3.

LM Power Engineering Corporation (Petitioner) ISSUE:Whether or not there exists a dispute

LMPower and Capitol Industrial Construction Groups between petitioner and respondent regarding the
Engineeri (Respondent) entered into a Subcontract interpretation and implementation of the Sub-
ng Corp. Agreement involving electrical work at the Port Contract Agreement that requires prior recourse
vs. of Zamboanga. Respondent then took over to voluntary arbitration.
Capitol some of the work contracted to Petitioner, It RULING:Yes. The instant case involves
Industrial was alleged that the petitioner failed to finish technical discrepancies that are better left to an
Constructi itbecause of its inability to procure materials. arbitral body that has expertise on those areas.
on Corp. Upon completion of the task, Petitioner billed The Subcontract has the Arbitral clause stating
G.R.No. the respondent the amount of that the parties agree that “Any dispute or
141833 6,711,813.90pesos. Respondent refused to conflict as regards to interpretation and
pay and contested the accuracy of the amount implementation of this agreement which cannot
of advances and billable accomplishments be settled between the parties amicably shall be
listed by the petitioner. Respondent also took settled by means of arbitration.” Within the
refuge in the termination clause agreement scope of the Arbitration clause are discrepancies
which allowed it to set off the cost of the work as to the amount of advances and billable
that petitioner had failed to undertake (due to accomplishments, the application of the
termination of take over).Because of the provision on termination, and the consequent
dispute, the Petitioner filed a complaint for set-off expenses. Also, there is no need for prior
collection of the balance due under the request for arbitration. As long as the parties
subcontract agreement. However, instead of agre to submit to voluntary arbitration,
filing an answer, the respondent filed a Motion regardless of what forum they may choose, their
to Dismiss, alleging that the complaint was agreement will fall within the jurisdiction of the
premature because there was no prior CIAC, such that, even if they specifically choose
recourse to arbitration. RTC deniedthe motion another forum, the parties will not be precluded
on the ground that the dispute did not involve form electing to submit their dispute before the
the interpretation or implementation of the CIAC because this right has been vested upon
agreement and was, therefore, not covered by each party by the law.
the arbitral clause. Also, the RTC ruled that the
take over of some work items by the
respondent was not equivalent to termination
but a mere modification of the subcontract.
On appeal, the CA reversed the RTC and
ordered the referral of the case to arbitration.
4. Sea Petitioner Sea-Land Services, Inc. and private Whether or not the Court of Appeals disregarded
Land vs. respondent A.P. Moller/Maersk Line(AMML), an agreement to arbitrate in violationof statute
CA. entered into a contract entitled, “Co-operation and Supreme Court decisions holding that
GR.no. in the Pacific, a vessel sharingagreement arbitration is a condition precedentto suit where
126212 where they mutually agreed to purchase, such an agreement to arbitrate exists. (YES)
share and exchange neededspace for cargo in
their containerships. Under the Agreement, Yes. For respondent Court of Appeals to say
they could be, dependingon the occasion, that the terms of the contract do notrequire
either a principal carrier (with a negotiable bill arbitration as a condition precedent to judicial
of lading or othercontract of carriage with action is erroneous. In the light ofthe Agreement
respect to cargo) or a containership operator clauses aforequoted, it is clear that arbitration is
(owner, operatoror charterer of containership the mode provided bywhich respondent AMML
on which the cargo is carried).During the as Principal Carrier can seek damages and/or
Agreement, Florex delivered to private indemnity frompetitioner, as Containership
respondent AMML cargo of variousfoodstuffs, Operator. Stated differently, respondent AMML
with Oakland, California as port of discharge is barredfrom taking judicial action against
and San Francisco as place ofdelivery. Under petitioner by the clear terms of their
this arrangement, respondent AMML was the Agreement.As the Principal Carrier with which
principal carrier whilepetitioner was the Florex directly dealt with, respondent AMML can
containership operator. The consignee refused andshould be held accountable by Florex in the
to pay for the cargo,alleging that delivery event that it has a valid claim against theformer.
thereof was delayed. Florex filed a complaint Pursuant to Clause 16.3 of the Agreement,
against respondentMaersk-Tabacalera respondent AMML, when faced withsuch a suit
Shipping Agency (Filipinas), Inc. for “shall use all reasonable endeavors to defend”
reimbursement of the value ofthe cargo and itself or “settle such suits foras low a figure as
other charges.Accordingly, respondent AMML reasonably possible.” In turn, respondent AMML
filed a Third Party Complaint against petitioner, can seek damagesand/or indemnity from
averringthat whatever damages sustained by petitioner as Containership Operator for
Florex were caused by petitioner, which whatever final judgmentmay be adjudged
actuallyreceived and transported Florex’s against it under the Complaint of Florex. The
cargo on its vessels and unloaded them. crucial point is thatcollection of said damages
Petitionerfiled a Motion to Dismiss the Third and/or indemnity from petitioner should be by
Party Complaint on the ground of failure to arbitration.All told, when the text of a contract is
state acause of action and lack of jurisdiction, explicit and leaves no doubt as to its intention,
the amount of damages not having thecourt may not read into it any other intention
beenspecified. The lower court denied that would contradict its plain import.Arbitration
petitioner’s Motion to Dismiss and Motion being the mode of settlement between the
5. Magellan Capital Holdings Corporation Whether or not MCHC and MCMC are entitled to
Magellan (MCHC) and its appointed manager,Magellan designate only one arbitrator. YES
Capital Capital Management Corporation (MCMC),
vs. entered into anEmployment Agreement with Yes. The Court ruled that although MCHC and
Rolando Zosa, wherein the latter was designated MCMC are two differentcorporations with
Zosa, asMCHC’s President and CEO. Sometime in personalities distinct and separate from each
G.R. No. 1995, Zosa was elected to a newposition as other, theyrepresent the same interest. It could
129916 Vice Chairman/Chairman for New Ventures never be expected that they would notprotect
Development, which,according to him had less and preserve their own interest, much less,
responsibility and scope than his former would both or either favorthe interest of Zosa. As
position. Inline with this, Zosa communicated MCMC is the manager of MCHC, its decision
his resignation for good reason, anddemanded wouldnaturally and certainly be in favor of its
that he be given the termination benefits employer, and MCHC would have toprotect and
provided for in Section 8 (c)(i) (ii) and (iii) of preserve its own interest. Apparently, Zosa
Employment Agreement. MCHC would never get orreceive justice and fairness in
communicated its non-acceptance of Zosa’s the arbitration proceedings from the panel
resignation for goodreason, and instead, ofarbitrators as provided for in the arbitration
informed him that the Employment Agreement clause. The arbitration law, as allother laws, is
isterminated for a cause, on account of the intended for the good and welfare of everybody.
latter’s violation of Section 12 thereof,and that Thus, in fairnessand justice to Zosa, MCHC and
he had no further rights under said Agreement MCMC should be considered as one andshould
or any claims againstMCHC and MCMC be entitled to only one arbitrator to represent
except the right to receive within 30 days the them in the arbitrationproceedings.The Court
amounts statedin Section 8 (a) (i) (ii) of the ruled that the arbitration clause, insofar as the
Agreement. This prompted Zosa to invoke composition of thepanel of arbitrators is
theArbitration Clause of the said Employment concerned should be declared void and of no
Agreement.The Arbitration Clause provides, effectbecause the law says, “Any clause giving
among others, that the parties agree to one of the parties power to choosemore
submitdisputes, controversies, and claims to arbitrators than the other is void and of no
the arbitration, effected by a panel ofthree effect.” (Article 2045, CivilCode). The dispute
arbitrators which are designated by each of the between Zosa and MCHC and MCMC should be
parties – (1) MCHC; (2)MCMC; and (3) Zosa. settled inaccordance with the arbitration clause
However, instead of submitting the dispute to of the employment agreement, but undera panel
arbitration,Zosa filed an action for damages of three arbitrators – one arbitrator to represent
against MCHC and MCMC before the MCHC and MCMC, oneto represent Zosa, and
RTC.MCHC and MCMC filed a motion to the third, to be chosen by both Zosa and MCHC
dismiss, alleging among others that the andMCMC.Arbitration proceedings are designed

coverage: until domestic arbitration

exam type is essay with cases (5 given cases)

with essay, enumeration, identification

coverage of oral exam- chapter 8-11

being index card
Capitol Industrial (RESPONDENT)-Mother contractor https://lawphil.net/judjuris/juri2003/mar2003/gr_1
LM Power Engineering Corp-Sub contractor

On February 22, 1983, 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.5

On April 25, 1985, respondent took over some of the work contracted to
petitioner.6 Allegedly, the latter had failed to finish it because of its
inability to procure materials

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].
Arbitration is one of the alternative methods of dispute resolution that is https://lawphil.net/judjuris/juri2000/mar2000/gr_1
now rightfullyvaunted as “the wave of the future” in international relations,
and is recognizedworldwide.

Florex was suing in its complaint under the provisions of the bill of lading
issued to it by the principal carrier (AMML) and not the bill of lading
issued by petitioner as containership operator. Florex, therefore had a
proper cause of action against AMML.

The Co-operation in the Pacific contract entered into by the parties

provide, nevertheless, that the principal carrier, in case of suits, can seek
damages and/or indemnity from petitioner as Containership Operator for
whatever final judgment may be adjudged against it under the Complaint
of Florex(clause 16.3 of the Agreement).

However, the court held that it is only through arbitration that the liability
of the containership operator may be determined pursuant to the
provision in the Agreement. The third party complaint by AMML thus
cannot proceed without first going through arbitration.
“Any clause giving one of the parties power to choose more arbitrators https://lawphil.net/judjuris/juri2001/mar2001/gr_1
than theother is void and of no effect.” (Article 2045, Civil Code)

Arbitration proceedings are designed to level the playing field among the
partiesin pursuit of a mutually acceptable solution to their conflicting
claims. Anyarrangement or scheme that would give undue advantage to a
party in thenegotiating table is anathema to the very purpose of arbitration
and should,therefore, be resisted.