-year lease contract4 (expiring on June 9, 2003) that was renewable for another 25 years upon
mutual agreement. The contract included an arbitration agreement:5

TEAM subleased the property to Capitol Publishing House (Capitol) on December 2, 1996 after notifying Fruehauf.

On May 2003, TEAM informed Fruehauf that it would not be renewing the lease. On May 31, 2003, the sublease
between TEAM and Capitol expired. However, Capitol only vacated the premises on March 5, 2005. In the
meantime, the master lease between TEAM and Fruehauf expired on June 9, 2003.

Fruehauf instituted SPProc. No. 11449 before the Regional Trial Court (RTC) for "Submission of an Existing

Controversy for Arbitration”. The RTC granted the petition and directed the parties to comply with the arbitration
clause of the contract.

On December 3, 2008, the arbitral tribunal awarded Fruehauf: (1) 8.2 million pesos as (the balance of) unpaid rent
from June 9, 2003 until March 5, 2005; and (2) 46.8 million pesos as damages. 

TEAM moved for reconsideration which the tribunal denied. Thus, TEAM petitioned the RTC to partially vacate or
modify the arbitral award. It argued that the tribunal failed to properly appreciate the facts and the terms of the lease
contract.

On April 29, 2009, the RTC found insufficient legal grounds under Sections 24 and 25 of the Arbitration Law to
modify or vacate the award. It denied the petition and CONFIRMED, the arbitral award. TEAM filed a Notice of
Appeal.

The CA reversed and set aside the arbitral award and dismissed the arbitral complaint for lack of merit.

ISSUE:

Whether or not an arbitral award is appealable or be subject for a petition for certiorari.

RULING:

NO.

The right to an appeal is neither' a natural right nor an indispensable component of due process; it is a mere statutory
privilege that cannot be invoked in the absence of an enabling statute. Neither the Arbitration Law nor the ADR Law
allows a losing party to appeal from the arbitral award. The statutory absence of an appeal mechanism reflects the
State's policy of upholding the autonomy of arbitration proceedings and their corresponding arbitral awards.

(Rule 19.7. No appeal or certiorari on the merits of an arbitral award - An agreement to refer a dispute to
arbitration shall mean that the arbitral award shall be final and binding. Consequently, a party to an arbitration
is precluded from filing an appeal or a petition for certiorari questioning the merits of an arbitral award. )

More than a decade earlier in Asset Privatization Trust v. Court of Appeals, we likewise defended the autonomy of
arbitral awards through our policy of non-intervention on their substantive merits:
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. They will not review the findings of law and fact contained in an award, and will not
undertake to substitute their judgment for that of the arbitrators, since any other rule would make an award the
commencement, not the end, of litigation. Errors of law and fact, or an erroneous decision of matters submitted to
the judgment of the arbitrators, are insufficient to invalidate an award fairly and honestly made. Judicial review of
an arbitration is, thus, more limited than judicial review of a trial. 

Nonetheless, an arbitral award is not absolute. Rule 19.10 of the Special ADR Rules - by referring to Section 24 of
the Arbitration Law and Article 34 of the 1985 United Nations Commission on International Trade
Law (UNCITRAL) Model Law - recognizes the very limited exceptions to the autonomy of arbitral awards.

(Rule 19.10. Rule on judicial review on arbitration in the Philippines. - As a general rule, the court can only vacate
or set aside the decision of an arbitral tribunal upon a clear showing' that the award suffers from any of the
infirmities or grounds for vacating an arbitral award under Section 24 of Republic Act No. 876 or under Rule 34 of
the Model Law in a domestic arbitration, or for setting aside an award in an international arbitration under Article
34 of the Model Law, or for such other grounds provided under these Special Rules.)

If the Regional Trial Court is asked to set aside an arbitral award in a domestic or international arbitration on any
ground other than those provided in the Special ADR Rules, the court shall entertain such ground for the setting
aside or non-recognition of the arbitral award only if the same amounts to a violation of public policy.

The court shall not set aside or vacate the award of the arbitral tribunal merely on the ground that the arbitral
tribunal committed errors of fact, or of law, or of fact and law, as the court cannot substitute its judgment for that of
the arbitral tribunal.