CHUNG-FU INDUSTRIES vs.

Court of Appeals
[G.R. No. 96283] 25 February 1992

FACTS:
Chung-Fu Industries (Chung-Fu), herein petitioner, and Roblecor Philippines, Inc. (Roblecor), herein private
respondent, entered into a construction agreement whereby the latter undertakes to build the former’s
industrial complex.
In the event of disputes arising from the performance of the subject contract, it was stipulated therein that the
issue(s) shall be submitted for resolution before a single arbitrator chosen by both parties. When Roblecor
failed to perform its contractual obligation, Chung-Fu took over the construction.
Hence, Roblecor filed a petition for Compulsory Arbitration to claim its unpaid billings. Subsequent
negotiations between the parties eventually led to the formulation of an arbitration agreement, which stipulates
that the parties mutually agree that the decision of the arbitrator shall be final and unappealable.
Therefore, there shall be no further judicial recourse if either party disagrees with the whole or any part of the
arbitrator's award. The Regional Trial Court approved the Arbitration Agreement and selected an arbitrator.
The arbitrator ruled in favor of Roblecor. Aggrieved, Chung-Fu moved for further hearing but was denied by
the trial court. Its motion for reconsideration was also denied.
The Court of Appeals affirmed the trial court’s decision. The trial court and the appellate court both determined
that Chung-Fu is precluded from challenging the decision in accordance with the Arbitration Agreement.
Hence, this petition.

ISSUE:
Whether or not the decision of the arbitrator shall be deemed final and unappealable and beyond the
ambit of the court’s power of judicial review.

RULING:

No.
As per Art 2044 of the Civil Code, the finality of the arbitrators award is not absolute and without
exceptions. It is also stated in Sections 24, 25 of the Arbitration Law (R.A. 876, year 1953) that there
are grounds for vacating, modifying or rescinding an arbitrator’s award. Thus, if there are factual
circumstances which are referred to in the said provisions be present, judicial review of the award is
properly warranted. Also, even decisions of an administrative agency which are declared as “final” are
not exempt from judicial review when so warranted. That is why a voluntary arbitrator, by the very
nature of their function, acts in a quasi-judicial capacity in deciding such cases, is not to be construed
as beyond the scope of the power of judicial review. The Court then provided that the lower court
committed grave abuse of discretion by not looking into the merits of the case despite a prima facie
showing of the existence of grounds warranting judicial review. Finally, the case was remanded back
to the court of origin for further hearing.
 ABS CBN Broadcasting Corp vs World Interactive Network Systems Japan Co.,
Ltd.,
GR No. 169332, Feb 11, 2008

FACTS:

ABS-CBN Broadcasting Corporation entered into a licensing agreement with respondent World Interactive
Network Systems (WINS) Japan Co., Ltd., a foreign corporation licensed under the laws of Japan. Under the
agreement, respondent was granted the... exclusive license to distribute and sublicense the distribution of the
television service known as "The Filipino Channel" (TFC) in Japan.
A dispute arose between the parties when petitioner accused respondent of inserting nine episodes of WINS
WEEKLY, a weekly 35-minute community news program for Filipinos in Japan, into the TFC programming from
March to May 2002. Petitioner claimed that... these were "unauthorized insertions" constituting a material
breach of their agreement. Consequently, on May 9, 2002, petitioner notified respondent of its intention to
terminate the agreement effective June 10, 2002.
Respondent filed an arbitration suit pursuant to the arbitration clause of its agreement with petitioner. It
contended that the airing of WINS WEEKLY was made with petitioner's prior approval. It also alleged that
petitioner only threatened to terminate their... agreement because it wanted to renegotiate the terms thereof to
allow it to demand higher fees.
The parties appointed Professor Alfredo F. Tadiar to act as sole arbitrator.
The arbitrator found in favor of respondent.
He held that petitioner gave its approval to respondent for the airing of WINS WEEKLY as shown by a series of
written exchanges between the parties.
Petitioner filed in the CA a petition for review.
Respondent, on the other hand, filed a petition for confirmation of arbitral award before the Regional Trial Court
(RTC) of Quezon City.
Consequently, petitioner filed a supplemental petition in the CA seeking to enjoin the RTC of Quezon City from
further proceeding with the hearing of respondent's petition for confirmation of arbitral award. After the petition
was admitted by the appellate court, the RTC of Quezon City issued an order holding in abeyance any further
action on respondent's petition as the assailed decision of the arbitrator had already become the subject of an
appeal in the CA.
CA rendered the assailed decision dismissing ABS-CBN's petition for lack of jurisdiction.
It stated that as the TOR itself provided that the arbitrator's decision shall be final and unappealable and that
no motion for reconsideration shall be filed,... then the petition for review must fail.
It ruled that it is the RTC which has jurisdiction over questions relating to arbitration.
Petitioner moved for reconsideration. The same was denied. Hence, this petition.

ISSUE:
Whether or not an aggrieved party in a voluntary arbitration dispute may avail of, directly in the CA, a petition
for review under Rule 43 or a petition for certiorari under Rule 65 of the Rules of Court, instead of filing a
petition to vacate the award in the RTC when the grounds invoked to overturn the arbitrator's decision are
other than those for a petition to vacate an arbitral award enumerated under RA 876.
RULING:
Yes.
The issues clearly fall under the classification of errors of fact and law questions which may be passed upon by
the CA via a petition for review under Rule 43. Petitioner cleverly crafted its assignment of errors in such a way
as to straddle both judicial remedies,... that is, by alleging serious errors of fact and law (in which case a
petition for review under Rule 43 would be proper) and grave abuse of discretion (because of which a petition
for certiorari under Rule 65 would be permissible).
RA 876 itself mandates that it is the Court of First Instance, now the RTC, which has jurisdiction over questions
relating to arbitration, such as a petition to vacate an arbitral award.
the law itself clearly provides that the RTC must issue an order vacating an arbitral award only "in any one of
the . . . cases" enumerated therein. Under the legal maxim in statutory construction expressio unius est
exclusio... alterius, the explicit mention of one thing in a statute means the elimination of others not specifically
mentioned. As RA 876 did not expressly provide for errors of fact and/or law and grave abuse of discretion
(proper grounds for a petition for review under Rule 43 and... a petition for certiorari under Rule 65,
respectively) as grounds for maintaining a petition to vacate an arbitral award in the RTC, it necessarily follows
that a party may not avail of the latter remedy on the grounds of errors of fact and/or law or grave abuse of
discretion to... overturn an arbitral award.
In cases not falling under any of the aforementioned grounds to vacate an award, the Court has already made
several pronouncements that a petition for review under Rule 43 or a petition for certiorari under Rule 65 may
be availed of in the CA. Which one would depend on the... grounds relied upon by petitioner.
In Luzon Development Bank v. Association of Luzon Development Bank Employees, the Court held that a
voluntary arbitrator is properly classified as a "quasi-judicial instrumentality" and is, thus, within the ambit of
Section 9 (3) of the
Judiciary Reorganization Act, as amended.
As such, decisions handed down by voluntary arbitrators fall within the exclusive appellate jurisdiction of the
CA. This decision was taken into consideration in approving Section 1 of Rule 43 of the Rules of Court.
These... cases held that the proper remedy from the adverse decision of a voluntary arbitrator, if errors of fact
and/or law are raised, is a petition for review under Rule 43 of the Rules of Court. Thus, petitioner's contention
that it may avail of a petition for review under Rule 43... under the circumstances of this case is correct.
As to petitioner's arguments that a petition for certiorari under Rule 65 may also be resorted to, we hold the
same to be in accordance with the Constitution and jurisprudence.
As may be gleaned from the above stated provision, it is well within the power and jurisdiction of the Court to
inquire whether any instrumentality of the Government, such as a voluntary arbitrator, has gravely abused its
discretion in the exercise of its functions and... prerogatives. Any agreement stipulating that "the decision of the
arbitrator shall be final and unappealable" and "that no further judicial recourse if either party disagrees with
the whole or any part of the arbitrator's award may be availed of" cannot be held to preclude in... proper cases
the power of judicial review which is inherent in courts. We will not hesitate to review a voluntary arbitrator's
award where there is a showing of grave abuse of authority or discretion and such is properly raised in a
petition for... certiorari and there is no appeal, nor any plain, speedy remedy in the course of law.
Significantly, Insular Savings Bank v. Far East Bank and Trust Company definitively outlined several judicial
remedies an aggrieved party to an arbitral award may undertake:
(1)... a petition in the proper RTC to issue an order to vacate the award on the grounds provided for in Section
24 of RA 876;
(2)... a petition for review in the CA under Rule 43 of the Rules of Court on questions of fact, of law, or mixed
questions of fact and law; and
(3)... a petition for certiorari under Rule 65 of the Rules of Court should the arbitrator have acted without or in
excess of his jurisdiction or with grave abuse of discretion amounting to lack or excess of jurisdiction.
Nevertheless, although petitioner's position on the judicial remedies available to it was correct, we sustain the
dismissal of its petition by the CA. The remedy petitioner availed of, entitled "alternative petition for review
under Rule 43 or petition for certiorari under Rule 65," was wrong.
Time and again, we have ruled that the remedies of appeal and certiorari are mutually exclusive and not
alternative or successive.
Proper issues that may be raised in a petition for review under Rule 43 pertain to errors of fact, law or mixed
questions of fact and law. While a petition for certiorari under Rule 65 should only limit itself to errors of
jurisdiction, that is, grave... abuse of discretion amounting to a lack or excess of jurisdiction. Moreover, it
cannot be availed of where appeal is the proper remedy or as a substitute for a lapsed appeal.
A careful reading of the assigned errors reveals that the real issues calling for the CA's resolution were less the
alleged grave abuse of discretion exercised by the arbitrator and more about the arbitrator's appreciation of the
issues and evidence presented by the parties.
 TUNA PROCESSING, INC., Petitioner, v. PHILIPPINE KINGFORD, INC.,
Respondent.
G.R. No. 185582 : February 29, 2012

FACTS:
Philippine Kingford, Inc. (Kingford) is a corporation duly organized and existing under the laws of the
Philippines while Tuna Processing, Inc. (TPI) is a foreign corporation not licensed to do business in the
Philippines. Due to circumstances not mentioned in the case, 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 a Petition for Confirmation, Recognition, and
Enforcement of Foreign Arbitral Award before the RTC of Makati City. The RTC dismissed the petition on the
ground that the petitioner lacked legal capacity to sue in the Philippines.

ISSUES:
Whether 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?
Whether or not the court a quo was correct in so dismissing the petition on the ground of petitioner's lack of
legal capacity to sue.
Whether a foreign corporation not licensed to do business in the Philippines have legal capacity to sue under
the provisions of the Alternative Dispute Resolution Act of 2004?

RULING:
The petition is impressed with merit.
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.
the Alternative Dispute Resolution Act of 2004 shall apply in this case as the Act, as its title - An Actto
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.
Inasmuch as the Alternative Dispute Resolution Act of 2004, a municipal law, applies in the instant petition, we
do not see the need to discuss compliance with international obligations under the New York Convention and
the Model Law. After all, both... already form part of the law.

We answer in the affirmative.

Arbitration, as an alternative mode of settlement, is gaining adherents in legal and judicial circles here and
abroad. If its tested mechanism can simply be ignored by an aggrieved party, one who, it must be stressed,
voluntarily and actively participated... in the arbitration proceedings from the very beginning, it will destroy the
very essence of mutuality inherent in consensual contracts
Clearly, on the matter of capacity to sue, a foreign arbitral award should be respected not because it is favored
over domestic laws and procedures, but because Republic Act No. 9285 has certainly erased any conflict of
law question.
Premises considered, petitioner TPI, although not licensed to do business in the Philippines, may seek
recognition and enforcement of the foreign arbitral award in accordance with the provisions of the Alternative
Dispute Resolution Act of 2004.

II
The remaining arguments of respondent Kingford are likewise unmeritorious.
First. There is no need to consider respondent's contention that petitioner TPI improperly raised a question of
fact when it posited that its act of entering into a MOA should not be considered "doing business" in the
Philippines for the purpose of determining capacity to... sue. We reiterate that the foreign corporation's
capacity to sue in the Philippines is not material insofar as the recognition and enforcement of a foreign arbitral
award is concerned.
Second. Respondent cannot fault petitioner for not filing a motion for reconsideration of the assailed Resolution
dated 21 November 2008 dismissing the case. We have, time and again, ruled that the prior filing of a motion
for reconsideration is not required in... certiorari under Rule 45.
Third. While we agree that petitioner failed to observe the principle of hierarchy of courts, which, under
ordinary circumstances, warrants the outright dismissal of the case,[42] we opt to relax the rules following the
pronouncement in Chua... v. Ang, to wit:
[I]t must be remembered that [the principle of hierarchy of courts] generally applies to cases involving
conflicting factual allegations. Cases which depend on disputed facts for decision cannot be brought
immediately before us as we are not triers of... facts. A strict application of this rule may be excused when the
reason behind the rule is not present in a case, as in the present case, where the issues are not factual but
purely legal. In these types of questions, this Court has... the ultimate says so that we merely abbreviate the
review process if we, because of the unique circumstances of a case, choose to hear and decide the legal
issues outright.
Moreover, the novelty and the paramount importance of the issue herein raised should be seriously
considered. Surely, there is a need to take cognizance of the case not only to guide the bench and the bar, but
if only to strengthen arbitration as... a means of dispute resolution, and uphold the policy of the State embodied
in the Alternative Dispute Resolution Act of 2004, to wit:
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 party 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. xxx
Fourth. As regards the issue on the validity and enforceability of the foreign arbitral award, we leave its
determination to the court a quo where its recognition and enforcement is being sought.
Fifth. Respondent claims that petitioner failed to furnish the court of origin a copy of the motion for time to file
petition for review on certiorari before the petition was filed with this Court. We, however, find petitioner's reply
in... order. Thus:
Admittedly, reference to "Branch 67" in petitioner TPI's "Motion for Time to File a Petition for Review on
Certiorari under Rule 45" is a typographical error. As correctly pointed out by respondent Kingford, the order
sought to be assailed originated... from Regional Trial Court, Makati City, Branch 61.
xxx Upon confirmation with the Regional Trial Court, Makati City, Branch 61, a copy of petitioner TPI's motion
was received by the Metropolitan Trial Court, Makati City, Branch 67. On 8 January 2009, the motion was
forwarded to the Regional Trial Court,... Makati City, Branch 61.
All considered, petitioner TPI, although a foreign corporation not licensed to do business in the Philippines, is
not, for that reason alone, precluded from filing the Petition for Confirmation, Recognition, and Enforcement of
Foreign Arbitral Award before a Philippine court.
 Stronghold Insurance Co., Inc. vs Sps Rune and Lea Stroe,
GR No. 204689, Jan 21, 2015

FACTS:
Spouses Stroem entered an Owners-Contractor Agreement with Asis-Leif & Company, Inc. (ALCI) represented
by Cynthia Asis-Leif for the construction of a two-storey house on their lot. ALCI secured a performance bond
in the amount of P4.5M from Stronghold Insurance Company (SIC) whereby the latter and ALCI bound
themselves solidarily to pay the Stroem spouses the agreed amount in the event the construction is not
completed.
ALCI failed to finish the project on time despite repeated demands and the Spouses Stroem rescinded the
agreement and hired an independent appraiser to evaluate the progress of the construction project. They later
filed a complaint for breach of contract with damages against ALCI and SIC. Only SIC was served with
summons. The RTC ruled in favor of the Spouses Stroem and ordered SIC to pay damages.
SIC argued that the RTC should have dismissed the case in view of the arbitration clause in the agreement
and that the stipulations in the Owners-Contractor Agreement are part and parcel of the conditions in the bond
issued by it. On the other hand, Spouses Stroem argued that the Owners-Contractor Agreement is ―separate
and distinct from the Bond. The parties to the Agreement are ALCI/Ms. Asis-Leif and Spouses Stroem, while
the parties to the Bond are Spouses Stroem and Stronghold. The considerations for the two contracts are
likewise distinct. Thus, the arbitration clause in the Agreement is binding only on the parties thereto,
specifically ALCI/Ms. Asis-Leif and Spouses Stroem.
ISSUE:
Whether SIC as surety can invoke the CIAC has jurisdiction over the case based on the principal contract.
RULING:
The SC ruled that SIC cannot invoke the stipulation in the principal contract providing for arbitration. What is at
issue in this case is the parties‘ agreement, or lack thereof, to submit the case to arbitration. Spouses Stroem
argue that SIC is not a party to the arbitration agreement. SIC did not consent to arbitration. Only Spouses
Stroem and Asis-Leif may invoke the arbitration clause in the contract.
This court has previously held that a performance bond, which is meant "to guarantee the supply of labor,
materials, tools, equipment, and necessary supervision to complete the project is significantly and substantially
connected to the construction contract and, therefore, falls under the jurisdiction of the CIAC.
The Owners-Contractor Agreement and the performance bond referred to each other; the performance bond
was issued pursuant to the construction agreement. In enforcing a surety contract, the complementary-
contracts-construed-together’ doctrine finds application. According to this principle, an accessory contract must
be read in its entirety and together with the principal agreement.

The ruling in Prudential Guarantee and Assurance Inc. v. Anscor Land, Inc., (G.R. No. 177240, September 8,
2010) to the effect that the Prudential willingly acceded to the terms of the principal contract providing for
arbitration despite the absence of a similar stipulation in the performance bond because the construction
contract breathes life into the performance bond will not apply to the present case. In Prudential, the
construction contract (principal contract) expressly incorporated the performance bond into the principal
contract. In the present case, the Owners-Contractor Agreement between ALCI and Spouses Stroem merely
stated that a performance bond shall be issued in favor of the latter. The performance bond merely referenced
(not incorporated) the contract entered into by Spouses Stroem and ALCI, which pertained to ALCI‘s duty to
construct a two-storey residence building. To be clear, it is in the Owners-Contractor Agreement that the
arbitration clause is found. The construction agreement was signed only by Spouses Stroem and the
contractor, ALCI, as represented by Ms. Ma. Cynthia Asis-Leif. It is basic that “contracts take effect only
between the parties, their assigns and heirs”. Not being a party to the construction agreement, SIC cannot
invoke the arbitration clause and cannot thus invoke the jurisdiction of the CIAC.
 Transfield Phils., Inc vs Luzon Hydro Corp., Inc.
GR No. 146717, May 19, 2006

FACTS:
Transfield Philippines (Transfield) entered into a turn-key contract with Luzon Hydro Corp. (LHC).Under the
contract, Transfield were to construct a hydro-electric plants in Benguet and Ilocos. Transfield was given the
sole responsibility for the design, construction, commissioning, testing and completion of the Project. The
contract provides for a period for which the project is to be completed and also allows for the extension of the
period provided that the extension is based on justifiable grounds such as fortuitous event. In order to
guarantee performance by Transfield, two stand-by letters of credit were required to be opened. During the
construction of the plant, Transfield requested for extension of time citing typhoon and various disputes
delaying the construction. LHC did not give due course to the extension of the period prayed for but referred
the matter to arbitration committee. Because of the delay in the construction of the plant, LHC called on the
stand-by letters of credit because of default. However, the demand was objected by Transfield on the ground
that there is still pending arbitration on their request for extension of time.

ISSUE:
Whether or not LHC can collect from the letters of credit despite the pending arbitration case

RULING:
Transfield’s argument that any dispute must first be resolved by the parties, whether through negotiations or
arbitration, before the beneficiary is entitled to call on the letter of credit in essence would convert the letter of
credit into a mere guarantee.
The independent nature of the letter of credit may be: (a) independence in toto where the credit is independent
from the justification aspect and is a separate obligation from the underlying agreement like for instance a
typical standby; or (b) independence may be only as to the justification aspect like in a commercial letter of
credit or repayment standby, which is identical with the same obligations under the underlying agreement. In
both cases the payment may be enjoined if in the light of the purpose of the credit the payment of the credit
would constitute fraudulent abuse of the credit.
Jurisprudence has laid down a clear distinction between a letter of credit and a guarantee in that the settlement
of a dispute between the parties is not a pre-requisite for the release of funds under a letter of credit. In other
words, the argument is incompatible with the very nature of the letter of credit. If a letter of credit is drawable
only after settlement of the dispute on the contract entered into by the applicant and the beneficiary, there
would be no practical and beneficial use for letters of credit in commercial transactions.

The engagement of the issuing bank is to pay the seller or beneficiary of the credit once the draft and the
required documents are presented to it. The so-called “independence principle” assures the seller or the
beneficiary of prompt payment independent of any breach of the main contract and precludes the issuing bank
from determining whether the main contract is actually accomplished or not. Under this principle, banks
assume no liability or responsibility for the form, sufficiency, accuracy, genuineness, falsification or legal effect
of any documents, or for the general and/or particular conditions stipulated in the documents or superimposed
thereon, nor do they assume any liability or responsibility for the description, quantity, weight, quality,
condition, packing, delivery, value or existence of the goods represented by any documents, or for the good
faith or acts and/or omissions, solvency, performance or standing of the consignor, the carriers, or the insurers
of the goods, or any other person whomsoever.
 Fruehauf Electronics Phils Corp. vs Technoligy Electronics Assembly and
Management Pacifi Corp.,
GR No. 204197, Nov 23, 2016

FACTS:
Fruehauf Electronics Philippines Corp. (Fruehauf) leased several parcels of land to Signetics. The latter was
eventually bought by Team Holdings Limited, which later changed its name to Technology Electronics
Assembly and Management Pacific Corp. (TEAM).
Fruehauf filed an unlawful detainer case against TEAM. To settle this, they executed a MOA, wherein the latter
undertook to pay Fruehauf 14.7 million pesos as unpaid rent, and a lease contract with a term of 15 years,
renewable for another 25 years upon mutual agreement. Said lease contract authorized TEAM to sublease the
property – TEAM leased it to Capitol Publishing House, and also includes an arbitration agreement which
provides that in event of any dispute or disagreement between the parties as to the interpretation of the
provisions of the lease contract, the parties shall refer it to arbitration composed by a panel of 3 arbitrators; one
to be appointed by Fruehauf, one to be appointed by TEAM, and the third one to be appointed by the first two
members.
In 2003, TEAM informed Fruehauf that it would not be renewing the lease which was about to expire in June of
the same year. The sublease between TEAM and Capitol also expired in 2003. However, the latter only
vacated the premises in 2005. Fruehauf instituted an action before the RTC for “Submission of an Existing
Controversy for Arbitration,” alleging that the property suffered damages that required extensive renovation;
that TEAM did not restore the property to its original condition; and that it failed to turn over the premises and
pay rent. RTC granted the petition and ordered the parties to comply with the arbitration agreement.
The arbitral tribunal awarded Fruehauf 8.2 million pesos as balance of the unpaid rent from 2003 to 2005, and
46.8 million pesos as damages, finding that Fruehauf had made several demands for the return of the leased
premises before and after the expiration of the lease contract and that there was no express or implied renewal
of the lease, and recognizing the fact that TEAM’s sublessor, Capitol, did not vacate the premises even after
the expiration of the lease contract.
The tribunal held that it was not enough for the lessor to simply vacate the leased property; it was also
necessary that the lessor place the thing at the disposal of the lessor, so that the latter can receive it without
any obstacle.
RTC: Found insufficient legal grounds to vacate the arbitral award.
CA: Reversed and set aside the arbitral award.

ISSUES:
(1) Whether or not arbitration awards are subject to appeal.
(2) Whether or not there is a remedy against arbitral awards.
(3) Whether or not there are remedies from an RTC decision confirming
vacating, modifying, or correcting an arbitral award.
RULING:
(1) No. Rule 19.7 of the Special Rules of Court on Alternative Dispute Resolution (Special ADR Rules)
provides that “An agreement to refer a dispute to arbitration shall mean that the arbitral award shall be final and
binding. Consequently, a party to an arbitration is precluded from filing an appeal or a petition for certiorari
questioning the merits of an arbitral award.”
The right to appeal is neither a natural right or an indispensable component of due process; it is a mere
statutory privilege that cannot be invoked in the absence of an enabling statute. Additionally, being 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. 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.
(2) Yes. Rule 19.10 of the Special ADR Rules - by referring to Section 24 of the Arbitration Law and Article 34
of the 1985 United Nations Commission on International Trade Law (UNCITRAL) Model Law - recognizes the
very limited exceptions to the autonomy of arbitral awards:
Rule 19.10 provides, “As a general rule, the court can only vacate or set aside the decision of an arbitral
tribunal upon a clear showing' that the award suffers from any of the infirmities or grounds for vacating an
arbitral award under Section 24 of Republic Act No. 876 or under Rule 34 of the Model Law in a domestic
arbitration, or for setting aside an award in an international arbitration under Article 34 of the Model Law, or for
such other grounds provided under these Special Rules.
If the Regional Trial Court is asked to set aside an arbitral award in a domestic or international arbitration on
any ground other than those provided in the Special ADR Rules, the court shall entertain such ground for the
setting aside or non-recognition of the arbitral award only if the same amounts to a violation of public policy.
The court shall not set aside or vacate the award of the arbitral tribunal merely on the ground that the arbitral
tribunal committed errors of fact, or of law, or of fact and law, as the court cannot substitute its judgment for
that of the arbitral tribunal.” Grounds for vacating a domestic arbitral award under Section 24 of the Arbitration
Law:
(a) when the award is procured by corruption, fraud, or other undue means; or (b) there was evident partiality
or corruption in the arbitrators or any of them; or (c) the arbitrators were guilty of misconduct that materially
prejudiced the rights of any party; or (d) 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.
The award may also be vacated if an arbitrator who was disqualified to act willfully refrained from disclosing his
disqualification to the parties. Notably, none of these grounds pertain to the correctness of the award but relate
to the misconduct of arbitrators. Grounds for setting aside an arbitral award under ADR Act of 2004 IRR: (i) the
party making the application furnishes proof that:
 Koppel, Inc. vs Makati Rotary Club Foundation, Inc.,
GR No. 198075, Sept 4, 2013

FACTS:
Fedders Koppel, Incorporated, a manufacturer of air-conditioning products, was the registered owner of a
parcel of land located at Km. 16, South Superhighway, Parañaque City within this parcel of land are buildings
and other improvements dedicated to the business of FKI. In 1975, FKI bequeathed the subject land (exclusive
of the improvements thereon) in favor of herein respondent Makati Rotary Club Foundation, Incorporated by
way of a conditional donation. The respondent accepted the donation with all of its conditions.
On 26 May1975, FKI and the respondent executed a Deed of Donationevidencing their consensus. One of the
conditions of the donation required the respondent to lease the subject land back to FKI under terms specified
in their Deed of Donation. With the respondent’s acceptance of the donation, a lease agreement between FKI
and the respondent was, therefore, effectively incorporated in the Deed of Donation.
The Deed of Donation also states that the period of lease is 25 years and the amount of rent to be paid by FKI
for the first 25 years is P40,126 per annum. The Deed of Donation also stipulated that the lease over the
subject property is renewable for another period of twenty-five (25) years " upon mutual agreement" of FKI and
the respondent. In which case, the amount of rent shall be determined in accordance with item 2(g) of the
Deed of Donation, viz: In October 1976, FKI and the respondent executed an Amended Deed of Donation that
reiterated the provisions of the Deed of Donation , including those relating to the lease of the subject land.
Verily, by virtue of the lease agreement contained in the Deed of Donation and Amended Deed of Donation ,
FKI was able to continue in its possession and use of the subject land. Two (2) days before the lease
incorporated in the Deed of Donation and Amended Deed of Donation was set to expire, or on 23 May 2000,
FKI and respondent executed another contract of lease ( 2000 Lease Contract ) covering the subject land. In
this 2000 Lease Contract, FKI and respondent agreed on a new five-year lease to take effect on the 26th of
May 2000, with annual rents ranging from ₱4,000,000 for the first year up to ₱4,900,000 for the fifth year.
The 2000 Lease Contract also contained an arbitration clause enforceable in the event the parties come to
disagreement about the" interpretation, application and execution" of the lease, After the 2000 Lease Contract
expired, FKI and respondent agreed to renew their lease for another five (5) years.
This new lease (2005 Lease Contract ) required FKI to pay a fixed annual rent of ₱4,200,000. In addition to
paying the fixed rent, however, the 2005 Lease Contract also obligated FKI to make a yearly " donation " of
money to the respondent. Such donations ranged from ₱3,000,000 for the first year up to ₱3,900,000for the
fifth year. Notably, the 2005 Lease Contract contained an arbitration clause similar to that in the 2000 Lease
Contract.
From 2005 to 2008, FKI faithfully paid the rentals and " donations "due it per the 2005 Lease Contract. But in
June of 2008, FKI sold all its rights and properties relative to its business in favor of herein petitioner Koppel,
Incorporated. On 29 August 2008, FKI and petitioner executed an Assignment and Assumption of Lease and
Donation —wherein FKI, with the conformity of the respondent, formally assigned all of its interests and
obligations under the Amended Deed of Donation and the 2005 Lease Contract in favor of petitioner.
The following year, petitioner discontinued the payment of the rent and " donation " under the 2005 Lease
Contract. Petitioner’s refusal to pay such rent and "donation " emanated from its belief that the rental
stipulations of the 2005 Lease Contract, and even of the 2000 Lease Contract, cannot be given effect because
they violated one of the" material conditions " of the donation of the subject land, as stated in the Deed of
Donation and Amended Deed of Donation. According to petitioner, the Deed of Donation and Amended Deed
of Donation actually established not only one but two (2) lease agreements between FKI and respondent, i.e. ,
one lease for the first twenty-five (25) years or from 1975 to 2000, and another lease for the next twenty-five
(25)years thereafter or from 2000 to 2025. 27 Both leases are material conditions of the donation of the subject
land.
Petitioner points out that while a definite amount of rent for the second twenty-five (25) year lease was not
fixed in the Deed of Donation and Amended Deed of Donation , both deeds nevertheless prescribed rules and
limitations by which the same may be determined. Such rules and limitations ought to be observed in any
succeeding lease agreements between petitioner and respondent for they are, in themselves, material
conditions of the donation of the subject land. In this connection, petitioner cites item 2(g) of the Deed of
Donation and Amended Deed of Donation that supposedly limits the amount of rent for the lease over the
second twenty-five (25) years to only " three percent (3%) of the fair market value of the subject land excluding
the improvements.
For petitioner then, the rental stipulations of both the 2000 Lease Contract and 2005 Lease Contract cannot be
enforced as they are clearly, in view of their exorbitant exactions, in violation of the aforementioned threshold
in item 2(g) of the Deed of Donation and Amended Deed of Donation .
Consequently, petitioner insists that the amount of rent it has to pay thereon is and must still be governed by
the limitations prescribed in the Deed of Donation and Amended Deed of Donation. Demand letters were sent
but to no avail, petitioners did not comply with the demands of the respondent. On 5 October 2009, respondent
filed an unlawful detainer case against the petitioner before the Metropolitan Trial Court (MeTC) of Parañaque
City. In due course, petitioner and respondent both submitted their position papers, together with their other
documentary evidence. Remarkably, however, respondent failed to submit the Second Demand Letter as part
of its documentary evidence.
The MeTC rendered judgmentin favor of the petitioner. While the MeTC refused to dismiss the action on the
ground that the dispute is subject to arbitration, it nonetheless sided with the petitioner with respect to the
issues regarding the insufficiency of the respondent’s demand and the nullity of the 2005 Lease Contract.
The RTC reversed the MeTC and ordered the eviction of the petitioner from the subject land. Aggrieved, the
petitioner appealed to the Court of Appeals. But the Court of Appeals only affirmed the decision of the RTC.
On 19 August 2011, the Court of Appeals affirmed the decision of the RTC.

ISSUE:
Whether or not the MeTC, RTC, and CA erred in over looking the significance of the arbitration clause in the
2005 Lease Contract.

RULING:
Yes. Present Dispute is Arbitrable Under the arbitration Clause of the 2005 Lease Agreement Contract. Going
back to the records of this case, it is discernable that the dispute between the petitioner and respondent
emanates from the rental stipulations of the 2005 Lease Contract.
The respondent insists upon the enforce ability and validity of such stipulations, whereas, petitioner, in
substance, repudiates them. It is from petitioner’s apparent breach of the 2005 Lease Contract that respondent
filed the instant unlawful detainer action. One cannot escape the conclusion that, under the foregoing
premises, the dispute between the petitioner and respondent arose from the application or execution of the
2005 Lease Contract .
Undoubtedly, such kinds of dispute are covered by the arbitration clause of the 2005 Lease Contract to wit:
Governing Law – The provisions of this 2005 Lease Contract shall be governed, interpreted and construed in
all aspects in accordance with the laws of the Republic of the Philippines. Any disagreement as to the
interpretation, application or execution of this 2005 Lease Contract shall be submitted to a board of three (3)
arbitrators constituted in accordance with the arbitration law of the Philippines. The decision of the majority of
the arbitrators shall be binding upon FKI and respondent. (Emphasis supplied) The arbitration clause of the
2005 Lease Contract stipulates that "any disagreement" as to the " interpretation, application or execution " of
the 2005 Lease Contract ought to be submitted to arbitration. To the mind of this Court, such stipulation is clear
and is comprehensive enough so as to include virtually any kind of conflict or dispute that may arise from the
2005 Lease Contract including the one that presently besets petitioner and respondent.
 DENR V. United Planners Consultants
G.R. No. 212081, February 23, 2015

FACTS:

DENR and UNITED PLANNERS entered into a consultancy agreement for one of DENR’S Land Resource
Management Master Plan Project. It was agreed that DENR will pay around P4M based on a predetermined
percentage corresponding to the particular stage of work accomplished. UNITED PLANNERS had completed
the work but DENR only paid around P2M, only 47% of the total contract price. DENR failed to pay the
remaining balance despite acknowledging its liability and assured payment at the soonest possible time.
UNITED PLANNERS then filed a complaint with the RTC. Likewise, it filed a Motion to Refer to Arbitration
pursuant to the ARBITRATION CLAUSE in the contract.
During pre-trial, both agreed to adapt CIAC Rules to govern the arbitration proceeding. Hence, an Arbitral
Tribunal (AT) was created. The AT rendered an award in favor of UNITED PLANNERS directing DENR to pay
the unpaid balance, with interests and other costs.
DENR filed a Motion for Reconsideration (MR) to the Arbitral Award (AA) with the RTC.
UNITED PLANNERS opposed the MR and moved to confirm the AA. RTC confirmed the AA and issued a Writ
of Execution.
DENR filed a Motion to Quash of the Writ of Execution.
RTC denied the Motion to Quash.
DENR received RTC’s order on July 12, 2012. On Sept 10, DENR filed a PETITION FOR CERTIORARI before
the COURT OF APPEALS questioning the merits of the Arbitral Award.
CA dismissed the Petition for Certiorari on 2 grounds:
1) the petition was prohibited under the CIAC rules because it assails the merits of the AA and
2) it was filed out of time, violating the 15 day reglementary period to file a Special Civil Action for certiorari
under the Special ADR Rules.

ISSUE:
Whether the CA correct dismissing the petition for certiorari.

RULING:
YES.
Under CIAC rules, filing a Motion for Reconsideration of the Arbitral Award was a prohibited pleading. Thus,
rendering the Arbitral Award final and executory.
By referral to arbitration, the case falls within the coverage of the Special ADR Rules. A petition for certiorari
under the Rules of Court, even in suppletory capacity is NOT allowed.
Rule 22.1 of the Special ADR rules is explicit that the provisions of the Rules of Court that are applicable to the
proceedings enumerated in Rule 1.1 of the Special ADR rules have either been included and incorporated or
specifically referred to. Also, it in cases where no specific rule is provided under the Special ADR Rules, the
court shall resolve the matter summarily and be guided by the spirit and intent of the Special ADR Rules and
the ADR laws.
Further, Special ADR rules provides that Petition for Certiorari must be filed within 15 days from notice of
RTC’s order. In this case, since the Petition was filed nearly 2 months after July 12, the petition is dismissible.
 Luzon Iron Devt Group Corp. vs Bridestone Mining and Devt Corp. ,
GR No. 220456, Dec 7, 2016

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:
Whether or not respondents are guilty of forum shopping and has violated the TPAA.

RULING:
Yes.
The Supreme court ruled that there was forum shopping Filing of complaints before the RTC and the DENR is
forum shopping. (Forum shopping is committed when multiple suits involving the same parties and the same
causes of action are filed, either simultaneously or successively, for the purpose of obtaining a favorable
judgment through means other than appeal or certiorari.)The summon was not properly served.
The Court, finds that Consolidated Iron was not properly served with summons through any of the permissible
modes under the Rules of Court. Indeed, Consolidated Iron was served with summons through Luzon Iron.
Such service of summons, however, was defective. Lastly, the controversy must be referred to arbitration as
laid down in the Agreement. Paragraphs 14.8 and 15.1 of the TPAA should be harmonized in such a way that
the arbitration clause is given life. The complaints filed before the RTC should have been dismissed, because
petitioners were able to establish that responsdents violated the prohibition on forum shopping. The parties,
nevertheless, are directed to initiate arbitration proceedings as provided under Paragraph 15.1 of the TPAA.
 Federal Express Corp. vs Airfreight 2100 Inc.,
GR No. 216600, Nov 21, 2016

FACTS:
Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court filed by FedEx and
Rhicke S. Jennings (Jennings), assailing the January 20, 2015 Decision of the CA, which affirmed RTC,
dismissing its petition for the issuance of a confidentiality/protective order.
FedEx is a foreign corporation doing business in the Philippines primarily engaged in international air carriage,
logistics and freight forwarding, while Jennings serves as its Managing Director for the Philippines and
Indonesia. Respondent Airfreight 2100 (Air21) is a domestic corporation likewise involved in the freight
forwarding business, while Alberto Lina (Lina) is the Chairman of its Board of Directors.
During the arbitration proceedings, Jennings testified that Merit and Ace are the proxies of Air21 which
aggrieved Lina in behalf of Air21 and filed a complaint for grave slander before the Taguig City Prosecutor
contending that it brought dishonor, discredit and contempt to his name and that of Air21.
Jennings and FedEx on the other hand filed their Petition for Issuance of a Confidentiality/Protective Order with
Application for Temporary Order of Protection and/or Preliminary Injunction before the RTC alleging that all
information and documents obtained in, or related to, the arbitration proceedings were confidential. FedEx
asserted that the testimony of Jennings, a witness in the arbitration proceedings, should not be divulged and
used to bolster the complaint-affidavit for grave slander as this was inadmissible in evidence.

ISSUE:
Whether the testimony of Jennings given during the arbitration proceedings falls within the ambit of confidential
information and, therefore, covered by the mantle of a confidentiality/protection order.

RULING:
Yes.
Gauged by the said parameters, the written statements of witnesses Ross, Holmes and Jennings, as well as
the latter's oral testimony in the April 25, 2013 arbitration hearing, both fall under Section 3 (h) [1] and [3] of the
ADR Act which states that "communication, oral or written, made in a dispute resolution proceedings, including
any memoranda, notes or work product of the neutral party or non-party participant, as defined in this Act; and
(3) pleadings, motions, manifestations, witness statements, reports filed or submitted in an arbitration or for
expert valuation," constitutes confidential information.
Notably, both the parties and the Arbitral Tribunal had agreed to the Terms of Reference (TOR) that "the
arbitration proceedings should be kept strictly confidential as provided in Section 23 of the ADR Act and Article
25-A19 of the PDRCI Arbitration Rules (Arbitration Rules) and that they should all be bound by such
confidentiality requirements."
The provisions of the ADR Act and the Arbitration Rules repeatedly employ the word "shall" which, in statutory
construction, is one of mandatory character in common parlance and in ordinary signification. Thus, the
general rule is that information disclosed by a party or witness in an ADR proceeding is considered privileged
and confidential.
 ANDREW D. FYFE, RICHARD T. NUTTALL, AND RICHARD J. WALD v.
PHILIPPINE AIRLINES, INC.,
G.R. No. 160071, June 06, 2016

FACTS:
This case concerns the order issued by the Regional Trial Court granting the respondent's application to
vacate the adverse arbitral award of the panel of arbitrators, and the propriety of the recourse from such order.
Under review are the resolutions promulgated in C.A.-G.R. No. 71224 entitled Andrew D. Fyfe, Richard T.
Nuttall and Richard J. Wald v. Philippine Airlines, Inc. on May 30, 20031 and September 19, 2003,2 whereby
the Court of Appeals (CA) respectively granted the respondent's Motion to Dismiss Appeal (without Prejudice
to the Filing of Appellee's Brief), and denied the petitioners' Motion for Reconsideration.
In 1998, the respondent underwent rehabilitation proceedings in the SEC, decreeing, among others, the
suspension of all claims for payment against the respondent.
When the PAL, terminated the Technical Services Agreement on July 26, 1999 which also resulted in the
termination of the services of the senior technical advisers including those of the Complainants it admitted that
the termination penalties in the amount of US$3,300,000.00 as provided in the Letter dated January 4, 1999
are payable to the Senior Technical Advisers by PAL. Xxx. PAL's admission of its liability to pay the termination
penalties to the complainants was made also in its Answer. PAIAs counsel even stipulated during the hearing
that the airline company admits that it is liable to pay Complainants the termination penalties.xxx.
However, PAL argued that although it is liable to pay termination penalties the Complainants are not entitled to
their respective claims because considering that PAL had paid RSS advance "advisory fees for two (2) years,
and RSS had rendered advisory services for only seven (7) months from January 4, 1999 to July 31, 1999 that
would entitle RSS to an (sic) advisory fees of only US$1,662,500.00 and therefore the unserved period of 17
months equivalent to US$4,037,500.00 should be refunded.
The Arbitration Tribunals is not convinced.
xxxx
PAL cannot refuse to pay Complainants their termination penalties by setting off against the unserved period of
seventeen (17) months of their advance advisory fees as the Agreement and the Side Letter clearly do not
allow refund. This Arbitration Tribunal cannot read into the contract, which is the law between the parties, what
the contract docs not provide or what the parties did not intend. It is basic in contract interpretation that
contracts that are not ambiguous are to be interpreted according to their literal meaning and should not be
interpreted beyond their obvious intendment. x x x. The penalties work as security for the Complainants
against the uncertainties of their work at PAL whose closure was a stark reality they were facing. This would
not result in unjust enrichment for the Complainants because the termination of the services was initiated by
PAL itself without cause. In feet, PAL admitted that at the time their services were terminated the Complainants
were performing well in their respective assigned works, x x x.
If it finds itself losing "substantial" sums of money because of its contractual commitments, there is nothing this
Arbitration Tribunal can do to remedy the situation. Jurisprudence teaches us that neither the law nor the
courts will extricate a party from an unwise or undesirable contract that he or she entered into with all the
required formalities and with full awareness of its consequences.
Dissatisfied with the outcome, the respondent filed its Application to Vacate Arbitral Award in the RTC which
the RTC granted the respondent's Application to Vacate Arbitral Award.
After their motion for reconsideration was denied, the petitioners appealed to the CA by notice of appeal. The
respondent moved to dismiss the appeal,34 arguing against the propriety of the petitioners' remedy, and
positing that Section 29 of the Arbitration Law limited appeals from an order issued in a proceeding under the
Arbitration Law to a review on certiorari upon questions of law.
The CA promulgated the now assailed resolution granting the respondent's Motion to Dismiss Appeal. It
declared that the appropriate remedy against the order of the RTC vacating the award was a petition for review
on certiorari under Rule 45.
The petitioners moved for reconsideration, but the CA denied their motion.

Hence, this appeal by the petitioners.

ISSUE:
Whether the CA gravely erred in dismissing their appeal for being an inappropriate remedy, and in holding that
a petition for review on certiorari under Rule 45 was the sole remedy under Section 29 of the Arbitration Law.
RULING:
No.
Firstly, the assailed resolution of the CA did not expressly declare that the petition for review on certiorari under
Rule 45 was the sole remedy from the RTC's order vacating the arbitral award. The CA rather emphasized that
the petitioners should have filed the petition for review on certiorari under Rule 45 considering that Section 29
of the Arbitration Law has limited the ground of review to "questions of law." Accordingly, the CA correctly
dismissed the appeal of the petitioners because pursuant to Section 2,49 Rule 41 of the Rules of Court an
appeal of questions of law arising in the courts in the first instance is by petition for review on certiorari under
Rule 45.

It is noted, however, that since the promulgation of the assailed decision by the CA on May 30, 2003, the law
on the matter underwent changes. On February 4, 2004. Republic Act No. 9285 (Alternative Dispute
Resolution Act of 2004) was passed by Congress, and was approved by the President on April 2, 2004.
Pursuant to Republic Act No. 9285, the Court promulgated on September 1, 2009 in A.M. No. 07-11-08-SC the
Special Rules of Court on Alternative Dispute Resolution, which are now the present rules of procedure
governing arbitration. Among others, the Special Rules of Court on Alternative Dispute Resolution requires an
appeal by petition for review to the CA of the final order of the RTC confirming, vacating, correcting or
modifying a domestic arbitral award, to wit:

Rule 19.12 Appeal to the Court of Appeals. - An appeal to the Court of Appeals through a petition for review
under this Special Rule shall only be allowed from the following orders of the Regional Trial Court:
Granting or denying an interim measure of protection;

a. Denying a petition for appointment of an arbitrator;

b. Denying a petition for assistance in taking evidence;
c. Enjoining or refusing to enjoin a person from divulging confidential information;
d. Confirming, vacating or correcting/modifying a domestic arbitral award;
e. Setting aside an international commercial arbitration award;
 f. Dismissing the petition to set aside an international commercial arbitration award even if the court does
not decide to recognize or enforce such award;
g. Recognizing and/or enforcing an international commercial arbitration award;
h. Dismissing a petition to enforce an international commercial arbitration award;
i. Recognizing and/or enforcing a foreign arbitral award;
j. Refusing recognition and/or enforcement of a foreign arbitral award;
k. Granting or dismissing a petition to enforce a deposited mediated settlement agreement; and
l. Reversing the ruling of the arbitral tribunal upholding its jurisdiction.
Although the Special Rules of Court on Alternative Dispute Resolution provides that the appropriate remedy
from an order of the RTC vacating a domestic arbitral award is an appeal by petition for review in the CA, not
an ordinary appeal under Rule 41 of the Rules of Court, the Court cannot set aside and reverse the assailed
decision on that basis because the decision was in full accord with the law or rule in force at the time of its
promulgation.
We remind that the petitioners cannot insist on their chosen remedy despite its not being sanctioned by the
Arbitration Law. Appeal as a remedy is not a matter of right, but a mere statutory privilege to be exercised only
in the manner and strictly in accordance with the provisions of the law.
 William Golangco Const. Corp. vs Ray Burton Devt Corp.,
GR No. 163582, Aug 9, 2010

FACTS:
This resolves the Petition for Review on Certiorari under Rule 45 of the Rules of Court, praying that the
Decision1 of the Court of Appeals (CA) dated December 19, 2003, holding that the Construction Industry
Arbitration Commission (CIAC) had no jurisdiction over the dispute between herein parties, and the CA
Resolution2 dated May 24, 2004, denying herein petitioner's motion for reconsideration, be reversed and set
aside.
The undisputed facts, as accurately narrated in the CA Decision, are as follows.
On July 20, 1995, petitioner Ray Burton Development Corporation [herein respondent] (RBDC for brevity) and
private respondent William Golangco Construction Corporation [herein petitioner] (WGCC) entered into a
Contract for the construction of the Elizabeth Place (Office/Residential Condominium).
On March 18, 2002, private respondent WGCC filed a complaint with a request for arbitration with the
Construction Industry Arbitration Commission (hereinafter referred to as CIAC). In its complaint, private
respondent prayed that CIAC render judgment ordering petitioner to pay private respondent the total amount of
₱53,667,219.45, and nd interest charges based on the prevailing bank rates on the foregoing amount from
March 1, 2002 and until such time as the same shall be fully paid.
On April 12, 2002, petitioner RBDC filed a Motion to Dismiss the aforesaid complaint on the ground of lack of
jurisdiction. It is petitioner's contention that the CIAC acquires jurisdiction over disputes arising from or
connected with construction contracts only when the parties to the contract agree to submit the same to
voluntary arbitration. In the contract between petitioner and private respondent, petitioner claimed that only
disputes by reason of differences in interpretation of the contract documents shall be deemed subject to
arbitration.
Private respondent filed a Comment and Opposition to the aforesaid Motion dated April 15, 2002. Private
respondent averred that the claims set forth in the complaint require contract interpretation and are thus
cognizable by the CIAC pursuant to the arbitration clause in the construction contract between the parties.
Moreover, even assuming that the claims do not involve differing contract interpretation, they are still
cognizable by the CIAC as the arbitration clause mandates their direct filing therewith.
On May 6, 2002, the CIAC rendered an Order denying respondent’s motion.
Thereafter, petitioner filed a Motion to Suspend Proceedings praying that the CIAC order a suspension of the
proceedings in Case No. 13-2002 until the resolution of the negotiations between the parties, and
consequently, that the period to file an Answer be held in abeyance.
Private respondent filed an Opposition to the aforesaid Motion and a Counter-Motion to Declare respondent to
Have Refused to Arbitrate and to Proceed with Arbitration Ex Parte.
Respondent's (petitioner's) Motion to Suspend Proceedings is DENIED.
Petitioner RBDC filed with the Court of Appeals CA a petition for Certiorari and Prohibition with prayer for the
issuance of a temporary restraining order and a writ of preliminary injunction.
On December 19, 2003, the CA rendered the assailed Decision granting the petition for certiorari, ruling that
the CIAC had no jurisdiction over the subject matter of the case because the parties agreed that only disputes
regarding differences in interpretation of the contract documents shall be submitted for arbitration, while the
allegations in the complaint make out a case for collection of sum of money. Petitioner moved for
reconsideration of said ruling, but the same was denied in a Resolution dated May 24, 2004.
ISSUE:
1. whether the CA acted with grave abuse of discretion in failing to dismiss the petition for certiorari filed
by herein respondent, in view of the latter's failure to file a motion for reconsideration of the assailed
CIAC Order and for failure to attach to the petition the relevant pleadings in CIAC Case No. 13-2002;
2. Whether the CA gravely erred in not upholding the jurisdiction of the CIAC over the subject complaint.

RULING:
The petition is meritorious.
Petitioner is correct that it was grave error for the CA to have given due course to respondent's petition for
certiorari despite its failure to attach copies of relevant pleadings in CIAC Case No. 13-2002. In Tagle v.
Equitable PCI Bank,5 the party filing the petition for certiorari before the CA failed to attach the Motion to Stop
Writ of Possession and the Order denying the same. On the ground of non-compliance with the rules, the CA
dismissed said petition for certiorari. When the case was elevated to this Court via a petition for certiorari, the
same was likewise dismissed.
In actions filed under Rule 65, the petition shall further indicate the material dates showing when notice of the
judgment or final order or resolution subject thereof was received, when a motion for new trial or
reconsideration, if any, was filed and when notice of the denial thereof was received.
It shall be filed in seven (7) clearly legible copies together with proof of service thereof on the respondent with
the original copy intended for the court indicated as such by the petitioner and shall be accompanied by a
clearly legible duplicate original or certified true copy of the judgment, order, resolution, or ruling subject
thereof, such material portions of the record as are referred to therein, and other documents relevant or
pertinent thereto. The certification shall be accomplished by the proper clerk of court or by his duly-authorized
representative, or by the proper officer of the court, tribunal, agency or office involved or by his duly authorized
representative. The other requisite number of copies of the petition shall be accompanied by clearly legible
plain copies of all documents attached to the original.
xxxx
The failure of the petitioner to comply with any of the foregoing requirements shall be sufficient ground for the
dismissal of the petition.
Even on the main issue regarding the CIAC's jurisdiction, the CA erred in ruling that said arbitration body had
no jurisdiction over the complaint filed by herein petitioner. There is no question that, as provided under
Section 4 of Executive Order No. 1008, also known as the "Construction Industry Arbitration Law," the CIAC
has original and exclusive jurisdiction over disputes arising from, or connected with, contracts entered into by
parties involved in construction in the Philippines and all that is needed for the CIAC to acquire jurisdiction is
for the parties to agree to submit the same to voluntary arbitration. Nevertheless, respondent insists that the
only disputes it agreed to submit to voluntary arbitration are those arising from interpretation of contract
documents. It argued that the claims alleged in petitioner's complaint are not disputes arising from
interpretation of contract documents; hence, the CIAC cannot assume jurisdiction over the case.
The Court finds that petitioner's claims that it is entitled to payment for several items under their contract, which
claims are, in turn, refuted by respondent, involves a "dispute arising from differences in interpretation of the
contract." Verily, the matter of ascertaining the duties and obligations of the parties under their contract all
involve interpretation of the provisions of the contract. Therefore, if the parties cannot see eye to eye regarding
each other’s obligations, i.e., the extent of work to be expected from each of the parties and the valuation
thereof, this is properly a dispute arising from differences in the interpretation of the contract.
Clearly, the subject matter of petitioner's claims arose from differences in interpretation of the contract, and
under the terms thereof, such disputes are subject to voluntary arbitration. Since, under Section 4 of Executive
Order No. 1008 the CIAC shall have original and exclusive jurisdiction over disputes arising from, or connected
with, contracts entered into by parties involved in construction in the Philippines and all that is needed for the
CIAC to acquire jurisdiction is for the parties to agree to submit the same to voluntary arbitration, there can be
no other conclusion but that the CIAC had jurisdiction over petitioner's complaint. Furthermore, Section 1,
Article III of the CIAC Rules of Procedure Governing Construction Arbitration (CIAC Rules) further provide that
"[a]n arbitration clause in a construction contract or a submission to arbitration of a construction dispute shall
be deemed an agreement to submit an existing or future controversy to CIAC jurisdiction, notwithstanding the
reference to a different arbitration institution or arbitral body in such contract or submission." Thus, even if
there is no showing that petitioner previously brought its claims before a Board of Arbitrators constituted under
the terms of the contract, this circumstance would not divest the CIAC of jurisdiction.
 Continental Marble Corp. vs NLRC,
GR No. L-43825, May 9, 1988

FACTS:
Rodito Nasayao claimed that he was appointed plant manager of the corporation and receiving a
compensation of P3,000.00, a month or 25% of the monthly net income of the company, whichever is greater,
when the company failed to give his salary for the months of May, June and July Nasayo filed a complaint with
the NLRC.
Continental Marble Corp., denied the claim of Rodito Nasayao, that the latter was not an employee of the
company, an undertaking agreed upon by the parties as joint venture, a sort of partnership, wherein Rodito
Nasayao was to keep the machinery in good working condition and, in return, he would get the contracts from
end-users for the installation of marble products, in which the company would not interfere. In addition, private
respondent Nasayao was to receive an amount equivalent to 25% of the net profits that the corporation will
earn, should there be any.
The case was submitted for voluntary arbitration and the parties selected Jose T. Collado as voluntary
arbitrator. In the course of the proceeding, Continental Marble Corp., challenged the arbitrator’s capacity to try
and decide the case fairly and judiciously and asked him to desist from further hearing the case. But the
respondent arbitrator refused. Later a judgement was rendered in favor of Rodito Nasayao.
Upon receipt of the decision, Continental Marble Corp., appealed to the National Labor Relations Commission
on grounds that the labor arbiter gravely abused his discretion in persisting to hear and decide the case
notwithstanding petitioners’ request for him to desist therefrom: and that the appealed decision is not
supported by evidence.
Rodito Nasayao filed a motion to dismiss the appeal on the ground that the decision of the voluntary arbitrator
is final, unappealable, and immediately executory; and a motion for the issuance of a writ of execution. The
Commission, dismissed the appeal on the ground that the decision appealed from is final, unappealable and
immediately executory. Continental Marble Corp., seek to annul and set aside the decision.

ISSUE:
Whether there exist an employee-employer relationship between Rodito Nasayao and Continental Marble
Corp, thus, would render the voluntary arbitrator correct.

RULING:
No.
The court relied on the so -called “control test” that is the most important element, in determining the existence
of an employer-employee relationship, the elements that are generally considered are the following: (a) the
selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the
employer’s power to control the employee with respect to the means and methods by which the work is to be
accomplished.
In the instant case, it appears that the petitioners had no control over the conduct of Rodito Nasayao in the
performance of his work. He decided for himself on what was to be done and worked at his own pleasure. He
was not subject to definite hours or conditions of work and, in turn, was compensated according to the results
of his own effort. He had a free hand in running the company and its business.

The Court has accorded great respect for, and finality to, findings of fact of a voluntary arbitrator and
administrative agencies which have acquired expertise in their respective fields, like the Labor Department and
the National Labor Relations Commission, their findings of fact and the conclusions drawn therefrom have to
be supported by substantial evidence.
In that instant case, the finding of the voluntary arbitrator that Rodito Nasayao was an employee of the
petitioner corporation is not supported by the evidence or by the law.
The court finds the version of the petitioners to be more plausible and in accord with human nature and the
ordinary course of things. As pointed out by the petitioners, it was illogical for them to hire the private
respondent Rodito Nasayao as plant manager with a monthly salary of P3,000.00, an amount which they could
ill-afford to pay, considering that the business was losing, at the time he was hired, and that they were about to
close shop in a few months’ time.
Besides, there is nothing in the record which would support the claim of Rodito Nasayao that he was an
employee of the petitioner corporation. He was not included in the company payroll, nor in the list of company
employees furnished the Social Security System.
Most of all, the element of control is lacking. Absent the power to control the employee with respect to the
means and methods by which his work was to be accomplished, there was no employer- employee
relationship between the parties. Hence, there is no basis for an award of unpaid salaries or wages to Rodito
Nasayao.
 Federal Builders, Inc. vs Power Factors Inc.,
GR No. 211504, March 8, 2017

FACTS:

Federal Builders, Inc. (Federal) was the general contractor of the Buillion Mall (Mall) under a construction
agreement with Bullion Investment and Development Corporaton (BIDC). Federal engaged Power Factors,
Inc. (Power) as its subcontractor for the electric works at the Mall and the Precinct Building (Precinct). Upon
completion of the electrical works, Power demanded payment for the unpaid amount for the electrical works
performed at Precinct, from Federal, which answered that its outstanding balance under the original contract
should be addressed directly to BDIC. Said demand only fall unto the deaf ear of Federal. Anent to this,
Power seek intervention from Construction Industry Arbitration Commission (CIAC) Construction Industry
Arbitration Commission (CIAC). After weighing the evidences presented, the CIAC rendered the Final Award
ordering Federal to pay Power the unpaid balance on the original contract plus damages.

ISSUES:
Whether or not the CIAC has jurisdiction over the case; and Whether or not Federal was liable to pay Power
the amount of the unpaid balance on the original contract plus damages.

RULING:
Both Federal and Power agreed to submit to voluntary arbitration, hence the CIAC had jurisdiction over the
case.
All that is required for the CIAC to acquire jurisdiction is for the parties of any construction contract to agree to
submit their dispute to arbitration. It may be reflected in the arbitration clause of their contract, or by
subsequently agreeing to submit their dispute to voluntary arbitration, which need not be signed or be formally
agreed upon in the contract, because it can also be in the form of other modes of communication in writing.
Consistent with the policy of encouraging alternative dispute resolution methods, any doubt should be resolved
in favor of the arbitration. The Contract of Service between Federal and Power, reads:
“15. Arbitration Committee – all disputes, controversies, or differences, which may arise between the parties
herein, out of or in relation to or in connection with this Agreement, or for breach thereof shall be settled by the
CIAC which shall have original and exclusive jurisdiction over the aforementioned disputes.”
 Korea Technologies Co., Ltd. Vs Lerma,
GR No. 143581, Jan. 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.

ISSUE:
Whether or not the arbitration clause in the contract of the parties should govern.
RULING:
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.
 MCC Industrial Sales Corp. vs Sangyong Corp.,
GR No. 170633, Oct. 17, 2007

FACTS:

Petitioner is engaged in the business of importing and wholesaling stainless steel products. One of its suppliers
is the responded, an international trading company with head office in Seoul, South Korea and regional
headquarters in Makati City, Philippines. The two corporations conducted business through telephone calls
and facsimile or telecopy transmissions. Respondent would send the pro forma invoices containing the details
of the steel product order to petitioner; if the latter conforms thereto, its representative affixes his signature on
the faxed copy and sends it back to the respondent, again by fax.

Respondent filed a civil action for damages due to breach of contract against petitioner before the Regional
Trial Court of Makati City. In its complaint, respondent alleged that defendants breached their contract when
they refused to open the letter of credit in the amount of US$170,000.00 for the remaining 100MT of steel
under Pro Forma Invoice Nos. ST2-POSTS0401-1 and ST2-POSTS0401-2.

After respondent rested its case, petitioner filed a Demurrer to Evidence alleging that respondent failed to
present the original copies of the pro forma invoices on which the civil action was based. Petitioner contends
that the photocopies of the pro forma invoices presented by respondent Ssangyong to prove the perfection of
their supposed contract of sale are inadmissible in evidence and do not fall within the ambit of R.A. No. 8792,
because the law merely admits as the best evidence the original fax transmittal. On the other hand, respondent
posits that, from a reading of the law and the Rules on Electronic Evidence, the original facsimile transmittal of
the pro forma invoice is admissible in evidence since it is an electronic document and, therefore, the best
evidence under the law and the Rules. Respondent further claims that the photocopies of these fax transmittals
(specifically ST2-POSTS0401-1 and ST2-POSTS0401-2) are admissible under the Rules on Evidence
because the respondent sufficiently explained the non-production of the original fax transmittals.

ISSUE:
Whether the print-out and/or photocopies of facsimile transmissions are electronic evidence and admissible as
such?

HELD:
Electronic document shall be regarded as the equivalent of an original document under the Best Evidence
Rule, as long as it is a printout or output readable by sight or other means, showing to reflect the data
accurately. Thus, to be admissible in evidence as an electronic data message or to be considered as the
functional equivalent of an original document under the Best Evidence Rule, the writing must foremost be an
“electronic data message” or an “electronic document.

The Implementing Rules and Regulations (IRR) of R.A. No. 8792 defines the “Electronic Data Message” refers
to information generated, sent, received or stored by electronic, optical or similar means, but not limited to,
electronic data interchange (EDI), electronic mail, telegram, telex or telecopy.
The phrase “but not limited to, electronic data interchange (EDI), electronic mail, telegram, telex or telecopy” in
the IRR’s definition of “electronic data message” is copied from the Model Law on Electronic Commerce
adopted by the United Nations Commission on International Trade Law (UNCITRAL), from which majority of
the provisions of R.A. No. 8792 were taken. While Congress deleted this phrase in the Electronic Commerce
Act of 2000, the drafters of the IRR reinstated it. The deletion by Congress of the said phrase is significant and
pivotal.
Moreover, when Congress formulated the term “electronic data message,” it intended the same meaning as
the term “electronic record” in the Canada law. This construction of the term “electronic data message,” which
excludes telexes or faxes, except computer-generated faxes, is in harmony with the Electronic Commerce
Law’s focus on “paperless” communications and the “functional equivalent approach” that it espouses.
Facsimile transmissions are not, in this sense, “paperless,” but verily are paper-based.
 Department of Foreign Affairs vs BCA International Corporation,
GR No. 210858, June 29, 2016

FACTS:
In an Amended Build-Operate-Transfer Agreement dated 5 April 2002 (Agreement), petitioner Department of
Foreign Affairs (DFA) awarded the Machine Readable Passport and Visa Project (MRPN Project) to
respondent BCA International Corporation (BCA), a domestic corporation.
During the implementation of the MRPN Project, DFA sought to terminate the Agreement. However, BCA
opposed the termination and filed a Request for Arbitration, according to the provision in the Agreement.
An ad hoc arbitral tribunal6 was constituted, the arbitral tribunal approved BCA's request to apply in court for
the issuance of subpoena, subject to the conditions that the application will not affect its proceedings and will
proceed whether the witnesses attend or not.
BCA filed before the RTC a Petition for Assistance in Taking Evidence8 pursuant to the Implementing Rules
and Regulations (IRR) of "The Alternative Dispute Resolution Act of 2004," or Republic Act No. 9285 (RA
9285).
DFA filed its comment, alleging that the presentation of the witnesses and documents was prohibited by law
and protected by the deliberative process privilege.

ISSUE:
Whether or not the witnesses presented before the ad hoc arbitral tribunal are prohibited from disclosing
information on the basis of the deliberative process privilege.

RULING:
No.
As a qualified privilege, the burden falls upon the government agency asserting the deliberative process
privilege to prove that the information in question satisfies both requirements - predecisional and deliberative.
"The agency bears the burden of establishing the character of the decision, the deliberative process involved,
and the role played by the documents in the course of that process." It may be overcome upon a showing that
the discoverant's interests in disclosure of the materials outweigh the government's interests in their
confidentiality. "The determination of need must be made flexibly on a case-by-case, ad hoc basis," and the
"factors relevant to this balancing include: the relevance of the evidence, whether there is reason to believe the
documents may shed light on government misconduct, whether the information sought is available from other
sources and can be obtained without compromising the government's deliberative processes, and the
importance of the material to the discoverant's case."
 Gonzales v Climax Mining, Ltd.,
GR No. 161957, 167994, Jan. 22, 2007

FACTS:
This is a consolidation of two petitions rooted in the same disputed Addendum Contract entered into by the
parties. In G.R. No. 161957, the Court in its Decision of 28 February 2005 denied the Rule 45 petition of
petitioner Jorge Gonzales (Gonzales). It held that the DENR Panel of Arbitrators had no jurisdiction over the
complaint for the annulment of the Addendum Contract on grounds of fraud and violation of the Constitution
and that the action should have been brought before the regular courts as it involved judicial issues. Both
parties filed separate motions for reconsideration. Gonzales avers in his Motion for Reconsideration that the
Court erred in holding that the DENR Panel of Arbitrators was bereft of jurisdiction, reiterating its argument that
the case involves a mining dispute that properly falls within the ambit of the Panels authority.
Gonzales adds that the Court failed to rule on other issues he raised relating to the sufficiency of his complaint
before the DENR Panel of Arbitrators and the timeliness of its filing. Respondents Climax Mining Ltd., et al.,
(respondents) filed their Motion for Partial Reconsideration and/or Clarification seeking reconsideration of that
part of the Decision holding that the case should not be brought for arbitration under Republic Act (R.A.) No.
876, also known as the Arbitration Law.
Respondents, citing American jurisprudence and the UNCITRAL Model Law, argue that the arbitration clause
in the Addendum Contract should be treated as an agreement independent of the other terms of the contract,
and that a claimed rescission of the main contract does not avoid the duty to arbitrate. Respondents add that
Gonzales argument relating to the alleged invalidity of the Addendum Contract still has to be proven and
adjudicated on in a proper proceeding; that is, an action separate from the motion to compel arbitration.
Pending judgment in such separate action, the Addendum Contract remains valid and binding and so does the
arbitration clause therein. Respondents add that the holding in the Decision that the case should not be
brought under the ambit of the Arbitration Law appears to be premised on Gonzales having impugned the
existence or validity of the addendum contract.
If so, it supposedly conveys the idea that Gonzales unilateral repudiation of the contract or mere allegation of
its invalidity is all it takes to avoid arbitration. Hence, respondents submit that the courts holding that the case
should not be brought under the ambit of the Arbitration Law be understood or clarified as operative only where
the challenge to the arbitration agreement has been sustained by final judgment.

Issue:
Whether or not it was proper for the RTC, in the proceeding to compel arbitration under R.A. No. 876, to order
the parties to arbitrate even though the defendant therein has raised the twin issues of validity and nullity of the
Addendum Contract and, consequently, of the arbitration clause therein as well.

RULING:
Yes.
Disputes do not go to arbitration unless and until the parties have agreed to abide by the arbitrators decision.
Necessarily, a contract is required for arbitration to take place and to be binding. R.A. No. 876 recognizes the
contractual natur of the arbitration agreement.
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 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.
The separability of the arbitration clause is confirmed in Art. 16(1) of the UNCITRAL Model Law and Art. 21(2)
of the UNCITRAL Arbitration Rules.
The proceeding in a petition for arbitration under R.A. No. 876 is limited only to the resolution of the question of
whether the arbitration agreement exists. Second, the separability of the arbitration clause from the Addendum
Contract means that validity or invalidity of the Addendum Contract will not affect the enforceability of the
agreement to arbitrate. Thus, Gonzales petition for certiorari should be dismissed.
This brings us back to G.R. No. 161957. The adjudication of the petition in G.R. No. 167994 effectively
modifies part of the Decision dated 28 February 2005 in G.R. No. 161957. Hence, we now hold that the validity
of the contract containing the agreement to submit to arbitration does not affect the applicability of the
arbitration clause itself. A contrary ruling would suggest that a parties mere repudiation of the main contract is
sufficient to avoid arbitration. That is exactly the situation that the separability doctrine, as well as jurisprudence
applying it, seeks to avoid. We add that when it was declared in G.R. No. 161957 that the case should not be
brought for arbitration, it should be clarified that the case referred to is the case actually filed by Gonzales
before the DENR Panel of Arbitrators, which was for the nullification of the main contract on the ground of
fraud, as it had already been determined that the case should have been brought before the regular courts
involving as it did judicial issues.
 RCBC Captial Corp. vs Banco de Oro Unibank, Inc.,
GR No. 196171, 199238, December 10, 2012

FACTS:
All three petitions emanated from arbitration proceedings commenced by RCBC Capital pursuant to the
arbitration clause under its Share Purchase Agreement (SPA) with EPCIB involving the latter’s shares in
Bankard, Inc. In the course of arbitration conducted by the Tribunal constituted and administered by the
International Chamber of Commerce- International Commercial Arbitration (ICC-ICA), EPCIB was merged with
BDO which assumed all its liabilities and obligations. RCBC entered into a Share Purchase Agreement (SPA)
with Equitable-PCI Bank, Inc. (EPCIB), George L. Go and the individual shareholders of Bankard, Inc. for the
sale to RCBC of 226,460,000 shares of Bankard. RCBC informed EPCIB and the other selling shareholders of
an overpayment of the subject shares, claiming there was an overstatement of valuation of accounts
amounting to P478 million and that the sellers violated their warranty.
RCBC commenced arbitration proceedings with the ICC-ICA. ICC asked them to advance cost of $350K in
which RCBC paid. But respondent did not pay assailing disproportionate share because RCBC has way
greater claim. Thus. RCBC paid the share of BDO in the cost and filed an Application for Reimbursement of
Advance on Costs Paid for the issuance of a partial award directing the Respondents to reimburse itspayment
in the amount of US$290,000 representing Respondents’ share in the Advance on Costs and to consider
Respondents’ counterclaim for actual damages in the amount of US$300,000 BDO Opposed on the ground
that the Arbitration Tribunal has lost its objectivity in an unnecessary litigation over the payment of
Respondents’ share in the advance costs.
BDO stressed that RCBC’s letter merely asked that Respondents be declared as in default for their failure to
pay advance costs as they had no intention of litigating for the advance costs. Respondents reiterated that
Article 30 envisions a situation whereby a party would refuse to pay its share on the advance on costs and
provides a remedy therefor – the other party "shall be free to pay the whole of the advance on costs." Such
party’s reimbursement for payments of the defaulting party’s share depends on the final arbitral award where
the party liable for costs would be determined.
Arbitration Tribunal rendered the Second Partial Award to RCBC. This prompted EPCIB to file a Motion to
Vacate Second Partial Award and RCBC filed in the same court a Motion to Confirm Second Partial Award.
Makati City RTC confirmed the Second Partial Award and denied EPCIB’s motion to vacate the same. EPCIB
appealed to CA and reversed the decision made by the lower court.

ISSUE:
Whether there is legal ground to vacate the second partial award.

RULING:
Yes.
According to Sec. 41 of RA 9285 “A party to a domestic arbitration may question the arbitral award with the
appropriate regional trial court in accordance with the rules of procedure to be promulgated by the Supreme
Court only on those grounds enumerated in Section 25 of RA 876.Any other ground raised against a domestic
arbitral award shall be disregarded by the regional trial court”.
Furthermore, in Rule 11.4 of the Special ADR Rule, it laid down the grounds for vacating an arbital award.
a. The arbitral award was procured through corruption, fraud or other undue means;
b. There was evident partiality or corruption in the arbitral tribunal or any of its members;
c. The arbitral tribunal was guilty of misconduct or any form of misbehavior that has materially prejudiced the
rights of any party such as refusing to postpone a hearing upon sufficient cause shown or to hear evidence
pertinent and material to the controversy;
d. One or more of the arbitrators was disqualified to act as such under the law and willfully refrained from
disclosing such disqualification; or c DEHICe.
e. The arbitral tribunal exceeded its powers, or so imperfectly executed them, such that a complete, final and
definite award upon the subject matter submitted to them was not made.The award may also be vacated on
any or all of the following grounds:
a. The arbitration agreement did not exist, or is invalid for any ground for the revocation of a contract or is
otherwise unenforceable; or
b. A party to arbitration is a minor or a person judicially declared to be incompetent. Additionally, it may also be
vacated on or all the following grounds
a. The arbitration agreement did not exist, or is invalid for any ground for the revocation of a contract or
is otherwise unenforceable; or
b. A party to arbitration is a minor or a person judicially declared to be incompetent. c. In deciding the
petition to vacate the arbitral award, the court shall disregard any other ground than those enumerated above.
The Supreme Court found that there was evident partiality in the case at hand. Evident partiality in its common
definition thus implies "the existence of signs and indications that must lead to an identification or inference" of
partiality. In the case at hand, EPCIB/BDO, in moving to vacate the Second Partial Award claimed that the
Arbitration Tribunal exceeded its powers in deciding the issue of advance cost not contemplated in the TOR,
and that Chairman Barker acted with evident partiality in making such award.
The Court adopts the reasonable impression of partiality standard, which requires a showing that a reasonable
person would have to conclude that an arbitrator was partial to the other party to the arbitration. Such interest
or bias, moreover, "must be direct, definite and capable of demonstration rather than remote, uncertain, or
speculative." When a claim of arbitrator's evident partiality is made, "the court must ascertain from such record
as is available whether the arbitrators' conduct was so biased and prejudiced as to destroy fundamental
fairness.
In applying such standard to the case at hand, Chairman Barker's act of furnishing the parties with copies of
Matthew Secomb's article, considering the attendant circumstances, is indicative of partiality such that a
reasonable man would have to conclude that he was favoring the Claimant, RCBC. Even before the issuance
of the Second Partial Award for the reimbursement of advance costs paid by RCBC, Chairman Barker
exhibited strong inclination to grant such relief to RCBC, notwithstanding his categorical ruling that the
Arbitration Tribunal "has no power under the ICC Rules to order the Respondents to pay the advance on costs
sought by the ICC or to give the Claimant any relief against the Respondents' refusal to pay.
It must be noted that RCBC in said letter did not contemplate the issuance of a partial order, despite Chairman
Barker's previous letter which mentioned the possibility of granting relief upon the parties making submissions
to the Arbitration Tribunal. Expectedly, in compliance with Chairman Barker's December 18, 2007 letter, RCBC
formally applied for the issuance of a partial award ordering BDO to pay its share in the advance costs.
Therefore, the CA did not err in concluding that the article ultimately favored RCBC as it reflected in advance
the disposition of the Arbitral Tribunal, as well as "signaled a preconceived course of action that the relief
prayed for by RCBC will be granted
 Bases Conversion Development Authority v DMCI Project Developers,
GR No. 173137, January 11, 2016

FACTS:
On June 10, 1995, Bases Conversion Development Authority (BCDA) entered into a Joint Venture
Agreement1 with Philippine National Railways (PNR) and other foreign
corporations.2chanroblesvirtuallawlibrary

Under the Joint Venture Agreement, the parties agreed to construct a railroad system from Manila to Clark
with possible extensions to Subic Bay and La Union and later, possibly to Ilocos Norte and Nueva Ecija. BCDA
shall establish North Luzon Railways Corporation (Northrail) for purposes of constructing, operating, and
managing the railroad system.
The Joint Venture Agreement contained the following provision:
ARTICLE XVI
ARBITRATION

If any dispute arise hereunder which cannot be settled by mutual accord between the parties to such dispute,
then that dispute shall be referred to arbitration. The arbitration shall be held in whichever place the parties to
the dispute decide and failing mutual agreement as to a location within twenty-one (21) days after the
occurrence of the dispute, shall be held in Metro Manila and shall be conducted in accordance with the
Philippine Arbitration Law (Republic Act No. 876) supplemented by the Rules of Conciliation and Arbitration of
the International Chamber of Commerce. All award of such arbitration shall be final and binding upon the
parties to the dispute.
On February 8, 1996, the Joint Venture Agreement was amended to include D.M. Consunji, Inc. and/or its
nominee as party. Under the amended Joint Venture Agreement, D.M. Consunji, Inc. shall be an additional
investor of Northrail. It shall subscribe to 20% of the increase in Northrail's authorized capital stock.
BCDA and the other parties to the Joint Venture Agreement, including D.M. Consunji, Inc. and/or its nominee,
entered into a Memorandum of Agreement. Under this agreement, the parties agreed that the initial seed
capital of P600 million shall be infused to Northrail. Of that amount, P200 million shall be D.M. Consunji, Inc.'s
share, which shall be converted to equity upon NorthraiPs privatization. Later, D.M. Consunji, Inc.'s share was
increased to P300 million.
In letters dated April 4, 1997, D.M. Consunji, Inc. informed PNR and the other parties that DMCI-PDI shall be
its designated nominee for all the agreements it entered and would enter with them in connection with the
railroad project.
Later, Northrail withdrew from the Securities and Exchange Commission its application for increased
authorized capital stock. Moreover, according to DMCI-PDI, BCDA applied for Official Development Assistance
from Obuchi Fund of Japan. This required Northrail to be a 100% government-owned and controlled
corporation.
On September 27, 2000, DMCI-PDI started demanding from BCDA and Northrail the return of its P300 million
deposit. DMCI-PDI cited Northrail's failure to increase its authorized capital stock as reason for the demand.
However, BCD refused as DMCI’s participation in Northrail was as a joint venture partner and co-investor in
the Manila Clark Rapid Railway Project, and as such, was granted corresponding representation in the
Northrail Board, it was was privy to all the deliberations of the Northrail Board and participated in the decisions
made and policies adopted to pursue the project. And it had full access to the financial statements of Northrail
and was regularly informed of the corporation's financial condition.
On August 17, 2005, DMCI-PDI served a demand for arbitration to BCDA and Northrail, citing the arbitration
clause in the June 10, 1995 Joint Venture Agreement. BCDA and Northrail failed to respond.

DMCI-PDI filed before the Regional Trial Court of Makati a Petition to Compel Arbitration against BCDA and
Northrail, pursuant to the alleged arbitration clause in the Joint Venture Agreement. DMCI-PDI prayed for "an
order directing the parties to proceed to arbitration in accordance with the terms and conditions of the
agreement."
BCDA filed a Motion to Dismiss on the ground that there was no arbitration clause that DMCI-PDI could
enforce since DMCI-PDI was not a party to the Joint Venture Agreement containing the arbitration
clause. Northrail filed a separate Motion to Dismiss on the ground that the court did not have jurisdiction over it
and that DMCI-PDI had no cause for arbitration against it.
In the Decision dated February 9, 2006, the trial court denied BCDA's and Northrail's Motions to Dismiss and
granted DMCI-PDI's Petition to Compel Arbitration.
The trial court ruled that the arbitration clause in the Joint Venture Agreement should cover all subsequent
documents including the amended Joint Venture Agreement and the Memorandum of Agreement. The three
(3) documents constituted one contract for the formation and funding of Northrail.
The trial court also ruled that even though DMCI-PDI was not a signatory to the Joint Venture Agreement and
the Memorandum of Agreement, it was an assignee of D.M. Consunji, Inc.'s rights. Therefore, it could invoke
the arbitration clause in the Joint Venture Agreement.50chanroblesvirtuallawlibrary
In an Order51 dated June 9, 2006, the trial court denied BCDA and Northrail's Motion for Reconsideration of
the February 9, 2006 trial court Decision.
BCDA filed a Rule 45 Petition before this court, assailing the February 9, 2006 trial court Order granting DMCI-
PDI's Petition to Compel Arbitration and the June 9, 2006 Order denying BCDA and Northrail's Motion for
Reconsideration.

ISSUE:
Whether DMCI-PDI may compel BCDA and Northrail to submit to arbitration.

RULING:
Yes.
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.
In other words, each document of agreement represents a step toward the implementation of the project, such
that the three agreements must be read together for a complete understanding of the parties' whole
agreement. The Joint Venture Agreement, the amended Joint Venture Agreement, and the Memorandum of
Agreement should be treated as one contract because they all form part of a whole agreement.
Hence, the arbitration clause in the Joint Venture Agreement should not be interpreted as applicable only to
the Joint Venture Agreement's original parties. The succeeding agreements are deemed part of or a
continuation of the Joint Venture Agreement. The arbitration clause should extend to all the agreements and its
parties since it is still consistent with all the terms and conditions of the amendments and supplements.