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01. DFA v. BCA, G.R. No. 225051 and 210858 ALI 2009). *Rule 9.9.

2009). *Rule 9.9. Relief against court action. - The order granting assistance in taking
evidence, shall be immediately executory and not subject to reconsideration or appeal. If the
Date: JUNE 29, 2016 court declines to grant assistance in taking evidence, the petitioner may file a motion for
Ponente: CARPIO, J. reconsideration or appeal.
Petitioner: Department of Foreign Affairs
Respondent: BCA International Corporation DFA went to the Supreme Court and filed a Petition for Review on Certiorari assailing the
RTC Resolution and Orders granting assistance in taking evidence. Hence, the present
DOCTRINE: (General Principles) petition.
Arbitration is deemed a special proceeding and governed by the special provisions of RA
9285, its IRR, and the Special ADR Rules. RA 9285 is the general law applicable to all matters ISSUE: W/N the RA 9285, its IRR, and the Special ADR Rules apply in this case.
and controversies to be resolved through alternative dispute resolution methods. While
enacted only in 2004, we held that RA 9285 applies to pending arbitration proceedings since RULING: Yes. Arbitration is deemed a special proceeding and governed by the special
it is a procedural law, which has retroactive effect. As a general rule, the retroactive provisions of RA 9285, its IRR, and the Special ADR Rules. RA 9285 is the general law
application of procedural laws does not violate any personal rights because no vested right applicable to all matters and controversies to be resolved through alternative dispute
has yet attached nor arisen from them. resolution methods. While enacted only in 2004, the Court held that RA 9285 applies to
pending arbitration proceedings since it is a procedural law, which has retroactive effect.
FACTS: In an Amended Build-Operate-Transfer Agreement dated April 5, 2002 (Agreement),
petitioner DFA awarded the Machine Readable Passport and Visa (MRP/V) Project to The IRR of RA 9285 reiterate that RA 9285 is procedural in character and applicable to all
respondent BCA International Corporation (BCA), a domestic corporation. During the pending arbitration proceedings. Consistent with Article 2046 of the Civil Code, the Special
implementation of the MRP/V Project, DFA sought to terminate the Agreement. ADR Rules were formulated and were also applied to all pending arbitration proceedings
However, BCA opposed the termination and filed a Request for Arbitration, according to covered by RA 9285, provided no vested rights are impaired.
Section 19.02 of the Agreement.
Thus, contrary to DFA's contention, RA 9285, its IRR, and the Special ADR Rules are
On June 29, 2009, an ad hoc arbitral tribunal was constituted to resolve the issues applicable to the present arbitration proceeding. The arbitration between the DFA and BCA
between the parties. In an Order dated 15 April 2013, the arbitral tribunal approved is still pending, since no arbitral award has yet been rendered. Moreover, DFA did not allege
BCA's request to apply in court for the issuance of subpoena, subject to the any vested rights impaired by the application of those procedural rules.
conditions that the application will not affect its proceedings and the hearing set in October
2013 will proceed whether the witnesses attend or not.

On May 16, 2013, BCA filed before the RTC of Makati City a Petition for Assistance in 02. Heirs of Salas v. Laperal Realty, G.R. No. 135362 JIMENEZ
Taking Evidence pursuant to the IRR of “The ADR Act of 2004” (RA 9285). BCA sought the
issuance of subpoena ad testificandum and subpoena duces tecum to the following witnesses Date: DECEMBER 13, 1999
and documents in their custody, Secretary of Foreign affairs or his representatives, Secretary Ponente: DE LEON, JR., J.
of Finance or his representatives, Chairman of the Commission on Audit or her Petitioner: Heirs of Augusto L. Salas, Jr.
representatives, Executive Director of the Department of Trade and Industry Build-Operate Respondent: Laperal Realty Corporation
Transfer Center, and Chairman of the DFA MRP/V Advisory Board or his representatives.
DOCTRINE: (General Principles)
DFA: opposed, alleging that the presentation of the witnesses and documents was prohibited A submission to arbitration is a contract. As such, the Agreement, containing the stipulation
by law and protected by the deliberative process privilege. on arbitration, binds the parties thereto, as well as their assigns and heirs.

RTC: ruled in favor of BCA and held that the evidence sought to be produced was no longer FACTS: Salas, Jr., the registered owner of the subject land, entered into an Owner-
covered by the deliberative process privilege. RTC issued the subpoena duces tecum and Contractor Laperal Realty Corporation render and provide complete construction services on
subpoena ad testificandum. his land. The former executed a Special Power of Attorney in favor of the latter to exercise
general control, supervision and management of the sale of his land, for cash or on
DFA: filed a motion to quash the subpoena duces tecum and subpoena ad testificandum. installment basis.
RTC denied the motion to quash and held that the motion was actually a motion for Laperal Realty subdivided the subject land and sold subdivided portions thereof to Rockway
reconsideration, which is prohibited under Rule 9 .9 of the Special Rules of Court on Real Estate Corporation, South Ridge Village, Inc., spouses Abrajano, Lava and Oscar Dacillo
Alternative Dispute Resolution (Special ADR Rules, EFFECTIVE OCTOBER 30, , Eduardo Vacuna, Florante de la Cruz and Jesus Vicente Capalan.
Salas Jr. was declared presumptively dead. The heirs of Salas, Jr. filed a Complaint for without prejudice to the rights of any party to petition the court to take measures to
declaration of nullity of sale, reconveyance, cancellation of contract, accounting and safeguard and/or conserve any matter which is the subject of the dispute in arbitration.
damages. Laperal Realty filed a Motion to Dismiss on the ground that petitioners failed to
submit their grievance to arbitration as required under the Agreement. (b) Arbitration, as an alternative method of dispute resolution, is encouraged by this Court.
RTC: dismissed the petitioners’ complaint on the ground that they failed to first resort to Aside from unclogging judicial dockets, it also hastens solutions especially of commercial
arbitration. disputes. The Court looks with favor upon such amicable arrangement and will only interfere
with great reluctance to anticipate or nullify the action of the arbitrator.
ISSUE: Whether or not the buyers of the subject land are assignees of Laperal Realty, thus,
making them parties to the arbitration clause. Facts: Victor Tancuan issued Home Bankers Savings and Trust Company (HBSTC) check for
P25, 250, 000 while Eugene Arriesgado issued Far East Bank and Trust Company (FEBTC)
RULING: No. A submission to arbitration is a contract. As such, the Agreement, containing three checks amounting to P25, 200, 000. Tancuan and Arriesgado exchanged each other’s
the stipulation on arbitration, binds the parties thereto, as well as their assigns and heirs. checks and deposited them with their respective banks for collection. When FEBTC presented
But only they. Petitioners, as heirs of Salas, Jr., and respondent Laperal Realty are certainly Tancuan’s HBSTC check for clearing, HBSTC dishonored it for being “Drawn Against
bound by the Agreement. Insufficient Funds.” HBTSC sent Arriesgado’s FEBTC checks through the Philippine Clearing
If respondent Laperal Realty, had assigned its rights under the Agreement to a third party, House Corporation (PCHC) to FEBTC but was returned as “Drawn Against Sufficient Funds.”
making the former, the assignor, and the latter, the assignee, such assignee would also be
bound by the arbitration provision since assignment involves such transfer of rights as to HBSTC received notice of dishonor but refused to accept the checks and returned them to
vest in the assignee the power to enforce them to the same extent as the assignor could FEBTC through the PCHC for the reason “Beyond Reglementary Period,” implying that HBSTC
have enforced them against the debtor18 or in this case, against the heirs of the original already treated the FEBTC checks as cleared and allowed the proceeds thereof to be
party to the Agreement. withdrawn. FEBTC demanded reimbursement for the returned checks but HBSTC refused.
However, respondents Rockway Real Estate Corporation, South Ridge Village, Inc., Maharami
Development Corporation, spouses Abrajano, spouses Lava, Oscar Dacillo, Eduardo Vacuna, FEBTC submitted the dispute for arbitration before the PCHC Arbitration Committee. And
Florante de la Cruz and Jesus Vicente Capellan are not assignees of the rights of respondent while the arbitration proceeding was still pending, FEBTC filed an action for sum of money
Laperal Realty under the Agreement to develop Salas, Jr.s land and sell the same. They are, and damages with preliminary attachment against HBSTC.
rather, buyers of the land that respondent Laperal Realty was given the authority to develop
and sell under the Agreement. As such, they are not assigns contemplated in Art. 1311 of HBSTC contends that since arbitration is a special proceeding, the civil suit filed is barred by
the New Civil Code which provides that contracts take effect only between the parties, their litis pendentia and should be dismissed.
assigns and heirs.
Issue: WON FEBTC may subsequently file a separate case in court over the same subject
matter of arbitration despite the pendency of that arbitration

03. Home Bankers Savings v. CA G.R. No. 115412 SALES Held: YES. Section 14 of R.A. 876, Arbitration Law, allows any party to the arbitration
proceeding to petition the court to take measures of safeguard and/or conserve any matter
Date: 19 November 1999 which is the subject of the dispute of arbitration.
Ponente: Buena, J.
Petitioner: Home Bankers Savings and Trust Company Simply put, participants in the regional clearing operations of the Philippine Clearing House
Respondents: CA and Far East Bank & Trust Co. Inc. Corporation cannot bypass the arbitration process laid out by the body and seek relief directly
from the courts. In the case at bar, undeniably, private respondent has initiated arbitration
proceedings as required by the PCHC rules and regulations, and pending arbitration has
Doctrine/s: (a) Sec. 14. Subpoena and subpoena duces tecum. — Arbitrators shall have sought relief from the trial court for measures to safeguard and/or conserve the subject of
the power to require any person to attend a hearing as a witness. They shall have the power the dispute under arbitration, as sanctioned by section 14 of the Arbitration Law, and
to subpoena witnesses and documents when the relevancy of the testimony and the otherwise not shown to be contrary to the PCHC rules and regulations.
materiality thereof has been demonstrated to the arbitrators. Arbitrators may also require
the retirement of any witness during the testimony of any other witness. All of the arbitrators
appointed in any controversy must attend all the hearings in that matter and hear all the
allegations and proofs of the parties; but an award by the majority of them is valid unless
the concurrence of all of them is expressly required in the submission or contract to arbitrate.
The arbitrator or arbitrators shall have the power at any time, before rendering the award,
04. LM Power Engineering Corp. v. Capitol Industrial Construction Corp., G.R. No. court action may be resorted to in case of direct and/or blatant violation of the TPAA occurs.
141833 DUMLAO Such construction is anathema to the policy favoring arbitration.

05. Luzon v. Bridestone, G.R. No. 220546 VILLAREAL As to formal request, the petitioners' failure to refer the case for arbitration, however, does
not render the arbitration clause in the TPAA inoperative. A formal request is not the sole
Date: December 07, 2016 means of invoking an arbitration clause in a pending suit. Similar to the said case, the
Ponente: MENDOZA, J. petitioners here made the RTC aware of the existence of the arbitration clause in the TPAA
Petitioner: LUZON IRON DEVELOPMENT GROUP CORPORATION AND CONSOLIDATED as they repeatedly raised this as an issue in all their motions to dismiss. As such, it was
IRON SANDS, LTD. enough to activate the arbitration clause and, thus, should have alerted the RTC in
Respondents: BRIDESTONE MINING AND DEVELOPMENT CORPORATION AND ANACONDA proceeding with the case.
MINING AND DEVELOPMENT CORPORATION,
06. Steamship v. Sulpicio Lines, G.R. No. 196072 RAMOS
DOCTRINE: Arbitration agreements are liberally construed in favor of proceeding to
arbitration. We adopt the interpretation that would render effective an arbitration clause if
the terms of the agreement allow for such interpretation. Thus, consistent with the state 07. DPWH v. CMC, G.R. No. 179732 HERMOGINIO
policy of favoring arbitration, the present TPAA must be construed in such a manner that
would give life to the arbitration clause rather than defeat it, if such interpretation is Date: September 13, 2017
permissible. With this in mind, the Court views the interpretation forwarded by the petitioners Ponente: LEONEN, J.
as more in line with the state policy favoring arbitration. Petitioner: DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS
Respondent: CMC/MONARK/PACIFIC/HI-TRI JOINT VENTURE
FACTS: Bridestone Mining and Development Corporation (Bridestone) and Anaconda Mining
and Development Corporation (Anaconda) filed separate complaints before the RTC for DOCTRINE: As the administrative agency tasked with resolving issues pertaining to the
rescission of contract and damages against petitioners Luzon Iron Development Group construction industry, the Construction Industry Arbitration Commission enjoys a wide
Corporation (Luzon Iron) and Consolidated Iron Sands, Ltd. (Consolidated Iron). Both latitude in recognition of its technical expertise and experience. Its factual findings are, thus,
complaints sought the rescission of the Tenement Partnership and Acquisition Agreement accorded respect and even finality, particularly when they are affirmed by an appellate court.
(TPAA) entered into by both petitioner and respondent for the assignment of the Exploration
Permit Application of the former in favor of the latter. Luzon Iron filed their Special FACTS: Republic of the Philippines, through the Department of Public Works and Highways
Appearance with Motion to Dismiss, separately, against both respondents, on similar ground, (DPWH), and CMC/Monark/Pacific/Hi-Tri J.V. (the Joint Venture) executed "Contract
among others: the RTC had no jurisdiction over the subject matter because of an arbitration Agreement for the Construction of Contract Package 6MI-9, Pagadian-Buug Section,
clause in the TPAA. RTC consolidated two cases and denied the motion to dismiss ruling that Zamboanga del Sur, Sixth Road Project, Road Improvement Component Loan No. 1473-PHI"
it had jurisdiction over the subject matter because under clause 14.8 of the TPAA, the parties (Contract) for a total contract amount of P713,330,885.28. DPWH hired BCEOM French
could go directly to courts when a direct and/or blatant violation of the provisions of the Engineering Consultants to oversee the project.
TPAA had been committed. Luzon filed Petition for Review before CA. The CA also sustained
the jurisdiction of the RTC over the subject matter opining that the arbitration clause in the On October 23, 2002, or while the project was ongoing, the Joint Venture's truck and
TPAA provided for an exception where parties could directly go to court. Hence this petition equipment were set on fire. On March 11, 2003, a bomb exploded at Joint Venture's hatching
for review on certiorari. plant located at Brgy. West Boyogan, Kumalarang, Zamboanga del Sur. According to reports,
the bombing incident was caused by members of the Moro Islamic Liberation Front. Several
ISSUE: Whether or not the controversy must be referred for arbitration. demand letters were sent by The Joint Venture for the extension and payment of the foreign
component of the Contact. Only the foreign contract were up for negotiations. Consequently,
RULING: Yes, Controversy must be referred for arbitration. The state adopts a policy in the Joint Venture filed a complaint against DPWH before the CIAC.
favor of arbitration. Thus, consistent with the state policy of favoring arbitration, the present Meanwhile, on July 8, 2004, the Joint Venture sent a "Notice of Mutual Termination of
TPAA must be construed in such a manner that would give life to the arbitration clause rather Contract", to DPWH requesting for a mutual termination of the contract subject of the
than defeat it, if such interpretation is permissible. With this in mind, the Court views the arbitration case.
interpretation forwarded by the petitioners as more in line with the state policy favoring After submission and hearing of the parties' respective memoranda, CIAC promulgated an
arbitration. Paragraphs 14.8 and 15.1 of the TPAA should be harmonized in such a way that Award on March 1, 2005, directing DPWH to pay the Joint Venture its money claims plus
the arbitration clause is given life. The Court disagrees with the respondents that Paragraph legal interest. CIAC, however, denied the Joint Venture's claim for price adjustment due to
14.8 of the TPAA should be construed as an exception to the arbitration clause where direct the delay in the issuance of a Notice to Proceed under Presidential Decree No. 1594 or the
"Policies, Guidelines, Rules, and Regulations for Government Infrastructure Contracts."
BCDA and Northrail refused to return saying the amount was in the nature of a contribution
ISSUE: Whether or not the filing of claim before CIAC was premature for non compliance and DMCI must share in the profits and losses. DMCI filed a petition to compel arbitration in
with the doctrine of exhaustion of administrative remedies. the RTC. BCDA countered saying that DMCI-PDI has no arbitration clause to enforce because
it is not a party to the JVA.
RULING: No. CIAC found and correctly ruled that respondent had duly complied with the
contractual obligation to exhaust administrative remedies provided for under sub-clause 67.1 RTC granted the petition to compel arbitration. Motion for reconsideration was denied. It
of the Conditions of Contract before it brought the case before the tribunal. A total of 17 said that the 3 documents must be read as 1 contract among to accomplish the single goal
demand letters were sent to petitioner to no avail. To require respondent to wait for the of implementing the railroad project.
DPWH Secretary's response while respondent continued to suffer financially would be to
condone petitioner's avoidance of its obligations to respondent. Hence, even assuming that ISSUE: Whether or not DMCI-PDI may compel BCDA and Northrail to arbitration.
subclause 67.1 was not applicable, the case would still fall within the exceptions to the
doctrine of exhaustion of administrative remedies since strict application of the doctrine will RULING: Yes. Each document was executed to achieve a single purpose of implementing the
be set aside when requiring it would only be unreasonable under the circumstances.

 railroad project, such that documents of agreement succeeding the original JVA merely
CIAC's specific purpose is the "early and expeditious settlement of disputes" in the amended or supplemented its provisions. The three agreements must be read together for
construction industry as a recognition of the industry's role in "the furtherance of national a complete understanding of the parties’ whole agreement. Hence, the arbitration clause
development goals." CIAC's authority to arbitrate construction disputes was then should extend to all the agreements and its parties DMCI and its nominee became a party
incorporated into the general statutory framework on alternative dispute resolution through to the amended JVA. Nomination pertains to the act of naming the party with whom it has a
Republic Act No. 9285 As a general rule, findings of fact of CIAC, a quasi-judicial tribunal relationship of trust or agency.
which has expertise on matters regarding the construction industry, should be respected and
upheld. Contrary to BCDA and Northrail’s petition, therefore, the agreement’s prohibition against
transfer, conveyance and assignment of rights without the consent of the other party does
not apply to nomination, DMCI-PDI is a party to all agreements including the arbitration
agreement. It may, thus, invoke the arbitration clause against all the parties.
08. BCDA v. DMCI, G.R. No. 173137 PAYNE

BASES CONVERSION DEVELOPMENT AUTHORITY (BCDA) vs. DMCI PROJECT


DEVELOPERS, INC. (DMCI) 09. Fruehaf v. Technology, G.R. No. 204197 REYES
G.R. No. 173137, January 11, 2016
LEONEN, J.: Date: Nov. 23, 2016
DOCTRINE: An arbitration clause in a document of contract may extend to subsequent Ponente: Brion, J.
documents of contract executed for the same purpose. Nominees of a party to and Petitioner: Fruehaf
beneficiaries of a contract containing an arbitration clause may become parties initiated Respondent: Technology electronics assembly and mgmt. pacific corp (TEAM)
based on that arbitration clause. Doctrine:

FACTS: Bases Conversion Development Authority (BCDA) entered into a Joint Venture FACTS:
Agreement with Philippine National Railways and other foreign corporations for a railroad Fruehaf leased several parcels of land in Pasig to Signetics Filipinas Corp. for a period
project which included an arbitration clause. As part of the agreement, BCDA established of 25years (until May 2003). Signetics constructed a semiconductor assembly factory on the
North Luzon Railways Corp. DM Consunji Inc. (DMCI) was invited to be an additional investor land on its own account. Signetics ceased its operations after the Board of Investments (BOI)
of the Northrail to contribute upon the latter’s increase in authorized capital stocks. withdrew the investment incentives granted to electronic industries based in Metro Manila.
In 1986, Team Holdings Limited (THL) bought Signetics. THL later changed its name
The JVA was amended to include DMCI and its nominee as party. A memorandum of to Technology Electronics Assembly and Mgmt Pacific Corp. (TEAM)
agreement was entered where DMCI’s share in the capital was set at 300 million pesos. Upon In Mar.1987, Fruehaf filed unlawful detainer case against TEAM. In an effort to
BCDA and Northrail’s request, DMCI PDI deposited such amount for deposits for future amicably settle the dispute, both parties executed a MOA on Jun 1988. Under the MOA,
subscription. In letters dated April 4, 1997, DM Consunji Inc informed PNR and the other undertook to pay fruehaf 14.7M as unpaid rent. They also entered into 15-year lease contract
parties that DMCI-PDI shall be designated nominee for all agreements it entered and would that was renewable for another 25years upon mutual agreement. The contract included an
enter with them in connection with the railroad project. However, the increase in authorized arbitration agreement. (provided that arbitration shall be conducted in accordance with
capital stock did not materialize. Thus, DMCI-PDI demanded the return of 300M. Arbitration Law)
The contract authorized TEAM to sublease the property. TEAM subleased the property 3) Petition for certiorari under Rule 65
to Capitol Publishing House (Capitol) on Dec 1996, after notifying Fruehaf. Respondent argues:
On May 2003, TEAM informed Fruehaf that it would not be renewing the lease. CA correctly ruled that arbitral tribunal’s errors were sufficient grounds to vacate or
On May 31, 2003, the lease between TEAM and Capitol expired. However, Capitol modify the award. TEAM said that it disagreed with arbitral award mainly on qs of fact and
only vacated the premises on Mar 5, 2005. In the meantime, the master lease between TEAM not only qs of law. And even assuming that it availed of the wrong mode of appeal, TEAM
and Fruehaf expired on Jun 9, 2003. posits that its appeal should still have been given due course in the interest of substantial
Fruehaf instituted before the RTC Submission of Existing Controversy for justice.
Arbitration. It alleged: 1) when the lease expired, the prop suffered from damage that
required extensive renovation, 2) when lease expired, TEAM failed to turn over the premises ISSUES: 1) what are the remedies or modes of appeal against unfavorable arbitral award?
and pay rent, 3) TEAM did not restore the prop to its original condition as required in the 2) what are the available remedies from RTC decision confirming, vacating, modifying or
contract. RTC granted the petition and directed the parties to comply with the arbitration correcting an arbitral award?
clause of the contract.
The dispute was refereed to 3-member arbitration tribunal. TEAM and Fruehaf RULING:
appointed one member each while Chairman was appointed by the first two members. FIRST ISSUE
The right to an appeal is neither a natural right nor an indispensable component of due
The arbitral award: in favor of Fruehaf. process; it is a mere statutory privilege that cannot be invoked in the absence of an enabling
statute. Neither the Arbitration Law nor the ADR Law allows a losing party to appeal an
Ruling of lower courts: arbitral award. The statutory absence of an appeal mechanism reflects the State’s policy of
RTC: confirmed the arbitral award and denied the appeal of TEAM, because accdg to S.29 of upholding the autonomy of arbitration proceedings and their corresponding arbitral awards.
Arbit Law, an ordinary appeal under Rule 41 is not proper mode of appeal against an order The Court has recognized this when it enacted the Special Rules of Court on ADR “An
confirming arbitral award. Thus, TEAM filed certiorari before the CA agreement to refer a dispute to arbitration shall mean that the arbitral award shall be final
and binding. Consequently, a party to an arbitration is precluded from filing an appeal or a
CA: held that S.29 of Arbitration Law: petition for certiorari questioning the merits of an arbitral award”
Section 29. Appeals. — An appeal may be taken from an order made in a proceeding under Moreover, in the case of Asset Privatization Trust v CA, the Court held: “the award of
this Act, or from a judgment entered upon an award through certiorari proceedings, but such arbitrator cannot be set aside for mere errors of judgment either as to the law or as to the
appeals shall be limited to questions of law. The proceedings upon such appeal, including facts. Courts are w/o power to amend or overrule merely because of disagreement with
the judgment thereon shall be governed by the Rules of Court in so far as they are applicable. matters of law or facts determined by the arbitrators. Errors of law and fact, or an erroneous
decision of matters submitted to the judgment of the arbitrators, are insufficient to invalidate
That S.29 of Arbit law, does not preclude the aggrieved party from resorting to other judicial an award fairly and honestly made”
remedies. That aggrieved party may resort to petition for certiorari when RTC has acted Nonetheless, arbitral award is not absolute. As provided in S.24 of Arbitration Law and Art.34
without or with grave abuse of discretion and there is no appeal, plain or speedy remedy in of UNCITRAL Model Law,
the course of law. Rule on Judicial Review on Arbitration in the Ph -GR: court can only vacate or set
It further cited ADR law: aside the decision of arbitral tribunal upon clear showing that the award suffers from any of
SEC. 46. Appeal from Court Decisions on Arbitral Awards. — A decision of the regional the infirmities or grounds for vacating an arbitral award under S.24 of RA 876 or under Rule
trial court confirming, vacating, setting aside, modifying or correcting an arbitral award may 34 of Model Law in domestic arbitration.
be appealed to the Court of Appeals in accordance with the rules of procedure to be If the RTC is asked to set aside an arbitral award in a domestic or international arbitration
promulgated by the Supreme Court. The losing party who appeals from the judgment of the on any ground other than those provided in the Special ADR Rules, the court shall entertain
court confirming an arbitral award shall be required by the appellant court to post such ground for setting aside only if the same amounts to a violation of public policy.
counterbond executed in favor of the prevailing party equal to the amount of the award in The court shall not set aside or vacate the award of the arbitral tribunal merely on the ground
accordance with the rules to be promulgated by the Supreme Court that the arbitral tribunal committed errors of fact, or of law, as the court cannot substitute
its judgment for that of the arbitral tribunal.
Petitioner argues: **See S.24 of RA 876 and Art. 34 of UNCITRAL MODEL LAW (memorize it)
That courts do not have the power to substitute their judgment for that of the The award may also be vacated if an arbitrator who was disqualified to act willfully refrained
arbitrators. It also insists that an ordinary appeal is not the proper remedy against an RTC from disclosing his disqualification to the parties. Note: none of these grounds pertain to
order, but rather, a petition for review on certiorari. It consistently argues that remedies correctness of award but relate to misconduct of arbitrators.
against arbitral award are:
1) Petition to vacate the award These grounds for vacating an arbitral award are exclusive. Under ADR Law, courts are
2) Petition to review under Rule 43 [raising qs of fact, law, or mixed] obliged to disregard any other grounds invoked to set aside an award:
S.41 Vacation Award – A party to domestic arbitration may question the arbitral award with extendible period of 15d from receipt of the order. The losing party may also opt to appeal
the appropriate RTC only on those grounds enumerated in S.25 of RA 876. any other ground from RTC’s ruling instead.
raised against a domestic arbitral award shall be disregarded by the RTC. Under the Arbitration Law, the mode of appeal was via petition for review on
certiorari.S.29 of RA 876 “An appeal may be taken from an order made in a proceeding
As established earlier, arbitral award is not appealable via Rule 43, bec: 1) there is no through certiorari proceedings, but such appeals shall be limited to questions of law”. The
statutory basis for an appeal from the final award of arbitrators, 2) arbitrators are not quasi mode of appeal can be interpreted as an Appeal by Certiorari to the SC under Rule 45.
judicial bodies, 3) Special ADR Rules specifically prohibit the filing of an appeal to question In the present case, RTC disallowed TEAM’s notice of appeal from the former’s
the merits of an arbitral award. decision confirming arbitral award. TEAM moved for reconsideration which was likewise
The Special ADR Rules allow the RTC to correct or modify an arbitral award pursuant to S.25 denied. In the interim, Special ADR Rules became effective, hence, the latter apply
of Arbitration Law. However, this authority cannot be interpreted as jurisdiction to review retroactively in light of its procedural character.
the merits of the award. The RTC can modify the award only in the ff cases: (S.25 RA876) In the case, CA ruled that RTC gravely abused its discretion when it refused to
a) Evident miscalculation of figures or evident mistake in the description of person, give due course to the notice of ordinary appeal. The CA is wrong. There is no basis than an
thing, property referred to in the award ordinary appeal is the correct remedy from an order confirming, vacating or correcting an
b) Where arbitrators have awarded upon a matter not submitted to them arbitral award.
c) Where arbitrators have omitted to resolve an issue submitted to them for
resolution
d) Where award is imperfect in a matter of form not affecting the merits of the
controversy, and if it has been a commissioner’s report, the defect could have been amended
or disregarded by the Court

A losing party is likewise precluded from resorting to certiorari under Rule 65 of RoC.
Certiorari is prerogative writ designed to correct errors of jurisdiction committed by judicial
or quasi judicial body. Because an arbitral tribunal is not a government organ exercising
judicial or quasi judicial powers, it is removed from the ambit of Rule 65. Not even the Court’s
expanded certiorari jurisdiction under the Constitution can justify the judicial intrusion into
the merits of arbitral awards.

Lastly, Special ADR Rules are self-contained body of rules. The parties cannot
invoke remedies under other provisions of the RoC unless they were incorporated in the
Special ADR Rules.

Hence, contrary to TEAM’s position, the Special ADR Rules actually forecloses
against other remedies outside of itself. Thus, losing party cannot assail an arbitral award
through petition for review under Rule 43 or petition for certiorari under Rule 65 bec. these
remedies are not specifically permitted in the Special ADR Rules. In sum, the only remedy
against final domestic arbitral award is to file petition to vacate or to modify/correct the
award not later then 30d from the receipt of the award. Unless ground to vacate has been
established, RTC must confirm the arbitral award as a matter of course.

SECOND ISSUE
The remedies against an order
Confirming, vacating, correcting or modifying
An arbitral award

Once the RTC orders the confirmation, vacation, correction/modification of


domestic arbitral award, the aggrieved party may move for reconsideration within non-
10. Lanuza v. BF Corp, G.R. No. 174938 PENA alleged that they had resigned as members of Shangri-La’s board of directors as of July 15,
1991.
G.R. No. 174938
October 1, 2014 During the arbitration proceedings, Shangri-La filed an omnibus motion and BF Corporation
Leonen, J. an urgent motion for clarification, both seeking to clarify the term, "parties," and whether
Shangri-La’s directors should be included in the arbitration proceedings and served with
Petitioner: Gerardo Lanuza, Jr. and Antonio O. Obles separate demands for arbitration. The petitioners, in their comment, said that the directors
Respondent: BF Corporation, Shangri-La Properties, Inc., A;fredo C. Ramos, Rufo B. Colayco, be excluded from the arbitration proceedings for being non-parties to Shangri-La and BF
Maximo G. Licauco III, and Benjamin C. Ramos Corporation’s Agreement.

DOCTRINE: Corporate representatives may be compelled to submit to arbitration RTC: Issued an order directing service of demands for arbitration upon all defendants in BF
proceedings pursuant to a contract entered into by the corporation they represent if there Corporation’s complaint including the directors of Shangri-La. According to the trial court,
are allegations of bad faith or malice in their acts representing the corporation. Shangri-La’s directors were interested parties who "must also be served with a demand for
arbitration to give them the opportunity to ventilate their side of the controversy, safeguard
When corporate veil is pierced, the corporation and persons who are normally treated as their interest and fend off their respective positions."
distinct from the corporation are treated as one person, such that when the corporation is
adjudged liable, these persons, too, become liable as if they were the corporation. Among The petitioners filed a motion for reconsideration of this order but was denied by the trial
the persons who may be treated as the corporation itself under certain circumstances are its court. Hence, they filed a petition for certiorari with the CA, alleging grave abuse of discretion
directors and officers. Section 31 of the Corporation Code provides the instances when in the issuance of the order compelling them to submit to arbitration proceedings despite
directors, trustees, or officers may become liable for corporate acts: being third parties to the contract.
1. When a director or officer has consented to the issuance of watered stocks or who,
having knowledge thereof, did not forthwith file with the corporate secretary his CA: Dismissed the petition and ruled that Shangri-La’s directors were necessary parties in
written objection thereto; the arbitration proceedings. They were deemed not third parties to the contract as they were
2. When a director, trustee or officer has contractually agreed or stipulated to hold sued for their acts in representation of the party to the contract pursuant to Art. 31 of the
himself personally and solidarily liable with the corporation; Corporation Code, and that as directors of the defendant corporation, they, in accordance
3. When a director, trustee or officer is made, by specific provision of law, personally with Art. 1217 of the Civil Code, stand to be benefited or injured by the result of the
liable for his corporate action. arbitration proceedings, hence, being necessary parties, they must be joined in order to have
complete adjudication of the controversy. Consequently, if [they were] excluded as parties
FACTS: BF Corporation filed a collection complaint with the RTC against Shangri-La and the in the arbitration proceedings and an arbitral award is rendered, holding Shangri-La and its
members of its board of directors (respondents) alleging that it entered into agreements with board of directors jointly and solidarily liable to private respondent BF Corporation, a problem
Shangri-La wherein it undertook to construct for Shangri-La a mall and a multi-level parking will arise, i.e., whether petitioners will be bound arbitral award, and this will prevent
structure along EDSA. Shangri-La had been consistent in paying BF Corporation in complete determination of the issues and resolution of the controversy. The Court of Appeals
accordance with its progress billing statements. However, by October 1991, Shangri-La further ruled that "excluding petitioners in the arbitration proceedings . . . would be contrary
started defaulting in payment. BF Corporation alleged that Shangri-La induced BF to the policy against multiplicity of suits.”
Corporation to continue with the construction of the buildings using its own funds and credit
despite Shangri-La’s default by misrepresenting that it had funds to pay for its obligations The petitioners filed a petition for review. They argue they cannot be held personally liable
and that the delay in payment was simply a matter of delayed processing of BF Corporation’s for corporate acts or obligations. The corporation is a separate being, and nothing justifies
progress billing statements. BF Corporation eventually completed the construction of the BF Corporation’s allegation that they are solidarily liable with Shangri-La. Neither did they
buildings. Shangri-La allegedly took possession of the buildings while still owing BF bind themselves personally nor did they undertake to shoulder Shangri-La’s obligations
Corporation an outstanding balance. BF Corporation alleged that despite repeated demands, should it fail in its obligations. They also argue that they are third parties to the contract
Shangri-La refused to pay the balance owed to it and that Shangri-La’s directors were in bad between BF Corporation and Shangri-La. Provisions including arbitration stipulations should
faith in directing Shangri-La’s affairs. Therefore, they should be held jointly and severally bind only the parties. BF Corporation also failed to establish fraud or bad faith on their part.
liable with Shangri-La for its obligations as well as for the damages that BF Corporation
incurred as a result of Shangri-La’s default. BF Corporation argued that the courts’ ruling that the parties should undergo arbitration
"clearly contemplated the inclusion of the directors of the corporation.” While petitioners
The respondents moved for the suspension of the proceedings in vies of BF Corporation’s were not parties to the agreement, they were still impleaded under Section 31 of the
failure to submit its dispute to arbitration, in accordance with the arbitration clause provided Corporation Code. Section 31 makes directors solidarily liable for fraud, gross negligence,
in its contract. BF Corporation opposed the motion to suspend proceedings. The respondents and bad faith. Petitioners are not really third parties to the agreement because they are
being sued as Shangri-La’s representatives, under Section 31 of the Corporation Code. BF 4. When a director or officer has consented to the issuance of watered stocks or who,
Corporation further argued that because petitioners were impleaded for their solidary liability, having knowledge thereof, did not forthwith file with the corporate secretary his
they are necessary parties to the arbitration proceedings. written objection thereto;
5. When a director, trustee or officer has contractually agreed or stipulated to hold
The Arbitral Tribunal denied BF Corporation’s claims against them and absolved the himself personally and solidarily liable with the corporation;
petitioners from liability. 6. When a director, trustee or officer is made, by specific provision of law, personally
liable for his corporate action.
ISSUE: Whether petitioners should be made parties to the arbitration proceedings
When there are allegations of bad faith or malice against corporate directors or
Note: The Arbitral Tribunal’s decision, absolving petitioners from liability, and its binding representatives, it becomes the duty of courts or tribunals to determine if these persons and
effect on BF Corporation, have rendered this case moot and academic. the corporation should be treated as one. The determination of these circumstances must
be made by one tribunal or court in a proceeding participated in by all parties involved,
The Arbitral Tribunal rendered a decision, finding that BF Corporation failed to prove the including current representatives of the corporation, and those persons whose personalities
existence of circumstances that render petitioners and the other directors solidarily liable. It are impliedly the same as the corporation.
ruled that petitioners and Shangri-La’s other directors were not liable for the contractual
obligations of Shangri-La to BF Corporation. The Arbitral Tribunal’s decision was made with Hence, when the directors, as in this case, are impleaded in a case against a corporation,
the participation of petitioners, albeit with their continuing objection. In view of our alleging malice or bad faith on their part in directing the affairs of the corporation,
discussion above, we rule that petitioners are bound by such decision. complainants are effectively alleging that the directors and the corporation are not acting as
separate entities. They are alleging that the acts or omissions by the corporation that violated
RULING: Yes their rights are also the directors’ acts or omissions. They are alleging that contracts executed
by the corporation are contracts executed by the directors. Complainants effectively pray
The petitioners may be compelled to submit to the arbitration proceedings in accordance that the corporate veil be pierced because the cause of action between the corporation and
with Shangri-La and BF Corporation’s agreement, in order to determine if the distinction the directors is the same.
between Shangri-La’s personality and their personalities should be disregarded.
The issue of whether the corporation’s acts in violation of complainant’s rights, and the
As a general rule, therefore, a corporation’s representative who did not personally bind incidental issue of whether piercing of the corporate veil is warranted, should be determined
himself or herself to an arbitration agreement cannot be forced to participate in arbitration in a single proceeding. Such finding would determine if the corporation is merely an
proceedings made pursuant to an agreement entered into by the corporation. He or she is aggregation of persons whose liabilities must be treated as one with the corporation. Thus,
generally not considered a party to that agreement. However, there are instances when the in cases alleging solidary liability with the corporation or praying for the piercing of the
distinction between personalities of directors, officers, and representatives, and of the corporate veil, parties who are normally treated as distinct individuals should be made to
corporation, are disregarded. We call this piercing the veil of corporate fiction. participate in the arbitration proceedings in order to determine if such distinction should
indeed be disregarded and, if so, to determine the extent of their liabilities.
Piercing the corporate veil is warranted when "the separate personality of a corporation is
used as a means to perpetrate fraud or an illegal act, or as a vehicle for the evasion of an
existing obligation, the circumvention of statutes, or to confuse legitimate issues. It is also 11. Koppel v. Makati Rotary, G.R. No. 198075 MAGDALUYO
warranted in alter ego cases "where a corporation is merely a farce since it is a mere alter
ego or business conduit of a person, or where the corporation is so organized and controlled
and its affairs are so conducted as to make it merely an instrumentality, agency, conduit or
adjunct of another corporation.

When corporate veil is pierced, the corporation and persons who are normally treated as
distinct from the corporation are treated as one person, such that when the corporation is
adjudged liable, these persons, too, become liable as if they were the corporation. Among
the persons who may be treated as the corporation itself under certain circumstances are its
directors and officers. Section 31 of the Corporation Code provides the instances when
directors, trustees, or officers may become liable for corporate acts:
12. Korea v. Lerma, G.R. No. 143581 TAMAYO RULING:
Yes! It is not contrary to public policy.
DOCTRINES: · Art 15 Arbitration Clause – All disputes, controversies, or differences which may arise
· In our jurisdiction, the policy to favor alternative methods of resolving disputes, between the parties, out of or in relation to or in connection with this contract or for the
particularly civil and commercial disputes. breach thereof, shall finally be settled by arbitration in Seoul in accordance with Commercial
· Arbitration, along with mediation, conciliation, and negotiation, being inexpensive, Arbitration Riles of the Korean Arbitration Board. THE AWARD RENDERED BY THE
speedy and less hostile methods have long been favored this court. ARBITRATION SHALL BE FINAL AND BINDING UPON THE PARTIES CONCERNED.
· FOREIGN ARBITRAL AWARDS WHEN CONFIRMED BY RTC ARE DEEMED NOT AS A · LEX LOCI CONTRACTUS
JUDGMENT OF A FOREIGN COURT BUT ARE ENFORCED AS FINAL AND EXECUTORY o Since the contract was perfected in the Philippines, our laws shall
DECISIONS OF COURTS OF LAW govern.
FACTS: o Art 2044 – Any stipulation that the arbitrators’ award or decision shall
· Petitioner Korea Technologies is engaged in the supply and installation of LPG Cylinder be final is valid without prejudice to Art 2038, 2039, and 2040.
in manufacturing plants. o The arbitration clause was:
· March 5, 1997 – Korea and Pacific General Steel Manufacturing Corporation (PGSMC) § Mutually and voluntarily agreed
executed a Contract. § Not shown to be contrary to law, or against morals, good
o Korea will set-up an LPG cylinder manufacturing plant in Carmona, customs, public order or public policy
Cavite. § No showing that parties are not on equal footing
o Contract is executed in the Philippines. · In the case of Gonzales v. Climax Mining, submission to arbitration is a contract, &
· April 7, 1997 – Parties executed IN KOREA an amendment in the Contract in terms that a clause in a contract providing that all matters in dispute between the parties shall
of payment. be referred to arbitration is a contract.
o Korea will ship machineries and facilities necessary & PGSMC will pay · RA876 was adopted to supplement NCC’s provision on arbitration. Any doubt should
US$ 306,000. be in favor of arbitration.
· October 14, 1997 – PGSMC entered into a CONTRACT OF LEASE with Worth Properties · RA 9285 incorporated the UNCITRAL MODEL LAW
for the use of 5,079 square meters, with a 4,032 square meters warehouse to house o In case a foreign arbitral body is chosen, arbitration rules of our
the LPG manufacturing plant at P332,560 per month with 10% annual increment clause. domestic arbitration bodies would not be applied.
· Initial operations could not be conducted as PGSMC encountered financial difficulties. o As a signatory of Uncitral Model aw, we are bound and incorporated
It agreed that Korea would be deemed to have completely complied. in our RA 9285 (ADR act of 2004) This has a retroactive effect since
o For the remaining balance in the installation and initial operations, it is a procedural law.
PGSMC issued 2 postdated checks of P4.5M each. · RA 9285 gives us the following guidelines:
o Checks were dishonored – “Payment stopped.” o RTC must refer to arbitration in proper cases. (Sec 24)
· A demand letter was sent, threatening of a BP 22 case. The wife of the PGSMC o Foreign arbitral awards must be confirmed by RTC. While mutually
President however faxed a letter complaining about a different brand of hydraulic press stipulated to be final and binding, they are not immediately
and undelivered parts. enforceable.
· PGSMC informed Korea that it was cancelling their contract. It filed a complaint for o Sec 35 of UNCITRAL LAW stipulates requirements for arbitral award
Estafa. to be recognized by competent court for enforcement.
· According to Korea, it cannot unilaterally rescind contract and dismantle machineries. § RA 9285 incorporated these:
It must be settled in Arbitration enshrined in Art 15 – Arbitration Clause in their contract. · Sec 42 – The recognition and enforcement
· July 1, 1998 – Korea instituted an application for arbitration before the Korean of such arbitral awards shall be filed with RTC.
Commercial Arbitration Board. Must also be a party to the New York
· Korea filed a Complaint for Specific Performance in RTC Muntinlupa alleging that it Convention.
violated Art 15 of their contract for unilaterally rescinding the contract. · Sec 43 – The court may, on the grounds of
o For PGSMC’s Defense: Arbitration clause was null and void for being comity and reciprocity, recognize and enforce
against public policy as it ousts local courts of jurisdiction. a non-convention award as a convention
· RTC Muntinlupa ruled that Art 15 is invalid for it ousts court jurisdiction. award.
· Court of Appeals affirmed the ruling of RTC. Arbitration Clause is against public policy. § FOREIGN ARBITRAL AWARDS WHEN CONFIRMED BY RTC
ISSUE: ARE DEEMED NOT AS A JUDGMENT OF A FOREIGN
Whether or not CA erred in affirming that arbitration clause is void for being contrary to COURT BUT ARE ENFORCED AS FINAL AND EXECUTORY
public policy? DECISIONS OF COURTS OF LAW
§ It is akin to a judgment or award or a quasi judicial body. of the fact that the main contract is invalid, the arbitration clause/agreement still
· RTC has jurIsdiction to review foreign arbitraL awards. It can set aside, reject or remains valid and enforceable.
vacate it. As held in Chung Fu Industries:
o It does not oust jurisdiction since these awards are NOT absolute FACTS:
and without exceptions as they are judicially reviewable. This is a consolidation of two petitions rooted in the same disputed Addendum Contract
· The grounds for review are different in domestic and foreign arbitral awards: entered into by the parties.
o FOREIGN: Art 34(2) UNCITRAL In G.R. No. 161957, the Court denied the Rule 45 petition of petitioner Gonzales. It held that
o DOMESTIC: Sec 23 and 25 of RA 876 the DENR Panel of Arbitrators had no jurisdiction over the complaint for the annulment of
· RTC Decisions are appealable to the CA, and to the SC via Rule 45. the Addendum Contract on grounds of fraud and violation of the Constitution and that the
· Thus, in the case at bar, CANNOT unilaterally rescind contract without resorting to action should have been brought before the regular courts. Gonzales averred that the case
arbitration involves a mining dispute that properly falls within the ambit of the Panel’s authority.
Respondents argue that Gonzales’s argument relating to the alleged invalidity of the
Addendum Contract still has to be adjudicated on in a proper proceeding; that is, an action
13. Gonzales v. Climax, G.R. No. 161957 DELA RAMA separate from the motion to compel arbitration.
On the other hand, G.R. No. 167994 is a Rule 65 petition wherein Gonzales challenged the
G.R. No. 161957; G.R. No. 167994. orders of the RTC requiring him to proceed with the arbitration proceedings as sought by
January 22, 2007 Climax-Arimco. The case stemmed from the petition to compel arbitration, pursuant
TINGA, J. to Clause 19.1 of the Addendum Contract and also in accordance with Sec. 5 of
R.A. No. 876, filed by respondent Climax-Arimco before the RTC while the
Petitioners: Jorge Gonzales and Panel of Arbitrators complaint for the nullification of the Addendum Contract was pending before the
Respondents: Climax Mining Ltd., Climax-Arimco Mining Corp., and Australasian Philippines DENR Panel of Arbitrators.
Mining Inc. Gonzales questioned the validity of the Addendum Contract, in view of Climax-
Arimco’s acts of fraud, oppression and violation of the Constitution. Thus, the
DOCTRINES: arbitration clause, Clause 19.1, contained therein is also null and void ab initio
Disputes do not go to arbitration unless and until the parties have agreed to abide by the and legally inexistent. In support of his argument, Gonzales invokes Sec. 6 of R.A. No.
arbitrator's decision. Necessarily, a contract is required for arbitration to take place and to 876 and Sec. 24 of R.A. No. 9285. Gonzales adds that the assailed Order also violated his
be binding. Sec. 2, R.A. No. 876 recognizes the contractual nature of the arbitration right to procedural due process when the trial court erroneously ruled on the existence of
agreement. The provision to submit to arbitration any dispute arising therefrom the arbitration agreement despite the absence of a hearing for the presentation of evidence
and the relationship of the parties is part of that contract and is itself a contract. on the nullity of the Addendum Contract.
The special proceeding under Sec. 6 of R.A. No. 876 recognizes the contractual nature of Respondent Climax-Arimco, on the other hand, assails the mode of review availed of by
arbitration clauses or agreements. This special proceeding is the procedural mechanism for Gonzales, citing Sec. 29 of R.A. No. 876. Gonzales has not denied that the relevant 15-day
the enforcement of the contract to arbitrate. R.A. No. 876 explicitly confines the court's period for an appeal had elapsed long before he filed this petition for certiorari. Climax-
authority only to the determination of whether or not there is an agreement in Arimco adds that an application to compel arbitration under Sec. 6 of R.A. No. 876 confers
writing providing for arbitration. The statute ordains that the court shall issue an order on the trial court only a limited and special jurisdiction, i.e., a jurisdiction solely to determine
"summarily directing the parties to proceed with the arbitration in accordance with the terms (a) whether or not the parties have a written contract to arbitrate, and (b) if the defendant
thereof." If the court, upon the other hand, finds that no such agreement exists, "the has failed to comply with that contract.
proceeding shall be dismissed." Climax-Arimco further notes that Gonzales's attack on the Addendum Contract is
The duty of the court is not to resolve the merits of the parties' claims but only to not a ground to deny effect to the arbitration clause in the Contract, stressing
determine if they should proceed to arbitration or not. that the arbitration agreement is separate and severable from the contract. The
Implicit in the summary nature of the judicial proceedings is the separable or independent grounds Gonzales invokes — fraud and oppression — are also not grounds for the revocation
character of the arbitration clause or agreement. The doctrine of separability, or of the arbitration clause in the Contract, as these should be raised in a separate action for
severability as other writers call it, enunciates that an arbitration agreement is independent rescission.
of the main contract. The arbitration agreement is to be treated as a separate
agreement and the arbitration agreement does not automatically terminate when ISSUE: W/N it was proper for the RTC to order the parties to arbitrate even though the
the contract of which it is part comes to an end. defendant therein has raised the twin issues of validity and nullity of the Addendum Contract
Indeed, the doctrine denotes that the invalidity of the main contract, also referred to as the and, consequently, of the arbitration clause therein
"container" contract, does not affect the validity of the arbitration agreement. Irrespective
RULING: YES
On the basis of the above-mentioned doctrines, this Court holds that Gonzales's argument Immediately after its appointment as such, Montebueno appointed Sabrosa Foods Inc.
that the Addendum Contract is null and void and, therefore the arbitration clause therein is as its marketing arm to focus on the marketing and selling as well as to manage its critical
void as well, is not tenable. First, the proceeding in a petition for arbitration under relationship with trade. On 3 October 1996, private respondents filed a complaint against
R.A. No. 876 is limited only to the resolution of the question of whether the petitioners for violating several provisions of the Civil Code. According to respondent, despite
arbitration agreement exists. Second, the separability of the arbitration clause their exclusive agreement, the products of petitioners were continuously being imported to
from the Addendum Contract means that validity or invalidity of the Addendum the Philippines causing them great embarrassment and substantial damage for the alleged
Contract will not affect the enforceability of the agreement to arbitrate. Thus, products being imported were damaged, counterfeited or aged.
Gonzales's petition for certiorari should be dismissed.
A contrary ruling would suggest that a party's mere repudiation of the main contract is Petitioners filed a Motion to Suspend Proceedings invoking the arbitration clause
sufficient to avoid arbitration. That is exactly the situation that the separability doctrine, as entered into by the parties. In a resolution, the trial court denied the motion to suspend on
well as jurisprudence applying it, seeks to avoid. the ground that the complaint of private respondents was based on damages with prayer for
The MR of Gonzales in G.R. No. 161957 should also be denied. Gonzales alleged fraud or the issuance of a Writ of Attachment and not on the distributorship agreement.
misrepresentation in the execution of the Addendum Contract is a ground for the annulment
of a voidable contract. Clearly, such allegations entail legal questions which are within the Issues: 1) Who are the proper parties to participate in the arbitration proceeding?
jurisdiction of the courts. The CA likewise found that Gonzales's complaint did not provide 2) Whether or not the dismissal of the Motion to Suspend was Proper.
any particulars to substantiate the alleged fraud.
As to the remedy, the Rule 65 petition deserves to be dismissed on procedural grounds, as Ruling:
it was filed in lieu of appeal which is the prescribed remedy and at that far beyond the 1) Petitioners Del Monte USA and Paul Derby Jr. and Respondents Montebueno
reglementary period. Judge Pimentel acted in accordance with the procedure prescribed in Marketing Inc. and Lily Sy. The arbitration agreement between the parties is a contract
R.A. No. 876. Even if the Court overlooks the employment of the wrong remedy in the and as a rule, contracts are to be respected as the law between the contracting parties and
broader interests of justice, the petition would nevertheless be dismissed for failure of produces effect between them, their assigns and heirs. Clearly, Petitioners Daniel Collins and
Gonzalez to show grave abuse of discretion. Luis Hidalgo and private respondents Sabrosa Foods Inc. are not parties to the agreement
and are not bound by the arbitration agreement. Hence the referral to arbitration could be
14. Del Monte v. CA, G.R. No. 136154 NOLASCO called for only between petitioners Del Monte-USA and Paul Derby and respondents
Title: Del Monte-USA v Court of Appeals Montebueno Marketing and Lily Sy.
Date: 07 February 2001
Ponente: Bellosillo, J. 2) YES. Applying the doctrine in the case of Salas v Laperal Realty Corporation, the
arbitration clause shall only bind the parties to the agreement. Being in the form of a contract,
Petitioner: Del Monte Corporation-USA, Paul E. Derby, Jr., Daniel Collins and Luis Hidalgo it may only compel to arbitrate those who are bound thereto. The object of arbitration is to
Respondent: Court of Appeals, Judge Bienvenido Reyes and Montebueno Marketing, Inc., allow the expeditious determination of a dispute. However, the issue at hand could not be
Liong Liong C. Sy and Sabrosa Foods, Inc. speedily and efficiently resolved in its entirety if we allow simultaneous arbitration and trial
or suspending the trial pending the arbitration. In the interest of justice, it would be proper
Doctrine: Proper parties in arbitration: The arbitration agreement between the parties is a if the trial court hears and adjudicates the case in a single and complete proceeding.
contract and as a rule, contracts are to be respected as the law between the contracting
parties and produces effect between them, their assigns and heirs. The arbitration agreement 15. Sea-Land v. CA, G.R. No. 126212 MORENO
shall only compel to arbitrate those who are bound to perform their obligations in the Date:
contract. Ponente:
Petitioner:Sea-Land Services, Inc.
Facts: Respondent: A.P. Moller/Maersk Line
In a distributorship agreement, Del Monte USA appointed Montebueno Marketing as Doctrine:
the sole and exclusive distributor of its products in the Philippines for a period of five years When the text of a contract is explicit and leaves no doubt as to its intention, the court may
and shall be renewable for two consecutive five-year periods with the consent of the parties. not read into it any other intention that would contradict its plain import. Arbitration being
The agreement provided for an arbitration clause which states: The agreement shall be the mode of settlement between the parties expressly provided for by their Agreement, the
governed by the laws of the State of California and if applicable the laws of the United States Third Party Complaint should have been dismissed.
of America. All disputes arising out of or in relation to this agreement or the parties’
relationship, including the termination thereof shall be resolved by arbitration in the City of This Court has previously held that arbitration is one of the alternative methods of dispute
San Francisco, State of California, under the rules of the American Arbitration Association. resolution that is now rightfully vaunted as "the wave of the future" in international relations,
and is recognized worldwide. To brush aside a contractual agreement calling for arbitration Issue/s:
in case of disagreement between the parties would therefore be a step backward WON an arbitration is a condition precedent to suit where such an agreement to arbitrate
exist

Facts:
Petitioner Sea-Land Services, Inc. and private respondent A.P. Moller/Maersk Line Ruling:
(hereinafter referred to as "AMML") are carriers of cargo in containerships as well as common
carriers. They entered into a contract entitled, "Co-operation in the Pacific", a vessel sharing From the agreement of the parties, the following matters are clear:
agreement whereby they mutually agreed to purchase, share and exchange needed space
for cargo in their respective containerships. Under the Agreement, they could be, either a First, disputes between the Principal Carrier and the Containership Operator arising from
principal carrier (with a negotiable bill of lading or other contract of carriage with respect to contracts of carriage shall be governed by the provisions of the bills of lading issued to the
cargo) or a containership operator (owner, operator or charterer of containership on which Principal Carrier by the Containership Operator.
the cargo is carried).
Second, the Principal Carrier shall use its best efforts to defend or settle all suits against it
Florex International, Inc. delivered to AMML cargo of various foodstuffs, with Oakland, for loss of or damage to cargo pursuant to bills of lading issued by it. Third, the Principal
California as port of discharge and San Francisco as place of delivery. A bill of lading was Carrier shall have the right to seek damages and/or indemnity from the Containership
consequently issued to Florex. Pursuant to the Agreement, AMML loaded the cargo on a Operator by arbitration, pursuant to Clause 32 of the agreement.
vessel owned by Sea-Land. Therefore, in this particular transaction, AMML was the principal
carrier and Sea-Land was the containership operator. Fourth, the Principal Carrier shall have the right to commence such arbitration any time until
one year after its liability has been finally determined by agreement, arbitration award or
The consignee thereof refused to pay for the cargo, alleging that delivery thereof was judgment, provided that the Containership Operator was given notice in writing by the
delayed. According to Florex, the cargo was received by the consignee only on June 28, 1991 Principal Carrier within three months of the Principal Carrier receiving notice in writing of said
in Long Beach, California, instead of in Oakland, California on June 5, 1991 as stipulated claim.

The Court of Appeals ruled that the terms of the Agreement "explicitly required that the
AMML filed its Answer alleging that even on the assumption that Florex was entitled to principal carrier's claim against the containership operator first be finally determined by,
reimbursement, it was petitioner who should be liable. Accordingly, AMML filed a Third Party among others, a court judgment, before the right to arbitratio
Complaint against petitioner averring that whatever damages sustained by Florex were accrues." This is erroneous. In the light of the Agreement clauses, specifically Clause 16. 3,
caused by petitioner, which actually received and transported Florex's cargo on its vessels it is clear that arbitration is the mode provided by which AMML as Principal Carrier can seek
and unloaded them. damages and/or indemnity from petitioner, as Containership Operator. Stated differently,
AMML is barred from taking judicial action against petitioner by the clear terms of their
Petitioner filed a Motion to Dismiss the Third Party Complaint on the ground of failure to Agreement.
state a cause of action and lack of jurisdiction, the amount of damages not having been
specified therein. Petitioner also prayed either for dismissal or suspension of the Third Party When the text of a contract is explicit and leaves no doubt as to its intention, the court may
Complaint on the ground that there exists an arbitration agreement between it and AMML not read into it any other intention that would contradict its plain import. Arbitration being
the mode of settlement between the parties expressly provided for by their Agreement, the
Third Party Complaint should have been dismissed.
Ruling of Lower Courts:
The Motion to Dismiss was denied. Upon Motion for Reconsideration, the same was denied. This Court has previously held that arbitration is one of the alternative methods of dispute
On appeal, petitioner filed a Petition for certiorari, which was also denied by CA. The CA resolution that is now rightfully vaunted as "the wave of the future" in international relations,
ratiocinated that the terms of the Agreement explicitly required that the principal carrier's and is recognized worldwide. To brush aside a contractual agreement calling for arbitration
claim against the containership operator first be finally determined by, among others, a court in case of disagreement between the parties would therefore be a step backward
judgment, before the right to arbitratio
accrues.
16. Magellan Capital v. Rolando Zosa, G.R. No. 129916 MACABUAT
Hence this present petition
17. Cargill v. San Fernando Regala, G.R. No. 175404 CABIOS Any dispute which the Buyer and Seller may not be able to settle by mutual agreement shall
be settled by arbitration in the City of New York before the American Arbitration Association.
G.R. No. 175404 The Arbitration Award shall be final and binding on both parties.
Date: January 31, 2011
Ponente: PERALTA, J. That respondent must first comply with the arbitration clause before resorting to court, thus,
Petitioner: CARGILL PHILIPPINES, INC the RTC must either dismiss the case or suspend the proceedings and direct the parties to
Respondent: SAN FERNANDO REGALA TRADING, INC proceed with arbitration, pursuant to Sections 6 and 7 of Republic Act (R.A.) No. 876, or the
Arbitration Law.
Doctrine: The doctrine of separability, or severability as other writers call it, enunciates that
an arbitration agreement is independent of the main contract. The arbitration agreement is Respondent filed an Opposition, wherein it argued that the RTC has jurisdiction over the
to be treated as a separate agreement and the arbitration agreement does not automatically action for rescission of contract and could not be changed by the subject arbitration clause.
terminate when the contract of which it is a part comes to an end. It cited cases wherein arbitration clauses, such as the subject clause in the contract, had
been struck down as void for being contrary to public policy since it provided that the
The separability of the arbitration agreement is especially significant to the determination of arbitration award shall be final and binding on both parties, thus, ousting the courts of
whether the invalidity of the main contract also nullifies the arbitration clause. Indeed, the jurisdiction.
doctrine denotes that the invalidity of the main contract, also referred to as the "container"
contract, does not affect the validity of the arbitration agreement. Irrespective of the fact In its Reply, petitioner maintained that the cited decisions were already inapplicable, having
that the main contract is invalid, the arbitration clause/agreement still remains valid and been rendered prior to the effectivity of the New Civil Code in 1950 and the Arbitration Law
enforceable. in 1953.

Facts: On June 18, 1998, respondent San Fernando Regala Trading, Inc. filed with the Ruling of Lower Courts: In denying the motion, the RTC found that there was no clear
Regional Trial Court (RTC) of Makati City a Complaint for Rescission of Contract with basis for petitioner's plea to dismiss the case, pursuant to Section 7 of the Arbitration Law.
Damages3 against petitioner Cargill Philippines, Inc. In its Complaint, respondent alleged The RTC said that the provision directed the court concerned only to stay the action or
that it was engaged in buying and selling of molasses and petitioner was one of its various proceeding brought upon an issue arising out of an agreement providing for the arbitration
sources from whom it purchased molasses. Respondent alleged that it entered into a contract thereof, but did not impose the sanction of dismissal.
dated July 11, 1996 with petitioner, wherein it was agreed upon that respondent would
purchase from petitioner 12,000 metric tons of Thailand origin cane blackstrap molasses at However, the RTC did not find the suspension of the proceedings warranted, since the
the price of US$192 per metric ton; that the delivery of the molasses was to be made in Arbitration Law contemplates an arbitration proceeding that must be conducted in the
January/February 1997 and payment was to be made by means of an Irrevocable Letter of Philippines under the jurisdiction and control of the RTC; and before an arbitrator who resides
Credit payable at sight, to be opened by September 15, 1996; that sometime prior to in the country; and that the arbitral award is subject to court approval, disapproval and
September 15, 1996, the parties agreed that instead of January/February 1997, the delivery modification, and that there must be an appeal from the judgment of the RTC. The RTC
would be made in April/May 1997 and that payment would be by an Irrevocable Letter of found that the arbitration clause in question contravened these procedures, i.e., the
Credit payable at sight, to be opened upon petitioner's advice. Petitioner, as seller, failed to arbitration clause contemplated an arbitration proceeding in New York before a non-resident
comply with its obligations under the contract, despite demands from respondent, thus, the arbitrator (American Arbitration Association); that the arbitral award shall be final and binding
latter prayed for rescission of the contract and payment of damages. on both parties. The RTC said that to apply Section 7 of the Arbitration Law to such an
agreement would result in disregarding the other sections of the same law and rendered
On July 24, 1998, petitioner filed a Motion to Dismiss/Suspend Proceedings and To Refer them useless and mere surplusages.
Controversy to Voluntary Arbitration, wherein it argued that the alleged contract between
the parties, dated July 11, 1996, was never consummated because respondent never In denying the petition, the CA found that stipulation providing for arbitration in contractual
returned the proposed agreement bearing its written acceptance or conformity nor did obligation is both valid and constitutional.
respondent open the Irrevocable Letter of Credit at sight. Petitioner contended that the
controversy between the parties was whether or not the alleged contract between the parties Notwithstanding such findings, the CA still held that the case cannot be brought under the
was legally in existence and the RTC was not the proper forum to ventilate such issue. It Arbitration Law for the purpose of suspending the proceedings before the RTC, since in its
claimed that the contract contained an arbitration clause, to wit: Motion to Dismiss/Suspend proceedings, petitioner alleged, as one of the grounds thereof,
that the subject contract between the parties did not exist or it was invalid; that the said
ARBITRATION contract bearing the arbitration clause was never consummated by the parties, thus, it was
proper that such issue be first resolved by the court through an appropriate trial; that the
issue involved a question of fact that the RTC should first resolve. Arbitration is not proper
when one of the parties repudiated the existence or validity of the contract. In so ruling that the validity of the contract containing the arbitration agreement does not
affect the applicability of the arbitration clause itself, we then applied the doctrine of
Issue: Whether the CA erred in finding that this case cannot be brought under the arbitration separability, thus:
law for the purpose of suspending the proceedings in the RTC.
The doctrine of separability, or severability as other writers call it, enunciates that an
Ruling: YES. Arbitration, as an alternative mode of settling disputes, has long been arbitration agreement is independent of the main contract. The arbitration agreement is to
recognized and accepted in our jurisdiction. R.A. No. 876 authorizes arbitration of domestic be treated as a separate agreement and the arbitration agreement does not automatically
disputes. Foreign arbitration, as a system of settling commercial disputes of an international terminate when the contract of which it is a part comes to an end.
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 The separability of the arbitration agreement is especially significant to the determination of
settlement of disputes. whether the invalidity of the main contract also nullifies the arbitration clause. Indeed, the
doctrine denotes that the invalidity of the main contract, also referred to as the "container"
A contract is required for arbitration to take place and to be binding. Submission to arbitration contract, does not affect the validity of the arbitration agreement. Irrespective of the fact
is a contract and a clause in a contract providing that all matters in dispute between the that the main contract is invalid, the arbitration clause/agreement still remains valid and
parties shall be referred to arbitration is a contract. The provision to submit to arbitration enforceable
any dispute arising therefrom and the relationship of the parties is part of the contract and
is itself a 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
Arbitration is not proper when one of the parties repudiates the existence or validity of the did not come into existence, since the arbitration agreement shall be treated as a separate
contract. Apropos is Gonzales v. Climax Mining Ltd., 452 SCRA 607, (G.R.No.161957), where agreement independent of the main contract. To reiterate. a contrary ruling would suggest
the Supreme Court held that: 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 question of validity of the contract containing the agreement to submit to the party who has repudiated the main contract is not prevented from enforcing its arbitration
arbitration will affect the applicability of the arbitration clause itself. A party clause.
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.... 18. RCBC v. BDO, G.R. No. 196171

Consequently, the petitioner herein cannot claim that the contract was never consummated Title: RCBC vs. BDO
and, at the same time, invokes the arbitration clause provided for under the contract which G.R. No. 196171
it alleges to be non-existent or invalid. Petitioner claims that private respondent's complaint Date: December 10, 2012
lacks a cause of action due to the absence of any valid contract between the parties. Ponente: Villarama, Jr., J.
Apparently, the arbitration clause is being invoked merely as a fallback position. The
petitioner must first adduce evidence in support of its claim that there is no valid contract Doctrine: Alternative dispute resolution methods or ADRs - like arbitration, mediation,
between them and should the court a quo find the claim to be meritorious, the parties may negotiation and conciliation - are encouraged by this Court. By enabling parties to resolve
then be spared the rigors and expenses that arbitration in a foreign land would surely entail. their disputes amicably, they provide solutions that are less time-consuming, less tedious,
less confrontational, and more productive of goodwill and lasting relationship.
However, the Gonzales case, which the CA relied upon for not ordering arbitration, had been Institutionalization of ADR was envisioned as "an important means to achieve speedy and
modified upon a motion for reconsideration in this wise: 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
x x x The adjudication of the petition in G.R. No. 167994 effectively modifies part process. For this reason, the law authorizes vacating an arbitral award when there is evident
of the Decision dated 28 February 2005 in G.R. No. 161957. Hence, we now hold partiality in the arbitrators.
that the validity of the contract containing the agreement to submit to arbitration
does not affect the applicability of the arbitration clause itself. A contrary ruling Facts: Sometime in May 2003 when RCBC informed EPCIB and the other selling shareholders
would suggest that a party's mere repudiation of the main contract is sufficient of an overpayment of the subject shares, claiming there was an overstatement of valuation
to avoid arbitration. That is exactly the situation that the separability doctrine, as of accounts amounting to ₱478 million and that the sellers violated their warranty under
well as jurisprudence applying it, seeks to avoid.
Section 5(g)of the SPA. RCBC commenced arbitration proceedings with the ICC-ICA in increment, insisting that RCBC should bear the cost of prosecuting its own claim and that
accordance with Section 10 of the SPA. compelling the Respondents to fund such prosecution is inequitable. Respondents reiterated
that it was willing to pay the advance on costs for their counterclaim.
Section 10. Arbitration: Should there be any dispute arising between the parties relating to
this Agreement including the interpretation or performance hereof which cannot be resolved In view of Respondents’ continuing refusal to pay its equal share in the advance on costs
by agreement of the parties within fifteen (15) days after written notice by a party to another, and increment, RCBC wrote the ICC-ICA stating that the latter should compel the
such matter shall then be finally settled by arbitration under the Rules of Conciliation and Respondents to pay as otherwise RCBC will be prejudiced and the inaction of the ICC-ICA
Arbitration of the International Chamber of Commerce in force as of the time of arbitration, and the Arbitration Tribunal will detract from the effectiveness of arbitration as a means of
by three arbitrators appointed in accordance with such rules. settling disputes. RCBC paid the additional US$100,000 under the second assessment to
avert suspension of the Arbitration Tribunal’s proceedings. Meanwhile, EPCIB’s corporate
The venue of arbitration shall be in Makati City, Philippines and the arbitration proceedings name was officially changed to Banco De Oro (BDO)-EPCIB after its merger with BDO was
shall be conducted in the English language. Substantive aspects of the dispute shall be settled duly approved by the Securities and Exchange Commission. As such, BDO assumed all the
by applying the laws of the Philippines. The decision of the arbitrators shall be final and obligations and liabilities of EPCIB under the SPA.
binding upon the parties hereto and the expenses of arbitration (including without limitation
the award of attorney’s fees to the prevailing party) shall be paid as the arbitrators shall The Arbitration Tribunal rendered a Partial Award and makes the following declarations (First
determine. Claimant RCBC charged Bankard with deviating from and contravening generally Partial Award) (1)The Claimant’s claim is not time-barred under the provisions of this SPA;
accepted accounting principles and practices, due to which the financial statements of (2) The Claimant has established the following breaches by the Respondents of the SPA; (3)
Bankard prior to the stock purchase were far from fair and accurate, and resulted in the The assets, revenue and net worth of Bankard were overstated; and (3) Subject to proof of
overpayment of ₱556 million. For this violation of sellers’representations and warranties loss the Claimant is entitled to damages for the foregoing breaches. RCBC filed with the
under the SPA, RCBC sought its rescission, as well as payment of actual damages in the Makati City RTC a motion to confirm the First Partial Award, while Respondents filed a motion
amount of ₱573,132,110, legal interest on the purchase price until actual restitution, moral to vacate the same. ICC-ICA by letter increased again the advance on costs. Respondents
damages and litigation and attorney’s fees, with alternative prayer for award of damages in declined to pay its adjudged total share and the ICC-ICA then invited RCBC to substitute for
the amount of at least ₱809,796,082 plus legal interest. Respondents in paying the balance. RCBC complied with the request.

EPCIB, Go and the other selling individual shareholders (Respondents) denied RCBC’s RCBC filed an Application for Reimbursement of Advance on Costs Paid, praying for the
allegations contending that RCBC’s claim is one for overpayment or price reduction under issuance of a partial award directing the Respondents to reimburse its payment representing
Section 5(h) of the SPA which is already time-barred, the remedy of rescission is unavailable, Respondents’ share in the Advance on Costs. RCBC contended that based on Mr. Secomb’s
and even assuming that rescission is permitted by the SPA, RCBC failed to file its claim within article, the Arbitration Tribunal is vested with jurisdiction and authority to render an award
a reasonable time. They further asserted that RCBC is not entitled to its alternative prayer with respect to said reimbursement of advance cost paid by the non-defaulting party.
for damages, being guilty of laches and failing to set out the details of the breach as required
under Section 7 of the SPA. The Arbitration Tribunal was constituted. The ICC-ICA informed The Arbitration Tribunal rendered the Second Partial Award as follows: Respondents are
the parties that they are required to pay US$350,000 as advance on costs pursuant to Article forthwith to pay to the Claimant the sum of US$290,000. The Makati City RTC issued the
30 (3) of the ICC Rules of Arbitration (ICC Rules). RCBC paid its share of US$107,000, the Order confirming the Second Partial Award and denying EPCIB’s motion to vacate the same.
balance remaining after deducting payments of US$2,500 and US$65,000 it made earlier. EPCIB filed in the CA a petition for review with application for TRO and/or writ of preliminary
Respondents’ share of the advance on costs was thus fixed at US$175,000. injunction in accordance with the Special Rules of Court on Alternative Dispute Resolution
(Special ADR Rules). The Arbitration Tribunal issued the Final Award.
Respondents filed an Application for Separate Advances on Costs dated September 17, 2004
under Article 30(2) of the ICC Rules, praying that the ICC fix separate advances on the cost George L. Go, in his personal capacity and as attorney-in-fact of the other listed shareholders
of the parties’ respective claims and counterclaims, instead of directing them to share equally of Bankard, Inc. in the SPA (Individual Shareholders), filed a petition in the CA, seeking to
on the advance cost of Claimant’s (RCBC) claim. Respondents deemed this advance cost set aside the November 10, 2010 Order and to enjoin Branch 148 from further proceeding.
allocation to be proper, pointing out that the total amount of RCBC’s claim is substantially By Decision dated June 15, 2011, the CA dismissed the said petition. Their motion for
higher – more than 40 times –the total amount of their counterclaims, and that it would be reconsideration of the said decision was likewise denied by the CA in its Resolution dated
unfair to require them to share in the costs of arbitrating what is essentially a price issue December 14, 2011.
that is now time-barred under the SPA. The Second Partial Award dated May 28, 2008 issued in International Chamber of Commerce
Court of Arbitration.
The ICC-ICA notified the parties of its decision to increase the advances on costs from
US$350,000 to US$450,000 subject to later readjustments. The ICC-ICA again invited the Issue: Whether or not there was evident partiality which is a legal ground to vacate the
Respondents to pay the US$100,000 increment. Respondents, however, refused to pay the Second Partial Award: YES
Corporation incurred several delays in the construction and SPI considered it serious and
Ruling: Yes, there was evident partiality and therefore constitutes as a legal ground for substantial but BF Corporation alleged that the project progressed with faithful compliance
vacating the Second Partial Award. Special ADR Rules sets forth that evident partiality or until a fire broke out damaging the project. According to SPI, BF Corp. did not finish and
corruption in the arbitral tribunal or any of its members is a ground for vacating an arbitral abandoned the project. This resulted to the disagreements between the parties. SPI
award: (a) The failure of the CA to apply the applicable standard or test for judicial review demanded a conference with BF Corp but it was futile.
prescribed in the Special ADR Rules may warrant the exercise of the Supreme Court’s
discretionary powers of judicial review; (b) Rule 19.10. Rule on judicial review on arbitration After few days, BF Corp filed a complaint before the Regional Trial Court of Pasig City for the
in the Philippines—As a general rule, the court can only vacate or set aside the decision of collection of money due from SPI representing the balance. Instead of filing an answer, SPI
an arbitral tribunal upon a clear showing that the award suffers from any of the infirmities moved to suspend proceedings and invoked the arbitration clause in the trade contract. SPI
or grounds for vacating an arbitral award. alleged that they had executed Trade Contract which entitled Contract Documents for
Builder’s Work Trade Contractor. Such agreement contained several documents regarding
Evident partiality is not defined in our arbitration laws. As one of the grounds for vacating the service contract. Among others were Articles of Agreement and Conditions of Contract.
an arbitral award under the Federal Arbitration Act (FAA) in the United States (US), the term The main contract was duly signed and executed by both parties. However, BF corp
"encompasses both an arbitrator’s explicit bias toward one party and an arbitrator’s inferred contended that there was no arbitration clause because the Conditions of Contract which
bias when an arbitrator fails to disclose relevant information to the parties." allegedly contained the arbitration clause was not duly executed as it was not signed by the
SPI. It also contended that assuming there was an arbitration clause, SPI belatedly invoked
The Court adopts the reasonable impression of partiality standard, which requires a showing it within reasonable time and such clause could not divest the jurisdiction which already
that a reasonable person would have to conclude that an arbitrator was partial to the other acquired by the RTC. The RTC denied the motion.
party to the arbitration.
SPI filed a petition for certiorari before the Court of Appeals contending that the RTC
In this case, Chairman Barker's furnishing a copy to both parties the Secomb article is committed grave abuse of discretion amounting to lack or excess of jurisdiction in dismissing
indicative of his partiality. The article ultimately favored RCBC by advancing its cause. the motion to suspend proceeding because of the arbitration clause. The Court of Appeals
Chairman Barker makes it appear that he intended good to be done in doing so but due set aside the ruling of the RTC and ruled that there was a valid arbitration clause which was
process dictates the cold neutrality of impartiality. seasonably invoked by SPI.

Chairman Barker's providing of copies of the said text is easily interpretable that he had Hence, this petition.
prejudged the matter before him. In any case, the Secomb article tackled bases upon which
the Second Partial Award was founded. The subject article reflected in advance the ISSUE: Is the contract between the parties included an arbitration clause in case of
disposition of the ICC arbitral tribunal. disagreement in the implementation of the contract.

WHEREFORE, premises considered, the petition in G.R. No. 199238 is DENIED. The HELD: Yes. Under the Arbitration Law, an arbitration agreement must be in writing and
Resolution dated September 13,2011 of the Court of Appeals in CA-G.R. SP No. 120888 is subscribed by the parties. The arbitration clause was embodied in the Conditions of Contract.
AFFIRMED. The petition in G.R. No. 196171 is DENIED. The Decision dated December 23, Such contract was in writing but was not subscribed by both of the parties. The Conditions
2010 of the Court of Appeals in CA-G.R. SP No. 113525 is hereby AFFIRMED. of Contract was just a part of the Main Contract. The main contract was duly executed and
signed by the parties. Since, the main contract is duly executed and signed and the
Conditions of Contract, which the arbitration clause was contained, was an integral part of
the main contract, the Conditions of Contract was deemed duly executed and signed by the
19. BF Corp v. CA, G.R. No. 120105 BOHOL parties. Thus, there was a valid arbitration clause.

Date: March 27, 1998 SPI did not invoke the arbitration clause belatedly. The arbitration clause provided that a
Ponente: Romero, J. notice of demand for arbitration must be made by the other party within reasonable time
Petitioner: BF Corporation from the time the dispute arises. In this case, the dispute arose when the BF corp demanded
Respondent: CA, Shangri-La Properties, Inc., Rufo B. Colayco, Alfredo C. Ramos, Maximo payment and SPI did not pay and demanded conference. When the conference did not
G. Licauco III and Benjamin C. Ramos resolve the disagreement, BF Corp filed the case in court after few days. Instead of filing an
answer, SPI filed a motion to suspend proceedings and invoked the arbitration clause. The
Supreme Court said that it was made within a reasonable time. According to the Supreme
FACTS: Private respondents, Shangri-la Properties, Inc. (SPI), and its Board of Directors Court, reasonable time is 30 days or 1 month. If BF Corp did not file a case in court, SPI
engaged the services of BF Corporation for the construction of EDSA PLAZA PROJECT. BF would have 30 days to invoke the arbitration clause from the dispute arises but it was not
the case because BF Corp already filed a complaint in court. The implementation of the on the basis of the doctrine of forum non conveniens alone, Steamship contends that the
arbitration clause will not divest the jurisdiction of the court. It would merely suspend the claim against it should be referred to arbitration in London. Sulpicio counters that the Court
proceeding but the court will not be deprived of jurisdiction already acquired. of Appeals was correct in ruling that there was no arbitration agreement between the parties.
Assuming there was a valid arbitration agreement between them, Sulpicio submits that the
trial court correctly relied on the ruling in European Resources in denying the referral of the
case to arbitration. Arbitration in London would not be the "most prudent action" because
20. Steamship v. Sulpicio Lines, G.R. No. 196072 the arbitral decision will not be binding on Pioneer Insurance and Seaboard-Eastern and it
G.R. No. 196072 would result in a "split jurisdiction." It is the State's policy to promote party autonomy in the
September 20, 2017 mode of resolving disputes. Under the freedom of contract principle, parties to a contract
Leonen, J. may stipulate on a particular method of settling any conflict between them. Arbitration and
Petitioner: STEAMSHIP MUTUAL UNDERWRITING ASSOCIATION (BERMUDA) LIMITED other alternative dispute resolution methods like mediation, negotiation, and conciliation are
Respondent: SULPICIO LINES, INC. favored over court action. In 1953, Republic Act No. 876 was passed, which reinforced
domestic arbitration as a process of dispute resolution. Foreign arbitration was likewise
Doctrine: An insured member may be compelled to arbitration pursuant to the Rules of the recognized through the Philippines' adherence to the United Nations Convention on the
Protection and Indemnity Club, which were incorporated in the insurance policy by reference. Recognition and Enforcement of Foreign Arbitral Awards of 1958, otherwise known as the
Where there are multiple parties, the court must refer to arbitration the parties covered by New York Convention. Consistent with State policy, "arbitration agreements are liberally
the agreement while proceeding with the civil action against those who were not bound by construed in favor of proceeding to arbitration. Thus, courts must give effect to the
the arbitration agreement. arbitration clause as much as the terms of the agreement would allow. Any doubt should be
resolved in favor of arbitration. The contract between Sulpicio and Steamship is more than
Facts: Steamship was a Bermuda-based Protection and Indemnity Club, managed outside a contract of insurance between a marine insurer and a shipowner. By entering its vessels in
London, England. It insures its members-shipowners against "third party risks and liabilities" Steamship, Sulpicio not only obtains insurance coverage for its vessels but also becomes a
for claims arising from (a) death or injury to passengers; (b) loss or damage to cargoes; and member of Steamship. Sulpicio's acceptance of the Certificate of Entry and Acceptance
(c) loss or damage from collisions. Sulpicio insured its Deet of inter-island vessels with manifests its acquiescence to all its provisions. The arbitration clause is found in Rule 47 of
Steamship for Protection & Indemnity risks through local insurance agents. On July 7, 2005, the 2005/2006 Club Rules. Under Rule 47, any dispute concerning the insurance afforded by
M/V Princess of the World was gutted by fire while on voyage from Iloilo to Zamboanga City, Steamship must first be brought by a claiming member to the Directors for adjudication. If
resulting in total loss of its cargoes. The fire incident was found by the Department of the this member disagrees with the decision of the Director, the dispute must be referred to
Interior and Local Government to be "accidental" in nature. Sulpicio claimed indemnity from arbitration in London. Despite the member's disagreement, the Managers of Steamship may
Steamship under the Protection & Indemnity insurance policy, Steamship denied the claim refer the dispute to arbitration without adjudication of the Directors. This procedure must be
and subsequently rescinded the insurance coverage of Sulpicio's other vessels. Sulpicio filed complied with before the member can pursue legal proceedings against Steamship. There is
a Complaint with the Regional Trial Court of Makati City against Steamship. Steamship filed no ambiguity in the terms and clauses of the Certificate of Entry Acceptance. Contrary to the
its Motion to Dismiss and/or to Refer Case to Arbitration pursuant to Republic Act No. 9285, ruling of the Court of Appeals, the Certificate clearly incorporates the entire Club Rules. In
or the Alternative Dispute Resolution Act of 2004 (ADR Law), and to Rule 47 of the 2005/2006 domestic arbitration, the formal requirements of an arbitration agreement are that it must
Club Rules, which supposedly provided for arbitration in London of disputes between "be in writing and subscribed by the party sought to be charged, or by his lawful agent." In
Steamship and its members. RTC denied the MTD. CA also denied the petition. international commercial arbitration, it is likewise required that the arbitration agreement
must be in writing. An arbitration agreement is in writing if it is contained (1) in a document
Issue/s: Whether or not there is a valid and binding arbitration agreement between signed by the parties, (2) in an exchange of letters, telex, telegrams or other means of
Steamship Mutual Underwriting (Bermuda) Limited and Sulpicio Lines, Inc telecommunication which provide a record of the agreement, or (3) in an exchange of
statements of claim and defense in which the existence of an agreement is alleged by a party
Ruling: This Court finds for Steamship. The Verification and Certification against Forum and not denied by another. Thus, an arbitration agreement that was not embodied in the
Shopping signed by Steamship's counsel substantially complied with the requirements of the main agreement but set forth in another document is binding upon the parties, where the
Rules of Court. Steamship further avers that the Court of Appeals' finding that there was no document was incorporated by reference to the main agreement. The arbitration agreement
proof that Sulpicio was given a copy of the Club Rules was incorrect and contradicted by the contained in the Club Rules, which in turn was referred to in the Certificate of Entry and
evidence on record. Steamship argues that a referral of the case to arbitration is imperative Acceptance, is binding upon Sulpicio even though there was no specific stipulation on dispute
pursuant to the mandates of Republic Act No. 9285 or the ADR Law. Steamship further resolution in this Certificate. The Regional Trial Court should suspend proceedings to give
submits that "a Philippine court is an inconvenient forum to thresh out the issues involved in way to arbitration. Even if there are other defendants who are not parties to the arbitration
Sulpicio's claim." First, Sulpicio's claim is governed by the English Law, as expressly stated agreement, arbitration is still proper. Republic Act No. 9285 was approved on April 2, 2004
in the 2005/2006 Club Rules. Second, a Philippine court would be "an ineffective venue" to and was the controlling law at the time the original and amended complaints were filed.
enforce any judgment that may be obtained against Steamship, a foreign corporation. Thus, Notably, the Regional Trial Court did not rule on whether or not a valid and existing
arbitration agreement existed between the parties. This Court finds that the Regional Trial CA still held that the case cannot be brought under the Arbitration Law for the purpose
Court acted in excess of its jurisdiction. Sulpicio cannot invoke lack of knowledge of the of suspending the proceedings before the RTC, since in its Motion to Dismiss/Suspend
London arbitration proceedings due to several reasons. First, it received and replied to the proceedings, petitioner alleged, as one of the grounds thereof, that the subject contract
notice of commencement of arbitration proceedings dated July 31, 2007. Second, Steamship between the parties did not exist or it was invalid; that the said contract bearing the
presented evidence showing Sulpicio's refusal to receive any notices, orders, or arbitration clause was never consummated by the parties, thus, it was proper that such issue
communications related to the arbitration proceedings. Lastly, the pendency of the London be first resolved by the court through an appropriate trial. Arbitration is not proper when one
arbitration was made known to the Court of Appeals and this Court through Steamship's of the parties repudiated the existence or validity of the contract.
petitions. Sulpicio's belated filing of its Petition, only after Steamship has deducted from the Issue/s: Whether the case can be brought under the arbitration law despite when parties
refund due it the alleged "arbitration costs," indicates its lack of sincerity and good faith. The repudiates the existence/validity of the contract containing the arbitration clause.
dispute between Sulpicio Lines, Inc. and Steamship Mutual Underwriting (Bermuda) Limited
is referred to arbitration in London in accordance with Rule 47 of the 2005/2006 Club Rules. Ruling: Yes. The Supreme Court ruled that disputes. 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
21. Cargill v. Regala, G.R. No. 175404 DECAPIA 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
Date: January 31, 2011 relationship of the parties is part of the contract and is itself a contract. In so ruling that the
Ponente: PERALTA, J validity of the contract containing the arbitration agreement does not affect the applicability
Petitioner: CARGILL PHILIPPINES, INC of the arbitration clause itself, the SC applied the doctrine of separability which denotes that
Respondent: SAN FERNANDO REGALA TRADING, INC. TRADING, I the invalidity of the main contract, also referred to as the "container" contract, does not
Doctrine: Doctrine of Separability/Severability affect the validity of the arbitration agreement. Irrespective of the fact that the main contract
The arbitration agreement is to be treated as a separate agreement and the arbitration is invalid, the arbitration clause/agreement still remains valid and enforceable.
agreement does not automatically terminate when the contract of which it is a part An arbitration agreement which forms part of the main contract shall not be regarded as
comes to an end. 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
Facts: Respondent herein entered into a contract dated July 11, 1996 with petitioner, independent of the main contract. To reiterate a contrary ruling would suggest that a party's
wherein it was agreed upon that respondent would purchase from petitioner 12,000 metric mere repudiation of the main contract is sufficient to avoid arbitration and that is exactly the
tons of Thailand origin cane blackstrap molasses at the price of US$192 per metric ton; that situation that the separability doctrine sought to avoid. Thus, we find that even the party
the delivery of the molasses was to be made in January/February 1997 and payment was to who has repudiated the main contract is not prevented from enforcing its arbitration clause.
be made by means of an Irrevocable Letter of Credit payable at sight, to be opened by
September 15, 1996; that sometime prior to September 15, 1996, the parties agreed that 22. PEZA v. Bataan, G.R. No. 179537 GASTON
instead of January/February 1997, the delivery would be made in April/May 1997 and that
payment would be by an Irrevocable Letter of Credit payable at sight, to be opened upon Date: 23 October 2009
petitioner's advice. Petitioner, as seller, failed to comply with its obligations under the Ponente: Carpio Morales, J.
contract, despite demands from respondent, thus, the latter prayed for rescission of the Petitioner: Philippine Economic Zone Authority
contract and payment of damages. Respondent: Edison (Bataan) Cogeneration Corporation
Petitioner filed a Motion to Dismiss/Suspend Proceedings and to Refer Controversy to
Voluntary Arbitration, wherein it argued that the alleged contract between the parties, was DOCTRINES: (a) A party aggrieved by the failure, neglect or refusal of another to perform
never consummated because respondent never returned the proposed agreement bearing under an agreement in writing providing for arbitration may petition the court for an order
its written acceptance and that the contract contained an arbitration clause. directing that such arbitration proceed in the manner provided for in such agreement.

Ruling of Lower Courts: RTC ruled that Arbitration Law contemplates an arbitration (b) Doctrine of Separability, or Severability; an arbitration agreement is independent of the
proceeding that must be conducted in the Philippines under the jurisdiction and control of main contract. The arbitration agreement is to be treated as a separate agreement;
the RTC; and before an arbitrator who resides in the country; and that the arbitral award is arbitration agreement does not automatically terminate when the contract, of which it is a
subject to court approval, disapproval and modification, and that there must be an appeal part, comes to an end.
from the judgment of the RTC. The RTC found that the arbitration clause in question
contravened these procedures because it contemplated an arbitration proceeding in New FACTS: The Philippine Economic Zone Authority (petitioner) entered into an agreement with
York before a nonresident arbitrator (American Arbitration Association) and that the arbitral Edison Cogeneration Corporation (respondent), whereby respondent undertook to construct
award shall be final and binding on both parties. a power plant which would sell electricity to petitioner for resale in the Bataan Economic
Processing Zone.
23. Benguet v. DENR, G.R. No. 163101 LOJA
Respondent requested from petitioner a tariff increase. Respondent reiterated the request, G.R. No. 163101
but petitioner ignored both requests. More so, petitioner granted a tariff increase to another Date: February 13, 2008
supplier of electricity. Respondent informed petitioner of a violation of its obligation on their Ponente: VELASCO, JR., J
agreement not to give preferential treatment to other power suppliers.
Petitioner: BENGUET CORPORATION
Respondent terminated the agreement and demanded ₱708,691,543.00 as pre-termination Respondent: DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES -MINES
fee. Petitioner disputed respondent’s right to terminate the agreement and refused to pay ADJUDICATION BOARD (DENR-MAB) and J.G. REALTY AND MINING CORPORATION
the fee, prompting respondent to request petitioner to submit the dispute to arbitration
pursuant to the arbitration clause of the agreement. However, petitioner refused to submit DOCTRINE: In the event a case that should properly be the subject of voluntary arbitration
to arbitration, respondent then filed a complaint against petitioner for specific performance is erroneously filed with the courts or quasi-judicial agencies, on motion of the defendant,
before the RTC of Pasay. the court or quasi-judicial agency shall determine whether such contractual provision for
arbitration is sufficient and effective. If in affirmative, the court or quasi-judicial agency shall
RTC: Petitioners admitted to the existence of the arbitration clause but refused to arbitrate, then order the enforcement of said provision.
justifying that the provision on the pre-termination fee subject of the respondent’s Request
for Arbitration is invalid and unenforceable. FACTS: On June 1, 1987, Benguet and J.G. Realty entered into a Royalty Agreement with
Option to Purchase (RAWOP), wherein J.G. Realty was acknowledged as the owner of four
Thus, RTC rendered judgment in favor of the respondent, since the petitioners refused to mining claims respectively named as Bonito-I, Bonito-II, Bonito-III, and Bonito-IV, with a
comply with the request for arbitration, failed to challenge the fact that there is a dispute total area of 288.8656 hectares, situated in Barangay Luklukam, Sitio Bagong Bayan,
between the parties, and to nominate a representative to the arbitration. Municipality of Jose Panganiban, Camarines Norte. The parties also executed a Supplemental
Agreement dated June 1, 1987. The mining claims were covered by Mineral Production
CA: Affirmed the RTC Order, denying the Motion for Reconsideration of the petitioners. Sharing Agreement (MPSA) application jointly filed by J.G. Realty as claimowner and Benguet
as operator.
ISSUE: Whether the issue presented by the respondent is an arbitrable issue.
In the RAWOP, Benguet obligated itself to perfect the rights to the mining claims and/or
RULING: Yes. The dispute raised by respondent calls for a proceeding under Section 6 of otherwise acquire the mining rights to the mineral claims. Within 24 months from the
Republic Act No. 876, which reads: …a party aggrieved by the failure, neglect or refusal of execution of the RAWOP, Benguet should also cause the examination of the mining claims
another to perform under an agreement in writing providing for arbitration may petition the for the purpose of determining whether or not they are worth developing with reasonable
court for an order directing that such arbitration proceed in the manner provided for in such probability of profitable production. Benguet undertook also to furnish J.G. Realty with a
agreement. report on the examination, within a reasonable time after the completion of the examination.
Moreover, also within the examination period, Benguet shall conduct all necessary
Moreover, the petitioner’s argument in disputing the legality of the pre-termination fee clause exploration in accordance with a prepared exploration program. If it chooses to do so and
of their agreement would not affect the agreement between the petitioner and respondent before the expiration of the examination period, Benguet may undertake to develop the
to resolve their dispute by arbitration. mining claims upon written notice to J.G. Realty. Benguet must then place the mining claims
into commercial productive stage within 24 months from the written notice. It is also provided
The doctrine of separability enunciates that an arbitration agreement is independent of the in the RAWOP that if the mining claims were placed in commercial production by Benguet,
main contract. The arbitration agreement is to be treated as a separate agreement and the J.G. Realty should be entitled to a royalty of five percent (5%) of net realizable value, and
arbitration agreement does not automatically terminate when the contract of which it is a to royalty for any production done by Benguet whether during the examination or
part comes to an end. development periods.

Furthermore, the Supreme Court emphasized that the respondent does not seek to nullify On August 9, 1989, Benguet issued a letter informing J.G. Realty of its intention to develop
the main contract as it merely submits issues for resolution by the arbitration committee. the mining claims. However, on February 9, 1999, J.G. Realty then sent a letter to Benguet
Such issues raised are subject to arbitration in accordance with the arbitration clause in the informing the latter that it was terminating the RAWOP on the following grounds:
parties’ agreement. a. The fact that your company has failed to perform the obligations set
forth in the RAWOP, i.e., to undertake development works within 2 years
from the execution of the Agreement;
b. Violation of the Contract by allowing high graders to operate on our
claim.
c. No stipulation was provided with respect to the term limit of the In RA 9285 or the "Alternative Dispute Resolution Act of 2004," the Congress reiterated the
RAWOP. efficacy of arbitration as an alternative mode of dispute resolution by stating in Sec. 32
d. Non-payment of the royalties thereon as provided in the RAWOP. thereof that domestic arbitration shall still be governed by RA 876. Clearly, a contractual
stipulation that requires prior resort to voluntary arbitration before the parties can go directly
J.G. Realty filed a Petition for Declaration of Nullity/Cancellation of the RAWOP to court is not illegal and is in fact promoted by the State. Availment of voluntary arbitration
with the Legaspi City Mines Adjudication Board (MAB) Panel of Arbitrators (POA). before resort is made to the courts or quasi-judicial agencies of the government is a valid
On March 19, 2001, the POA issued a decision in favor of J.G. Realty: 1) cancelling contractual stipulation that must be adhered to by the parties.
the RAWOP and the Supplemental Agreement, and 2) excluding Benguet from the
joint MPSA Application over the mineral claims denominated as "BONITO-I", Moreover, RA 876 provides that ”if any suit or proceeding be brought upon an issue arising
"BONITO-II", "BONITO-III" and "BONITO-IV". out of an agreement providing for the arbitration thereof, the court in which such suit or
proceeding is pending, upon being satisfied that the issue involved in such suit or proceeding
Benguet filed a Notice of Appeal with the MAB. On December 2, 2002, the MAB upheld the is referable to arbitration, shall stay the action or proceeding until an arbitration has been
March 19, 2001 Decision which canceled the RAWOP and excluded Benguet from the joint had in accordance with the terms of the agreement. Thus, in the event a case that should
MPSA application over four mining claims. Benguet then filed a Motion for Reconsideration properly be the subject of voluntary arbitration is erroneously filed with the courts or quasi-
but it was denied by MAB. Benguet filed the instant petition under Rule 65 of the Rules of judicial agencies, on motion of the defendant, the court or quasi-judicial agency shall
Court. determine whether such contractual provision for arbitration is sufficient and effective. If in
affirmative, the court or quasi-judicial agency shall then order the enforcement of said
ISSUE: Should the controversy have first been submitted to arbitration before the POA took provision.
cognizance of the case?
However, Benguet is already estopped from questioning the POA’s jurisdiction. For
RULING: The case should have first been brought to voluntary arbitration before the POA participating in the proceedings, it impliedly recognized the MAB’s jurisdiction. What Benguet
should have done was to immediately challenge the POA’s jurisdiction by a special civil action
J.G. Realty’s contention, that prior resort to arbitration is unavailing in the instant case for certiorari when POA ruled that it has jurisdiction over the dispute. To redo the proceedings
because the POA’s mandate is to arbitrate disputes involving mineral agreements, is fully participated in by the parties after the lapse of seven years from date of institution of
misplaced. Compulsory arbitration has been defined both as "the process of settlement of … the original action with the POA would be anathema to the speedy and efficient
disputes by a government agency which has the authority to investigate and to make an administration of justice.
award which is binding on all the parties, and as a mode of arbitration where the parties are
compelled to accept the resolution of their dispute through arbitration by a third party. A
voluntary arbitrator is not part of the governmental unit…, said arbitrator renders arbitration 24. Bengson v. Chan, G.R. No. L-27283 YASTO
services provided for under… law(s). The arbitration provided by the POA is compulsory,
while the nature of the arbitration provision in the RAWOP is voluntary, not involving any G.R. No. L-27283; 29 July 1977
government agency. Aquino, J.

The RAWOP pertinently provide: Plaintiff-appellant: Soledad F. Bengson


Defendant-appellees: Mariano M. Chan, Universal Construction Supply and Leoncio Chan,
“Any disputes, differences or disagreements between BENGUET and the Mutual Security Insurance Corporation, and Krause A. Ignacio
OWNER with reference to anything whatsoever pertaining to this
Agreement that cannot be amicably settled by them shall not be cause Doctrine:
of any action of any kind whatsoever in any court or administrative Arbitration may be resorted to during the pendency of the case. Under Section 7 of the
agency but shall, upon notice of one party to the other, be referred to a Arbitration Law, "if any suit or proceeding be brought upon an issue arising out of an
Board of Arbitrators consisting of three (3) members, one to be selected agreement providing for the arbitration thereof, the court in which such quit or proceeding
by BENGUET, another to be selected by the OWNER and the third to be is pending, upon being satisfied that the issue involved in such suit or proceeding is referable
selected by the aforementioned two arbitrators so appointed. to arbitration, shall stay the action or proceeding until an arbitration has been had in
accordance with the terms of the agreement: Provided, That the applicant for the stay is not
No action shall be instituted in court as to any matter in dispute as in default in proceeding with such arbitration."
hereinabove stated, except to enforce the decision of the majority of the
Arbitrators.” Facts:
On 21 June 1966, Soledad F. Bengson (Bengson) and Mariano M. Chan (Chan) entered into
a contract for the construction of a six-story building on Bengson's lot in San Fernando, La 25. GI v. Union, G.R. No. L-30475 AURELIO
Union. In the contract, Bengson bound herself to pay Chan, the contractor, the sum of Facts: In Civil Case No. 68558 the petitioners (private respondents herein) and the
P352,000 for the materials, labor, and construction expenses. respondent (petitioner herein) General Insurance & Surety Corporation entered into a First
Surplus Reinsurance Agreement which was executed by petitioners in London on January
It was stipulated that construction would start on July 5, 1965; that the first two stories 28, 1959, and by the respondent in Manila on June 3, 1959. The parties agreed on reciprocal
should be completed and available for use within five months from said date, and that the reinsurance expressed and payable in pounds sterling between the petitioners and
construction should be finished within 12 months from said date. respondent commencing on January 1st, 1959, and terminating on December 31st, 1961. In
the said reinsurance agreement, the petitioners and respondent expressly agreed to settle
The contract likewise contained the following arbitration clause: by arbitration all their differences of whatever nature or controversy arising out of the
Any and all questions, disputes or differences arising between the parties hereto contract, which agreement is embodied in Article XII of the reinsurance agreement
relative to the construction of the building shall be determined by arbitration of In Civil Case No. 68559 the petitioners and the respondent entered into a Retrocession Quota
two persons, each chosen by the parties themselves. The determination of said Share Fire Pool Agreement executed by the petitioners in London on February 17, 1960, and
arbitration shall be final, conclusive and binding upon both parties hereto, unless by the respondent in Manila on April 11, 1960. In said agreement the parties agreed on
they choose to go to court, in which case the determination by arbitration is a reciprocal reinsurance arrangements expressed and payable in pounds sterling which would
condition precedent for taking any court action x x x. commence on January 1st, 1960, and would terminate on December 31st, 1961. The
retrocession agreement entered into by the parties provides in Article XII thereof
On 24 May 1966, Bengson filed an action for damages against Chan and the sureties on his The reinsurance and retrocession agreements were terminated , on which date the
performance bond, alleging that Chan violated the contract by not finishing the building petitioners claim that there was due from the respondent under the treaties negotiated
within the stipulated period, among others. She claimed payment for damages totalling between the petitioners as ceding companies and the respondent as reinsurer the sum of
P183,800. Meanwhile, Chan and his sureties (defendants) answered that the stipulation certain amount in pounds which respondent should pay to the petitioners in pounds sterling.
providing for the period of construction was novated by the parties, and that Chan stopped However, while petitioners requested the respondent to pay the aforesaid sum in pounds
the construction because Bengson refused to pay the balance of the work already sterling or in Philippine pesos at the exchange rate prevailing on the date of payment
accomplished. In the amended answer, defendants alleged that Bengson did not submit the Respondent refused to pay in pounds sterling and insisted that it should pay the said amount
controversy for arbitration as required by the contract. in Philippine pesos at the old official exchange rate of P2.015 to $1.00. In view of the
respondent's refusal to pay in the manner demanded by the petitioners, the latter made a
Trial Court: Sustained the new defense and dismissed the complaint. written formal demand upon respondent to proceed with the arbitration of their controversy
in the manner provided for in the reinsurance agreement
Issue: . In the said communication, the petitioners informed the respondent that they had appointed
W/n the trial court was correct in dismissing the case. Mr. T.B. Turvey of Victory Insurance Co., Ltd., 7316 King William St., London, E. C. 4, as
arbitrator in their behalf and requested respondent to name its own arbitrator. The
Ruling: respondent, however, refused to proceed with the arbitration, contending that there was no
NO. Bengson's failure to resort to arbitration does not warrant the dismissal of her complaint. controversy or dispute existing between the parties so that there was no need for arbitration.
Arbitration may be resorted to during the pendency of the case. Under Section 7 of the Hence, the filing of this case.
Arbitration Law, "if any suit or proceeding be brought upon an issue arising out of an Judgment was then rendered on November 21, 1968 declaring that a valid controversy
agreement providing for the arbitration thereof, the court in which such quit or proceeding existed and the herein petitioner was ordered to submit to arbitration.
is pending, upon being satisfied that the issue involved in such suit or proceeding is referable
to arbitration, shall stay the action or proceeding until an arbitration has been had in Issue: whether or not a controversy or dispute exists under the circumstances to warrant
accordance with the terms of the agreement: Provided, That the applicant for the stay is not an order compelling the parties to submit to arbitration.
in default in proceeding with such arbitration."
Held: Yes, A cursory reading of the petitions (complaints) in the trial court and the answers
Instead of dismissing the case, the proceedings therein should be suspended and the parties thereto will readily reveal that indeed, a valid controversy existed between the parties, which
should be directed to go through the motions of arbitration at least within a 60-day period. is a proper subject for arbitration. The two (2) civil cases brought by herein respondents
With the consent of the parties, the trial court may appoint a third arbitrator to prevent a alleged that there was still some amount payable in pounds sterling due to it from the herein
deadlock between the two arbitrators. In the event that the disputes between the parties petitioner. This allegation was denied by petitioner in its answer. Petitioner's defenses in the
could not be settled definitively by arbitration, then the hearing of the instant case should trial court were anchored on three (3) grounds, namely: 1) that there was a previous
be resumed. agreement between the parties that beginning January 1, 1959, the balance under the
agreement will be made payable in US dollars; 2) that the provision to refer to arbitration
any dispute arising from the reinsurance and the retrocession agreements can no longer be 26. Tuna Processing v. Philippine Kingford, G.R. No. 185582 CAPA
enforced five (5) years after the termination of both agreements; and 3) as a special
alternative defense, that it was in fact the private respondents who owe the petitioner some G.R. No. 185582 February 29, 2012
amount. Since it was not disputed that in both the First Surplus Reinsurance Agreement and TUNA PROCESSING, INC., Petitioner,
the Retrocession Quota Share Fire Pool Agreement the parties had agreed that any dispute vs.
arising from these agreements shall be referred to a set of arbitrators, the trial court correctly PHILIPPINE KINGFORD, INC., Respondent.
ordered the parties to submit to arbitration.
We hold therefore, that as regards the dispute on the amount the parties owe each other,
the same is a proper subject of arbitration. Petitioner: Tuna Processing, Inc.
Finally, petitioner, while admitting the existence of the provision to refer to arbitration any Respondent: Philippine Kingford, Inc. (among the tuna processors that entered into a MOA)
dispute or controversy arising from the reinsurance and the retrocession agreements,
likewise contended that said provision can no longer be enforced five (5) years after the DOCTRINE/S:
termination of both contracts on December 31, 1961. ● Sec. 133. Doing business without a license. - No foreign corporation
The above contention of petitioner is not meritorious. The language of the reinsurance transacting business in the Philippines without a license, or its successors or
contract on arbitration of any dispute between them which may arise before or after the assigns, shall be permitted to maintain or intervene in any action, suit or
termination of the agreement is clear. Article XII of the Reinsurance Agreement of petition, proceeding in any court or administrative agency of the Philippines; but such
provides: corporation may be sued or proceeded against before Philippine courts or
ARTICLE XII administrative tribunals on any valid cause of action recognized under Philippine
In the event of any dispute at any time arising out of or in any way connected with or relating laws.
to this Agreement, whether before or after the termination of notice under the agreement, ● On the matter of capacity to sue, a foreign arbitral award should be respected not
the same shall be referred to the decision of two arbitrators, one to be appointed in writing because it is favored over domestic laws and procedures, but because Republic
by the London Manager of the Union Insurance Society of Canton, Limited, and the other by Act No. 9285 has certainly erased any conflict of law question.
the Reinsurer or in case of disagreement between the arbitrators to the decision of an Umpire FACTS:
to be appointed in writing by the arbitrators before entering upon the reference and it shall Kanemitsu Yamaoka ("licensor"), and five (5) Philippine tuna processors, namely, Angel
be a condition precedent that unless and until an award has been made neither party shall Seafood Corporation, East Asia Fish Co., Inc., Mommy Gina Tuna Resources, Santa Cruz
have any right of action against the other. Seafoods, Inc., and respondent Kingford entered into a Memorandum of Agreement (MOA).
On the other hand, the retrocession agreement is also clear that all differences of whatever The MOA stated as its objectives that it wishes to form an alliance with Sponsors for purposes
nature arising out of the agreement shall be submitted to a court of arbitration. No restriction of enforcing his three aforementioned patents, granting licenses under those patents, and
as to time was contemplated by the parties, Further, the provision on arbitration is the collecting royalties. Further, the sponsors wish to be licensed under the aforementioned
remedy by which the parties may resort to for disputes arising from the agreements. While patents in order to practice the processes claimed in those patents in the United States, the
the two agreements have been terminated, the provision requiting arbitration remains as a Philippines, and Indonesia, enforce those patents and collect royalties in conjunction with
remedy to settle any dispute/controversy arising from the agreements. Licensor. The parties likewise executed a Supplemental Memorandum of Agreement and an
Where there is an agreement to arbitrate and one party puts up a claim which the other Agreement to Amend Memorandum of Agreement.
disputes, the need to arbitrate is imperative.
Since there obtains herein a written provision for arbitration as well as failure on respondent's Due to a series of events not mentioned in the petition, the licensees, including
part to comply therewith, the court a quo rightly ordered the parties to proceed to arbitration respondent Kingford, withdrew from petitioner TPI and correspondingly reneged
in accordance with the terms of their agreement (Sec. 6, Rep. Act 876). Respondents' on their obligations. Petitioner submitted the dispute for arbitration before the
arguments touching upon the merits of the dispute are improperly raised herein. They should International Centre for Dispute Resolution in the State of California, United States and won
be addressed to the arbitrators. This proceedings is merely a summary remedy to enforce the case against respondent.
the agreement to arbitrate. The duty of the court in this case is not to resolve the merits of
the parties' claims but only to determine if they should proceed to arbitration or not. The award stated that “Within thirty (30) days from the date of transmittal of this Award
to the Parties, pursuant to the terms of this award, the total sum to be paid by RESPONDENT
KINGFORD to CLAIMANT TPI, is the sum of ONE MILLION SEVEN HUNDRED FIFTY
THOUSAND EIGHT HUNDRED FORTY SIX DOLLARS AND TEN CENTS ($1,750,846.10)”. To
enforce the award, petitioner TPI filed a Petition for Confirmation, Recognition, and
Enforcement of Foreign Arbitral Award before the RTC of Makati City. Then,
respondent Kingford filed a Motion to Dismiss. After the court denied the motion for lack of
merit, respondent sought for the inhibition of Judge Alameda and moved for reconsideration
of the order denying the motion. Judge Alameda inhibited himself notwithstanding "[t]he strengthen arbitration as a means of dispute resolution may be defeated by misplaced
unfounded allegations and unsubstantiated assertions in the motion." technical considerations not found in the relevant laws.
Following the same principle, the Alternative Dispute Resolution Act of 2004 shall apply
Petitioner TPI now seeks to nullify, in this instant Petition for Review on Certiorari in this case as the Act, as its title - An Act to Institutionalize the Use of an Alternative Dispute
under Rule 45, the order of the trial court dismissing its Petition for Confirmation, Resolution System in the Philippines and to Establish the Office for Alternative Dispute
Recognition, and Enforcement of Foreign Arbitral Award. 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
ISSUE/S: their own arrangements to resolve their disputes."It specifically provides exclusive grounds
1. Whether or not the court a quo was correct in so dismissing the petition on the available to the party opposing an application for recognition and enforcement of the arbitral
ground of petitioner’s lack of legal capacity to sue. PETITION IS WITH MERIT. award.
2. Does a foreign corporation not licensed to do business in the Philippines have legal Inasmuch as the Alternative Dispute Resolution Act of 2004, a municipal law, applies in
capacity to sue under the provisions of the Alternative Dispute Resolution Act of the instant petition, we do not see the need to discuss compliance with international
2004? THE COURT RULES IN THE AFFIRMATIVE. obligations under the New York Convention and the Model Law. After all, both already form
RULING: part of the law.
1. The petition is impressed with merit. In particular, the Alternative Dispute Resolution Act of 2004 incorporated the New York
Sec. 133. Doing business without a license. - No foreign corporation transacting Convention in the Act by specifically providing:
business in the Philippines without a license, or its successors or assigns, shall be permitted SEC. 42. Application of the New York Convention. - The New York Convention shall govern
to maintain or intervene in any action, suit or proceeding in any court or administrative the recognition and enforcement of arbitral awards covered by the said Convention.
agency of the Philippines; but such corporation may be sued or proceeded against before
Philippine courts or administrative tribunals on any valid cause of action recognized under 2. The Court rules in the affirmative.
Philippine laws. It is pursuant to the aforequoted provision that the court a quo Sec. 45 of the Alternative Dispute Resolution Act of 2004 provides that the opposing party
dismissed the petition. in an application for recognition and enforcement of the arbitral award may raise only those
Herein plaintiff TPI’s "Petition, etc." acknowledges that it "is a foreign corporation grounds that were enumerated under Article V of the New York Convention, to wit (cites
established in the State of California" and "was given the exclusive right to license or ART. V, par. 1 &2). Clearly, not one of these exclusive grounds touched on the capacity to
sublicense the Yamaoka Patent" and "was assigned the exclusive right to enforce the said sue of the party seeking the recognition and enforcement of the award. Further, provisions
patent and collect corresponding royalties" in the Philippines. TPI likewise admits that it does of the Special Rules of Court on Alternative Dispute Resolution supports the position. Rule
not have a license to do business in the Philippines. 13.1 of the Special Rules provides that "[a]ny party to a foreign arbitration may petition
There is no doubt, therefore, in the mind of this Court that TPI has been doing business the court to recognize and enforce a foreign arbitral award." The contents of such petition
in the Philippines, but sans a license to do so issued by the concerned government agency are enumerated in Rule 13.5.Capacity to sue is not included.
of the Republic of the Philippines, when it collected royalties from "five (5) Philippine tuna Indeed, it is in the best interest of justice that in the enforcement of a foreign arbitral
processors[,] namely[,] Angel Seafood Corporation, East Asia Fish Co., Inc., Mommy Gina award, we deny availment by the losing party of the rule that bars foreign
Tuna Resources, Santa Cruz Seafoods, Inc. and respondent Philippine Kingford, Inc." This corporations not licensed to do business in the Philippines from maintaining a suit
being the real situation, TPI cannot be permitted to maintain or intervene in any in our courts. When a party enters into a contract containing a foreign arbitration clause
action, suit or proceedings in any court or administrative agency of the and, as in this case, in fact submits itself to arbitration, it becomes bound by the
Philippines." A priori, the "Petition, etc." extant of the plaintiff TPI should be dismissed for contract, by the arbitration and by the result of arbitration, conceding thereby the
it does not have the legal personality to sue in the Philippines. capacity of the other party to enter into the contract, participate in the arbitration and cause
The petitioner counters, however, that it is entitled to seek for the recognition and the implementation of the result.
enforcement of the subject foreign arbitral award in accordance with Republic Act No. 9285 Clearly, on the matter of capacity to sue, a foreign arbitral award should be
(Alternative Dispute Resolution Act of 2004), the Convention on the Recognition and respected not because it is favored over domestic laws and procedures, but
Enforcement of Foreign Arbitral Awards drafted during the United Nations Conference on because Republic Act No. 9285 has certainly erased any conflict of law question.
International Commercial Arbitration in 1958 (New York Convention), and the UNCITRAL Finally, even assuming, only for the sake of argument, that the court a quo correctly observed
Model Law on International Commercial Arbitration (Model Law), as none of these specifically that the Model Law, not the New York Convention, governs the subject arbitral award,
requires that the party seeking for the enforcement should have legal capacity to sue. petitioner may still seek recognition and enforcement of the award in Philippine court, since
In the present case, enforcement has been effectively refused on a ground not found the Model Law prescribes substantially identical exclusive grounds for refusing recognition or
in the [Alternative Dispute Resolution Act of 2004], New York Convention, or Model Law. It enforcement.
is for this reason that TPI has brought this matter before this most Honorable Court, as it is Premises considered, petitioner TPI, although not licensed to do business in the
imperative to clarify whether the Philippines’ international obligations and State policy to Philippines, may seek recognition and enforcement of the foreign arbitral award
in accordance with the provisions of the Alternative Dispute Resolution Act of 2004.
Resolution is reversed and set aside. The case is remanded for further proceedings. the agency. Since DFA already made a definite proposition and entered into a contract, DFA's
acts, transactions or decisions were no longer privileged.
27. Mabuhay Holding Corporation v. Sembcorp Logistics LTD, G.R. No. 212734, 5
December 2018 MECANO
ISSUE:

28. DFA v. BCA, G.R. No. 225051 and 210858 SEDAYAO Whether or not the RTC erred in ruling that witnesses presented during hearings before
the ad hoc arbitral tribunal are no longer prohibited from disclosing information on the basis
DEPARTMENT OF FOREIGN AFFAIRS vs. BCA INTERNATIONAL CORPORATION of the deliberative process privilege

Date: JUNE 29, 2016 HELD:


Ponente: CARPIO, J.
Petitioner: Department of Foreign Affairs YES
Respondent: BCA International Corporation
DFA insists the evidence sought to be subpoenaed is covered by the deliberative process
DOCTRINE: privilege. DFA contends that the RTC erred in holding that the deliberative process privilege
is no longer applicable in this case. RTC based its decision on Chavez v. Public Estates
Deliberative process privilege is one kind of privileged information within the Authority, wherein its states that "acts, transactions or decisions are privileged only before a
exceptions of the constitutional right to information. The deliberative process privilege is a definite proposition is reached by the agency” RTC said that, in this case, since DFA did not
protection from the disclosure of advisory opinions, recommendations, and deliberations only make "a definite proposition" but also entered into a contract, the evidence sought to
comprising part of a process by which governmental decisions and policies are formulated be produced is no longer privileged.
(Akbayan vs. Aquino).
Contrary to the ruling of RTC, there is nothing in the Chavez v. Public Estates Authority
FACTS: ruling that states that once a "definite proposition" is reached by an agency, the privileged
character of a document no longer exists. In addition, before a "definite proposition" is
In an Amended Build-Operate-Transfer Agreement dated April 5, Department of Foreign reached by an agency, there are no "official acts, transactions, or decisions" yet which can
Affairs (DFA) awarded the Machine Readable Passport and Visa Project (MRPN Project) to be accessed by the public under the right to information. Only when there is an official
BCA International Corporation (BCA). During the implementation of the MRPN Project, DFA recommendation can a "definite proposition" arise and, accordingly, the public's right to
sought to terminate the Agreement. However, BCA opposed the termination and filed a information attaches. However, this right to information has certain limitations and does not
Request for Arbitration, according to the provision in the agreement. cover privileged information to protect the independence of decision-making by the
government.
An ad hoc arbitral tribunal was constituted. In their order, the arbitral tribunal approved
BCA's request to apply in court for the issuance of subpoena, subject to the conditions that Deliberative process privilege is one kind of privileged information within the
the application will not affect its proceedings and that the hearing set in October 2013 will exceptions of the constitutional right to information. The deliberative process privilege is a
proceed whether the witnesses attend or not. protection from the disclosure of advisory opinions, recommendations, and deliberations
comprising part of a process by which governmental decisions and policies are formulated
Thereafter, BCA filed before the RTC a Petition for Assistance in Taking Evidence (Akbayan vs. Aquino)
pursuant to the Implementing Rules and Regulations of "The Alternative Dispute Resolution Deliberative Process Privilege is a privilege during Court sessions. Under Section 2 Rule
Act of 2004," or Republic Act No. 9285 (RA 9285). In its petition, BCA sought the issuance 10 of THE INTERNAL RULES OF THE SUPREME COURT, Court sessions are executive in
of subpoena ad testificandum and subpoena duces tecum to witnesses and documents in character, with only the Members of the Court present. Court deliberations are confidential
their custody. and shall not be disclosed to outside parties, except as may be provided herein or as
authorized by the Court.
DFA filed its comment. DFA alleged that the presentation of the witnesses and
documents was prohibited by law and protected by the deliberative process privilege. This privilege can also be invoked in Arbitration proceedings under RA 9285. It
enumerated three policy bases of this privilege. These are: (1) the privilege protects candid
The RTC disagreed with DFA and ruled in favor of BCA. According to RTC, the evidence discussions within an agency; (2) it prevents public confusion from premature disclosure of
sought to be produced was no longer covered by the deliberative process privilege and that agency opinions before the agency establishes final policy; and (3) it protects the integrity
acts, transactions or decisions are privileged only before a definite proposition is reached by
of an agency's decision; the public should not judge officials based on information they FedEx is a foreign corporation doing business in the Philippines primarily engaged in
considered prior to issuing their final decisions. international air carriage, logistics and freight forwarding, while Jennings is its Managing
Director. Respondent Air21 is a domestic corporation involved in freight forwarding, while
This privilege cannot be waived. Rights cannot be waived if it is contrary to law, public Lina is the Chairman of its Board of Directors.
order, public policy, morals, or good customs, or prejudicial to a third person with a right
recognized by law (Article 6 NCC). There is a public policy involved in a claim of deliberative FedEx’s International Freight Forwarder’s (IFF) license to do business in the Philippines was
process privilege, which is the policy of open, frank discussion between subordinate and chief suspended pending a case filed by Merit and Ace (both freight forwarding companies) which
concerning administrative action. questioned the issuance of the IFF to FedEx. Thus, it executed various Global Service
Program (GSP) contracts with Air21 to undertake the former’s delivery and pick-up services
Under RA 9285, orders of an arbitral tribunal are appealable to the courts. If an official within the country. In the implementation of their contracts, several issues ensued. They
is compelled to testify before an arbitral tribunal and the order of an arbitral tribunal is agreed to submit themselves to arbitration before the Philippine Dispute Resolution Center
appealed to the courts, such official can be inhibited by fear of later being subject to public (PDRC).
criticism, preventing such official from making candid discussions within his or her agency.
The decision of the court is widely published, including details involving the privileged In the arbitration proceedings, individual statements were submitted averring that Merit and
information. This disclosure of privileged information can inhibit a public official from Ace were either owned or controlled by Air21 employees or persons connected with the Lina
expressing his or her candid opinion. Future quality of deliberative process can be impaired Group of Companies, which included Air21. Jennings, in his cross-examination and re-direct
by undue exposure of the decision-making process to public scrutiny after the court decision examination, supported this claim. Aggrieved, Lina filed a complaint for grave slander against
is made. Jennings before the Office of the City Prosecutor in Taguig City. Lina quoted certain portions
of the written statements submitted by witnesses in the arbitration hearing, including the
In this case, the RTC erred in applying our ruling in Chavez v. Public Estates Authority. transcript of stenographic notes reflecting Jenning’s testimony to support his complaint.
However, both BCA's and DFA's assertions of subpoena of evidence and the deliberative
process privilege are broad and lack specificity, hence it cannot be determined whether the FedEx and Jennings filed a Petition for Issuance of a Confidentiality/Protective Order with
evidence sought to be produced is covered by the deliberative process privilege. The parties TRO and/or Preliminary Injunction before the RTC alleging that all information and
are directed to specify their claims before the RTC and, thereafter, the RTC shall determine documents obtained in, or related to, the arbitration proceedings were confidential.
which evidence is covered by the deliberative process privilege. It is necessary to consider
the circumstances surrounding the demand for the evidence to determine whether or not its FedEx argues that Jennings’ statements were part of the (a) records and evidence of
production is injurious to the consultative functions of government that the privilege of non- Arbitration (Sec. 23 ADR Act); (b) witness statements made therein (Sec 3[h][3]); and (c)
disclosure protects. communication made in a dispute resolution proceedings (Sec 3[h][1]). As such, they assert
that Rule 10.5 of the Special ADR Rules, allowing for the issuance of a
Note: The case was returned to the RTC Makati to determine whether the documents confidentiality/protective order, was completely disregarded by the CA. Further, that the test
and records sought to be subpoenaed are protected by the deliberative process privilege. In of relevance that “statements made without any bearing on the subject proceedings are not
other words, in this case, the issue on whether or not the witnesses presented during the confidential in nature,” have no basis in law.
October 14, 16, and 17, 2013 hearings before the ad hoc arbitral tribunal are prohibited
from disclosing information on the basis of the deliberative process privilege was not Issue/s: Does the testimony of Jennings fall within the ambit of confidential
determined. This case just discussed deliberative process privilege. information?

Ruling: YES
29. Federal v. Airfreight, G.R. No. 216600 SOLANO Section 3(h) of RA 9285 provides that, confidential information means any information,
Date: November 21, 2016 relative to the subject of the mediation or arbitration, expressly intended by the
Ponente: Mendoza, J. source not to be disclosed, or obtained under circumstances that would create a reasonable
Petitioner: Federal Express Corporation (FedEx) and Rhicke S. Jennings expectation on behalf of the source that the information shall not be disclosed. It shall
Respondent: Airfreight 2100, Inc. (Air21) and Alberto D. Lina include:
Doctrine: Confidential information shall not be subject to discovery and shall be 1. Communication, oral or written, made in a dispute resolution
inadmissible in any adversarial proceeding. proceedings, including any memoranda, notes or work product of the neutral
Facts: party or non-party participant, as defined in this Act;
RTC: Dismissed FedEx’ petition for the issuance of a confidentiality/protective order. CA 2. An oral or written statement made or which occurs during mediation or for
affirmed. purposes of considering, conducting, participating, initiating, continuing or
reconvening mediation or retaining a mediator; and
3. Pleadings, motions manifestations, witness statements, reports filed or The separability of the arbitration agreement is especially significant to the determination of
submitted in an arbitration or for expert evaluation. whether the invalidity of the main contract also nullifies the arbitration clause. Indeed, the
This list is not exclusive and may include other information as long as they satisfy the doctrine denotes that the invalidity of the main contract, also referred to as the "container"
requirements of express confidentiality or implied confidentiality. contract, does not affect the validity of the arbitration agreement. Irrespective of the fact
that the main contract is invalid, the arbitration clause/agreement still remains valid and
The rules on confidentiality and protective orders apply when: enforceable.”
1. An ADR proceeding is pending;
2. A party, counsel or witness disclosed information or was otherwise compelled to FACTS: Respondent Ernest and Young (EYLLP) is a global company having its place of
disclose information; business in the United States of America having Punongbayan & Araullo (PA) as its firm
3. The disclosure was made under circumstances that would create a reasonable member here in the Philippines. PA was chosen as the exclusive Financial Advisor of National
expectation, on behalf of the source, that the information shall be kept Home Mortgage Finance Corporation (NHMFC) for the liquidation of NHMFC’s Php40 Billion
confidential; Unified Home Lending Program (UHLP Project). Said engagement was concluded in a
4. The source of the information or party who made the disclosure has the right to Financial Advisory Services Agreement (FASA) between PA and NHMFC dated March 26,
prevent such information from being disclosed; 2002.
5. The source of the information or the party who made the disclosure has not given
his express consent to any disclosure; and Petitioner Strickland, on the other hand, was a partner of EYLLP, as evidenced by their
6. The applicant would be materially prejudiced by an unauthorized disclosure of the Partnership Agreement. Under the FASA, Strickland was listed as a member of the
information obtained, or to be obtained, during the ADR proceeding. Engagement Team for the said UHLP Project. In July 2004, the transactional relationship
Rule 10.8 of the Special ADR Rules mandates that courts should be guided by the principle between the parties went awry resulting to the separation of Strickland. This prompted
that confidential information shall not be subject to discovery and shall be inadmissible in Strickland to file a complaint against EYLLP, PA, and EY/APS, asking for equitable
any adversarial proceeding. compensation for services rendered to NHMFC on the said Project.

Article 5.42 of the IRR of the ADR Act echoes that arbitration proceedings, records, evidence EYLLP filed a Motion to Refer to Arbitration by virtue of the Arbitration Clause in their
and the arbitral award and other confidential information are privileged and confidential and Partnership Agreement.
shall not be published except:
[i] with the consent of the parties; or RTC: denied, because the arbitration clause in question was inoperative or incapable of being
[ii] for the limited purpose of disclosing to the court relevant documents where resort to the performed in this jurisdiction.
court is allowed (See also Section 23 of ADR Act).
The presence of the above criteria must be apparent; otherwise, the general rule shall be CA: annulled RTC’s ruling, and ordered referral to arbitration in so far as EYLLP and Strickland
applied. In this case, only a perceived imputation of a wrongdoing was alleged by the are concerned.
respondents. Strickland contends that the CA's referral of the dispute between EYLLP and Strickland to
arbitration is a grave error since EYLLP failed to properly allege and prove the Partnership
Moreover, the term “relative” simply means “connected to,” which means that parties in Agreement. Absent an actionable Partnership Agreement, there is no existing arbitration
arbitration proceedings are encouraged to discuss openly their grievances and explore the clause.
circumstances which may have any connection in identifying the source of the conflict.
ISSUES: W/N the Partnership Agreement was properly alleged and proven according to
30. Dale Strickland v. Ernst & Young LLP, G.R. No. 193782, 1 August 2018 ALI Section 7, Rule 8 of the Rules of Court on actionable documents.
Date: August 1, 2018
Petitioners: DALE STRICKLAND HELD: Yes, the Partnership Agreement, containing the Arbitration Clause was properly
Respondents: ERNST & YOUNG LLP alleged and proved.
Ponente: Jardeleza, J. Strickland raised the issue that CA departed from the accepted and usual course of judicial
proceedings when it relied on an UNSIGNED and UNAUTHENTICATED “Partnership
DOCTRINE: "The DOCTRINE OF SEPARABILITY, or doctrine of severability, enunciates that Agreement” which was not properly produced, pleaded, authenticated and proved.
an arbitration agreement is independent of the main contract. The arbitration agreement is
to be treated as a separate agreement and the arbitration agreement/clause does not In this case, EYLLP initially only quoted the provision of the Partnership Agreement on
automatically terminate when the contract of which it is a part comes to an end. Dispute Resolution, including a section on Arbitration, in its ANSWER. Eventually, it submitted
a copy of the Partnership Agreement in a MANIFESTATION. The setting forth of its provisions
in EYLLP's answer and in its motion to refer to arbitration, coupled with the actual submission
by EYLLP of the Partnership Agreement, complies with the requirements of Section 7, Rule 2002 (Agreement), petitioner Department of Foreign Affairs (DFA) awarded the Machine
8 of the Rules of Court which Strickland should have specifically denied. Readable Passport and Visa Project (MRPN Project) to respondent BCA International
Corporation (BCA), a domestic corporation. During the implementation of the MRPN Project,
It must be noted that the validity of the contract containing the arbitration agreement, does DFA sought to terminate the Agreement. However, BCA opposed the termination and filed a
not affect the applicability of the arbitration clause itself. A contrary ruling would suggest Request for Arbitration, according to the provision in the Agreement:
that a party’s mere repudiation of the main contract is sufficient to avoid arbitration. That is
exactly the situation that the separability doctrine seeks to avoid. Section 19.02. Failure to Settle Amicably - If the Dispute cannot be settled amicably within
ninety (90) days by mutual discussion as contemplated under Section 19.01 herein, the
Thus, the petition is denied, the Court upheld the decisions of the Court of Appeals ordering Dispute shall be settled with finality by an arbitrage tribunal operating under International
the referral of the parties to arbitration. Law, hereinafter referred to as the "Tribunal", under the UNCITRAL Arbitration Rules
contained in Resolution 31/98 adopted by the United Nations General Assembly
31. Cargill v. San Fernando Regala, G.R. No. 175404 ARCEGA on December 15, 1976, and entitled "Arbitration Rules on the United Nations Commission
on the International Trade Law". The DFA and the BCA undertake to abide by and implement
Date: 31 January 2011 the arbitration award. The place of arbitration shall be Pasay City, Philippines, or such other
Ponente: Peralta, J. place as may be mutually agreed upon by both parties. The arbitration proceeding shall be
Petitioner: Cargill Philippines, Inc. conducted in the English language. (Emphasis supplied)
Respondent: San Fernando Regala Trading, Inc.
On 29 June 2009, an ad hoc arbitral tribunal was constituted. In an Order dated 15 April
DOCTRINE: 2013, the arbitral tribunal approved BCA's request to apply in court for the issuance of
subpoena, subject to the conditions that the application will not affect its proceedings and
FACTS: the hearing set in October 2013 will proceed whether the witnesses attend or not.
On 16 May 2013, BCA filed before the RTC a Petition for Assistance in Taking Evidence
ISSUE: pursuant to the Implementing Rules and Regulations (IRR) of "The Alternative Dispute
Resolution Act of 2004," or Republic Act No. 9285 (RA 9285). In its petition, BCA sought the
RULING: issuance of subpoena ad testificandum and subpoena duces tecum to the following witnesses
and documents in their custody.
32. Aboitiz v. Gothong, G.R. No. 198226 AURELIO
33. Home Bankers Savings v. CA, G.R. No. 115412 BOHOL On 1 July 2013, DFA filed its comment, alleging that the presentation of the witnesses and
documents was prohibited by law and protected by the deliberative process privilege.
34. DFA v. BCA, G.R. No. 225051 and 210858 CABIOS
Ruling of Lower Courts: In a Resolution dated 2 September 2013, the RTC ruled in favor
G.R. No. 210858 of BCA and held that the evidence sought to be produced was no longer covered by the
Date: June 29, 2016 deliberative process privilege. According to the RTC, the Court held in Chavez v. Public
Ponente: CARPIO, J. Estates Authority that acts, transactions or decisions are privileged only before a definite
PetitionerPetitioner: DEPARTMENT OF FOREIGN AFFAIRS proposition is reached by the agency and since DFA already made a definite proposition and
Respondent: BCA INTERNATIONAL CORPORATION entered into a contract, DFA's acts, transactions or decisions were no longer privileged.

Doctrine: RA 9285, its IRR, and the Special ADR Rules provide that any party to an On 6 September 2013, the RTC issued the subpoena due es tecum and subpoena ad
arbitration, whether domestic or foreign, may request the court to provide assistance in testificandum. On 12 September 2013, DFA filed a motion to quash the subpoena duces
taking evidence such as the issuance of subpoena ad testificandum and subpoena duces tecum and subpoena ad testificandum, which BCA opposed.
tecum. The Special ADR Rules specifically provide that they shall apply to assistance in taking
evidence, and the RTC order granting assistance in taking evidence shall be immediately In an Order dated 11 October 2013, the RTC denied the motion to quash and held that the
executory and not subject to reconsideration or appeal. An appeal with the Court of Appeals motion was actually a motion for reconsideration, which is prohibited under Rule 9.9 of the
(CA) is only possible where the RTC denied a petition for assistance in taking evidence. An Special Rules of Court on Alternative Dispute Resolution (Special ADR Rules).
appeal to the Supreme Court from the CA is allowed only under any of the grounds specified On 14, 16, and 17 October 2013, Undersecretary Franklin M. Ebdalin (Usec. Ebdalin), Atty.
in the Special ADR Rules. Voltaire Mauricio (Atty. Mauricio), and Luisi to Ucab (Mr. Ucab) testified before the arbitral
tribunal pursuant to the subpoena.
Facts: In an Amended Build-Operate-Transfer Agreement dated 5 April
In an Order dated 8 January 2014, the RTC denied the motion for reconsideration filed by Hydro Corporation, we held that Section 14 of RA 876 recognizes the right of any party to
DFA. The RTC ruled that the motion became moot with the appearance of the witnesses petition the court to take measures to safeguard and/or conserve any matter which is the
during the arbitration hearings. Hence, DFA filed this petition with an urgent prayer for the subject of the dispute in arbitration.
issuance of a temporary restraining order and/or a writ of preliminary injunction.
35. Transfield v. Luzon Hydro, G.R. No. 146717 (2006) CAPA
In a Resolution dated 2 April 2014, the Court issued a temporary
restraining order enjoining the arbitral tribunal from taking cognizance of the testimonies of DOCTRINE:
Usec. Ebdalin, Atty. Mauricio, and Mr. Ucab.
For forum-shopping to exist, there must be:
Issue: Whether the parties can ask court assistance in arbitration. (a) identity of parties, or at least such parties as represent the same interests in both
actions;
Ruling: Yes. The IRR of RA 9285 reiterate that RA 9285 is procedural in character and (b) identity of rights asserted and relief prayed for, the relief being founded on the same
applicable to all pending arbitration proceedings.17 Consistent with Article 2046 of the Civil facts; and
Code, the Special ADR Rules were formulated and were also applied to all pending arbitration (c) the identity of the two preceding particulars is such that any judgment rendered in
proceedings covered by RA 9285, provided no vested rights are impaired. Thus, contrary to the other action will, regardless of which party is successful, amount to res judicata in the
DFA's contention, RA 9285, its IRR, and the Special ADR Rules are applicable to the present action under consideration.
arbitration proceeding. The arbitration between the DFA and BCA is still pending, since no ● R.A. No. 9825 provides that international commercial arbitrations shall be
arbitral award has yet been rendered. Moreover, DFA did not allege any vested rights governed shall be governed by the Model Law on International Commercial
impaired by the application of those procedural rules. Arbitration ("Model Law") adopted by the United Nations Commission on
International Trade Law
RA 9285, its IRR, and the Special ADR Rules provide that any party to an arbitration, whether
domestic or foreign, may request the court to provide assistance in taking evidence such as
the issuance of subpoena ad testificandum and subpoena duces tecum. The Special ADR
Rules specifically provide that they shall apply to assistance in taking evidence, and the RTC
order granting assistance in taking evidence shall be immediately executory and not subject FACTS:
to reconsideration or appeal. An appeal with the Court of Appeals (CA) is only possible where
the RTC denied a petition for assistance in taking evidence. An appeal to the Supreme Court LHC claims that Transfield Philippines, Inc. (TPI) is guilty of forum-shopping
from the CA is allowed only under any of the grounds specified in the Special ADR Rules. We when it filed the following suits:
rule that the DFA failed to follow the procedure and the hierarchy of courts provided in RA
9285, its IRR, and the Special ADR Rules, when DFA directly appealed before this Court the 1) for confirmation, recognition and enforcement of the Third Partial Award in the case before
RTC Resolution and Orders granting assistance in taking evidence. the ICC International Court of Arbitration;
2) filed before the International Court of Arbitration, International Chamber of Commerce
DFA contends that the RTC issued the subpoenas on the premise that RA 9285 and the (ICC) a request for arbitration pursuant to the Turnkey Contract between LHC and TPI; and
Special ADR Rules apply to this case. However, we find that even without applying RA 9285 3) Transfield Philippines, Inc. v. Luzon Hydro Corporation, Australia and New Zealand
and the Special ADR Rules, the RTC still has the authority to issue the subpoenas to assist Banking Group Limited and Security Bank Corp.
the parties in taking evidence.
On the other hand, TPI claims that it is LHC which is guilty of forum-shopping when
The 1976 UNCITRAL Arbitration Rules, agreed upon by the parties to govern them, state it raised the issue of forum-shopping not only in this case, but also in Civil Case No. 04-332,
that the "arbitral tribunal shall apply the law designated by the parties as applicable to the and even asked for the dismissal of the other case based on this ground. Moreover, TPI
substance of the dispute. Failing such designation by the parties, the arbitral tribunal shall argues that LHC is relitigating in Civil Case No. 04-332 the very same causes of action in ICC
apply the law determined by the conflict of laws rules which it considers applicable. " Case No. 11264/TE/MW.
Established in this jurisdiction is the rule that the law of the place where the contract is made
governs, or lex loci contractus.26 Since there is no law designated by the parties as applicable Meanwhile, ANZ Bank and Security Bank moved to be excused from filing a
and the Agreement was perfected in the Philippines, "The Arbitration Law," or Republic Act memorandum. They claim that with the finality of the Court's Decision, any resolution by the
No. 876 (RA 876), applies. Court on the issue of forum-shopping will not materially affect their role as the banking
entities involved are concerned. Thereafter, TPI moved to set the case for oral argument,
RA 876 empowered arbitrators to subpoena witnesses and documents when the materiality positing that the resolution of the Court on the issue of forum-shopping may have significant
of the testimony has been demonstrated to them. In Transfield Philippines, Inc. v. Luzon implications on the interpretation of the Alternative Dispute Resolution Act of 2004, as well
as the viability of international commercial arbitration as an alternative mode of dispute Security Bank and ANZ Bank since these banks are not parties to the arbitration case, and
resolution in the country. LHC opposed arguing that the respective memoranda of the parties that the ICC Arbitral tribunal would not even be able to compel LHC to obey any writ of
are sufficient for the Court to resolve the issue of forum-shopping. TPI filed its Manifestation preliminary injunction issued from its end.
and Reiterative Motion where it manifested that the International Chamber of Commerce
(ICC) arbitral tribunal had issued its Final Award ordering LHC to pay TPI US$24,533,730.00. 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'
ISSUE: arbitral dispute, allows the application of a party to a judicial authority for interim or
Whether there was forum-shopping. 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
RULING: safeguard and/or conserve any matter which is the subject of the dispute in arbitration. In
The Court ruled in the negative. 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
The essence of forum-shopping is the filing of multiple suits involving the same parties for arbitral tribunal has no power to act or to act effectively.
the same cause of action, either simultaneously or successively, for the purpose of obtaining
a favorable judgment. Forum-shopping has likewise been defined as the act of a party R.A. No. 9825 provides that international commercial arbitrations shall be governed shall be
against whom an adverse judgment has been rendered in one forum, seeking and governed by the Model Law on International Commercial Arbitration ("Model Law")
possibly getting a favorable opinion in another forum, other than by appeal or the adopted by the United Nations Commission on International Trade Law
special civil action of certiorari, or the institution of two or more actions or (UNCITRAL).26 The UNCITRAL Model Law provides:
proceedings grounded on the same cause on the supposition that one or the other court ARTICLE 35. Recognition and enforcement
would make a favorable disposition. (1) An arbitral award, irrespective of the country in which it was made,
shall be recognized as binding and, upon application in writing to the
Thus, for forum-shopping to exist, there must be: competent court, shall be enforced subject to the provisions of this article
(a) identity of parties, or at least such parties as represent the same interests in both and of article 36.
actions; (2) The party relying on an award or applying for its enforcement shall
(b) identity of rights asserted and relief prayed for, the relief being founded on the same supply the duly authenticated original award or a duly certified
facts; and copy thereof, and the original arbitration agreement referred to in
(c) the identity of the two preceding particulars is such that any judgment rendered in article 7 or a duly certified copy thereof. If the award or agreement is not
the other action will, regardless of which party is successful, amount to res judicata in the made in an official language of this State, the party shall supply a duly
action under consideration. certified translation thereof into such language.
However, it does not resolve them all. The outstanding quantum issues
There is no identity of causes of action between and among the arbitration case, the instant will be determined in a future award. It will contain a reconciliation of
petition, and Civil Case No. 04-332. the amounts awarded to each party and a determination of the net amount
payable to Claimant or Respondent, as the case may be.
The arbitration case, ICC Case No. 11264 TE/MW, is an arbitral proceeding commenced WHEREFORE, the Court RESOLVES to DISMISS the charges of forum-
pursuant to the Turnkey Contract between TPI and LHC, to determine the primary issue of shopping filed by both parties against each other.
whether the delays in the construction of the project were excused delays, which would
consequently render valid TPI's claims for extension of time to finish the project. On the
other hand, Civil Case No. 00-1312, the precursor of the instant petition was filed to enjoin 36. DFA v. BCA, G.R. No. 225051 and 210858 DECAPIA
LHC from calling on the securities and respondent banks from transferring or paying the
securities in case LHC calls on them. However, in view of the fact that LHC collected the 37. PSALM v. CIR, G.R. No. 198146 DELA RAMA
proceeds, TPI, in its appeal and Petition for Review asked that the same be returned and
placed in escrow pending the resolution of the disputes before the ICC arbitral tribunal. POWER SECTOR ASSETS AND LIABILITIES MANAGEMENT CORPORATION vs.
COMMISSIONER OF INTERNAL REVENUE
Neither is there an identity of parties between and among the three (3) cases. DOCTRINE:
The ICC case only involves TPI and LHC logically since they are the parties to the Turnkey Jurisdiction over the subject matter is vested by the Constitution or by law, and
Contract. In comparison, the instant petition includes Security Bank and ANZ Bank, the banks not by the parties to an action. Jurisdiction cannot be conferred by consent or
sought to be enjoined from releasing the funds of the letters of credit. The Court agrees with acquiescence of the parties or by erroneous belief of the court, quasi-judicial office or
TPI that it would be ineffectual to ask the ICC to issue writs of preliminary injunction against government agency that it exists.
The purpose of PD 242 is to provide for a speedy and efficient administrative shall be tantamount to the filing of an application for refund (in cash)/tax credit
settlement or adjudication of disputes between government offices or agencies certificate (TCC), at the option of NPC/PSALM. xxx”
under the Executive branch, as well as to filter cases to lessen the clogged In compliance with the MOA, PSALM remitted under protest to the BIR the amount
dockets of the courts. The procedure is not much different, and no less desirable, representing the total basic VAT due. PSALM filed with the DOJ a petition for the
than the arbitration procedures provided in Republic Act No. 876 (Arbitration adjudication of the dispute with the BIR to resolve the issue of whether the sale of the power
Law) and in Section 26, R.A. 6715 (The Labor Code). It is an alternative to, or a plants should be subject to VAT. The DOJ ruled in favor of PSALM, stating that: “In cases
substitute for, traditional litigation in court with the added advantage of avoiding the involving purely question[s] of law, such as in the instant case, between and among the
delays, vexations and expense of court proceedings. GOCC and government bureau, the issue is best settled in this Department.”
PD 242 will only apply where no private party is involved. The BIR moved for reconsideration, alleging that the DOJ had no jurisdiction since
It is only proper that intra-governmental disputes be settled administratively since the the dispute involved tax laws administered by the BIR and therefore within the jurisdiction
opposing government offices, agencies and instrumentalities are all under the President's of the Court of Tax Appeals (CTA). The DOJ denied BIR's MR. The BIR Commissioner
executive control and supervision. This constitutional power of control of the President (Commissioner of Internal Revenue) filed with the CA a petition for certiorari, seeking to set
cannot be diminished by the CTA. Thus, if two executive offices or agencies cannot aside the DOJ's decision for lack of jurisdiction.
agree, it is only proper and logical that the President, as the sole Executive who The CA held that the petition filed by PSALM with the DOJ was really a protest against the
under the Constitution has control over both offices or agencies in dispute, should assessment of deficiency VAT, which under the NIRC of 1997 is within the authority of the
resolve the dispute instead of the courts. CIR to resolve. Quoting paragraph H of the MOA, the CA stated that the parties in effect
Under his constitutional power of control, the President decides the dispute between agreed to consider a DOJ ruling favorable to PSALM as the latter's application for
the two executive offices. The judiciary cannot substitute its decision over that of the refund.
President. Only after the President has decided or settled the dispute can the The CA ruled that the CIR is the proper body to resolve cases involving disputed
courts' jurisdiction be invoked. Until such time, the judiciary should not interfere since assessments, refunds of internal revenue taxes, fees or other charges, penalties imposed in
the issue is not yet ripe for judicial adjudication. relation thereto, or other matters arising under the NIRC or other laws administered by the
Under the doctrine of exhaustion of administrative remedies, it is mandated that BIR. The CA stressed that jurisdiction is conferred by law or by the Constitution; the
where a remedy before an administrative body is provided by statute, relief must be parties, such as in this case, cannot agree or stipulate on it by conferring
sought by exhausting this remedy prior to bringing an action in court in order to jurisdiction in a body that has none. Jurisdiction over the person can be waived
give the administrative body every opportunity to decide a matter that comes within its but not the jurisdiction over the subject matter which is neither subject to
jurisdiction. agreement nor conferred by consent of the parties.
In requiring parties to exhaust administrative remedies before pursuing action in a court, the The CA held that the DOJ Secretary erred in ruling that the CIR is estopped from assailing
doctrine prevents overworked courts from considering issues when remedies are available the jurisdiction of the DOJ after having agreed to submit to its jurisdiction. As a general rule,
through administrative channels. Furthermore, the doctrine endorses a more economical and estoppel does not confer jurisdiction over a cause of action to a tribunal where none,
less formal means of resolving disputes, and promotes efficiency since disputes and claims by law, exists. In conclusion, the CA found that the DOJ Secretary gravely abused his
are generally resolved more quickly and economically through administrative discretion amounting to lack of jurisdiction when he assumed jurisdiction.
proceedings rather than through court litigations.
ISSUE: W/N the Secretary of Justice has jurisdiction over the case
FACTS:
Petitioner is a GOCC created under RA 9136, also known as the Electric Power Industry RULING: YES
Reform Act of 2001 (EPIRA). The principal purpose of PSALM is to manage the orderly sale, Contrary to the ruling of the CA, the Court finds that the DOJ is vested by law with
disposition, and privatization of the National Power Corporation (NPC) generation assets, real jurisdiction over this case. This case involves a dispute between PSALM and NPC, which
estate and other disposable assets, and Independent Power Producer (IPP) contracts. are both wholly government-owned corporations, and the BIR, a government office, over the
PSALM conducted public biddings for the privatization of the Pantabangan-Masiway imposition of VAT on the sale of the two power plants. There is no question that original
Hydroelectric Power Plant and Magat Hydroelectric Power Plant. The NPC received a letter jurisdiction is with the CIR, who issues the preliminary and the final tax assessments.
from the BIR demanding immediate payment of P3,813,080,472 deficiency VAT for the sale However, if the government entity disputes the tax assessment, the dispute is
of the Pantabangan-Masiway Plant and Magat Plant. The NPC indorsed BIR's demand letter already between the BIR (represented by the CIR) and another government
to PSALM. entity, in this case, the petitioner PSALM.
The BIR, NPC, and PSALM executed a Memorandum of Agreement, wherein they agreed Under PD 242, all disputes and claims solely between government agencies and
that, among others: “H) Any resolution in favor of NPC/PSALM by any appropriate offices, including GOCCs, shall be administratively settled or adjudicated by the
court or body shall be immediately executory without necessity of notice or Secretary of Justice, the Solicitor General, or the Government Corporate Counsel,
demand from NPC/PSALM. A ruling from the DOJ that is favorable to NPC/PSALM depending on the issues and government agencies involved. As regards cases
involving only questions of law, it is the Secretary of Justice who has jurisdiction.
The use of the word "shall" means that administrative settlement or adjudication of disputes of the parties fails or refuses to abide by the compromise, the other party may either enforce
and claims between government agencies and offices, including GOCCs, is not merely the compromise or regard it as rescinded and insist upon his original demand.
permissive but mandatory and imperative. Thus, under PD 242, it is mandatory that
disputes and claims "solely" between government agencies and offices, including GOCCs, Facts: In October 1994, petitioner Teodoro Chavez leased a fishpond in Bulacan to
involving only questions of law, be submitted to and settled or adjudicated by the Secretary respondent Jacinto Trillana. The contract of lease provided for a term of six (6) years with a
of Justice. rental fee for the whole term of ₱2,240,000. The contract further provided that Trillana shall
In fact, the MOA executed by the BIR, NPC, and PSALM explicitly provides that "a ruling from undertake all construction and preservation of improvements in the fishpond that may be
the DOJ that is favorable to NPC/PSALM shall be tantamount to the filing of an application destroyed during the period of the lease, at his expense, without reimbursement from
for refund (in cash)/TCC, at the option of NPC/PSALM." Such provision indicates that the Chavez.
BIR and petitioner PSALM and the NPC acknowledged that the Secretary of
Justice indeed has jurisdiction to resolve their dispute. In August 1996, a powerful typhoon hit the country which damaged the subject fishpond.
As explained in PHIVIDEC v. Judge Velez: “It does not diminish the jurisdiction of [the] courts Trillana did not immediately undertake the necessary repairs. Three weeks later, he was
but only prescribes an administrative procedure for the settlement of certain types informed by a barangay councilor that major repairs were being undertaken in the fishpond,
of disputes xxx, so that they need not always repair to the courts for the settlement at the instance of the Chavez. In September 1996, Trillana filed a complaint before the Office
of controversies arising from the interpretation and application of statutes, contracts or of the Barangay Captain due to the unauthorized repairs undertaken by Chavez, the ouster
agreements. The procedure is not much different, and no less desirable, than the of his personnel from the leased premises and its unlawful taking by Chavez despite their
arbitration procedures provided in Republic Act No. 876 (Arbitration Law) and in valid and subsisting lease contract. After conciliation proceedings, an agreement was reached
Section 26, R.A. 6715 (The Labor Code). It is an alternative to, or a substitute for, by the parties whereby Chavez agreed to reimburse to Trillana the rent pertaining to the
traditional litigation in court with the added advantage of avoiding the delays, unexpired period of the lease, amounting to P150,000.00 or P100,000.00 if paid before
vexations and expense of court proceedings. September 23, 1996.
A litigant cannot go to court without first pursuing his administrative remedies; otherwise,
his action is premature and his case is not ripe for judicial determination. PD 242 (now On February 7, 1997, Trillana filed a complaint against Chavez before the Regional Trial Court
Chapter 14, Book IV of Executive Order No. 292), provides for such administrative remedy. of Valenzuela alleging non-compliance by petitioner with their lease contract and the
Thus, only after the President has decided the dispute between government offices and foregoing "Kasunduan." The RTC ruled in favour of respondent. On appeal, the Court of
agencies can the losing party resort to the courts, if it so desires. Otherwise, a resort to the Appeals affirmed the same with modification.
courts would be premature for failure to exhaust administrative remedies.
Furthermore, it should be noted that the 1997 NIRC is a general law governing the In the instant petition for review, Chavez contends that the CA erred in ruling that the RTC
imposition of national internal revenue taxes, fees, and charges. On the other hand, PD 242 of Valenzuela City had jurisdiction over the action filed by Trillana considering that the subject
is a special law that applies only to disputes involving solely government offices, agencies, matter thereof was already amicably settled before the Office of the Barangay Captain. As
or instrumentalities. Necessarily, such disputes must be resolved under PD 242 and not under such, respondent should have followed the procedure for enforcement of the amicable
the NIRC, precisely because PD 242 specifically mandates the settlement of such settlement as provided for in the Revised Katarungang Pambarangay Law.
intragovernmental disputes.
Since the amount involved in this case is more than one million pesos, the DOJ Secretary's Issue: Whether or not the remedy of respondent in the instant case should be limited to the
decision may be appealed to the Office of the President in accordance with PD 242. If the enforcement of the “Kasunduan” pursuant to the Revised Katarungang Pambarangay Law.
appeal thereto is denied, the aggrieved party can still appeal to the CA. NO

Ruling: The Revised Katarungang Pambarangay Law provides that an amicable settlement
38. PVID v. Velez, G.R. No. 84295 DUMLAO reached after barangay conciliation proceedings has the force and effect of a final judgment
of a court if not repudiated or a petition to nullify the same is filed before the proper city or
39. Chavez v. CA, G.R. No. 159411 FAN municipal court within ten (10) days from its date. This special provision follows the general
precept enunciated in Article 2037 of the Civil Code which provides that a compromise has
Title: Chavez v. Court of Appeals upon the parties the effect and authority of res judicata; but there shall be no execution
G.R No. 159411 except in compliance with a judicial compromise.
Date: March 18, 2005 However, in Heirs of Zari, et al. v. Santos, the Court has clarified that the broad precept
Ponente: Puno, J. enunciated in Art. 2037 is qualified by Art. 2041 of the same Code, which provides that if
one of the parties fails or refuses to abide by the compromise, the other party may either
Doctrine: A compromise has upon the parties the effect and authority of res judicata; but enforce the compromise or regard it as rescinded and insist upon his original demand.
there shall be no execution except in compliance with a judicial compromise. However, if one
Here, the Revised Katarungang Pambarangay Law provides for a two-tiered mode of
enforcement of an amicable settlement, to wit: (a) by execution by the Punong Barangay
which is quasi-judicial and summary in nature on mere motion of the party entitled thereto;
and (b) an action in regular form, which remedy is judicial. However, the mode of
enforcement does not rule out the right of rescission under Art. 2041 of the Civil Code. The
availability of the right of rescission is apparent from the wording of Sec. 417 itself which
provides that the amicable settlement "may" be enforced. The use of the word "may" clearly
makes the procedure provided in the Revised Katarungang Pambarangay Law directory or
merely optional in nature.

Thus, although the "Kasunduan" executed by petitioner and respondent before the Office of
the Barangay Captain had the force and effect of a final judgment of a court, Chavez’s non-
compliance paved the way for the application of Art. 2041 under which Trillana may either:
1) enforce the compromise, following the procedure laid out in the Revised Katarungang
Pambarangay Law, or 2) regard it as rescinded and insist upon his original demand. Trillana
chose the latter option when he instituted herein civil case.

IN VIEW WHEREOF, the petition is PARTIALLY GRANTED. The assailed Decision dated April
2, 2003 of the Court of Appeals in CA-G.R. CV No. 59023 is modified by deleting the award
of ₱300,000.00 as reimbursement of advance rentals. The assailed Decision is AFFIRMED in
all other respects.

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