Puromines v.

CA, 220 SCRA 281

FACTS: Puromines, Inc. (Puromines for brevity) and Makati Agro

Trading, Inc. (not a party in this case) entered into a contract with
private respondent Philipp Brothers Oceanic, Inc. for the sale of
prilled Urea in bulk. The Sales Contract No. S151.8.01018 provided,
among others an arbitration clause which states, thus: Any disputes
arising under this contract shall be settled by arbitration in London
in accordance with the Arbitration Act 1950 and any statutory
amendment or modification thereof. Each party is to appoint an
Arbitrator, and should they be unable to agree, the decision of an
Umpire appointed by them to be final. The Arbitrators and Umpire are
all to be commercial men and resident in London. This submission may
be made a rule of the High Court of Justice in England by either
party. On or about May 22, 1988, the vessel M/V "Liliana Dimitrova"
loaded on board at Yuzhny, USSR a shipment of 15,500 metric tons
prilled Urea in bulk complete and in good order and condition for
transport to Iloilo and Manila, to be delivered to petitioner. Three
bills of lading were issued by the ship-agent in the Philippines,
Maritime Factors Inc., namely: Bill of Lading No. 1 dated May 12, 1988
covering 10,000 metric tons for discharge in Manila; Bill of Lading
No. 2 of even date covering 4,000 metric tons for unloading in Iloilo
City; and Bill of Lading No. 3, also dated May 12, 1988, covering
1,500 metric tons likewise for discharge in Manila. The shipment
covered by Bill of Lading No. 2 was discharged in Iloilo City complete
and in good order and condition. However, the shipments covered by
Bill of Lading Nos. 1 and 3 were discharged in Manila in bad order and
condition, caked, hardened and lumpy, discolored and contaminated with
rust and dirt. Damages were valued at P683,056.29 including additional
discharging expenses. Consequently, petitioner filed a complaint 3
with the trial court 4 for breach of contract of carriage against
Maritime Factors, Inc. (which was not included as respondent in this
petition) as ship-agent in the Philippines for the owners of the
vessel MV "Liliana Dimitrova," while private respondent, Philipp
Brothers Oceanic, Inc., was impleaded as charterer of the said vessel
and proper party to accord petitioner complete relief. Answer to the
complaint, while private respondent filed a motion to dismiss, dated
February 9, 1989, on the grounds that the complaint states no cause of
action; that it was prematurely filed; and that petitioner should
comply with the arbitration clause in the sales contract. The motion
to dismiss was opposed by petitioner contending the inapplicability of
the arbitration clause inasmuch as the cause of action did not arise

from a violation of the terms of the sales contract but rather for
claims of cargo damages where there is no arbitration agreement. The
Court rendered a decision in favor of the petitioner. Unsatisfied with
the judgment, the respondent appealed and the lowers courts decision
was reversed by the appellate court. Hence this petition. ISSUE:
Whether the phrase "any dispute arising under this contract" in the
arbitration clause of the sales contract covers a cargo claim against
the vessel (owners and/or charterers) for breach of contract of
carriage RULING: Yes. An examination of the sales contract No.
S151.8.01018 shows that it is broad enough to include the claim for
damages arising from the carriage and delivery of the goods subjectmatter thereof. Considering that the private respondent was one of the
signatories to the sales contract . . . all parties are obliged to
respect the terms and conditions of the said sales contract, including
the provision thereof on "arbitration." Arbitration has been held
valid and constitutional. Even before the enactment of Republic Act
No. 876, this Court has countenanced the settlement of disputes
through arbitration. The rule now is that unless the agreement is such
as absolutely to close the doors of the courts against the parties,
which agreement would be void, the courts will look with favor upon
such amicable arrangements and will only interfere with great
reluctance to anticipate or nullify the action of the arbitrator.
Premises considered, we uphold the validity and applicability of the
arbitration clause as stated in Sales Contract No. S151.8.01018 to the
present dispute. WHEREFORE, petition is hereby DISMISSED and the
decision of the court a quo is AFFIRMED.

G.R. No. 96283 February 25, 1992

CHUNG FU INDUSTRIES (PHILIPPINES) INC., its Directors and Officers
namely: HUANG KUO-CHANG, HUANG AN-CHUNG, JAMES J.R. CHEN, TRISTAN A.
CATINDIG, VICENTE B. AMADOR, ROCK A.C. HUANG, JEM S.C. HUANG, MARIA
TERESA SOLIVEN and VIRGILIO M. DEL ROSARIO, petitioners,
vs.
COURT OF APPEALS, HON. FRANCISCO X. VELEZ (Presiding Judge, Regional
Trail Court of Makati [Branch 57]) and ROBLECOR PHILIPPINES,
INC., respondents.

FACTS:- M a y 1 7 , 1 9 8 9 :
p e t i t i o n e r C h u n g F u Industries and private respondents
R o b l e c o r P h i l i p p i n e s f o r g e d a construction agreeme
n t w h e r e i n R o b l e c o r c o m m i t t e d t o c o n s t r u c t and finish on Dec.
31, 1989, ChungFus industrial/factory complex in Tanawan, Cavite
in consideration of P42MI t w a s s t i p u l a t e d a l s o t h a t i n
t h e event of disputes, the parties will
b e s u b j e c t e d t o a n a r b i t r a t i o n resolution, wherein the
arbitrator will be chosen by both partiesA p a r t
f r o m
t h e
c o n s t r u c t i o n
a g r e e m e n t , t h e p a r t i e s a l s o entered into ancillary
contracts for the construction of a dormitory and
support facilities with a contract
p r i c e o f 3 , 8 7 5 , 2 8 5 . 0 0 t o b e completed on or before
October 31,1989 and the other dated Aug.
12,1 9 8 9
f o r
t h e
i n s t a l l a t i o n
o f
electrical
, w a t e r a n d h y d r a n t systems at the plant site, priced at
1 2 . 1 M a n d r e q u i r i n g c o m p l e t i o n thereof one month after civil
workshave been finishedH o w e v e r ,
R o b l e c o r
f a i l e d
t o complete
t h e w o r k d e s p i t e t h e extension allowed by Chung FuS u b s e q u e n t l y ,
C h u n g
F u
h a d
t o take over the
construction when ithad become evident that Roblecor w a s n o t i n a
p o s i t i o n t o f u l f i l l t h e obligation- C l a i m i n g a n
u n s a t i s f i e d a c c o u n t o f P10, 500, 000 and unpaid progress
b i l l i n g s
o f
P
2 ,
3 7 0 ,
1 7 9 . 2 3 , R o b l e c o r f i
l e d a p e t i t i o n f o r Compulsory Arbitration with
prayerf o r T R O
b e f o r e r e s p o n d e n t R T C , pursuant to the arbitration clausein
the construction agreementC h u n g
F u
m o v e d
t o
d i s m i s s
t h e petition and
further prayed for the quashing of the restraining orderSubsequent negotiations
b e t w e e n the parties eventually led to the
f o r m u l a t i o n o f a n a r b i t r a t i o n agreement which includes
that thedecision of the arbitrator shall
befinal and unappealable, therefore,t h e r e s h a l l b e n o f u r t h e r
j u d i c i a l recourse if either party disagreesw i t h t h e w h o l e o r
a n y p a r t o f t h e arbitrators awardR T C
a p p r o v e d
t h e
a r b i t r a t i o n agreement
a n d A s u n c i o n w a s appointed as the sole arbitratorA r b i t r a t o r
r u l e d
i n
f a v o r
o f
t h e
contractor
Roblecor- C h u n g
F u
m o v e d
t o
r e m a n d
t h e case
for further hearing and
askedf o r
a
r e c o n s i d e r a t i o n
o f
t h e judgment award
claiming that Asuncion committed 12 instancesof grave error by
disregarding theprovisions of the parties contract- R T C d e n i e d
C h u n g F u s
M o t i o n t o Remand and approved RoblecorsMotion for
Confirmation of Award- C h u n g F u e l e v a t e d t h e c a s e t o

C A which denied the petition- H e n c e ,

S u p r e m e Court

this

petition

to

the

ISSUES:1 . Whether or not t h e s u b j e c t a r b i t r a t i o n a w a r d is

beyond the ambit of the courtspower of judicial review
2 . Whether or not r e s p o n d e n t c o u r t c o m m i t t e d grave abuse of
discretion
HELD/RATIO:-No- I t s s t a t e d e x p l i c i t l y u n d e r A r t .
2044 of the Civil
Codet h a t t h e f i n a l i t y o f t h e a r b i t r a t o r s a w a r d
is nota b s o l u t e
a n d
w i t h o u t exceptions- W h e r e
t h e
c o n d i t i o n s described in Arts. 2038,2
039 and 2040 applicable
tob o t h c o m p r o m i s e s a n d a r b i t r a t i o n s a r e o b t a i n i n g , th
e arbitrators award maybe annulled or rescinded.A d d i t i o n a l l y ,
S e c t i o n s
2 4 and 25 of the Arbit
rationL a w p r o v i d e g r o u n d s f o r v a c a t i n g , M o d i f y i
n g o r r e s c i n d i n g a n a r b i t r a t o r s award.

BF Corporation v. CA, 288 SCRA 267 (1998)

Facts:
Petitioner and respondent Shangri-la Properties, Inc. entered into an agreement
whereby the latter engaged the former to construct the main structure of the
"EDSA PlazaProject," a shopping mall complex in Mandaluyong. Petitioner
incurred delay in the construction work that SPI considered as "serious and
substantial."
On the other hand, according to petitioner, the construction works "progressed
in faithful compliance with the First Agreement until a fire broke out
damaging Phase I" of the Project.
Hence, SPI proposed the re-negotiation of the agreement between them.Petitioner
and SPI entered into a written agreement denominated as "Agreement for the
Execution of Builder's Work for the EDSA Plaza Project." Said agreement would
cover the construction work on said project as of May 1, 1991 until its
eventual completion. According to SPI, petitioner "failed to complete the
construction works and abandoned the project."
This resulted in disagreements between the parties as regards their respective
liabilities under the contract.Petitioner filed with the RTC of Pasig a
complaint for collection of the balance due under the construction
agreement. SPI and its co-defendants filed a motion to suspend proceedings
instead of filing an answer. The motion was anchored on defendants' allegation
that the formaltrade contract for the construction of the project

provided for a clause requiring prior resort to arbitration before

judicial intervention could be invoked in any dispute arising from the
contract.Petitioner opposed said motion claiming that there was no formal
contract between the parties although they entered into an agreement defining
their rights and obligations in undertaking the project.Thereafter, upon a
finding that an arbitration clause indeed exists, the lower court deniedthe
motion to suspend proceedings as the Conditions of Contract was not duly
executed or signed by the parties, and the failure of the defendants to submit
any signed copy of the said document,.The lower court then ruled that, assuming
that the arbitration clause was valid and binding, still, it was "too late in
the day for defendants to invoke arbitration. Considering the fact that under
the supposed Arbitration Clause invoked by defendants, it is required that
"Notice of the demand for arbitration of a dispute shall be filed in writing
with the other party . . . . in nocase . . . . later than the time of final
payment . . . "which apparently, had elapsed because defendants have failed to
file any written notice of any demand for arbitration during the said long
period of one year and eight months. The CA annulled the orders of the RTC.
Issue:
Whether or not a petition for certiorari is proper
Held:
Yes. The rule that the special civil action of
Certiorari may not be invoked as a substitutefor the remedy of appeal. The
Court has likewise ruled that "certiorari
will not be issued to cureerrors in proceedings or correct erroneous
conclusions of law or fact. As long as a court actswithin its jurisdiction,
any alleged errors committed in the exercise of its jurisdiction will
amountto nothing more than errors of judgment which are reviewable by timely
appeal and not by aspecial civil action of certiorari ."

JORGE GONZALES and PANEL OF ARBITRATORS vs. CLIMAX MINING LTD.,CLIMAXARIMCO MINING CORP. and AUSTRALASIAN PHILIPPINES MINING INC.,G.R.
No. 161957, January 22, 2007
Facts:
This is a consolidation of two petitions rooted in the same disputed
Addendum Contractentered into by the parties.In one case, the Court
held that the DENR Panel of Arbitrators had no jurisdiction over
thecomplaint for the annulment of the Addendum Contract on grounds of
fraud and violation of theConstitution and that the action should have
been brought before the regular courts as it involved judicial
issues.Gonzales averred that the DENR Panel of Arbitrators Has
jurisdiction because the case involves
a mining dispute that properly falls within the ambit of the Panels
authority.
Respondents Climax Mining Ltd., et al., on the other hand, seek
reconsideration/clarification onthe decision holding that the case
should not be brought for arbitration under R.A. No. 876.They argued

that the arbitration clause in the Addendum Contract should be treated

as anagreement independent of the other terms of the contract, and
that a claimed rescission of themain contract does not avoid the duty
to arbitrate.On another case, Gonzales challenged the order of the RTC
requiring him to proceed with thearbitration proceedings while the
complaint for the nullification of the Addendum Contract
was pending before the DENR Panel of Arbitrators. He contended that an
y issue as to the nullity,inoperativeness, or incapability of
performance of the arbitration clause/agreement raised by oneof the
parties to the alleged arbitration agreement must be determined by the
court prior toreferring them to arbitration.While Climax-Arimco
contended that an application to compel arbitration under Sec. 6 of
R.A. No. 876 confers on the trial court only a limited and special
jurisdiction,
i.e.
, a jurisdiction solelyto determine (a) whether or not the parties
have a written contract to arbitrate, and (b) if thedefendant has
failed to comply with that contract.
Issue: Whether or not arbitration is proper even though issues
of validity and nullity of theAddendum Contract and, consequently, of
the arbitration clause were raised.
Ruling: Positive.In
La Naval Drug Corporation v. Court of Appeals,
the Court held that R.A. No. 876 explicitlyconfines the court's
authority only to the determination of whether or not there is an
agreement inwriting providing for arbitration. In the affirmative, the
statute ordains that the court shall issuean order "summarily
directing the parties to proceed with the arbitration in accordance
with theterms thereof." If the court, upon the other hand, finds that
no such agreement exists, "the proceeding shall be dismissed." The
cited case also stressed that the proceedings are summary innature.
Republic v. Judge Gingoyon and Piatco
Facts:
This case is a motion for reconsideration for a previous decision of
the SC. In the assailed decision of the SC, it ruled that PIATCO
should be justly compensated before the Government can take over the
NAIA Terminal 3. Now, the Government is arguing that PIATCO should not
be
paid
because
it
has
pending
obligations
with
Takenaka Corporation (Takenaka)
and Asahikosan (Asahikosan)
Corporation for services rendered by the said corporations in building
the Terminal. It argues that the said corporations still has pending
liens on the Terminal. The situation the Republic now faces is that if
any part of its Php3,002,125,000 deposit is released directly to
PIATCO, and PIATCO, as in the past, does not wish to settle its

obligations directly to Takenaka, Asahikosan and Fraport, the Republic

may end up having expropriated a terminal with liens and claims far in
excess of its actual value, the liens remain unextinguished, and
PIATCO on the other hand, ends up with the Php3,0002,125,000 in its
pockets gratuitously.
Issue:
Should the Government pay PIATCO just compensation before taking over
the Terminal?
Held:
Yes.
The Court is wont to reverse its previous rulings based on factual
premises that are not yet conclusive or judicially established.
Certainly,
whatever
claims
or
purported
liens Takenaka and Asahikosan against PIATCO or over the NAIA 3 have
not been judicially established. Neither Takenaka norAsahikosan are
parties to the present action, and thus have not presented any claim
which could be acted upon by this Court. The earlier adjudications
in Aganv. PIATCO made no mention of either Takenaka or Asahikosan, and
certainly made no declaration as to their rights to any form of
compensation. If there is indeed any right to remuneration due to
these two entities arising from NAIA 3, they have not yet been
established by the courts of the land.
It must be emphasized that the conclusive ruling in the Resolution
dated 21 January 2004 in Agan v. PIATCO (Agan 2004) is that PIATCO, as
builder of the facilities, must first be justly compensated in
accordance with law and equity for the Government to take over the
facilities. It is on that premise that the Court adjudicated this case
in its 19 December 2005 Decision.
While the Government refers to a judgment rendered by a London court
in favor of Takenaka and Asahikosan against PIATCO in the amount of
US$82 Million, it should be noted that this foreign judgment is not
yet binding on Philippine courts. It is entrenched in Section 48, Rule
39 of the Rules of Civil Procedure that a foreign judgment on the mere
strength of its promulgation is not yet conclusive, as it can be
annulled on the grounds of want of jurisdiction, want of notice to the
party, collusion, fraud, or clear mistake of law or fact. It is
likewise recognized in Philippine jurisprudence and international law
that a foreign judgment may be barred from recognition if it runs
counter to public policy.

Assuming that PIATCO indeed has corresponding obligations to other

parties relating to NAIA 3, the Court does not see how such
obligations, yet unproven, could serve to overturn the Decision
mandating that the Government first pay PIATCO the amount of 3.02
Billion Pesos before it may acquire physical possession over the
facilities. This directive enjoining payment is in accordance with
Republic Act No. 8974, and under the mechanism established by the law
the amount to be initially paid is that which is provisionally
determined as just compensation. The provisional character of this
payment means that it is not yet final, yet sufficient under the law
to entitle the Government to the writ of possession over the
expropriated property.
There are other judicial avenues outside of this Motion for
Reconsideration wherein all other claims relating to the airport
facilities may be ventilated, proved and determined. Since such claims
involve factual issues, they must first be established by the
appropriate trier of facts before they can be accorded any respect by
or binding force on this Court.

AGAN JR. VS PIATCO EN BANC

G.R. No.
Congress;

155001. May 5, 2003 En Banc [Non-legislative

Police
Power;
Delegation
of
emergency

power of
powers]

FACTS:
On October 5, 1994, AEDC submitted an unsolicited proposal to the
Government through the DOTC/MIAA for the development of NAIA
International Passenger Terminal III (NAIA IPT III).
DOTC constituted the Prequalification Bids and Awards Committee (PBAC)
for the implementation of the project and submitted with its
endorsement proposal to the NEDA, which approved the project.
On June 7, 14, and 21, 1996, DOTC/MIAA caused the publication in two
daily newspapers of an invitation for competitive or comparative
proposals on AEDCs unsolicited proposal, in accordance with Sec. 4-A
of RA 6957, as amended.

On September 20, 1996, the consortium composed of Peoples Air Cargo

and Warehousing Co., Inc. (Paircargo), Phil. Air and Grounds Services,
Inc. (PAGS) and Security Bank Corp. (Security Bank) (collectively,
Paircargo Consortium) submitted their competitive proposal to the
PBAC. PBAC awarded the project to Paircargo Consortium. Because of
that, it was incorporated into Philippine International Airport
Terminals Co., Inc.
AEDC subsequently protested the alleged undue preference given to
PIATCO and reiterated its objections as regards the prequalification
of PIATCO.
On July 12, 1997, the Government and PIATCO signed the Concession
Agreement for the Build-Operate-and-Transfer Arrangement of the NAIA
Passenger Terminal III (1997 Concession Agreement). The Government
granted PIATCO the franchise to operate and maintain the said terminal
during the concession period and to collect the fees, rentals and
other charges in accordance with the rates or schedules stipulated in
the 1997 Concession Agreement. The Agreement provided that the
concession period shall be for twenty-five (25) years commencing from
the in-service date, and may be renewed at the option of the
Government for a period not exceeding twenty-five (25) years. At the
end of the concession period, PIATCO shall transfer the development
facility to MIAA.
Meanwhile, the MIAA which is charged with the maintenance and
operation of the NAIA Terminals I and II, had existing concession
contracts with various service providers to offer international
airline airport services, such as in-flight catering, passenger
handling,
ramp
and
ground
support,
aircraft
maintenance
and
provisions, cargo handling and warehousing, and other services, to
several international airlines at the NAIA.
On September 17, 2002, the workers of the international airline
service providers, claiming that they would lose their job upon the
implementation of the questioned agreements, filed a petition for
prohibition. Several employees of MIAA likewise filed a petition
assailing the legality of the various agreements.
During the pendency of the cases, PGMA, on her speech, stated that she
will not honor (PIATCO) contracts which the Executive Branchs legal
offices have concluded (as) null and void.
ISSUE:
Whether or not the State can temporarily take over a business affected
with public interest.

RULING:
Yes. PIATCO cannot, by mere contractual stipulation, contravene the
Constitutional provision on temporary government takeover and obligate
the government to pay reasonable cost for the use of the Terminal
and/or Terminal Complex.
Article
XII,
Section
17
of
the
1987
Constitution
provides:
Section 17. In times of national emergency, when the public interest
so requires, the State may, during the emergency and under reasonable
terms prescribed by it, temporarily take over or direct the operation
of any privately owned public utility or business affected with public
interest.
The above provision pertains to the right of the State in times of
national emergency, and in the exercise of its police power, to
temporarily take over the operation of any business affected with
public interest. The duration of the emergency itself is the
determining factor as to how long the temporary takeover by the
government would last. The temporary takeover by the government
extends only to the operation of the business and not to the ownership
thereof. As such thegovernment is not required to compensate the
private entity-owner of the said business as there is no transfer of
ownership, whether permanent or temporary. The private entity-owner
affected by the temporary takeover cannot, likewise, claim just
compensation for the use of the said business and its properties as
the temporary takeover by the government is in exercise of its police
power and not of its power of eminent domain.

Article XII, section 17 of the 1987 Constitution envisions a situation

wherein the exigencies of the times necessitate the government to
temporarily take over or direct the operation of any privately owned
public utility or business affected with public interest. It is the
welfare
and
interest
of
the
public
which
is
the
paramount
consideration in determining whether or not to temporarily take over a
particular business. Clearly, the State in effecting the temporary
takeover is exercising its police power. Police power is the most
essential, insistent, and illimitable of powers. Its exercise
therefore must not be unreasonably hampered nor its exercise be a
source of obligation by the government in the absence of damage due to
arbitrariness of its exercise. Thus, requiring the government to pay
reasonable compensation for the reasonable use of the property

pursuant
to
Constitution.

the

operation

of

the

business

contravenes

the