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[G.R. No. 129916.

March 26, 2001] 355 Scra 157 Arbitration shall be effected by a panel of
MAGELLAN CAPITAL MANAGEMENT three arbitrators. The Manager, Employee and
CORPORATION and MAGELLAN CAPITAL Corporation shall designate one (1) arbitrator
HOLDINGS CORPORATION, petitioners, who shall, in turn, nominate and elect who
vs. ROLANDO M. ZOSA and HON. JOSE P. among them shall be the chairman of the
SOBERANO, JR., in his capacity as Presiding committee.
Judge of Branch 58 of the Regional Trial Court
Of Cebu, 7th Judicial Region, respondents. Any such arbitration, including the rendering
of an arbitration award, shall take place in Metro
Manila. The arbitrators shall interpret this
Agreement in accordance with the substantive laws
March 18, 1994 – a management agreement of the Republic of the Philippines.
were entered between Magellan Capital Holdings
Corporation [MCHC] and Magellan Capital The arbitrators shall have no power to add to,
Management Corporation [MCMC] the latter being subtract from or otherwise modify the terms of
appointed as the manager for the operation of its Agreement or to grant injunctive relief of any nature.
business and affairs of the prior.
Any judgment upon the award of the
MCHC, MCMC, and private respondent arbitrators may be entered in any court having
Rolando M. Zosa entered into an "Employment jurisdiction thereof, with costs of the arbitration to be
Agreement" designating Zosa as President and borne equally by the parties, except that each party
Chief Executive Officer of MCHC. shall pay the fees and expenses of its own counsel
Under the "Employment Agreement", the in the arbitration.
term of respondent Zosa's employment shall be co-
terminous with the management agreement, or until November 10, 1995 - respondent Zosa
March 1996,[2] unless sooner terminated pursuant to designated his brother, Atty. Francis Zosa, as his
the provisions of the Employment Agreement. representative while MCHC designated Atty. Inigo S.
Fojas[10] and MCMC nominated Atty. Enrique I.
May 10, 1995 - majority of MCHCs Board of Quiason[11] as their respective representatives in the
Directors decided not to re-elect respondent Zosa as arbitration panel.
President and Chief Executive Officer of MCHC on
account of loss of trust and confidence[4] arising from But instead of submitting the dispute to
alleged violation of the resolution issued by MCHC's arbitration, respondent Zosa, on April 17, 1996, filed
board of directors and of the non-competition clause an action for damages against petitioners before the
of the Employment Agreement.[5] RTC OF CEBU[12] to enforce his benefits under
Nevertheless, respondent Zosa was elected the Employment Agreement.
to a new position as MCHC's Vice- July 3, 1996 - petitioners filed a motion to
Chairman/Chairman for New Ventures dismiss[13] arguing that (1) the trial court has no
Development. jurisdiction over the instant case since respondent
September 26, 1995 - Zosa communicated Zosa's claims should be resolved through arbitration
his resignation for good reason from the position of pursuant to Section 23 of the Employment
Vice-Chairman under paragraph 7 of Agreement with petitioners; and (2) the venue is
the Employment Agreement on the ground that said improperly laid since respondent Zosa, like the
position had less responsibility and scope than petitioners, is a resident of Pasig City thus the case
President and Chief Executive Officer. He is cognizable by RTC of PASIG.
demanded that he be given termination benefits. July 5, 1996 - respondent Zosa filed an
October 20, 1995 - MCHC communicated its amended complaint
non-acceptance of respondent Zosa's resignation ISSUE/S:
for good reason, but instead terminated him for
cause. He was further advised that he shall have no WON SEC has jurisdiction over the case -
further rights under the said Agreement or any Negative
claims against the Manager or the Corporation WON Article 23 of the Employment
except the right to receive within thirty (30) days from Agreement or the Arbitration Clause Valid -
November 19, 1995. Affirmative
Disagreeing with the position taken by HELD:
petitioners, respondent Zosa invoked the Arbitration
Clause of the Employment Agreement. The controversy does not in any way involve
the election/appointment of officers of petitioner
23. Arbitration. In the event that any dispute, MCHC, as claimed by petitioners in their assignment
controversy or claim arises out of or under any of errors.
provisions of this Agreement, then the parties hereto Respondent Zosas amended complaint
agree to submit such dispute, controversy or claim focuses heavily on the illegality of the Employment
to arbitration as set forth in this Section and the Agreements Arbitration Clause initially invoked by
determination to be made in such arbitration shall be him in seeking his termination benefits under
final and binding. Section 8 of the employment contract.
And under Republic Act No. 876, otherwise the composition of the panel of
known as the Arbitration Law, it is the regional trial arbitrators. Arbitration Clause state:
court which exercises jurisdiction over questions
relating to arbitration. (Go to first page for the Arbitration Clause)

That jurisdiction lies with the SEC, which is

It appears that the two (2) defendants
raised for the first time in this petition, suffice it to
[petitioners] (MCMC and MCHC) have one (1)
state that the Amended Complaint squarely put in
arbitrator each to compose the panel of three (3)
issue the question whether the Arbitration Clause is
valid and effective between the parties.
As the defendant MCMC is the Manager of
Although the controversy which spawned the defendant MCHC, its decision or vote in the
action concerns the validity of the termination of the arbitration proceeding would naturally and certainly
service of a corporate officer, the issue on the be in favor of its employer and the defendant MCHC
validity and effectivity of the arbitration clause is would have to protect and preserve its own interest;
determinable by the regular courts, and do not fall hence, the two (2) votes of both defendants (MCMC
within the exclusive and original jurisdiction of the and MCHC) would certainly be against the lone
SEC. arbitrator for the plaintiff [herein defendant].

The determination and validity of the Hence, apparently, plaintiff [defendant]

agreement is not a matter intrinsically connected would never get or receive justice and fairness in the
with the regulation and internal affairs of arbitration proceedings from the panel of arbitrators
corporations it is rather an ordinary case to be as provided in the aforequoted arbitration clause.
decided in accordance with the general laws, and do
not require any particular expertise or training to In fairness and justice to the plaintiff
interpret and apply. [defendant], the two defendants (MCMC and
MCHC)[herein petitioners] which represent the
Decision of the CA affirming the trial courts same interest should be considered as one and
assumption of jurisdiction over the case has become should be entitled to only one arbitrator to represent
the law of the case which now binds the petitioners. them in the arbitration proceedings.

The law of the case doctrine has been Accordingly, the arbitration clause, insofar as
defined as a term applied to an established rule that the composition of the panel of arbitrators is
when an appellate court passes on a question and concerned should be declared void and of no effect,
remands the cause to the lower court for further because the law says, Any clause giving one of the
proceedings, the question there settled becomes the parties power to choose more arbitrators than the
law of the case upon subsequent appeal.[27] CAs other is void and of no effect.
decision has already attained finality as evidenced
by a Resolution of this Court ordering entry of The dispute or controversy between the
judgment of said case. defendants (MCMC and MCHC) [herein petitioners]
and the plaintiff [herein defendant] should be settled
Petitioners, therefore, are barred from in the arbitration proceeding in accordance with the
challenging anew, through another remedial Employment Agreement, but under the panel of
measure and in any other forum, the authority of the three (3) arbitrators, one (1) arbitrator to represent
regional trial court to resolve the validity of the the plaintiff, one (1) arbitrator to represent both
arbitration clause. defendants (MCMC and MCHC) [herein petitioners]
and the third arbitrator to be chosen by the plaintiff
There is no quarrel that both defendants are [defendant Zosa] and defendants [petitioners].
entirely two different corporations with personalities
distinct and separate from each other and that a This issue of estoppel, well- settled is the rule
corporation has a personality distinct and separate that issues not raised below cannot be resolved on
from those persons composing the corporation as review in higher courts.[31]
well as from that of any other legal entity to which it
may be related.
Secondly, employment agreements such as the
one at bar are usually contracts of adhesion. Any
But as the defendants [herein petitioner] ambiguity in its provisions is generally resolved
represent the same interest, it could never be against the party who drafted the document.
expected, in the arbitration proceedings, that they
would not protect and preserve their own interest, A contract of employment, being a contract of
much less, would both or either favor the interest of adhesion, is ambiguous, any ambiguity therein
the plaintiff. should be construed strictly against the party who
The arbitration law, as all other laws, is prepared it.
intended for the good and welfare of everybody. In And, finally, respondent Zosa never submitted
fact, what is being challenged by the plaintiff herein himself to arbitration proceedings (as there was
is not the law itself but the provision of the none yet) before bewailing the composition of the
Employment Agreement based on the said law, panel of arbitrators.
which is the arbitration clause but only as regards
He in fact, lost no time in assailing the arbitration implementation of the Agreement and was,
clause upon realizing the inequities that may mar the therefore, not covered by the arbitral clause.[13]
arbitration proceedings if the existing line-up of
arbitrators remained unchecked. After trial on the merits, the RTC[14] ruled that
We need only to emphasize in closing that the take-over of some work items by respondent was
arbitration proceedings are designed to level the not equivalent to a termination, but a mere
playing field among the parties in pursuit of a modification, of the Subcontract.
mutually acceptable solution to their conflicting
claims. The latter was ordered to give full payment
for the work completed by petitioner.
Any arrangement or scheme that would give
undue advantage to a party in the negotiating table The Issues
is anathema to the very purpose of arbitration and In its Memorandum, petitioner raises the
should, therefore, be resisted. following issues for the Courts consideration:

WHEREFORE, premises considered, the

petition is hereby DISMISSED and the decision of
the trial court dated July 18, 1997 is AFFIRMED. Whether or not there exist[s] a
controversy/dispute between petitioner and
SO ORDERED. respondent regarding the interpretation and
implementation of the Sub-Contract Agreement
dated February 22, 1983 that requires prior recourse
[G.R. No. 141833. March 26, 2003] 399 Scra 562 to voluntary arbitration;
GROUPS, INC., respondent. In the affirmative, whether or not the
DECISION requirements provided in Article III [1] of CIAC
Arbitration Rules regarding request for arbitration
The Facts ha[ve] been complied with[.][17]
On February 22, 1983, Petitioner LM Power
Engineering Corporation and Respondent Capitol
Industrial Construction Groups Inc. entered into a The Courts Ruling
Subcontract Agreement involving electrical work at The Petition is unmeritorious.
the Third Port of Zamboanga.[5]
First Issue:
On April 25, 1985, respondent took over Whether Dispute Is Arbitrable
some of the work contracted to Petitioner claims that there is no conflict
petitioner.[6] Allegedly, the latter had failed to finish it regarding the interpretation or the implementation of
because of its inability to procure materials.[7] the Agreement.

Upon completing its task under the Contract, Thus, without having to resort to prior
petitioner billed respondent in the amount arbitration, it is entitled to collect the value of the
of P6,711,813.90.[8] Contesting the accuracy of the services it rendered through an ordinary action for
amount of advances and billable accomplishments the collection of a sum of money from respondent.
listed by the former, the latter refused to pay.
On the other hand, the latter contends that
Respondent also took refuge in the there is a need for prior arbitration as provided in the
termination clause of the Agreement.[9] That clause Agreement.
allowed it to set off the cost of the work that petitioner
had failed to undertake -- due to termination or take- This is because there are some disparities
over -- against the amount it owed the latter. between the parties positions regarding the extent of
the work done, the amount of advances and billable
Because of the dispute, petitioner filed with accomplishments, and the set off of expenses
the Regional Trial Court (RTC) of Makati (Branch incurred by respondent in its take-over of petitioners
141) a Complaint[10] for the collection of the amount work.
representing the alleged balance due it under the We side with respondent. Essentially, the
Subcontract. dispute arose from the parties ncongruent positions
on whether certain provisions of their Agreement
Instead of submitting an Answer, respondent could be applied to the facts.
filed a Motion to Dismiss,[11] alleging that the
Complaint was premature, because there was no The instant case involves technical
prior recourse to arbitration. discrepancies that are better left to an arbitral body
that has expertise in those areas.
In its Order[12] dated September 15, 1987,
the RTC denied the Motion on the ground that the In any event, the inclusion of an arbitration
dispute did not involve the interpretation or the clause in a contract does not ipso facto divest the
courts of jurisdiction to pass upon the findings of Supposedly, as a result of the take-over,
arbitral bodies, because the awards are still judicially respondent incurred expenses in excess of the
reviewable under certain conditions.[18] contracted price.

In the case before us, the Subcontract has It sought to set off those expenses against
the following arbitral clause: the amount claimed by petitioner for the work the
latter accomplished, pursuant to the following
6. The Parties hereto agree that any dispute provision:
or conflict as regards to interpretation and If the total direct and indirect cost of
implementation of this Agreement which cannot be completing the remaining part of the WORK exceed
settled between [respondent] and [petitioner] the sum which would have been payable to
amicably shall be settled by means of arbitration x x [petitioner] had it completed the WORK, the amount
x.[19] of such excess [may be] claimed by [respondent]
Clearly, the resolution of the dispute between from either of the following:
the parties herein requires a referral to the provisions
of their Agreement. 1. Any amount due [petitioner] from
[respondent] at the time of the termination of this
Within the scope of the arbitration clause are Agreement.[22]
discrepancies as to the amount of advances and
billable accomplishments, the application of the The issue as to the correct amount of
provision on termination, and the consequent set-off petitioners advances and billable accomplishments
of expenses. involves an evaluation of the manner in which the
parties completed the work, the extent to which they
A review of the factual allegations of the did it, and the expenses each of them incurred in
parties reveals that they differ on the following connection therewith.
questions: (1) Did a take-over/termination occur? (2)
May the expenses incurred by respondent in the Arbitrators also need to look into the
take-over be set off against the amounts it owed computation of foreign and local costs of materials,
petitioner? (3) How much were the advances and foreign and local advances, retention fees and
billable accomplishments? letters of credit, and taxes and duties as set forth in
the Agreement.
The resolution of the foregoing issues lies in
the interpretation of the provisions of the These data can be gathered from a review of
Agreement. According to respondent, the take-over the Agreement, pertinent portions of which are
was caused by petitioners delay in completing the reproduced hereunder:
work. Such delay was in violation of the provision in C. CONTRACT PRICE AND TERMS OF
the Agreement as to time schedule: PAYMENT
[Petitioner] shall adhere strictly to the All progress payments to be made by
schedule related to the WORK and complete the [respondent] to [petitioner] shall be subject to a
WORK within the period set forth in Annex C retention sum of ten percent (10%) of the value of
hereof. NO time extension shall be granted by the approved quantities.
[respondent] to [petitioner] unless a corresponding
time extension is granted by [the Ministry of Public
Any claims by [respondent] on [petitioner]
Works and Highways] to the CONSORTIUM.[20]
may be deducted by [respondent] from the progress
payments and/or retained amount.
Because of the delay, respondent alleges
that it took over some of the work contracted to
Any excess from the retained amount after
petitioner, pursuant to the following provision in the
deducting [respondents] claims shall be released by
[respondent] to [petitioner] after the issuance of [the
Ministry of Public Works and Highways] of the
K. TERMINATION OF AGREEMENT Certificate of Completion and final acceptance of the
[Respondent] has the right to terminate WORK by [the Ministry of Public Works and
and/or take over this Agreement for any of the Highways].
following causes: xxxxxxxxx
6. If despite previous warnings by EQUIPMENT
[respondent], [petitioner] does not execute the [Respondent shall open the letters of credit for the
WORK in accordance with this Agreement, importation of equipment and materials listed in
or persistently or flagrantly neglects to carry out [its] Annex E hereof after the drawings, brochures, and
obligations under this Agreement.[21] other technical data of each items in the list have
been formally approved by [the Ministry of Public SECTION. 1. Submission to Arbitration --
Works and Highways]. Any party to a construction contract wishing to have
recourse to arbitration by the Construction Industry
However, petitioner will still be fully Arbitration Commission (CIAC) shall submit its
responsible for all imported materials and Request for Arbitration in sufficient copies to the
equipment. Secretariat of the CIAC; PROVIDED, that in the case
of government construction contracts, all
administrative remedies available to the parties must
All expenses incurred by [respondent], both have been exhausted within 90 days from the time
in foreign and local currencies in connection with the the dispute arose.
opening of the letters of credit shall be deducted
from the Contract Prices.
Tesco was promulgated by this Court, using
the foregoing provision as reference.
On the other hand, Section 1 of Article III of
N. OTHER CONDITIONS the new Rules of Procedure Governing Construction
xxxxxxxxx Arbitration has dispensed with this requirement and
2. All customs duties, import duties, recourse to the CIAC may now be availed of
contractors taxes, income taxes, and other taxes whenever a contract contains a clause for the
that may be required by any government agencies in submission of a future controversy to arbitration, in
connection with this Agreement shall be for the sole this wise:
account of [petitioner].[23]
SECTION 1. Submission to CIAC
Being an inexpensive, speedy and amicable Jurisdiction An arbitration clause in a construction
method of settling disputes,[24] arbitration -- along contract or a submission to arbitration of a
with mediation, conciliation and negotiation -- is construction dispute shall be deemed an agreement
encouraged by the Supreme Court.Aside from to submit an existing or future controversy to CIAC
unclogging judicial dockets, arbitration also hastens jurisdiction, notwithstanding the reference to a
the resolution of disputes, especially of the different arbitration institution or arbitral body in such
commercial kind.[25] contract or submission.

It is thus regarded as the wave of the future When a contract contains a clause for the
in international civil and commercial submission of a future controversy to arbitration, it is
disputes. Brushing aside a contractual agreement not necessary for the parties to enter into a
calling for arbitration between the parties would be a submission agreement before the claimant may
step backward.[27] invoke the jurisdiction of CIAC.

Consistent with the above-mentioned policy The foregoing amendments in the Rules
of encouraging alternative dispute resolution were formalized by CIAC Resolution Nos. 2-91 and
methods, courts should liberally construe arbitration 3-93.[31]
The difference in the two provisions was
Provided such clause is susceptible of an clearly explained in China Chang Jiang Energy
interpretation that covers the asserted dispute, an Corporation (Philippines) v. Rosal Infrastructure
order to arbitrate should be granted.[28] Any doubt Builders et al.[32] (an extended unsigned Resolution)
should be resolved in favor of arbitration.[29] and reiterated in National Irrigation Administration v.
Court of Appeals,[33] from which we quote thus:
Second Issue:
Prior Request for Arbitration Under the present Rules of Procedure, for a
According to petitioner, particular construction contract to fall within the
assuming arguendo that the dispute is arbitrable, jurisdiction of CIAC, it is merely required that the
the failure to file a formal request for arbitration with parties agree to submit the same to voluntary
the Construction Industry Arbitration Commission arbitration.
(CIAC) precluded the latter from acquiring
jurisdiction over the question. Unlike in the original version of Section 1, as
applied in the Tesco case, the law as it now stands
To bolster its position, petitioner even cites does not provide that the parties should agree to
our ruling in Tesco Services Incorporated v. submit disputes arising from their agreement
Vera.[30] We are not persuaded. specifically to the CIAC for the latter to acquire
jurisdiction over the same.
Section 1 of Article II of the old Rules of
Procedure Governing Construction Arbitration Rather, it is plain and clear that as long as
indeed required the submission of a request for the parties agree to submit to voluntary arbitration,
arbitration, as follows: regardless of what forum they may choose, their
agreement will fall within the jurisdiction of the CIAC,
such that, even if they specifically choose another
forum, the parties will not be precluded from electing 3. Under Section I.04 of the Supplemental
to submit their dispute before the CIAC because this Contract, the total amount of procurement and
right has been vested upon each party by law, i.e., transportation cost[s] and expenses which may be
E.O. No. 1008.[34] reimbursed by MCI from CHATHAM shall not
exceed the amount of P75, 000,000.00.
Clearly, there is no more need to file a
request with the CIAC in order to vest it with 4. In the course of the construction, Change
jurisdiction to decide a construction dispute. Orders No. 1, 4, 8A, 11, 12 and 13 were
The arbitral clause in the Agreement is a
commitment on the part of the parties to submit to 5. CHATHAM reimbursed MCI the amount of
arbitration the disputes covered therein. P60,000.00 corresponding to bonuses advanced to
its workers by the latter for the 14th, 16th, and 17th
Because that clause is binding, they are floors.
expected to abide by it in good faith.[35] And because 6. CHATHAM's payments to MCI totaled
it covers the dispute between the parties in the P104,875,792.37, representing payments for
present case, either of them may compel the other portions of MCI's progress billings and x x x
to arbitrate.[36] additional charges..

Since petitioner has already filed a In the resolution of these issues, the CIAC
Complaint with the RTC without prior recourse to discovered significant data, which were not evident
arbitration, the proper procedure to enable the CIAC or explicit in the documents and records but
to decide on the dispute is to request the stay or otherwise revealed or elicited during the hearings,
suspension of such action, as provided under RA which the CIAC deemed material and relevant to the
876 [the Arbitration Law].[37] complete adjudication of the case

WHEREFORE, the Petition is DENIED and the The CIAC disposed of the specific money
assailed Decision AFFIRMED. Costs against claims by either granting or reducing them. On Issue
petitioner. No. 9, i.e., whether CHATHAM failed to complete
and/or deliver the project within the approved
completion period and, if so, whether CHATHAM is
G.R. No. 141897 September 24, 2001, 365 Scra
liable for liquidated damages and how much.
697 METRO CONSTRUCTION, INC., petitioner,
vs. CHATHAM PROPERTIES, INC., respondent.
FACTS : CIAC rendered Judgment in favor of the
Claimant [MCI] directing Respondent [CHATHAM] to
Respondent Chatham Properties, Inc.
pay Claimant [MCI] the net sum of SIXTEEN
(CHATHAM) and petitioner Metro Construction, Inc.
(MCI) entered into a contract for the construction of
a multi-storey building known as the Chatham
91/100 (16,126,922.91) PESOS. Impugning the
House. In April 1998, MCI sought to collect from
decision of the CIAC, CHATHAM instituted a petition
CHATHAM a sum of money for unpaid progress
for review with the Court of Appeals
billings and other charges and instituted a request
for adjudication of its claims with the CIAC.
In upholding the decision of the CIAC, the
Court of Appeals confirmed the jurisprudential
The preliminary conference before the CIAC
principle that absent any showing of arbitrariness,
started in June 1998 and was concluded a month
the CIAC's findings as an administrative agency and
after with the signing of the Terms of Reference
quasi-judicial body should not only be accorded
(TOR) of the Case.
great respect but also given the stamp of finality.

In the meantime, the TOR was amended and

However the Court of Appeals found
finalized on 19 August 1998. The facts, as admitted
exception in the CIAC's disquisition of Issue No.9 on
by the parties before the CIAC and incorporated in
the matter of liquidated damages.
the original TOR, are as follows :

1. On 21 April 1994, the parties formally
entered into a contract for the construction of the WON under existing law and rules the Court
"Chatham House" . . . for the contract price of price of Appeals can also review findings of facts of the
of P50,000,000.00 Construction Industry Arbitration Commission
2. On 12 July 1994, a Supplemental Contract
was executed by and between the parties whereby HELD :
CHATHAM authorized MCI to procure in behalf of EO. No. 1008 vest upon the CIAC original
the former materials, equipment, etc. and exclusive jurisdiction over disputes arising from,
or connected with, contracts entered into by parties
involved in construction in the Philippines, whether
the dispute arises before or after the completion of 318 Scra 558 HOME BANKERS SAVINGS
the contract, or after the abandonment or breach AND TRUST COMPANY V. CA (G.R. NO. 115412)
By express provision of Section 19 thereof, Facts:
the arbitral award of the CIAC is final and Victor Tancuan issued Petitioner Home
unappealable, except on questions of law, which are Bankers Savings and Trust Company a check while
appealable to the Supreme Court. Eugene Arriesgado issued Private Respondent Far
East Bank and Trust Company three checks; both
The parties, however, disagree on whether checks totaling the amount of P25,250,000.00.
the subsequent Supreme Court issuances on
appellate procedure and R.A. No. 7902 removed Tancuan and Arriesgado exchanged each
from the Supreme Court its appellate jurisdiction in other’s checks and deposited them with their
Section 19 of E.O. No. 1008 and vested the same in respective banks for collection. When FEBTC
the Court of Appeals, and whether appeals from presented Tancuan’s HBSTC check for clearing, it
CISC awards are no longer confined to questions of was dishonored for being DAIF.
Meanwhile, HBSTC sent Arriesgado’s 3
Through Circular No. 1-91, the Supreme FEBTC checks through the Philippine Clearing
Court intended to establish a uniform procedure for House Corporation (PCHC) to FEBTC but was
the review of the final orders or decisions of the returned for being DAIF.
Court of Tax Appeals and other quasi judicial.
HBSTC receive the notice of dishonor but
The Circular designated the Court of Appeals refused to accept the checks and returned them to
as the reviewing body to resolve questions of fact or FEBTC through the PCHC for the reason “Beyond
of law or mixed questions of fact and law. Reglementary Period,” implying that HBSTC already
treated the 3 checks as cleared and allowed the
It is clear that Circular No. 1-91 covers the proceeds thereof to be withdrawn.
CIAC. In the first place, it is a quasi judicial agency.
In the second place, the language of Section 1 of FEBTC demanded reimbursement for the
Circular No. 1-91 emphasizes the obvious inclusion returned checks and inquired from HBSTC whether
of the CIAC even if it is not named in the it had permitted any withdrawal of funds against the
enumeration of quasi-judicial agencies. unfunded checks.

In sum, under Circular No. 1-91, appeals HBSTC, however refused to make any
from the arbitral awards of the CIAC may be brought reimbursement and to provide FEBTC with the
to the Court of Appeals, and not to the Supreme needed information.
Court alone. The grounds for the appeal are likewise
Thus, FEBTC submitted the dispute for
broadened to include appeals on questions of facts
arbitration before the PCHC Arbitration Committee,
and appeals involving mixed questions of fact and
under its Supplementary Rules on Regional Clearing
to which FEBTC and HBSTC are bound as
participants in the regional clearing operations
The jurisdiction of the Court of Appeals over administered by the PCHC.
appeals from final orders or decisions of the CIAC is While the arbitration proceeding was still
further fortified by the amendments to B.P. Blg. 129, pending, FEBTC filed an action for sum of money
as introduced by RA. No. 7902. and damages with preliminary attachment against
With the amendments, the Court of Appeals HBSTC moved to dismiss on the ground that
is vested with appellate jurisdiction over all final there is no cause of action and because it seeks to
judgments, decisions, resolutions, orders or awards enforce an arbitral award which as yet does not
of Regional Trial Courts and quasi-judicial agencies, exist. The trial court denied the motion to dismiss
instrumentalities, boards or commissions, except and the motion for reconsideration. Petitioner then
"those within the appellate jurisdiction of the filed a petition for certiorari with respondent CA to
Supreme Court in accordance with the Constitution, which it had dismissed.
the Labor Code of the Philippines under Presidential
Decree No. 442, as amended, the provisions of this
Act, and of subparagraph (1) of the third paragraph
and subparagraph (4) of the fourth paragraph of Whether or not private respondent which
Section 17 of the Judiciary Act of 1948.". commenced an arbitration proceeding under the
auspices of the PCHC may subsequently file a
separate case in court over the same subject matter
In view of all the foregoing, The Supreme despite the pendency of that arbitration, simply to
Court rejects MCI's submission that Circular No. 1- obtain the provisional remedy of attachment against
91, B.P. Blg. 129, as amended by RA. 7902, Revised the adverse party in the arbitration proceeding.
Administrative Circular 1-95, and Rule 43 of the
1997 Rules of Civil Procedure failed to efficaciously
modify the provision on appeals in E.O. No. 1008. Ruling:
We find no merit in the petition. Section 14 of This case involves a boundary dispute
Republic Act 876, otherwise known as the between petitioner Toyota Motor Phil. Corporation
Arbitration Law, allows any party to the arbitration (Toyota) and private respondent Sun Valley
proceeding to petition the court to take measures to Manufacturing and Development Corporation (Sun
safeguard and/or conserve any matter which is the Valley).
subject of the dispute in arbitration. Both Toyota and Sun Valley are the
registered owners of two (2) adjoining parcels of land
Petitioner’s exposition of the foregoing which they purchased from the Asset Privatization
provision deserves scant consideration. Section 14 Trust (APT). The properties in question formerly
simply grants an arbitrator the power to issue belonged to Delta Motors Corporation (DMC) which
subpoena and subpoena duces tecum at any time were foreclosed by the Philippine National Bank
before rendering the award. (PNB) and later transferred to the national
government through the APT for disposition.
The exercise of such power is without
prejudice to the right of a party to file a petition in APT then proceeded to classify the DMC
court to safeguard any matter which is the subject of properties, called the GC III-Delta Motors
the dispute in arbitration. Corporation, and divided into Delta I, Delta II, and
Delta III. Further subdivisions for the separate
catalogues were made for each division e.g. Delta I
In the case at bar, private respondent filed an
into Lots 1, 2 and 3. After this classification, APT
action for a sum of money with prayer for a writ of
parcelled out and catalogued the properties for
preliminary attachment. Undoubtedly, such action
bidding and sale.
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 Part of the duly parcelled Delta I property (Lot
what is known in banking as a “kiting scheme.” 2) was sold to Toyota through public bidding. After
its purchase, Toyota constructed a concrete hollow
block (CHB) perimeter fence around its alleged
However, the civil action was not a simple
property. Another part of the parcelled Delta I (Lot 1)
case of a money claim since private respondent has
was purchased by Sun Valley from APT.
included a prayer for a writ of preliminary
attachment, which is sanctioned by section 14 of the
Arbitration Law. Petitioner then filed a case against APT for
the reformation of the Deed of Sale executed
between them alleging that the instrument failed to
Simply put, participants in the regional
reflect the true intention of the parties as the title
clearing operations of the Philippine Clearing House
failed to include 723 square meters strip of land.
Corporation cannot bypass the arbitration process
laid out by the body and seek relief directly from the
courts. On the other hand, Sun Valley, filed a case
In the case at bar, undeniably, private for recovery of possession of the disputed 723
respondent has initiated arbitration proceedings as square meters relying upon the title description of its
required by the PCHC rules and regulations, and property and the surveys it has commissioned.
pending arbitration has sought relief from the trial
court for measures to safeguard and/or conserve the Through legal maneuverings, the parties
subject of the dispute under arbitration, as have succeeded in muddling up the vital issues of
sanctioned by section 14 of the Arbitration Law, and the case and getting the lower courts embroiled in
otherwise not shown to be contrary to the PCHC numerous appeals over technicalities.
rules and regulations.
Hence, the three appellate
At this point, we emphasize that arbitration, decisions/resolutions before the Court for review
as an alternative method of dispute resolution, is and conflicting orders issued by lower courts as a
encouraged by this Court. result of the separate cases filed by the parties.

Aside from unclogging judicial dockets, it Issue:

also hastens solutions especially of commercial Whether or not Judge Tensuan had
disputes. The Court looks with favor upon such jurisdiction to take cognizance of the case for
amicable arrangement and will only interfere with reformation of instrument.
great reluctance to anticipate or nullify the action of
the arbitrator.
Attention must first be brought to the fact that the
Wherefore, premises considered, the petition contract of sale executed between APT and Toyota
is hereby dismissed and the decision of the court a provides an arbitration clause which states that:
quo is affirmed.
5. In case of disagreement or conflict arising out
of this Contract, the parties hereby undertake
TOYOTA MOTOR PHILIPPINES CORPORATION to submit the matter for determination by a
V. CA (G.R. NO. 102881) 216 Scra 236 committee of experts, acting as arbitrators,
Facts: the composition of which shall be as follows:
a) One member to be appointed by the
VENDOR; b) One member to be appointed
by the VENDEE; c) One member, who shall
be a lawyer, to be appointed by both of the
aforesaid parties;
The contention that the arbitration clause has
become dysfunctional because of the presence of
third parties is untenable.

Toyota filed an action for reformation of its

contract with APT, the purpose of which is to look
into the real intentions/agreement of the parties to
the contract and to determine if there was really a
mistake in the designation of the boundaries of the
property as alleged by Toyota.

Such questions can only be answered by the

parties to the contract themselves. This is a
controversy which clearly arose from the contract
entered into by APT and Toyota. Inasmuch as this
concerns more importantly the parties APT and
Toyota themselves, the arbitration committee is
therefore the proper and convenient forum to settle
the matter as clearly provided in the deed of sale.

Having been apprised of the presence of the

arbitration clause in the motion to dismiss filed by
APT, Judge Tensuan should have at least
suspended the proceedings and directed the parties
to settle their dispute by arbitration. Judge Tensuan
should have not taken cognizance of the case.

In view of all the foregoing, the petition is

hereby dismissed for failure to show reversible error,
much less grave abuse of discretion, on the part of
the respondent court.