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1. G.R. No. 225051. July 19, 2017 DEPARTMENT OF FOREIGN AFFAIRS (DFA) VS. BCA
INTERNATIONAL CORPORATION & AD HOC ARBITRAL TRIBUNAL

Facts:
In an Amended Build-Operate-Transfer Agreement dated 5 April 2002, Department of Foreign
Affairs (DFA) awarded the Machine Readable Passport and Visa Project (MRPV Project) to BCA
International Corporation (BCA). Such Agreement contained an arbitration clause as to wit:
Section 19.02. Failure to Settle Amicably – If the Dispute cannot be settled amicably within ninety
(90) days by mutual discussion as contemplated xxx herein, the Dispute shall be settled with finality by an
arbitrage tribunal operating under International Law xxx under the UNCITRAL Arbitration Rules contained
in Resolution 31/98 adopted by the United Nations General Assembly on December 15, 1976 xxx. The DFA
and the BCA undertake to abide by and implement the arbitration award. The place of arbitration shall be
Pasay City, Philippines, or such other place as may be mutually agreed upon by both parties. The
arbitration proceeding shall be conducted in the English language.
However, during the implementation of the MRPV Project, DFA sought to terminate the Agreement. This
was opposed by BCA and filed a Request for Arbitration according to the above provision.
On 29 June 2009, an ad hoc arbitral tribunal was constituted. On 16 May 2013, BCA filed before the RTC a
Petition for Assistance in Taking Evidence pursuant to the Implementing Rules and Regulations (IRR) of
“The Alternative Dispute Resolution Act of 2004” or RA 9285, seeking the issuance of subpoena ad
testificandum and subpoena duces tecum against DFA.
On 1 July 2013, DFA filed its comment alleging that the subpoena ad testificandum and subpoena
duces tecum being sought by BCA is prohibited by law as it runs afoul from the 1976 UNCITRAL Arbitration
Rules that they have agreed in the foregoing Agreement.

Issues:
Whether or not RA 9285 and the Special ADR Rules apply to the present arbitration proceedings.

Ruling:
YES.
RA 9285 and the Special ADR Rules apply to the present arbitration proceedings. While RA 9285
was passed only in 2004, it nonetheless applies in the instant case since it is a procedural law which has a
retroactive effect. As a general rule, the retroactive application of procedural laws does not violate any
personal rights because no vested right has yet attached nor arisen from them. Further, consistent with
Article 2046 of the Civil Code, the Special ADR Rules were formulated and were also applied to all pending
arbitration proceedings covered by RA 9285, provided no vested rights are impaired.
RA 9285, its IRR, and the Special ADR Rules provide that any party to an arbitration, whether
domestic of foreign, may request the court to provide assistance in taking evidence such as the issuance of
subpoena ad testificandum and subpoena duces tecum. 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 and controversies to be resolved through alternative dispute resolution
methods. While enacted only in 2004, RA 9285 applies to pending arbitration proceedings since it is a
procedural law which has a retroactive effect.

2. G.R. No. 135362. December 13, 1999. Heirs of Augusto L. Salas, Jr. vs. Laperal Realty
Corporation

Facts:
Petitioners filed a complaint for rescission of several sale transactions involving land owned by
Augusto L. Salas, Jr., their predecessor-in-interest, claiming they suffered l e s i o n of more than one-fourth
(1/4) of the value of Salas, Jr.'s land when respondent Laperal Realty subdivided it and sold portions
thereof to respondent lot buyers. The trial court dismissed the case because they failed to resort to
arbitration which was required in the original agreement entered into by and between Salas, Jr. and Laperal
Realty Corporation. Petitioners, however, claimed that their causes of action did not emanate from the
original agreement, hence, their failure to arbitrate should not be a ground for dismissal of the case. On
appeal, the Supreme Court held that petitioners-heirs of Salas, Jr., and Laperal Realty are certainly bound
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by the arbitration provision unlike respondent lot buyers who are neither parties to the Agreement nor the
latter's assigns or heirs. However, to hold trial in abeyance for respondent lot buyers pending arbitration
between petitioners and Laperal Realty would result in multiplicity of suits. The Supreme Court, therefore,
granted the petition and ordered the trial court to proceed with the hearing of the suit for rescission.
Court intervention is allowed under Republic Act (RA) No. 9285 in the following instances: (1) when
a party in the arbitration proceedings requests for an interim measure of protection; (2) judicial review of
arbitral awards by the Regional Trial Court (RTC); and (3) appeal from the RTC decisions on arbitral
awards to the Court of Appeals (CA).
RA No. 9285 declares the policy of the State to actively promote party autonomy in the resolution of
disputes or the freedom of the parties to make their own arrangements to resolve their disputes. Towards
this end, the State shall encourage and actively promote the use of Alternative Dispute Resolution as an
important means to achieve speedy and impartial justice and declog court dockets.
Court intervention in the Special ADR Rules is allowed through these remedies: (1) Specific Court
Relief, which includes Judicial Relief Involving the Issue of Existence, Validity and Enforceability of the
Arbitral Agreement, Interim Measures of Protection, Challenge to the Appointment of Arbitrator,
Termination of Mandate of Arbitrator, Assistance in Taking Evidence, Confidentiality/Protective Orders,
Confirmation, Correction or Vacation of Award in Domestic Arbitration, all to be filed with the RTC; (2) a
motion for reconsideration may be filed by a party with the RTC on the grounds specified in Rule 19.1; (3)
an appeal to the Court of Appeals through a petition for review under Rule 19.2 or through a special civil
action for certiorari under Rule 19.26; and (4) a petition for certiorari with the Supreme Court from a
judgment or final order or resolution of the Court of Appeals, raising only questions of law.

Issue:
Whether or not failure to arbitrate is a ground for dismissal of the case

Ruling:
NO.
This Court has recognized arbitration agreements as valid, binding, enforceable and not contrary to
public policy so much so that when there obtains a written provision for arbitration which is not complied
with, the trial court should suspend the proceedings and order the parties to proceed to arbitration in
accordance with the terms of their agreement. Arbitration is the “wave of the future” in dispute resolution.
To brush aside a contractual agreement calling for arbitration in case of disagreement between parties
would be a step backward.
A submission to arbitration is a contract. As such, the Agreement, containing the stipulation on
arbitration, binds the parties thereto, as well as their assigns and heirs; But only them. Petitioners, as heirs
of Salas, Jr., and respondent Laperal Realty are certainly bound by the Agreement. If respondent Laperal
Realty had assigned its rights under the Agreement to a third party, 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 vest in the assignee the power to enforce them to the same extent as
the assignor could have enforced them against the debtor or in this case, against the heirs of the original
party to the Agreement.

HOME BANKERS SAVINGS AND TRUST COMPANY v COURT OF APPEALS and FAR EAST BANK
&TRUST COMPANY

FACTS:
Victor Tancuan issued Home Bankers Savings and Trust Company (HBSTC) a check for
25,250,000.00 Pesos while Eugene Arriesgrado issued Far & East Bank and Trust Company (FEBTC)
checks for 8.6 Million pesos, 8.5 Million pesos and 8.1 Million pesos, respectively, the three checks
amounting to 25,200,000 pesos. Tancuan and Arriesgrado exchanged each other’s checks an deposited
them with their respective banks for collection. When FEBTC presented Tancuan’s HBSTC check for
clearing, HBSTC dishonored it for being “Drawn against insufficient funds”. After that, HBSTC sent
Arriesgrado’s 3 FEBTC checks through the Philippine Clearing House Corporation (PCHC) to FEBTC but
was returned for being “Drawn against insufficient funds”. HBSTC received the notification of dishonor but
refused to accept them and instead returned them to FEBTC through PCHC for the reason “Beyond
Reglementary Period” implying that HBSTC already treated the 3 FEBTC checks as cleared and allowed
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the proceeds thereof to be withdrawn. FEBTC demanded reimbursement for the returned checks and
inquired form HBSTC whether it had permitted any withdrawal of funds against the unfunded checks and if
so, on what date. HBSTC refused to make any reimbursement.
FEBTC submitted the dispute for arbitration with PCHC. While the arbitration proceedings was still pending,
FEBTC filed and action for sum of money and damages with preliminary attachment against HBSTC,
Robert Tancuan, Victor Tancuan and Eugene Arriesgrado. HBTSC filed a motion to dismiss and said that
the complaint stated no cause of action and that it should be dismissed because it seeks to enforce an
arbitral award which as yet does not exist.

ISSUE:
Whether or not FEBTC which commenced the arbitration proceeding under PCHC may
subsequently file a separate case in court over the same subject matter or arbitration despite the pendency
of the arbitration to obtain the provisional remedy of attachment against the bank, the adverse party in the
arbitration proceeding.

RULING:
NO.
Section 14 of Republic Act 876, otherwise known as the Arbitration Law, allows any party to the
arbitration proceeding to petition the court to take measures to safeguard and/or conserve any matter which
is the subject of the dispute in arbitration, thus: Section 14. Subpoena and subpoena duces tecum.—
Arbitrators shall have the power to require any person to attend a hearing as a witness. They shall have the
power to subpoena witnesses and documents when the relevancy of the testimony and the 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, without prejudice to the rights of any party to petition the court to take measures to safeguard and/or
conserve any matter which is the subject of the dispute in arbitration.
Also, the participants cannot bypass the arbitration process laid out by the body and seek relief
directly from the courts. In the case at bar, the private respondent has initiated arbitration proceedings as
required by the PCHC rules and regulations, and pending arbitration has sought relief from the trial court for
measures to safeguard the subject of the dispute.
Simply put, participants in the regional clearing operations of the Philippine Clearing House
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 sought relief from the trial court for
measures to safeguard and/or conserve the subject of the dispute under arbitration, as sanctioned by
section 14 of the Arbitration Law, and otherwise not shown to be contrary to the PCHC rules and
regulations.
At this point, we emphasize that arbitration, as an alternative method of dispute resolution, is
encouraged by this Court. Aside from unclogging judicial dockets, it also hastens solutions especially of
commercial 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.

May the participants in the regional clearing operations of the PCHC bypass the arbitration process?

No. Participants in the regional clearing operations of the Philippine Clearing House 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 sought relief from the trial court for measures to safeguard and/or
conserve the subject of the dispute under arbitration, as sanctioned by section 14 of the Arbitration Law,
and otherwise not shown to be contrary to the PCHC rules and regulations. (Home Bankers Saving and
Trust Company vs. CA G.R. No. 115412. November 19, 1999)

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G.R. No. 141833. March 26, 2003 LM Power Engineering Corporation vs. Capitol Industrial
Construction Groups, Inc.

Facts:
This is a Petition for Review on Certiorari filed by the petitioner LM Power against Respondent
Capitol Industrial seeking to set aside the decision of CA.
Petitioner LM Power Engineering Corporation and Respondent Capitol Industrial Construction Groups Inc.
entered into a Subcontract Agreement involving electrical work at the Third Port of Zamboanga. Due to the
inability of the petitioner to procure materials, Capitol Industial took over some of the work contracted to the
former. After the completion of the contract, petitioner billed respondent in the amount of P6, 711,813.90
but the respondent refused to pay. Petitioner filed with the RTC of Makati a Complaint for the collection of
the amount representing the alleged balance due it under the subcontract. Respondent filed a Motion to
Dismiss, alleging that the Complaint was premature, due to the absence of prior recourse to arbitration.
RTC denied the Motion on the ground that the dispute did not involve the interpretation or the
implementation of the Agreement and was not covered by the arbitral clause and ruled in favor of the
petitioner. Respondent appealed to the CA, the latter reversed the decision of the RTC and ordered the
referral of the case to arbitration. Hence, this Petition.

ISSUE:
WON there is a need for the prior arbitration before filing of the complaint with the court.

HELD:
YES.
SC ruled that in the case at hand it involves technical discrepancies that are better left to an arbitral
body that has expertise in the subject matter. Moreover, the agreement between the parties contains
arbitral clause that “any dispute or conflict as regards to interpretation and implementation of this
agreement which cannot be settled between respondent and petitioner amicably shall be settled by means
of arbitration”. The resolution of the dispute between the parties herein requires a referral to the provisions
of their agreement. Within the scope of the arbitration clause are discrepancies as to the amount of
advances and billable accomplishments, the application of the provision on termination, and the
consequent set-off of expenses.
With respect to the disputes on the take-over/termination and the expenses incurred by respondent in the
take-over, the SC ruled that the agreement provides specific provisions that any delay, expenses and any
other acts in violation to such agreement, the respondent can terminate and can set off the amount it
incurred in the completion of the contract.
SC tackled also that there’s no need for the prior request for arbitration by the parties with the
Construction Industry Arbitration Commission (CIAC) in order for it to acquire jurisdiction. Because
pursuant to Section 1 of Article III of the new Rules of Procedure Governing Construction Arbitration,
when a contract contains a clause for the submission of a future controversy to arbitration, it is not
necessary for the parties to enter into a submission agreement before the claimant may invoke the
jurisdiction of CIAC. Furthermore, the arbitral clause in the agreement is a commitment on the part of the
parties to submit to arbitration the disputes covered therein. Because that clause is binding, they are
expected to abide by it in good faith.
Since a complaint with the RTC has been filed without prior recourse to arbitration, under RA 876
(Arbitration Law) the proper procedure is to request the stay or suspension of such action in order to settle
the dispute with the CIAC.
The inclusion of an arbitration clause in a contract does not ipso facto divest the courts of
jurisdiction to pass upon the findings of arbitral bodies, because the awards are still judicially reviewable
under certain conditions. Being an inexpensive, speedy and amicable method of settling disputes,
arbitration—along with mediation, conciliation and negotiation—is encouraged by the Supreme Court;
Arbitration is regarded as the “wave of the future” in international civil and commercial disputes; Consistent
with the policy of encouraging alternative dispute resolution methods, courts should liberally construe
arbitration clauses.
Construction Industry Arbitration Commission (CIAC); Recourse to the CIAC may now be availed of
whenever a contract “contains a clause for the submission of a future controversy to arbitration. In this
wise: “SECTION 1. Submission to CIAC Jurisdiction.—An arbitration clause in a construction contract or a
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submission to arbitration of a construction dispute shall be deemed an agreement to submit an existing or


future controversy to CIAC jurisdiction, notwithstanding the reference to a different arbitration institution or
arbitral body in such contract or submission. When a contract contains a clause for the submission of a
future controversy to arbitration, it is not necessary for the parties to enter into a submission agreement
before the claimant may invoke the jurisdiction of CIAC.” The foregoing amendments in the Rules were
formalized by CIAC Resolution Nos. 2-91 and 3-93.

G.R. No. 220546. December 7, 2016 Luzon Iron Development Group Corporation vs.Bridestone
Mining and Development Corporation

Facts:
Respondents Bridestone Mining and Development Corporation (Bridestone) and Anaconda Mining
and Development Corporation (Anaconda) filed separate complaints before the RTC for rescission of
contract and damages against petitioners Luzon Iron Development Group Corporation (Luzon Iron) and
Consolidated Iron Sands, Ltd. (Consolidated Iron). Both complaints sought the rescission of the Tenement
Partnership and Acquisition Agreement (TPAA) entered into by both petitioner and respondent for the
assignment of the Exploration Permit Application of the former in favor of the latter. The complaints also
sought the return of the Exploration Permits to Bridestone and Anaconda. Petitioner filed a motion to
dismiss, they contended that the RTC could not acquire jurisdiction over Consolidated Iron because it was
a foreign corporation that had never transacted business in the Philippines. Petitioner further alleged that
respondents are guilty of forum shopping by filing a case with the RTC and the DENR. On the other hand,
respondents asserted that the trial court had jurisdiction over the complaints because the TPAA itself
allowed a direct resort before the courts in exceptional circumstances. They cited paragraph 14.8 thereof
as basis explaining that when a direct and/or blatant violation of the TPAA had been committed, a party
could go directly to the courts. RTC ruled in favor of respondents which was later upheld by the CA.

Issue:
1) Whether or not the filing of complaints before the RTC and before the DENR constitutes forum shopping;
2) Whether or not summons were validly served to petitioners.

Held:
1) Yes. The following are the elements of forum shopping: (a) identity of parties, or at least such
parties representing the same interests in both actions; (b) identity of rights asserted and reliefs
prayed for, the relief being founded on the same facts; and (c) the identity of the two preceding
particulars, such that any judgment rendered in the other action will, regardless of which party is
successful, amounts to res judicata in the action under consideration. All the above-stated elements
are present in the case at bench. Both complaints filed before different fora involved similar facts
and issues. Thus, the filing of two separate complaints by the petitioners with the RTC and the
DENR clearly constitutes forum shopping. Them very evil which the prohibition against forum
shopping sought to prevent had happened—the RTC and the DENR had rendered conflicting
decisions.
2) No. In the case at bench, it is crystal clear that Consolidated Iron transacted business in the
Philippines as it was a signatory in the TPAA that was executed in Makati. Hence, as the
respondents argued, it may be served with the summons in accordance with the modes provided
under Section 12, Rule 14 of the Rules of Court. The Court finds that Consolidated Iron was not
properly served with summons through any of the possible modes under the Rules of Court. Indeed,
Consolidated Iron was served with summons through Luzon Iron. Such service of summons,
however, was defective. It is undisputed that Luzon Iron was never registered before the Securities
and Exchange Commission (SEC) as Consolidated Iron's resident agent. Thus, the service of
summons to Consolidated Iron throughLuzon Iron cannot be deemed a service to a resident agent
under the first mode of service. The dismissal of the complaints before the RTC was warranted.
—A reading of the complaints filed before the RTC and the DENR reveals that they had almost identical
causes of action and they prayed for similar reliefs as they ultimately sought the return of their respective
Exploration Permit on the ground of the alleged violations of the TPAA committed by the petitioners. In Yap
v. Chua, 672 SCRA 419 (2012), the Court ruled that identity of causes of action did not mean absolute
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identity. Hornbook is the rule that identity of causes of action does not mean absolute identity; otherwise, a
party could easily escape the operation of res judicata by changing the form of the action or the relief
sought. The test to determine whether the causes of action are identical is to ascertain whether the
same evidence will sustain both actions, or whether there is an identity in the facts essential to the
maintenance of the two actions. If the same facts or evidence would sustain both, the two actions
are considered the same, and a judgment in the first case is a bar to the subsequent action.
The petitioners’ failure to refer the case for arbitration, however, does not render the arbitration clause in
the TPAA inoperative. In Koppel, Inc. v. Makati Rotary Club Foundation, Inc. (Koppel), 705 SCRA 142
(2013), the Court explained that an arbitration clause becomes operative, notwithstanding the lack of a
formal request, when a party has appraised the trial court of the existence of an arbitration clause, viz.:
x x x The operation of the arbitration clause in this case is not at all defeated by the failure of the petitioner
to file a formal “request” or application therefor with the MeTC. We find that the filing of a “request” pursuant
to Section 24 of R.A. No. 9285 is not the sole means by which an arbitration clause may be validly invoked
in a pending suit.
Generally, the action of the court is stayed if the matter raised before it is subject arbitration. In the case at
bench, however, the complaints filed before the RTC should have been dismissed considering that the
petitioners were able to establish the ground for their dismissal, that is, violating the prohibition on forum
shopping. The parties, nevertheless, are directed to initiate arbitration proceedings as provided under
Paragraph 15.1 of the TPAA.
G.R. No. 196072. September 20, 2017 Steamship Mutual Underwriting Association(Bermuda)
Limited vs. Sulpicio Lines, Inc.

Petition for Review on Certiorari; A Rule 45 petition is the proper remedy to reverse a decision or resolution
of the Court of Appeals (CA) even if the error assigned is grave abuse of discretion in the findings of fact or
of law. Under Rule 45 of the Rules of Court, a petition for review must be verified and must contain a sworn
certification against forum shopping.
In domestic arbitration, the formal requirements of an arbitration agreement are that it must “be in
writing and subscribed by the party sought to be charged, or by his lawful agent.” In international
commercial arbitration, it is likewise required that the arbitration agreement must be in writing.—The Court
of Appeals ruled that the arbitration agreement in the 2005/2006 Club Rules is not valid because it was not
signed by the parties. In domestic arbitration, the formal requirements of an arbitration agreement are that it
must “be in writing and subscribed by the party sought to be charged, or by his lawful agent.” In
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 signed by the parties, (2) in an
exchange of letters, telex, telegrams or other means of 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 and not denied by another. The reference in a contract to a document
containing an arbitration clause constitutes an arbitration agreement provided, that the contract is in writing
and the reference is such as to make that clause part of the contract.
An arbitration agreement that was not embodied in the main agreement but set forth in another
document is binding upon the parties, where the document was incorporated by reference to the main
agreement. The arbitration agreement contained in the Club Rules, which in turn was referred to in the
Certificate of Entry and Acceptance, is binding upon Sulpicio even though there was no specific stipulation
on dispute resolution in this Certificate. Furthermore, as stated earlier, Sulpicio became a member of
Steamship by the very act of making a contract of insurance with it. The Certificate of Entry and
Acceptance issued by Steamship states that “[its] name has been entered in the Register of Members of
the Club as a Member.” Sulpicio admits its membership and the entry of its vessels to Steamship.
“[A] party is not relieved of the duty to exercise the ordinary care and prudence that would be
exacted in relation to other contracts. The conformity of the insured to the terms of the policy is implied from
[its] failure to express any disagreement with what is provided for.” The agreement to submit all disputes to
arbitration is a long standing provision in the Club Rules. It was incumbent upon Sulpicio to familiarize itself
with the Club Rules, under the presumption that a person takes due care of its concerns. Being a member
of Steamship for 20 years, it has been bound by its Rules and has been expected to abide by them in good
faith.
Sulpicio is estopped from denying knowledge of the Rulebook by its own acts and representations,
as evidenced by its various letters to Steamship, showing its familiarity with the Rulebook and its
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provisions. “In estoppel, a person, who by his [or her] deed or conduct has induced another to act in a
particular manner, is barred from adopting an inconsistent position, attitude or course of conduct that
thereby causes loss or injury to another.” It further bars a party from denying or disproving a fact, which has
become settled by its acts. Hence, this Court finds a preponderance of evidence showing that Sulpicio was
given a copy and had knowledge of the 2005/2006 Club Rules. Moreover, the 2005/2006 Club Rules’
provision on arbitration is valid and binding upon Sulpicio.
The present rule on multiple parties manifests due regard to the policy of the law in favor of
arbitration. In light of the express mandate of Republic Act No. 9285 and the subsequent 2009 Special ADR
Rules, this Court’s ruling in European Resources and Technologies, Inc. v. Ingenieuburo Birkhann + Nolte,
Ingeniurgesellschaft mbh, 435 SCRA 246 (2004), is deemed abrogated.
Where a motion is filed in court for the referral of a dispute to arbitration, Section 24 of Republic Act
No. 9285 ordains that the dispute shall be referred “to arbitration unless it finds that the arbitration
agreement is null and void, inoperative or incapable of being performed.” Thus, the Regional Trial Court
went beyond its authority of determining only the issue of whether or not there was a valid arbitration
agreement between the parties when it denied Steamship’s Motion to Dismiss and/or to Refer Case to
Arbitration solely on the ground that it would not be the most prudent action under the circumstances of the
case. The Regional Trial Court went against the express mandate of Republic Act No. 9285. Consequently,
the Court of Appeals erred in finding no grave abuse of discretion on the part of the trial court in denying
referral to arbitration.

G.R. No. 179732. September 13, 2017 Department of Public Works and Highways vs.
CMC/Monark/Pacific/Hi-Tri Joint Venture

FACTS:
 April 29, 1999: Republic of the Philippines, through the Department of Public Works and Highways
(DPWH), and CMC/Monark/Pacific/Hi-Tri J.V. (the Joint Venture) executed "Contract Agreement for
the Construction of Contract Package 6MI-9, Pagadian-Buug Section, Zamboanga del Sur, Sixth
Road Project, Road Improvement Component Loan No. 1473-PHI"
 October 23, 2002: the Joint Venture's truck and equipment were set on fire.
 March 11, 2003: a bomb exploded at Joint Venture's hatching 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.
 The Joint Venture made several written demands for extension and payment of the foreign
component of the Contract. There were efforts between the parties to settle the unpaid Payment
Certificates amounting to P26,737,029.49. Thus, only the foreign component of US$358,227.95 was
up for negotiations subject to further reduction of the amount on account of payments subsequently
received by the Joint Venture from DPWH.
 In a letter dated September 18, 2003, BCEOM French Engineering Consultants recommended that
DPWH promptly pay the outstanding monies due the Joint Venture. The letter also stated that the
actual volume of the Joint Venture's accomplishment was "2,732m2 of hardrock and 4,444m3 of
rippable rock," making the project 80% complete when it was halted.
 March 3, 2004: the Joint Venture filed a Complaint against DPWH before CIAC.
 July 8, 2004: Meanwhile, the Joint Venture sent a "Notice of Mutual Termination of Contract", to
DPWH requesting for a mutual termination of the contract subject of the arbitration case.
 July 16, 2004: then DPWH Acting Secretary Florante Soriquez accepted the Joint Venture's request
for mutual termination of the contract.
 March 1, 2005: CIAC promulgated an Award directing DPWH to pay the Joint Venture its money
claims plus legal interest. CIAC, however, denied the Joint Venture's claim for price adjustment due
to 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."
 DPWH and the Joint Venture filed their respective petitions for review before the Court of Appeals.
 The Court of Appeals in its Decision dated September 20, 2007, sustained CIAC's Award with
certain modifications and remanded the case to CIAC for the determination of the number of days'
extension that the Joint Venture is entitled to.

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 The Court of Appeals held that CIAC did not commit reversible error in not awarding the price
adjustment sought by the Joint Venture under Presidential Decree No. 1594.
 The Court of Appeals also held that CIAC did not err in not awarding actual damages in the form of
interest at the rate of 24%. However, the Court of Appeals ruled that CIAC was correct when it
awarded legal interest.
 The Court of Appeals sustained the Joint Venture's argument on the non-inclusion of a clear finding
of its entitlement to time extensions in the dispositive portion of the CIAC Award.
 Petitioner DPWH filed the present Petition for Review assailing the Court of Appeals Decision.

ISSUE:
Whether or not the Court of Appeals gravely erred in rendering the assailed decision because it
completely ignored, overlooked, or misappreciated facts of substance, which, if duly considered, would
materially affect the outcome of the case.

HELD:

1) No. CA did not gravely err in rendering the assailed decision because as a general rule,
findings of fact of CIAC, a quasi-judicial tribunal which has expertise on matters regarding
the construction industry, should be respected and upheld.
In distinguishing between commercial arbitration, voluntary arbitration under Article 219(14) of the Labor
Code, and construction arbitration, Freuhauf Electronics Philippines Corporation v. Technology Electronics
Assembly and Management Pacific ruled that commercial arbitral tribunals are purely ad hoc bodies
operating through contractual consent, hence, they are not quasi-judicial agencies. In contrast, voluntary
arbitration under the Labor Code and construction arbitration derive their authority from statute in
recognition of the public interest inherent in their respective spheres. Furthermore, voluntary arbitration
under the Labor Code and construction arbitration exist independently of the will of the contracting parties.
—CIAC was created under Executive Order No. 1008, or the “Construction Industry Arbitration Law.” It was
originally under the administrative supervision of the Philip pine Domestic Construction Board which, in
turn, was an imple- menting agency of the Construction Industry Authority of the Philip pines. The
Construction Industry Authority of the Philippines is presently a part of the Department of Trade and
Industry as an attached agency. CIAC’s specific purpose is the “early and expedi tious settlement of
disputes” in the construction industry as a recog nition of the industry’s role in “the furtherance of national
development goals.”
As a general rule, findings of fact of CIAC, a quasi-judicial tribunal which has expertise on matters
regarding the construction industry, should be respected and upheld. In National Housing Authority v. First
United Constructors Corp., 657 SCRA 175 (2011), this Court held that CIAC’s factual findings, as affirmed
by the Court of Appeals, will not be overturned except as to the most compelling of reasons: As this finding
of fact by the CIAC was affirmed by the Court of Appeals, and it being apparent that the CIAC arrived at
said finding after a thorough consideration of the evidence presented by both parties, the same may no
longer be reviewed by this Court. The all too familiar rule is that the Court will not, in a petition for review on
certiorari, entertain matters factual in nature, save for the most compelling and cogent reasons, like when
such factual findings were drawn from a vacuum or arbitrarily reached, or are grounded entirely on
speculation or conjectures, are conflicting or are premised on the supposed evidence and contradicted by
the evidence on record or when the inference made is manifestly mistaken or absurd. This conclusion is
made more compelling by the fact that the CIAC is a quasi-judicial body whose jurisdiction is confined to
construction disputes. Indeed, settled is the rule that findings of fact of administrative agencies and quasi-
judicial bodies, which have acquired expertise because their jurisdiction is confined to specific matters, are
generally accorded not only respect, but finality when affirmed by the Court of Appeals.
—In distinguishing between commercial arbitration, voluntary arbitration under Article 219(14) of the Labor
Code, and construction arbitration, Freuhauf Electronics Philippines Corporation v. Technology Electronics
Assembly and Management Pacific, 810 SCRA 280 (2016), ruled that commercial arbitral tribu nals are
purely ad hoc bodies operating through contractual consent, hence, they are not quasi-judicial agencies. In
contrast, voluntary arbitration under the Labor Code and construction arbitration derive their authority from
statute in recognition of the public interest inherent in their respective spheres. Furthermore, voluntary
arbitra tion under the Labor Code and construction arbitration exist inde pendently of the will of the
contracting parties: Voluntary Arbitrators resolve labor disputes and grievances arising from the
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interpretation of Collective Bargaining Agreements. These disputes were specifically excluded from the
coverage of both the Arbitration Law and the ADR Law. Unlike purely commercial relationships, the
relationship between capital and labor are heavily impressed with public interest. Because of this, Voluntary
Arbitrators authorized to resolve labor disputes have been clothed with quasi-judicial authority. On the other
hand, commercial relationships covered by our commercial arbitration laws are purely private and
contractual in nature. Unlike labor relationships, they do not possess the same compelling state interest
that would justify state interference into the autonomy of contracts. Hence, commercial arbitration is a
purely private system of adjudication facilitated by private citizens instead of government instrumentalities
wielding quasi-judicial powers. Moreover, judicial or quasi-judicial jurisdiction cannot be conferred upon a
tribunal by the parties alone. The Labor Code itself confers subject-matter jurisdiction to Voluntary
Arbitrators. Notably, the other arbitration body listed in Rule 43 — the Construction Industry Arbitration
Commission (CIAC) — is also a government agency attached to the Department of Trade and Industry. Its
jurisdiction is likewise conferred by statute. By contrast, the subject matter jurisdiction of commercial
arbitrators is stipulated by the parties.

G.R. No. 173137. January 11, 2016 Bases Conversion Development Authority vs. DMCI Project
Developers, Inc.
Principle:
Arbitration is a mode of settling disputes between parties. Like many alternative dispute resolution
processes, it is a product of the meeting of minds of parties submitting a predefined set of disputes. They
agree among themselves to a process of dispute resolution that avoids extended litigation. The state
adopts a policy in favor of arbitration. Republic Act No. 9285 expresses this policy: SEC. 2. Declaration of
Policy.—It is hereby declared the policy of the State to actively promote party autonomy in the resolution of
disputes or the freedom of the parties to make their own arrangements to resolve their disputes. Towards
this end, the State shall encourage and actively promote the use of Alternative Dispute Resolution (ADR)
as an important means to achieve speedy and impartial justice and declog court dockets. As such, the
State shall provide means for the use of ADR as an efficient tool and an alternative procedure for the
resolution of appropriate cases. Likewise, the State shall enlist active private sector participation in the
settlement of disputes through ADR. This Act shall be without prejudice to the adoption by the Supreme
Court of any ADR system, such as mediation, conciliation, arbitration, or any combination thereof as a
means of achieving speedy and efficient means of resolving cases pending before all courts in the
Philippines which shall be governed by such rules as the Supreme Court may approve from time to time.
There is no rule that a contract should be contained in a single document. A whole contract may be
contained in several documents that are consistent with one other. Moreover, at any time during the lifetime
of an agreement, circumstances may arise that may cause the parties to change or add to the terms they
previously agreed upon. Thus, amendments or supplements to the agreement may be executed by
contracting parties to address the circumstances or issues that arise while a contract subsists.
When an agreement is amended, some provisions are changed. Certain parts or provisions may be added,
removed, or corrected. These changes may cause effects that are inconsistent with the wordings of the
contract before the changes were applied. In that case, the old provisions shall be deemed to have lost
their force and effect, while the changes shall be deemed to have taken effect. Provisions that are not
affected by the changes usually remain effective. —When a contract is supplemented, new provisions that
are not inconsistent with the old provisions are added. The nature, scope, and terms and conditions are
expanded. In that case, the old and the new provisions form part of the contract.
—Assignment involves the transfer of rights after the perfection of a contract. Nomination pertains to the act
of naming the party with whom it has a relationship of trust or agency. In Philippine Coconut Producers
Federation, Inc. (COCOFED) v. Republic, 663 SCRA 514 (2012), this court defined “nominee” as follows: In
its most common signification, the term “nominee’’ refers to one who is designated to act for another
usually in a limited way; a person in whose name a stock or bond certificate is registered but who is not the
actual owner thereof is considered a nominee.” Corpus Juris Secundum describes a nominee as one: “. . .
designated to act for another as his representative in a rather limited sense. It has no connotation,
however, other than that of acting for another, in representation of another or as the grantee of another. In
its commonly accepted meaning the term connoted the delegation of authority to the nominee in a
representative or nominal capacity only, and does not connote the transfer or assignment to the nominee of
any property in, or ownership of, the rights of the person nominating him.” Contrary to BCDA and Northrail’s
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position, therefore, the agreement’s prohibition against transfers, conveyance, and assignment of rights
without the consent of the other party does not apply to nomination.
—There is, therefore, merit to DMCI-PDI’s argument that if the Civil Code gives third party beneficiaries to a
contract the right to demand the contract’s fulfillment in its favor, the reverse should also be true. A
beneficiary who communicated his or her acceptance to the terms of the agreement before its revocation
may be compelled to abide by the terms of an agreement, including the arbitration clause. In this case,
Northrail is deemed to have communicated its acceptance of the terms of the agreements when it accepted
D.M. Consunji, Inc.’s funds.

G.R. No. 204197. November 23, 2016 Fruehauf Electronics Philippines Corporation vs. Technology
Electronics Assembly and Management Pacific Corporation

Arbitration is an alternative mode of dispute resolution outside of the regular court system. Although
adversarial in character, arbitration is technically not litigation. It is a voluntary process in which one or
more arbitrators — appointed according to the parties’ agreement or according to the applicable rules of the
Alternative Dispute Resolution (ADR) Law — resolve a dispute by rendering an award.
Resort to arbitration is voluntary. It requires consent from both parties in the form of an arbitration clause
that preexisted the dispute or a sub sequent submission agreement. This written arbitration agreement is
an independent and legally enforceable contract that must be complied with in good faith. By entering into
an arbitration agreement, the parties agree to submit their dispute to an arbitrator (or tribunal) of their own
choosing and be bound by the latter’s resolution.
However, this contractual and consensual character means that the parties cannot implead a third party in
the proceedings even if the latter’s participation is necessary for a complete settlement of the dispute. The
tribunal does not have the power to compel a person to participate in the arbitration proceedings without
that person’s consent. It also has no authority to decide on issues that the parties did not submit (or agree
to submit) for its resolution.
As a purely private mode of dispute resolution, arbitration proceedings, including the records, the evidence,
and the arbitral award, are confidential unlike court proceedings which are generally public. This allows the
parties to avoid negative publicity and protect their privacy.
The contractual nature of arbitral proceedings affords the parties substantial autonomy over the
proceedings. The parties are free to agree on the procedure to be observed during the proceedings. This
lends considerable flexibility to arbitration proceedings as compared to court litigation governed by the
Rules of Court.
The parties likewise appoint the arbitrators based on agreement. There are no other legal requirements as
to the competence or technical qualifications of an arbitrator. Their only legal qualifications are: (1) being of
legal age; (2) full enjoyment of their civil rights; and (3) the ability to read and write. The parties can tailor-fit
the tribunal’s composition to the nature of their dispute.
The errors of an arbitral tribunal are not subject to correction by the judiciary. As a private alternative to
court proceedings, arbitration is meant to be an end, not the beginning, of litigation. Thus, the arbitral award
is final and binding on the parties by reason of their contract — the arbitration agreement.
FACTS:
In 1978, Fruehauf Electronics Philippines Corp. (Fruehauf) leased several parcels of land in Pasig City to
Signetics Filipinas Corporation (Signetics) for a period of 25 years (until May 28, 2003). Signetics
constructed a semiconductor assembly factory on the land on its own account.
In 1983, Signetics ceased its operations and in 1986, Team Holdings Limited (THL) bought Signetics. THL
later changed its name to Technology Electronics Assembly and Management Pacific Corp. (TEAM)
In March 1987, Fruehauf filed an unlawful detainer case against TEAM. In an effort to amicably settle the
dispute, both parties executed a Memorandum of Agreement (MOA) where TEAM undertook to pay
Fruehauf 14.7 million pesos as unpaid rent (for the period of December 1986 to June 1988).
They also entered a 15-year lease contract4 (expiring on June 9, 2003) that was renewable for another 25
years upon mutual agreement. The contract included an arbitration agreement:5
TEAM subleased the property to Capitol Publishing House (Capitol) on December 2, 1996 after notifying
Fruehauf.

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On May 2003, TEAM informed Fruehauf that it would not be renewing the lease. On May 31, 2003, the
sublease between TEAM and Capitol expired. However, Capitol only vacated the premises on March 5,
2005. In the meantime, the master lease between TEAM and Fruehauf expired on June 9, 2003.
Fruehauf instituted SPProc. No. 11449 before the Regional Trial Court (RTC) for "Submission of an
Existing Controversy for Arbitration”. The RTC granted the petition and directed the parties to comply with
the arbitration clause of the contract.
On December 3, 2008, the arbitral tribunal awarded Fruehauf: (1) 8.2 million pesos as (the balance of)
unpaid rent from June 9, 2003 until March 5, 2005; and (2) 46.8 million pesos as damages.
TEAM moved for reconsideration which the tribunal denied. Thus, TEAM petitioned the RTC to partially
vacate or modify the arbitral award. It argued that the tribunal failed to properly appreciate the facts and the
terms of the lease contract.
On April 29, 2009, the RTC found insufficient legal grounds under Sections 24 and 25 of the Arbitration Law
to modify or vacate the award. It denied the petition and CONFIRMED, the arbitral award. TEAM filed a
Notice of Appeal.
The CA reversed and set aside the arbitral award and dismissed the arbitral complaint for lack of merit.

ISSUE:
Whether or not an arbitral award is appealable or be subject for a petition for certiorari.

RULING:
NO.
The right to an appeal is neither' a natural right nor an indispensable component of due 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 from the arbitral award. The statutory
absence of an appeal mechanism reflects the State's policy of upholding the autonomy of arbitration
proceedings and their corresponding arbitral awards.

G.R. No. 174938. October 1, 2014 Lanuza, Jr. vs. BF Corporation

FACTS:

BF Corporation entered into agreements with Shangri-La wherein it undertook to construct for Shangri-La a
mall and a multilevel parking structure along EDSA.

When Shangri-La started defaulting in payment, Shangri-La induced BF Corporation to continue with the
construction of the buildings using its own funds and credit. According to BF Corporation, ShangriLa
misrepresented that it had funds to pay for its obligations with BF Corporation.

BF Corporation eventually completed the construction of the buildings. Shangri-La allegedly took
possession of the buildings while still owing BF Corporation an outstanding balance.

BF Corporation filed a collection complaint Shangri-La and the members of its board of directors. BF
Corporation alleged that despite repeated demands, Shangri-La refused to pay the balance owed to it.

Shangri-La, et al. filed a motion to suspend the proceedings in view of BF Corporation’s failure to submit its
dispute to arbitration, in accordance with the arbitration clause provided in its contract. The RTC denied
the motion to suspend proceedings.

Shangri-La, et al. filed a petition for certiorari with the CA.

The CA granted the petition for certiorari and ordered the submission of the dispute to arbitration.

Hence, this petition.

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Petitioners argue that they cannot be held personally liable for corporate acts or obligations, and that they
are third parties to the contract between BF Corporation and Shangri-La. Provisions including arbitration
stipulations should bind only the parties. Based on our arbitration laws, parties who are strangers to an
agreement cannot be compelled to arbitrate.

ISSUE:

Whether petitioners should be made parties to the arbitration proceedings, pursuant to the arbitration
clause provided in the contract between BF Corporation and Shangri-La.

RULING:

The petition must fail.

Corporate representatives may be compelled to submit to arbitration proceedings pursuant to a contract


entered into by the corporation they represent if there are allegations of bad faith or malice in their acts
representing the corporation.

This jurisdiction adopts a policy in favor of arbitration. Arbitration allows the parties to avoid litigation and
settle disputes amicably and more expeditiously by themselves and through their choice of arbitrators. The
policy in favor of arbitration has been affirmed in our Civil Code, which was approved as early as 1949. It
was later institutionalized by the approval of Republic Act No. 876, which expressly authorized, made valid,
enforceable, and irrevocable parties’ decision to submit their controversies, including incidental issues, to
arbitration.
In view of our policy to adopt arbitration as a manner of settling disputes, arbitration clauses are liber ally
construed to favor arbitration. Thus, in LM Power Engineering Corporation v. Capitol Industrial Construction
Groups, Inc., 399 SCRA 562 (2003), this court said: Being an inexpensive, speedy and amicable method of
settling disputes, arbitration — along with mediation, conciliation and negotiation is encouraged by the
Supreme Court. Aside from unclogging judicial dockets, arbitration also hastens the resolution of disputes,
especially of the commercial kind. It is thus regarded as the “wave of the future” in international civil and
commercial disputes. Brushing aside a contractual agreement calling for arbitration between the parties
would be a step backward. Consistent with the above mentioned policy of encouraging alternative dispute
resolution methods, courts should liberally construe arbitration clauses. Provided such clause is susceptible
of an interpretation that covers the asserted dispute, an order to arbitrate should be granted. Any doubt
should be resolved in favor of arbitration.
If there is an interpretation that would render effective an arbitration clause for purposes of avoiding
litigation and expediting resolution of the dispute, that interpretation shall be adopted. Petitioners’ main
argument arises from the separate personality given to juridical persons vis-à-vis their directors, officers,
stockholders, and agents. Since they did not sign the arbitration agreement in any capacity, they cannot be
forced to submit to the jurisdiction of the Arbitration Tribunal in accordance with the arbitration agreement.
Moreover, they had already resigned as directors of Shangri-La at the time of the alleged default.
—If there is an interpretation that would render effective an arbitration clause for purposes of avoiding
litigation and expediting resolution of the dispute, that interpretation shall be adopted. Petitioners’ main
argument arises from the separate personality given to juridical persons vis-à-vis their directors, officers,
stockholders, and agents. Since they did not sign the arbitration agreement in any capacity, they cannot be
forced to submit to the jurisdiction of the Arbitration Tribunal in accordance with the arbitration agreement.
Moreover, they had already resigned as directors of Shangri-La at the time of the alleged default.

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