Case #21
HI-PRECISION STEEL CENTER, INC., vs.
LIM KIM STEEL BUILDERS, INC., and CONSTRUCTION INDUSTRY
ARBITRATION COMMISSION
G.R. No. 110434 December 13, 1993
I. LAW:
Executive Order No. 1008 Construction Industry Arbitration Law, Sec.
19.
Sec. 19. Finality of Awards. —
The arbitral award shall be binding upon the parties. It shall be final
and unappealable except on questions of law which shall be appealable
to the Supreme Court.
II. FACTS:
Hi-Precision (Petitioner) entered into a contract with Steel
Builders (Private Respondent) under which the latter as Contractor was
to complete a 21 Million Pesos construction project owned by Hi-
Precision with a period of 153 days. The said completion of the project
was then moved to November 4, 1990, however, when the date came,
only 75.8674% of the project was actually completed.
Contention of Petitioner: Non completion was due to Steel Builders
delay both during the original contract and period of extension.
Contention of Respondent: Respondent claimed that the said non-
completion of the project was either excusable or was due to Hi-
Precision’s own fault and issuance of change orders.
Steel Builders filed a “Request for Adjudication” with the
CIAC (Public Respondent) and sought payment of its unpaid billings,
alleged unearned profits and other receivables. Hi-Precision on the
other hand claimed for damages and reimbursement of alleged
additional costs. The CIAC formed an Arbitral Tribunal with 3 members
and such tribunal rendered a decision in favor of Steel Builders Inc
ordering Hi-Precision to pay Steel Builders their claim.
Hi-Precision now asks the Court to set aside the Award,
contending basically that it was the contractor Steel Builders who had
defaulted on its contractual undertakings and so could not be the
injured party and should not be allowed to recover any losses it may
have incurred in the project.
Petitioner Hi-Precision insists it is still entitled to damages,
and claims that the Arbitral Tribunal committed grave abuse of
discretion when it allowed certain claims by Steel Builders and offset
them against claims of Hi-Precision.
2 basic arguments of Hi Precision:
i. Petitioner asks this Court to correct legal errors committed by the
Arbitral Tribunal, which at the same time constitute grave abuse of
discretion amounting to lack of jurisdiction on the part of the Arbitral
Tribunal; and
ii. Should the supposed errors petitioner asks us to correct be
characterized as errors of fact, such factual errors should nonetheless
be reviewed because there was "grave abuse of discretion" in the
misapprehension of facts on the part of the Arbitral Tribunal.
III. ISSUE:
Whether the arbitral award can be reviewed by Supreme Court
IV. HELD:
The arbitral award in the case at bar cannot be reviewed
by the SC. Section 19 of Executive Order 1008 as amended says, “The
arbitral award shall be binding upon the parties. It shall be final and
unappealable except on questions of law which shall be appealable to
the Supreme Court.
Section 19 makes it crystal clear that questions of fact
cannot be raised in proceedings before the Supreme Court — which is
not a trier of facts — in respect of an arbitral award rendered under
the aegis of the CIAC. Consideration of the animating purpose of
voluntary arbitration in general and arbitration under the aegis of the
CIAC in particular, requires us to apply rigorously the above principle
embodied in Section 19 that the Arbitral Tribunal's findings of fact shall
be final and unappealable.
Voluntary arbitration involves the reference of a dispute to
an impartial body, the members of which are chosen by the parties
themselves, which parties freely consent in advance to abide by the
arbitral award issued after proceedings where both parties had the
opportunity to be heard.
The basic objective is to provide a speedy and inexpensive
method of settling disputes by allowing the parties to avoid the
formalities, delay, expense and aggravation which commonly
accompany ordinary litigation, especially litigation which goes through
the entire hierarchy of courts.
Executive Order No. 1008 created an arbitration facility to
which the construction industry in the Philippines can have recourse.
The Executive Order was enacted to encourage the early and
expeditious settlement of disputes in the construction industry, a public
policy the implementation of which is necessary and important for the
realization of national development goals
Aware of the objective of voluntary arbitration in the labor
field, in the construction industry, and in any other area for that matter,
the Court will not assist one or the other or even both parties in any
effort to subvert or defeat that objective for their private purposes.
The Court will not review the factual findings of an arbitral
tribunal upon the artful allegation that such body had
"misapprehended the facts" and will not pass upon issues which are,
at bottom, issues of fact, no matter how cleverly disguised they might
be as "legal questions."
The parties here had recourse to arbitration and chose the
arbitrators themselves; they must have had confidence in such
arbitrators. The Court will not, therefore, permit the parties to relitigate
before it the issues of facts previously presented and argued before
the Arbitral Tribunal, save only where a very clear showing is made
that, in reaching its factual conclusions, the Arbitral Tribunal
committed an error so egregious and hurtful to one party as to
constitute a grave abuse of discretion resulting in lack or loss of
jurisdiction.
G.R. No. 129175
RUBEN N. BARRAMEDA, ELVIS L. ESPIRITU, MERARDO G. ENERO, JR.,
MARCELITO B. ABBAS and REYNALDO V.ABUNDO, petitioners,vs.
ROMEO ATIENZA, EDGARDO DASCO, BERNARDO DIEZMO, JESUS
FERNANDEZ, MILAGROS ESTRELLADO,ARTEMIO INDIAS, RAUL
CARRANCEJA, MARY ANN ASOR and ANTONIO OBIAS, respondents
ISSUE:
Whether or not petitioners are the rightful directors of Camarines Norte Electric
Cooperative (CANORECO) as against respondents, who were elected in a general
assembly of members called by a presidential ad hoc committee.
FACTS:
March 10, 1990
Congress enacted into law Republic Act No. 6938 (the Cooperative Code of the
Philippines) and Republic Act No. 6939 (creating the Cooperative Development
Authority [CDA]). The latter act vested the power to register cooperatives solely on
CDA.
July 10, 1996
Cooperative Development Authority (CDA) certified that CANORECO is registered
as a full-fledged cooperative under R. A. No. 6938.
CANORECO is an electric cooperative organized under the provisions of P. D. No.
269, National Electrification Administration Decree (NEA), as amended by P.
D. No. 1645.
March 1, 1988
NEA and CANORECO entered into a Contract of Loan and First Mortgage of
CANORECO properties for the improvement of the cooperatives electrification
program. One provision in the loan agreement is embodied in Article VI, Section
2, which provides:
Section 2. In the event of default, the NEA may, in addition to the
rights, privileges, powers and remedies granted to it under Presidential
Decree No. 269 and other pertinent laws, exercise any or all of the
following remedies.
a. xxx
b. xxx
c. Assign or appoint a Project Supervisor and/or General Manager
d. Take over the construction, operation, management and control of
the SYSTEM
e. Take any other lawful remedial measure
During the incumbency of Reynaldo Abundo, one of the signatories of the loan
contract and the general manager of CANORECO that time defaulted in payment
of the obligation as they fell due. Thus, CANORECO had an outstanding loan with
NEA amounted to Php74 million.
In 1995
NEA enforced the provision of the mortgage contract by designating an acting
general manager of CANORECO to protect state funds invested therein.
March 26, 1995
NEA appointed a new general manager, Felix Rolando G. Zaldua, and declared
former manager Reynaldo V. Abundo as pesona non grata.
Shortly, the group of Reynaldo V. Abundo contested the authority of NEA to
supervise and control CANORECO, filing with CDA several cases.
February 15, 1996
CDA declared the board meeting of May 28, 1995, void ab initio because there
was no quorum considering that there were only three (3) incumbent board
members who were present. Thus, the resolutions issued during the meeting were
all declared null and void.
The election of respondents Norberto Ochoa, Antonio Obias, Felicito Ilan, and Luis
Pascua, as President, Vice-President, Secretary, and Treasurer, respectively, of
CANORECO was declared null and void ab initio.

Mr. Reynaldo Abundo was restated to his position as General Manager
considering that the recall of his appointment was done under a void Resolution,
and that the designation of Mr. Oscar Acodera as Officer-In-Charge, under the
same void Resolution, has no force and effect.
ART. 51. Removal. -- An elective officer, director, or committee member may be
removed by a vote of two-thirds (2/3) of the voting members present and
constituting a quorum, in a regular or special general assembly meeting called for
the purpose. The person involved shall be given an opportunity to be heard at said
assembly.

Finally, respondents Antonio Obias, Norberto Ochoa, Luisito Pascua, and
petitioners Ruben Barrameda, Elvis Espiritu, Marcelito Abas and Merardo Enero,
Jr. are ordered to work together as Board of Directors, for the common good of
CANORECO and its consumer-members, and to maintain an atmosphere of
sincere cooperation among the officers and members of CANORECO.
February 27, 1996
Petitioner Abundo resigned as general manager of CANORECO.
In turn, NEA recognized the appointment of acting general manager Felix Rolando
G. Zaldua. On September 23, 1996, Juanito M. Irabon replaced Rolando G.
Zaldua.
September 26, 1996
CDA issued a writ of execution and order to vacate thereby enabling petitioners to
resume control of CANORECO.
December 3, 1996
President Fidel V. Ramos issued Memorandum Order No. 409, in response to
letters from the Governor of Camarines Norte and the Office of the Sangguniang
Panlalawigan regarding the conflict between the NEA group and the CDA group.
It must be pointed out that the controversy which resulted in the issuance of the
Memorandum Order stemmed from a struggle between two groups vying for
control of the management of CANORECO. One faction was led by the group of
Norberto Ochoa, while the other was petitioners group whose members were, at
that time, the incumbent directors and officers. It was the action of Ochoa and his
cohorts in holding a special meeting on 28 May 1995 and then declaring vacant
the positions of cooperative officers and thereafter electing themselves to the
positions of president, vice-president, treasurer, and secretary of CANORECO
which compelled the petitioners to file a petition with the CDA. The CDA thereafter
came out with a decision favorable to the petitioners.
Obviously there was a clear case of intra-cooperative dispute. Article 121 of the
Cooperative Code is explicit on how the dispute should be resolved; thus:
ART. 121. Settlement of Disputes. -- Disputes among members, officers,
directors, and committee members, and intra-cooperative disputes shall, as far as
practicable, be settled amicably in accordance with the conciliation or mediation
mechanisms embodied in the by-laws of the cooperative, and in applicable laws.
Should such a conciliation/mediation proceeding fail, the matter shall be settled in
a court of competent jurisdiction.

The order constituted an ad hoc committee to temporarily take over and manage Complementing this Article is Section 8 of R. A. No. 6939, which provides:
the affairs of CANORECO.
SEC. 8. Mediation and Conciliation. Upon request of either or both or both
The ad hoc committee was composed of: parties, the [CDA] shall mediate and conciliate disputes with the cooperative or
between cooperatives: Provided, That if no mediation or conciliation succeeds
 Rex Tantiongco Chairman Presidential Assistant on Energy Affairs within three (3) months from request thereof, a certificate of non-resolution shall
 Honesto de Jesus Cooperative Development Authority Nominee be issued by the commission prior to the filing of appropriate action before the
 Andres Ibasco Cooperative Development Authority Nominee proper courts.
 Teodulo M. Mea National Electrification Administration Nominee
Even granting for the sake of argument that the party aggrieved by a decision of
 Vicente Lukban National Electrification Administration Nominee
the CDA could pursue an administrative appeal to the Office of the President on
the theory that the CDA is an agency under its direct supervision and control, still
February 16, 1997
the Office of the President could not in this case, motu proprio or upon request of
The ad hoc committee presided over by Chairman Rex Tantiongco called for a
a party, supplant or overturn the decision of the CDA. The record does not disclose
special general membership meeting of CANORECO to determine whether there
that the group of Norberto Ochoa appealed from the decision of the CDA in CDA-
was a need to change the composition of CANORECOs board of directors. An
CO Case No. 95-010 to the Office of the President as the head of the Executive
overwhelming majority voted in favor of replacing the board of directors of
Department exercising supervision and control over said agency. In fact the CDA
CANORECO.
had already issued a Cease and Desist Order dated 14 August 1996 ordering
Antonio Obias, Norberto Ochoa, Luis Pascua, Felicito Ilan and their followers to
March 23, 1997
cease and desist from acting as the Board of Directors and Officers of Camarines
CANORECO elected as new board members the following:
Norte Electric Cooperative (CANORECO) and to refrain from implementing their
Resolution calling for the District V Election on August 17 and 24, 1996.
1. Milagros Estrellado
Consequently, the said decision of the CDA had long become final and executory
2. Jesus Thomas Fernandez
when Memorandum Order No. 409 was issued on 3 December 1996. That
3. Bernardo Diezmo
Memorandum cannot then be considered as one reversing the decision of the CDA
4. Raul Carranceja
which had attained finality.
5. Romeo Atienza
6. Edgar Dasco
The pertinent laws on cooperatives, namely, R. A. No. 6938, R. A. No. 6939, and
7. Artemio Indias
P. D. No. 269 as amended by P. D. No. 1645 do not provide for the President or
any other administrative body to take over the internal management of a
April 19, 1997
cooperative. Article 98 of R. A. No. 6938 instead provides:
The board passed Resolution No. 01, series of 1997, declaring the position of
general manager vacant, and Resolution No. 02, series of 1997, appointing Mary
ART. 98. Regulation of Public Service Cooperatives. -- (1) The internal affairs
Ann C. Asor general manager.
of public service cooperatives such as the rights and privileges of members, the
rules and procedures for meetings of the general assembly, board of directors and
Hence, the petition for quo warranto.
committees; for the election and qualification of officers, directors, and committee
members; allocation and distribution of surpluses, and all other matters relating to
February 27, 1998
their internal affairs shall be governed by this Code.
Memorandum Order No. 409 of the President was declared invalid.
November 16, 1998
Having registered itself with the CDA pursuant to Section 128 of R.A. No. 6938
The decision in G. R. No. 127249 declared invalid Memorandum Order No. 409,
and Section 17 of R.A. No. 6939, CANORECO was brought under the coverage
but did not delve on the issue of who are the rightful directors of the cooperative.
of said laws. Article 38 of R.A. No. 6938 vests upon the board of directors the
Until the merits of the quo warranto proceedings have been decided, petitioners
conduct and management of the affairs of cooperatives, and Article 39 provides
cannot unilaterally assume their former positions in the cooperative.
for the powers of the board of directors. These sections read:
Memorandum Order No. 409
Article 38. Composition of the Board of Directors. -- The conduct and
management of the affairs of a cooperative shall be vested in a board of directors
M. O. No. 409 caused the interruption of petitioners functions.
which shall be composed of not less than five (5) nor more than fifteen (15)
members elected by the general assembly for a term fixed in the by-laws but not
Citing Municipality of Malabang v. Benito:
exceeding a term of two (2) years and shall hold office until their successors are
duly elected and qualified, or until duly removed. However, no director shall serve
"An unconstitutional act is not a law; it confers no rights; it imposes no
for more than three (3) consecutive terms.
duties; it affords no protection; it creates no office; it is, in legal
contemplation, as inoperative as though it had never been passed."
Article 39. Powers of the Board of Directors. -- The board of directors shall
direct and supervise the business, manage the property of the cooperative and
In the same wise, M. O. No. 409 "created no office." The existence of M. O. No.
may, by resolution, exercise all such powers of the cooperative as are not reserved
409 is "an operative fact which cannot justly be ignored." Therefore, M. O. No. 409
for the general assembly under this Code and the by-laws.
conferred no rights. The board of directors, elected through the ad hoc committees
exercise of its functions while the law was in force, did not exist, as if no election
As to the officers of cooperatives, Article 43 of the Code provides:
was held.
ART. 43. Officers of the Cooperatives. The board of directors shall elect from
In this case, however, the situation was complicated by certain events. While we
among themselves only the chairman and vice-chairman, and elect or appoint
declared M. O. No. 409 unconstitutional, the election of respondents before such
other officers of the cooperative from outside of the board in accordance with their
event is presumed valid until nullified.
by-laws. All officers shall serve during good behavior and shall not be removed
except for cause and after due hearing. Loss of confidence shall not be a valid
The law expressly confers on the board of directors the power to manage the
ground for removal unless evidenced by acts or omissions causing loss of
affairs of the cooperative, according to the Cooperative Code.
confidence in the honesty and integrity of such officer. No two (2) or more persons
with relationship up to the third degree of consanguinity or affinity shall serve as
However, CANORECO entered into a contract of loan with NEA.
elective or appointive officers in the same board.
The National Electrification Administration
Under Article 34 of the Code, the general assembly of cooperatives has the
exclusive power, which cannot be delegated, to elect or appoint the members of
As far as NEA is concerned, Article VI, Section 2 of the loan agreement was clear
the board of directors and to remove them for cause. Article 51 thereof provides
that in the event of default in the payment of the loan, NEA may assign or appoint
for removal of directors and officers as follows:
a project supervisor or a general manager. This provision finds support in Section
10, Chapter II, P. D. No. 269, as amended by P. D. No. 1645.
At the time NEA took over the management of CANORECO, it exercised its rights
under the law and the loan agreement entered into by CANORECO and NEA.
Nevertheless, this is without prejudice to the holding of a general assembly for the
purpose of conducting another election of directors since the term of office of the
directors expired sometime in 1996. In the meantime, respondents shall hold office
until their successors shall have been elected and qualified.
WHEREFORE, the petition is hereby DENIED. Respondents are allowed to
continue occupying their positions pending the holding of a general assembly for
the purpose of electing directors.
G.R. No. 132400 January 31, 2005
EDUARDO J. MARIÑO, JR. VS GIL GAMILLA
FACTS: In 1986, the UST Faculty Union (USTFU) entered into an initial collective
bargaining agreement with the University of Santo Tomas (UST) wherein UST
undertook to provide USTFU with a free office space at Room 302 of its Health
Center Building.
On 21 September 1996, the officers and directors of USTFU scheduled a general
membership meeting on 5 October 1996 for the election of the union officers.
However, respondent Gamilla and some faculty members filed a Petition with the
Med-Arbitration Unit of the DOLE seeking to stop the holding of the USTFU
election.
Meanwhile, on 2 October 1996, Rev. Fr. Aligan, O.P., Secretary General of the
UST, issued a Memorandum regarding the holding of a faculty convocation on 4
October 1996.
On 4 October 1996, Med-Arbiter Falconitin issued a TRO enjoining the holding of
the election of the USTFU officers and directors. However, denying the TRO they
themselves sought, Gamilla and some of the faculty members present in the 4
October 1996 faculty convocation proceeded with the election of the USTFU
officers. In the succeeding week, petitioners filed with the DOLE a petition for
prohibition, injunction, with prayer for preliminary injunction and TRO, seeking to
invalidate the election held on 4 October 1996.
On 27 January 1997, respondents Gamilla, Cardenas and Aseron, with some other
persons, served a letter demanding that the latter vacate the premises located at
Room 302, Health Center Building, UST—the Office of USTFU. However, only the
office messenger was in the office at the time. After coercing the office messenger
to step out of the office, Gamilla and company padlocked the door leading to the
union’s office.
Petitioners filed with the RTC a Complaint for injunction and damages with a
prayer for preliminary injunction and TRO over the use of the USTFU office.
The Med-Arbiter Falconitin rendered a decision, declaring the 4 October 1996
election and its results null and void ab initio. The decision was appealed to the
Bureau of Labor Relations which affirmed the same. 15 Respondents brought the
matter to this Court via a special civil action for certiorari.16 The Court promulgated
its decision,17 dismissing the petition on 16 November 1999.
On 3 March 1997, the RTC issued the assailed order granting the writ of preliminary
injunction. The respondents filed a Petition for Certiorari. The Court of Appeals
stated that the basic issue of the case was whether the RTC of Manila had
jurisdiction over the subject matter. It agreed with respondents’ disquisition that
petitioners’ cause of action in the complaint before the trial court is inextricably
linked and intertwined with the issue of who are the legitimate officers of the
USTFU, which issue was then being litigated before the DOLE. The appellate court
held that civil case merely "grew out" from the labor case. It also cited the
prohibition against the issuance of injunction in any case involving or growing out
of a labor dispute, unless otherwise provided by law. Hence, this petition.
ISSUES: I. Whether the regional trial court had no jurisdiction
II. Whether the case is a labor dispute cognizable by the DOLE;
III. Whether the RTC ’s issuance of preliminary injunction is correct.
RULING:
FIRST ISSUE: There is merit in the petition but only in part. Fundamentally, the
civil case a quo seeks two reliefs one is for the removal of the padlocks on the
office door and restraining respondents from blocking petitioners’ access to the
premises, while the other is for the recovery of moral and exemplary damages.
It is a settled rule that jurisdiction, once acquired, continues until the case is finally
terminated. The petition with the Med-Arbiter was filed ahead of the complaint in
the civil case before the RTC. As such, when the petitioners filed their complaint a
quo, jurisdiction over the injunction and restraining order prayed for had already
been lodged with the Med-Arbiter. The removal of padlocks and the access to the
office premises is necessarily included in petitioners’ prayer to enjoin respondents
from performing acts pertaining to union officers and on behalf of the union. In
observance of the principle of adherence of jurisdiction, it is clear that the RTC
should not have exercised jurisdiction over the provisional reliefs prayed for in the
complaint.
Jurisdiction over a subject matter is conferred by law and determined by the
allegations in the complaint and the character of the relief sought, irrespective of
whether the plaintiff is entitled to all or some of the claims asserted therein.
As to the claim for damages before the lower court. Art. 226 of the Labor Code
provides, thus:
The Bureau of Labor Relations and the Labor Relations Divisions in the regional
offices of the DOLE shall have original and exclusive authority to act, at their own
initiative or upon request of either or both parties, on all inter-union and intra-
union conflicts, and all disputes, grievances or problems arising from or affecting
labor-management relations in all workplaces whether agricultural or non-
agricultural, except those arising from the implementation or interpretation of
collective bargaining agreements which shall be the subject of grievance procedure
and/or voluntary arbitration.
Thus, unlike the NLRC which is explicitly vested with the jurisdiction over claims
for actual, moral, exemplary and other forms of damages, the BLR is not
specifically empowered to adjudicate claims of such nature arising from intra-union
or inter-union disputes. In fact, Art. 241 of the Labor Code ordains the separate
institution before the regular courts of criminal and civil liabilities arising from
violations of the rights and conditions of union membership. The Court has
consistently held that where no employer-employee exists between the parties and
no issue is involved which may be resolved by reference to the Labor Code, other
labor statutes, or any collective bargaining agreement, it is the regional trial court
that has jurisdiction.
Administrative agencies are tribunals of limited jurisdiction and as such, can
exercise only those powers which are specifically granted to them by their enabling
statutes. Consequently, matters over which they are not granted authority are
beyond their competence. While the trend is towards vesting administrative bodies
with the power to adjudicate matters coming under their particular specialization,
to ensure a more knowledgeable solution of the problems submitted to them, this
should not deprive the courts of justice their power to decide ordinary cases in
accordance with the general laws that do not require any particular expertise or
training to interpret and apply. In their complaint in the civil case, petitioners do
not seek any relief under the Labor Code but the payment of a sum of money as
damages on account of respondents’ alleged tortuous conduct. The action is within
the realm of civil law and, hence, jurisdiction over the case belongs to the regular
courts.58
SECOND ISSUE: The case is neither a labor nor an inter-union dispute. It is
clearly an intra-union dispute.
Labor dispute includes any controversy or matter concerning terms or conditions
of employment or the association or representation of persons in negotiating,
fixing, maintaining, changing or arranging the terms and conditions of
employment, regardless of whether the disputants stand in the proximate relation
of employer and employee.45 Jurisdiction over labor disputes, including claims for
actual, moral, exemplary and other forms of damages arising from the employer-
employee relations is vested in Labor Arbiters and the National Labor Relations
Commission (NLRC).46
On the other hand, an intra-union dispute refers to any conflict between and
among union members. It encompasses all disputes or grievances arising from any
violation of or disagreement over any provision of the constitution and by-laws of
a union, not excepting cases arising from chartering or affiliation of labor
organizations or from any violation of the rights and conditions of union
membership provided for in the Labor Code. 47 In contrast, an inter-union dispute
refers to any conflict between and among legitimate labor organizations involving
questions of representation for purposes of collective bargaining; it includes all
other conflicts which legitimate labor organizations may have against each other
based on any violations of their rights as labor organizations.48 Like labor disputes,
jurisdiction over intra-union and inter-union disputes does not pertain to the
regular courts. It is vested in the Bureau of Labor Relations Divisions in the regional
offices of the Department of Labor.
THIRD ISSUE: The RTC’s issuance of preliminary injunction and TRO in favor of
Marino et, al. is not correct. The dispute in the case at bar is an intra-union dispute.
The propriety of padlocking the union’s office, the relief sought by the petitioner
in the civil case, is interwoven with the issue of legitimacy of the assumption of
office by the respondents in light of the violation of the union’s constitution and
by-laws, which was then pending before the Med-Arbiter. Necessarily, therefore,
the trial court has no jurisdiction over the case insofar as the prayer for the removal
of the padlocks and the issuance of an injunctive writ is concerned.
CASE #24 Eming, Nat Bernard G.
A. D. GOTHONG MANUFACTURING CORPORATION EMPLOYEES UNION-
ALU, petitioner, vs. HON. NIEVES CONFESOR, SECRETARY,
DEPARTMENT OF LABOR AND EMPLOYMENT and A. D. GOTHONG
MANUFACTURING CORPORATION
Definition of terms:
"Certification Election" means the process of determining, through secret ballot,
the sole and exclusive bargaining agent of the employees in an appropriate
bargaining unit, for purposes of collective bargaining.
“Med-Arbiter" is an official in the Regional Office authorized to hear, conciliate,
mediate and decide representation cases, internal union and inter-union
disputes.
Pertinent Provisions:
DOLE DEPARTMENT ORDER NO. 40-F-03 further amending the Labor Code
Section 1, Rule VIII. Who may file. - Any legitimate labor organization,
including a national union or federation that has issued a charter certificate to its
local/chapter or the local/chapter itself, may file a petition for certification
election.
In all cases, whether the petition for certification election is filed by an employer
or a legitimate labor organization, the employer shall not be considered a party
thereto with a concomitant right to oppose a petition for certification election.
The employer's participation in such proceedings shall be limited to: (1) being
notified or informed of petitions of such nature; and (2) submitting the list of
employees during the pre-election conference' should the med arbiter act
favorably on the petition. Any employee has the right to intervene for the
protection of his individual right.
SECTION 8. Where to file motion for intervention. — The motion for
intervention in certification election proceedings shall be filed before the Med-
Arbiter assigned to the case. The mere filing of said motion, however, will not
suspend the holding of the certification election without an order issued by the
Med-Arbiter.
Facts: Petitioner A. D. Gothong Manufacturing Corporation Employees
Union-ALU (Union) seeks to reverse and set aside the decision of the Secretary
of Labor promulgated on September 30, 1993 affirming in toto the Resolution of
Mediator-Arbiter, Achilles V. Manit declaring Romulo Plaza and Paul Michael Yap
as rank- and-file employees of A. D. Gothong Manufacturing Corporation
(Company).
The Union filed a petition for certification filed a petition for certification election
in its bid to represent the unorganized regular rank-and-file employees of
respondent Company excluding its office staff and personnel. The Company
opposed the petition as it excluded office personnel who are rank and file
employees. In the inclusion-exclusion proceedings, the parties agreed to the
inclusion of Romulo Plaza and Paul Michael Yap in the list of eligible voters on
condition that their votes are considered challenged on the ground that they
were supervisory employees.
The certification election was conducted as scheduled and yielded the following
results:
YES - - - - - - - - - - - - - - - 20
NO - - - - - - - - - - - - - - - - 19
Challenged - - -- - - - - - - - - 2
Total votes cast - - - - - - - -41
Plaza and Yap argued that they are rank-and-file employees. Plaza claimed that
he was a mere salesman based in Cebu, and Yap argued that he is a mere
expediter whose job includes the facilitation of the processing of the bills of
lading of all intended company shipments.
In support of its position paper, the petitioner Union submitted the affidavits of
Ricardo Caete, Pedro Diez, et al., Photocopies of company memorandums, and
Photocopy of the minutes of the regular quarterly staff meeting.
The Med-Arbiter declared that the challenged voters Yap and Plaza are rank-and-
file employees.
The Union appealed to the Secretary of Labor.
Respondent’s Claim: respondent Company stressed that Pacita Gothong is the
company’s corporate secretary and not Baby L. Siador, who signed the minutes
of the meeting submitted in evidence also that Romulo Plaza could not qualify as
a manager of the Davao Branch the opening of which branch never materialized.
Respondent Secretary of Labor affirmed the finding of the Med-Arbiter. Thus, the
case reached the SC by petition for review on certiorari.
Issues: 1. Whether the decision of the Med-Arbiter affirmed by the SOLE is
reversible.
2. Whether Romulo Plaza and Paul Michael Yap are rank-and-file
employees.
Held: The petition has failed to show reversible error in the findings of the
Med-Arbiter and the Secretary of the Department of Labor. It has also been
established that in the determination of whether or not certain employees are
managerial employees, this Court accords due respect and therefore sustains the
findings of fact made by quasi-judicial agencies which are supported by
substantial evidence considering their expertise in their respective fields.
The test of supervisory or managerial status depends on whether a person
possess authority to act in the interest of his employer and whether such
authority is not merely routinary or clerical in nature, but requires the use of
independent judgment. Thus, where such recommendatory powers as in the
case at bar, are subject to evaluation, review and final action by the department
heads and other higher executives of the company, the same, although present,
are not exercise of independent judgment as required by law.
This Court is not a trier of facts. As earlier stated, it is not the function of this
Court to examine and evaluate the probative value of all evidence presented to
the concerned tribunal which formed the basis of its impugned decision or
resolution. Following established precedents, it is inappropriate to review that
factual findings of the Med-Arbiter regarding the issue whether Romulo Plaza and
Paul Michael Yap are or are not rank-and-file employees considering that these
are matters within their technical expertise. They are binding on this Court as we
are satisfied that they are supported by substantial evidence, and we find no
capricious exercise of judgment warranting reversal by certiorari.
25. CAPITOL MEDICAL CENTER, INC. (THE COMPANY) v. NLRC, ET AL.
G.R. No. 147080, April 26, 2005
FACTS: Capitol Medical Center Employees Association-Alliance of Filipino Workers
(the Union) was the exclusive bargaining agent of the rank-and-file employees of
the petitioner Capitol Medical Center, Inc. had been the bone of contention
between the Union and the petitioner Capitol Medical Center, Inc (the Company).
The petitioner’s refusal to negotiate for a collective bargaining agreement (CBA)
resulted in a union-led strike on April 15, 1993.
The Union had to contend with another union – the Capitol Medical
Center Alliance of Concerned Employees (CMC-ACE) – which demanded for a
certification election among the rank-and-file employees of the petitioner. Med-
Arbiter Brigida Fadrigon granted the petition, and the matter was appealed to the
Secretary of Labor and Employment (SOLE).
Undersecretary Bienvenido E. Laguesma rendered a Resolution
granting the appeal and denied the motion filed by the company and the CMC-
ACE. CMC-ACE brought the matter to the Supreme Court which rendered judgment
affirming the resolution of Undersecretary Laguesma.
Instead of filing a motion with the SOLE for the enforcement of the
resolutions of Undersecretary Laguesma as affirmed by this Court, the Union filed
a Notice of Strike on October 29, 1997 with the National Conciliation and Mediation
Board (NCMB), serving a copy thereof to the petitioner.
The Union alleged as grounds for the projected strike the following
acts of the petitioner:
(a) refusal to bargain;
(b) coercion on employees; and
(c) interference/ restraint to self-organization.
A series of conferences was conducted before NCMB (National Capital
Region) but no agreement was reached. The Company filed a letter with the board
requesting for the dismissal of the notice of strike since the Union failed to furnish
the Regional Branch of the NCMB with a copy of a notice of the meeting where
the strike vote was conducted.
The Union submitted to the NCMB the minutes of the alleged strike
vote purportedly held on November 10, 1997 at the parking lot in front of the
petitioner’s premises, at the corner of Scout Magbanua Street and Panay Avenue,
Quezon City. It appears that 178 out of the 300 union members participated
therein, and the results were as follows: 156 members voted to strike; 14 members
cast negative votes; and eight votes were spoiled.
Thereafter, the officers and members of the Union staged a strike.
Subsequently, the Union filed an ex parte motion with the DOLE praying for its
assumption of jurisdiction over the dispute. The SOLE issued an Order assuming
jurisdiction.
In obedience with the order of the SOLE, the officers and members of
the Union stopped their strike and returned to work.
The company filed a petition with the NLRC asking to declare the strike
illegal.
LABOR ARBITER: Labor Arbiter Facundo Leda ruled in Favor of the company
declaring the strike illegal.
 The Labor Arbiter ruled that no voting had taken place.
Moreover, no notice of such voting was furnished to the
NCMB at least twenty-four (24) hours prior to the
intended holding of the strike vote.
NLRC: Upon appeal to the NLRC, the NLRC reversed the ruling of the Labor Arbiter
and denied the subsequent Motion for Reconsideration.
CA: The Company filed a petition for certiorari under before the Court of Appeals
but the CA affirmed the NLRC’S ruling.
Hence, the case reached the SC via petition for review.
ISSUES: 1.Whether or not the strike in the case at bar is illegal.
2. Whether respondents complied with the legal
requirements for staging the subject strike.
SUPREME COURT’S RULING:
The strike is illegal. The Union failed to comply with the procedures
mandated by law.
Section 10 of Rule 22 of the Omnibus Rules of the NLRC
provides that:
“A decision to declare a strike must be approved by a majority of
the total union membership in the bargaining unit concerned obtained by secret
ballot in meetings or referenda called for the purpose. A decision to declare a
lockout must be approved by a majority of the Board of Directors of the employer,
corporation or association or the partners obtained by secret ballot in a meeting
called for the purpose.”
The regional branch of the Board may, at its own initiative or upon the
request of any affected party, supervise the conduct of the secret balloting. In
every case, the union or the employer shall furnish the regional branch of the
Board and notice of the meetings referred to in the preceding paragraph at
least 24 hours before such meetings as well as the results of the voting at least
7 days before the intended strike or lockout, subject to the cooling-off
period.
Although the 2nd paragraph of Section 10 of the said Rule is not
provided in the Labor Code of the Philippines, it was incorporated in the Omnibus
Rules Implementing the Labor Code and has the force and effect of law.
Aside from the mandatory notices embodied in Artivle 263, par.
(c ) and (f) of the Labor Code, a union intending to stage a strike is mandated
to notify the NCMC of the meeting for the conduct of strike vote, at least
24 hours prior to such meeting.
Unless the NCMB is notified of the date, place and time of the meeting
of the union members for the conduct of a strike vote, the NMCB would be unable
to supervise the holding of the same, if and when it decides to exercise its power
of supervision.
In National Federation of Labor v. NLRC, the Court enumerated
the notices required by Art 263 of the Labor Code and the Implementing
Rules, which include the 24-hour prior notice to the NCMB:
1) A notice of strike, with the required contents, should be filed
with the DOLE, specifically the Regional Branch of the NCMB,
copy furnished the employer of the union;
2) A cooling-off period must be observed between the filing of
the notice and the actual execution of the strike 30 days in case
of bargaining deadlock and 15 days in case of unfair labor
practice.
However, in the case of union busting where the union’s
existence is threatened, the cooling-off period need not be
observed.
3) Before a strike actually commenced, a strike vote should be
taken by secret balloting, with a 24-hour prior notice to
NCMB. The decision to declare a strike required the secret-
ballot approval of majority of the total union
membership in the bargaining unit concerned.
4) The result of the strike vote should be reported to the NCMB
at least 7 days before the intended strike or lockout, subject
to the cooling-off period.
A Union is mandated to notify the NCMB of an impending dispute
in a particular bargaining unit via notice of strike. Thereafter, the NCMB, through
its conciliator-mediators, shall call the parties to a conference at the soonest
possible time in order to actively assist them in exploring all possibilities for
amicable settlement.
In the event of the failure in conciliation/mediation proceedings, the
parties shall be encouraged to submit their dispute for voluntary arbitration.
However, if the parties refuse, the union may hold a strike vote, and if the
requisite number of votes is obtained, a strike may ensue.
PURPOSE OF STRIKE VOTE:
 to ensure that the decision to strike broadly rests with the
majority of the union members in general and not with a
mere minority;
 discourage wildcat strikes, union bossism and even
corruption.
A strike vote report submitted to the NCMB at least 7 DAYS prior to
the intended date of strikes ensures that a strike was, indeed, taken.
In the event that the report is false, the 7-day period affords the
members an opportunity to take the appropriate remedy before it is too
late.
The 15 to 30 day cooling-off period is designed to afford the
parties the opportunity to amicably resolve the dispute with the assistance of the
NCMB conciliator/mediator, while
7-day strike ban is to intended to give the DOLE an opportunity to
verify whether the projected strike really carries the imprimatur of the majority of
the union members.
The requirement of giving notice of the conduct of a strike
vote to the NCMB at least 24 hours before the meeting for the said
purpose is designed to:
(a) inform the NCMB of the intent of the union to conduct a
strike vote;
(b) give the NCMB ample time to decide on whether or not
there is a need to supervise the conduct of the strike vote
to prevent any acts of violence and/or irregularities
attendant thereto;
(c) should the NCMB decide on its own initiative or upon the
request of an interested party including the employer, to
supervise the strike vote, to give it ample time to prepare
for the deployment of the requisite personnel, including
peace officers if need be.
Unless and until the NCMB is notified at least 24 hours of the
union’s decision to conduct a strike vote, the date, place, and time, the NCMB
cannot determine for itself whether to supervise a strike vote meeting or not and
insure its peaceful and regular conduct.
The failure of a union to comply with the requirement of the giving of
notice to the NCMB at least 24 hours prior to the holding of a strike vote meeting
will render the subsequent strike staged by the union illegal.
In case, the respondent Union failed to comply with the 24-hour prior
notice requirement to the NCMB before it conducted the alleged strike vote
meeting on November 10, 1997. As a result, the petitioner complained that no
strike vote meeting ever took place and averred that the strike staged by the
respondent union was illegal.
Article 264 of the Labor Code of the Philippines and Section 7,
Rule XXII of the Omnibus Rules Implementing the Labor Code:
No labor organization shall declare a strike UNLESS supported by a
majority vote of the members of the union obtained by secret ballot in a meeting
called for that purpose.
The requirement is mandatory and the failure of the union to
comply renders the strike illegal. The union is thus mandated to allege and
prove compliance with the requirements of the law.
26. INSULAR SAVINGS BANK, Petitioner,
v.
FAR EAST BANK AND TRUST COMPANY, Respondent.
G.R. No. 141818 June 22, 2006
Note: the case made no mention of the Insular Savings Bank as the petitioner,
because at that time, it was HBTC (1991). The petitioner, now Insular Savings
Bank (in the 2006 case), is the predecessor-in-interest of Home Bankers Trust and
Company HBTC.
Facts:
On December 11, 1991, Far East Bank and Trust Company (Respondent) filed a
complaint against Home Bankers Trust and Company (HBTC) with the Philippine
Clearing House Corporation’s (PCHC) Arbitration Committee. Far East Bank and
Trust Company sought to recover from petitioner, the sum of P25, 200,000.00
representing the total amount of the three checks drawn and debited against its
clearing account. HBTC sent these checks to Far East Bank and Trust Company for
clearing by operation of the PCHC clearing system. Thereafter, Far East Bank and
Trust Company dishonored the checks for insufficiency of funds and returned the
checks to HBTC. However, the HBTC refused to accept them since the checks were
returned by Far East Bank and Trust Company after the reglementary regional
clearing period.
On January 17, 1992, before the termination of the arbitration proceedings, Far
East Bank and Trust Company filed another complaint but this time with the
Regional Trial Court (RTC) in Makati City for Sum of Money and Damages with
Preliminary Attachment. The complaint was filed not only against HBTC but also
against Robert Young, Eugene Arriesgado and Victor Tancuan (collectively known
as Defendants), who were the president and depositors of HBTC respectively.
Aware of the arbitration proceedings between Far East Bank and Trust Company
and petitioner, the RTC, in an Omnibus Order dated April 30, 1992, suspended the
proceedings in the case against all the defendants pending the decision of the
Arbitration Committee which stated that: "Proceedings against Home Bankers and
Trust Co. are suspended pending award/decision in the arbitration proceedings
while those against individual defendants be immediately reinstated and
continued."
On February 2, 1998, the PCHC Arbitration Committee rendered its decision in
favor of Far East Bank and Trust Company and against HBTC and companions,
sentencing to pay the sum of P25.2 million as principal. In view of the fact,
however, that this amount was split between the parties in the course of the
proceedings, the amount to be paid by the defendant should only be
P12,600,000.00 plus interest on this latter amount at the rate of 12% per annum
from February 11, 1992, the date when the total amount of P25.2 Million was split
between plaintiff and defendant up to the date of payment.
Petitioner filed a motion for reconsideration before the arbitration committee but
was denied. Consequently, to appeal the decision of the Arbitration Committee,
petitioner filed a petition for review in the earlier case filed by Far East Bank and
Trust Company in the RTC of Makati .In an order dated January 20, 1999, the RTC
directed both petitioner and respondent to file their respective memoranda, after
which, said petition would be deemed submitted for resolution.
On February 8, 1999, Far East Bank filed a Motion to Dismiss the Petition for
Review for Lack of Jurisdiction, which was opposed by the petitioner.
The RTC dismissed the case for lack of Jurisdiction on the premise that the petition
for review is a separate and distinct case, the same must comply with all the
requirements for filing initiatory pleadings for civil actions. Also, the RTC denied
the petitioner’s motion for reconsideration.
Argument of the petitioner: contends that Civil Case before the RTC was merely
suspended to await the outcome of the arbitration case pending before the PCHC.
Thus, any petition questioning the decision of the Arbitration Committee must be
filed in the same civil case and should not be docketed as a separate action.
Likewise, petitioner avers that had it filed a separate action, "this would have
resulted in a multiplicity of suits, which is abhorred in procedure."
Argument of Far East Bank and Trust Company: avers that the RTC correctly
dismissed the appeal from the award of private arbitrators since there is no
statutory basis for such appeal. Respondent argues that petitioner’s claim that the
parties by agreement had conferred on the RTC appellate jurisdiction over
decisions of private arbitrators is erroneous because they cannot confer a non-
existent jurisdiction on the RTC or any court
Issue:
Whether the Regional Trial Court erred in dismissing the petition due to lack of
jurisdiction on the ground that it should have been docketed as a separate case
Held:
No.
SEC. 23 of the arbitration law provides: Confirmation of award. – At any time within
one month after the award is made, any party to the controversy which was
arbitrated may apply to the court having jurisdiction, as provided in Section
28, for an order confirming the award; and thereupon the court must
grant such order unless the award is vacated, modified or corrected, as
prescribed herein. Notice of such motion must be served upon the adverse party
or his attorney as prescribed by law for the service of such notice upon an attorney
in action in the same court.
The proper recourse of petitioner from the denial of its motion for reconsideration
by the Arbitration Committee is to file either a motion to vacate the arbitral award
with the RTC, a petition for review with the Court of Appeals under Rule 43 of the
Rules of Court, or a petition for certiorari under Rule 65 of the Rules of Court. In
the case at bar, petitioner filed a petition for review with the RTC when the same
should have been filed with the Court of Appeals under Rule 43 of the Rules of
Court. Thus, the RTC of Makati did not err in dismissing the petition for review for
lack of jurisdiction but not on the ground that petitioner should have filed a
separate case but on the necessity of filing the correct petition in the proper court.
It is immaterial whether petitioner filed the petition for review as an appeal of the
arbitral award or whether it filed a separate case in the RTC, considering that the
RTC will only have jurisdiction over an arbitral award in cases of motions to vacate
the same. Otherwise, as elucidated herein, the Court of Appeals retains jurisdiction
in petitions for review or in petitions for certiorari. Consequently, petitioner’s
arguments, with respect to the filing of separate action from resulting in a
multiplicity of suits, cannot be given due course.
UNIVERSITY OF THE CORDILLERAS
COLLEGE OF LAW
BAGUIO CITY
ALTERNATIVE DISPUTE RESOLUTION (CASE DIGEST)
CASE NO. 27: DIGESTED BY JOHN PAUL M. LAGAO
RCBC CAPITAL CORPORATION versus BANCO DE ORO UNI BANK, INC.
“The court, in the present case dismissed the prior cases involving arbitration
(G.R. Nos. 196171, 199238 and 200213) upon prayer by both parties of the
same”
FACTUAL ANTECEDENTS:
TRANSACTIONS WHICH GAVE RISE TO THE DISPUTE:
On May 24, 2000, RCBC entered into a Share Purchase Agreement5 (SPA) with
Equitable-PCI Bank, Inc. (EPCIB), George L. Go and the individual
shareholders6 of Bankard, Inc. (Bankard) for the sale to RCBC of 226,460,000
shares (Subject Shares) of Bankard, constituting 67% of the latter’s capital stock.
After completing payment of the contract price (₱1,786,769,400), the
corresponding deeds of sale over the subject shares were executed in January
2001.
Note: EPICIB later changed its name as it merged with BANCO DE ORO.
The dispute between the parties arose sometime in May 2003 when 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 ₱478 million and that the sellers violated their warranty under
Section 5(g) of the SPA.7
As no settlement was reached, RCBC commenced arbitration proceedings with
the International Chamber of Commerce- International Court of Arbitration (ICC-
ICA) in accordance with Section 10 of the SPA:
Section 10.Arbitration
Should there be any dispute arising between the parties relating to this
Agreement including the interpretation or performance hereof which
cannot be resolved by agreement of the parties within fifteen (15) days
after written notice by a party to another, such matter shall then
be finally settled by arbitration under the Rules of Conciliation
and Arbitration of the International Chamber of Commerce in
force as of the time of arbitration, by three arbitrators appointed
in accordance with such rules. The venue of arbitration shall be in
Makati City, Philippines and the arbitration proceedings shall be
conducted in the English language. Substantive aspects of the dispute
shall be settled by applying the laws of the Philippines. The decision of
the arbitrators shall be final and binding upon the parties hereto and
the expenses of arbitration (including without limitation the award of
attorney’s fees to the prevailing party) shall be paid as the arbitrators
shall determine.
CONFLICTING CLAIMS BETWEEN RCBC AND EPCIB
Thus, RCBC in its Request for Arbitration, dated May 12, 2004, charged
Bankard with deviating from and contravening generally accepted accounting
principles and practices, due to which the financial statements of Bankard prior
to the stock purchase were far from fair and accurate, and resulted in the
overpayment of ₱556 million. For this violation of sellers’ representations and
warranties under the SPA, RCBC sought its rescission, as well as payment of
actual damages in the amount of ₱573,132,110, legal interest on the purchase
price until actual restitution, moral damages and litigation and attorney’s fees,
with alternative prayer for award of damages in the amount of at least
₱809,796,082 plus legal interest.
In their Answer, EPCIB, Go and the other selling individual shareholders
(Respondents) denied RCBC’s allegations contending that RCBC’s claim is one for
overpayment or price reduction under Section 5(h) of the SPA which is already
time-barred, the remedy of rescission is unavailable, and even assuming that
rescission is permitted by the SPA, RCBC failed to file its claim within a
reasonable time. They further asserted that RCBC is not entitled to its alternative
prayer for damages, being guilty of laches and failing to set out the details of the
breach as required under Section 7 of the SPA. A counterclaim for litigation
expenses and costs of arbitration in the amount of US$300,000, as well as moral
and exemplary damages, was likewise raised by the Respondents.
COMMENCEMENT OF THE ARBITRATION
The Arbitration Tribunal was constituted. Mr. Neil Kaplan was nominated by
RCBC; Justice Santiago M. Kapunan (a retired Member of this Court) was
nominated by the Respondents; and Sir Ian Barker was appointed by the ICC-
ICA as Chairman.
On August 13, 2004, the ICC-ICA informed the parties that they are required to
pay US$350,000 as advance on costs pursuant to Article 30 (3) of the ICC Rules
of Arbitration (ICC Rules). RCBC paid its share of US$107,000, the balance
remaining after deducting payments of US$2,500 and US$65,000 it made earlier.
Respondents’ share of the advance on costs was thus fixed at US$175,000.
Ultimately, the respondents continuously refused the order of paying the
advance costs to commence the arbitration proceedings. It is firm in insisting
that RCBC should bear the cost of prosecuting its own claim and that
compelling the Respondents to fund such prosecution is inequitable.
Respondents reiterated that it was willing to pay the advance on costs for their
counterclaim (the ICC-ICA advised that it was not possible to fix
separate advances on costs).
Respondents, as in default, does not have any personality to
participate in the proceedings not only with respect to their
counterclaims but also to the claim of RCBC. THUS,
FIRST PARTIAL AWARD:
The Tribunal AWARDS, DECLARES AND ORDERS as follows:
(a) The Respondents are forthwith to pay to the Claimant the sum of
US$290,000.
(b) The Respondents’ counterclaim is to be considered as withdrawn.
(c) All other questions, including interest and costs, will be dealt with
in a subsequent award.
The above partial award was received by RCBC and Respondents on June 12,
2008.
SECOND PARTIAL AWARD (vacated by the Court of Appeals):
The Tribunal by a majority (Sir Ian Barker & Mr. Kaplan) awards, declares and
adjudges as follows:
(a)The Respondents are to pay damages to the Claimant for breach
of the sale and purchase agreement for Bankard shares in the sum of
₱348,736,920.29.
(b) The Respondents are to pay to the Claimant the sum of
US$880,000 in respect of the costs of the arbitration as fixed by the
ICC Court.
(c) The Respondents are to pay to the Claimant the sum of
US$582,936.56 for the fees and expenses of Mr. Best.
(d) The Respondents are to pay to the Claimant their expenses of the
arbitration as follows:
(i) Experts’ fees ₱7,082,788.55
(ii) Costs of without prejudice meeting ₱22,571.45
(iii) Costs of arbitration hearings ₱553,420.66
(iv)Costs of transcription service ₱483,597.26
Total ₱8,144,377.62
(e) The Respondents are to pay to the Claimant the sum of
₱7,000,000 for party-and-party legal costs.
(f) The Counterclaims of the Respondents are all dismissed.
(g) All claims of the Claimant are dismissed, other than those
referred to above.
ISSUE:
Whether or not the Court of Appeals acted contrary to law and prior rulings of
this honorable court and committed reversible error when it reversed the arbitral
tribunal’s findings of fact and law in the second partial award in patent
contravention of the special ADR rules which expressly prohibits the
courts, in an application to vacate an arbitral award, from disturbing
the findings of fact and/or interpretation of law of the arbitral tribunal.
(GROUND: EVIDENT PARTIALITY OF A MEMBER OF THE TRIBUNAL-
REFERRING TO CHAIRMAN BARKER)
RESOLUTION:
In resolving the matter, the RULE was applied:
Rule 19.10. Rule on judicial review on arbitration in the Philippines.-
-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.
Thus, the issue as to whether evident partiality on the part of Chairman Barker
(ground for vacating an arbitral award) exists:
EVIDENT PARTIALITY, DEFINED:
"Any dealings that might create an impression of possible bias,"
(Justice Black’s plurality opinion)
The court holds that there is partiality on the part of Chairman Black. By
furnishing the parties with a copy of this article, Chairman Barker practically
armed RCBC with supporting legal arguments under the "contractual approach"
discussed by Secomb. True enough, RCBC in its Application for Reimbursement
of Advance Costs Paid utilized said approach as it singularly focused on Article
30(3) of the ICC Rules and fiercely argued that BDO was contractually bound to
share in the advance costs fixed by the ICC. But whether under the "contractual
approach" or "provisional approach" (an application must be treated as an
interim measure of protection under Article 23 [1] rather than enforcement of a
contractual obligation), both treated in the Secomb article, RCBC succeeded in
availing of a remedy which was not expressly allowed by the Rules but
in practice has been resorted to by parties in international commercial
arbitration proceedings. It may also be mentioned that the author, Matthew
Secomb, is a member of the ICC Secretariat and the "Counsel in charge of the
file", as in fact he signed some early communications on behalf of the ICC
Secretariat pertaining to the advance costs fixed by the ICC. This bolstered the
impression that Chairman Barker was predisposed to grant relief to
RCBC by issuing a partial award.
In fine, we hold that 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 "signalled a preconceived course of action that the relief prayed for by
RCBC will be granted."
Note: Alternative dispute resolution methods or ADRs – like arbitration,
mediation, negotiation and conciliation – are encouraged by this Court. By
enabling parties to resolve their disputes amicably, they provide solutions that
are less time-consuming, less tedious, less confrontational, and more productive
of goodwill and lasting relationship. Institutionalization of ADR was envisioned as
"an important means to achieve speedy and impartial justice and declog court
dockets." The most important feature of arbitration, and indeed, the key to its
success, is the public’s confidence and trust in the integrity of the process. For
this reason, the law authorizes vacating an arbitral award when there
is evident partiality in the arbitrators.
And since the court encourages amicable and speedy settlement of
disputes, in the present case:
1. After negotiations, the Parties have mutually agreed that it is in their
best interest and general benefit to settle their differences with
respect to their respective causes of action, claims or counterclaims
in the above-captioned case, with a view to a renewal of their
business relations.
2. Thus, the Parties have reached a complete, absolute and final
settlement of their claims, demands, counterclaims and causes of
action arising, directly or indirectly, from the facts and circumstances
giving rise to, surrounding or arising from the present Petition, and
have agreed to jointly terminate and dismiss the present Petition in
accordance with their agreement.
3. In view of the foregoing compromise between the Parties, BDO and
RCBC Capital, with the assistance of their respective counsels, have
decided to jointly move for the termination and dismissal of the
above-captioned case with prejudice.
Frabelle Fishing Corporation vs. Philippines American Life Insurance
Company
530 scra 543
Facts:
Philam Properties Corporation, Philippine American Life Insurance Company, and
PERF Realty Corporation, herein respondents, are all corporations duly organized
and existing under Philippine laws.
On May 8, 1996, respondents entered into a Memorandum of Agreement (1996
MOA) whereby each agreed to contribute cash, property, and services for the
construction and development of Philamlife Tower, a 45-storey office
condominium along Paseo de Roxas, Makati City.
On December 6, 1996, respondents executed a Deed of Assignment (1996
DOA) wherein they assigned to Frabelle Properties Corporation (Frabelle) their
rights and obligations under the 1996 MOA with respect to the construction,
development, and subsequent ownership of Unit No. 38-B located at the
38th floor of Philamlife Tower. The parties also stipulated that the assignee shall
be deemed as a co-developer of the construction project with respect to Unit No.
38-B. Frabelle, in turn, assigned to Frabelle Fishing Corporation (Frabelle
Fishing), petitioner herein, its rights, obligations and interest over Unit No. 38-B.
On March 9, 1998, petitioner Frabelle Fishing and respondents executed a
Memorandum of Agreement (1998 MOA) to fund the construction of designated
office floors in Philamlife Tower.
The dispute between the parties started when petitioner (Frabelle Fishing) found
material concealment on the part of respondents regarding certain details in the
1996 DOA and 1998 MOA and their gross violation of their contractual obligations
as condominium developers. These violations are: (a) the non-construction of a
partition wall between Unit No. 38-B and the rest of the floor area; and (b) the
reduction of the net usable floor area from four hundred sixty eight (468) square
meters to only three hundred fifteen (315) square meters.
Dissatisfied with its existing arrangement with respondents, petitioner,
on October 22, 2001, referred the matter to the Philippine Dispute Resolution
Center, Inc. (PDRCI) for arbitration. However, in a letter dated November 7,
2001, respondents manifested their refusal to submit to PDRCI’s jurisdiction.
On February 11, 2002, petitioner filed with the Housing and Land Use Regulatory
Board (HLURB), Expanded National Capital Region Field Office a complaint for
reformation of instrument, specific performance and damages against
respondents. Petitioner alleged, among others, that the contracts do not reflect
the true intention of the parties; and that it is a mere buyer and not co-
developer and/or co-owner of the condominium unit.
After considering their respective memoranda, HLURB Arbiter Atty. San Vicente,
with the approval of HLURB Director Obligacion, issued an order denying the
dismissal of the case by the respondents and set the initial preliminary hearing of
the case.
Respondents then filed with the Court of Appeals a petition for prohibition with
prayer for the issuance of a temporary restraining order and writ preliminary
injunction. Petitioner claimed, among others, that the HLURB has no jurisdiction
over the subject matter of the controversy and that the contracts between the
parties provide for compulsory arbitration.
The Court of Appeals held that the HLURB has no jurisdiction over an action for
reformation of contracts. The jurisdiction lies with the Regional Trial Court.
Petitioner filed a motion for reconsideration but denied.
Issue:
1. Whether the HLURB has jurisdiction over the complaint for
reformation of instruments, specific performance and damages.
2. Whether the parties should initially resort to arbitration.
Rulings:
1. No. We hold that being an action for reformation of instruments, petitioners
complaint necessarily falls under the jurisdiction of the Regional Trial Court
pursuant to Section 1, Rule 63 of the 1997 Rules of Civil Procedure, as amended,
which provides:
SECTION 1. Who may file petition. Any person interested under a deed, will,
contract or other written instrument, whose rights are affected by a statute,
executive order or regulation, ordinance, or any other governmental regulation
may, before breach or violation thereof, bring an action in the
appropriate Regional Trial Court to determine any question of construction or
validity arising, and for a declaration of his rights or duties thereunder.
An action for the reformation of an instrument, to quiet title to real property
or remove clouds therefrom, or to consolidate ownership under Article 1607 of
the Civil Code, may be brought under this Rule.
As correctly held by the Court of Appeals, any disagreement as to the nature of
the parties relationship which would require first an amendment or
reformation of their contract is an issue which the courts may and can
resolve without the need of the expertise and specialized knowledge of the
HLURB.
2. Yes. Paragraph 4.2 of the 1998 MOA mandates that any dispute between or
among the parties “ shall finally be settled by arbitration conducted in
accordance with the Rules on Conciliation and Arbitration of the International
Chamber of Commerce ”. Petitioner referred the dispute to the PDRCI but
respondents refused to submit to its jurisdiction.
It bears stressing that such arbitration agreement is the law between the parties.
They are, therefore, expected to abide by it in good faith. This Court has
previously held that arbitration is one of the alternative methods of dispute
resolution that is now rightfully vaunted as “ the wave of the future” in
international relations, and is recognized worldwide. To brush aside a contractual
agreement calling for arbitration in case of disagreement between the parties
would therefore be a step backward.
Case No. 29
G.R. No. 174938 October 1, 2014
GERARDO LANUZA, JR. AND ANTONIO O. OLBES, Petitioners,
vs.
BF CORPORATION, SHANGRI-LA PROPERTIES, INC., ALFREDO C.
RAMOS, RUFO B. COLAYCO, MAXIMO G. LICAUCO III, AND BENJAMIN
C. RAMOS, Respondents.
Facts:
BF Corporation alleged in its complaint that:
On December 11, 1989 and May 30, 1991, BF Corporation entered into agreements
with Shangri-La wherein it undertook to construct for Shangri-La a mall and a
multilevel parking structure along EDSA. Shangri-La had been consistent in paying
BF Corporation in accordance with its progress billing statements. However, by
October 1991, Shangri-La started defaulting in payment.
Shangri-La induced BF Corporation to continue with the construction of the
buildings using its own funds and credit despite Shangri-La’s default. Shangri-La
misrepresented that it had funds to pay for its obligations with BF Corporation,
and the delay in payment was simply a matter of delayed processing of BF
Corporation’s progress billing statements.
BF Corporation eventually completed the construction of the buildings. Shangri-La
took possession of the buildings while still owing BF Corporation an outstanding
balance. Despite repeated demands by BF Corporation, Shangri-La refused to pay
the balance owed to it.
And because Shangri-La’s directors were in bad faith in directing Shangri-La’s
affairs, therefore, they should be held jointly and severally liable with Shangri-La
for its obligations as well as for the damages that BF Corporation incurred as a
result of Shangri-La’s default.
Before the Regional Trial Court
In 1993- BF Corporation filed a collection complaint with the Regional Trial Court
against Shangri-La and the members of its board of directors: Alfredo C. Ramos,
Rufo B. Colayco, Antonio O. Olbes, Gerardo Lanuza, Jr., Maximo G. Licauco III,
and Benjamin C. Ramos.
August 3, 1993- Shangri-La, Alfredo C. Ramos, Rufo B. Colayco, Maximo G. Licauco
III, and Benjamin C. Ramos filed a motion to suspend the proceedings in view of
BF Corporation’s failure to submit its dispute to arbitration, in accordance with the
arbitration clause provided in its contract.
August 19, 1993- BF Corporation opposed the motion to suspend proceedings.
November 18, 1993- the Regional Trial Court denied the motion to suspend
proceedings.
December 8, 1993- Petitioners filed an answer to BF Corporation’s complaint, with
compulsory counterclaim against BF Corporation and cross-claim against Shangri-
La. They alleged that they had resigned as members of Shangri-La’s board of
directors as of July 15, 1991.
February 11, 1994- Regional Trial Court denied the motion for reconsideration of
its November 18, 1993 order.
Before the Court of Appeals
Shangri-La, Alfredo C. Ramos, Rufo B. Colayco, Maximo G. Licauco III, and
Benjamin Ramos filed a petition for certiorari with the Court of Appeals.
April 28, 1995- the Court of Appeals granted the petition for certiorari and ordered
the submission of the dispute to arbitration.
Before the Supreme Court
BF Corporation filed a petition for review on certiorari with the Supreme Court.
March 27, 1998- The Supreme Court affirmed the Court of Appeals’ decision,
directing that the dispute be submitted for arbitration.
Proceedings related to the issue
Before the Regional Trial Court
Another issue arose after BF Corporation had initiated arbitration proceedings. BF
Corporation and Shangri-La failed to agree as to the law that should govern the
arbitration proceedings.
October 27, 1998- The trial court issued the order directing the parties to conduct
the proceedings in accordance with Republic Act No. 876.
Shangri-La filed an omnibus motion and BF Corporation an urgent motion for
clarification, both seeking to clarify the term, "parties," and whether Shangri-La’s
directors should be included in the arbitration proceedings and served with
separate demands for arbitration.
Petitioners filed their comment on Shangri-La’s and BF Corporation’s motions,
praying that they be excluded from the arbitration proceedings for being non-
parties to Shangri-La’s and BF Corporation’s agreement.
July 28, 2003- The trial court issued the order directing service of demands
for arbitration upon all defendants in BF Corporation’s
complaint. Shangri-La’s directors were interested parties who "must also be
served with a demand for arbitration to give them the opportunity to ventilate their
side of the controversy, safeguard their interest and fend off their respective
positions."
January 19, 2005- Petitioners’ motion for reconsideration of this order was
denied.
Before the Court of Appeals
Petitioners filed a petition for certiorari with the Court of Appeals, alleging grave
abuse of discretion in the issuance of orders compelling them to submit to
arbitration proceedings despite being third parties to the contract between
Shangri-La and BF Corporation.
May 11, 2006 decision- The Court of Appeals dismissed petitioners’ petition for
certiorari. The Court of Appeals ruled that Shangri-La’s directors were
necessary parties in the arbitration proceedings.
According to the Court of Appeals:
[They were] deemed not third-parties to the contract as
they [were] sued for their acts in representation of the
party to the contract pursuant to Art. 31 of the Corporation
Code, and that as directors of the defendant corporation,
[they], in accordance with Art. 1217 of the Civil Code,
stand to be benefited or injured by the result of the
arbitration proceedings, hence, being necessary parties,
they must be joined in order to have complete adjudication
of the controversy. Consequently, if [they were] excluded
as parties in the arbitration proceedings and an arbitral
award is rendered, holding [Shangri-La] and its board of
directors jointly and solidarily liable to private respondent
BF Corporation, a problem will arise, i.e., whether
petitioners will be bound by such arbitral award, and this
will prevent complete determination of the issues and
resolution of the controversy.
The Court of Appeals further ruled that "excluding petitioners in the arbitration
proceedings . . . would be contrary to the policy against multiplicity of suits."
The petition is dismissed. The assailed orders dated July 28, 2003 and January
19, 2005 of public respondent RTC in Pasig City are affirmed.
October 5, 2006- The Court of Appeals denied petitioners’ motion for
reconsideration in the resolution.
Before the Supreme Court
November 24, 2006- Petitioners filed a petition for review of the May 11, 2006
Court of Appeals decision, which affirmed the trial court's decision holding that
petitioners, as director, should submit themselves as parties to the arbitration
proceedings between BF Corporation and Shangri-La Properties, Inc. (Shangri-La),
and the October 5, 2006 Court of Appeals resolution.
Decision of the Arbitral Tribunal
Petitioners were included by the Arbitral Tribunal in the proceedings conducted,
notwithstanding their continuing objection thereto.
July 31, 2007- The Arbitral Tribunal had already promulgated its decision. It
denied BF Corporation’s claims against the petitioners, thus absolving petitioners
from liability.
Issues:
1. Whether the decision of Arbitral Tribunal, in absolving petitioners from
liability, precluded the regular courts from resolving issues.
2. Whether petitioners should be made parties to the arbitration
proceedings, pursuant to the arbitration clause provided in the contract
between BF Corporation and Shangri-La.
3. Whether the petitioners and the other directors are solidarily liable with
Shangri-La.
Notes (for us to better understand the ruling)
As a general rule, therefore, a corporation’s representative who did not
personally bind himself or herself to an arbitration agreement cannot be
forced to participate in arbitration proceedings made pursuant to an
agreement entered into by the corporation. He or she is generally not considered
a party to that agreement.
However, there are instances when the distinction between personalities
of directors, officers, and representatives, and of the corporation, are
disregarded. We call this piercing the veil of corporate fiction.
Piercing the corporate veil is warranted when "[the separate personality of a
corporation] is used as a means to perpetrate fraud or an illegal act, or as a
vehicle for the evasion of an existing obligation, the circumvention of
statutes, or to confuse legitimate issues." It is also warranted in alter ego cases
"where a corporation is merely a farce since it is a mere alter ego or business
conduit of a person, or where the corporation is so organized and controlled and
its affairs are so conducted as to make it merely an instrumentality, agency,
conduit or adjunct of another corporation." When corporate veil is pierced,
the corporation and persons who are normally treated as distinct from the
corporation are treated as one person, such that when the corporation is
adjudged liable, these persons, too, become liable as if they were the corporation.
Among the persons who may be treated as the corporation itself under
certain circumstances are its directors and officers.
Ruling:
1. The Arbitral Tribunal’s decision, absolving petitioners from liability,
and its binding effect on BF Corporation, have rendered this case moot and
academic.
The mootness of the case, however, had not precluded us from resolving
issues so that principles may be established for the guidance of the bench, bar,
and the public. In De la Camara v. Hon. Enage, the Supreme Court disregarded
the fact that petitioner in that case already escaped from prison and ruled on the
issue of excessive bails:
While under the circumstances a ruling on the merits of the
petition for certiorari is not warranted, still, as set forth at
the opening of this opinion, the fact that this case is moot
and academic should not preclude this Tribunal from
setting forth in language clear and unmistakable, the
obligation of fidelity on the part of lower court judges to
the unequivocal command of the Constitution that
excessive bail shall not be required.
This principle was repeated in subsequent cases when the Supreme Court deemed
it proper to clarify important matters for guidance.
2. Thus, we rule that petitioners may be compelled to submit to
the arbitration proceedings in accordance with Shangri-La and BF
Corporation’s agreement, in order to determine if the distinction between Shangri-
La’s personality and their personalities should be disregarded.
However, in ruling that petitioners may be compelled to submit to the arbitration
proceedings, we are not overturning Heirs of Augusto Salas wherein the Supreme
Court affirmed the basic arbitration principle that only parties to an arbitration
agreement may be compelled to submit to arbitration.
In that case, the Supreme Court recognized that persons other than the main
party may be compelled to submit to arbitration, e.g., assignees and
heirs. Assignees and heirs may be considered parties to an arbitration agreement
entered into by their assignor because the assignor’s rights and obligations are
transferred to them upon assignment. In other words, the assignor’s rights and
obligations become their own rights and obligations. In the same way, the
corporation’s obligations are treated as the representative’s obligations
when the corporate veil is pierced.
3. Arbitral Tribunal rendered a decision, finding that BF Corporation
failed to prove the existence of circumstances that render petitioners and the other
directors solidarily liable. It ruled that petitioners and Shangri-La’s other
directors were not liable for the contractual obligations of Shangri-La to BF
Corporation. The Arbitral Tribunal’s decision was made with the participation of
petitioners, albeit with their continuing objection. Thus, the Supreme Court ruled
that petitioners are bound by such decision.
Section 31 of the Civil Code provides the instances when a director, trustee,
or officer of a corporation may be made solidarily liable with it for all
damages suffered by the corporation, its stockholders or members, and other
persons in any of the following cases:
a) The director or trustee willfully and knowingly voted for or assented to a
patently unlawful corporate act;
b) The director or trustee was guilty of gross negligence or bad faith in
directing corporate affairs; and
c) The director or trustee acquired personal or pecuniary interest in conflict
with his or her duties as director or trustee.
Solidary liability with the corporation will also attach in the following
instances:
a) "When a director or officer has consented to the issuance of watered
stocks or who, having knowledge thereof, did not forthwith file with the
corporate secretary his written objection thereto";
b) "When a director, trustee or officer has contractually agreed or stipulated
to hold himself personally and solidarily liable with the corporation"; and
c) "When a director, trustee or officer is made, by specific provision of law,
personally liable for his corporate action."
DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES (DENR),
vs. UNITED PLANNERS CONSULTANTS , INC. (UPCI), UCPI.
G.R. No. 21208 (February 23, 2015)
The Facts
On July 26, 1993, Department of Environment and Natural Resources
(DENR), through the Land Management Bureau (LMB), entered into an
Agreement for Consultancy Services (Consultancy Agreement) with United
Planners Consultants, Inc. in connection with the LMB's Land Resource
Management Master Plan Project (LRMMP). Under the Consultancy Agreement,
DENR committed to pay a total contract price of ₱4,337,141.00, based on a
predetermined percentage corresponding to the particular stage of work
accomplished.
In December 1994, UCPI completed the work required, which DENR
formally accepted on December 27, 1994. However, DENR was able to pay only
47% of the total contract price in the amount of ₱2,038,456.30.
 For failure to pay its obligation under the Consultancy Agreement despite
repeated demands, UCPI instituted a Complaint against DENR before the
Regional Trial Court of Quezon City.
Upon motion of UCPI, the case was subsequently referred to arbitration
pursuant to the arbitration clause of the Consultancy Agreement, which DENR
did not oppose.
During the preliminary conference, the parties agreed to adopt the CIAC
Revised Rules Governing Construction Arbitration (CIAC Rules) to govern the
arbitration proceedings.
On the due date for submission of the draft decisions, only UCPI complied
while DENR moved for the deferment of the deadline which it followed with
another motion for extension of time, asking that it be given until May 11, 2010
to submit its draft decision.
The Arbitral Tribunal denied DENR’s motions and deemed its non-
submission as a waiver, but declared that it would still consider DENR’s draft
decision if submitted before May 7, 2010, or the expected date of the final
award’s promulgation. DENR filed its draft decision only on May 7, 2010.
The Arbitral Tribunal rendered its Award dated May 7, 2010 (Arbitral
Award) in favor of UCPI
Unconvinced, DENR filed a motion for reconsideration, which the Arbitral
Tribunal merely noted without any action, claiming that it had already lost
jurisdiction over the case after it had submitted to the RTC its Report together
with a copy of the Arbitral Award.
Consequently, DENR filed before the RTC a Motion for Reconsideration
dated May 19, 2010 (May 19, 2010 Motion for Reconsideration) and a
Manifestation and Motion dated June 1, 2010 (June 1, 2010 Manifestation and
Motion), asserting that it was denied the opportunity to be heard when the
Arbitral Tribunal failed to consider its draft decision and merely noted its motion
for reconsideration. For its part, UCPI filed an opposition thereto and moved for
the confirmation of the Arbitral Award in accordance with the Special Rules of
Court on Alternative Dispute Resolution (Special ADR Rules).
The RTC merely noted DENR’s aforesaid motions, finding that copies of
the Arbitral Award appear to have been sent to the parties by the Arbitral
Tribunal, including the OSG. On the other hand, the RTC confirmed the Arbitral
Award pursuant to Rule 11.2 (A) of the Special ADR Rules and ordered DENR to
pay UCPI the costs of confirming the award, as prayed for, in the total amount of
₱50,000.00. From this order, DENR did not file a motion for reconsideration.
Thus, on June 15, 2011, UCPI moved for the issuance of a writ of
execution, to which no comment/opposition was filed by DENR despite the RTC’s
directive therefor. In an Order dated September 12, 2011, the RTC granted
UCPI’s motion.
DENR moved to quash the writ of execution, positing that UCPI was not
entitled to its monetary claims. It also claimed that the issuance of said writ was
premature since the RTC should have first resolved its May 19, 2010 Motion for
Reconsideration and June 1, 2010 Manifestation and Motion, and not merely
noted them, thereby violating its right to due process.
The RTC Ruling
DENR was not denied due process, it’s May 19, 2010 Motion for
Reconsideration was a prohibited pleading under Section 17.2, Rule 17 of the
CIAC Rules. The available remedy to assail an arbitral award was to file a motion
for correction of final award pursuant to Section 17.1 of the CIAC Rules.
The CA Ruling
The certiorari petition is dismissed on two (2) grounds:
(a) the petition essentially assailed the merits of the Arbitral Award which
is prohibited under Rule 19.7 of the Special ADR Rules; and
(b) the petition was filed out of time, having been filed way beyond 15
days from notice of the RTC’s July 9, 2012 Order, in violation of Rule 19.28.
The Issue Before the Court
The core issue for the Court’s resolution is whether or not the CA erred in
applying the provisions of the Special ADR Rules, resulting in the dismissal of
DENR’s special civil action for certiorari.
The Court’s Ruling
The Consultancy Agreement contained an arbitration clause. Hence, UCPI,
after it filed its complaint, moved for its referral to arbitration which was not
objected to by DENR. By its referral to arbitration, the case fell within the
coverage of the Special ADR Rules. However, with respect to the arbitration
proceedings itself, the parties had agreed to adopt the CIAC Rules before the
Arbitral Tribunal in accordance with Rule 2.3 of the Special ADR Rules.
Under Section 17.2, Rule 17 of the CIAC Rules, no motion for
reconsideration or new trial may be sought, but any of the parties may file a
motion for correction of the final award, which shall interrupt the running of the
period for appeal.
Moreover, the parties may appeal the final award to the CA through a
petition for review under Rule 43 of the Rules of Court.
Records do not show that any of the foregoing remedies were availed of
by DENR. Instead, it filed the May 19, 2010 Motion for Reconsideration of the
Arbitral Award, which was a prohibited pleading under the Section 17.2, Rule 17
of the CIAC Rules, thus rendering the same final and executory.
Accordingly, the case was remanded to the RTC for confirmation
proceedings pursuant to Rule 11 of the Special ADR Rules which requires
confirmation by the court of the final arbitral award. This is consistent with
Section 40, Chapter 7 (A) of RA 9285 which similarly requires a judicial
confirmation of a domestic award to make the same enforceable.
A CIAC arbitral award need not be confirmed by the regional trial court to
be executory as provided under E.O. No. 1008.
During the confirmation proceedings, DENR did not oppose the RTC’s
confirmation by filing a petition to vacate the Arbitral Award under Rule 11.2 (D)
of the Special ADR Rules. Neither did it seek reconsideration of the confirmation
order in accordance with Rule 19.1 (h) thereof. Instead, DENR filed only on
September 10, 2012 a special civil action for certiorari before the CA. Thus, for
failing to avail of the foregoing remedies before resorting to certiorari, the CA
correctly dismissed its petition.
Note that the special civil action for certiorari described in Rule 19.26
above may be filed to annul or set aside the following orders of the Regional
Trial Court.
Rule 19.28 of the Special ADR Rules provide that certiorari petition should
be filed "with the [CA] within fifteen (15) days from notice of the judgment,
order or resolution sought to be annulled or set aside. No extension of time to
file the petition shall be allowed."
In this case, DENR asserts that its petition is not covered by the Special
ADR Rules (particularly, Rule 19.28 on the 15-day reglementary period to file a
petition for certiorari) but by Rule 65 of the Rules of Court (particularly, Section 4
thereof on the 60-day reglementary period to file a petition for certiorari), which
it claimed to have suppletory application in arbitration proceedings since the
Special ADR Rules do not explicitly provide for a procedure on execution. The
position is untenable.
Execution is fittingly called the fruit and end of suit and the life of the law.
A judgment, if left unexecuted, would be nothing but an empty victory for the
prevailing party.
While it appears that the Special ADR Rules remain silent on the
procedure for the execution of a confirmed arbitral award, it is the Court’s
considered view that the Rules’ procedural mechanisms cover not only aspects of
confirmation but necessarily extend to a confirmed award’s execution in light of
the doctrine of necessary implication which states that every statutory grant of
power, right or privilege is deemed to include all incidental power, right or
privilege.
Accordingly, since the Special ADR Rules are intended to achieve speedy
and efficient resolution of disputes and curb a litigious culture, every
interpretation thereof should be made consistent with these objectives.
Thus, with these principles in mind, the Court so concludes that the
Special ADR Rules, as far as practicable, should be made to apply not only to the
proceedings on confirmation but also to the confirmed award’s execution.
Resort to the Rules of Court even in a suppletory capacity is not allowed.
Rule 22.1 of the Special ADR Rules explicitly provides that "[t]he provisions of
the Rules of Court that are applicable to the proceedings enumerated in Rule 1.1
of these Special ADR Rules have either been included and incorporated in these
Special ADR Rules or specifically referred to herein." Besides, Rule 1.13 thereof
provides that "[i]n situations where no specific rule is provided under the Special
ADR Rules, the court shall resolve such matter summarily and be guided by the
spirit and intent of the Special ADR Rules and the ADR Laws."