Narrative Report

Name: Escuyos, Kaibigan C.

Section: OLBN11E7
Year Level: 4th year

Title: G.R. No. 204197

FRUEHAUF ELECTRONICS PHILIPPINES CORPORATION, Petitioner,
vs.
TECHNOLOGY ELECTRONICS ASSEMBLY AND MANAGEMENT PACIFIC
CORPORATION, Respondent.
And Reaction to the Hostage/-taking during 2010 involved by Major Mendoza.

Introduction

Alternative Dispute Resolution

Recently, the Firm won a multi-million-dollar case for a Korean firm against a huge local
company, which meant an extremely large award for the client. This particular case was
concluded by means of an arbitration proceeding officiated by the Integrated Bar of the
Philippines. This process is called an Alternative Dispute Resolution (“ADR”). This
refers to a range of processes that are used to resolve conflicts or disputes without, or
prior to, recourse to the courts. These may involve such proceedings as mediation,
conciliation, mini-trial and a variety of other methods designed to use collaborative,
interest-based approaches to reach settlement. MFL & Partners’ ADR lawyers are well-
versed in the Arbitration Rules of the United Nations Commission on International Trade
Law (UNCITRAL), the Republic Act 9285 (Philippine ADR Law) and Construction
Industry Arbitration Commission (CIAC) Rules.
Aside from representing clients in ADR proceedings, we also assist businessmen and
companies in dispute avoidance; drafting of dispute resolution clauses in a variety of
contracts; conflict management on an industrial scale; damage minimization; and in
negotiating multi-party commercial transactions.

G.R. No. 204197

FRUEHAUF ELECTRONICS PHILIPPINES CORPORATION, Petitioner,
vs.
TECHNOLOGY ELECTRONICS ASSEMBLY AND MANAGEMENT PACIFIC
CORPORATION, Respondent.

Brief Factual Antecedents

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 after the Board of Investments (BOI) withdrew

the investment incentives granted to electronic industries based in Metro Manila.
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) on June 9, 1988.3 Under the MOA, 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

17. ARBITRATION
In the event of any dispute o~ disagreement between the parties hereto involving the
interpretation or implementation of any provision of this Contract of Lease, the dispute
or disagreement shall be referred to arbitration by a three (3) member arbitration
committee, one member to be appointed by the LESSOR, another member to be
appointed by the LESSEE, and the third member to be appointed by these two
members. The arbitration shall be conducted in accordance with the Arbitration Law
(R.A. No. 876).

The contract also authorized TEAM to sublease the property. 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. 6
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.
On March 9, 2004, Fruehauf instituted SPProc. No.11449 before the Regional Trial
Court (RTC) for "Submission of an Existing Controversy for Arbitration." 7 It alleged: (1)
that when the lease expired, the property suffered from damage that required extensive
renovation; (2) that when the lease expired, TEAM failed to turn over the premises and
pay rent; and (3) that TEAM did not restore the property to its original condition as
required in the contract. Accordingly, the parties are obliged to submit the dispute to
arbitration pursuant to the stipulation in the lease contract.

The Arbitral Award12

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. 13
The tribunal found that Fruehauf made several demands for the return of the leased
premises before and after: the expiration of the lease 14 and that there was no express or
implied renewal of the lease after June 9, 2003. It recognized that the sub-lessor,
Capitol, remained in possession of the lease. However, relying on the commentaries of
Arturo Tolentino on the subject, the tribunal held that it was not enough for lessor to
simply vacate the leased property; it is necessary that he place the thing at the disposal
of the lessor, so that the latter can receive it without any obstacle.  15
For failing to return the property' to Fruehauf, TEAM remained liable for the payment of
rents. However, if it can prove that Fruehauf received rentals from Capitol, TEAM can
deduct these from its liability. 16 Nevertheless, the award of rent and damages was
without prejudice to TEAM's right to seek redress from its sub-lessee, Capitol. 17
With respect to the improvements on the land, the tribunal viewed the situation from two
perspectives:
First, while the Contract admitted that Fruehauf was only leasing the land and not the
buildings and improvements thereon, it nevertheless obliged TEAM to deliver the
buildings, installations and other improvements existing at the inception of the lease
uponits expiration. 18
The other view, is that the MOA and the Contract recognized that TEAM owned the
existing improvements on the property and considered them as separate from the land
for the initial 15-year term of the lease. 19 However, Fruehauf had a vested right to
become the owner of these improvements at the end of the 15-year term.
Consequently, the contract specifically obligated TEAM not to remove, transfer, destroy,
or in any way alienate or encumber these improvements without prior written consent
from Fruehauf. 20
The Issues
This case raises the following questions:
1. What are the remedies or the modes of appeal against an unfavorable arbitral
award?
2. What are the available remedies from an RTC decision confirming, vacating,
modifying, or correcting an arbitral award?
3. Did the arbitral tribunal err in awarding Fruehauf damages for the repairs of the
building and rental fees from the expiration of the lease?
We are aware of the contrary view expressed by the late Chief Justice Renato Corona
in ABS-CBN Broadcasting Corporation v. World Interactive Network Systems
(WINS)Japan Co., Ltd.  87
The ABS-CBN Case opined that a voluntary arbitrator is a "quasi-judicial
instrumentality" of the government 88 pursuant to Luzon Development Bank v.
Association of Luzon Development Bank Employees,  89 Sevilla Trading Company v.
Sernana,  90 Manila Midtown Hotel v. Borromeo,  91 and Nippon Paint Employees Union-
Olalia v. Court of Appeals.  92 Hence, voluntary arbitrators are included in the Rule 43
jurisdiction of the Court of Appeals:
SECTION 1. Scope.-This Rule shall apply to appeals from judgments or final orders of
the Court of Tax Appeals and from awards, judgments, final orders or resolutions of or
authorized by any quasi-judicial agency in the exercise of its quasi-judicial functions.
Among these agencies are the Civil Service Commission, Central: Board of Assessment
Appeals, Securities and Exchange Commission, Office of the President, Land
Registration Authority, Social Security Commission, Civil Aeronautics Board, Bureau of
Patents, Trademarks and Technology Transfer, National Electrification Administration,
Energy Regulatory Board, National Telecommunications Commission, Department of
Agrarian Reform under Republic Act No. 6657, Government Service Insurance System,
Employees Compensation Commission, Agricultural Inventions Board, Insurance
Commission, Philippine Atomic Energy Commission, Board of Investments,
Construction Industry Arbitration Commission, and voluntary arbitrators authorized
by law.93 (emphasis supplied)
Citing Insular Savings Bank v. Far East Bank and Trust Co.,  94 the ABS-CBN
Case pronounced that the losing party in an arbitration proceeding may avail of three
alternative remedies: (1) a petition to vacate the arbitral award before the RTC; (2) a
petition for review with the CA under Rule 43 of the Rules of Court raising questions of
fact, of law, or of both; and (3) a I petition for certiorari under Rule 65 should the
arbitrator act beyond its jurisdiction or with grave abuse of discretion. 95
What are remedies from a final domestic
arbitral award?
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.
Reaction to the Hostage/-taking during 2010 involved by Major Mendoza.

The Hong Kong tour group held hostage by Police Senior Inspector (Captain) Rolando
D. Mendoza inside the Hong Thai tour bus on August 23, 2010 in front of the Quirino
Grandstand along Independence Ave. of Rizal Park consisted of three families, two
couples, a mother and daughter, and the tour leader.
Base on my reaction towards the video I watch, at about 9 am August 23, 2010. A tour
bus driver was casually resting inside a bus waiting for the passengers to return from a
tour in Fort Santiago a well-known tourist spot in the Philippines, a man in a police
uniform, armed with an m16 and a handgun boarded along with the passengers the
armed personnel declare hostage. Aboard the bus are 20 tourists from Hong Kong, 3
Filipino tour guides, the driver and the hostage taker, 55-year-old Rolando Mendoza.
Mendoza was a former policeman who was fired from service because of an alleged
drug violation stripping him off from all the benefits of retirement, which is only a year
away he was known to be diligent, was respected in the police force and was once
commended as one the best policemen in the Philippines.
At about 10am, the bus arrived and parked in front of Quirino Grandstand one the main
attractions in the area, Mendoza handcuffed the driver making sure he will not escape,
as word goes out, police quickly arrived to the scene and the incident, instantly caught
massive media attention worldwide. Col. Orlando Yebra and Maj. Romea Salvador,
Mendoza’s former colleagues were tasked to negotiate with Mendoza. Mendoza
informed them that he only has one demand to be reinstated back to the police service
and if met, Mendoza said, I will voluntarily surrender with handcuffs on.
Months before this incident Mendoza had constantly claimed to be innocent in the
charges pressed against him, repeatedly appealing to the office of the ombudsman to
no avail.
Behind the scenes, at the side of Quirino Grandstand the Manila police SWAT Team
are preparing for the worst-case scenario rehearsing a rescue operation to save the
lives of the hostages the Special Action Force or SAF, an elite unit of the PNP, arrived
at the scene following and order from the President. Vice Mayor Isko Moreno on the
way to the office of the Ombudsman to grant Mendoza’s demand.
Mendoza released a total of 6 tourists and 2 Filipinos giving hope to everyone that
things are going well. However, the media frantically covering stories left and right it
became the turning point of the whole ordeal. Inside the bus Mendoza has been
carefully watching all the news being reported the bus is equipped with a television
providing Mendoza with live news coverage of everything that is going on suddenly,
Mendoza has getting upset to the news he was presented negatively in the news due to
this, Mendoza demanded for a media to go in and do an interview as it is significant for
him to explain his side to the public, the police decided not to send in the media thinking
it was unsafe.
At about 1:30 in the afternoon, after hours of waiting for the media to come, because his
demands were not answered Mendoza posted two shocking signs at the window that
says: Media now and 3:00 PM Dead Lock. Mendoza told the negotiators that if his
demands are not met, he will execute one person as Mendoza handcuffed a tour guide
along the bus door.
At about 2 pm, SPO2 Gregorio Mendoza brother of Rolando Mendoza, Major Salvador
immediately approached Gregorio, according to Gregorio, he was there to help talk his
brother to convince to stop. A gun was found in his holster alarming Major Salvador for
possible conspiration quickly disarming Gregorio right in front of his brother, after the
commotion subsided the police asked for Gregorio to help them and ask his brother to
extend the deadline.
At the office of the ombudsman Vice Mayor Isko Mereno calls Mendoza and informed
him that his case is already taking progress. At the 6:00 pm a radio station was able to
contact Mendoza and did a live interview, at the same time, the decision of the
ombudsman arrived at the scene immediately, handed to Mendoza by the negotiators
and Mendoza’s brother. Mendoza did not like what the letter says.
Colonel Yebra told Mendoza that he will convince his boss to issue an order to suspend
the implementation of the penalty, Mendoza accepted the proposal.
The media were uncontrollably competing for the best live coverage revealing critical
information on air including the existence and positions of snipers. Inside the bus
Mendoza see everything in the television. The brother of Mendoza, Gregorio was trying
to arrest by the police and the media quickly respond to the area pointing their camera
to Mendoza brother. Gregorio was arrested because of bringing a firearm to the hostage
scene, conspiring and for disrupting negotiation at the bus Mendoza seeing his brother
arresting and say treating him like a pig and Mendoza patient reach the peak and start
to fired a gun and kill the hostage the driver of the bus miraculously, he was able to
escape and said “Patay na ang lahat ng tao,” assuming everyone inside the bus are
dead. The Special Action force are already waiting for the order to conduct an assault
however, Ground Commander General Magtibay has a different plan for the situation.
General Magtibay orders not the SAF but the Manila Police SWAT Team to conduct the
operation this surprised even the SWAT, considering they lack equipment and the SAF
were more suitable for the job with the order received the SWAT then enters the scene.
Inside the bus Mendoza see the every move of the team because of the coverage of the
media, after the series of failed plans and the overwhelming pressure of the situation
the SWAT finally accepted suggestions from the media, the SWAT team finally entered
to the bus window but Mendoza open fired to fall back of the SWAT team, fortunately no
one was injured, an order was received from a new ground commander it was to let the
Special Action Force take over the situation. A tear gas was thrown at the rear of the
bus the tear gas chokes Mendoza and force him to retreat in front of the bus and the
snipers scattered throughout the grandstand and notice the small movement inside the
bus as Mendoza reaches the front a sniper took aim and fired. The reported that the
Mendoza the clean shot in the head killed Mendoza instantly. The incident left nine
people including Mendoza, rescuers then were shocked, as they discovered that there
are still eight people alive inside.
My conclusion about this tragedy what will the outcome be different if the officials
listened to his demands, will the victims survive if the media did not interfere, or they
would the whole incident never have happened if someone just listened.
Ombudsman Emilio Gonzales Allegedly asked Mendoza a large amount of money, to
reconsider his case, he was fired by the President Aquino, and the reported that it was
Mayor Lim who ordered the arrest of Gregorio Mendoza. Gregorio Mendoza was
criminally charged as a Co-accomplice, along with other charges. The Manila Police
SWAT team received harsh criticisms worldwide.
It was the first crisis that hit the Aquino administration, as then-president Benigno
Aquino III refused to issue an official apology which Hong Kong demanded.
The incident also strained relations between the Philippines and Hong Kong, with the
latter issuing a black travel warning to the country, asking residents to avoid non-
essential travel.
In April 2018, President Rodrigo Duterte himself apologized to Hong Kong during an
official event.

Alternative Dispute Resolution - MFBR - THE LAW FIRM OF MALLARI FIEL BRILLANTE RONQUILLO

G.R. No. 204197 (lawphil.net)

Manila Hostage Crisis: A Year Later - YouTube