1. BF Corporation vs. CA
“Reasonableness” is
Same; Same; A contract may be encompassed in several instruments
even though every instrument is not signed by the parties, since it is
sufficient if the unsigned instruments are clearly identified or referred
to and made part of the signed instrument or instruments.—
Petitioner’s contention that there was no arbitration clause because
the contract incorporating said provision is part of a “hodgepodge”
document, is therefore untenable. A contract need not be contained in
a single writing. It may be collected from several different writings
which do not conflict with each other and which, when connected,
show the parties, subject matter, terms and consideration, as in
contracts entered into by correspondence. A contract may be
encompassed in several instruments even though every instrument is
not signed by the parties, since it is sufficient if the unsigned
instruments are clearly identified or referred to and made part of the
signed instrument or instruments. Similarly, a written agreement of
which there are two copies, one signed by each of the parties, is
binding on both to the same extent as though there had been only one
copy of the agreement and both had signed it.
Same; Same; The subscription of the principal agreement effectively
covers the other documents incorporated by reference therein.—The
flaw in petitioner’s contentions therefore lies in its having segmented
the various components of the whole contract between the parties into
several parts. This notwithstanding, petitioner ironically admits the
execution of the Articles of Agreement. Notably, too, the lower court
found that the said Articles of Agreement “also provides that the
‘Contract Documents’ therein listed ‘shall be deemed an integral part
of this Agreement,’ and one of the said documents is the ‘Conditions
of Contract’ which contains the Arbitration Clause.’ ” It is this Articles
of Agreement that was duly signed by Rufo B. Colayco, president of
private respondent SPI, and Bayani F. Fernando, president of
petitioner corporation. The same agreement was duly subscribed
before notary public Nilberto R. Briones. In other words, the
subscription of the principal agreement effectively covered the other
documents incorporated by reference therein.
Same; Same; Words and Phrases; “Reasonableness” is a relative
term and the question of whether the time within which an act has to
be done is reasonable depends on attendant circumstances.—The
arbitration clause provides for a “reasonable time” within which the
parties may avail of the relief under that clause.
a relative term and the question of whether the time within which an
act has to be done is reasonable depends on attendant
circumstances. This Court finds that under the circumstances
obtaining in this case, a one-month period from the time the parties
held a conference on July 12, 1993 until private respondent SPI
notified petitioner that it was invoking the arbitration clause, is a
reasonable time. Indeed, petitioner may not be faulted for resorting to
the court to claim what was due it under the contract. However, we
find its denial of the existence of the arbitration clause as an attempt
to cover up its misstep in hurriedly filing the complaint before the
lower court.
Same; Republic Act 876; The potentials of arbitration as one of the
alternative dispute resolution methods that are now rightfully vaunted
as “the wave of the future” in international relations, is recognized
worldwide.—It should be noted that in this jurisdiction, arbitration has
been held valid and constitutional. Even before the approval on June
19, 1953 of Republic Act No. 876, this Court has countenanced the
settlement of disputes through arbitration. Republic Act No. 876 was
adopted to supplement the New Civil Code’s provisions on arbitration.
Its potentials as one of the alternative dispute resolution methods that
are now rightfully vaunted as “the wave of the future” in international
relations, are recognized worldwide. To brush aside a contractual
agreement calling for arbitration in case of disagreement between the
parties would therefore be a step backward.
2. ABS-CBN Broadcasting Corporation vs. World Interactive
Network Systems (WINS) Japan Co., Ltd.
Courts; Jurisdictions; Arbitration; Alternative Dispute Resolution; 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.—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.
Same; Same; Same; Same; 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.—The law itself clearly provides that the RTC must issue an
order vacating an arbitral award only “in any one of the . . . cases”
enumerated therein. Under the legal maxim in statutory construction
expressio unius est exclusio alterius, the explicit mention of one thing
in a statute means the elimination of others not specifically mentioned.
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.
Same; Same; Same; Same; Adamson v. Court of Appeals (232 SCRA
602) 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.—Adamson v. Court of Appeals, 232 SCRA
602 (1994), 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 that case, the trial court
vacated the arbitral award seemingly based on grounds included in
Section 24 of RA 876 but a closer reading thereof revealed otherwise.
On appeal, the CA reversed the decision of the trial court and affirmed
the arbitral award.
Same; Same; Same; Same; The Court held that a voluntary arbitrator
is properly classified as a “quasi-judicial instrumentality” and is, thus,
within the ambit of Section 9(3) of the Judiciary Reorganization Act, as
amended.—In Luzon Development Bank v. Association of Luzon
Development Bank Employees, 249 SCRA 162 (1965), the Court held
that a voluntary arbitrator is properly classified as a “quasi-judicial
instrumentality” and is, thus, within the ambit of Section 9 (3) of the
Judiciary Reorganization Act, as amended. Same; Same; Same;
Same; The proper remedy from the adverse decision of a voluntary
arbitrator, if errors of fact and/or law are raised, is a petition for review
under Rule 43 of the Rules of Court.—This rule was cited in Sevilla
Trading Company v. Semana, 428 SCRA 239 (2004), Manila Midtown
Hotel v. Borromeo, 438 SCRA 653 (2004), and Nippon Paint
Employees Union-Olalia v. Court of Appeals, 443 SCRA 286 (2004).
These cases held that the proper remedy from the adverse decision of
a voluntary arbitrator, if errors of fact and/or law are raised, is a
petition for review under Rule 43 of the Rules of Court. Thus,
petitioner’s contention that it may avail of a petition for review under
Rule 43 under the circumstances of this case is correct.
Same; Same; Same; Same; Any agreement stipulating that “the
decision of the arbitrator shall be final and unappealable” and “that no
further judicial recourse if either party disagrees with the whole or any
part of the arbitrator’s award may be availed of” cannot be held to
preclude in proper cases the power of judicial review which is inherent
in courts.—As may be gleaned from the above stated provision, it is
well within the power and jurisdiction of the Court to inquire whether
any instrumentality of the Government, such as a voluntary arbitrator,
has gravely abused its discretion in the exercise of its functions and
prerogatives. Any agreement stipulating that “the decision of the
arbitrator shall be final and unappealable” and “that no further judicial
recourse if either party disagrees with the whole or any part of the
arbitrator’s award may be availed of” cannot be held to preclude in
proper cases the power of judicial review which is inherent in courts.
We will not hesitate to review a voluntary arbitrator’s award where
there is a showing of grave abuse of authority or discretion and such
is properly raised in a petition for certiorari and there is no appeal, nor
any plain, speedy remedy in the course of law.
3. Real Bank, Inc. vs. Samsung Mabuhay Corporation
Actions; Mediation; Mediation is part of pre-trial and failure of the
plaintiff to appear thereat merits sanction on the part of the absent
party.—In Senarlo v. Judge Paderanga, 617 SCRA 247 (2010), this
Court accentuated that mediation is part of pre-trial and failure of the
plaintiff to appear thereat merits sanction on the part of the absent
party. This court held: A.M. No. 01-10-5- SC-PHILJA dated 16
October 2001, otherwise known as the Second Revised Guidelines for
the Implementation of Mediation Proceedings and Section 5, Rule 18
of the Rules of Court grant judges the discretion to dismiss an action
for failure of the plaintiff to appear at mediation proceedings.
4. LM Power Engineering Corporation vs. Capitol Industrial
Construction Groups, Inc.
Alternative Dispute Resolution; Arbitration; Courts; Jurisdiction; The
inclusion of an arbitration clause in a contract does not ipso facto
divest the courts of jurisdiction to pass upon the findings of arbitral
bodies, because the awards are still judicially reviewable under
certain conditions.—We side with respondent. Essentially, the dispute
arose from the parties’ incongruent positions on whether certain
provisions of their Agreement could be applied to the facts. The
instant case involves technical discrepancies that are better left to an
arbitral body that has expertise in those areas. In any event, the
inclusion of an arbitration clause in a contract does not ipso facto
divest the courts of jurisdiction to pass upon the findings of arbitral
bodies, because the awards are still judicially reviewable under
certain conditions.
Same; Same; Same; Being an inexpensive, speedy and amicable
method of settling disputes, arbitration—along with mediation,
conciliation and negotiation—is encouraged by the Supreme Court;
Arbitration is regarded as the “wave of the future” in international civil
and commercial disputes; Consistent with the policy of encouraging
alternative dispute resolution methods, courts should liberally
construe arbitration clauses.—Being an inexpensive, speedy and
amicable method of settling disputes, arbitration—along with
mediation, conciliation and negotiation— is encouraged by the
Supreme Court. Aside from unclogging judicial dockets, arbitration
also hastens the resolution of disputes, especially of the commercial
kind. It is thus regarded as the “wave of the future” in international civil
and commercial disputes. Brushing aside a contractual agreement
calling for arbitration between the parties would be a step backward.
Consistent with the above-mentioned policy of encouraging alternative
dispute resolution methods, courts should liberally construe arbitration
clauses. Provided such clause is susceptible of an interpretation that
covers the asserted dispute, an order to arbitrate should be granted.
Any doubt should be resolved in favor of arbitration.
Same; Same; Same; Construction Industry Arbitration Commission
(CIAC); Recourse to the CIAC may now be availed of whenever a
contract “contains a clause for the submission of a future controversy
to arbitration.—On the other hand, Section 1 of Article III of the new
Rules of Procedure Governing Construction Arbitration has dispensed
with this requirement and recourse to the CIAC may now be availed
ofwhenever a contract “contains a clause for the submission of a
future controversy to arbitration,” in this wise: “SECTION 1.
Submission to CIAC Jurisdiction.—An arbitration clause in a
construction contract or a submission to arbitration of a construction
dispute shall be deemed an agreement to submit an existing or future
controversy to CIAC jurisdiction, notwithstanding the reference to a
different arbitration institution or arbitral body in such contract or
submission. When a contract contains a clause for the submission of
a future controversy to arbitration, it is not necessary for the parties to
enter into a submission agreement before the claimant may invoke
the jurisdiction of CIAC.” The foregoing amendments in the Rules
were formalized by CIAC Resolution Nos. 2-91 and 3-93.
5. Rizal Commercial Banking Corporation vs. Magwin Marketing
Corporation
Same; Same; Alternative Dispute Resolution; Compromise
Agreements; The proper course of action that should have been taken
by the court a quo, upon manifestation of the parties of their
willingness to discuss a settlement, is to suspend the proceedings and
allow them reasonable time to come to terms; While the rules allow
the trial court to suspend its proceedings consistent with the policy to
encourage the use of alternative mechanisms of dispute resolution,
the grant to the parties of only 15 days to conclude a deal is, to say
the least, a passive and paltry attempt of the court a quo in its task of
persuading litigants to agree upon a reasonable concession.—As also
explained therein, the proper course of action that should have been
taken by the court a quo, upon manifestation of the parties of their
willingness to discuss a settlement, was to suspend the proceedings
and allow them reasonable time to come to terms (a) If willingness to
discuss a possible compromise is expressed by one or both parties;
or (b) If it appears that one of the parties, before the commencement
of the action or proceeding, offered to discuss a possible compromise
but the other party refused the offer, pursuant to Art. 2030 of the Civil
Code. If despite efforts exerted by the trial court and the parties the
negotiations still fail, only then should the action continue as if no
suspension had taken place. Ostensibly, while the rules allow the trial
court to suspend its proceedings consistent with the policy to
encourage the use of alternative mechanisms of dispute resolution, in
the instant case, the trial court only gave the parties fifteen (15) days
to conclude a deal. This was, to say the least, a passive and paltry
attempt of the court a quo in its task of persuading litigants to agree
upon a reasonable concession. Hence, if only to inspire confidence in
the pursuit of a middle ground between petitioner and respondents,
we must not interpret the trial court’s Orders as dismissing the action
on its own motion because the parties, specifically petitioner, were
anxious to litigate their case as exhibited in their several
manifestations and motions.
6. Rizalina Positos vs. Jacob Chua
Same; Conciliation Proceedings; Non-compliance with conciliation
requirement under the Local Government Code (Republic Act No.
7160) affects the sufficiency of a party’s cause of action and renders
the complaint susceptible to dismissal on the ground of prematurity.—
As reflected above, respondent’s complaint was dismissed for failure
to comply with the conciliation process. Non-compliance affected the
sufficiency of his cause of action and rendered the complaint
susceptible, as in fact it resulted to dismissal on the ground of
prematurity.
7. Uniwide Sales Realty and Resources Corporation vs. Titan-
Ikeda Construction and Development Corporation
Same; Same; Same; Same; As an arbitration body, the Construction
Industry Arbitration Commission (CIAC) can only resolve issues
brought before it by the parties through the Terms of Reference (TOR)
which functions similarly as a pre-trial brief.— Arbitration has been
defined as “an arrangement for taking and abiding by the judgment of
selected persons in some disputed matter, instead of carrying it to
established tribunals of justice, and is intended to avoid the
formalities, the delay, the expense and vexation of ordinary litigation.”
Voluntary arbitration, on the other hand, involves the reference of a
dispute to an impartial body, the members of which are chosen by the
parties themselves, which parties freely consent in advance to abide
by the arbitral award issued after proceedings where both parties had
the opportunity to be heard. The basic objective is to provide a speedy
and inexpensive method of settling disputes by allowing the parties to
avoid the formalities, delay, expense and aggravation which
commonly accompany ordinary litigation, especially litigation which
goes through the entire hierarchy of courts. As an arbitration body, the
CIAC can only resolve issues brought before it by the parties through
the TOR which functions similarly as a pre-trial brief. Thus, if
Uniwide’s claim for liquidated damages was not raised as an issue in
the TOR or in any modified or amended version of it, the CIAC cannot
make a ruling on it. The Rules of Court cannot be used to contravene
the spirit of the CIAC rules, whose policy and objective is to “provide a
fair and expeditious settlement of construction disputes through a
nonjudicial process which ensures harmonious and friendly relations
between or among the parties.”
Same; Same; Same; Same; Aware of the objective of voluntary
arbitration in the labor field, in the construction industry, and in any
other area for that matter, the Court will not assist one or the other or
even both parties in any effort to subvert or defeat that objective for
their private purposes; The Court will not permit the parties to
relitigate before it the issues of facts previously presented and argued
before the Arbitral Tribunal, save only where a clear showing is made
that, in reaching its factual conclusions, the Arbitral Tribunal
committed an error so egregious and hurtful to one party as to
constitute a grave abuse of discretion resulting in lack or loss of
jurisdiction.—It is worthy to stress our ruling in Hi-
Precision Steel Center, Inc. v. Lim Kim Steel Builders, Inc., 228 SCRA
397 (1993), which was reiterated in David v. Construction Industry
and Arbitration Commission, 435 SCRA 654 (2004), that: x x x
Executive Order No. 1008 created an arbitration facility to which the
construction industry in the Philippines can have recourse. The
Executive Order was enacted to encourage the early and expeditious
settlement of disputes in the construction industry, a public policy the
implementation of which is necessary and important for the realization
of national development goals. Aware of the objective of voluntary
arbitration in the labor field, in the construction industry, and in any
other area for that matter, the Court will not assist one or the other or
even both parties in any effort to subvert or defeat that objective for
their private purposes. The Court will not review the factual findings of
an arbitral tribunal upon the artful allegation that such body had
“misapprehended facts” and will not pass upon issues which are, at
bottom, issues of fact, no matter how cleverly disguised they might be
as “legal questions.” The parties here had recourse to arbitration and
chose the arbitrators themselves; they must have had confidence in
such arbitrators. The Court will not, therefore, permit the parties to
relitigate before it the issues of facts previously presented and argued
before the Arbitral Tribunal, save only where a clear showing is made
that, in reaching its factual conclusions, the Arbitral Tribunal
committed an error so egregious and hurtful to one party as to
constitute a grave abuse of discretion resulting in lack or loss of
jurisdiction. Prototypical examples would be factual conclusions of the
Tribunal which resulted in deprivation of one or the other party of a fair
opportunity to present its position before the Arbitral Tribunal, and an
award obtained through fraud or the corruption of arbitrators. Any
other, more relaxed rule would result in setting at naught the basic
objective of a voluntary arbitration and would reduce arbitration to a
largely inutile institution.
8. Philrock, Inc. vs. Construction Industry Arbitration
Commission
Actions; Arbitration; Construction Industry Arbitration Commission
(CIAC); Jurisdiction; Section 4 of Executive Order (EO) 1008
expressly vests in the CIAC original and exclusive jurisdiction over
disputes arising from or connected with construction contracts entered
into by parties that have agreed to submit their dispute to voluntary
arbitration.—Petitioner avers that the CIAC lost jurisdiction over the
arbitration case after both parties had withdrawn their consent to
arbitrate. The June 13,
1995 RTC Order remanding the case to the CIAC for arbitration was
allegedly an invalid mode of referring a case for arbitration. We
disagree. Section 4 of Executive Order 1008 expressly vests in the
CIAC original and exclusive jurisdiction over disputes arising from or
connected with construction contracts entered into by parties that
have agreed to submit their dispute to voluntary arbitration.
Same; Same; Same; Same; The Supreme Court will not countenance
the effort of any party to subvert or defeat the objective of voluntary
arbitration for its own private motives.—As pointed out by the solicitor
general, petitioner maneuvered to avoid the RTC’s final resolution of
the dispute by arguing that the regular court also lost jurisdiction after
the arbitral tribunal’s April 13, 1994 Order referring the case back to
the RTC. In so doing, petitioner conceded and estopped itself from
further questioning the jurisdiction of the CIAC. The Court will not
countenance the effort of any party to subvert or defeat the objective
of voluntary arbitration for its own private motives. After submitting
itself to arbitration proceedings and actively participating therein,
petitioner is estopped from assailing the jurisdiction of the CIAC,
merely because the latter rendered an adverse decision.
Same; Same; Same; Judicial Review; Voluntary arbitrators, by the
nature of their functions, act in quasi-judicial capacity, such that their
decisions are within the scope of judicial review.— We disagree with
the solicitor general. As pointed out earlier, factual findings of quasi-
judicial bodies that have acquired expertise are generally accorded
great respect and even finality, if they are supported by substantial
evidence. The Court, however, has consistently held that despite
statutory provisions making the decisions of certain administrative
agencies “final,” it still takes cognizance of petitions showing want of
jurisdiction, grave abuse of discretion, violation of due process, denial
of substantial justice or erroneous interpretation of the law. Voluntary
arbitrators, by the nature of their functions, act in a quasi-judicial
capacity, such that their decisions are within the scope of judicial
review.
9. Agan, Jr. vs. Philippine International Air Terminals Co., Inc.
Actions; Alternative Dispute Resolution; Arbitration; Where petitioners
are not parties to a contract with an arbitration clause, they cannot be
compelled to submit to arbitration proceedings; A speedy and decisive
resolution of all the critical issues in the present controversy, including
those raised by petitioners, cannot be made before an arbitral
tribunal.—It is established that petitioners in the present cases who
have presented legitimate interests in the resolution of the controversy
are not parties to the PIATCO Contracts. Accordingly, they cannot be
bound by the arbitration clause provided for in the ARCA and hence,
cannot be compelled to submit to arbitration proceedings. A speedy
and decisive resolution of all the critical issues in the present
controversy, including those raised by petitioners, cannot be made
before an arbitral tribunal. The object of arbitration is precisely to allow
an expeditious determination of a dispute. This objective would not be
met if this Court were to allow the parties to settle the cases by
arbitration as there are certain issues involving nonparties to the
PIATCO Contracts which the arbitral tribunal will not be equipped to
resolve.
10. Transfield Philippines, Inc. vs. Luzon Hydro Corporation
Same; Same; Same; Arbitration; The pendency of arbitral
proceedings does not foreclose resort to the courts for provisional
reliefs.—As a fundamental point, the pendency of arbitral proceedings
does not foreclose resort to the courts for provisional reliefs. The
Rules of the ICC, which governs the parties’ arbitral dispute, allows
the application of a party to a judicial authority for interim or
conservatory measures. Likewise, Section 14 of Republic Act (R.A.)
No. 876 (The Arbitration Law) recognizes the rights of any party to
petition the court to take measures to safeguard and/or conserve any
matter which is the subject of the dispute in arbitration. In addition,
R.A. 9285, otherwise known as the “Alternative Dispute Resolution
Act of 2004,” allows the filing of provisional or interim measures with
the regular courts whenever the arbitral tribunal has no power to act
or to act effectively.
11. Korea Technologies Co., Ltd. vs. Lerma
Contracts; Arbitration; Conflict of Laws; While it is established in this
jurisdiction is the rule that the law of the place where the contract is
made governs—lex loci contractus—Art. 2044 of the Civil Code
sanctions the validity of mutually agreed arbitral clause or the finality
and binding effect of an arbitral award.—
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.” (Emphasis supplied.) Arts. 2038, 2039, and 2040 abovecited
refer to instances where a compromise or an arbitral award, as
applied to Art. 2044 pursuant to Art. 2043, may be voided, rescinded,
or annulled, but these would not denigrate the finality of the arbitral
award.
Same; Same; Same; Model Law on International Commercial
Arbitration of the United Nations Commission on International Trade
Law (UNCITRAL Model Law); Alternative Dispute Resolution Act of
2004 (R.A. 9285); As signatory to the Arbitration Rules of the United
Nations Commission on International Trade Law (UN-CITRAL) Model
Law on International Commercial Arbitration of the UNCITRAL in the
New York Convention on 21 June 1985, the Phil-ippines committed
itself to be bound by the Model Law; The Philip-pines has
incorporated the Model Law in Alternative Dispute Resolution Act of
2004.—For domestic arbitration proceedings, we have particular
agencies to arbitrate disputes arising from contractual relations. In
case a foreign arbitral body is chosen by the parties, the arbitration
rules of our domestic arbitration bodies would not be applied. As
signatory to the Arbitration Rules of the UNCITRAL Model Law on
International Commercial Arbitration of the United Nations
Commission on International Trade Law (UNCITRAL) in the New York
Convention on June 21, 1985, the Philippines committed itself to be
bound by the Model Law. We have even incorporated the Model Law
in Republic Act No. (RA) 9285, otherwise known as the Alternative
Dispute Resolution Act of 2004 entitled An Act to Institutionalize the
Use of an Alternative Dispute Resolution System in the Philippines
and to Establish the Office for Alternative Dispute Resolution, and for
Other Purposes, promulgated on April 2, 2004. Secs. 19 and 20 of
Chapter 4 of the Model Law are the pertinent provisions.
Same; Same; Same; Same; Same; Statutory Construction; RA 9285
is a procedural law which has a retroactive effect.—While RA 9285
was passed only in 2004, it nonetheless applies in the instant case
since it is a procedural law which has a retroactive effect. Likewise,
KOGIES filed its application for arbitration before the KCAB on July 1,
1998 and it is still pending because no arbitral award has yet been
rendered. Thus, RA 9285 is applicable to the instant case. Well-
settled is the rule that procedural laws are construed to be applicable
to actions pending and undetermined at the time of their passage, and
are deemed retroactive in that sense and to that extent. As a general
rule, the retroactive application of procedural laws does not violate
any personal rights because no vested right has yet attached nor
arisen from them.
Same; Same; Same; Same; Same; Under Sec. 24 of R.A. 9285, the
Regional Trial Court does not have jurisdiction over disputes that are
properly the subject of arbitration pursuant to an arbitration clause,
and mandates the referral to arbitration in such cases.—Under Sec.
24, the RTC does not have jurisdiction over disputes that are properly
the subject of arbitration pursuant to an arbitration clause, and
mandates the referral to arbitration in such cases, thus: SEC. 24.
Referral to Arbitration.—A court before which an action is brought in a
matter which is the subject matter of an arbitration agreement shall, if
at least one party so requests not later than the pre-trial conference,
or upon the request of both parties thereafter, refer the parties to
arbitration unless it finds that the arbitration agreement is null and
void, inoperative or incapable of being performed.
Same; Same; Same; Same; Same; Judicial Review; Even if foreign
arbitral awards are mutually stipulated by the parties in the arbitration
clause to be final and binding, the same are not immediately
enforceable or cannot be implemented immediately— they must still
be confirmed by the Regional Trial Court.—Foreign arbitral awards
while mutually stipulated by the parties in the arbitration clause to be
final and binding are not immediately enforceable or cannot be
implemented immediately. Sec. 35 of the
UNCITRAL Model Law stipulates the requirement for the arbitral
award to be recognized by a competent court for enforcement, which
court under Sec. 36 of the UNCITRAL Model Law may refuse
recognition or enforcement on the grounds provided for. RA 9285
incorporated these provisos to Secs. 42, 43, and 44 relative to Secs.
47 and 48.
Same; Same; Same; Same; Same; Same; It is now clear that foreign
arbitral awards when confirmed by the Regional Trial Court are
deemed not as a judgment of a foreign court but as a Foreign arbitral
award, and when confirmed, are enforced as final and executory
decisions of our courts of law—the concept of a final and binding
arbitral award is similar to judgments or awards given by some quasi-
judicial bodies, like the National Labor Relations Commission and the
Mines Adjudication Board.—It is now clear that foreign arbitral awards
when confirmed by the RTC are deemed not as a judgment of a
foreign court but as a foreign arbitral award, and when confirmed, are
enforced as final and executory decisions of our courts of law. 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.
Same; Same; Same; Same; Same; Same; While the Regional
Trial Court (RTC) does not have jurisdiction over disputes governed
by arbitration mutually agreed upon by the parties, still the foreign
arbitral award is subject to judicial review by the RTC which can set
aside, reject, or vacate it.—While the RTC does not have jurisdiction
over disputes governed by arbitration mutually agreed upon by the
parties, still the foreign arbitral award is subject to judicial review by
the RTC which can set aside, reject, or vacate it. In this sense, what
this Court held in Chung Fu Industries (Phils.), Inc., 206 SCRA 545
(1992), relied upon by KOGIES is applicable insofar as the foreign
arbitral awards, while final and binding, do not oust courts of
jurisdiction since these arbitral awards are not absolute and without
exceptions as they are still judicially reviewable. Chapter 7 of RA 9285
has made it clear that all arbitral awards, whether domestic or foreign,
are subject to judicial review on specific grounds provided for.
Same; Same; Same; Same; Same; Same; Grounds for judicial review
different in domestic and foreign arbitral awards—for foreign or
international arbitral awards, the grounds for setting aside, rejecting or
vacating the award by the Regional Trial Court (RTC) are provided
under Art. 34(2) of the United Nations Commission on International
Trade Law (UNCITRAL) Model Law, while for final domestic arbitral
awards, they may only be assailed before the RTC and vacated on
the grounds provided under Sec. 25 of RA 876.— The differences
between a final arbitral award from an international or foreign arbitral
tribunal and an award given by a local arbitral tribunal are the specific
grounds or conditions that vest jurisdiction over our courts to review
the awards. For foreign or international arbitral awards which must
first be confirmed by the RTC, the grounds for setting aside, rejecting
or vacating the award by the RTC are provided under Art. 34(2) of the
UNCITRAL Model Law. For final domestic arbitral awards, which also
need confirmation by the RTC pursuant to Sec. 23 of RA 876 and
shall be recognized as final and executory decisions of the RTC, they
may only be assailed before the RTC and vacated on the grounds
provided under Sec. 25 of RA 876.
Same; Same; Same; Same; Same; Same; An arbitration clause,
stipulating that the arbitral award is final and binding, does not oust
our courts of jurisdiction as the international arbitral award is still
judicially reviewable under certain conditions provided for by the
United Nations Commission on International Trade Law (UN-CITRAL)
Model Law on International Commercial Arbitration (ICA) as applied
and incorporated in RA 9285.—Petitioner is correct in its contention
that an arbitration clause, stipulating that the arbitral award is final and
binding, does not oust our courts of jurisdiction as the international
arbitral award, the award of which is not absolute and without
exceptions, is still judicially reviewable under certain conditions
provided for by the UNCITRAL Model Law on ICA as applied and
incorporated in RA 9285.
Same; Same; Rescission; Where an arbitration clause in a contract is
availing, neither of the parties can unilaterally treat the contract as
rescinded since whatever infractions or breaches by a party or
differences arising from the contract must be brought first and
resolved by arbitration, and not through an extrajudicial rescission or
judicial action.—What this Court held in University of the Philippines v.
De Los Angeles, 35 SCRA 102 (1970) and reiterated in succeeding
cases, that the act of treating a contract as rescinded on account of
infractions by the other contracting party is valid albeit provisional as it
can be judicially assailed, is not applicable to the instant case on
account of a valid stipulation on arbitration. Where an arbitration
clause in a contract is availing, neither of the parties can unilaterally
treat the contract as rescinded since whatever infractions or breaches
by a party or differences arising from the contract must be brought
first and resolved by arbitration, and not through an extrajudicial
rescission or judicial action.
Same; Same; Court Personnel; Sheriffs; A sheriff is not technically
competent to ascertain the actual status of the equipment and
machineries as installed in the plant.—Whatever findings and
conclusions made by the RTC Branch Sheriff from the inspection
made on October 28, 1998, as ordered by the trial court on October
19, 1998, is of no worth as said Sheriff is not technically competent to
ascertain the actual status of the equipment and machineries as
installed in the plant.
Same; Same; Alternative Dispute Resolution Act of 2004 (R.A. 9285);
The pendency of an arbitral proceeding does not foreclose resort to
the courts for provisional reliefs—the RTC has authority and
jurisdiction to grant interim measures of protection.—In the recent
2006 case of Transfield Philippines, Inc. v. Luzon Hydro Corporation,
490 SCRA 14 (2006), we were explicit that even “the pendency of an
arbitral proceeding does not foreclose resort to the courts for
provisional reliefs.” We explicated this way: As a fundamental point,
the pendency of arbitral proceedings does not foreclose resort to the
courts for provisional reliefs. The Rules of the ICC, which governs the
parties’ arbitral dispute, allows the application of a party to a judicial
authority for interim or conservatory measures. Likewise, Section 14
of Republic Act (R.A.) No. 876 (The Arbitration Law) recognizes the
rights of any party to petition the court to take measures to safeguard
and/or conserve any matter which is the subject of the dispute in
arbitration. In addition, R.A. 9285, otherwise known as the “Alternative
Dispute Resolution Act of 2004,” allows the filing of provisional or
interim measures with the regular courts whenever the arbitral tribunal
has no power to act or to act effectively. It is thus beyond cavil that the
RTC has authority and jurisdiction to grant interim measures of
protection.
12. Koppel, Inc. vs. Makati Rotary Club Foundation, Inc.
Civil Law; Mines and Mining; Mining Act of 1995 (R.A. No. 7942);
Arbitrators; Panel of Arbitrators of the Mines and Geosciences Bureau
(PA-MGB); Jurisdiction; The Supreme Court pointed out to the
provisions of R.A. No. 7942, or the Mining Act of 1995, which granted
the PA-MGB with exclusive original jurisdiction only over mining
disputes, i.e., disputes involving “rights to mining areas,” “mineral
agreements or permits,” and “surface owners, occupants,
claimholders or concessionaires” requiring the technical knowledge
and experience of mining authorities in order to be resolved.—
Gonzales decided the issue in the negative. In holding that the PA-
MGB was devoid of any jurisdiction to take cognizance of the
complaint for arbitration, this Court pointed out to the provisions of
R.A. No. 7942, or the Mining Act of 1995, which granted the PA-MGB
with exclusive original jurisdiction only over mining disputes, i.e.,
disputes involving “rights to mining areas,” “mineral agreements or
permits,” and “surface owners, occupants, claimholders or
concessionaires” requiring the technical knowledge and experience of
mining authorities in order to be resolved. Accordingly, since the
complaint for arbitration in Gonzales did not raise mining disputes as
contemplated under R.A. No. 7942 but only issues relating to the
validity of certain mining related agreements, this Court held that such
complaint could not be arbitrated before the PA-MGB. It is in this
context that we made the pronouncement now in discussion:
Arbitration before the Panel of Arbitrators is proper only when there is
a disagreement between the parties as to some provisions of the
contract between them, which needs the interpretation and the
application of that particular knowledge and expertise possessed by
members of that Panel. It is not proper when one of the parties
repudiates the existence or validity of such contract or agreement on
the ground of fraud or oppression as in this case. The validity of the
contract cannot be subject of arbitration proceedings. Allegations of
fraud and duress in the execution of a contract are matters within the
jurisdiction of the ordinary courts of law. These questions are legal in
nature and require the application and interpretation of laws and
jurisprudence which is necessarily a judicial function.
Same; Doctrine of Separability; Under the doctrine of separability, an
arbitration agreement is considered as independent of the main
contract. Being a separate contract in itself, the arbitration agreement
may thus be invoked regardless of the possible nullity or invalidity of
the main contract.—Under the doctrine of separability, an arbitration
agreement is considered as independent of the main contract. Being a
separate contract in itself, the arbitration agreement may thus be
invoked regardless of the possible nullity or invalidity of the main
contract. Once again instructive is Cargill, wherein this Court held
that, as a further consequence of the doctrine of separability, even the
very party who repudiates the main contract may invoke its arbitration
clause.
Same; Arbitration; Mediation; “Mediation” and “Arbitration,”
Distinguished.—The JDR framework is based on the processes of
mediation, conciliation or early neutral evaluation which entails the
submission of a dispute before a “JDR judge” who shall merely
“facilitate settlement” between the parties in conflict or make a “non-
binding evaluation or assessment of the chances of each party’s
case.” Thus in JDR, the JDR judge lacks the authority to render a
resolution of the dispute that is binding upon the parties in conflict. In
arbitration, on the other hand, the dispute is submitted to an
arbitrator/s — a neutral third person or a group of thereof — who shall
have the authority to render a resolution binding upon the parties.
Same; Same; It is clear that under the law, the petitioner and the
respondent should have been referred to arbitration pursuant to the
arbitration clause of the 2005 Lease Contract.—It is clear that under
the law, the instant unlawful detainer action should have been stayed;
the petitioner and the respondent should have been referred to
arbitration pursuant to the arbitration clause of the 2005 Lease
Contract. The MeTC, however, did not do so in violation of the law —
which violation was, in turn, affirmed by the RTC and Court of Appeals
on appeal.
13. Gonzales vs. Climax Mining Ltd.
Actions; Alternative Dispute Resolution; Arbitration; Forum Shopping;
Pleadings and Practice; There is no forum shopping where one is a
petition for certiorari which raises the issue of whether or not there
was grave abuse of discretion while the other is a Petition to Compel
for Arbitration seeking the implementation of the arbitration clause in
the agreement between the parties.— Petitioner claims that
respondents are guilty of forum-shopping for failing to disclose before
this Court that they had filed a Petition to Compel for Arbitration
before the RTC of Makati City. However, it cannot be determined from
petitioner’s mere allegations in the Petition that the Petition to Compel
for Arbitration instituted by respondent Climax-Arimco, involves
related causes of action and the grant of the same or substantially the
same reliefs as those involved in the instant case. Petitioner did not
attach copies of the Petition to Compel for Arbitration or any order or
resolution of the RTC of Makati City related to that case. Furthermore,
it can be gleaned from the nature of the two actions that the issues in
the case before the RTC of Makati City and in the petition for certiorari
before the Court of Appeals are different. A petition for certiorari
raises the issue of whether or not there was grave abuse of discretion,
while the Petition to Compel for Arbitration seeks the implementation
of the arbitration clause in the agreement between the parties.
Same; Same; Same; Mining Claims; Words and Phrases; A judicial
question is a question that is proper for determination by the courts,
as opposed to a moot question or one properly decided by the
executive or legislative branch while a mining dispute is a dispute
involving (a) rights to mining areas, (b) mineral agreements, FTAAs,
or permits, and (c) surface owners, occupants and
claimholders/concessionaires.—A judicial question is a question that
is proper for determination by the courts, as opposed to a moot
question or one properly decided by the executive or legislative
branch. A judicial question is raised when the determination of the
question involves the exercise of a judicial function; that is, the
question involves the determination of what the law is and what the
legal rights of the parties are with respect to the matter in controversy.
On the other hand, a mining dispute is a dispute involving (a) rights to
mining areas, (b) mineral agreements, FTAAs, or permits, and (c)
surface owners, occupants and claimholders/concessionaires. Under
Republic Act No. 7942 (otherwise known as the Philippine Mining Act
of 1995), the Panel of Arbitrators has exclusive and original
jurisdiction to hear and decide these mining disputes. The Court of
Appeals, in its questioned decision, correctly stated that the Panel’s
jurisdiction is limited only to those mining disputes which raise
questions of fact or matters requiring the application of technological
knowledge and experience.
Same; Same; Same; Same; The trend has been to make the
adjudication of mining cases a purely administrative matter.—In
Pearson v. Intermediate Appellate Court, this Court observed that the
trend has been to make the adjudication of mining cases a purely
administrative matter. Decisions of the Supreme Court on mining
disputes have recognized a distinction between (1) the primary
powers granted by pertinent provisions of law to the then
Secretary of Agriculture and Natural Resources (and the bureau
directors) of an executive or administrative nature, such as granting of
license, permits, lease and contracts, or approving, rejecting,
reinstating or canceling applications, or deciding conflicting
applications, and (2) controversies or disagreements of civil or
contractual nature between litigants which are questions of a judicial
nature that may be adjudicated only by the courts of justice. This
distinction is carried on even in Rep. Act No. 7942.
Same; Same; Same; Same; Contracts; The resolution of the validity
or voidness of the contracts remains a legal or judicial question as it
requires the exercise of judicial function.—Whether the case involves
void or voidable contracts is still a judicial question. It may, in some
instances, involve questions of fact especially with regard to the
determination of the circumstances of the execution of the contracts.
But the resolution of the validity or voidness of the contracts remains a
legal or judicial question as it requires the exercise of judicial function.
It requires the ascertainment of what laws are applicable to the
dispute, the interpretation and application of those laws, and the
rendering of a judgment based thereon. Clearly, the dispute is not a
mining conflict. It is essentially judicial. The complaint was not merely
for the determination of rights under the mining contracts since the
very validity of those contracts is put in issue.
Same; Same; Same; Same; Same; The question of constitutionality is
exclusively within the jurisdiction of the courts to resolve as this would
clearly involve the exercise of judicial power and a Panel of Arbitrators
does not have jurisdiction over such an issue since it does not involve
the application of technical knowledge and expertise relating to
mining.—The Complaint is also not what is contemplated by Rep. Act
No. 7942 when it says the dispute should involve FTAAs. The
Complaint is not exclusively within the jurisdiction of the Panel of
Arbitrators just because, or for as long as, the dispute involves an
FTAA. The Complaint raised the issue of the constitutionality of the
FTAA, which is definitely a judicial question. The question of
constitutionality is exclusively within the jurisdiction of the courts to
resolve as this would clearly involve the exercise of judicial power.
The Panel of Arbitrators does not have jurisdiction over such an issue
since it does not involve the application of technical knowledge and
expertise relating to mining. This the Panel of Arbitrators has even
conceded in its Orders dated 18 October 2001 and 25 June 2002. At
this juncture, it is worthy of note that in a case, which was resolved
only on 1 December 2004, this Court upheld the validity of the FTAA
entered into by the Republic of the Philippines and WMC
(Philippines), Inc. and constitutionality of Rep. Act No. 7942 and
DENR Administrative Order 96-40. In fact, the Court took the case on
an original petition, recognizing “the exceptional character of the
situation and the paramount public interest involved, as well as the
necessity for a ruling to put an end to the uncertainties plaguing the
mining industry and the affected communities as a result of doubts
case upon the constitutionality and validity of the Mining Act, the
subject FTAA and future FTAAs, and the need to avert a multiplicity of
suits.”
Same; Same; Same; Same; Same; Arbitration before the Panel of
Arbitrators is proper only when there is a disagreement between the
parties as to some provisions of the contract between them, which
needs the interpretation and the application of that particular
knowledge and expertise possessed by members of that Panel—it is
not proper when one of the parties repudiates the existence or validity
of such contract or agreement on the ground of fraud or oppression.—
Arbitration before the Panel of Arbitrators is proper only when there is
a disagreement between the parties as to some provisions of the
contract between them, which needs the interpretation and the
application of that particular knowledge and expertise possessed by
members of that Panel. It is not proper when one of the parties
repudiates the existence or validity of such contract or agreement on
the ground of fraud or oppression as in this case. The validity of the
contract cannot be subject of arbitration proceedings. Allegations of
fraud and duress in the execution of a contract are matters within the
jurisdiction of the ordinary courts of law. These questions are legal in
nature and require the application and interpretation of laws and
jurisprudence which is necessarily a judicial function.
Same; Same; Same; Same; The question of validity of the contract
containing the agreement to submit to arbitration will affect the
applicability of the arbitration clause itself—a party cannot rely on the
contract and claim rights or obligations under it and at the same time
impugn its existence or validity.—We agree that the case should not
be brought under the ambit of the Arbitration Law, but for a different
reason. The question of validity of the contract containing the
agreement to submit to arbitration will affect the applicability of the
arbitration clause itself. A party cannot rely on the contract and claim
rights or obligations under it and at the same time impugn its
existence or validity. Indeed, litigants are enjoined from taking
inconsistent positions. As previously discussed, the complaint should
have been filed before the regular courts as it involved issues which
are judicial in nature.
14. Cargill Philippines, Inc. vs. San Fernando Regala Trading, Inc.
Arbitration; Alternative Dispute Resolution; Arbitration, as an
alternative mode of settling disputes, has long been recognized and
accepted in our jurisdiction.—Arbitration, as an alternative mode of
settling disputes, has long been recognized and accepted in our
jurisdiction. R.A. No. 876 authorizes arbitration of domestic disputes.
Foreign arbitration, as a system of settling commercial disputes of an
international character, is likewise recognized. The enactment of R.A.
No. 9285 on April 2, 2004 further institutionalized the use of
alternative dispute resolution systems, including arbitration, in the
settlement of disputes.
Same; Same; Contracts; Submission to arbitration is a contract and a
clause in a contract providing that all matters in dispute between the
parties shall be referred to arbitration is a contract.—A contract is
required for arbitration to take place and to be binding. Submission to
arbitration is a contract and a clause in a contract providing that all
matters in dispute between the parties shall be referred to arbitration
is a contract. The provision to submit to arbitration any dispute arising
therefrom and the relationship of the parties is part of the contract and
is itself a contract.
Same; Same; Same; An arbitration agreement which forms part of the
main contract shall not be regarded as invalid or nonexistent just
because the main contract is invalid or did not come into existence,
since the arbitration agreement shall be treated as a separate
agreement independent of the main contract.—Applying the Gonzales
ruling, an arbitration agreement which forms part of the main contract
shall not be regarded as invalid or non-existent just because the main
contract is invalid or did not come into existence, since the arbitration
agreement shall be treated as a separate agreement independent of
the main contract. To reiterate a contrary ruling would suggest that a
party’s mere repudiation of the main contract is sufficient to avoid
arbitration and that is exactly the situation that the separability
doctrine sought to avoid. Thus, we find that even the party who has
repudiated the main contract is not prevented from enforcing its
arbitration clause.
15. Uy vs. Public Estates Authority
Construction Industry; Alternative Dispute Resolution; Arbitration;
Construction Industry Arbitration Commission (CIAC); Appeals;
Appeals from judgment of the Construction Industry Arbitration
Commission (CIAC) shall be taken to the Court of Appeals (CA) by
filing a petition for review within fifteen (15) days from the receipt of
the notice of award, judgment, final order or resolution, or from the
date of its last publication if publication is required by law for its
effectivity, or of the denial of petitioner’s motion for new trial or
reconsideration.—Appeals from judgment of the CIAC shall be taken
to the CA by filing a petition for review within fifteen (15) days from the
receipt of the notice of award, judgment, final order or resolution, or
from the date of its last publication if publication is required by law for
its effectivity, or of the denial of petitioner’s motion for new trial or
reconsideration duly filed in accordance with the governing law of the
court or agency a quo.
16. Shinryo (Philippines) Company, Inc. vs. RPN Incorporated
Appeals; Administrative Law; Alternative Dispute Resolution (ADR);
Construction Industry; It is settled that findings of fact of quasi-judicial
bodies, which have acquired expertise because their jurisdiction is
confined to specific matters, are generally accorded not only respect,
but also finality, especially when affirmed by the Court of Appeals;
Factual findings of construction arbitrators are final and conclusive
and not reviewable by this Court on appeal.— As reiterated by the
Court in IBEX International, Inc. v. Government Service Insurance
System, 603 SCRA 306 (2009), to wit: It is settled that findings of fact
of quasi-judicial bodies, which have acquired expertise because their
jurisdiction is confined to specific matters, are generally accorded not
only respect, but also finality, especially when affirmed by the Court of
Appeals. In particular, factual findings of construction arbitrators are
final and conclusive and not reviewable by this Court on appeal. This
rule, however, admits of certain exceptions. In Uniwide Sales Realty
and Resources Corporation v. Titan-Ikeda Construction and
Development Corporation, 511 SCRA 335 (2006), we said: In David v.
Construction Industry and Arbitration Commission, 435 SCRA 654
(2004), we ruled that, as exceptions, factual findings of construction
arbitrators may be reviewed by this Court when the petitioner proves
affirmatively that: (1) the award was procured by corruption, fraud or
other undue means; (2) there was evident partiality or corruption of
the arbitrators or any of them; (3) the arbitrators were guilty of
misconduct in refusing to hear evidence pertinent and material to the
controversy; (4) one or more of the arbitrators were disqualified to act
as such under Section nine of
Republic Act No. 876 and willfully refrained from disclosing such
disqualifications or of any other misbehavior by which the rights of any
party have been materially prejudiced; or (5) the arbitrators exceeded
their powers, or so imperfectly executed them, that a mutual, final and
definite award upon the subject matter submitted to them was not
made. Other recognized exceptions are as follows: (1) when there is a
very clear showing of grave abuse of discretion resulting in lack or
loss of jurisdiction as when a party was deprived of a fair opportunity
to present its position before the Arbitral Tribunal or when an award is
obtained through fraud or the corruption of arbitrators, (2) when the
findings of the Court of Appeals are contrary to those of the CIAC, and
(3) when a party is deprived of administrative due process.
Arbitration; Mathematical computations, the propriety of arbitral
awards, claims for “other costs” and “abandonment” are factual
questions.—Again, these issues are purely factual and cannot be
properly addressed in this petition for review on certiorari. In Hanjin
Heavy Industries and Construction Co., Ltd. v. Dynamic Planners and
Construction Corp., 553 SCRA 541 (2008), it was emphasized that
mathematical computations, the propriety of arbitral awards, claims for
“other costs” and “abandonment” are factual questions. Since the
discussions of the CIAC and the CA in their respective Decisions
show that its factual findings are supported by substantial evidence,
there is no reason why this Court should not accord finality to said
findings. Verily, to accede to petitioner’s request for a recalibration of
its evidence, which had been thoroughly studied by both the CIAC
and the CA would result in negating the objective of Executive Order
No. 1008, which created an arbitration body to ensure the prompt and
efficient settlement of disputes in the construction industry.
17. Heunghwa Industry Co., Ltd. vs. DJ Builders Corp.
Courts; Certiorari; Administrative Law; Jurisdiction; Whether the
subject matter falls within the exclusive jurisdiction of a quasijudicial
agency is a question of law.—As a general rule, a petition for certiorari
before a higher court will not prosper unless the inferior court has
been given, through a motion for reconsideration, a chance to correct
the errors imputed to it. This rule, though, has certain exceptions: (1)
when the issue raised is purely of law, (2) when public interest is
involved, or (3) in case of urgency. As a fourth exception, it has been
held that the filing of a motion for reconsideration before availment of
the remedy of certiorari is not a condition sine qua non when the
questions raised are the same as those that have already been
squarely argued and exhaustively passed upon by the lower court.
The Court agrees with petitioner that the main issue of the petition for
certiorari filed before the CA undoubtedly involved a question of
jurisdiction as to which between the RTC and the CIAC had authority
to hear the case. Whether the subject matter falls within the exclusive
jurisdiction of a quasi-judicial agency is a question of law. Thus, given
the circumstances present in the case at bar, the non-filing of a
motion for reconsideration by petitioner to the CIAC Order should
have been recognized as an exception to the rule.
Alternative Dispute Resolution; Arbitration; Construction Industry
Arbitration Commission (CIAC); Jurisdiction; Executive Order 1008
grants to the Construction Industry Arbitration Commission (CIAC)
original and exclusive jurisdiction over disputes arising from, or
connected with, contracts entered into by parties involved in
construction in the Philippines.—Executive Order 1008 grants to the
CIAC original and exclusive jurisdiction over disputes arising from, or
connected with, contracts entered into by parties involved in
construction in the Philippines. In the case at the bar, it is undeniable
that the controversy involves a construction dispute as can be seen
from the issues referred to the CIAC, to wit: 1. Manpower and
equipment standby time; 2. Unrecouped mobilization expenses; 3.
Retention; 4. Discrepancy of billings; and 5. Price escalation for fuel
and oil usage. x x x x
Same; Same; Same; Same; There are two acts which may vest the
Construction Industry Arbitration Commission (CIAC) with jurisdiction
over a construction dispute—one is the presence of an arbitration
clause in a construction contract, and the other is the agreement by
the parties to submit the dispute to the Construction Industry
Arbitration Commission (CIAC).—There are two acts which may vest
the CIAC with jurisdiction over a construction dispute. One is the
presence of an arbitration clause in a construction contract, and the
other is the agreement by the parties to submit the dispute to the
CIAC. The first act is applicable to the case at bar. The bare fact that
the parties incorporated an arbitration clause in their contract is
sufficient to vest the CIAC with jurisdiction over any construction
controversy or claim between the parties. The rule is explicit that the
CIAC has jurisdiction notwithstanding any reference made to another
arbitral body. It is well-settled that jurisdiction is conferred by law and
cannot be waived by agreement or acts of the parties. Thus, the
contention of petitioner that it never authorized its lawyer to submit the
case for arbitration must likewise fail. Petitioner argues that
notwithstanding the presence of an arbitration clause, there must be a
subsequent consent by the parties to submit the case for arbitration.
To stress, the CIAC was already vested with jurisdiction the moment
both parties agreed to incorporate an arbitration clause in the sub-
contract agreement. Thus, a subsequent consent by the parties would
be superfluous and unnecessary.
Same; Same; Same; Same; Where the jurisdiction of Construction
Industry Arbitration Commission (CIAC) is properly invoked by the
filing of a Request for Arbitration in accordance with these Rules, the
failure despite due notice which amounts to a refusal of the
Respondent to arbitrate, shall not stay the proceedings
notwithstanding the absence or lack of participation of the
respondent.—Under the CIAC rules, even without the participation of
petitioner in the proceedings, the CIAC was still required to proceed
with the hearing of the construction dispute. Section 4.2 of the CIAC
rules provides: SECTION 4.2 Failure or refusal to arbitrate—Where
the jurisdiction of CIAC is properly invoked by the filing of a Request
for Arbitration in accordance with these Rules, the failure despite due
notice which amounts to a refusal of the Respondent to arbitrate, shall
not stay the proceedings notwithstanding the absence or lack of
participation of the Respondent. In such case, CIAC shall appoint the
arbitrator/s in accordance with these Rules. Arbitration proceedings
shall continue, and the award shall be made after receiving the
evidence of the Claimant. This Court finds that the CIAC simply
followed its rules when it proceeded with the hearing of the dispute
notwithstanding that petitioner refused to participate therein.
18. Tuna Processing, Inc. vs. Philippine Kingford, Inc.
Statutory Construction; Between a general law and a special law, the
latter prevails.—In several cases, this Court had the occasion to
discuss the nature and applicability of the Corporation Code of the
Philippines, a general law, viz-a-viz other special laws. Thus, in
Koruga v. Arcenas, Jr., 590 SCRA 49 (2009), this Court rejected the
application of the Corporation Code and applied the New Central
Bank Act. It ratiocinated: Koruga’s invocation of the provisions of the
Corporation Code is misplaced. In an earlier case with similar
antecedents, we ruled that: “The Corporation Code, however, is a
general law applying to all types of corporations, while the New
Central Bank Act regulates specifically banks and other financial
institutions, including the dissolution and liquidation thereof. As
between a general and special law, the latter shall prevail—generalia
specialibus non derogant.” (Emphasis supplied) Further, in the recent
case of Hacienda Luisita, Incorporated v. Presidential Agrarian
Reform Council, 653 SCRA 154 (2011), this Court held: Without
doubt, the Corporation Code is the general law providing for the
formation, organization and regulation of private corporations. On the
other hand, RA 6657 is the special law on agrarian reform. As
between a general and special law, the latter shall prevail—generalia
specialibus non derogant. Following the same principle, the
Alternative Dispute Resolution Act of 2004 shall apply in this case as
the Act, as its title—An Act to Institutionalize the Use of an Alternative
Dispute Resolution System in the Philippines and to Establish the
Office for
Alternative Dispute Resolution, and for Other Purposes—would
suggest, is a law especially enacted “to actively promote party
autonomy in the resolution of disputes or the freedom of the party to
make their own arrangements to resolve their disputes.” It specifically
provides exclusive grounds available to the party opposing an
application for recognition and enforcement of the arbitral award.
Same; Alternative Dispute Resolution; Alternative Dispute Resolution
Act of 2004; Conflict of Laws; The Alternative Dispute Resolution Act
of 2004 complies with international obligations under the New York
Convention and the Model Law.—Inasmuch as the Alternative Dispute
Resolution Act of 2004, a municipal law, applies in the instant petition,
we do not see the need to discuss compliance with international
obligations under the New York Convention and the Model Law. After
all, both already form part of the law. In particular, the Alternative
Dispute Resolution Act of 2004 incorporated the New York
Convention in the Act by specifically providing: SEC. 42. Application
of the New York Convention.—The New York Convention shall govern
the recognition and enforcement of arbitral awards covered by the
said Convention. xxx SEC. 45. Rejection of a Foreign Arbitral
Award.—A party to a foreign arbitration proceeding may oppose an
application for recognition and enforcement of the arbitral award in
accordance with the procedural rules to be promulgated by the
Supreme Court only on those grounds enumerated under Article V of
the New York Convention. Any other ground raised shall be
disregarded by the regional trial court. It also expressly adopted the
Model Law, to wit: Sec. 19. Adoption of the Model Law on
International Commercial Arbitration. International commercial
arbitration shall be governed by the Model Law on International
Commercial Arbitration (the “Model Law”) adopted by the United
Nations Commission on International Trade Law on
June 21, 1985 xxx.”
Alternative Dispute Resolution; Alternative Dispute Resolution Act of
2004; Conflict of Laws; 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.—Does a foreign corporation not licensed to do business
in the Philippines have legal capacity to sue under the provisions of
the Alternative Dispute Resolution Act of 2004? We answer in the
affirmative. 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; or
(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; or (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; or (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. Clearly, not one of
these 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.”
Same; Same; Same; When a party enters into a contract containing a
foreign arbitration clause and 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.— Indeed, it is in the best interest of
justice that in the enforcement of a foreign arbitral award, we 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 our 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, 300 SCRA 579 (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.
Same; Same; Same; 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.—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 court a quo correctly observed that the Model Law, not the
New York Convention, governs the subject arbitral award, petitioner
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. Premises
considered, petitioner TPI, although not licensed to do business in the
Philippines, may seek recognition and enforcement of the foreign
arbitral award in accordance with the provisions of the Alternative
Dispute Resolution Act of 2004.
Same; Same; Same; Foreign Corporations; The foreign corporation’s
capacity to sue in the Philippines is not material insofar as the
recognition and enforcement of a foreign arbitral award is
concerned.—There is no need to consider respondent’s contention
that petitioner TPI improperly raised a question of fact when it posited
that its act of entering into a MOA should not be considered “doing
business” in the Philippines for the purpose of determining capacity to
sue. We reiterate that the foreign corporation’s capacity to sue in the
Philippines is not material insofar as the recognition and enforcement
of a foreign arbitral award is concerned.
19. F.F. Cruz & Co., Inc. vs. HR Construction Corp.
Construction Contracts; Construction Industry Arbitration Commission
(CIAC); Jurisdiction; Arbitration; Appeals; Executive Order (E.O.) No.
1008 vests upon the Construction Industry Arbitration Commission
(CIAC) original and exclusive jurisdiction over disputes arising from, or
connected with, contracts entered into by parties involved in
construction in the Philippines; The arbitral award of Construction
Industry Arbitration Commission (CIAC) shall be final and
inappealable except on questions of law which shall be appealable to
the Supreme Court.—Executive Order (E.O.) No. 1008 vests upon the
CIAC original and exclusive
Jurisdiction over disputes arising from, or connected with, contracts
entered into by parties involved in construction in the Philippines.
Under Section 19 of E.O. No. 1008, the arbitral award of CIAC “shall
be final and inappealable except on questions of law which shall be
appealable to the Supreme Court.” In Hi-Precision Steel Center, Inc.
v. Lim Kim Steel Builders, Inc., 228 SCRA 397 (1993), we explained
raison d’ etre for the rule on finality of the CIAC’s arbitral award in this
wise: Voluntary arbitration involves the reference of a dispute to an
impartial body, the members of which are chosen by the parties
themselves, which parties freely consent in advance to abide by the
arbitral award issued after proceedings where both parties had the
opportunity to be heard. The basic objective is to provide a speedy
and inexpensive method of settling disputes by allowing the parties to
avoid the formalities, delay, expense and aggravation which
commonly accompany ordinary litigation, especially litigation which
goes through the entire hierarchy of courts. Executive Order No. 1008
created an arbitration facility to which the construction industry in the
Philippines can have recourse. The Executive Order was enacted to
encourage the early and expeditious settlement of disputes in the
construction industry, a public policy the implementation of which is
necessary and important for the realization of national development
goals. Aware of the objective of voluntary arbitration in the labor field,
in the construction industry, and in any other area for that matter, the
Court will not assist one or the other or even both parties in any effort
to subvert or defeat that objective for their private purposes. The
Court will not review the factual findings of an arbitral tribunal upon
the artful allegation that such body had “misapprehended the facts”
and will not pass upon issues which are, at bottom, issues of fact, no
matter how cleverly disguised they might be as “legal questions.” The
parties here had recourse to arbitration and chose the arbitrators
themselves; they must have had confidence in such arbitrators. x x x.
20. Estate of Nelson R. Dulay vs. Aboitiz Jebsen Maritime, Inc.
Labor Law; Arbitration; It is settled that when the parties have validly
agreed on a procedure for resolving grievances and to submit a
dispute to voluntary arbitration then that procedure should be strictly
observed.—In any case, the Court agrees with petitioner’s contention
that the CBA is the law or contract between the parties. Article 13.1 of
the CBA entered into by and between respondent GCI and AMOSUP,
the union to which petitioner belongs, provides as follows: The
Company and the Union agree that in case of dispute or conflict in the
interpretation or application of any of the provisions of this Agreement,
or enforcement of Company policies, the same shall be settled
through negotiation, conciliation or voluntary arbitration. The
Company and the Union further agree that they will use their best
endeavor to ensure that any dispute will be discussed, resolved and
settled amicably by the parties hereof within ninety (90) days from the
date of filing of the dispute or conflict and in case of failure to settle
thereof any of the parties retain their freedom to take appropriate
action. (Emphasis supplied) From the foregoing, it is clear that the
parties, in the first place, really intended to bring to conciliation or
voluntary arbitration any dispute or conflict in the interpretation or
application of the provisions of their CBA. It is settled that when the
parties have validly agreed on a procedure for resolving grievances
and to submit a dispute to voluntary arbitration then that procedure
should be strictly observed.
Same; Same; Collective Bargaining Agreements; It is only in the
absence of a collective bargaining agreement that parties may opt to
submit the dispute to either the National Labor Relations Commission
(NLRC) or to voluntary arbitration.—It is only in the absence of a
collective bargaining agreement that parties may opt to submit the
dispute to either the NLRC or to voluntary arbitration. It is elementary
that rules and regulations issued by administrative bodies to interpret
the law which they are entrusted to enforce, have the force of law, and
are entitled to great respect. Such rules and regulations partake of the
nature of a statute and are just as binding as if they have been written
in the statute itself. In the instant case, the Court finds no cogent
reason to depart from this rule.
Same; Same; Conciliation; Constitutional Law; Under the third
paragraph, Section 3, Article XIII, of the Constitution, “[t]he State shall
promote the principle of shared responsibility between workers and
employers and the preferential use of voluntary modes in settling
disputes, including conciliation, and shall enforce their mutual
compliance therewith to foster industrial peace.”—No less than the
Philippine Constitution provides, under the third paragraph, Section 3,
Article XIII, thereof that “[t]he State shall promote the principle of
shared responsibility between workers and employers and the
preferential use of voluntary modes in settling disputes, including
conciliation, and shall enforce their mutual compliance therewith to
foster industrial peace.”
21. Agbayani vs. Court of Appeals
Same; Arbitration; The compulsory process of arbitration is a pre-
condition for the filing of the complaint in court.—The compulsory
process of arbitration is a pre-condition for the filing of the complaint in
court. Where the complaint (a) did not state that it is one of excepted
cases, or (b) it did not allege prior availment of said conciliation
process, or (c) did not have a certification that no conciliation had
been reached by the parties, the case should be dismissed.
23. RCBC Capital Corporation vs. Banco de Oro Unibank, Inc.
Alternative Dispute Resolution; A review brought to the Supreme
Court under the Special Alternative Dispute Resolution (ADR) Rules is
not a matter of right. Rule 19.36 of said Rules specified the conditions
for the exercise of this Court’s discretionary review of the Court of
Appeal’s decision.―At the outset, it must be stated that a review
brought to this Court under the Special ADR Rules is not a matter of
right. Rule 19.36 of said Rules specified the conditions for the
exercise of this Court’s discretionary review of the CA’s decision. Rule
19.36. Review discretionary.―A review by the Supreme Court is not a
matter of right, but of sound judicial discretion, which will be granted
only for serious and compelling reasons resulting in grave prejudice to
the aggrieved party. The following, while neither controlling nor fully
measuring the court’s discretion, indicate the serious and compelling,
and necessarily, restrictive nature of the grounds that will warrant the
exercise of the Supreme Court’s discretionary powers, when the Court
of Appeals: a. Failed to apply the applicable standard or test for
judicial review prescribed in these Special ADR Rules in arriving at its
decision resulting in substantial prejudice to the aggrieved party; b.
Erred in upholding a final order or decision despite the lack of
jurisdiction of the court that rendered such final order or decision; c.
Failed to apply any provision, principle, policy or rule contained in
these Special ADR Rules resulting in substantial prejudice to the
aggrieved party; and d. Committed an error so egregious and harmful
to a party as to amount to an undeniable excess of jurisdiction. The
mere fact that the petitioner disagrees with the Court of Appeals’
determination of questions of fact, of law or both questions of fact and
law, shall not warrant the exercise of the Supreme Court’s
discretionary power. The error imputed to the Court of Appeals must
be grounded upon any of the above prescribed grounds for review or
be closely analogous thereto. A mere general allegation that the Court
of Appeals has committed serious and substantial error or that it has
acted with grave abuse of discretion resulting in substantial prejudice
to the petitioner without indicating with specificity the nature of such
error or abuse of discretion and the serious prejudice suffered by the
petitioner on account thereof, shall constitute sufficient ground for the
Supreme Court to dismiss outright the petition. (Emphasis supplied)
Same; Evident Partiality; Evident partiality in its common definition
thus implies “the existence of signs and indications that must lead to
an identification or inference” of partiality.―Evident partiality is not
defined in our arbitration laws. As one of the grounds for vacating an
arbitral award under the Federal Arbitration Act (FAA) in the United
States (US), the term “encompasses both an arbitrator’s explicit bias
toward one party and an arbitrator’s inferred bias when an arbitrator
fails to disclose relevant information to the parties.” Evident partiality
in its common definition thus implies “the existence of signs and
indications that must lead to an identification or inference” of partiality.
Despite the increasing adoption of arbitration in many jurisdictions,
there seems to be no established standard for determining the
existence of evident partiality. In the US, evident partiality “continues
to be the subject of somewhat conflicting and inconsistent judicial
interpretation when an arbitrator’s failure to disclose prior dealings is
at issue.”
Same; Same; The plurality opinion written by Justice Black in
Commonwealth Coatings Corp. v. Continental Casualty Co., et al.,
393 U.S. 145 (1968), laid down the rule that the arbitrators must
disclose to the parties “any dealings that might create an impression
of possible bias,” and that underlying such standard is “the premise
that any tribunal permitted by law to try cases and controversies not
only must be unbiased but also must avoid even the appearance of
bias.”―The first case to delineate the standard of evident partiality in
arbitration proceedings was Commonwealth Coatings Corp. v.
Continental Casualty Co., et al. decided by the US Supreme Court in
1968. The Court therein addressed the issue of whether the
requirement of impartiality applies to an arbitration proceeding. The
plurality opinion written by Justice Black laid down the rule that the
arbitrators must disclose to the parties “any dealings that might create
an impression of possible bias,” and that underlying such standard is
“the premise that any tribunal permitted by law to try cases and
controversies not only must be unbiased but also must avoid even the
appearance of bias.” In a separate concurring opinion, Justice White
joined by Justice Marshall, remarked that “[t]he Court does not decide
today that arbitrators are to be held to the standards of judicial
decorum of Article III judges, or indeed of any judges.” He opined that
arbitrators should not automatically be disqualified from an arbitration
proceeding because of a business relationship where both parties are
aware of the relationship in advance, or where the parties are
unaware of the circumstances but the relationship is trivial. However,
in the event that the arbitrator has a “substantial interest” in the
transaction at hand, such information must be disclosed.
Same; Alternative dispute resolution methods or Alternative Dispute
Resolution (ADRs)―like arbitration, mediation, negotiation and
conciliation―are encouraged by this 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 relationship.―Alternative dispute
resolution methods or ADRs―like arbitration, mediation, negotiation
and conciliation―are encouraged by this 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 relationship. Institutionalization of
ADR was envisioned as “an important means to achieve speedy and
impartial justice and declog court dockets.” The most important
feature of arbitration, and indeed, the key to its success, is the public’s
confidence and trust in the integrity of the process. For this reason,
the law authorizes vacating an arbitral award when there is evident
partiality in the arbitrators.