1. CHUNG FU INDUSTRIES (PHILIPPINES) INC.
, its Directors and
Officers namely: HUANG KUO-CHANG, HUANG AN-CHUNG,
JAMES J.R. CHEN, TRISTAN A. CATINDIG, VICENTE B. AMADOR,
ROCK A.C. HUANG, JEM S.C. HUANG, MARIA TERESA SOLIVEN
and VIRGILIO M. DEL ROSARIO, petitioners, vs. COURT OF
APPEALS, HON. FRANCISCO X. VELEZ (Presiding Judge,
Regional Trail Court of Makati [Branch 57]) and ROBLECOR
PHILIPPINES, INC., respondents.
G.R. No. 96283 | February 25, 1992
FACTS:
Petitioner Chung Fu Industries (Philippines) and private respondent
Roblecor Philippines, Inc. forged a construction agreement whereby
respondent contractor committed to construct and finish petitioner
corporation’s industrial/factory complex.
 In the event of disputes arising from the performance of subject
contract, it was stipulated therein that the issue(s) shall be
submitted for resolution before a single arbitrator chosen by
both parties.
Roblecor filed a petition for Compulsory Arbitration with prayer for
TRO before respondent RTC to claim the unsatisfied account and
unpaid progress billings.
 Chung Fu moved to dismiss the petition and further prayed for the
quashing of the restraining order.
 Subsequent negotiations between the parties eventually led to the
formulation of an arbitration agreement which, among others,
provides:
o The parties mutually agree that the decision of the
arbitrator shall be final and unappealable.
o Therefore, there shall be no further judicial recourse if
either party disagrees with the whole or any part of the
arbitrator’s award.
Respondent RTC approved the arbitration agreement and thereafter,
Engr. Willardo Asuncion was appointed as the sole arbitrator.
 Arbitrator Asuncion ordered petitioner to immediately pay
respondent contractor and further declared the award as final
and unappealable.
 Roblecor then moved for the confirmation of said award which was
accordingly confirmed and a writ of execution granted to it.
Meanwhile, Chung Fu moved to remand the case for further hearing
and asked for a reconsideration of the judgment award claiming that
Arbitrator Asuncion committed twelve (12) instances of grave error by
disregarding the provisions of the parties’ contract.
 Chung Fu’s Motion was denied and similarly its motion for
reconsideration.
Chung Fu elevated the case via a petition for certiorari to respondent
CA.
 The respondent appellate court concurred with the findings and
conclusions of respondent trial court. A motion for reconsideration
of said resolution was filed by petitioner, but was similarly denied.
ISSUE: Whether or not petitioners are estopped from questioning the
arbitration award allegedly in view of the stipulations in the parties’
arbitration agreement that “the decision of the arbitrator shall be final
and unappealable” and that “there shall be no further judicial recourse if
either party disagrees with the whole or any part of the arbitrator’s
award.” – NO
RULING:
Civil Law; Arbitration; The finality of the arbitrator’s award is not absolute
and without exceptions.—
 It is stated explicitly under Art. 2044 of the Civil Code that the finality
of the arbitrators’ award is not absolute and without exceptions.
 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.
 Additionally, under Sections 24 and 25 of the Arbitration Law, there
are grounds for vacating, modifying or rescinding an arbitrator’
award.
 Thus, if and when the factual circumstances referred to in the
above-cited provisions are present, judicial review of the award
is properly warranted.
This is where the proper remedy is certiorari under Rule 65 of the
Revised Rules of Court. It is to be borne in mind, however, that this
action will lie only where a grave abuse of discretion or an act without or
in excess of jurisdiction on the part of the voluntary arbitrator is clearly
shown.
Voluntary arbitrators by the nature of their functions act in a quasi-judicial
capacity.
 It should be stressed too, that voluntary arbitrators, by the nature
of their functions, act in a quasi-judicial capacity. It stands to
reason, therefore, that their decisions should not be beyond the
scope of the power of judicial review of this Court.
In the case at bar, petitioners assailed the arbitral award on the
following grounds, most of which allege error on the part of the arbitrator
in granting compensation for various items which apparently are
disputed by said petitioners.
 After closely studying the list of errors, as well as petitioners’
discussion of the same in their Motion to Remand Case For Further
Hearing and Reconsideration and Opposition to Motion for
Confirmation of Award,
 we find that petitioners have amply made out a case where the
voluntary arbitrator failed to apply the terms and provisions of the
Construction Agreement which forms part of the law applicable as
between the parties, thus committing a grave abuse of
discretion.
 Furthermore, in granting unjustified extra compensation to
respondent for several items, he exceeded his powers — all of
which would have constituted ground for vacating the award
under Section 24 (d) of the Arbitration Law.
Wherefore, the petition is granted. The Resolutions of the CA as well as
the Orders of respondent RTC are hereby SET ASIDE. Accordingly, this
case is REMANDED to the court of origin for further hearing on this
matter. All incidents arising therefrom are reverted to the status quo
ante until such time as the trial court shall have passed upon the merits
of this case.
2. BF CORPORATION, petitioner, vs. COURT OF APPEALS,
SHANGRI-LA PROPERTIES, COLAYCO, ALFREDO C.
RAMOS, INC., RUFO B. MAXIMO G.LICAUCO III and
BENJAMIN C. RAMOS, respondents.
ROMERO, J.:
FACTS:
 BF Corporation (BF) and respondent Shangri-La Properties, Inc.
(Shang) entered into the 1ST AGREEMENT whereby Shang
engaged BF to construct the main structure of the EDSA Plaza
Project – the EDSA Shangri-La Mall – in Mandaluyong City.
- While the construction work was in progress Shang once
again hired BF for the expansion of the project, the 2ND
AGREEMENT.
 BF incurred delay in the construction work that SPI considered as
serious and substantial.
- BF contended that they had faithfully complied with the first
agreement until a fire broke out on [Nov 30, 1990]
damaging phase 1 of the project, Hence SPI proposed the
renegotiation of the agreement between them.
 Parties entered into another agreement named “Agreement for the
Execution of Builders Work for the EDSA Plaza Project” (3RD
AGREEMENT) that would cover the construction work on said
project as of May 1, 1991 until its eventual completion.
 BF filed with the RTC of Pasig a complaint for the collection of
the balance due under the construction agreement.
- Named Defendants therein were Shang and members of its
BOD – A. Ramos, Colayco, Obles, Lanuza Jr., Licauco &
B.Ramos.
 Shang and its co-defendants filed a motion to suspend
proceedings instead of filing an answer.
- Motion was anchored on the defendants allegation that the
formal trade contract of the the construction project provided
 for a clause requiring prior resort to arbitration before judicial
intervention.
 Shang submitted a copy of the condition of the contract containing
arbitration clause that it failed to attach its motion to suspend
proceedings.
BF OPPOSITION:
 BF opposed said motion stating that there was no formal contract
between the parties although they entered into an agreement. They
emphasized that the agreement did not provide for an arbitration
thus cannot deprive the court of its jurisdiction.
SHANG CONTENTION:
 Shang insisted that there was an arbitration clause in the existing
contract between them. It alleged that the suspension would not
deprive the court of its jurisdiction and would expedite the
settlement proceedings rather than delay it.
BF REJOINDER
 In a rejoinder, BF reiterated that there was no arbitration clause
in the contract between the parties.
 It averred that if there was an arbitration clause, suspension of the
proceedings was no longer proper and that defendants should be
declared in default for failure to answer within the reglementary
period.
SHANG SUR-REJOINDER
 In its sur-rejoinder, Shang pointed out the significance of the
petitioner’s admission of the due execution of the Articles of
Agreement.
 It was shown that the Signature of Colayco (Shang President) and
Bayani Fernando (BF President) was in such agreement and was
even duly notarized.
RTC: found that the arbitration clause did exist, however the lower court
denied motion to suspend proceedings and ruled in favor of BF
 This was because despite the fact there was an arbitration agreement,
the Conditions of Contract only the initials of Bayani Fernando was
present, while no signature on the part of Shang.
 There were no signed documents to prove Shang’s claims thus
there is serious doubt to the validity of the arbitration clause found
in the Conditions of Contract
 Assuming that the arbitration clause was valid and binding, it was too
late for Shang to invoke arbitration because:
- the demand should have been made before the time of final
payment except as otherwise expressly stipulated in the contract
- the court found that the project was to be completed on Oct 31,
1991 and any delays would incur 80K for each day of delay from
Nov 1,1991 with liquefied damages up to a maximum of 5% of the
total contract price
- the court found out that the project was completed in accordance
with the agreement and Shang had took possession and started
operations thereof by opening the same to the public in Nov, 1911.
- BF billed Shang the total amount of P110,883,101.52 contained in
a demand letter sent on Feb 17, 1993. Instead of paying the
amound demanded, SPI set up its own claim of P220,000,000.00
and scheduled a conference on that claim for July 12, 1993. The
conference took place but was futile.
 Shang filed MR - denied because of lack of merit and directed the other
defendants to file their responsive pleading within the reglementary
period.
- Instead of filing an answer to the complaint, SPI filed a petition for
Certiorari under Rule 65 before the Court of appeals.
CA: granted the petition and annulled and set aside the orders and stayed
the proceedings in the lower court.
 According to the contract the project manager and the contractor should
coordinate with the owner, should there be failure to resolve differences,
dispute shall be submitted for arbitration.
 Although it was only the initials of Bayani Fernando and De La Cruz
present and none from Shang, it does not affect its effectivity. BF
categorically admitted that the document is the agreement bewtween
the parties, the initial signature of BF representative to signify
conformity to arbitration is no longer necessary. The parties should be
allowed to submit their dispute to arbitration in accordance with their
agreement.
 Demand for arbitration was made within a reasonable time after the
dispute has arisen and attempts to settle amicably has failed. This was
evidenced by the fact that such demands were acted upon only months.
Jul 12 conference - Jul 14 Shang complaint against BF - Aug 13
Request for arbitration.
ISSUE: WON the parties entered into an arbitrary agreement
RULING:
 Yes, according to Sec 4 of R.A. 876 a contract to arbitrate a
controversy thereafter arising between the parties, as well as a
submission to arbitrate an existing controversy, shall be in writing
and subscribed by the party sought to be charged, or by his lawful
agent.
 The making of a contract or submission for arbitration described in
section 2 hereof, providing for arbitration of any controversy, shall
be deemed a consent of the parties of the province or city where
any of the parties resides, to enforce such contract of submission.
Contracts; Arbitration; Words and Phrases; Formal Requirements
of an Agreement to Arbitrate; To “subscribe” means to write
underneath, as one’s name; to sign at the end of a document.—
 The formal requirements of an agreement to arbitrate are therefore
the following:
a) it must be in writing and
b) it must be subscribed by the parties or their representatives.
 There is no denying that the parties entered into a written contract
that was submitted in evidence before the lower court.
 To “subscribe” means to write underneath, as one’s name; to sign
at the end of a document. That word may sometimes be construed
to mean to give consent to or to attest.
The failure of a party to initial the ‘Conditions of Contract’ does not
affect compliance with the formal requirements for arbitration
agreements where that particular portion of the covenants between
the parties is included by reference in the Articles of Agreement. –
 The Court finds that, upon a scrutiny of the records of this case,
these requisites were complied with in the contract in question. The
Articles of Agreement, which incorporates all the other contracts
and agreements between the parties, was signed by
representatives of both parties and duly notarized.
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.
 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.
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.
“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.
 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.
RA 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 RA No. 876, this
Court has countenanced the settlement of disputes through
arbitration.
 RA. 876 was adopted to supplement the New Civil Code’s
provisions on arbitration.
 To brush aside a contractual agreement calling for arbitration in
case of disagreement between the parties would therefore be a
step backward.
CIVIL PROCEDURAL ISSUES:
The special civil action of certiorari may not be invoked as a substitute for
the remedy of appeal.—
 This is reiterated in Ongsitco v. Court of Appeals as follows: “Countless times
in the past, this Court has held that ‘where appeal is the proper remedy,
certiorari will not lie.’
 The writs of certiorari and prohibition are remedies to correct lack or excess
of jurisdiction or grave abuse of discretion equivalent to lack of jurisdiction
committed by a lower court.
 ‘Where the proper remedy is appeal, the action for certiorari will not be
entertained. Certiorari is not a remedy for errors of judgment. Errors of
judgment are correctible by appeal, errors of jurisdiction are reviewable by
certiorari.’
 Rule 65 is very clear. The extraordinary remedies of certiorari,
prohibition and mandamus are available only when ‘there is no appeal
or any plain, speedy and adequate remedy in the ordinary course of
law.’ That is why they are referred to as ‘extraordinary.’
Certiorari will not be issued to cure errors in proceedings or correct
erroneous conclusions of law or fact.—
 As long as a court acts within its jurisdiction, any alleged errors committed in
the exercise of its jurisdiction will amount to nothing more than errors of
judgment which are reviewable by timely appeal and not by a special civil
action of certiorari.”
If a lower court prematurely assumes jurisdiction over a case, then it
becomes an error of jurisdiction which is a proper subject of a petition for
certiorari. —
 This is not exactly so in the instant case. While this Court does not deny the
eventual jurisdiction of the lower court over the controversy, the issue posed
basically is whether the lower court prematurely assumed jurisdiction over it.
If the lower court indeed prematurely assumed jurisdiction over the case,
then it becomes an error of jurisdiction which is a proper subject of a petition
for certiorari before the Court of Appeals. And if the lower court does not
have jurisdiction over the controversy, then any decision or order it may
render may be annulled and set aside by the appellate court.
Where the issue posed is a question of law, the special civil action of
certiorari may be rightfully invoked.—
 The CA found that an Arbitration Clause does in fact exist. In resolving
said question of fact, the CA interpreted the construction of the subject
contract documents containing the Arbitration Clause in accordance with RA
876 (Arbitration Law) and existing jurisprudence which will be extensively
discussed hereunder.
 In effect, the issue posed before the CA was likewise a question of law. Being
a question of law, the private respondents rightfully invoked the special civil
action of certiorari.
Where a rigid application of the rule that certiorari cannot be a substitute for
appeal will result in a manifest failure or miscarriage of justice, the
provisions of the Rules of Court which are technical rules may be relaxed.—
 As we shall show hereunder, had the Court of Appeals dismissed the petition
for certiorari, the issue of whether or not an arbitration clause exists in the
contract would not have been resolved in accordance with evidence extant
in the record of the case. Consequently, this would have resulted in a judicial
rejection of a contractual provision agreed by the parties to the contract.
3. HI-PRECISION STEEL CENTER, INC., vs. LIM KIM STEEL
BUILDERS, INC., and CONSTRUCTION INDUSTRY ARBITRATION
COMMISSION || G.R. No. 110434 December 13, 1993 ||
FELICIANO, J.:
FACTS:
 Petitioner Hi-Precision entered into a contract with private
respondent Steel Builders under which the latter as Contractor was
to complete a P21 Million construction project owned by the former
within a period of 153 days, i.e. from 8 May 1990 to 8 October
1990. The project completion date was first moved to 4 November
1990. On that date, however, only 75.8674% of the project was
actually completed. Petitioner attributed this non-completion to
Steel Builders which allegedly had frequently incurred delays
during the original contract period and the extension period.
- Upon the other hand, Steel Builders insisted that the delays in
the project were either excusable or due to Hi-Precision's own
fault and issuance of change orders. The project was taken
over on 7 November 1990, and eventually completed on
February 1991, by Hi-Precision.
 Steel Builders filed a "Request for Adjudication" with public
respondent CIAC. In its Complaint filed with the CIAC, Steel
Builders sought payment of its unpaid progress buildings, alleged
unearned profits and other receivables. Hi-Precision, upon the
other hand, in its Answer and Amended Answer, claimed actual
and liquidated damages, reimbursement of alleged additional costs
it had incurred in order to complete the project and attorney's fees.
The CIAC formed an Arbitral Tribunal with three (3) members, two (2)
being appointed upon nomination of Hi-Precision and Steel Builders,
respectively; the third member (the Chairman) was appointed by the
CIAC as a common nominee of the two (2) parties. On the Chairman
was a lawyer.
Arbitral Tribunal: petitioner Hi-Precision] is ordered to pay the
Contractor [private respondent Steel Builders] the amount of
P6,400,717.83 and all other claims of the parties against each other are
deemed compensated and offset.
 In its Award, the Arbitral Tribunal stated that it was guided by
Articles 1169, 1192 and 2215 of the Civil Code. With such
guidance, the arbitrators concluded that (a) both parties were at
fault, though the Tribunal could not point out which of the parties
was the first infractor; and (b) the breaches by one party affected
the discharge of the reciprocal obligations of the other party.
 Petitioner Hi-Precision now asks this Court to set aside the Award,
contending basically that it was the contractor Steel Builders who
had defaulted on its contractual undertakings and so could not be
the injured party and should not be allowed to recover any losses
it may have incurred in the project. Petitioner Hi-Precision insists it
is still entitled to damages, and claims that the Arbitral Tribunal
committed grave abuse of discretion when it allowed certain claims
by Steel Builders and offset them against claims of Hi-Precision.
ISSUES: W/N Petitioner is correct in asking this Court to correct legal
errors committed by the Arbitral Tribunal, which at the same time
constitute grave abuse of discretion amounting to lack of jurisdiction on
the part of the Arbitral Tribunal
HELD: No, questions of fact cannot be raised in proceedings before the
Supreme Court — which is not a trier of facts — in respect of an arbitral
award rendered under the aegis of the CIAC.
Executive Order No. 1008, as amended, provides, in its Section 19, as
follows:
Sec. 19. Finality of Awards. — The arbitral award shall be
binding upon the parties. It shall be final and inappealable
except on questions of law which shall be appealable to the
Supreme Court.
Section 19 makes it crystal clear that questions of fact cannot
be raised in proceedings before the Supreme Court — which
is not a trier of facts — in respect of an arbitral award rendered
under the aegis of the CIAC. Consideration of the animating
purpose of voluntary arbitration in general, and arbitration
under the aegis of the CIAC in particular, requires us to apply
rigorously the above principle embodied in Section 19 that the
 Arbitral Tribunal's findings of fact shall be final and
inappealable.
 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. 21
 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.
- 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 very 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.
 We consider that in asking this Court to go over each individual
claim submitted by it and each individual countering claim
submitted by Steel Builders to the Arbitral Tribunal, petitioner Hi-
Precision is asking this Court to pass upon claims which are either
clearly and directly factual in nature or require previous
determination of factual issues.
 Upon the other hand, the Court considers that petitioner Hi-
Precision has failed to show any serious errors of law amounting to
grave abuse of discretion resulting in lack of jurisdiction on the part
of the Arbitral Tribunal, in either the methods employed or the
results reached by the Arbitral Tribunal, in disposing of the detailed
claims of the respective parties.
Petition DISMISSED.
4.
5. REAL BANK VS SAMSUNG MABUHAY CORP.
FACTS:
 Plaintiff SAMSUNG MABUHAY ELECTRONIC CORPORATION is
a joint venture corporation between SAMSUNG ELECTRONICS
CO. LTD., a foreign corporation duly organized and existing
under Korean laws, and plaintiff MABUHAY ELECTRONICS COR
PORATION, a corporation organized and existing under Philippine
laws.
 As a result of the joint venture Agreement, Samsung Mabuhay El
ectronics Corporation became the exclusive distributor for
Samsung products in the Philippines.
 Sometime in December of 1996, Conpinco Trading, a regular
dealer of respondent Samsung Mabuhay Corporation in Davao
City, issued five postdated UCPB checks payable to the order of
Samsung Mabuhay Corporation, to wit
- These five checks were picked up by Reynaldo Senson,
former Collection Supervisor of Samsung Mabuhay
Corporation for Visayas and Mindanao, at Conpinco Trading’s
place of business at J.P. Laurel Avenue, Bajada Drive,
Davao City last 14 December 1996.
 All of the five 5 checks were denominated to the PAYEE’S
ACCOUNT only, the payee being Mabuhay
Electronics Corporation although the proceeds of the checks were
actually intended for Samsung Mabuhay Corporation. After the
Joint Venture Agreement, Samsung dealers were duly requested
by Samsung Mabuhay Corporation to make all
checks payable to the order of Samsung Mabuhay Corporation
instead of Mabuhay Electronics Corporation. Nevertheless, sole
dealers, like Conpinco Trading, still made out checks payable to
Mabuhay Electronics Corporation
 Plaintiff Samsung Mabuhay Corporation continued to receive
checks from its local dealers payable to the order of Mabuhay
Electronics Corporation. Plaintiff Samsung Mabuhay Corporation
deposited the said checks to its bank account with Far East Bank
and Trust Company (FEBTC), Adriatico Branch. FEBTC
accepted for deposit into Samsung Mabuhay Corporation’s accou
nt therein all checks payable to Mabuhay Electronics Corporation.
 Two of the five checks picked-up by Reynaldo Senson were
remitted to Samsung Mabuhay Corporation, were cleared by the
drawee Bank, UCPB, and the amount credited to the account
of Samsung Mabuhay Corporation with FEBTC
 However, the three remaining UCPB checks were not remitted by
Reynaldo Senson to Samsung Mabuhay Corporation. Instead,
Reynaldo Senson, using an alias name, Eduardo Bacea, opened
an account with defendant Real BanK, Malolos, Bulacan branch
under the account name of one Mabuhay Electronics Company, a
business entity in no way related to plaintiff Mabuhay Electronics
Corporation. Mabuhay Electronics Company is a single
proprietorship owned and managed by Reynaldo Senson, alias
Eduardo Bacea.
 Reynaldo Senson, alias Eduardo Bacea, opened an account with
defendant Real Bank by presenting an identification card bearing
Mabuhay Electronics Company, the alias name Eduardo Bacea
identifying him as the General Manager of Mabuhay Electronics
Company, and the photograph of Reynaldo Senson. Reynaldo
Senson and Eduardo Bacea are one and the same person as
shown in the identification card issued by Samsung Mabuhay
Corporation to Reynaldo Senson.
- Reynaldo Senson, alias Eduardo Bacea, through the
negligence of defendant Real Bank, indorsed the checks and
then deposited all the three checks in the account of Mabuhay
Electronics Company.
 Defendant, Real Bank, then sent 3 checks for clearing and for
payment thru FEBTC, Malolos, Bulacan Branch after stamping at
the back of the checks the ususal endorsements: “ALL PRIOR
ENDORSEMENT and/or LACK OF ENDORSEMENT
GUARANTEED.” Copinco Trading’s account with the drawee bank,
UCPB, was eventually debited for the value of the 3 checks and
Mabuhay Electronics Company’s account with the defendant Real
Bank was credited for the same account although it was not the
payee nor the person authorized by the payee. Subsequently,
Reynaldo Seson, alias Eduardo CBacea, was able to withdraw the
amount of P1,563,750. The value of the 3 checks were negligently
credited by defendant to the account of Mabuhay Electronics
Company, although the check was payable only to Mabuhay
Electronics Corporation and to no one else
 Despite plaintiffs’, Samsung Mabihay Corporation’s, demands,
defendant ignored and refused to reimburse them with the value of
3 checks. Thus, plaintiffs were constrained to hire the legal services
of the law firm of V.E. Del Rosario and Partners
 Real Bank Inc filed its Answer and Samsung filed a Reply. On 12
March 1998, Samsung filed an Ex-Parte Motion to Set Case for
Pre-Trial, asking that the case be set for pre-trial. In a notice, Judge
Amelia Tria-Infante of RTC Manila, set the case fro pre-trial.
 RTC issued an Order requiring both petitioner Real Bank and
respondent Samsung to appear in mediation proceeding. This
Order was sent to respondent Samsung’s former counsel, V.E. Del
Rosario and Partners which had at that time already filed a notice
of withdrawal of appearance.
 The mediation proceedings took place as scheduled and Mediator
Tammy Ann C. Reyes, who handled the mediation proceedings
 submitted her report to the Court stating therein that no action was
taken on the case referred for mediation because respondent
Samsung failed to appear.
 On 04 June 2001, the new counsel of respondent, Ortega, Del
Castillo, Bacorro, Odulio, Calma and Carbonell, entered its
appearancce. This was filed and received by the Court on 06 June
2001.
 Subsequently, RTC Branch 9 of Manila, where the case was
pending was designated as a Family Court. Hence the case was
re-raffle to RTC Judge Marivic Balisi-Umali, RTC Branch 20.
RTC: issued an Order, dismissed the complaint of respondent Samsung
for failure to appear at the mediation conference previously scheduled
by the trial judge.
 Samsung’s new counsel challenged the Order in a Motion for
Reconsideration alleging that the dismissal as improper and
inappropriate as it was not notified of the scheduled mediation
conference. Besides, the notice of the scheduled mediation was
sent to the previous counsel who had already withdrawn.
 Judge Umali denied the MR.
CA: Respondent Judge did not even peruse or verify the records of the
case. Has she done so, she would have discovered that the former
counsel of petitioner to whom she sent the Notice of the Order would
have already withdrawn and that a new counsel for petitioner had
already entered their appearance. Likewise, she should have discovered
that at that time the Order was issued, petitioner was no longer holding
Office at its given address. Clearly, respondent Judge committed a
grave abuse of discretion in issue such Order
Petitioner Real Bank;s Motion for Reconsideration was denied by the CA
ISSUE:
a) WON CA erred in setting aside theo0rder of the trial court dismissing
the case before it due to the failure of respondent and its counsel to
attend the mediation conference
b) WON the CA erred in holding that respondent was not notified of the
mediation conference
HELD:
a) NO. Mediation is part of pre-trial and failure of the plaintiff to appear
threat merits sanction on the part of the absent party. The Second
Revised Guidelines for the Implementation of Mediation Proceedings
and Section 5, Rule 18 of the ROC grant judges the discretion to dismiss
an action for failure of the plaintiff to appear at mediation proceedings.
b) NO. Under Rule 138, Section 26 of the ROC, the withdrawal of
counsel with the conformity of the client is completed once the same is
filed in court. No further action thereon by the court is needed other than
the mechanical act of the Clerk of Court of entering the name of the new
counsel in the docket and of giving written notice thereof to the adverse
party.
 In this case, it is uncontroverted that the withdrawal of respondent
Samsung’s original counsel, V.E. Del Rosario and Partners was
with the client’s consent. Thus no approval thereof by the trial court
was required because a court’s approval is indispensable only if
the withdrawal is without the client’s consent.
 It being daylight clear that the withdrawal of respondent Samsung’s
original counsel was sufficient as the same carried the stamp of
approval of the client, the notice of mediation sent to respondent
Samsung’s original counsel was ineffectual as the same was sent
at the time when such counsel had already validly withdrawn its
representation. Corollarily, the absence of respondent Samsung
during the scheduled mediation conference was excusable and
justified. Therefore, the trial court erroneously dismissed the case.
6. LM POWER vs. CAPITOL INDUSTRIAL
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.
Facts:
This is a Petition for Review on Certiorari filed by the petitioner LM
Power against Respondent Capitol Industrial seeking to set aside the
decision of CA.
Petitioner LM Power Engineering Corporation and Respondent
Capitol Industrial Construction Groups Inc.
- entered into a Subcontract Agreement involving electrical
work at the Third Port of Zamboanga.
Due to the inability of the petitioner to procure materials,
- Capitol Industial took over some of the work contracted to the
former.
After the completion of the contract,
- petitioner billed respondent in the amount of P6, 711,813.90
but the respondent refused to pay.
Petitioner filed with the RTC of Makati a Complaint for the collection of
the amount representing the alleged balance due it under the
subcontract.
Respondent filed a Motion to Dismiss, alleging that the Complaint was
premature, due to the absence of prior recourse to arbitration.
RTC denied the Motion on the ground that the dispute did not involve
the interpretation or the implementation of the Agreement and was not
covered by the arbitral clause and ruled in favor of the petitioner.
Respondent appealed to the CA, the latter reversed the decision of the
RTC and ordered the referral of the case to arbitration.
Hence, this Petition.
ISSUE: WON there is a need for the prior arbitration before filing of the
complaint with the court.
RULING: AFFIRMATIVE.
SC ruled that in the case at hand it involves technical discrepancies
that are better left to an arbitral body that has expertise in the
subject matter.
Moreover, the agreement between the parties contains arbitral clause
that
- “any dispute or conflict as regards to interpretation and
implementation of this agreement which cannot be settled
between respondent and petitioner amicably shall be settled
by means of arbitration”.
The resolution of the dispute between the parties herein requires a
referral to the provisions of their agreement.
- Within the scope of the arbitration clause are discrepancies
as to the amount of advances and billable
accomplishments, the application of the provision on
termination, and the consequent set-off of expenses.
With respect to the disputes on the take-over/termination and the
expenses incurred by respondent in the take-over,
- the SC ruled that the agreement provides specific provisions
that any delay, expenses and any other acts in violation to
such agreement, the respondent can terminate and can set
off the amount it incurred in the completion of the contract.
SC tackled also that there’s no need for the prior request for
arbitration by the parties with the Construction Industry Arbitration
Commission (CIAC) in order for it to acquire jurisdiction.
- Because pursuant to Section 1 of Article III of the new
Rules of Procedure Governing Construction Arbitration,
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.
- Furthermore, the arbitral clause in the agreement is a
commitment on the part of the parties to submit to
arbitration the disputes covered therein.
 - Because that clause is binding, they are expected to abide
by it in good faith.
Since a complaint with the RTC has been filed without prior recourse to
arbitration, under RA 876 (Arbitration Law)
- the proper procedure is to request the stay or suspension
of such action in order to settle the dispute with the CIAC.
 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 Ordersas 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.

7. RIZAL COMMERCIAL BANKING CORPORATION, petitioner,

vs.
MAGWIN MARKETING CORPORATION, NELSON TIU, BENITO SY
and ANDERSON UY, respondents.
G.R. No. 152878 | May 5, 2003

Petitioner RCBC filed a complaint for recovery of a sum

of money against Magwin Marketing Corporation, Nelson Tiu,
Benito Sy and Anderson Uy.
 Discussions between petitioner and respondents were undertaken
to restructure the indebtedness of respondent.
 Petitioner approved a debt payment scheme for the corporation
which was communicated to the latter by means of a letter for the
conformity of its officers and respondent.
 Only respondent Nelson Tiu affixed his signature on the letter to
signify his agreement to the terms and conditions of the
restructuring.

The TRIAL COURT dismissed the case for failure to prosecute its
action for an unreasonable length of time.
 Petitioner moved for reconsideration and filed a Manifestation and
Motion to Set Case for Pre-Trial.

Conference alleging that only defendant Nelson Tiu had affixed his
signature on the letter which informed the defendants that petitioner
already approved defendant Magwin Marketing Corporations request for
restructuring of its loan obligations.

The trial court denied petitioner's motion to calendar the Case for pre-
trial.

ISSUE:
Whether or not failure to compromise warrants procedural sanction.

RULING:
A compromise agreement or amicable settlement is a remedy strongly
encouraged under our jurisdiction.
 However, the failure to consummate one does not warrant any
procedural sanction, much less provide an authority for the court
to jettison the case.

This Court's ruling is pursuant to the case of Goldloop Properties, Inc. v.

Court of Appeals, where it was held that the trial court cannot dismiss a
complaint for failure of the parties to submit a compromise
agreement.

Alternative Dispute Resolution; Compromise Agreements

 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.