GMCC VS.

GOTESCO

For GMCC's failure to pay ''parking slot dues" in the total amount of P38,783.l 1 (covering the period from January
2004 to February 2011), the Gotesco Regency Twin Towers Condominium Corporation filed a small claims action
against GMCC before the Metropolitan Trial Court (MeTC) OF Manila.

Finding merit in the condominium corporation's claim, and pursuant to Sections 12 and 18 of the Rules of Procedure
for Small Claims Cases, the MeTC rendered Judgment and found GMCC liable to pay the aforementioned amount.

GMCC assailed the MeTC decision before the RTC, via special civil action for certiorari under Rule 65 of the Rules
of Court. It was denied for its failure to discharge the onus of proving that the MeTC acted with grave abuse of
discretion. MR before RTC was denied as well.

GMCC assailed the RTC decision before the CA via petition for review under Rule 42 of the Rules of Court. CA
dismissed the petition for being a wrong remedy. MR before CA was denied.

While the petition was before the Supreme Court, GMCC moved for the withdrawal of its petition as there was
already a satisfaction of the judgment award, specifically, a Writ of Execution was issued by the MeTC to levy on
the Parking Slot No. 153. On September 14, 2012, it was subjected to a Sheriffs Auction Sale, where, the amount
of P50,573.00, the condominium corporation was adjudged as the highest bidder. Later, GMCC exercised its right
of redemption.

Accordingly, on February 25, 2014, GMCC has settled its liability and paid parking-dues for Parking Slot No. 153.
However, notwithstanding said payment, the condominium corporation opposed GMCC's motion to withdraw.
While it admits that there is already a satisfaction of the judgment award, it however, posits that said payment only
covers GMCC's obligations until February 2011.

GMCC can withdraw the petition after the satisfaction of the judgment award.

For failure of GMCC to appear on the scheduled date of hearing, the controversy was properly passed upon and
decided by the court a quo based on the facts as alleged in the Statement of Claim on the same day. This is pursuant
to Section 18 of the Rules of Procedure for Small Claims Cases, in relation to Section 1217 thereof.

There being no injunctive relief issued for the benefit of GMCC, execution followed as a matter of course. And, it is
a basic procedural precept that execution puts an end to litigation; it is where justice is served to the prevailing party.

The claim of the condominium corporation that GMCC has been delinquent in paying association dues for one of its
units is inconsequential as it was not asserted in the Statement of Claim. While Section 6 of the Rules of Procedure
for Small Claims Cases allows joinder of claims (provided that the total amount claimed, exclusive of interest and
costs, does not exceed Pl 00,000.00), the condominium corporation only alleged the failure of GMCC to pay its
parking slot dues over Parking Slot No. 153 in its Statement of Claim.

A.L. ANG NETWORK VS. MONDEJAR

A.L. Ang Network, Inc. filed a complaint for sum of money under the Rule pf Procedure for Small Claims Cases
against respondent. The MTCC ruled in favour of respondent. A.L. Ang Network, Inc. file a petition for certiorari
under Rule 65 beforre the RTC ascribing grave abuse of discretion on the part of MTCC in finding that they failed
to establish with certainty respondent’s obligation and in not ordering the respondent to pay the full amount to be
collected. RTC dismissed the petition citing that the petition was only filed to circumvent the non-appealable nature
of small claims cases and that it cannot supplant the decision of the MTCC with another decision directing
respondent to pay petitioner a bigger sum than that which has been awarded.

RTC is not correct in denying petitioner’s recourse under Rule 65 assailing the MTCC decision in the small
claims case.
The remedy of appeal is not allowed in the final nature of a small claims case decision. Nevertheless, the proscription
on appeals in small claims cases does not preclude the aggrieved party from filing a petition for certiorari under Rule
65.

A petition for certiorari, unlike an appeal, is an original action designed to correct only errors of jurisdiction and not
of judgment. The RTC could either grant or dismiss the petition based on an evaluation of whether or not the MTCC
gravely abused its discretion by capriciously, whimsically, or arbitrarily disregarding evidence that is material to the
controversy.

OKADA VS. SECURITY PACIFIC ASSURANCE CORPORATION

CHUNG FU INDUSTRIES (PHILIPPINES) INC. VS. CA

Petitioner Chung Fu entered into a construction agreement with Roblecor Phil. Inc. for the corporation’s industrial
factory with a total consideration of P42,000,000.00. Also, said companies entered into 2 other ancillary construction
contracts amounting to P3,875,285.00 and P12,100,000.00. The said construction agreement contained a stipulation
that in the event of disputes arising from the performance of the contract, such issue shall be submitted for resolution
before a single arbitrator chosen by the parties. However, Roblecor failed to complete the work despite the extension
of time provided by Chung Fu, which later on had to take over the said construction. Roblecor then claimed for the
unsatisfied account of P10,500,000 and unpaid progress billings of P2,370,179.23 and filed a petition for the
compulsory arbitration with a prayer for a TRO, while Chung Fu prayed for the dismissal of such petition. The RTC
approved the arbitration agreement and Engr. Asuncion was latter appointed as the sole arbitrator. He then ordered
the petitioners to pay the respondent contractor P16,108,801.00 and declared such award as final and unappealable.
Chung Fu moved to remand the case for further hearing but the lower court denied the motion and granted the
Confirmation of the award in favour of Roblecor. Chung Fu elevated the case to the CA via a petition for certiorari
but the CA only assailed the resolution of the lower court assailing that the signatories of the Arbitration Agreement
are bound to observe the stipulations thereof for the finality of the award.

The decision of the arbitrator shall not be deemed final and unappealable and beyond the ambit of the
court’s power of judicial review.

As per Art 2044 of the Civil Code, the finality of the arbitrators award is not absolute and without exceptions. It is
also stated in Sections 24, 25 of the Arbitration Law (R.A. 876, year 1953) that there are grounds for vacating,
modifying or rescinding an arbitrator’s award. Thus, if there are factual circumstances which are referred to in the
said provisions be present, judicial review of the award is properly warranted. Also, even decisions of an
administrative agency which are declared as “final” are not exempt from judicial review when so warranted. That is
why a voluntary arbitrator, by the very nature of their function, acts in a quasi-judicial capacity in deciding such cases,
is not to be construed as beyond the scope of the power of judicial review. The Court then provided that the lower
court committed grave abuse of discretion by not looking into the merits of the case despite a prima facie showing
of the existence of grounds warranting judicial review. Finally, the case was remanded back to the court of origin for
further hearing.

GOLANGCO CONSTRUCTION CORPORATION VS. RAY BURTON DEVELOPMENT CORPORATION

FEDERAL BUILDERS VS. POWER FACTORS

Federal Builders, Inc. (Federal) was the general contractor of the Buillion Mall (Mall) under a construction agreement
with Bullion Investment and Development Corporaton (BIDC). Federal engaged Power Factors, Inc. (Power) as its
subcontractor for the electric works at the Mall and the Precinct Building (Precinct). Upon completion of the electrical
works, Power demanded payment for the unpaid amount for the electrical works performed at Precinct, from Federal,
which answered that its outstanding balance under the original contract should be addressed directly to BDIC. Said
demand only fall unto the deaf ear of Federal. Anent to this, Power seek intervention from Construction Industry
Arbitration Commission (CIAC) Construction Industry Arbitration Commission (CIAC). After weighing the evidences
presented, the CIAC rendered the Final Award ordering Federal to pay Power the unpaid balance on the original
contract plus damages.

Both Federal and Power agreed to submit to voluntary arbitration, hence the CIAC had jurisdiction over the case. All
that is required for the CIAC to acquire jurisdiction is for the parties of any construction contract to agree to submit
their dispute to arbitration. It may be reflected in the arbitration clause of their contract, or by subsequently agreeing
to submit their dispute to voluntary arbitration, which need not be signed or be formally agreed upon in the contract,
because it can also be in the form of other modes of communication in writing. Consistent with the policy of
encouraging alternative dispute resolution methods, any doubt should be resolved in favor of the arbitration. The
Contract of Service between Federal and Power, reads: “15. Arbitration Committee – all disputes, controversies, or
differences, which may arise between the parties herein, out of or in relation to or in connection with this Agreement,
or for breach thereof shall be settled by the CIAC which shall have original and exclusive jurisdiction over the
aforementioned disputes.”

KOREA TECHNOLOGIES CO. LTD VS. LERMA

Petitioner Korea Technologies Co., Ltd. (KOGIES) is a Korean corporation which is engaged in the supply and
installation of Liquefied Petroleum Gas (LPG) Cylinder manufacturing plants, while private respondent Pacific
General Steel Manufacturing Corp. (PGSMC) is a domestic corporation. On March 5, 1997, PGSMC and KOGIES
executed a Contract whereby KOGIES would set up an LPG Cylinder Manufacturing Plant in Carmona, Cavite. The
contract was executed in the Philippines. On April 7, 1997, the parties executed, in Korea, an Amendment for
Contract No. KLP-970301 dated March 5, 1997 amending the terms of payment. The contract and its amendment
stipulated that KOGIES will ship the machinery and facilities necessary for manufacturing LPG cylinders for which
PGSMC would pay USD 1,224,000. KOGIES would install and initiate the operation of the plant for which PGSMC
bound itself to pay USD 306,000 upon the plants production of the 11-kg. LPG cylinder samples. Thus, the total
contract price amounted to USD 1,530,000. On October 14, 1997, PGSMC entered into a Contract of Lease with
Worth Properties, Inc. (Worth) for use of Worths 5,079-square meter property with a 4,032-square meter warehouse
building to house the LPG manufacturing plant. The monthly rental was PhP 322,560 commencing on January 1,
1998 with a 10% annual increment clause. Subsequently, the machineries, equipment, and facilities for the
manufacture of LPG cylinders were shipped, delivered, and installed in the Carmona plant. PGSMC paid KOGIES
USD 1,224,000. However, gleaned from the Certificate executed by the parties on January 22, 1998, after the
installation of the plant, the initial operation could not be conducted as PGSMC encountered financial difficulties
affecting the supply of materials, thus forcing the parties to agree that KOGIES would be deemed to have completely
complied with the terms and conditions of the March 5, 1997 contract. For the remaining balance of USD306,000
for the installation and initial operation of the plant, PGSMC issued two postdated checks: (1) BPI Check No.
0316412 dated January 30, 1998 for PhP 4,500,000; and (2) BPI Check No. 0316413 dated March 30, 1998 for PhP
4,500,000. When KOGIES deposited the checks, these were dishonored for the reason PAYMENT STOPPED.
Thus, on May 8, 1998, KOGIES sent a demand letter to PGSMC threatening criminal action for violation of Batas
Pambansa Blg. 22 in case of nonpayment. On the same date, the wife of PGSMCs President faxed a letter dated
May 7, 1998 to KOGIES President who was then staying at a Makati City hotel. She complained that not only did
KOGIES deliver a different brand of hydraulic press from that agreed upon but it had not delivered several equipment
parts already paid for.

The arbitration clause in the contract of the parties should govern.

Established in this jurisdiction is the rule that the law of the place where the contract is made governs. Lex loci
contractus. The contract in this case was perfected here in the Philippines. Therefore, our laws ought to govern.
Nonetheless, Art. 2044 of the Civil Code sanctions the validity of mutually agreed arbitral clause or the finality and
binding effect of an arbitral award. Art. 2044 provides, Any stipulation that the arbitrators award or decision shall be
final, is valid, without prejudice to Articles 2038, 2039 and 2040.

The arbitration clause was mutually and voluntarily agreed upon by the parties. It has not been shown to be contrary
to any law, or against morals, good customs, public order, or public policy. There has been no showing that the
parties have not dealt with each other on equal footing. We find no reason why the arbitration clause should not be
respected and complied with by both parties. In Gonzales v. Climax Mining Ltd., we held that submission to
arbitration is a contract and that a clause in a contract providing that all matters in dispute between the parties shall
be referred to arbitration is a contract. Again in Del Monte Corporation-USA v. Court of Appeals, we likewise ruled
that [t]he 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.
Having said that the instant arbitration clause is not against public policy, we come to the question on what governs
an arbitration clause specifying that in case of any dispute arising from the contract, an arbitral panel will be
constituted in a foreign country and the arbitration rules of the foreign country would govern and its award shall be
final and binding.

Thus, it can be gleaned that the concept of a final and binding arbitral award is similar to judgments or awards given
by some of our quasi-judicial bodies, like the National Labor Relations Commission and Mines Adjudication Board,
whose final judgments are stipulated to be final and binding, but not immediately executory in the sense that they
may still be judicially reviewed, upon the instance of any party. Therefore, the final foreign arbitral awards are
similarly situated in that they need first to be confirmed by the RTC.

MCC INDUSTRIAL SALES CORP. VS. SSANGYONG CORP.

Petitioner is engaged in the business of importing and wholesaling stainless steel products. One of its suppliers is
the responded, an international trading company with head office in Seoul, South Korea and regional headquarters
in Makati City, Philippines. The two corporations conducted business through telephone calls and facsimile or
telecopy transmissions. Respondent would send the pro forma invoices containing the details of the steel product
order to petitioner; if the latter conforms thereto, its representative affixes his signature on the faxed copy and sends
it back to the respondent, again by fax.

Respondent filed a civil action for damages due to breach of contract against petitioner before the Regional Trial
Court of Makati City. In its complaint, respondent alleged that defendants breached their contract when they refused
to open the letter of credit in the amount of US$170,000.00 for the remaining 100MT of steel under Pro Forma
Invoice Nos. ST2-POSTS0401-1 and ST2-POSTS0401-2.

After respondent rested its case, petitioner filed a Demurrer to Evidence alleging that respondent failed to present
the original copies of the pro forma invoices on which the civil action was based. Petitioner contends that the
photocopies of the pro forma invoices presented by respondent Ssangyong to prove the perfection of their supposed
contract of sale are inadmissible in evidence and do not fall within the ambit of R.A. No. 8792, because the law
merely admits as the best evidence the original fax transmittal. On the other hand, respondent posits that, from a
reading of the law and the Rules on Electronic Evidence, the original facsimile transmittal of the pro forma invoice is
admissible in evidence since it is an electronic document and, therefore, the best evidence under the law and the
Rules. Respondent further claims that the photocopies of these fax transmittals (specifically ST2-POSTS0401-1 and
ST2-POSTS0401-2) are admissible under the Rules on Evidence because the respondent sufficiently explained the
non-production of the original fax transmittals.

Electronic document shall be regarded as the equivalent of an original document under the Best Evidence Rule, as
long as it is a printout or output readable by sight or other means, showing to reflect the data accurately. Thus, to be
admissible in evidence as an electronic data message or to be considered as the functional equivalent of an original
document under the Best Evidence Rule, the writing must foremost be an “electronic data message” or an “electronic
document.

The Implementing Rules and Regulations (IRR) of R.A. No. 8792 defines the “Electronic Data Message” refers to
information generated, sent, received or stored by electronic, optical or similar means, but not limited to, electronic
data interchange (EDI), electronic mail, telegram, telex or telecopy.

The phrase “but not limited to, electronic data interchange (EDI), electronic mail, telegram, telex or telecopy” in the
IRR’s definition of “electronic data message” is copied from the Model Law on Electronic Commerce adopted by the
United Nations Commission on International Trade Law (UNCITRAL), from which majority of the provisions of R.A.
No. 8792 were taken. While Congress deleted this phrase in the Electronic Commerce Act of 2000, the drafters of
the IRR reinstated it. The deletion by Congress of the said phrase is significant and pivotal.

Moreover, when Congress formulated the term “electronic data message,” it intended the same meaning as the term
“electronic record” in the Canada law. This construction of the term “electronic data message,” which excludes
telexes or faxes, except computer-generated faxes, is in harmony with the Electronic Commerce Law’s focus on
“paperless” communications and the “functional equivalent approach” that it espouses. Facsimile transmissions are
not, in this sense, “paperless,” but verily are paper-based.
[I]n an ordinary facsimile transmission, there exists an original paper-based information or data that is scanned, sent
through a phone line, and re-printed at the receiving end. … [I]n a virtual or paperless environment, technically, there
is no original copy to speak of, as all direct printouts of the virtual reality are the same, in all respects, and are
considered as originals. Ineluctably, the law’s definition of “electronic data message,” which, as aforesaid, is
interchangeable with “electronic document,” could not have included facsimile transmissions, which have an original
paper-based copy as sent and a paper-based facsimile copy as received. These two copies are distinct from each
other, and have different legal effects. While Congress anticipated future developments in communications and
computer technology when it drafted the law, it excluded the early forms of technology, like telegraph, telex and
telecopy (except computer-generated faxes, which is a newer development as compared to the ordinary fax machine
to fax machine transmission), when it defined the term “electronic data message.”

[T]he terms “electronic data message” and “electronic document,” as defined under the Electronic Commerce Act of
2000, do not include a facsimile transmission. Accordingly, a facsimile transmission cannot be considered as
electronic evidence. It is not the functional equivalent of an original under the Best Evidence Rule and is not
admissible as electronic evidence.

DFA VS. BCA

In an Amended Build-Operate-Transfer Agreement, petitioner DFA awarded the Machine Readable Passport and
Visa Project (MRPN Project) to BCA International Corporation (BCA). During the implementation of the MRPN
Project, DFA sought to terminate the Agreement. However, BCA opposed the termination and filed a Request for
Arbitration. An ad hoc arbitral tribunal was constituted. In an Order, the arbitral tribunal approved BCA's request to
apply in court for the issuance of subpoena, subject to the conditions that the application will not affect its
proceedings and the hearing set in October 2013 will proceed whether the witnesses attend or not.

BCA filed before the RTC a Petition for Assistance in Taking Evidence pursuant to the Implementing Rules and
Regulations of The ADR Act of 2004 (RA 9285). In its petition, BCA sought the issuance of subpoena ad
testificandum and subpoena duces tecum to the several witnesses and documents in their custody.

DFA filed its comment, alleging that the presentation of the witnesses and documents was prohibited by law and
protected by the deliberative process privilege.

RTC ruled in favor of BCA and held that the evidence sought to be produced was no longer covered by the
deliberative process privilege.

RTC issued the subpoena due es tecum and subpoena ad testificandum. DFA filed a motion to quash the subpoena
duces tecum and subpoena ad testificandum, which BCA opposed. RTC denied the motion to quash and held that
the motion was actually a motion for reconsideration, which is prohibited under Rule 9 .9 of the Special Rules of
Court on Alternative Dispute Resolution (Special ADR Rules).

Said persons/officers testified before the arbitral tribunal pursuant to the subpoena. RTC denied the motion for
reconsideration filed by DFA. The RTC ruled that the motion became moot with the appearance of the witnesses
during the arbitration hearings. Hence, DFA filed this petition with an urgent prayer for the issuance of a temporary
restraining order and/or a writ of preliminary injunction. The Court issued a temporary restraining order enjoining the
arbitral tribunal from taking cognizance of the testimonies

The 1976 UNCITRAL Arbitration Rules and the Rules of Court apply to the present arbitration proceedings, not RA
9285 and the Special ADR Rules.

The Special ADR Rules specifically provide that they shall apply to assistance in taking evidence, and the RTC order
granting assistance in taking evidence shall be immediately executory and not subject to reconsideration or appeal.
An appeal with the CA is only possible where the RTC denied a petition for assistance in taking evidence. An appeal
to the SC from the CA is allowed only under any of the grounds specified in the Special ADR Rules.

We rule that the DFA failed to follow the procedure and the hierarchy of courts provided in RA 9285, its IRR, and the
Special ADR Rules, when DFA directly appealed before this Court the RTC Resolution and Orders granting
assistance in taking evidence. DFA contends that the RTC issued the subpoenas on the premise that RA 9285 and
the Special ADR Rules apply to this case. However, we find that even without applying RA 9285 and the Special
ADR Rules, the RTC still has the authority to issue the subpoenas to assist the parties in taking evidence.
The 1976 UNCITRAL Arbitration Rules, agreed upon by the parties to govern them, state that the "arbitral tribunal
shall apply the law designated by the parties as applicable to the substance of the dispute. Failing such designation
by the parties, the arbitral tribunal shall apply the law determined by the conflict of laws rules which it considers
applicable.

Established in this jurisdiction is the rule that the law of the place where the contract is made governs, or lex loci
contractus. Since there is no law designated by the parties as applicable and the Agreement was perfected in the
Philippines, "The Arbitration Law," or Republic Act No. 876 (RA 876), applies.

GONZALES VS. CLIMAX MINING

This is a consolidation of two petitions rooted in the same disputed Addendum Contract entered into by the parties.

In one case, the Court held that the DENR Panel of Arbitrators had no jurisdiction over the complaint for the
annulment of the Addendum Contract on grounds of fraud and violation of the Constitution and that the action should
have been brought before the regular courts as it involved judicial issues.

Gonzales averred that the DENR Panel of Arbitrators Has jurisdiction because the case involves a mining dispute
that properly falls within the ambit of the Panel’s authority.

Respondents Climax Mining Ltd., et al., on the other hand, seek reconsideration/clarification on the decision holding
that the case should not be brought for arbitration under R.A. No. 876. They argued that the arbitration clause in
the Addendum Contract should be treated as an agreement independent of the other terms of the contract, and that
a claimed rescission of the main contract does not avoid the duty to arbitrate.

On another case, Gonzales challenged the order of the RTC requiring him to proceed with the arbitration
proceedings while the complaint for the nullification of the Addendum Contract was pending before the DENR Panel
of Arbitrators. He contended that any issue as to the nullity, inoperativeness, or incapability of performance of the
arbitration clause/agreement raised by one of the parties to the alleged arbitration agreement must be determined
by the court prior to referring them to arbitration.

While Climax-Arimco contended that an application to compel arbitration under Sec. 6 of R.A. No. 876 confers on
the trial court only a limited and special jurisdiction, i.e., a jurisdiction solely to determine (a) whether or not the
parties have a written contract to arbitrate, and (b) if the defendant has failed to comply with that contract.

Arbitration is proper even though issues of validity and nullity of the Addendum Contract and, consequently,
of the arbitration clause were raised.

In La Naval Drug Corporation v. Court of Appeals, the Court held that R.A. No. 876 explicitly confines the court's
authority only to the determination of whether or not there is an agreement in writing providing for arbitration. In the
affirmative, the statute ordains that the court shall issue an order "summarily directing the parties to proceed with
the arbitration in accordance with the terms thereof." If the court, upon the other hand, finds that no such agreement
exists, "the proceeding shall be dismissed." The cited case also stressed that the proceedings are summary in
nature.

Implicit in the summary nature of the judicial proceedings is the separable or independent character of the arbitration
clause or agreement.

The doctrine of separability or severability enunciates that an arbitration agreement is independent of the main
contract. The arbitration agreement is to be treated as a separate agreement and the arbitration agreement does
not automatically terminate when the contract of which it is part comes to an end.

The separability of the arbitration agreement is especially significant to the determination of whether the invalidity of
the main contract also nullifies the arbitration clause. Indeed, the doctrine denotes that the invalidity of the main
contract, also referred to as the “container” contract, does not affect the validity of the arbitration
agreement. Irrespective of the fact that the main contract is invalid, the arbitration clause/agreement still remains
valid and enforceable.

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, as well as jurisprudence
applying it, seeks to avoid.

The Court added that when it declared that the case should not be brought for arbitration, it should be clarified that
the case referred to is the case actually filed by Gonzales before the DENR Panel of Arbitrators, which was for the
nullification of the main contract on the ground of fraud, as it had already been determined that the case should have
been brought before the regular courts involving as it did judicial issues.

TRANSFIELD PHILIPPINES VS. LUZON HYDRO ELECTRIC CORP.

Transfield Philippines (Transfield) entered into a turn-key contract with Luzon Hydro Corp. (LHC).Under the contract,
Transfield were to construct a hydro-electric plants in Benguet and Ilocos. Transfield was given the sole responsibility
for the design, construction, commissioning, testing and completion of the Project. The contract provides for a period
for which the project is to be completed and also allows for the extension of the period provided that the extension
is based on justifiable grounds such as fortuitous event. In order to guarantee performance by Transfield, two stand-
by letters of credit were required to be opened. During the construction of the plant, Transfield requested for
extension of time citing typhoon and various disputes delaying the construction. LHC did not give due course to the
extension of the period prayed for but referred the matter to arbitration committee. Because of the delay in the
construction of the plant, LHC called on the stand-by letters of credit because of default. However, the demand was
objected by Transfield on the ground that there is still pending arbitration on their request for extension of time.

Transfield’s argument that any dispute must first be resolved by the parties, whether through negotiations or
arbitration, before the beneficiary is entitled to call on the letter of credit in essence would convert the letter of credit
into a mere guarantee.

The independent nature of the letter of credit may be: (a) independence in toto where the credit is independent from
the justification aspect and is a separate obligation from the underlying agreement like for instance a typical standby;
or (b) independence may be only as to the justification aspect like in a commercial letter of credit or repayment
standby, which is identical with the same obligations under the underlying agreement. In both cases the payment
may be enjoined if in the light of the purpose of the credit the payment of the credit would constitute fraudulent abuse
of the credit.

Jurisprudence has laid down a clear distinction between a letter of credit and a guarantee in that the settlement of a
dispute between the parties is not a pre-requisite for the release of funds under a letter of credit. In other words, the
argument is incompatible with the very nature of the letter of credit. If a letter of credit is drawable only after settlement
of the dispute on the contract entered into by the applicant and the beneficiary, there would be no practical and
beneficial use for letters of credit in commercial transactions.

The engagement of the issuing bank is to pay the seller or beneficiary of the credit once the draft and the required
documents are presented to it. The so-called “independence principle” assures the seller or the beneficiary of prompt
payment independent of any breach of the main contract and precludes the issuing bank from determining whether
the main contract is actually accomplished or not. Under this principle, banks assume no liability or responsibility for
the form, sufficiency, accuracy, genuineness, falsification or legal effect of any documents, or for the general and/or
particular conditions stipulated in the documents or superimposed thereon, nor do they assume any liability or
responsibility for the description, quantity, weight, quality, condition, packing, delivery, value or existence of the
goods represented by any documents, or for the good faith or acts and/or omissions, solvency, performance or
standing of the consignor, the carriers, or the insurers of the goods, or any other person whomsoever.

RCBC VS. BANGKO DE ORO

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.

There is legal ground to vacate the second partial award.

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 article1 - 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

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."
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

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 Second 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.

UMBAO VS. YAP

Petitioner Umbao and respondent Yap both had agreed in writing to “submit their case to the Wage Administration
Service for investigation” and “to abide by whatever decision (said) office may render on the case” which “they
recognized . . . to be final and conclusive.” After proper investigation had been conducted by Severo Puncan of the
same Service, who after hearing the parties and considering their evidence, declared in a written report, respondent
Yap to be liable for unpaid wages; that the award had been approved by Ruben Santos, Acting Chief of the Service;
and that respondent had refused to abide by and comply with it. Respondent’s answer did not deny the existence of
the covenant and of the award but questioned the enforceability of both, contending mainly that the Service had no
legal authority to act as arbitrator, that the procedural requirements of Republic Act No. 602 had not been followed,
and that the provisions of Republic Act No. 876 known as the Arbitration Law had been disregarded. Petitioner then
asked for judgment on the pleadings. The Court, noting non-observance of the procedure outlined in Republic Act
No. 876, gave judgment for defendant. However upon motion to reconsider, the judge seeing differently, held the
arbitration agreements to be a contract obligatory on the parties under the provisions of the New Civil Code.
Consequently, he rendered judgment against defendant. Hence this appeal.

The argument evidently assumes that a compromise agreement is the same as an arbitration agreement. Such
assumption is error: one is different from the other; they are treated in two separate chapters of the Code.

No rules have been promulgated by this Court. However the Legislature adopted such rules in Republic Act No. 876
known as “The Arbitration Law’ effective December 1953. Said act was obviously adopted to supplement-not to
supplant-the New Civil Code on arbitration. It expressly declares that “the provisions of chapters one and two, Title
XIV, Book of the Civil Code the parties may select the arbitrator without court intervention. And section 8 of the Act
impliedly permits them to do so. There is nothing in Republic Act 876 requiring court permission of knowledge or
intervention before the arbitrator selected by the parties may perform his assigned work. The section does not mean
there can be no arbitration without a previous court actuation. The case between herein litigants has not required
court intervention from the beginning, because they had named the arbitrator: the Administration Service and
necessarily the proper officer, thereof, Severo Puncan. And this defendant should not be permitted to question the
authority of said officernow, because he voluntarily submitted his evidence to him; and he only turned around to
deny such authority when the resultant verdict adversely affected his pocket. He even appealed to the Secretary of
Labor, and without questioning Puncan’s authority, pleaded for exoneration on the merits.

As to the arbitration proceedings, Republic Act No. 876 contains provisions about the procedure to be adopted by
arbitrators, their oath, the hearings, and the form and content of the award. Even so, herein appellant asserted no
prejudicial departure therefrom. As already stated, Republic Act No. 876 did not require court intervention (in the
case at bar) prior to the award of the arbitrator, no ground for it having arisen, as the parties voluntarily took steps
to carry out the settlement process down to the arbiter’s decision. It was only after such award, when defendant
refused to comply that judicial action became necessary, thru the means afforded by the statute: confirmation of
award and judgment.

These provisions, we believe, apply whether or not the court intervened from the very beginning. Now then,
examining the complaint and the judgment entered herein in the light of the above directions, we find substantial
conformity therewith; so much so that defendant raised no issue on the same. Wherefore, the judgment should be,
and is hereby affirmed.

CONTINENTAL MARBLE CORP. VS. NLRC

Private respondent Rodito Nasayao claimed that sometime in May 1974, he was appointed plant manager of the
petitioner corporation, with an alleged compensation of P3,000.00, a month, or 25% of the monthly net income of
the company, whichever is greater, and when the company failed to pay his salary for the months of May, June, and
July 1974, Rodito Nasayao filed a complaint with the National Labor Relations Commission, Branch IV, for the
recovery of said unpaid varies. Petitioners denied that Rodito Nasayao was employed in the company as plant
manager with a fixed monthly salary of P3,000.00. They claimed that the undertaking agreed upon by the parties
was a joint venture, a sort of partnership, wherein Rodito Nasayao was to keep the machinery in good working
condition and, in return, he would get the contracts from end-users for the installation of marble products, in which
the company would not interfere. In addition, private respondent Nasayao was to receive an amount equivalent to
25% of the net profits that the petitioner corporation would realize, should there be any. Petitioners alleged that since
there had been no profits during said period, private respondent was not entitled to any amount. The case was
submitted for voluntary arbitration and the parties selected the herein respondent Jose T. Collado as voluntary
arbitrator. In the course of the proceedings, however, the herein petitioners challenged the arbitrator’s capacity to
try and decide the case fairly and judiciously and asked him to desist from further hearing the case. But, the
respondent arbitratorrefused. In due time, or on 29 December 1975, he rendered judgment in favor of the
complainant, ordering the herein petitioners to pay Rodito Nasayao the amount of P9,000.00, within 10 days from
notice. Petitioners appealed to the National Labor Relations Commission on grounds that the labor arbiter gravely
abused his discretion in persisting to hear and decide the case notwithstanding petitioners’ request for him to desist
therefrom: and that the appealed decision is not supported by evidence. Rodito Nasayao filed a motion to dismiss
the appeal on the ground that the decision of the voluntary arbitrator is final, unappealable, and immediately
executory respondent Commission, in a resolution dated 7 May 1976, dismissed the appeal on the ground that the
decision appealed from is final, unappealable and immediately executory, and ordered the herein petitioners to
comply with the decision of the voluntary arbitrator within 10 days from receipt of the resolution. Court issued a
temporary restraining order, restraining herein respondents from enforcing and/or carrying out the questioned
decision and resolution.

A voluntary arbitrator by the nature of her functions acts in quasijudicial capacity. There is no reason why her
decisions involving interpretation of law should be beyond this Court’s review. Administrative officials are presumed
to act in accordance with law and yet we do hesitate to pass upon their work where a question of law is involved or
where a showing of abuse of authority or discretion in their official acts is properly raised in petitions for certiorari.

While the Court has accorded great respect for, and finality to, findings of fact of a voluntary arbitrator and
administrative agencies which have acquired expertise in their respective fields, like the Labor Department and the
National Labor Relations Commission, their findings of fact and the conclusions drawn therefrom have to be
supported by substantial evidence. In that instant case, the finding of the voluntary arbitrator that Rodito Nasayao
was an employee of the petitioner corporation is not supported by the evidence or by the law.

The decisions of the voluntary arbitrators must be given the highest respect and as a general rule must be accorded
a certain measure of finality. This is especially true where the arbitrator chosen by the parties enjoys first rate
credentials. It is not correct however, that this respect precludes the exercise of judicial review over their decisions.

In spite of statutory provisions making final the decisions of certain administrative agencies, the SC may take
cognizance of petitions questioning these decisions where want of jurisdiction, grave abuse of discretion, violation
of due process, denial of substantial justice, or erroneous interpretation of the law are brought to its attention.

MALAYAN INSURANCE VS. ST. FRANCIS SQUARE

BASES CONVERSION VS. DMCI

 ABS CBN VS. WORLD INTERACTIVE

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.

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.

KOREA TECHNOLOGIES CO. LTD VS. LERMA

DFA VS. BCA

TRANSFIELD PHILIPPINES VS. LUZON HYDRO ELECTRIC CORP.

 TUNA PROCESSING VS. PHIL. KINGFORD

Kanemitsu Yamaoka, co-patentee of a US Patent, Philippine Letters Patent, and an Indonesian Patent, entered into
a Memorandum of Agreement (MOA) with five Philippine tuna processors including Respondent Philippine Kingford,
Inc. (KINGFORD). The MOA provides for the enforcing of the abovementioned patents, granting licenses under the
same, and collecting royalties, and for the establishment of herein Petitioner Tuna Processors, Inc. (TPI).

Due to a series of events not mentioned in the Petition, the tuna processors, including Respondent KINGFORD,
withdrew from Petitioner TPI and correspondingly reneged on their obligations. Petitioner TPI 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 KINGFORD.

To enforce the award, Petitioner TPI filed a Petition for Confirmation, Recognition, and Enforcement of Foreign
Arbitral Award before the RTC of Makati City. Respondent KINGFORD filed a Motion to Dismiss, which the RTC
denied for lack of merit. Respondent KINGFORD then sought for the inhibition of the RTC judge, 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 Ruiz, to which the case was re-
raffled, in turn, granted Respondent KINGFORDS’s Motion for Reconsideration and dismissed the Petition on the
ground that Petitioner TPI lacked legal capacity to sue in the Philippines. Petitioner TPI is a corporation established
in the State of California and not licensed to do business in the Philippines.

Hence, the present Petition for Review on Certiorari under Rule 45.

A foreign corporation not licensed to do business in the Philippines, but which collects royalties from
entities in the Philippines, may sue here to enforce a foreign arbitral award.

Sec. 45 of the Alternative Dispute Resolution Act of 2004 provides that the opposing party in an application for
recognition and enforcement of the arbitral award may raise only those grounds that were enumerated under Article
V of the New York Convention, to wit:

Article V
1. Recognition and enforcement of the award may be refused, at the request of the party against whom it is invoked,
only if that party furnishes to the competent authority where the recognition and enforcement is sought, proof that:

a. The parties to the agreement referred to in Article II were, under the law applicable to them, under some
incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, failing any
indication thereon, under the law of the country where the award was made;
b. The party against whom the award is invoked was not given proper notice of the appointment of the
arbitrator or of the arbitration proceedings or was otherwise unable to present his case;
c. The award deals with a difference not contemplated by or not falling within the terms of the submission
to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration, provided that, if
the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the
award which contains decisions on matters submitted to arbitration may be recognized and enforced;
d. The composition of the arbitral authority or the arbitral procedure was not in accordance with the
agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the
arbitration took place; or
e. The award has not yet become binding on the parties, or has been set aside or suspended by a
competent authority of the country in which, or under the law of which, that award was made.

2. Recognition and enforcement of an arbitral award may also be refused if the competent authority in the country
where recognition and enforcement is sought finds that:
a. The subject matter of the difference is not capable of settlement by arbitration under the law of that
country; or
b. The recognition or enforcement of the award would be contrary to the public policy of that country.

Not one of the abovementioned exclusive grounds touched on the capacity to sue of the party seeking the
recognition and enforcement of the award.

Pertinent provisions of the Special Rules of Court on Alternative Dispute Resolution, which was promulgated by the
Supreme Court, likewise support this position.
Rule 13.1 of the Special Rules provides that “[a]ny party to a foreign arbitration may petition the court to recognize
and enforce a foreign arbitral award.” The contents of such petition are enumerated in Rule 13.5. Capacity to sue
is not included. Oppositely, in the rule on local arbitral awards or arbitrations in instances where “the place of
arbitration is in the Philippines,” it is specifically required that a petition “to determine any question concerning the
existence, validity and enforceability of such arbitration agreement” available to the parties before the
commencement of arbitration and/or a petition for “judicial relief from the ruling of the arbitral tribunal on a preliminary
question upholding or declining its jurisdiction” after arbitration has already commenced should state “[t]he facts
showing that the persons named as petitioner or respondent have legal capacity to sue or be sued.”

Indeed, it is in the best interest of justice that in the enforcement of a foreign arbitral award, the Court
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 Philippine 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 [1998], 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 RTC correctly observed that the Model Law, not
the New York Convention, governs the subject arbitral award, Petitioner TPI 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.

INSULAR SAVINGS VS. FAR EASTERN

On December 11, 1991, Far East Bank and Trust Company (Respondent) filed a complaint against Home Bankers
Trust and Company (HBTC) with the Philippine Clearing House Corporation’s (PCHC) Arbitration Committee.

Respondent sought to recover from the petitioner, the sum of P25,200,000.00 representing the total amount of the
three checks drawn and debited against its clearing account. HBTC sent these checks to respondent for clearing
by operation of the PCHC clearing system. Thereafter, respondent dishonored the checks for insufficiency of
funds and returned the checks to HBTC. However, the latter refused to accept them since the checks were
returned by respondent after the reglementary regional clearing period.

Meanwhile, on January 17, 1992, before the termination of the arbitration proceedings, respondent filed another
complaint but this time with the Regional Trial Court (RTC) in Makati City for Sum of Money and Damages with
Preliminary Attachment.

The complaint was filed not only against HBTC but also against Robert Young, Eugene Arriesgado and Victor
Tancuan (collectively known as Defendants), who were the president and depositors of HBTC respectively. Aware
of the arbitration proceedings between respondent and petitioner, the RTC, in an Omnibus Order suspended the
proceedings in the case against all the defendants pending the decision of the Arbitration Committee

On February 2, 1998, the PCHC Arbitration Committee rendered its decision in favor of respondent. The motion for
reconsideration filed by petitioner was denied by the Arbitration Committee.

Consequently, to appeal the decision of the Arbitration Committee, petitioner filed a petition for review in the earlier
case filed by respondent in Branch 135 of the RTC of Makati.
In an order dated January 20, 1999, the RTC directed both petitioner and respondent to file their respective
memoranda, after which, said petition would be deemed submitted for resolution.
Both parties filed several pleadings. On February 8, 1999, respondent filed a Motion to Dismiss Petition for
Review for Lack of Jurisdiction, which was opposed by the petitioner.

On November 9, 1999, the RTC dismissed the petition for review.

The RTC denied petitioner’s motion for reconsideration, hence, this petition.

The Regional Trial Court did not err in dismissing the Petition of Petitioner for lack of jurisdiction on the ground that
it should have been docketed as a separate case.

As provided in the PCHC Rules, the findings of facts of the decision or award rendered by the Arbitration
Committee shall be final and conclusive upon all the parties in said arbitration dispute. Under Article 2044 of the
New Civil Code, the validity of any stipulation on the finality of the arbitrators’ award or decision is recognized.
However, where the conditions described in Articles 2038, 2039 and 2040 applicable to both compromises and
arbitrations are obtaining, the arbitrators’ award may be annulled or rescinded. Consequently, the decision of the
Arbitration Committee is subject to judicial review.
Furthermore, petitioner had several judicial remedies available at its disposal after the Arbitration Committee
denied its Motion for Reconsideration.

It may petition the proper RTC to issue an order vacating the award
• Invoking the grounds provided for under Section 24 of the Arbitration Law;
• Filing a petition for review under Rule 43 of the Rules of Court with the Court of Appeals on questions of fact, of
law, or mixed questions of fact and law; and Lastly,
• Petitioner may file a petition for certiorari under Rule 65 of the Rules of Court on the ground that the Arbitrator
Committee acted without or in excess of its jurisdiction or with grave abuse of discretion amounting to lack or
excess of jurisdiction.

Since this case involves acts or omissions of a quasi-judicial agency, the petition should be filed in and cognizable
only by the Court of Appeals.

In this instance, petitioner did not avail of any of the abovementioned remedies available to it. Instead it filed a
petition for review with the RTC where Civil Case No. 92-145 is pending pursuant to Section 13 of the PCHC
Rules to sustain its action. Clearly, it erred in the procedure it chose for judicial review of the arbitral award.

Jurisdiction over the subject matter is conferred by law and not by the consent or acquiescence of any or all of the
parties or by erroneous belief of the court that it exists.

In the instant case, petitioner and respondent have agreed that the PCHC Rules would govern in case of
controversy. However, since the PCHC Rules came about only as a result of an agreement between and among
member banks of PCHC and not by law, it cannot confer jurisdiction to the RTC. Thus, the portion of the PCHC
Rules granting jurisdiction to the RTC to review arbitral awards, only on questions of law, cannot be given effect.

Consequently, the proper recourse of petitioner from the denial of its motion for reconsideration by the Arbitration
Committee is to file either a motion to vacate the arbitral award with the RTC, a petition for review with the Court of
Appeals under Rule 43 of the

Rules of Court, or a petition for certiorari under Rule 65 of the Rules of Court.

Alternative dispute resolution methods or ADRs – like arbitration, mediation, negotiation and conciliation – are
encouraged by the Supreme Court. By enabling parties to resolve their disputes amicably, they provide solutions
that are less time-consuming, less tedious, less confrontational, and more productive of goodwill and lasting
relationships. It must be borne in mind that arbitration proceedings are mainly governed by the Arbitration Law and
suppletorily by the Rules of Court.
 STRONGHOLD VS. SPS. STROEM

Spouses Rune and Lea Stroem (Spouses Stroem) entered into an Owners-Contractor Agreement[4] with Asis-Leif
& Company, Inc. (Asis-Leif) for the construction of a two-storey house on the lot owned by Spouses Stroem in
Antipolo, Rizal. Asis-Leif secured Performance Bond No. LP/G(13)83056 in the amount of P4,500,000.00 from
Stronghold Insurance Company, Inc. (Stronghold). Stronghold and Asis-Leif, through Ms. Ma. Cynthia Asis-Leif,...
bound themselves jointly and severally to pay the Spouses Stroem the agreed amount in the event that the
construction project is not completed

Asis-Leif failed to finish the project on time despite repeated demands of the Spouses Stroem Spouses Stroem
subsequently rescinded the agreement. On April 5, 2001, Stronghold sent a letter to Asis-Leif requesting that the
company settle its obligations with the Spouses Stroem. No response was received from Asis-Leif. Spouses Stroem
filed a Complaint (with Prayer for Preliminary Attachment)[13] for breach of contract and for sum of money with a
claim for damages against Asis-Leif, Ms. Cynthia Asis-Leif, and Stronghold.

Only Stronghold was served summons. Regional Trial Court rendered a judgment in favor of the Spouses Stroem.
The trial court ordered Stronghold to pay the Spouses Stroem ?4,500,000.00 with 6% legal interest from the time of
first demand Both Stronghold and the Spouses Stroem appealed to the Court of Appeals.

The Court of Appeals affirmed with modification the trial court's Decision. It increased the amount of attorney's fees
to ?50,000.00. On March 20, 2013, this court required the Spouses Stroem to submit their Comment on the Petition.

Stronghold argues that the trial court did not acquire jurisdiction over the case and, therefore, the Court of Appeals
committed reversible error when it upheld the Decision of the Regional Trial Court... he lower courts should have
dismissed the... case in view of the arbitration clause in the agreement Moreover, "the stipulations in said Agreement
are part and parcel of the conditions in the bond. Were it not for such stipulations in said agreement, [Stronghold]
would not have agreed to issue a bond in favor of the Spouses Stroem.

On the other hand, the Spouses Stroem argue that Stronghold committed forum shopping warranting dismissal of
the case. According to the Spouses Stroem, Stronghold deliberately committed forum shopping when it filed the
present petition despite the... pendency of the Spouses Stroem's Motion for Partial Reconsideration of the Court of
Appeals Decision dated November 20, 2012.

This court resolves to deny the Petition.

Indeed, petitioner is guilty of forum shopping. Petitioner failed to carry out its duty of promptly informing this court of
any pending action or proceeding before this court, the Court of Appeals, or any other tribunal or agency. This court
cannot countenance petitioner's disregard of the rules. On this basis, this case should be dismissed

Petitioner... raised the issue of lack of jurisdiction in view of an arbitration agreement for the first time. Petitioner and
respondents recognize that CIAC has jurisdiction over disputes arising from the agreement. This court, however,
cannot apply the ruling in Prudential to the present case. Several factors militate against petitioner's claim.

The contractual stipulations in this case and in Prudential are different. This court in Prudential held that the
construction contract expressly incorporated the performance bond into the contract.[79] In the present case, Article
7 of the Owners-Contractor Agreement merely stated that a performance bond shall be... issued in favor of
respondents, in which case petitioner and Asis-Leif Builders and/or Ms. Ma. Cynthia Asis-Leif shall pay
P4,500,000.00 in the event that Asis-Leif fails to perform its duty under the Owners-Contractor Agreement.

Consequently, the... performance bond merely referenced the contract entered into by respondents and Asis-Leif,
which pertained to Asis-Leif's duty to construct a two-storey residence building with attic, pool, and landscaping over
respondents' property

Owners-Contractor Agreement that the arbitration clause is found.

Not being a party to the construction agreement, petitioner cannot invoke the arbitration clause. Petitioner, thus,
cannot invoke the jurisdiction of the CIAC. Where a surety in a construction contract actively participates in a
collection suit, it is estopped from raising jurisdiction later.

Assuming that petitioner is privy to the construction agreement, we cannot allow petitioner to invoke arbitration at
this late... stage of the proceedings since to do so would go against the law's goal of prompt resolution of cases in
the construction industry.
 FRUEHAUF ELECTRONICS VS. TECHNOLOGY ELECTRONICS ASSMEBLY

Fruehauf Electronics Philippines Corporation (Fruehauf), claimant in the arbitration, sought to reverse the Court of
Appeals’ (CA) decision that set aside the arbitral award for unpaid rent and damages against the successor-in
interest of its lessee, Technology Electronics Assembly and Management Pacific Corporation (TEAM). Fruehauf
argued, among others, that courts do not have the power to substitute their judgment for that of arbitrators.
Meanwhile, TEAM contended that the CA correctly resolved the substantive issues of the case, as the arbitral
tribunal’s errors were sufficient grounds for the CA to modify and vacate the award.

ABS-CBN Broadcasting Corporation v. World Interactive Network Systems (WINS) Japan Co., Ltd. (G.R. No.
169332, February 11, 2008) and other cases and held that arbitral tribunals are not quasi-judicial agencies with
administrative adjudicatory powers. Apart from being an obiter dictum, the ruling in ABSCBN committed the fallacy
of equivocation, equating “voluntary arbitrator” in labor disputes with “arbitrator/ arbitration tribunal” in commercial
arbitration.

Moreover, Rule 43, Section 1 of the Rules enumerates the quasi-judicial agencies whose decisions are appealable
to the CA. Treating arbitral tribunals as quasi-judicial bodies would place them in the same footing as the RTCs,
effectively removing arbitral awards from the scope of the RTC’s authority to confirm or to vacate them on the
grounds provided by law, such as the validity of the arbitration agreement or the regularity of the proceedings.

Thus, the Supreme Court held that the only remedy against a final domestic arbitral award is to file a petition to
vacate or to modify/correct the award under Rule 11.2 of the Special Alternative Dispute Resolution (ADR) Rules.
Unless a ground to vacate has been established, the RTC must confirm the arbitral award as a matter of course.

…..

As for the proper mode of appeal from an order confirming, vacating, correcting, or modifying an arbitral award, the
Supreme Court ruled that the losing party may move for reconsideration and thereafter appeal the ruling via petition
for review on certiorari under Rule 45 raising pure questions of law.

As there was no law granting judicial authority to review the merits of the award to Fruehauf, the Supreme Court
refrained from passing upon the correctness of the arbitral tribunal’s findings to avoid judicial legislation. In doing so,
the Supreme Court upheld the autonomy of arbitral awards and deemed the arbitral tribunal’s errors, if any, as simple
errors of fact and/or law, which are not justiciable issues.

DFA VS. BCA

TUNA PROCESSING VS. PHIL. KINGFORD

RCBC VS. BANGKO DE ORO

STRONGHOLD VS. SPS. STROEM

KOPPEL VS. MAKATI ROTARY

DENR VS. UPCI

Petitioner, through the Land Management Bureau (LMB), entered into an Agreement for Consultancy Services
(Consultancy Agreement) with respondent United Planners Consultants, Inc. in connection with the LMB’s Land
Resource Management Master Plan Project (LRMMP). Under the Consultancy Agreement, petitioner committed to
pay a total contract price of P4,337,141.00, based on a predetermined percentage corresponding to the particular
stage of work accomplished.
Respondent completed the work required, which petitioner formally accepted on December 27, 1994. However,
petitioner was able to pay only 47% of the total contract price in the amount of P2,038,456.30.

October 25, 1994 - The Commission on Audit (COA) released the Technical Services Office Report (TSO) finding
the contract price of the Agreement to be 84.14% excessive. This notwithstanding, petitioner, in a letter dated
December 10, 1998, acknowledged its liability to respondent in the amount of P2,239,479.60 and assured payment
at the soonest possible time.

For failure to pay its obligation under the Consultancy Agreement despite repeated demands, respondent instituted
a Complaint against petitioner before the Regional Trial Court of Quezon City. Due to the existence of Arbitration
clause, the respondent moved for the issue to be tried through arbitration. The Arbitral Tribunal rendered its Award
dated May 7, 2010 (Arbitral Award) in favor of respondent.

Petitioner filed a motion for reconsideration. Arbitral Tribunal claimed that it had already lost jurisdiction over the
case after it had submitted to the RTC its Report together with a copy of the Arbitral Award.

March 30, 2011, the RTC merely noted petitioner’s aforesaid motions, finding that copies of the Arbitral Award appear
to have been sent to the parties by the Arbitral Tribunal, including the OSG, contrary to petitioner’s claim. On the
other hand, the RTC confirmed the Arbitral Award pursuant to Rule 11.2 (A)36 of the Special ADR Rules and ordered
petitioner to pay respondent the costs of confirming the award, as prayed for, in the total amount of P50,000.00.
From this order, petitioner did not file a motion for reconsideration.

Respondent moved for the issuance of a writ of execution, to which no comment/opposition was filed by petitioner
despite the RTC’s directive therefor. In an Order dated September 12, 2011, the RTC granted respondent’s motion.
Petitioner moved to quash the writ of execution, positing that respondent was not entitled to its monetary claims. It
also claimed that the issuance of said writ was premature since the RTC should have first resolved its May 19, 2010
Motion for Reconsideration and June 1, 2010 Manifestation and Motion, and not merely noted them, thereby violating
its right to due process.

In an Order dated July 9, 2012, the RTC denied petitioner’s motion to quash.

Petitioner received the RTC’s Order dated July 9, 2012 denying its motion to quash. Dissatisfied, it filed on
September 10, 2012 a petition for certiorari before the CA, docketed as CA-G.R. SP No. 126458, averring in the
main that the RTC acted with grave abuse of discretion in confirming and ordering the execution of the Arbitral
Award.

The CA dismissed the certiorari petition on two (2) grounds, namely: (a) the petition essentially assailed the merits
of the Arbitral Award which is prohibited under Rule 19 of the Special ADR Rules and (b) the petition was filed out
of time, having been filed way beyond 15 days from notice of the RTC’s July 9, 2012 Order, in violation of Rule
19.2852 in relation to Rule 19.853 of said Rules which provide that a special civil action for certiorari must be filed
before the CA within 15 days from notice of the judgment, order, or resolution sought to be annulled or set aside (or
until July 27, 2012). Aggrieved, petitioner filed the instant petition.

The petition is DENIED, Republic Act No. (RA) 9285, otherwise known as the Alternative Dispute Resolution Act of
2004,” institutionalized the use of an Alternative Dispute Resolution System (ADR System) in the Philippines. The
Act, however, was without prejudice to the adoption by the Supreme Court of any ADR system as a means of
achieving speedy and efficient means of resolving cases pending before all courts in the Philippines.

May 7, 2010, the Arbitral Tribunal rendered the Arbitral Award in favor of respondent. Under Section 17.2, Rule 17
of the CIAC Rules, no motion for reconsideration or new trial may be sought, but any of the parties may file a motion
for correction of the final award, which shall interrupt the running of the period for appeal, Moreover, the parties may
appeal the final award to the CA through a petition for review under Rule 43 of the Rules of Court.

LUZON IRON VS. BRIDESTONE MINING

Respondents Bridestone Mining and Development Corporation (Bridestone) and Anaconda Mining and
Development Corporation (Anaconda) filed separate complaints before the RTC for rescission of contract and
damages against petitioners Luzon Iron Development Group Corporation (Luzon Iron) and Consolidated Iron
Sands, Ltd. (Consolidated Iron). Both complaints sought the rescission of the Tenement Partnership and
Acquisition Agreement (TPAA) entered into by both petitioner and respondent for the assignment of the
Exploration Permit Application of the former in favor of the latter. The complaints also sought the return of the
Exploration Permits to Bridestone and Anaconda. Petitioner filed a motion to dismiss, they contended that the RTC
could not acquire jurisdiction over Consolidated Iron because it was a foreign corporation that had never
transacted business in the Philippines. Petitioner further alleged that respondents are guilty of forum shopping by
filing a case with the RTC and the DENR. On the other hand, respondents asserted that the trial court had
jurisdiction over the complaints because the TPAA itself allowed a direct resort before the courts in exceptional
circumstances. They cited paragraph 14.8 thereof as basis explaining that when a direct and/or blatant violation of
the TPAA had been committed, a party could go directly to the courts. RTC ruled in favor of respondents which
was later upheld by the CA.
The Supreme court ruled that there was forum shopping Filing of complaints before the RTC and the DENR is
forum shopping. (Forum shopping is committed when multiple suits involving the same parties and the same
causes of action are filed, either simultaneously or successively, for the purpose of obtaining a favorable judgment
through means other than appeal or certiorari). The summon was not properly served. The Court, finds that
Consolidated Iron was not properly served with summons through any of the permissible modes under the Rules
of Court. Indeed, Consolidated Iron was served with summons through Luzon Iron. Such service of summons,
however, was defective. Lastly, the controversy must be referred to arbitration as laid down in the Agreement.
Paragraphs 14.8 and 15.1 of the TPAA should be harmonized in such a way that the arbitration clause is given life.
The complaints filed before the RTC should have been dismissed, because petitioners were able to establish that
responsdents violated the prohibition on forum shopping. The parties, nevertheless, are directed to initiate
arbitration proceedings as provided under Paragraph 15.1 of the TPAA.

FEDERAL EXPRESS VS. AIRFREIGHT

FYFE VS. PAL

PAL underwent rehabilitation proceedings in the Securities Exchange Commission (SEC). To convince its
creditors, they decided to hire technical advisers. Peter Foster of Cathay Pacific and Michael Scantlebury
organized Regent Star Services Ltd.. Regent Star and PAL entered into a Technical Services Ageement (TSA)
effective for five years. Regent Star subsequently engaged with FYFE. Wald and Nuttall and commenced o render
their services immediately after the TSA on the ground of lack of confidence. In its notice the respondent
demanded the offsetting of the penalties due with the two year advance advisory fees it had paid to Regent Star.
Regent Star proposed that the issue had submitted to arbitration with the Philippine Dispute Resolution Center Inc.
(PDRCI) pursuant to the TSA. PDRCI rendered judgment ordering PAL to pay the termination penalties. PAL filed
its application to Vacate Arbitral Award in the RTC of Manila.
The CA emphasized that the petitioners should have led the petition for review on certiorari under Rule 45
considering that Section 29 of the Arbitration Law has limited the ground of review to "questions of law." Although
the Special Rules of Court on Alternative Dispute Resolution provides that the appropriate remedy from an order
of the RTC vacating a domestic arbitral award is an appeal by petition for review in the CA, not an ordinary appeal
under Rule 41 of the Rules of Court, the Court cannot set aside and reverse the assailed decision on that basis
because the decision was in full accord with the law or rule in force at the time of its promulgation