OIL AND NATURAL GAS COMMISSION v Court of Appeals, 293 SCRA 96

( 1998)

FACTS:

The conflict between the and the private respondent, rooted from the failure of the
respondent to deliver 43,000 metric tons of oil well cement to the petitioner even it
had already received payment and despite petitioners several demands. The
petitioner then referred its claim to an arbitrator pursuant to Clause 16 of their
contract which stipulates that he venue for arbitration shall be at Dehra Dun. The
chosen arbitrator, one Shri N.N. Malhotra, resolved the dispute in favor of the
petitioner setting forth the arbitral award. Despite several demands for compliance
still the respondent refused to pay the amount adjudged. 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.

ISSUE:

Whether or not the arbitrator had jurisdiction over the dispute between the
petitioner and the private respondent under Clause 16 of the contract.

RULING:

YES. The constitutional mandate that no decision shall be rendered by any court
without expressing therein dearly and distinctly the facts and the law on which it is
based does not preclude the validity of "memorandum decisions" which adopt by
reference the findings of fact and conclusions of law contained in the decisions of
inferior tribunals.

OIL AND NATURAL GAS COMMISSION, petitioner, vs. COURT OF APPEALS and
PACIFIC CEMENT COMPANY, INC., respondents. GR. No. 114323 July 23, 1998.

For those who did not take up arbitration: Big commercial contracts, particularly
international commercial contracts now usually have a provision to submit all disputes to
arbitration. In arbitration, the parties are free to choose who the arbitrators who will
render the award. An award in an arbitration proceeding is equivalent to a ruling or decision
of a court. After parties present their arguments and evidence, the arbitrators render the
award. The winning party goes to court to have the award confirmed by a judge or
magistrate. Once confirmed by the court, the party can have it enforced. In this case, the
parties agreed on an arbitrator and the arbitration proceedings were held in India. The award
of the arbitrator was then confirmed or adopted by a court in India. It was the Indian courts
ruling which was being sought to be enforced here in the Philippines. They did this by filing
a complaint for the enforcement of a foreign judgment in the RTC of Pasig.

FACTS:
 Oil and Natural Gas Commission is a foreign corporation, owned and controlled by the
Government of India.

Pacific Cement Co is a Philippine corporation.

Pacific was supposed to deliver more than 4,000 metric tons of oil well cement to
Bombay and Calcutta but because of a dispute with the carrier, the shipment never
reached the destination. Despite payment by Oil and Natural, as well as repeated
demands, Pacific does not deliver the oil well cement.

During negotiations, the parties agreed that the Pacific will replace the oil well
cement with Class G cement. Pacific did deliver the Class G cement but they were
not according to specifications. Oil and Natural informed Pacific that they will submit
the dispute to arbitration as provided for in their contract.

The dispute was therefore submitted to arbitration, the arbitrator was Shri Malhotra,
an employee of Oil and Natural Gas. The decision of the arbitrator was in favour of Oil
and Natural Gas. The arbitral decision was confirmed by an Indian court.

Oil and Natural Gas filed a complaint in Pasig RTC for the enforcement of the
foreign judgment. This was opposed by Pacific for being bereft of any statement of
facts and law upon which the award in favor of the petitioner was based. The
judgment of the Indian court apparently simply adopted the award of the arbitrator
without stating anything by way of support for its judgment.

The Pasig RTC dismissed the complaint. The RTC said that the contract provided for
some disputes to be settled by the regular court and some to be submitted
to arbitration. This type, the RTC said, was for the courts. Consequently, the
proceedings had before the arbitrator were null and void and the foreign
court had therefore, adopted no legal award which could be the source of
an enforceable right.

The CA affirmed the dismissal by the RTC. Aside from agreeing with the RTC that the
arbitral award was void, the CA also said that the full text of the judgment of
the foreign court contains the dispositive portion only and indicates no
findings of fact and law as basis for the award. Hence, the said judgment
cannot be enforced by any Philippine court as it would violate the constitutional
provision that no decision shall be rendered by any court without
expressing therein clearly and distinctly the facts and the law on which it is
based.

Philippine Supreme Court Decision: Department of Foreign Affairs and

Bangko Sentral ng Pilipinas vs. Falcon and BCA International Corporation;
G.R. No. 176657; September 1, 2010.

The Philippine Department of Foreign Affairs (DFA) implemented its

Machine
Readable Passport and Visa Project (the MRPV Project) under the Build-
Operate-andTransfer (BOT) scheme. Pursuant to the BOT Law, having
found that BCA
International Corporation (BCA) submitted the sole complying bid, direct
negotiations
were commenced between DFA and BCA for the MRPV Project. In compliance
with the
Notice of Award and the BOT Law, BCA incorporated a project company, the
Philippine
Passport Corporation (PPC) to undertake and implement the MRPV Project.
Consequently, on February 8, 2001 a Build-Operate-Transfer Agreement
(BOT
Agreement) was entered into by the DFA and the PPC. Later, an Amended
BOT
Agreement was entered into by the DFA and BCA with the conformity of PPC.
Then, an
Assignment Agreement was executed by BCA and PPC, whereby BCA
assigned and
ceded its rights, title, interest and benefits arising from the Amended BOT
Agreement to
PPC.

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 MRPV
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.

As the impasse remained unresolved, BCA filed a Request for Arbitration

dated April 7,
2006 with the Philippine Dispute Resolution Center, Inc. (PDRCI), pursuant to
Section
19.02 of the Amended BOT Agreement which provides:
Section 19.02. Failure to Settle Amicably If the Dispute cannot be settled
amicably within ninety (90) days by mutual discussion as contemplated
under
Section 19.01 herein, the Dispute shall be settled with finality by an arbitrage
tribunal operating under International Law, hereinafter referred to as the
"Tribunal", under the UNCITRAL Arbitration Rules contained in Resolution
31/98 adopted by the United Nations General Assembly on December 15,
1976,
and entitled "Arbitration Rules on the United Nations Commission on the
International Trade Law". The DFA and the BCA undertake to abide by and
implement the arbitration award. The place of arbitration shall be Pasay City,
Philippines, or such other place as may mutually be agreed upon by both
parties.
The arbitration proceeding shall be conducted in the English language.

Thereafter, the DFA and the Bangko Sentral ng Pilipinas (BSP) entered into
a
Memorandum of Agreement for the latter to provide the former passports
compliant
with international standards. The BSP then solicited bids for the supply,
delivery,
installation and commissioning of a system for the production of Electronic
Passport
Booklets or e-Passports.
Thus, BCA filed a Petition for Interim Relief under Section 28 of the
Alternative Dispute
Resolution Act of 2004 (the ADR Act of 2004), with the Regional Trial Court
of Pasig
City. In that petition, BCA prayed for, among others, that the trial court grant
interim
relief to BCA prior to the constitution of the arbitral tribunal in the form an
order
temporarily restraining the DFA and BSP and their agents (i) from awarding a
new
contract to implement the MRPV Project, or any similar electronic passport or
visa
project; or (ii) if such contract has been awarded, from implementing such
MRPV Project
or similar projects until further orders from the court.

On January 23, 2007, the trial court ordered the issuance of a temporary
restraining order
restraining the DFA and the BSP and their agents from awarding a new
contract to
implement the MVPV Project or any similar electronic passport or visa
project, or if such
contract has been awarded, from implementing such or similar projects.
After hearing, the trial court issued an Order granting BCA's application for
preliminary
injunction. Hence, the DFA and the BSP filed a Petition before the Supreme
Court
assailing the order of the trial court and the issuance of the writ of
preliminary injunction.
The Supreme Court noted that under Section 28 of the ADR Act of 2004, the
grant of an
interim measure of protection by the proper court before the constitution of
an arbitral
tribunal is allowed.

The Supreme Court also stated that the ADR Act of 2004 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 governing
national government projects, namely, Republic Act No. 8975 which prohibits
courts,
except the Supreme Court, from issuing a temporary restraining order and/or
a writ of
preliminary injunction in cases involving national government projects.

However, the Supreme Court found that DFA and BSP failed to prove that the
MRPV
Project is a national government project as defined in Republic Act No.
8975 and thus,
the trial court had jurisdiction to issue the injunction. As to whether the
issuance of the
injunction was proper, the Supreme Court, after considering the arguments
of the parties,
held that the issuance of the injunction by the trial court was not warranted
and
amounted to grave abuse of discretion.

The Supreme Court emphasized that its decision touches only on the issues
of (a) the
jurisdiction of the trial court to issue a writ of preliminary injunction as an
interim relief
under the factual milieu of this case; and (b) the entitlement of BCA to
injunctive relief.
The merits of the DFA and BCA's dispute regarding the termination of the
Amended
BOT Agreement must be threshed out in the proper arbitration proceedings.
The civil
case pending before the trial court is purely for the grant of interim relief
since the main
case is to be the subject of arbitration proceedings.

The Supreme Court noted that during the pendency of this case, the
arbitration case was
dismissed by the PDRCI for lack of jurisdiction, in view of the lack of
agreement
between the parties to arbitrate before the PDRCI. The Supreme Court held
that in view
of intervening circumstances, BCA can no longer be granted injunctive relief
and the civil
case before the trial court should be accordingly dismissed. However, this is
without
prejudice to the parties resolving the main controversy in arbitration
proceedings, in
accordance with the provisions of the Amended BOT Agreement, which
should proceed
with dispatch.