Alternative Dispute Resolution Digests, Arbues 2019
G.R. No. 212081 February 23, 2015
DENR v UNITED PLANNERS CONSULTANTS , INC. (UPCI)
Facts:
Under the Consultancy Agreement, petitioner committed to pay a total
contract price of ₱4M, based on a predetermined percent corresponding to the
stage of work accomplished. Respondent completed the work required. However,
petitioner was able to pay only 47% of the total contract price.
Respondent instituted a Complaint against petitioner before the RTC
QC. Upon motion of respondent, the case was subsequently referred to
arbitration pursuant to the arbitration clause of the Consultancy Agreement,
which petitioner did not oppose.
The Arbitral Tribunal rendered its Award in favor of respondent.
Petitioner filed MR, which the Arbitral Tribunal merely noted without any
action, claiming that it had already lost jurisdiction over the case after it had
submitted to the RTC its Report together with a copy of the Arbitral Award.
Petitioner filed before the RTC MR, asserting that it was denied due process
when the Arbitral Tribunal merely noted its MR. Respondent moved for the
confirmation of the Award in accordance with Special ADR Rules. RTC
confirmed the Arbitral Award pursuant to Rule 11.2 (A) of the Special ADR
Rules. No MR filed by petitioner. Respondent moved for the issuance of a writ
of execution. Petitioner did not oppose. RTC granted respondent’s motion.
Petitioner moved to quash the writ of execution. Motion to quash denied. Special
civil action for certiorari filed with CA.
CA dismissed the certiorari petition on 2 grounds, namely: (a) the
petition essentially assailed the merits of the Arbitral Award which is prohibited
under Rule 19.7 of the Special ADR Rules; and (b) the petition was filed out of
time, having been filed way beyond 15 days from notice of the RTC’s Order, in
violation of Rule 19.28 in relation to Rule 19.8 of said Rules which provide that
a special civil action for certiorari must be filed before the CA within 15 days
from notice of the judgment sought to be annulled.
Petitioner asserts that its petition is not covered by the Special ADR
Rules (particularly, Rule 19.28 on the 15-day reglementary period) but by Rule
65 of the Rules of Court (particularly, Section 4 thereof on the 60-day
reglementary, which it claimed to have suppletory application in arbitration
proceedings since the Special ADR Rules do not explicitly provide for a
procedure on execution.
1
Issue:
WON the Special ADR Rules is applicable in execution.
Held: Yes.
RA 9285, otherwise known as the ADR Act of 2004," institutionalized
the use of an ADR System in the Philippines. The Act, however, was without
prejudice to the adoption by the Supreme Court of any ADR system as a means
of achieving speedy and efficient means of resolving cases pending before all
courts in the Philippines. Accordingly, A.M. No. 07-11-08-SC was created
setting forth the Special ADR Rules that shall govern the procedure to be
followed by the courts whenever judicial intervention is sought in ADR
proceedings in specific cases where it is allowed.
Special ADR Rules do not automatically govern the arbitration
proceedings itself. A pivotal feature of arbitration as an alternative mode of
dispute resolution is that it is a product of the freedom of the parties to make their
own arrangements to resolve their own disputes. Thus, Rule 2.3 of the Special
ADR Rules explicitly provides that "parties are free to agree on the procedure to
be followed in the conduct of arbitral proceedings. Failing such agreement, the
arbitral tribunal may conduct arbitration in the manner it considers appropriate.
In the case at bar, the Consultancy Agreement contained an arbitration clause.
Hence, respondent, after it filed its complaint, moved for its referral to arbitration
which was not objected to by petitioner. By its referral to arbitration, the case fell
within the coverage of the Special ADR Rules.
While it appears that the Special ADR Rules remain silent on the
procedure for the execution of a confirmed arbitral award, it is the Court’s
considered view that the Rules’ procedural mechanisms cover not only aspects
of confirmation but necessarily extend to a confirmed award’s execution in light
of the doctrine of necessary implication which states that every statutory grant of
power, right or privilege is deemed to include all incidental power, right or
privilege.
No statute can be enacted that can provide all the details involved in its
application. One of the rules of statutory construction used to fill in the gap is the
doctrine of necessary implication. The doctrine states that what is implied in a
statute is as much a part thereof as that which is expressed. Every statute is
understood, by implication, to contain all such provisions as may be necessary to
effectuate its object and purpose, or to make effective rights, powers, privileges
or jurisdiction which it grants, including all subsidiary consequences as may be
fairly and logically inferred . In eo plus sit, simper inest et minus.
 Alternative Dispute Resolution Digests, Arbues 2019
G.R. No. 178042 October 9, 2013
CARGILL PHILIPPINES v SAN FERNANDO REGALA
Facts:
Respondent filed with the RTC Makati a Complaint for Rescission of
Contract against petitioner Cargill. It alleged that it agreed that it would purchase
from Cargill 12k metric tons of molasses. Cargill failed to comply with its
obligations. The respondent then filed for rescission. The petitioner filed a
Motion to Dismiss/Suspend proceeding, arguing that they must first resort to
arbitration as stated in their agreement before going to court. RTC ruled in favor
of the respondent. CA affirmed, adding that the case cannot be brought under the
Arbitration Law for the purpose of suspending the proceedings before the RTC,
since in its 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 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 trial.
Issue:
WON the validity of the contract affects the validity of the Arbitration
Clause found in such contract.
Held: No.
A contract is required for arbitration to take place and to be binding.
Submission to arbitration is a contract and a clause in a contract providing that
all matters in dispute between the parties shall be referred to arbitration is a
contract. The provision to submit to arbitration any dispute arising therefrom and
the relationship of the parties is part of the contract and is itself a contract.
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 to be treated as a separate agreement and the arbitration
agreement does not automatically terminate when the contract of which it is a
part comes to an end. The separability of the arbitration agreement is especially
significant to the determination of whether the invalidity of the main contract
also nullifies the arbitration clause. Indeed, the doctrine denotes that the
invalidity of the main contract, also referred to as the "container" contract, does
not affect the validity of the arbitration agreement. Irrespective of the fact that
the main contract is invalid, the arbitration clause/agreement still remains valid
and enforceable.
2
G.R. No. L-21549 October 22, 1924
TEODORO VEGA v SAN CARLOS MILLING
Facts:
This action is for the recovery of 32k kilos of centrifugal sugar, or its
value, P6k. CFI of Negros ruled in favor of Vega. The defendant company
appealed from this judgment, and alleges that the lower court erred in having
held itself with jurisdiction to take cognizance of and render judgment in the
cause.
The assignment of error is based on clause 23 of the Mill's covenants
and clause 14 of the Planter's Said clauses are as follows:
23. That it (the Mill — Party of the first part) will submit and all differences that
may arise between the Mill and the Planters to the decision of arbitrators
xxx xxx xxx
14. That they (the Planters--Parties of the second part) will submit any and all
differences that may arise between the parties of the first part and the parties of the second
part of the decision of arbitrators.
Defendant contends that as such stipulations on arbitration are valid,
they constitute a condition precedent, to which the plaintiff should have resorted
before applying to the courts, as he prematurely did.
Issue:
WON Arbitration was a condition precedent.
Held: No.
An agreement to submit to arbitration, not consummated by an award,
is no bar to suit at law or in equity concerning the subject matter submitted. And
the rule applies both in respect of agreements to submit existing differences and
agreements to submit differences which may arise in the future.
The expression "subject to the provisions as to arbitration, hereinbefore
appearing" does not declare such to be a condition precedent. This phrase does
not read "subject to the arbitration," but "subject to the provisions as to arbitration
hereinbefore appearing." And, which are these "provisions as to arbitration
hereinbefore appearing?" Undoubtedly clauses 23 and 14 quoted above, which
do not make arbitration a condition precedent.
 Alternative Dispute Resolution Digests, Arbues 2019
G.R. No. 156660 August 24, 2009
ORMOC SUGARCANE PLANTERS' ASSOCIATION (OSPA) v CA
Facts:
Petitioner Ormoc Sugar Planter’s Association (OSPA) and other
associations whose members are sugar planters while respondent Hideco Sugar
Milling and Ormoc Sugar Milling are sugar centrals engaged in the grinding and
milling sugar cane delivered to them by numerous individual sugar planters who
may or may not be members of an association. The relationship of individual
sugar planters are governed by milling contracts. The milling contract provides
that 34% the sugar and molasses produced by the planters shall belong to the
sugar centrals 65% thereof to the individual planters and the remaining, 1% shall
be given to the association to which the planter is a member. If the planter is not
a member of any it shall revert back to the centrals. Petitioner filed a case before
the RTC for arbitration under RA 876 to Recover Additional Benefits and others
against respondents. Petitioners claim breach of the milling contract because
respondent gave the 1% to the individual planters who are not members instead
of reverting it back to the centrals. The RTC directed the parties to proceed with
the arbitration. Respondents elevated the case to the CA by way of certiorari. The
CA set aside the challenged decision hence the petition.
Issue:
Whether sugar planters’ associations are clothed with legal personality
to file a suit against, or demand arbitration from, respondents in their own name
without impleading the individual Planters.
Held:
Section 2 of Arbitration Law provides 2 modes of arbitration: (a) an
agreement to submit to arbitration some future dispute, usually stipulated upon
in a civil contract between the parties, and known as an agreement to submit to
arbitration, and (b) an agreement submitting an existing matter of difference to
arbitrators, termed the submission agreement. Article XX of the milling contract
falls to the former because it was made in anticipation of a dispute that might
arise between the parties after the contract’s execution.
Except where a compulsory arbitration is provided by statute, the first
step toward the settlement of a difference by arbitration is the entry by the parties
into a valid agreement to arbitrate. An agreement to arbitrate is a contract, the
relation of the parties is contractual, and the rights and liabilities of the parties
are controlled by the law of contracts. In an agreement for arbitration, the
ordinary elements of a valid contract must appear, including an agreement to
3
arbitrate some specific thing, and an agreement to abide by the award, either in
express language or by implication.
Petitioners are associations duly existing and organized under
Philippine law, i.e. they have juridical personalities separate and distinct from
that of their member Planters. None of the petitioners were parties or signatories
to the milling contracts. This circumstance is fatal to petitioners' cause since they
anchor their right to demand arbitration from the respondent sugar centrals upon
the arbitration clause found in the milling contracts. There is no legal basis for
petitioners' purported right to demand arbitration when they are not parties to the
milling contracts, especially when the language of the arbitration clause
expressly grants the right to demand arbitration only to the parties to the contract.
Simply put, petitioners do not have any agreement to arbitrate with respondents.
*The formal requirements of an agreement to arbitrate
(a) it must be in writing and (b) it must be subscribed by the parties or
their representatives. To subscribe means to write underneath, as one’s name; to
sign at the end of a document.
G.R. No. L-23390 April 24, 1967 MINDANAO PORTLAND
CEMENT CORPORATION v McDONOUGH CONSTRUCTION
Facts:
Petitioner and respondent executed a contract for the construction by
the respondent for the petitioner of a dry portland, cement plant at Iligan City. In
a separate contract, Turnbull, Inc. — the "engineer" referred to in the
construction contract — was engaged to design and manage the construction of
the plant. Alterations in the plans and specifications were subsequently made
Differences later arose. Mindanao Portland claimed from McDonough damages
in the amount of more than Php2M allegedly occasioned by the delay in the
project's completion. Respondent in turn asked for more than P450k from
petitioner for alleged losses due to cost of extra work.
 Alternative Dispute Resolution Digests, Arbues 2019
Petitioner sent written invitations to arbitrate, invoking a provision in
their contract regarding arbitration of disputes. Respondent instead, with
Turnbull’s approval, submitted to petitioner for payment its final statement of
work accomplished, asking for P403k as unpaid balance of the consideration of
the contract. Petitioner filed a complaint with CFI Manila to compel respondent
to arbitrate with it concerning alleged disputes arising from their contract.
Respondent, contends first, that there is no showing of disagreement; and second,
that if there is, the same falls under the exception, to be resolved by the engineer.
RTC rendered a decision holding that their dispute should be submitted to
arbitration.
Issue:
WON the issues should be submitted for arbitration.
Held: Yes.
The parties agreed by way of exception that disagreements with respect
to the following matters shall be finally resolved by the engineer, instead of being
submitted to arbitration: (1) The interpretation of plans and specifications; (2)
sufficiency of materials; and (3) the time, sequence and method of performing
the work. The disputes involved here, on the other hand, are on (1) the proper
computation of the total contract price, including the cost of additional or extra
work; and (2) the liability for alleged delay in completing the project and for
alleged losses due to change in the plans and specifications. Thus, pars. 19 to 22
of its General Conditions deal with the subject "Interpretation of Plans and
Specifications". And thereunder, the engineer is empowered to correct all errors
in the plans. No mention is made therein as to the cost of the project; this matter
is covered by the engineering contract, under which Turnbull, Inc.'s function is
limited to making estimates of costs only. To none of the exceptions then do the
disagreements in question belong, the rule of arbitration therefore applies.
*Duty of the court when the issue on WON to arbitrate arise.
Respondent's arguments touching upon the merits of the dispute are
improperly raised herein. They should be addressed to the arbitrators. This
proceeding is merely a summary remedy to enforce 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.
4
Korea Technologies Co. Ltd vs Lerma GR No. 143581 January 7, 2008
Facts:
Petitioner Korea Technologies Co., Ltd. (KOGIES) is a Korean
corporation which is engaged in the supply and installation of Liquefied
Petroleum Gas (LPG) Cylinder manufacturing plants, while private respondent
Pacific General Steel Manufacturing Corp. (PGSMC) is a domestic corporation.
On March 5, 1997, PGSMC and KOGIES executed a Contract whereby KOGIES
would set up an LPG Cylinder Manufacturing Plant in Carmona, Cavite. The
contract was executed in the Philippines. On April 7, 1997, the parties executed,
in Korea, an Amendment for Contract No. KLP-970301 dated March 5, 1997
amending the terms of payment. The contract and its amendment stipulated that
KOGIES will ship the machinery and facilities necessary for manufacturing LPG
cylinders for which PGSMC would pay USD 1,224,000. KOGIES would install
and initiate the operation of the plant for which PGSMC bound itself to pay USD
306,000 upon the plants production of the 11-kg. LPG cylinder samples. Thus,
the total contract price amounted to USD 1,530,000. On October 14, 1997,
PGSMC entered into a Contract of Lease with Worth Properties, Inc. (Worth) for
use of Worths 5,079-square meter property with a 4,032-square meter warehouse
building to house the LPG manufacturing plant. The monthly rental was PhP
322,560 commencing on January 1, 1998 with a 10% annual increment clause.
Subsequently, the machineries, equipment, and facilities for the manufacture of
LPG cylinders were shipped, delivered, and installed in the Carmona plant.
PGSMC paid KOGIES USD 1,224,000. However, gleaned from the Certificate
executed by the parties on January 22, 1998, after the installation of the plant,
the initial operation could not be conducted as PGSMC encountered financial
difficulties affecting the supply of materials, thus forcing the parties to agree that
KOGIES would be deemed to have completely complied with the terms and
conditions of the March 5, 1997 contract. For the remaining balance of
USD306,000 for the installation and initial operation of the plant, PGSMC issued
two postdated checks: (1) BPI Check No. 0316412 dated January 30, 1998 for
PhP 4,500,000; and (2) BPI Check No. 0316413 dated March 30, 1998 for PhP
4,500,000. When KOGIES deposited the checks, these were dishonored for the
reason PAYMENT STOPPED. Thus, on May 8, 1998, KOGIES sent a demand
letter to PGSMC threatening criminal action for violation of Batas Pambansa
Blg. 22 in case of nonpayment. On the same date, the wife of PGSMCs President
faxed a letter dated May 7, 1998 to KOGIES President who was then staying at
a Makati City hotel. She complained that not only did KOGIES deliver a different
brand of hydraulic press from that agreed upon but it had not delivered several
equipment parts already paid for.
 Alternative Dispute Resolution Digests, Arbues 2019
Issue: WON the arbitration clause in the contract of the parties should govern.
Held: Yes.
Established in this jurisdiction is the rule that the law of the place where
the contract is made governs. Lex loci contractus. The contract in this case was
perfected here in the Philippines. Therefore, our laws ought to govern.
Nonetheless, Art. 2044 of the Civil Code sanctions the validity of mutually
agreed arbitral clause or the finality and binding effect of an arbitral award. Art.
2044 provides, Any stipulation that the arbitrators award or decision shall be
final, is valid, without prejudice to Articles 2038, 2039 and 2040.
The arbitration clause was mutually and voluntarily agreed upon by the
parties. It has not been shown to be contrary to any law, or against morals, good
customs, public order, or public policy. There has been no showing that the
parties have not dealt with each other on equal footing. We find no reason why
the arbitration clause should not be respected and complied with by both parties.
In Gonzales v. Climax Mining Ltd., we held that submission to arbitration is a
contract and that a clause in a contract providing that all matters in dispute
between the parties shall be referred to arbitration is a contract. Again in Del
Monte Corporation-USA v. Court of Appeals, we likewise ruled that [t]he
provision to submit to arbitration any dispute arising therefrom and the
relationship of the parties is part of that contract and is itself a contract.
Having said that the instant arbitration clause is not against public
policy, we come to the question on what governs an arbitration clause specifying
that in case of any dispute arising from the contract, an arbitral panel will be
constituted in a foreign country and the arbitration rules of the foreign country
would govern and its award shall be final and binding.
Thus, it can be gleaned that the concept of a final and binding arbitral
award is similar to judgments or awards given by some of our quasi-judicial
bodies, like the National Labor Relations Commission and Mines Adjudication
Board, whose final judgments are stipulated to be final and binding, but not
immediately executory in the sense that they may still be judicially reviewed,
upon the instance of any party. Therefore, the final foreign arbitral awards are
similarly situated in that they need first to be confirmed by the RTC.
5
BOLOS V. BOLOS 634 SCRA 429, [October 20, 2010]
FACTS:
Petitioner Cynthia Bolos(Cynthia)filed a petition for the declaration of
nullity of her marriage to Respondent Danilo Bolos (Danilo) under Article 36 of
the Family Code. After trial on the merits, the RTC granted the petition for
annulment. A copy of said decision was received by respondent Danilo and he
thereafter timely filed the Notice of Appeal.
The RTC denied due course to the appeal for Danilo’s failure to file the
required motion for reconsideration or new trial, in violation of Section 20 of the
Rule on Declaration of Absolute Nullity of Void Marriages and Annulment of
Voidable Marriages. Thereafter, the RTC issued the order declaring its decision
declaring the marriage null and void as final and executory and granting the
Motion for Entry of Judgment filed by Cynthia. Not in conformity, Danilo filed
with the CA a petition forcertiorari under Rule 65 seeking to annul the orders of
the RTC as they were rendered with grave abuse of discretion amounting to lack
or in excess of jurisdiction. Danilo also prayed that he be declared
psychologically capacitated to render the essential marital obligations to Cynthia,
who should be declared guilty of abandoning him, the family home and their
children.
The CA granted the petition and reversed and set aside the assailed
orders of the RTC declaring the nullity of marriage as final and executory. The
appellate court stated that the requirement of a motion for reconsideration as a
prerequisite to appeal under A.M. No. 02-11-10-SC did not apply in this case as
the marriage between Cynthia and Danilo was solemnized on February 14, 1980
before the Family Code took effect.
Petitioner argues that A.M. No. 02-11-10-SC is also applicable to
marriages solemnized before the effectivity of the Family Code. According to
petitioner, the phrase “under the Family Code” in A.M. No. 02-11-10-SC refers
to the word “petitions” rather than to the word “marriages.” Such that petitions
filed after the effectivity of the Family Code are governed by the A.M. No. even
if the marriage was solemnized before the same. Danilo, in his Comment,
counters that A.M. No. 02-11-10-SC is not applicable because his marriage with
Cynthia was solemnized on February 14, 1980, years before its effectivity.
 Alternative Dispute Resolution Digests, Arbues 2019
ISSUE: WON A.M. No. 02-11-10-SC entitled “Rule on Declaration of
Absolute Nullity of Void Marriages and Annulment of Voidable Marriages,” is
applicable to the case at bench.
HELD: No.
The Rule on Declaration of Absolute Nullity of Void Marriages and
Annulment of Voidable Marriages as contained in A.M. No. 02-11-10-SC which
the Court promulgated on March 15, 2003, is explicit in its scope. Section 1 of
the Rule, in fact, reads:
“Section 1. Scope.—This Rule shall govern petitions for declaration of
absolute nullity of void marriages and annulment of voidable marriages
under the Family Code of the Philippines.
The Rules of Court shall apply suppletorily.”
The categorical language of A.M. No. 02-11-10-SC leaves no room for
doubt. The coverage extends only to those marriages entered into during the
effectivity of the Family Code which took effect on August 3, 1988.7 The rule
sets a demarcation line between marriages covered by the Family Code and those
solemnized under the Civil Code.8 The Court finds Itself unable to subscribe to
petitioner’s interpretation that the phrase “under the Family Code” in A.M. No.
02-11-10-SC refers to the word “petitions” rather than to the word “marriages.”
In fine, the CA committed no reversible error in setting aside the RTC
decision which denied due course to respondent’s appeal and denying
petitioner’s motion for extension of time to file a motion for reconsideration.
6
G.R. No. 189600 June 29, 2010 MILAGROS E. AMORES v HRET
Facts:
In her Petition for Quo Warranto seeking the ouster of private
respondent, petitioner alleged that, among other things, private respondent
assumed office without a formal proclamation issued by the COMELEC; he was
disqualified to be a nominee of the youth sector of CIBAC since, at the time of
the filing of his certificates of nomination and acceptance, he was already 31
years old or beyond the age limit of 30 pursuant to Section 9 of Party-List System
Act; and his change of affiliation from CIBAC’s youth sector to its overseas
Filipino workers and their families sector was not effected at least six months
prior to the May 14, 2007 elections so as to be qualified to represent the new
sector under Section 15 of RA No. 7941.
Respecting the age qualification for youth sectoral nominees under
Section 9 of RA No. 7941, public respondent held that it applied only to those
nominated as such during the first three congressional terms after the ratification
of the Constitution or until 1998, unless a sectoral party is thereafter registered
exclusively as representing the youth sector, which CIBAC, a multi-sectoral
organization, is not. In the matter of private respondent’s shift of affiliation from
CIBAC’s youth sector to its overseas Filipino workers and their families sector,
public respondent held that Section 15 of RA No. 7941 did not apply as there
was no resultant change in party-list affiliation.
Petitioner contends that, among other things, public respondent created
distinctions in the application of Sections 9 and 15 of RA No. 7941 that are not
found in the subject provisions, fostering interpretations at war with equal
protection of the laws; and NBC Resolution No. 07-60, which was a partial
proclamation of winning party-list organizations, was not enough basis for
private respondent to assume office on July 10, 2007, especially considering that
he admitted receiving his own Certificate of Proclamation only on December 13,
2007
Issue: WON respondent is over age.
Held: Yes.
A cardinal rule in statutory construction is that when the law is clear and
free from any doubt or ambiguity, there is no room for construction or
interpretation. There is only room for application.
 Alternative Dispute Resolution Digests, Arbues 2019
As the law states in unequivocal terms that a nominee of the youth sector
must at least be 25 but not more than 30 years of age on the day of the election,
so it must be that a candidate who is more than 30 on election day is not qualified
to be a youth sector nominee. Since this mandate is contained in the Party-List
System Act, it covers ALL youth sector nominees vying for party-list
representative seats.
As petitioner points out, RA No. 7941 was enacted only in March, 1995.
There is thus no reason to apply Section 9 thereof only to youth sector nominees
nominated during the first three congressional terms after the ratification of the
Constitution in 1987. Under this interpretation, the last elections where Section
9 applied were held in May, 1995 or two months after the law was enacted. This
is certainly not sound legislative intent, and could not have been the objective of
RA No. 7941.
There is likewise no rhyme or reason in public respondent’s
ratiocination that after the third congressional term from the ratification of the
Constitution, which expired in 1998, Section 9 of RA No. 7941 would apply only
to sectoral parties registered exclusively as representing the youth sector. This
distinction is nowhere found in the law. Ubi lex non distinguit nec nos distinguire
debemus. When the law does not distinguish, we must not distinguish.
G.R. No. 103200 August 31, 1994 LA NAVAL DRUG v CA
Facts:
In 1989, a conflict between La Naval Drug Corporation and a certain
Wilson Yao arose regarding a lease contract. Yao invoked a provision in the lease
contract whereby pursuant to R.A. 876 (Arbitration Law), they should refer the
matter to arbitration. Hence, the parties agreed to refer the issue to three
arbitrators however, certain complications arose when they were choosing a third
arbitrator. This prompted Yao to go to court to demand the arbitrators to proceed
7
with the arbitration. Yao went to the regional trial court (Angeles City) and the
case was filed as a summary proceeding case under R.A. 876. Yao also prayed
for an award for damages in his favor.
In its answer, La Naval asserted that the case should be dismissed as it
was filed prematurely; La Naval questioned Yao’s claim for damages as it
averred that the same should be litigated independently and not in the same
summary proceeding case. However, La Naval also posed a counterclaim.
The RTC resolved the matter regarding the arbitrators (it appointed a
third arbitrator). The RTC also ruled that La Naval is estopped from questioning
Yao’s claim for damages for being out of jurisdiction as La Naval itself filed a
counterclaim for damages.
ISSUE: Whether or not the RTC has jurisdiction over the claims for damages
between parties.
HELD: No.
R.A. 876 is clear that summary proceedings under said law shall only
involve the matter of arbitration. The parties’ claims for damages must be
litigated in another civil case.
The Supreme Court went on to discuss that where the court clearly has
no jurisdiction over the subject matter, in this case the claim and counterclaim
for damages, the court must dismiss the case (in this case, the claim and
counterclaim for damages). Lack of jurisdiction over the subject matter as a
defense may be raised at any time. Failure to raise such defense shall not estop
the defendant from raising such defense (as opposed to the defense of lack of
jurisdiction over the person which is deemed waived if the defendant voluntarily
appeared – if defendant voluntarily appeared, then he is estopped from raising
that defense).
 Alternative Dispute Resolution Digests, Arbues 2019

G.R. No. 179537 October 23, 2009 that such arbitration proceed in the manner provided for in such
PEZA vs EDISON (BATAAN) agreement.

Facts: *Authority of the court in arbitration cases

Petitioner Philippine Economic Zone Authority (PEZA) and Edison
(Bataan) Cogeneration Corporation (respondent) entered into a Power Supply
and Purchase Agreement (PSPA or agreement) for a 10-year period effective
October 25, 1997 whereby respondent undertook to construct, operate, and
maintain a power plant which would sell, supply and deliver electricity to PEZA
for resale to business locators in the Bataan Economic Processing Zone.
However due to alleged violation of clause 4.9 of the PSPA which gave
preferential right over other power suppliers, respondent terminated the
agreement. Respondent also demanded pre-termination fee amounting to 708M
php.
Petitioner disputed the respondent’s right to terminate the agreement
and also refused to submit the case for arbitration. In consequence, respondent
filed a complaint for specific performance with the RTC. The complaint reads:
Under Clauses 14.1 and 14.2 of the Agreement, the dispute shall be resolved
through arbitration before an Arbitration Committee composed of one
representative of each party and a third member who shall be mutually acceptable
to the parties. In petitioner’s answer, it alleged that the Request for Arbitration
dated October 20, 2004 is not an arbitrable issue, considering that the provision
on pre-termination fee in the PSPA, is gravely onerous, unconscionable, greatly
disadvantageous to the government, against public policy and therefore invalid
and unenforceable. RTC ruled in favor of the respondent. CA affirmed.
R.A. No. 876 "explicitly confines the court’s authority only to the
determination of whether or not there is an agreement in writing providing for
arbitration." Given petitioner’s admission of the material allegations of
respondent’s complaint including the existence of a written agreement to resolve
disputes through arbitration, the assailed appellate court’s affirmance of the trial
court’s grant of respondent’s Motion for Judgment on the Pleadings is in order.
*Doctrine of Separability
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 to be treated as a separate agreement and the arbitration
agreement does not automatically terminate when the contract of which it is a
part comes to an end.
The separability of the arbitration agreement is especially significant to
the determination of whether the invalidity of the main contract also nullifies the
arbitration clause. Indeed, the doctrine denotes that the invalidity of the main
contract, also referred to as the "container" contract, does not affect the validity
of the arbitration agreement. Irrespective of the fact that the main contract is
invalid, the arbitration clause/agreement still remains valid and enforceable.

Issue: WON the case should be referred to arbitration.

Held: Yes.

The dispute raised by respondent calls for a proceeding under Section 6

of Republic Act No. 876, "An Act to Authorize the Making of Arbitration and
Submission Agreements, to Provide for the Appointment of Arbitrators and the
Procedure for Arbitration in Civil Controversies, and for Other Purposes" which
reads:

SECTION 6. Hearing by court. — A party aggrieved by the failure,

neglect or refusal of another to perform under an agreement in writing
providing for arbitration may petition the court for an order directing
G.R. No. 129916 March 26, 2001

8
 Alternative Dispute Resolution Digests, Arbues 2019

MAGELLAN CAPITAL MANAGEMENT v ROLANDO M. ZOSA
Facts:
On March 1994, Respondent entered into an employment agreement
with petitioner valid giving him the position of Chief Executive Officer which is
valid until March 1996. However, on May 1995, the Board demoted Zosa as VP
for new ventures. Zosa submitted his resignation and demanded termination
benefits. Respondent was however, terminated without benefits.
Respondent filed a case respondent Zosa invoked the Arbitration Clause
of the Employment Agreement, to wit:
It is error for the petitioners to claim that the case should fall under the
jurisdiction of the Securities and Exchange Commission [SEC, for brevity]. The
controversy does not in anyway involve the election/appointment of officers of
petitioner MCHC, as claimed by petitioners in their assignment of errors.
Respondent Zosa's amended complaint focuses heavily on the illegality of the
Employment Agreement's "Arbitration Clause" initially invoked by him in
seeking his termination benefits under Section 8 of the employment contract.
And under RA 876, or the "Arbitration Law," it is the RTC which exercises
jurisdiction over questions relating to arbitration.
*Law of the case doctrine

"23. Arbitration. In the event that any dispute, controversy or claim
arises out of or under any provisions of this Agreement, then the parties
hereto agree to submit such dispute, controversy or claim to arbitration
as set forth in this Section and the determination to be made in such
arbitration shall be final and binding. Arbitration shall be effected by a
panel of three arbitrators.
The "law of the case" doctrine has been defined as "a term applied to an
established rule that when an appellate court passes on a question and remands
the cause to the lower court for further proceedings, the question there settled
becomes the law of the case upon subsequent appeal."
*Purpose of arbitration

However, instead of submitting the dispute to arbitration, respondent
Zosa, on April 17, 1996, filed an action for damages against petitioners before
the RTC to enforce his benefits under the Employment Agreement. On July 3,
1996, petitioners filed a motion to dismiss arguing that the trial court has no
jurisdiction over the instant case since respondent Zosa's claims should be
resolved through arbitration pursuant to Section 23 of the Employment
Agreement with petitioners.
Arbitration proceedings are designed to level the playing field among
the parties in pursuit of a mutually acceptable solution to their conflicting claims.
Any arrangement or scheme that would give undue advantage to a party in the
negotiating table is anathema to the very purpose of arbitration and should,
therefore, be resisted.

On August 1, 1996, the RTC issued an Order denying petitioners motion

to dismiss upon the findings that (1) the validity and legality of the arbitration
provision can only be determined after trial on the merits; and (2) the amount of
damages claimed, which is over P100k, falls within the jurisdiction of the RTC.
Petitioners filed a MR which was denied.

CA filed a PetCert and Prohibition with the CA under R65. CA granted

the petition prompting the RTC to rendered a decision declaring the "arbitration
clause" in the Employment Agreement partially void and of no effect.

Issue: WON the RTC is devoid of jurisdiction.

Held: No. G.R. NO. 181969 : October 2, 2009

ROMAGO, INC., v. SIEMENS BUILDING

9
 Alternative Dispute Resolution Digests, Arbues 2019
Facts:
On December 3, 1999, ROMAGO entered into an Equipment Supply
Sub-Contract Agreement (ESSA) with SBTI. For the contract price of P100M,
SBTI undertook to deliver the needed electrical equipment for the project.
SBTI made deliveries, but ROMAGO failed to pay in full. As of March 2001,
ROMAGO's unpaid billings amounted to P6M, prompting SBTI to withhold
further deliveries of equipment to the jobsite. Consequently, ROMAGO took
over all the contractual activities of SBTI.
Later, however, SBTI resumed its deliveries under the ESSA. As of July
25, 2001, it had already delivered 99.81% of all the necessary equipment.
ROMAGO, however, refused to pay for the deliveries which, by then, already
amounted to P16,937,612.68, unless SBTI compensates ROMAGO for the total
expenses it allegedly incurred in taking over SBTI's contractual obligations.
Hence, on June 4, 2003, SBTI filed a Request for Arbitration with the
Philippine Dispute Resolution Center, Inc. (PDRCI). In its Answer,, ROMAGO
admitted that the agreed contract price was P67M, but averred that it made
substantial payments. It further alleged that it had claims against SBTI, which
should be deducted from the former's liability. PDRCI ruled in favor of SBTI and
denied the counter-claim.
SBTI filed a petition for confirmation of the Arbitrator's decision with
Makati RTC. Romago prayed for the denial of the petition and for the setting
aside of the Arbitrator's decision. ROMAGO argued that the Arbitrator displayed
partiality in hearing the arbitration case and in rendering the decision. It pointed
out that the Arbitrator considered SBTI's claims as gospel truth and granted the
same in toto, but denied ROMAGO's counterclaims despite the preponderance
of evidence in support of its claim. ROMAGO, thus, contended that SBTI could
not ask for the confirmation and execution of the Arbitrator's decision. RTC ruled
for SBTI.
Issue: WON the Arbitral award may be confirmed.
Held: Yes.
SBTI has for its legal anchor Section 26 of the Arbitration Law, which
states that, "a motion to vacate, modify or correct the award or decision must be
made within 30 days after the award is filed or delivered."
10
*Difference between the act of setting forth an affirmative defense and filing a
Motion to Vacate within the context of the law on Arbitration.
The Arbitration Law requires the losing party to seek vacation of the
award by filing a Motion for this purpose within a period of thirty (30) days from
service of the Decision. For as a matter of consequence, failure to do so will
amount to an unqualified acquiescence to the findings of the Arbitrator, and if he
does not, then the award must be confirmed in accordance with section 23 of the
law. The Arbitration Law provides that, where an award is vacated, the Court, in
its discretion, may direct a new hearing either before the same arbitrator(s) or
before a new arbitrator(s) to be chosen in the manner provided in the submission
of the contract for the selection of the original arbitrator(s) and any provision
limiting the time in which the arbitrator(s) may make a decision shall be deemed
applicable to the new arbitration and to commence from the date of the court's
order. (Sec. 24 par. (d), R.A. 876).
It is possible therefore, that when the prevailing party file a petition to
confirm a domestic arbitral award, the losing party responds with a counterclaim
to have the award vacated. There is a time limit, however, to actions to vacate
domestic arbitral awards. The party dissatisfied with the award must institute a
suit to vacate the award within 1 month from the time it is served upon him. If
he fails to institute the suit to vacate the award within this period, the award
becomes final and executory"
G.R. No. 185582 February 29, 2012
TUNA PROCESSING, INC. v PHILIPPINE KINGFORD
Facts:
 Alternative Dispute Resolution Digests, Arbues 2019
On 14 January 2003, Kanemitsu Yamaoka (hereinafter referred to as the
"licensor"), co-patentee of U.S. Patent No. 5,484,619, and 5 Philippine tuna
processors, namely, Angel Seafood Corporation, East Asia Fish Co., Inc.,
Mommy Gina Tuna Resources, Santa Cruz Seafoods, Inc., and respondent
Kingford (collectively referred to as the "sponsors"/"licensees") entered into a
Memorandum of Agreement (MOA).
The licensees, including respondent Kingford, withdrew from petitioner
TPI and correspondingly reneged on their obligations. Petitioner submitted the
dispute for arbitration before the International Centre for Dispute Resolution in
the State of California, United States and won the case against respondent.
To enforce the award, petitioner TPI filed on 10 October 2007 a Petition
for Confirmation, Recognition, and Enforcement of Foreign Arbitral Award
before the RTC of Makati.
Issue: WON a foreign corporation not licensed to do business in the Philippines,
but which collects royalties from entities in the Philippines, sue here to enforce
a foreign arbitral award?
Held: No.
The Corporation Code of the Philippines expressly provides:
Sec. 133. Doing business without a license. - No foreign corporation
transacting business in the Philippines without a license, or its
successors or assigns, shall be permitted to maintain or intervene in any
action, suit or proceeding in any court or administrative 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 Philippine laws.
It is pursuant to the aforequoted provision that the court a quo dismissed
the petition. Thus:
Herein plaintiff TPI’s "Petition, etc." acknowledges that it "is a foreign
corporation established in the State of California" and "was given the exclusive
right to license or sublicense the Yamaoka Patent" and "was assigned the
exclusive right to enforce the said patent and collect corresponding royalties" in
the Philippines. TPI likewise admits that it does not have a license to do business
in the Philippines.
11
The petitioner counters, however, that it is entitled to seek for the
recognition and enforcement of the subject foreign arbitral award in accordance
with Republic Act No. 9285 (Alternative Dispute Resolution Act of 2004),22 the
Convention on the Recognition and Enforcement of Foreign Arbitral Awards
drafted during the United Nations Conference on International Commercial
Arbitration in 1958 (New York Convention), and the UNCITRAL Model Law
on International Commercial Arbitration (Model Law),23 as none of these
specifically requires that the party seeking for the enforcement should have legal
capacity to sue.
*How do we reconcile the provisions of the Corporation Code of the Philippines
on one hand, and the Alternative Dispute Resolution Act of 2004, the New York
Convention and the Model Law on the other?
The Corporation Code, however, is a general law applying to all types
of corporations, while the New Central Bank Act regulates specifically banks
and other financial institutions, including the dissolution and liquidation thereof.
As between a general and special law, the latter shall prevail – generalia
specialibus non derogant."
Following the same principle, the Alternative Dispute Resolution Act
of 2004 shall apply in this case as the Act, as its title - An Act to Institutionalize
the Use of an Alternative Dispute Resolution System in the Philippines and to
Establish the Office for Alternative Dispute Resolution, and for Other Purposes
- would suggest, is a law especially enacted "to actively promote party autonomy
in the resolution of disputes or the freedom of the party to make their own
arrangements to resolve their disputes." It specifically provides exclusive
grounds available to the party opposing an application for recognition and
enforcement of the arbitral award.
*Alternative Dispute Resolution Act of 2004 incorporated the New York
Convention and Model Law in the Act thru sections 19, 42, and 45.
G.R. NO. 135362. December 13, 1999
HEIRS OF AUGUSTO L. SALAS v Laperal Realty
Facts:
On May 15, 1987, Salas entered into an Owner-Contractor Agreement
(hereinafter referred to as the Agreement) with respondent Laperal Realty to
 Alternative Dispute Resolution Digests, Arbues 2019
render and provide complete (horizontal) construction services on his land. Salas
executed a SPA in favor of respondent Laperal Realty to exercise general control,
supervision and management of the sale of his land, for cash or on installment
basis. On June 10, 1989, Salas, Jr. left his home in the morning for a business
trip to Nueva Ecija. He never returned. He was declared dead via a petition in
RTC.
Meanwhile, Laperal sold parcels of land to different persons. Petitioners
filed a petition for declaration of nullity of sale, reconveyance, cancellation of
contract. On April 24, 1998, respondent Laperal Realty filed a Motion to Dismiss
on the ground that petitioners failed to submit their grievance to arbitration as
required under Article VI of the Agreement.
Issue: WON the case should be submitted for arbitration.
Held: No.
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. However, this case
is an exception.
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 they. 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. However, the buyers of the land
are not assignees of the rights of respondent Laperal Realty under the Agreement
to develop Salas, Jr.s land and sell the same. They are, 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 the
12
New Civil Code which provides that contracts take effect only between the
parties, their assigns and heirs.
Respondent Laperal Realty, as a contracting party to the Agreement, has
the right to compel petitioners to first arbitrate before seeking judicial relief.
However, to split the proceedings into arbitration for respondent Laperal Realty
and trial for the respondent lot buyers, or to hold trial in abeyance pending
arbitration between petitioners and respondent Laperal Realty, would in effect
result in multiplicity of suits, duplicitous procedure and unnecessary delay. On
the other hand, it would be in the interest of justice if the trial court hears the
complaint against all herein respondents and adjudicates petitioners rights as
against theirs in a single and complete proceeding.
G.R. No. 136154 February 7, 2001 DEL MONTE-USA v CA
Facts:
On 1 July 1994, in a Distributorship Agreement, petitioner Del Monte
Corporation-USA (DMC-USA) appointed private respondent Montebueno
Marketing, Inc. (MMI) as the sole and exclusive distributor of its Del Monte
products in the Philippines The agreement provided, among others, for an
arbitration clause which states –
12. GOVERNING LAW AND ARBITRATION4
This Agreement shall be governed by the laws of the State of California
and/or, if applicable, the United States of America. All disputes arising
out of or relating to this Agreement or the parties' relationship, including
the termination thereof, shall be resolved by arbitration in the City of
San Francisco, State of California, under the Rules of the American
Arbitration Association.
 Alternative Dispute Resolution Digests, Arbues 2019
On 3 October 1996, MMI filed a Complaint against petitioners DMC-
USAin RTC Malabon. Private respondents predicated their complaint on the
alleged violations by petitioners of Arts. 20, 21 and 23 of the Civil Code.
According to private respondents, DMC-USA products continued to be brought
into the country by parallel importers despite the appointment of private
respondent MMI as the sole and exclusive distributor of Del Monte products
thereby causing them great embarrassment and substantial damage.
Petitioners filed a Motion to Suspend Proceedings invoking the
arbitration clause in their Agreement with private respondents. RTC denied the
Motion to Suspend Proceedings as the grounds alleged therein did not constitute
the suspension of the proceedings considering that the action was for damages
with prayer for the issuance of Writ of Preliminary Attachment and not on the
Distributorship Agreement. CA affirmed.
Issue: WON the case should be submitted for arbitration.
Held: No.
The Agreement between petitioner DMC-USA and private respondent
MMI is a contract. The provision to submit to arbitration any dispute arising
therefrom and the relationship of the parties is part of that contract and is itself a
contract. As a rule, contracts are respected as the law between the contracting
parties and produce effect as between them, their assigns and heirs. Clearly, only
parties to the Agreement, i.e., petitioners DMC-USA and private respondents
MMI are bound by the Agreement and its arbitration clause as they are the only
signatories thereto. Petitioners Daniel Collins and Luis Hidalgo, and private
respondent SFI, not parties to the Agreement and cannot even be considered
assigns or heirs of the parties, are not bound by the Agreement and the arbitration
clause therein. Consequently, referral to arbitration in the State of California
pursuant to the arbitration clause and the suspension of the case pending the
return of the arbitral award could be called for but only as to petitioners DMC-
USA and Paul E. Derby, Jr., and private respondents MMI and LILY SY, and
not as to the other parties in this case.
*SFI is the marketing arm of MMI and is one of the complainant but no a
signatory of the contract.
G.R. NO. 127004 March 11, 1999
NATIONAL STEEL CORPO V. RTC OF LANAO DEL NORTE
Facts:
13
Respondent Edward Willkom Enterprises Inc. (EWEI) and Ramiro
Construction executed a contract with petitioner National Steel Corporation
(NSC) whereby the former jointly undertook the Contract for Site Development
for the latter’s Integrated Iron and Steel Mills Complex. Sometime in 1983, the
services of Ramiro Construction was terminated and EWEI took over the
contractual obligation. Due to this and to other causes deemed sufficient by
EWEI, extensions of time for the termination of the project were granted by NSC.
Differences later arose, EWEI filed a case before the RTC praying essentially for
payments with interest from the time of delay; the price adjustment as provided
by PD 1594; and exemplary damages and attorney’s fees. NSC filed an answer
with counterclaim to plaintiffs complaints. The court upon joint motion of both
parties had issued an order dismissing the said complaint and counterclaim in
view of the desire of both parties to implement Sec. 19 of the contract, providing
for a resolution of any conflict by arbitration. In accordance with the aforesaid
order and pursuant to Sec. 19 of the Contract, herein parties constituted an
Arbitration Board after which of a series of hearings, rendered the decision
directing NSC to pay EWEI. The RTC affirmed and confirmed the award of the
arbitrators. NSC’s Motion for Reconsideration was denied, hence has come to
this court via the present petition.
Issue: WON the lower court acted with grave abuse of discretion in not vacating
the arbitrator’s award.
Ruling:
Thus, in a Petition to Vacate Arbitrator’s Decision before the trial court,
regularity in the performance of official functions is presumed and the
complaining party has the burden of proving the existence of any of the grounds
for vacating the award, as provided for by Sections 24 of the Arbitration Law, to
wit: (a) The award was procured by corruption, fraud or other undue means; (b)
That there was evident partiality or corruption in the arbitrators of any of them;
or (c) That the arbitrators were guilty of misconduct in refusing to postpone the
hearing upon sufficient cause shown, or in refusing to hear evidence pertinent
and material to the controversy; that one or more of the arbitrators was
disqualified to act as such under section nine hereof, and wilfully refrained from
disclosing such disqualification or of any other misbehavior by which the rights
of any party have been materially prejudiced; or (d) That the arbitrators exceeded
their powers, or so imperfectly executed them, that a mutual, final and definite
award upon the subject matter submitted to them was not made. . . .
 Alternative Dispute Resolution Digests, Arbues 2019
The grounds relied upon by the petitioner were the following (a) That
there was evident partiality in the assailed decision of the Arbitrators in favor of
the respondent; and (b) That there was mistaken appreciation of the facts and
application of the law by the Arbitrators.
Petitioner’s allegation that there was evident partiality is untenable. It is
anemic of evidentiary support. In the case of Adamson vs. Court of Appeals, in
upholding the decision of the Board of Arbitrators, this Court ruled that the fact
that a party was disadvantaged by the decision of the Arbitration Committee does
not prove evident partiality. Proofs other than mere inference are needed to
establish evident partiality. Here, petitioner merely averred evident partiality
without any proof to back it up. Petitioner was never deprived of the right to
present evidence nor was there any showing that the Board showed signs of any
bias in favor of EWEI.
Parentethically, and in the light of the record above-mentioned, this
Court hereby holds that the Board of Arbitrators did not commit any “evident
partiality” imputed by petitioner NSC. Above all, this Court must sustain the said
decision for it is a well-settled rule that the actual findings of an administrative
body should be affirmed if there is substantial evidence to support them and the
conclusions stated in the decision are not clearly against the law and
jurisprudence, similar to the instant case, Henceforth, every reasonable
intendment will be indulged to give effect such proceedings and in favor of the
regulatory and integrity of the arbitrators act. Indeed, the allegation of evident
partiality is not well-taken because the petitioner failed to substantiate the same.
WHEREFORE, the awards made by the Board of Arbitrators which the
trial court adopted in its decision are modified.
G.R. No. 121171. December 29, 1998
ASSET PRIVATIZATION TRUST v CA
Facts:
14
Marinduque Mining and Industrial Corporation (MMIC) was granted
exclusive authority to exploit mineral reserves in Surigao. MMIC, as mortgagor,
agreed to constitute a mortgage in favor of PNB and DBP as mortgagees, over
all MMICs assets. Article V of the Mortgage Trust Agreement allows the taking
of the mortgaged property in case of default.
MMIC failed to pay the overdue loan thus DBP and PNB exercised
their right to foreclosure. The foreclosed assets were sold to PNB as the lone
bidder and were assigned to three newly formed corporations, namely, Nonoc
Mining Corporation, Maricalum Mining and Industrial Corporation, and Island
Cement Corporation. In 1986, these assets were transferred to the Asset
Privatization Trust (APT).
Stockholders of MMIC filed a derivative suit against DBP and PNB for
the annulment of foreclosure sale. APT, as successor of the DBP and PNBs
interest in MMIC, mutually agreed to submit the case to arbitration by entering
into a Compromise and Arbitration Agreement. The Arbitration Committee ruled
in favor of MMIC.
MMIC filed with Makati RTC an Application/Motion for Confirmation
of Arbitration Award. Petitioner countered with an Opposition and Motion to
Vacate Judgment because the plaintiff’s Application/Motion is improperly filed
with Makati RTC, considering that the said motion is neither a part nor the
continuation of the proceedings in the Civil Case which was dismissed upon
motion of the parties. In fact, the defendants in the said Civil Case were the DBP
and PNB.
Issue: WON Makati RTC has jurisdiction to confirm arbital award.
Held: No.
The term dismiss has a precise definition in law. To dispose of an action
suit, or motion without trial on the issues involved.
Admittedly the correct procedure was for the parties to go back to the
court where the case was pending to have the award confirmed by said court.
However, Branch 62 made the fatal mistake of issuing a final order dismissing
the case. While Branch 62 should have merely suspended the case and not
dismissed it, neither of the parties questioned said dismissal. Thus, both parties
as well as said court are bound by such error.
 Alternative Dispute Resolution Digests, Arbues 2019
It is erroneous then to argue, as private respondents do, that petitioner
APT was charged with the knowledge that the case was merely stayed until
arbitration finished, as again, the order of Branch 62 in very clear terms stated
that the complaint was dismissed. By its own action, Branch 62 had lost
jurisdiction over the vase. It could not have validly reacquired jurisdiction over
the said case on mere motion of one of the parties. The Rules of Court is specific
on how a new case may be initiated and such is not done by mere motion in a
particular branch of the RTC. Consequently, as there was no pending action to
speak of, the petition to confirm the arbitral award should have been filed as a
new case and raffled accordingly to one of the branches of the Regional Trial
Court.
*The nature and limits of the Arbitrators powers.
As a rule, the award of an arbitrator cannot be set aside for mere errors
of judgment either as to the law or as to the facts. Courts are without power to
amend or overrule merely because of disagreement with matters of law or facts
determined by the arbitrators. Courts will not review the findings of law and fact
contained in an award, and will not undertake to substitute their judgment for
that of the arbitrators, since any other rule would make an award the
commencement, not the end, of litigation. Errors of law and fact, or an erroneous
decision of matters submitted to the judgment of the arbitrators, are insufficient
to invalidate an award fairly and honestly made. Judicial review of an arbitration
is, thus, more limited than judicial review of a trial.
Nonetheless, the arbitrators awards is not absolute and without
exceptions. The arbitrators cannot resolve issues beyond the scope of the
submission agreement. The parties to such an agreement are bound by the
arbitrators award only to the extent and in the manner prescribed by the contract
and only if the award is rendered in conformity thereto. Thus, Sections 24 and
25 of the Arbitration Law provide grounds for vacating, rescinding or modifying
an arbitration award. Where the conditions described in Articles 2038, 2039 and
2040 of the Civil Code applicable to compromises and arbitration are attendant,
the arbitration award may also be annulled.
*arbitrators came out with an award in excess of their powers and palpably
devoid of factual and legal basis.
G.R. No. 129169 November 17, 1999
NATIONAL IRRIGATION ADMINISTRATION v CA
Facts:
15
NIA awarded Hydro Resources Contractors Corporation the contract to
build a waterway for Magat River. NIA obliged itself to pay Hydro in peso and
in dollar account. The dollar payment was never made. After unsuccessfully
pursuing its case with NIA, HYDRO, on 7 December 1994, filed with the
Construction Industry Arbitration Commission (CIAC) a Request for
Adjudication of the aforesaid claim. On 13 March 1995, NIA filed a Motion to
Dismiss 7 alleging lack of jurisdiction over the disputes. NIA contended that
there was no agreement with HYDRO to submit the dispute to CIAC for
arbitration considering that the construction contract was executed in 1978 and
the project completed in 1982, whereas the Construction Industry Arbitration
Law creating CIAC was signed only in 1985; and that while they have agreed to
arbitration as a mode of settlement of disputes, they could not have contemplated
submission of their disputes to CIAC.
Issue: WON CIAC has jurisdiction.
Held: Yes.
EO 1008, otherwise known as the "Construction Industry Arbitration
Law" which was promulgated on 4 February 1985, vests upon CIAC original and
exclusive jurisdiction over disputes arising from, or connected with contracts
entered into by parties involved in construction in the Philippines, whether the
dispute arises before or after the completion of the contract, or after the
abandonment or breach thereof. The disputes may involve government or private
contracts. For the Board to acquire jurisdiction, the parties to a dispute must agree
to submit the same to voluntary arbitration.
It is undisputed that the contracts between HYDRO and NIA contained
an arbitration clause wherein they agreed to submit to arbitration any dispute
between them that may arise before or after the termination of the agreement.
Consequently, the claim of HYDRO having arisen from the contract is arbitrable.
Under the present Rules of Procedure, for a particular construction
contract to fall within the jurisdiction of CIAC, it is merely required that the
parties agree to submit the same to voluntary arbitration.
LM POWER vs. CAPITOL INDUSTRIAL
G.R. No. 141833. March 26, 2003
Facts:
 Alternative Dispute Resolution Digests, Arbues 2019

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.
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.

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

HELD:
AFFIRMATIVE.
SC ruled that in the case at hand it involves technical discrepancies that are better
left to an arbitral body that has expertise in the subject matter. Moreover, the
agreement between the parties contains arbitral clause that “any dispute or
conflict as regards to interpretation and implementation of this agreement which
cannot be settled between respondent and petitioner amicably shall be settled by
means of arbitration”. The resolution of the dispute between the parties herein
requires a referral to the provisions of their agreement. Within the scope of the
arbitration clause are discrepancies as to the amount of advances and billable
accomplishments, the application of the provision on termination, and the
consequent set-off of expenses.
With respect to the disputes on the take-over/termination and the expenses
incurred by respondent in the take-over, the SC ruled that the agreement provides
specific provisions that any delay, expenses and any other acts in violation to

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