Sie sind auf Seite 1von 45

NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURG vs.

STOLT-NIELSEN
PHILIPPINES, INC.
G.R. No. 87958
April 26, 1990

Facts: United Coconut Chemicals, Inc. (SHIPPER) shipped 404.774 metric tons of distilled C6-C18 fatty acid
on board MT "Stolt Sceptre," a tanker owned by Stolt-Nielsen Philippines Inc. (CARRIER), from Bauan,
Batangas, Philippines, consigned to "Nieuwe Matex" at Rotterdam, Netherlands, covered by Tanker Bill of
Lading BL No. BAT-1. The shipment was insured under a marine cargo policy with Petitioner National Union
Fire Insurance Company of Pittsburg (INSURER), a non-life American insurance corporation, through its
settling agent in the Philippines, the American International Underwriters, Inc.,.

It appears that the Bill of Lading issued by the CARRIER contained a general statement of incorporation of
the terms of a Charter Party between the SHIPPER and Parcel Tankers, Inc., entered into in Greenwich,
Connecticut, U.S.A.

Upon receipt of the cargo by the CONSIGNEE in the Netherlands, it was found to be discolored and totally
contaminated. On 21 April 1986, as subrogee of the SHIPPER, the INSURER filed suit against the CARRIER,
before the Regional Trial Court of Makati (RTC), for recovery of a sum of money representing the amount the
INSURER had paid the SHIPPER. The CARRIER moved to dismiss/suspend the proceedings on the ground
that the RTC had no jurisdiction over the claim the same being an arbitrable one; that as subrogee of the
SHIPPER, the INSURER is subject to the provisions of the Bill of Lading, which includes a provision that the
shipment is carried under and pursuant to the terms of the Charter Party, between the SHIPPER and Parcel
Tankers, Inc. providing for arbitration.

The INSURER opposed the dismissal/suspension of the proceedings on the ground that it was not legally
bound to submit the claim for arbitration inasmuch as the arbitration clause provided in the Charter Party was
not incorporated into the Bill of Lading, and that the arbitration clause is void for being unreasonable and
unjust. RTC denied the Motion, but subsequently reconsidered its action, and deferred resolution on the Motion
to Dismiss/Suspend Proceedings until trial on the merits "since the ground alleged in said motion does not
appear to be indubitable."

Issue: Are the terms of the Charter Party, particularly the provision on arbitration, binding on the INSURER?

Ruling: Yes. The pertinent portion of the Bill of Lading in issue provides in part:

This shipment is carried under and pursuant to the terms of the Charter dated December 21st 1984 at
Greenwich, Connecticut, U.S.A. between Parcel Tankers. Inc. and United Coconut Chemicals, Ind. as
Charterer and all the terms whatsoever of the said Charter except the rate and payment of freight
specified therein apply to and govern the rights of the parties concerned in this shipment. Copy of the
Charter may be obtained from the Shipper or Charterer. (Emphasis supplied)

While the provision on arbitration in the Charter Party reads:

H. Special Provisions.

4. Arbitration. Any dispute arising from the making, performance or termination of this Charter Party
shall be settled in New York, Owner and Charterer each appointing an arbitrator, who shall be a
merchant, broker or individual experienced in the shipping business; the two thus chosen, if they
cannot agree, shall nominate a third arbitrator who shall be an admiralty lawyer. Such arbitration shall
be conducted in conformity with the provisions and procedure of the United States arbitration act, and
a judgment of the court shall be entered upon any award made by said arbitrator. Nothing in this clause
shall be deemed to waive Owner's right to lien on the cargo for freight, deed of freight, or demurrage.

Clearly, the Bill of Lading incorporates by reference the terms of the Charter Party. It is settled law that the
charter may be made part of the contract under which the goods are carried by an appropriate reference in the
Bill of Lading (Wharton Poor, Charter Parties and Ocean Bills of Lading (5th ed., p. 71). This should include
the provision on arbitration even without a specific stipulation to that effect. The entire contract must be read
together and its clauses interpreted in relation to one another and not by parts. Moreover, in cases where a Bill
of Lading has been issued by a carrier covering goods shipped aboard a vessel under a charter party, and the
charterer is also the holder of the bill of lading, "the bill of lading operates as the receipt for the goods, and as
document of title passing the property of the goods, but not as varying the contract between the charterer and
the shipowner" (In re Marine Sulphur Queen, 460 F 2d 89, 103 [2d Cir. 1972]; Ministry of Commerce vs. Marine
Tankers Corp. 194 F. Supp 161, 163 [S.D.N.Y. 1960]; Greenstone Shipping Co., S.A. vs. Transworld Oil, Ltd.,
588 F Supp [D.El. 1984]). The Bill of Lading becomes, therefore, only a receipt and not the contract of carriage
in a charter of the entire vessel, for the contract is the Charter Party (Shell Oil Co. vs. M/T Gilda, 790 F 2d
1209, 1212 [5th Cir. 1986]; Home Insurance Co. vs. American Steamship Agencies, Inc., G.R. No. L-25599, 4
April 1968, 23 SCRA 24), and is the law between the parties who are bound by its terms and condition provided
that these are not contrary to law, morals, good customs, public order and public policy (Article 1306, Civil
Code).

We hold, therefore, that the INSURER cannot avoid the binding effect of the arbitration clause. By
subrogation, it became privy to the Charter Party as fully as the SHIPPER before the latter was indemnified,
because as subrogee it stepped into the shoes of the SHIPPER-ASSURED and is subrogated merely to the
latter's rights. It can recover only the amount that is recoverable by the assured. And since the right of action
of the SHIPPER-ASSURED is governed by the provisions of the Bill of Lading, which includes by reference
the terms of the Charter Party, necessarily, a suit by the INSURER is subject to the same agreements (see St.
Paul Fire and Marine Insurance Co. vs. Macondray, G.R. No. L-27796, 25 March 1976, 70 SCRA 122).
HEIRS OF AUGUSTO SALAS VS. LAPERAL REALTY CORP.
GR No. 135362
Dec. 13, 1999

Facts: Augusto Salas, Jr. was the registered owner of a vast tract of land in LipaCity, Batangas. He entered into
an Owner-Contractor Agreement with Respondent Laperal Realty Corporation to render and provide complete
construction services on his land. Said agreement contains an arbitration clause, to wit:
“ARTICLE VI. ARBITRATION. All cases of dispute between CONTRACTOR and
OWNER’S representative shall be referred to the committee represented by:
1. One representative of the OWNER;
2. One representative of the CONTRACTOR;
3. One representative acceptable to both OWNER and CONTRACTOR.
”Salas, Jr. then executed a Special Power of Attorney in favor of Respondent Laperal Realty to
exercise general control, supervision and management of the sale of his land, for cash or on installment basis.
By virtue thereof, Respondent Laperal Realty subdivided said land and sold portions thereof to Respondents
Rockway Real Estate Corporation and South Ridge Village, Inc. in 1990; to Respondent spouses Abrajano and
Lava and Oscar Dacillo in 1991; and to Respondents Eduardo Vacuna, Florante de la Cruz and Jesus Vicente
Capalan in 1996. Back in1989, Salas, Jr. left his home in the morning for a business trip to Nueva Ecija. He,
however, never returned on that unfaithful morning. Seven years later or in 1996, his wife, Teresita Diaz-Salas
filed with the RTC of Makati City a verified Petition for the Declaration of Presumptive Death,
which Petition was granted. In 1998, Petitioners, as heirs of Salas, Jr. filed in the RTC of Lipa City a Complaint
for Declaration of Nullity of Sale, Reconveyance, Cancellation of Contract, Accounting and
Damages against Respondents. Respondent Laperal Realty filed a Motion to Dismiss on the ground that
Petitioners failed to submit their grievance to arbitration as required under Article VI of the Owner-Contractor
Agreement. Respondent spouses Abrajano and Lava and Respondent Dacillo filed a Joint Answer with
Counterclaim and Crossclaim praying for dismissal of Petitioners’ Complaint for the same reason.
The RTC then issued the herein assailed Order dismissing Petitioners’ Complaint for non-compliance
with the foregoing arbitration clause. Hence the present Petition for Review on Certiorari under Rule 45.
Issue: Whether or not the arbitration clause under Article VI of the Owner-Contractor Agreement is binding
upon the Respondent Lot Buyers?
Ruling: No. Respondent Lot Buyers are neither parties to the Agreement nor the latter’s assigns or heirs.
Consequently, the right to arbitrate as provided in Article VI of the Agreement was never vested in Respondent
Lot Buyers. Respondent Laperal Realty, on the other hand, as a contracting party to the Agreement, has the
right to compel Petitioners to first arbitrate before seeking judicial relief. However, to split the proceedings
into arbitration for Respondent Laperal Realty and trial for the Respondent Lot Buyers, or to hold trial in
abeyance pending arbitration between Petitioners and Respondent Laperal Realty, would in effect result in
multiplicity of suits, duplicitous procedure and unnecessary delay. On the other hand, it would be in the interest
of justice if the trial court hears the complaint against all herein Respondents and adjudicates Petitioners’ rights
as against theirs in a single and complete proceeding.
DEL MONTE CORP-USA VS. COURT OF APPEALS
G.R. No. 136154
February 7, 2001

Facts: On 1 July 1994, in a Distributorship Agreement, petitioner Del Monte Corporation-USA (DMC-USA)
appointed private respondent Montebueno Marketing, Inc. (MMI) as the sole and exclusive distributor of its
Del Monte products in the Philippines for a period of five (5) years, renewable for two (2) consecutive five (5)
year periods with the consent of the parties. The Agreement provided, among others, for an arbitration clause
which states -

12. GOVERNING LAW AND ARBITRATION


This Agreement shall be governed by the laws of the State of California and/or, if applicable, the
United States of America. All disputes arising out of or relating to this Agreement or the parties
relationship, including the termination thereof, shall be resolved by arbitration in the City of San
Francisco, State of California, under the Rules of the American Arbitration Association. The arbitration
panel shall consist of three members, one of whom shall be selected by DMC-USA, one of whom shall
be selected by MMI, and third of whom shall be selected by the other two members and shall have
relevant experience in the industry x x x x

In October 1994 the appointment of private respondent MMI as the sole and exclusive distributor of Del
Monte products in the Philippines was published in several newspapers in the country. Immediately after its
appointment, private respondent MMI appointed Sabrosa Foods, Inc. (SFI), with the approval of petitioner
DMC-USA, as MMIs marketing arm to concentrate on its marketing and selling function as well as to manage
its critical relationship with the trade. Private respondents MMI, SFI and MMIs Managing Director filed a
Complaint against petitioners DMC-USA et al. before the Regional Trial Court. Private respondents predicated
their complaint on the alleged violations by petitioners of Arts. 20, 21 and 23 of the Civil Code. According to
private respondents, DMC-USA products continued to be brought into the country by parallel importers
despite the appointment of private respondent MMI as the sole and exclusive distributor of Del Monte products
thereby causing them great embarrassment and substantial damage. They alleged that the products brought into
the country by these importers were aged, damaged, fake or counterfeit, so that in March 1995 they had to
cause, after prior consultation with Antonio Ongpin, Market Director for Special Markets of Del Monte
Philippines, Inc., the publication of a "warning to the trade" paid advertisement in leading newspapers.
Petitioners DMC-USA and Paul E. Derby, Jr., apparently upset with the publication, instructed private
respondent MMI to stop coordinating with Antonio Ongpin and to communicate directly instead with
petitioner DMC-USA through Paul E. Derby, Jr.

Private respondents further averred that petitioners knowingly and surreptitiously continued to deal with the
former in bad faith by involving disinterested third parties and by proposing solutions which were entirely out
of their control. Private respondents claimed that they had exhausted all possible avenues for an amicable
resolution and settlement of their grievances; that as a result of the fraud, bad faith, malice and wanton attitude
of petitioners, they should be held responsible for all the actual expenses incurred by private respondents in
the delayed shipment of orders which resulted in the extra handling thereof, the actual expenses and cost of
money for the unused Letters of Credit (LCs) and the substantial opportunity losses due to created out-of-
stock situations and unauthorized shipments of Del Monte-USA products to the Philippine Duty Free Area
and Economic Zone; that the bad faith, fraudulent acts and willful negligence of petitioners, motivated by their
determination to squeeze private respondents out of the outstanding and ongoing Distributorship Agreement
in favor of another party, had placed private respondent LILY SY on tenterhooks since then; and, that the
shrewd and subtle manner with which petitioners concocted imaginary violations by private respondent MMI
of the Distributorship Agreement in order to justify the untimely termination thereof was a subterfuge. For the
foregoing, private respondents claimed, among other reliefs, the payment of actual damages, exemplary
damages, attorneys fees and litigation expenses.
On 21 October 1996 petitioners filed a Motion to Suspend Proceedings invoking the arbitration clause in their
Agreement with private respondents.

Issue: Whether or not the dispute between the parties warrants an order compelling them to submit to
arbitration.

Ruling: There is no doubt that arbitration is valid and constitutional in our jurisdiction. Even before the
enactment of RA 876, this Court has countenanced the settlement of disputes through arbitration. 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 arrangement and will only interfere with great
reluctance to anticipate or nullify the action of the arbitrator. Moreover, as RA 876 expressly authorizes
arbitration of domestic disputes, foreign arbitration as a system of settling commercial disputes was likewise
recognized when the Philippines adhered to the United Nations "Convention on the Recognition and the
Enforcement of Foreign Arbitral Awards of 1958" under the 10 May 1965 Resolution No. 71 of the Philippine
Senate, giving reciprocal recognition and allowing enforcement of international arbitration agreements between
parties of different nationalities within a contracting state.

A careful examination of the instant case shows that the arbitration clause in the Distributorship Agreement
between petitioner DMC-USA and private respondent MMI is valid and the dispute between the parties is
arbitrable. However, this Court must deny the petition.

The Agreement between petitioner DMC-USA and private respondent MMI is a contract. The provision to
submit to arbitration any dispute arising therefrom and the relationship of the parties is part of that contract
and is itself a contract. As a rule, contracts are respected as the law between the contracting parties and produce
effect as between them, their assigns and heirs.[24] Clearly, only parties to the Agreement, i.e., petitioners DMC-
USA and its Managing Director for Export Sales Paul E. Derby, Jr., and private respondents MMI and its
Managing Director LILY SY are bound by the Agreement and its arbitration clause as they are the only
signatories thereto. Petitioners Daniel Collins and Luis Hidalgo, and private respondent SFI, not parties to the
Agreement and cannot even be considered assigns or heirs of the parties, are not bound by the Agreement and
the arbitration clause therein. Consequently, referral to arbitration in the State of California pursuant to the
arbitration clause and the suspension of the proceedings in Civil Case No. 2637-MN pending the return of the
arbitral award could be called for[25] but only as to petitioners DMC-USA and Paul E. Derby, Jr., and private
respondents MMI and LILY SY, and not as to the other parties in this case, in accordance with the recent case
of Heirs of Augusto L. Salas, Jr. v. Laperal Realty Corporation, which superseded that of Toyota Motor
Philippines Corp. v. Court of Appeals.

The object of arbitration is to allow the expeditious determination of a dispute. Clearly, the issue before us
could not be speedily and efficiently resolved in its entirety if we allow simultaneous arbitration proceedings
and trial, or suspension of trial pending arbitration. Accordingly, the interest of justice would only be served if
the trial court hears and adjudicates the case in a single and complete proceeding.
NATIONAL STEEL CORPORATION vs. THE REGIONAL TRIAL COURT OF LANAO DEL
NORTE
G.R. No. 127004
March 11, 1999

Facts: The herein petitioner and the private respondent together with Ramiro construction entered into a
contract whereby the former jointly undertook the Contract for Site Development for the latter's Integrated
Iron and Steel Mills Complex to be established at Iligan City. Ramiro terminated its services to the private
respondent EWEI. As a result thereof, the termination of the construction had been extended and the same
was granted by the herein petitioner, NSP. Eventually, the dispute and disagreement arose between the parties,
the private respondent in herein case (EWIE) filed civil case and its prayer was to pay the latter for damages.
NSP also filed its answer with counterclaim. RTC dismissed the motion and the complaint viewing sec 9 of the
contract which they entered that conflict arising from them should be resolved through arbitration. The
arbitrators rendered their decision holding the NSC to pay EWEI. The confirmation of arbitration award was
filed to RTC of Lanao and the latter was affirmed and confirmed by the same. The special complaint of vacating
the award filed by the oppose party was dismissed by the same court.

Issue: Whether or not the lower court acted with grave abuse of discretion in notvacating the arbitrator's
award?

Ruling: No, the Lower Court did not gravely abuse its discretion by not vacating the awards. However, the
Supreme Court only modified the award. The herein petition failed to substantiate that there was evident
partiality. The complaining party has the burden of proving the existence of any of thegrounds for vacating the
award, as provided for by Sections 24 of the Arbitration Law, to wit:

Sec. 24 GROUNDS FOR VACATING THE AWARD — In any one of the following cases, the
court must make an order vacating the award upon the petition of any party to the controversy when such party
proves affirmatively that in the arbitration proceedings:
(a) The award was procured by corruption, fraud or other undue means
(b) That there was evident partiality or corruption in the arbitrators of any of them; or
(c) That the arbitrators were guilty of misconduct in refusing to postpone the hearing upon sufficient
cause shown, or in refusing to hear evidence pertinent and material to the controversy; that one or
more of the arbitrators was disqualified to act as such under section nine hereof, and wilfully refrained
from disclosing such disqualification or of any other misbehavior by which the rights of any party have
been materially prejudiced; or
(d) That the arbitrators exceeded their powers, or so imperfectly executed them, that a mutual, final
and definite award upon the subject matter submitted to them was not made. xxx"

Parentethically, and in the light of the record above-mentioned, this Court hereby holds that the Board
of Arbitrators did not commit any 'evident partiality' imputed by petitioner NSC. Above all, this Court must
sustain the said decision for it is a well settled rule that the actual findings of an administrative body should be
affirmed if there is substantial evidence to support them and the conclusions stated in the decision are not
clearly against the law and jurisprudence similar to the instant case. Henceforth, every reasonable intendment
will be indulged to give effect such proceedings and in favor of the regulatory and integrity of the arbitrators
act.
ASSET PRIVATIZATION TRUST vs. COURT OF APPEALS
G.R. No. 121171
December 29, 1998

Facts: Pursuant to a Mortgage Trust Agreement, the Development Bank of the Philippines and the Philippine
National Bank foreclosed the assets of the Marinduque Mining and Industrial Corporation. The assets were
sold to Philippine National Bank and later transferred to the Asset Privatization Trust (APT).

In February 1985, Jesus Cabarrus, Sr., together with other stockholders of Marinduque Mining and Industrial
Corporation, filed a derivative suit against DBP and PNB before the Regional Trial Court for Annulment of
Foreclosures, Specific Performance and Damages. In the course of the trial, MMIC and APT as successor in
interest of DBP and PNB, agreed to submit the case to arbitration by entering into a Compromise and
Arbitration Agreement. This agreement was approved by the trial court and the complaint was corollarily
dismissed.

Thereafter, the Arbitration Committee rendered a decision ordering APT to pay MMIC damages and arbitration
costs in the amount of P2.5 Billion, P13,000,000.00 of which is for moral and exemplary damages. On motion
of Cabarrus and the other stockholders of MMIC, the trial court confirmed the Arbitration Committee’s award.
Its motion for reconsideration having been denied, APT filed a special civil action for certiorari with the Court
of Appeals. It was likewise denied. Hence, this petition for review on certiorari.

Issue: Whether or not the Court of Appeals erred in not treating petitioner APTS petition for certiorari as an
appeal taken from the order confirming the award.

Ruling: No. As a rule, the award of an arbitrator cannot be set aside for mere errors of judgment either as to
the law or as to the facts. Courts are without power to amend or overrule merely because of disagreement with
matters of law or facts determined by the arbitrators. They will not review the findings of law and fact contained
in an award, and will not undertake to substitute their judgment for that of the arbitrators, since any other rule
would make an award the commencement, not the end, of litigation. Errors of law and fact, or an erroneous
decision of matters submitted to the judgment of the arbitrators, are insufficient to invalidate an award fairly
and honestly made. Judicial review of an arbitration is, thus, more limited than judicial review of a trial.

Nonetheless, the arbitrators awards is not absolute and without exceptions. The arbitrators cannot resolve
issues beyond the scope of the submission agreement. The parties to such an agreement are bound by the
arbitrators award only to the extent and in the manner prescribed by the contract and only if the award is
rendered in conformity thereto. Thus, Sections 24 and 25 of the Arbitration Law provide grounds for vacating,
rescinding or modifying an arbitration award. Where the conditions described in Articles 2038, 2039 and 2040
of the Civil Code applicable to compromises and arbitration are attendant, the arbitration award may also be
annulled. In Chung Fu Industries (Phils.) vs. Court of Appeals, we held: x x x. It is stated explicitly under Art.
2044 of the Civil Code that the finality of the arbitrators awards is not absolute and without exceptions. Where
the conditions described in Articles 2038, 2039, and 2040 applicable to both compromises and arbitration are
obtaining, the arbitrators' award may be annulled or rescinded. Additionally, under Sections 24 and 25, of the
Arbitration Law, there are grounds for vacating, modifying or rescinding an arbitrators award. Thus, if and
when the factual circumstances referred to in the above-cited provisions are present, judicial review of the
award is properly warranted.
NATIONAL IRRIGATION ADMINISTRATION (NIA) vs. HONORABLE COURT OF
APPEALS
G.R. No. 129169
November 17, 1999

Facts: Records show that in a competitive bidding held by NIA in August 1978, Hydro Resources Contractors
Corporation (HYDRO) was awarded Contract MPI-C-2 for the construction of the main civil works of the
Magat River Multi-Purpose Project. The contract provided that HYDRO would be paid partly in Philippine
pesos and partly in U.S. dollars. HYDRO substantially completed the works under the contract in 1982 and
final acceptance by NIA was made in 1984. HYDRO thereafter determined that it still had an account receivable
from NIA representing the dollar rate differential of the price escalation for the contract.

After unsuccessfully pursuing its case with NIA, HYDRO, on 7 December 1994, filed with the CIAC a Request
for Adjudication of the aforesaid claim. HYDRO nominated six arbitrators for the arbitration panel, from
among whom CIAC appointed Engr. Lauro M. Cruz. On 6 January 1995, NIA filed its Answer wherein it
questioned the jurisdiction of the CIAC alleging lack of cause of action, laches and estoppel in view of
HYDROs alleged failure to avail of its right to submit the dispute to arbitration within the prescribed period as
provided in the contract. On the same date, NIA filed a Compliance wherein it nominated six arbitrators, from
among whom CIAC appointed Atty. Custodio O. Parlade, and made a counterclaim for P1,000,000 as moral
damages; at least P100,000 as exemplary damages; P100,000 as attorneys fees; and the costs of the arbitration.

At the preliminary conference, NIA through its counsel Atty. Joy C. Legaspi of the Office of the Government
Corporate Counsel, manifested that it could not admit the genuineness of HYDROs evidence since NIAs
records had already been destroyed. NIA requested an opportunity to examine the originals of the documents
which HYDRO agreed to provide.

On 13 March 1995, NIA filed a Motion to Dismiss alleging lack of jurisdiction over the disputes. NIA
contended that there was no agreement with HYDRO to submit the dispute to CIAC for arbitration
considering that the construction contract was executed in 1978 and the project completed in 1982, whereas
the Construction Industry Arbitration Law creating CIAC was signed only in 1985; and that while they have
agreed to arbitration as a mode of settlement of disputes, they could not have contemplated submission of their
disputes to CIAC. NIA further argued that records show that it had not voluntarily submitted itself to
arbitration by CIAC.

Issue: Whether or not respondent CIAC has authority or jurisdiction to hear and try this dispute between the
herein parties.

Ruling: The CIAC has jurisdiction over the controversy. Executive Order No.1008, otherwise known as the
Construction Industry Arbitration Law which was promulgated on 4 February 1985, vests upon CIAC original
and exclusive jurisdiction over disputes arising from, or connected with contracts entered into by parties
involved in construction in the Philippines, whether the dispute arises before or after the completion of the
contract, or after the abandonment or breach thereof. The disputes may involve government or private
contracts. For the Board to acquire jurisdiction, the parties to a dispute must agree to submit the same to
voluntary arbitration.

The complaint of HYDRO against NIA on the basis of the contract executed between them was filed on 7
December 1994, during the effectivity of E.O. No. 1008. Hence, it is well within the jurisdiction of CIAC. The
jurisdiction of a court is determined by the law in force at the time of the commencement of the action.

NIAs argument that CIAC had no jurisdiction to arbitrate on contract which preceded its existence is untenable.
E.O. 1008 is clear that the CIAC has jurisdiction over all disputes arising from or connected with construction
contract whether the dispute arises before or after the completion of the contract. Thus, the date the parties
entered into a contract and the date of completion of the same, even if these occurred before the constitution
of the CIAC, did not automatically divest the CIAC of jurisdiction as long as the dispute submitted for
arbitration arose after the constitution of the CIAC. Stated differently, the jurisdiction of CIAC is over the
dispute, not the contract; and the instant dispute having arisen when CIAC was already constituted, the arbitral
board was actually exercising current, not retroactive, jurisdiction. As such, there is no need to pass upon the
issue of whether E.O. No. 1008 is a substantive or procedural statute.

It is undisputed that the contracts between HYDRO and NIA contained an arbitration clause wherein they
agreed to submit to arbitration any dispute between them that may arise before or after the termination of the
agreement. Consequently, the claim of HYDRO having arisen from the contract is arbitrable. NIAs reliance
with the ruling on the case of Tesco Services Incorporated v. Vera, is misplaced.

The 1988 CIAC Rules of Procedure which were applied by this Court in Tesco case had been duly amended
by CIAC Resolutions No. 2-91 and 3-93, Section 1 of Article III of which read as follows:

Submission to CIAC Jurisdiction - An arbitration clause in a construction contract or a submission to arbitration


of a construction contract or a submission to arbitration of a construction dispute shall be deemed an agreement
to submit an existing or future controversy to CIAC jurisdiction, notwithstanding the reference to a different
arbitration institution or arbitral body in such contract or submission. When a contract contains a clause for
the submission of a future controversy to arbitration, it is not necessary for the parties to enter into a submission
agreement before the claimant may invoke the jurisdiction of CIAC.
DEMOSTHENES P. AGAN vs. PHILIPPINE INTERNATIONAL AIR TERMINALS CO., INC.,
G.R. No. 155001
May 5, 2003

Facts: In 1989, The DOTC conducted studies on NAIA’s capability to cope with the traffic development up
to 2010. In 1993, business tycoons Gokongwei, Gotianun, Sy, Tan, Ty, and Yuchengco formed the Asia’s
Emerging Dragon Group (AEDC) and submitted an unsolicited proposal to the Government through the
DOTC/MIAA for the development of NAIA Terminal III under a Build-Operate-Transfer Agreement (BOT)
under BOT Law (RA6957, amended by RA 7718).

DOTC began the bidding process for the NAIA Terminal III project by forming the PBAC (Prequalification
Bids and Awards Committee). AEDC’s primary competitor was the PAIRCARGO consortium (composed of
Pair Cargo, PAGS, and Security Bank) filed their bid, which AEDC questioned since the former allegedly lacked
financial capability.

PAIRCARGO Consortium was awarded the Contract because it offered a higher guaranteed payment to the
government. Later on, PAIRCARGO changed its name to PIATCO (Phil. Int’l Airport Terminals Co. Inc.
Post- bidding, the government and PIATCO signed the 1997 Concession Agreement for the NAIA Terminal
III project, and a subsequent Amended & Revised Concession Agreement + supplements of the said 1997
Concession Agreement were entered into.

The Government, through then DOTC Secretary Arturo T. Enrile, and PIATCO, through its President, Henry
T. Go, signed the “Concession Agreement for the Build-Operate-and-Transfer Arrangement of the Ninoy
Aquino International Airport Passenger Terminal III” (1997 Concession Agreement). The Government and
PIATCO signed an Amended and Restated Concession Agreement (ARCA). Subsequently, the Government
and PIATCO signed three Supplements to the ARCA. The First Supplement was signed on August 27, 1999;
the Second Supplement on September 4, 2000; and the Third Supplement on June 22, 2001.

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.

Consequently, the workers of the international airline service providers, claiming that they stand to lose their
employment upon the implementation of the questioned agreements, filed before this Court a petition for
prohibition to

During the pendency of the case before this Court, President Gloria Macapagal Arroyo, on November 29,
2002, in her speech at the 2002 Golden Shell Export Awards at Malacañang Palace, stated that she will not
“honor (PIATCO) contracts which the Executive Branch’s legal offices have concluded (as) null and void.”
Respondent PIATCO filed its Comments to the present petitions. Several petitions of prohibition filed by
NAIA Terminal I & II’s int’l service providers, their employees, and congressmen alleging that the 1997
Concession Agreement, the ARCA, & its supplements are contrary to the Constitution, BOT Law, & its IRR.

Issue: Whether or not the arbitration step taken by PIATCO will not oust this Court of its jurisdiction over
the cases.

Ruling: No. In Del Monte Corporation-USA v. Court of Appeals, even after finding that the arbitration clause
in the Distributorship Agreement in question is valid and the dispute between the parties is arbitrable, this
Court affirmed the trial courts decision denying petitioners Motion to Suspend Proceedings pursuant to the
arbitration clause under the contract. In so ruling, this Court held that as contracts produce legal effect between
the parties, their assigns and heirs, only the parties to the Distributorship Agreement are bound by its terms,
including the arbitration clause stipulated therein. This Court ruled that arbitration proceedings could be called
for but only with respect to the parties to the contract in question. Considering that there are parties to the case
who are neither parties to the Distributorship Agreement nor heirs or assigns of the parties thereto, this Court,
citing its previous ruling in Salas, Jr. v. Laperal Realty Corporation,[21] held that to tolerate the splitting of
proceedings by allowing arbitration as to some of the parties on the one hand and trial for the others on the
other hand would, in effect, result in multiplicity of suits, duplicitous procedure and unnecessary delay.Thus,
we ruled that the interest of justice would best be served if the trial court hears and adjudicates the case in a
single and complete proceeding.

It is established that petitioners in the present cases who have presented legitimate interests in the resolution
of the controversy are not parties to the PIATCO Contracts. Accordingly, they cannot be bound by the
arbitration clause provided for in the ARCA and hence, cannot be compelled to submit to arbitration
proceedings. A speedy and decisive resolution of all the critical issues in the present controversy, including
those raised by petitioners, cannot be made before an arbitral tribunal. The object of arbitration is precisely to
allow an expeditious determination of a dispute. This objective would not be met if this Court were to allow
the parties to settle the cases by arbitration as there are certain issues involving non-parties to the PIATCO
Contracts which the arbitral tribunal will not be equipped to resolve.
LM POWER ENGINEERING CORPORATION vs. CAPITOL INDUSTRIAL
CONSTRUCTION GROUPS, INC.,
G.R. No. 141833
March 26, 2003

Facts: Petitioner LM Power Engineering Corporation and Respondent Capitol Industrial Construction Groups
Inc. entered into a Subcontract Agreement involving electrical work at the Third Port of Zamboanga.
Respondent took over some of the work contracted to petitioner. Allegedly, the latter had failed to finish it
because of its inability to procure materials. Upon completing its task under the Contract, petitioner billed
respondent in the amount of P6,711,813.90. Contesting the accuracy of the amount of advances and billable
accomplishments listed by the former, the latter refused to pay. Respondent also took refuge in the termination
clause of the Agreement. That clause allowed it to set off the cost of the work that petitioner had failed to
undertake -- due to termination or take-over -- against the amount it owed the latter.

Because of the dispute, petitioner filed with the Regional Trial Court a Complaint for the collection of the
amount representing the alleged balance due it under the Subcontract. Instead of submitting an Answer,
respondent filed a Motion to Dismiss, alleging that the Complaint was premature, because there was no prior
recourse to arbitration.

Issue: Whether or not the controversy/dispute between petitioner and respondent regarding the interpretation
and implementation of the Sub-Contract Agreement requires prior recourse to voluntary arbitration.

Ruling: Yes. Essentially, the dispute arose from the parties congruent positions on whether certain provisions
of their Agreement could be applied to the facts. The instant case involves technical discrepancies that are
better left to an arbitral body that has expertise in those areas. In any event, the inclusion of an arbitration
clause in a contract does not ipso facto divest the courts of jurisdiction to pass upon the findings of arbitral
bodies, because the awards are still judicially reviewable under certain conditions.

In the case before us, the Subcontract has the following arbitral clause:

6. The Parties hereto agree that any dispute or conflict as regards to interpretation and implementation
of this Agreement which cannot be settled between [respondent] and [petitioner] amicably shall be
settled by means of arbitration x x x.

Clearly, the resolution of the dispute between the parties herein requires a referral to the provisions of their
Agreement. Within the scope of the arbitration clause are discrepancies as to the amount of advances and
billable accomplishments, the application of the provision on termination, and the consequent set-off of
expenses.
CHARLES BERNARD H. REYES vs. ANTONIO YULO BALDE II
G.R. NO. 168384
August 18, 2006

Facts: Respondent-spouses Cesar and Carmelita Esquig entered into a Design-Build Construction Agreement
with petitioner Charles Bernard H. Reyes for the architectural design and construction of a 2-storey residence.
In accordance with the contract, spouses Esquig paid the amount of P1,050,000 as down payment. Thereafter,
construction commenced.

The relationship between petitioner and respondent spouses went on smoothly the latter left for the United
States and designated their co-respondent, Rosemarie Papas, as their representative. According to petitioner,
Papas meddled with the construction works by demanding changes and additional works which entailed
additional cost. Papas also refused to pay petitioner's progress billing and the salary of the laborers. Petitioner
thereafter prepared an accounting report of all the additional works and their corresponding costs, however,
Papas denied all the items in the list and refused to pay the same. Worse, Papas wrote the Board of Directors
of Tahanan Village Homeowner's Association requesting for the cancellation of the contractor's work permit.

Thus, petitioner filed a complaint for Accounting, Collection of Sum of Money, Rescission of Contract with
Damages against spouses Esquig and Rosemarie Papas with the Regional Trial Court. Respondents filed a
motion to dismiss on the ground that the court has no jurisdiction over the subject matter of the case. They
claimed that the Design-Build Construction Agreement contained an arbitration clause, thus any dispute arising
therefrom should be brought before the CIAC.

On even date, respondents also filed a complaint before the CIAC against the petitioner. Respondents alleged
that petitioner unreasonably delayed the construction and refused to finish the project. Thus, they prayed that
petitioner be ordered to finish the project or, in the alternative, to pay the cost to finish the same; to reimburse
the overpayments made by respondents; and to pay liquidated damages, attorney's fees and costs of the suit.
Instead of submitting an answer, petitioner filed with the CIAC a motion to dismiss on grounds of lack of
jurisdiction to hear and decide the case as well as the pendency of the case before the trial court involving the
same subject matter.

Issue: Whether or not CIAC may take cognizance of the present case.

Ruling: Yes. Design-Build Construction Agreement mutually entered into by the parties contain an arbitration
clause, to wit:

ARTICLE 10. ARBITRATION. All questions in dispute under the Agreement shall be submitted in
accordance with the provisions of Philippine Law on Arbitration and provided for in Article 2042 of
the New Civil Code of the Philippines and the provisions of Republic Act No. 876.

Clearly, the presence of the arbitration clause in the parties' contract vests jurisdiction on the CIAC on all
controversies arising from such contract. The arbitral clause in the agreement is a commitment by the parties
to submit to arbitration the disputes covered therein. Because that clause is binding, they are expected to abide
by it in good faith.[14] Where the jurisdiction of CIAC is properly invoked, the failure or refusal of herein
petitioner to arbitrate shall not affect the proceedings. Arbitration proceedings shall continue notwithstanding
the absence or lack of participation of petitioner, and the award shall be made after receiving the evidence of
the claimant.

With respect to petitioner's contention that the action is purely civil in nature hence, jurisdiction rests with the
Regional Trial Court, the same must fail. Since the action is rooted on alleged violations of the agreement, it is
embraced by the term “construction dispute". As CIAC aptly ruled:
As regards Respondent's assertion that the claims in the civil case are not arbitrable, this Commission
again begs to digress. A cursory perusal of the claims in civil case would show that such fall within the
scope of CIAC jurisdiction, to wit: (1) accounting of all payments made for the purchase of
construction materials; (2) cost of additional work; (3) balance on the contract price; (4) interest; (5)
rescission of contract; (6) moral damages; (7) exemplary damages; and (8) cost of suit.

Besides, Section 23 of E.O. No. 1008 expressly provides that all provisions of existing laws, proclamations,
decrees, letters of instructions and executive orders contrary to or inconsistent with E.O. No. 1008 are repealed
or modified accordingly. E.O. No. 1008 which vests jurisdiction to the CIAC over construction disputes is a
special law; hence, it takes precedence over Batas Pambansa Blg. 129 or the Judiciary Reorganization Act of
1980, a general law which vests jurisdiction to the Regional Trial Courts over civil actions in which the subject
of the litigation is incapable of pecuniary estimation.
MARIA LUISA PARK ASSOCIATION INC VS. SAMANTHA MARIE T. ALMENDRAS
G.R. No. 171763
June 5, 2009

Facts: Respondents Samantha Marie T. Almendras and Pia Angela T. Almendras purchased from MRO
Development Corporation a residential lot located in Maria Luisa Estate Park. After some time, respondents
filed with petitioner Maria Luisa Park Association, Incorporated (MLPAI) an application to construct a
residential house, which was approved. Thus, respondents commenced the construction of their house. Upon
ocular inspection of the house, MLPAI found out that respondents violated the prohibition against multi-
dwelling stated in MLPAIs Deed of Restriction. Consequently, MLPAI sent a letter to the respondents,
demanding that they rectify the structure; otherwise, it will be constrained to forfeit respondents construction
bond and impose stiffer penalties.

In a Letter, respondents, as represented by their father Ruben D. Almendras denied having violated MLPAIs
Deed of Restriction. MLPAI, in its reply, pointed out respondents specific violations of the subdivision rules,
to wit: (a) installation of a second water meter and tapping the subdivisions main water pipeline, and (b)
construction of two separate entrances that are mutually exclusive of each other. It likewise reiterated its
warning that failure to comply with its demand will result in its exercise of more stringent measures.

In view of these, respondents filed with the Regional Trial Court a complaint for Injunction, Declaratory Relief,
Annulment of Provisions of Articles and By-Laws with Prayer for Issuance of a Temporary Restraining Order
(TRO)/Preliminary Injunction. MLPAI moved for the dismissal of the complaint on the ground of lack of
jurisdiction and failure to comply with the arbitration clause provided for in MLPAIs by-laws.

In an Order, the trial court dismissed the complaint for lack of jurisdiction, holding that it was the Housing and
Land Use Regulatory Board (HLURB) that has original and exclusive jurisdiction over the case.

Issue: Whether or not the parties failed to abide to the arbitration agreement in the MLPAI by-laws.

Ruling: Yes. Article XII of the MLPAI by-laws entered into by the parties provide:

Mode of Dispute Resolution. Should any member of the Association have any grievance, dispute or
claim against the Association or any of the officers and governors thereof in connection with their
function and/or position in the Association, the parties shall endeavor to settle the same amicably. In
the event that efforts at amicable settlement fail, such dispute, difference or disagreement shall be
brought by the member to an arbitration panel composed of three (3) arbitrators for final settlement,
to the exclusion of all other fora. Such arbitration may be initiated by giving notice to the other party,
such notice designating one (1) independent arbitrator. Within thirty (30) from the receipt of said
notice, the other party shall designate a second independent arbitrator by written notice to the first
party. Both arbitrators shall within fifteen (15) days thereafter select a third independent arbitrator,
who shall be the chairman of the Arbitration Tribunal. In the event that the two (2) arbitrators
respectively nominated by the parties fail to select the third independent arbitrator within the fifteen-
day period, the third arbitrator shall be jointly selected by the parties. In the event that the other party
does not nominate an arbitrator, the Arbitration Tribunal shall be composed of one (1) arbitrator
nominated by the party initiating the proceedings. The Arbitration Tribunal shall render its decision
within forty-five (45) days from the selection of the third arbitrator, which decision shall be valid and
binding between the parties unless repudiated within five (5) days from receipt thereof on grounds that
the same was procured through fraud or violence, or that there are patent or gross errors in facts made
basis of the decision. The award of the Tribunal shall be enforced by a court of competent jurisdiction.
Venue of action covered by this Article shall be in the courts of justice of Cebu City only. Under the
provision of the by-laws, any dispute or claim against the Association or any of its officers and
governors shall first be settled amicably. If amicable settlement fails, such dispute shall be brought by
the member to an arbitration panel for final settlement. The arbitral award shall be valid and binding
between the parties unless repudiated on grounds that the same was procured through fraud or
violence, or that there are patent or gross errors in the tribunals findings of facts upon which the
decision was based.

The terms of Article XII of the MLPAI by-laws clearly express the intention of the parties to bring first to the
arbitration process all disputes between them before a party can file the appropriate action. The agreement to
submit all disputes to arbitration is a contract. As such, the arbitration agreement binds the parties thereto, as
well as their assigns and heirs. Respondents, being members of MLPAI, are bound by its by-laws, and are
expected to abide by it in good faith.

In the instant case, we observed that while both parties exchanged correspondence pertaining to the alleged
violation of the Deed of Restriction, they, however, made no earnest effort to resolve their differences in
accordance with the arbitration clause provided for in their by-laws. Mere exchange of correspondence will not
suffice much less satisfy the requirement of arbitration. Arbitration being the mode of settlement between the
parties expressly provided for in their by-laws, the same should be respected. Unless an arbitration agreement
is such as absolutely to close the doors of the courts against the parties, the courts should look with favor upon
such amicable arrangements.

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.
FORT BONIFACIO DEVELOPMENT CORPORATION vs. MANUEL N. DOMINGO
G.R. No. 180765
February 27, 2009

Facts: Petitioner entered into a Trade Contract with LMM Construction for partial structural and architectural
works on one of its projects, the Bonifacio Ridge Condominium. According to the said Contract, petitioner
had the right to withhold the retention money equivalent to 5% of the contract price for a period of one year
after the completion of the project.

Due to the defect and delay in the work of LMM Construction on the condominium project, petitioner
unilaterally terminated the Trade Contract5 and hired another contractor to finish the rest of the work left
undone by LMM Construction. Despite the pre-termination of the Trade Contract, petitioner was liable to pay
LMM Construction a fraction of the contract price in proportion to the works already performed by the latter.

On 30 April 2005, petitioner received a letter from respondent inquiring on the retention money supposedly
due to LMM Construction and informing petitioner that a portion of the amount receivable by LMM
Construction therefrom was already assigned to him as evidenced by the Deed of Assignment executed by
LMM Construction in respondent’s favor on 28 February 2005. LMM Construction assigned its receivables
from petitioner to respondent to settle the alleged unpaid obligation of LMM Construction to respondent
amounting to ₱804,068.21. Petitioner acknowledged that LMM Construction did have receivables still with
petitioner, however it still failed to pay the said amount to respondent. This prompted respondent to file a
Complaint for collection of sum of money, against both LMM Construction and petitioner. Instead of filing
an Answer, petitioner filed a Motion to dismiss on the ground of lack of jurisdiction over the subject matter.
Petitioner argued that since respondent merely stepped into the shoes of LMM Construction as its assignor, it
was the CIAC and not the regular courts that had jurisdiction over the dispute as provided in the Trade
Contract.

Issue: Whether or not the RTC has jurisdiction over civil case.

Ruling: Yes. It is an elementary rule of procedural law that jurisdiction of the court over the subject matter is
determined by the allegations of the complaint, irrespective of whether or not the plaintiff is entitled to recover
upon all or some of the claims asserted therein. What determines the jurisdiction of the court is the nature of
the action pleaded as appearing from the allegations in the complaint. The averments therein and the character
of the relief sought are the ones to be consulted. Accordingly, the issues in the instant case can only be properly
resolved by an examination and evaluation of respondent’s allegations in his Complaint in Civil Case.

The adjudication of the Civil Case necessarily involves the application of pertinent statutes and jurisprudence
to matters such as obligations, contracts of assignment, and, if appropriate, even preference of credits, a task
more suited for a trial court to carry out after a full-blown trial, than an arbitration body specifically devoted to
construction contracts. The Court recognizes the laudable objective of voluntary arbitration 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. It cannot, however, altogether surrender to arbitration those cases, such as the one at bar,
the extant facts of which plainly call for the exercise of jurisdiction by the regular courts for their resolution.
FORT BONIFACIO DEVELOPMENT CORPORATION VS. HO. VALENTINO SORONGON
& VALENTINE FONG
G.R. No. 176709
May 8, 2009

Facts: Petitioner entered into a trade contract with Maxco wherein Maxco would undertake the structural and
partial architectural package of the BRCP 1. Later petitioner accused Maxco of delay in completion of its work
and sent the latter a notice of termination. Petitioner also instructed Maxco to perform remedial measures prior
to the contract expiration pursuant to Clause 23.1 of the contract.

Subsequently, Maxco was sued by its creditors including respondent for debts unrelated to BRCP 1. In order
to settle the collection suit, Maxco assigned its receivables representing its retention money from the BRCP 1
in the amount of P1,577,115.90. Thereafter, respondent wrote to petitioner, informing the latter of Maxcos
assignment in his favor and asking the latter to confirm the validity of Maxcos receivables. Petitioner replied,
informing the respondent that Maxco did have receivables, however these were not due and demandable until
January of next year, moreover the amount had to be ascertained and liquidated.

A subsequent exchange of correspondence failed to settle the matter. Petitioner through counsel, wrote to
respondent informing the latter that there is no more amount due to Maxco from petitioner after the
rectification of defect as well as the satisfaction of notices of garnishment. On February 13, 2006, respondent
filed a complaint for a sum of money against petitioner and Maxco in the Regional Trial Court. Respondent
claimed that there were sufficient residual amounts to pay the receivables of Maxco at the time he served notice
of the assignment. The subsequent notices of garnishment should not adversely affect the receivables assigned
to him. The retention money was over due in January 2006 and despite demand, petitioner did not pay the
amount subject of the deed of assignment. Petitioner however, paid out the retention money to other garnishing
creditors of Maxco to the detriment of respondent.

On March 16, 2006, instead of filing an Answer, petitioner filed a Motion to Dismiss on the ground of lack of
jurisdiction over the subject matter. Petitioner argued that since respondent merely stepped into the shoes of
Maxco as its assignee, it was the CIAC and not the regular courts that had jurisdiction over the dispute as
provided in the Trade Contract.

Issue: Whether or not it is the RTC or the CIAC which has jurisdiction over the case.

Ruling: RTC. While it is true that respondent, as the assignee of the receivables of Maxco from petitioner
under the Trade Contract, merely stepped into the shoes of Maxco. However, the right of Maxco to the
retention money from petitioner under the trade contract is not even in dispute in Civil Case No. 06-0200-
CFM. Respondent raises as an issue before the RTC is the petitioners alleged unjustified preference to the
claims of the other creditors of Maxco over the retention money.

Although the jurisdiction of the CIAC is not limited to the instances enumerated in Section 4 of E. O. No.
1008, Fongs claim is not even construction-related at all. This court has held that: Construction is defined as
referring to all on-site works on buildings or altering structures, from land clearance through completion
including excavation, erection and assembly and installation of components and equipment.Thus, petitioners
insistence on the application of the arbitration clause of the Trade Contract to Fong is clearly anchored on an
erroneous premise that the latter is seeking to enforce a right under the trade contract. This premise cannot
stand since the right to the retention money of Maxco under the Trade Contract is not being impugned herein.
It bears mentioning that petitioner readily conceded the existence of the retention money. Fongs demand that
the portion of retention money should have been paid to him before the other creditors of Maxco clearly, does
not require the CIACs expertise and technical knowledge of construction.
The adjudication of Civil Case necessarily involves the application of pertinent statutes and jurisprudence to
matters of assignment and preference of credits. As this Court held in Fort Bonifacio Development
Corporation v. Domingo, this task more suited for a trial court to carry out after a full-blown trial, than an
arbitration body specifically devoted to construction contracts.
HUTAMA-RSEA JOINT OPERATIONS, INC. vs. CITRA METRO MANILA TOLLWAYS
CORPORATION
G.R. No. 180640
April 24, 2009

Facts: Petitioner is a sub-contractor engaged in engineering and construction works. Respondent, on the other
hand, is the general contractor and operator of the South Metro Manila Skyway Project. They entered into an
Engineering Procurement Construction Contract (EPCC). Petitioner was to construct Stage 1 of the Skyway
Project for the price of US$369,510,304.00.

Respondent only partially paid the said interim billings, even after several letters by petitioner, but respondent
still failed to do so pay the outstanding balance. The Skyway was opened for public use, and toll fees were
accordingly collected. After informing respondent of the completion, petitioner demand once more for
payment of the outstanding balance on the interim billings, as well as the "Early Completion Bonus" agreed
upon in the EPCC but respondent refused.

Petitioner finally filed with the Construction Industry Arbitration Commission (CIAC) a Request for
Arbitration, seeking to enforce its money claims. In its Answer ad cautelam with Motion to Dismiss, respondent
averred that the CIAC had no jurisdiction over CIAC. Filing by petitioner of said case was allegedly premature
because a condition precedent, i.e., prior referral by the parties of their dispute to the Dispute Adjudication
Board (DAB) had not been complied with. Respondent asked the CIAC to dismiss and to direct the parties to
comply first with Clause 20.4 of the EPCC.

The CIAC ruled that it had jurisdiction, and that the determination of whether compliance of petitioner was a
factual issue that may be resolved during the trial. It then ordered respondent to file an Answer to petitioner’s
Request for Arbitration. After respondent and petitioner filed an Answer and a Reply, respectively, CIAC
conducted a preliminary conference, wherein petitioner and respondent signed the Terms of Reference.
Respondent, however, subsequently filed an Urgent Motion requesting that CIAC refrain from proceeding with
the trial proper until it had resolved the issue of whether prior resort by the parties to DAB was a condition
precedent to the submission of the dispute to CIAC.

Issue: Whether or not the CIAC has jurisdiction over the case.

Ruling: Yes. Under Section 1, Article III of the CIAC Rules, an arbitration clause in a construction contract
shall be deemed as an agreement to submit an existing or future controversy to CIAC jurisdiction,
notwithstanding the reference to a different arbitration institution or arbitral body in such contract x x x.
Elementary is the rule that when laws or rules are clear, it is incumbent on the court to apply them. When the
law (or rule) is unambiguous and unequivocal, application, not interpretation thereof, is imperative.

Hence, the bare fact that the parties herein incorporated an arbitration clause in the EPCC is sufficient to vest
the CIAC with jurisdiction over any construction controversy or claim between the parties. The arbitration
clause in the construction contract ipso facto vested the CIAC with jurisdiction. This rule applies, regardless of
whether the parties specifically choose another forum or make reference to another arbitral body. Since the
jurisdiction of CIAC is conferred by law, it cannot be subjected to any condition; nor can it be waived or
diminished by the stipulation, act or omission of the parties, as long as the parties agreed to submit their
construction contract dispute to arbitration, or if there is an arbitration clause in the construction contract. The
parties will not be precluded from electing to submit their dispute to CIAC, because this right has been vested
in each party by law.
EQUITABLE PCI BANKING CORPORATION, ET AL V. RCBC CAPITAL CORPORATION
G.R. No. 182248
December 18, 2008

Facts: Petitioners Equitable PCI Bank, Inc. (EPCIB) and the individual shareholders of Bankard, Inc., as
sellers, and respondent RCBC Capital Corporation (RCBC), as buyer, executed a Share Purchase Agreement
(SPA) for the purchase of petitioners interests in Bankard. To expedite the purchase, RCBC agreed to dispense
with the conduct of a due diligence audit on the financial status of Bankard.

Under the SPA, RCBC undertakes, on the date of contract execution, to deposit, as downpayment, 20% of the
purchase price in an escrow account. The escrowed amount, the SPA stated, should be released to petitioners
on an agreed-upon release date and the balance of the purchase price shall be delivered to the share buyers
upon the fulfillment of certain conditions agreed upon, in the form of a managers check.
RCBC deposited the stipulated downpayment amount in an escrow account after which it was given full
management and operational control of Bankard.

Sometime in September 2000, RCBC had Bankards accounts audited. Such audit concluded that the warranty,
as contained in Section 5(h) of the SPA, was correct. RCBC paid the balance of the contract price. The
corresponding deeds of sale for the shares in question were executed.

Thereafter, in a letter, RCBC informed petitioners of its having overpaid the purchase price of the subject
shares, claiming that there was an overstatement of valuation of accounts amounting to PhP 478 million,
resulting in the overpayment of over PhP 616 million. Thus, RCBC claimed that petitioners violated their
warranty, as sellers, embodied in Sec. 5(g) of the SPA.

Following unsuccessful attempts at settlement, RCBC, filed a Request for Arbitration with the ICC-ICA.
After drawn out proceedings with each party alleging deviation and non-compliance by the other with
arbitration rules, the tribunal, with Justice Kapunan dissenting, rendered a Partial Award . On the matter of
prescription, the tribunal held that RCBC’s claim is not time-barred, the claim properly falling under the
contemplation of Sec. 5(g) and not Sec. 5(h). As such, the tribunal concluded, RCBC’s claim was filed within
the three (3)-year period under Sec. 5(g) and that the six (6)-month period under Sec. 5(h) did not apply. The
tribunal also exonerated RCBC from laches, the latter having sought relief within the three (3)-year period
prescribed in the SPA. Notably, the tribunal considered the rescission of the SPA and ASPA as impracticable
and "totally out of the question." RCBC filed with the RTC a Motion to Confirm Partial Award. The RTC
issued the first assailed order confirming the Partial Award and denying the adverted separate motions to vacate
and to suspend and inhibit. From this order, petitioners sought reconsideration, but their motion was denied
by the RTC

Issue: Whether or not there is manifest disregard of the law by the ICC-ICA.

Ruling: No. This is a procedural miscue for petitioners who erroneously bypassed the Court of Appeals (CA)
in pursuit of its appeal. While this procedural gaffe has not been raised by RCBC, still we would be remiss in
not pointing out the proper mode of appeal from a decision of the RTC confirming, vacating, setting aside,
modifying, or correcting an arbitral award.

Rule 45 is not the remedy available to petitioners as the proper mode of appeal assailing the decision of the
RTC confirming as arbitral award is an appeal before the CA pursuant to Sec. 46 of Republic Act No. (RA)
9285, otherwise known as the Alternative Dispute Resolution Act of 2004.
Petitioners assert that "the arbitrators’ partial award admitted and used the Summaries as evidence, and held on
the basis of the ‘information’ contained in them that petitioners were in breach of their warranty in GAAP
compliance."
Petitioners’ position is bereft of merit. The petitioners afforded the opportunity to refute the summaries and
pieces of evidence submitted by RCBC which became the bases of the experts’ opinion.

Petitioners’ right to due process was not breached. Sec. 15 of RA 876 or the Arbitration Law provides that:

Section 15. Hearing by arbitrators – Arbitrators may, at the commencement of the hearing, ask both
parties for brief statements of the issues in controversy and/or an agreed statement of facts. Thereafter
the parties may offer such evidence as they desire, and shall produce such additional evidence as the
arbitrators shall require or deem necessary to an understanding and determination of the dispute. The
arbitrators shall be the sole judge of the relevancy and materiality of the evidence offered or produced,
and shall not be bound to conform to the Rules of Court pertaining to evidence. Arbitrators shall
receive as exhibits in evidence any document which the parties may wish to submit and the exhibits
shall be properly identified at the time of submission. All exhibits shall remain in the custody of the
Clerk of Court during the course of the arbitration and shall be returned to the parties at the time the
award is made. The arbitrators may make an ocular inspection of any matter or premises which are in
dispute, but such inspection shall be made only in the presence of all parties to the arbitration, unless
any party who shall have received notice thereof fails to appear, in which event such inspection shall
be made in the absence of such party. (Emphasis supplied.)

The well-settled rule is that administrative agencies exercising quasi-judicial powers shall not be fettered by the
rigid technicalities of procedure, albeit they are, at all times required, to adhere to the basic concepts of fair
play.
EMPIRE EAST LAND HOLDINGS, INC. VS. CAPITOL INDUSTRIAL CONSTRUCTION
GROUPS, INC.,
G.R. No. 168074
September 26, 2008

Facts: On February 12, 1997, petitioner Empire East Land Holdings, Inc. and respondent Capitol Industrial
Corporation Groups, Inc. entered into a Construction Agreemen whereby the latter bound itself to undertake
the complete supply and installation of the building shell wet construction of the formers building known as
Gilmore Heights Phase I, located at Gilmore cor., San Juan, Metro Manila.

Respondent agreed that the construction work would be completed within 330 calendar days from Day 1, upon
the Construction Managers confirmation. Petitioner initially considered February 20, 1997 as Day 1 of the
project. However, when respondent entered the project site, it could not start work due to the on-going bulk
excavation by another contractor. Respondent thus asked petitioner to move Day 1 to a later date, when the
bulk excavation contractor would have completely turned over the site. After a series of correspondence
between petitioner and respondent, February 25, 1997 was proposed as Day 1. Accordingly, respondents
completion date of the project was fixed on January 21, 1998.

Prior to and during the construction period, changes in circumstances arose, prompting the parties to make
adjustments in the initial terms of their contract. In view of the limitation on the target accomplishment to P1
million worth of work per month, respondent asked that the topping-off be moved to February 1999.
Respondent likewise requested a price adjustment with respect to overhead and equipment expenses and
legislated additional labor cost. These requests were not, however, acted upon by petitioner.

After the completion of the side trimmings and excavation of the buildings foundation, respondent demanded
the payment of P2,248,507.70 and P1,805,225.90, respectively. Instead of paying the amount, petitioner agreed
with the respondent on a negotiated amount of P900,000.00 for side trimmings. However, respondents claim
for foundation excavation was not acted upon. During the construction period, petitioner granted, on separate
occasions, respondents requests for payroll and material accommodations.

On March 13, 1999, respondent submitted its final billing, amounting to P4,442,430.90 representing its work
accomplishment and retention, less all deductions. On March 23, 1999, a punch list was drawn as a result of
the joint inspection undertaken by the parties. Petitioner, on the other hand, refused to issue a certificate of
completion. It, instead, sent a letter to respondent informing the latter that it was already in default.

Issue: Whether or not the unfinished work was deemed recognized and accepted by petitioner.

Ruling: Yes. After a thorough review of the documents presented by both parties, both the CIAC and the CA
concluded that the unfinished works, i.e., masonry works, were actually recognized and accepted by petitioner.
It thus agreed to take over, through its new contractor, the balance of work. The only consequence of such
acceptance was the deduction of the value of the unfinished works from the total contract price. This was the
reason why the contract price was reduced from P84 million to P62,828,826.53. The deletion was, likewise,
confirmed by respondent in a letter dated August 21, 1998.

Applying Article 1235 of the Civil Code, petitioners act exempted respondent from liability for the unfinished
works. A person entering into a contract has a right to insist on its performance in all particulars, according to
its meaning and spirit. But if he chooses to waive any of the terms introduced for his own benefit, he may do
so. When the obligee accepts the performance, knowing its incompleteness or irregularity, and without
expressing any protest or objection, the obligation is deemed fully complied with.
In the instant case, petitioner was aware of the unfinished work of respondent; yet, it did not raise any objection
or protest. It, instead, voluntarily hired another contractor to perform the unfinished work, and opted to reduce
the contract price. By removing from the contract price the value of the works deleted, it is as if said items were
not included in the original terms, in the first place. Thus, as correctly concluded by the CIAC, and as affirmed
by the CA, petitioner is not entitled to reimbursement from respondent for the expenses it incurred to complete
the unfinished works.
Diesel Construction Co., Inc. vs.UPSI Property Holdings, Inc.
G.R. No. 154885

UPSI Property Holdings, Inc. vs. Diesel Construction Co.,Inc. and FGU Insurance Corp.,
G.R. No. 154937
March 24, 2008

FACTS: On August 26, 1995, Diesel, as Contractor, and UPSI, as Owner, entered into a Construction
Agreement for the interior architectural construction works for the 14th to 16th floors of the UPSI Building 3
Meditel/Condotel Project. Under the Agreement, as amended, Diesel, for PhP 12,739,099, agreed to undertake
the Project, payable by progress billing. As stipulated, Diesel posted, through FGU Insurance Corp. (FGU), a
performance bond in favor of UPSI. The agreement contained provisions on contract works and Project
completion, extensions of contract period, change/extra works orders, delays, and damages for negative
slippage.

Of particular relevance to this case is the section obliging the contractor, in case of unjustifiable delay, to pay
the owner liquidated damages in the amount equivalent to one-fifth (1/5) of one (1) percent of the total Project
cost for each calendar day of delay. In the course of the Project implementation, change orders were effected
and extensions sought. At one time or another, Diesel requested for extension.

UPSI, it would appear, disapproved the desired extensions, thus putting Diesel in a state of default for a given
contract work. And for every default situation, UPSI assessed Diesel for liquidated damages in the form of
deductions from Diesels progress payments, as stipulated in the Agreement.

Apparently irked by and excepting from the actions taken by UPSI, Diesel, thru its Project manager, sent, on
March 16, 2000, a letter notice to UPSI stating that the Project has been completed as of that date. UPSI,
however, disregarded the notice, and refused to accept delivery of the contracted premises, claiming that Diesel
had abandoned the Project unfinished. Apart therefrom, UPSI withheld Diesels 10% retention money and
refused to pay the unpaid balance of the contract price.

It is upon the foregoing factual backdrop that Diesel filed a complaint before the CIAC, praying that UPSI be
compelled to pay the unpaid balance of the contract price, plus damages and attorneys fees. In an answer with
counterclaim, UPSI denied liability, accused Diesel of abandoning a project yet to be finished, and prayed for
repayment of expenses it allegedly incurred for completing the Project and for a declaration that the deductions
it made for liquidated damages were proper.

ISSUE: Whether or not the CA may intervene to annul the findings of a highly specialized agency, like the
CIAC, on the ground that essentially the question to be resolved goes to the very heart of the substantiality of
evidence, when in so doing, CA merely substituted its own conjectural opinion to that of the CIAC Arbitral
Tribunals well-supported findings and award.

RULING:
KOREA TECHNOLOGIES CO., LTD. VS. HON. ALBERTO A. LERMA
G.R. No. 143581
January 7, 2008
LM POWER ENGINEERING COPORATION vs. CAPITOL INDUSTRIAL CONSTRUCTION
GROUPS
G.R No. 141833
March 26 2003

FACTS: LM Power Engineering Corporation (Petitioner) and Capitol Industrial Construction Groups
(Respondent) entered into a Subcontract Agreement involving electrical work at the Port of Zamboanga.
Respondent then took over some of the work contracted to Petitioner, It was alleged that the petitioner failed
to finish it because of its inability to procure materials.

Upon completion of the task, Petitioner billed the respondent the amount of 6,711,813.90 pesos. Respondent
refused to pay and contested the accuracy of the amount of advances and billable accomplishments listed by
the petitioner. Respondent also took refuge in the termination clause agreement which allowed it to set off the
cost of the work that petitioner had failed to undertake (due to termination of take over).

Because of the dispute, the Petitioner filed a complaint foe collection of the balance due under the subcontract
agreement. However, instead of filing an answer, the respondent filed a Motion to Dismiss, alleging that the
complaint was premature because there was no prior recourse to arbitration. RTC denied the motion on the
ground that the dispute did not involve the interpretation or implementation of the agreement and was,
therefore, not covered by the arbitral clause. Also, the RTC ruled that the take over of some work items by the
respondent was not equivalent to termination but a mere modification of the subcontract.

ISSUE: Whether or not there exists a dispute between petitioner and respondent regarding the interpretation
and implementation of the Sub-Contract Agreement that requires prior recourse to voluntary arbitration.

RULING: Yes. The instant case involves technical discrepancies that are better left to an arbitral body that has
expertise on those areas. The Subcontract has the Arbitral clause stating that the parties agree that “Any dispute
or conflict as regards to interpretation and implementation of this agreement which cannot be settled between
the parties amicably shall be settled by means of arbitration.” Within the scope of the Arbitration clause are
discrepancies as to the amount of advances and billable accomplishments, the application of the provision on
termination, and the consequent set-off expenses. Also, there is no need for prior request for arbitration. As
long as the parties agree to submit to voluntary arbitration, regardless of what forum they may choose, their
agreement will fall within the jurisdiction of the CIAC, such that, even if they specifically choose another forum,
the parties will not be precluded from electing to submit their dispute before the CIAC because this right has
been vested upon each party by the law.
OIL AND NATURAL GAS COMMISSION VS. COURT OF APPEALS
G.R. No. 114323
July 23, 1998

FACTS: This proceeding involves the enforcement of a foreign judgment rendered by the Civil Judge of Dehra
Dun, India in favor of the petitioner, against the private respondent, PACIFIC CEMENT COMPANY,
INCORPORATED. The petitioner is a foreign corporation owned and controlled by the Government of India
while the private respondent is a private corporation duly organized and existing under the laws of the
Philippines.

The conflict between the petitioner and the private respondent rooted from the failure of the respondent to
deliver 43,000 metric tons of oil well cement to the petitioner even it had already received payment and despite
petitioner’s several demands. The petitioner then informed the private respondent that it was referring its claim
to an arbitrator pursuant to Clause 16 of their contract which stipulates that he venue for arbitration shall be at
Dehra dun.
The chosen arbitrator, one Shri N.N. Malhotra, resolved the dispute in favour of the petitioner setting forth
the arbitral award. To enable the petitioner to execute the above award, it filed a Petition before the Court of
the Civil Judge in Dehra Dun. India praying that the decision of the arbitrator be made "the Rule of Court" in
India. This was objected by the respondent but foreign court refused to admit the private respondent's
objections for failure to pay the required filing fees. Despite notice sent to the private respondent of the
foregoing order and several demands by the petitioner for compliance therewith, the private respondent refused
to pay the amount adjudged by the foreign court as owing to the petitioner.

The petitioner filed a complaint with Branch 30 of the Regional Trial Court (RTC) of Surigao City for the
enforcement of the aforementioned judgment of the foreign court. The private respondent moved to dismiss
the complaint. RTC dismissed the complaint for lack of a valid cause of action. The petitioner then appealed
to the respondent Court of Appeals which affirmed the dismissal of the complaint. In its decision, the appellate
court concurred with the RTC's ruling that the arbitrator did not have jurisdiction over the dispute between the
parties, thus, the foreign court could not validly adopt the arbitrator's award. The petitioner filed this petition
for review on certiorari,

ISSUE: Whether or not the arbitrator had jurisdiction over the dispute between the petitioner and the private
respondent under Clause 16 of the contract.

RULING: The constitutional mandate that no decision shall be rendered by any court without expressing
therein dearly and distinctly the facts and the law on which it is based does not preclude the validity of
"memorandum decisions" which adopt by reference the findings of fact and conclusions of law contained in
the decisions of inferior tribunals.

Furthermore, the recognition to be accorded a foreign judgment is not necessarily affected by the fact that the
procedure in the courts of the country in which such judgment was rendered differs from that of the courts of
the country in which the judgment is relied on. If the procedure in the foreign court mandates that an Order
of the Court becomes final and executory upon failure to pay the necessary docket fees, then the courts in this
jurisdiction cannot invalidate the order of the foreign court simply because our rules provide otherwise.
MAGELLAN CAPITAL MANAGEMENT CORPORATION VS. ROLANDO M. ZOSA
G.R No. 129916
March 26 2001

FACTS: Magellan Capital Holdings Corporation (MCHC) appointed Magellan Capital Management
Corporation (MCMC) as manager for the operation of its business and affair. MCMC, MCHC and Rolando
Zosa entered into an employment agreement designating Zosa as Chief Executive Officer of MCHC. It is
provided for in the Employment Agreement that the term of Zosa’s ecmployment shall be co-terminous with
the management agreement or until March 1996, unless sooner terminated.

Majority of the Board of Directors deided not to re-elect Zosa as President and Chief Executive Officer on
account of loss of trust and violation of the resolution issued by the MCHC’s board of directors and of the
non-competition clause of the Employment Agreement. Nevertheless, Zosa was elected to a new position as
MCHC’s Vice-Chairman/Chairman for New Ventures Development.

Zosa communicated his resignation from his position of Vice-Chairman under the Employment Agreement
on the ground that the said position had less responsibility and scope that President and Chief Executive
Officer. He demanded that he be given termination benefits as provided for in the Employment Agreement.
MCHC did not accept the resignation for a good reason and instead informed him tht the Employment
Agreement is terminated for cause on account of his breach of Section 12 thereof. Zosa was also advised that
he shall have no further rights under the agreement or any claims against the manager of the corporation except
the right to receive within 30 days the amounts stated in the Agreement. Zosa invoked the Arbitration clause.

Zosa designated his brother (Atty. Francis Zosa) as his representative in the arbitration panel while MCHC
designated 2 representatives in the arbitration panel. However, instead of submitting the dispute to arbitration,
Zosa filed an action for damages against petitioners.

ISSUE: Whether or not the court erred in voiding the arbitration clause.

RULING: No. MCMC and MCHC represent the same interest. Though they are 2 corporations with distinct
personalities, they represent the same interest. Thus, it would be expected that they would protect and preserve
their own interest and neither would favor Zosa’s interest during the arbitration. If the arbitration clause would
be followed, MCMC would have 1 arbitrator, MCHC would have another arbitrator, and Zosa would have 1.
But MCMC is the manager of MCHC, MCHC would naturally favor its employed. Thus, their 2 votes would
win vs Zosa’s lone vote.
BF CORPORATION VS. COURT OF APPEALS
G.R. No. 120105
March 27, 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 Plaza Project," a shopping mall complex in
Mandaluyong. Petitioner incurred delay in the construction work that SPI considered as "serious and
substantial."
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 formal trade 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.
ISSUE: Whether or not the contract between petitioner and respondent embodies an arbitration clause in case
of disagreement between the parties in the implementation of contractual provisions.

RULING: Yes. The making of a contract or submission for arbitration described in Sec. 2 of R.A. 876
providing for arbitration of any controversy, shall be deemed a consent of the parties of the province or city
where any of the parties resides, to enforce such contract of submission.

The formal requirements of an agreement to arbitrate are: (a) it must be in writing and (b) it must be subscribed
by the parties or their representatives. There is no denying that the parties entered into a written contract that
was submitted in evidence before the lower court.

The Court finds that, upon a scrutiny of the records of this case, these requisites were complied with in the
contract in question. The Articles of Agreement, which incorporates all the other contracts and agreements
between the parties, was signed by representatives of both parties and duly notarized. The failure of the private
respondent's representative to sign the "Conditions of Contract" would not affect the compliance with the
formal requirements for arbitration agreements
LUZON DEVELOPMENT BANK VS. ASSOCIATION OF LDB EMPLOYEES
G.R. No. 120319
October 6, 1995

FACTS: At a conference, the parties agreed on the submission of their respective Position Papers. Atty. Garcia,
in her capacity as Voluntary Arbitrator, received ALDBE’s Position Paper ; LDB, on the other hand, failed to
submit its Position Paper despite a letter from the Voluntary Arbitrator reminding them to do so. As of May
23, 1995 no Position Paper had been filed by LDB.

Without LDB’s Position Paper, the Voluntary Arbitrator rendered a decision disposing as follows:

WHEREFORE, finding is hereby made that the Bank has not adhered to the CBA provision nor the MOA on
promotion.

Hence, this petition for certiorari and prohibition seeking to set aside the decision of the Voluntary Arbitrator
and to prohibit her from enforcing the same.

ISSUE: Whether or not a voluntary arbiter’s decision is appealable to the CA and not the SC

RULING: YES. The jurisdiction conferred by law on a voluntary arbitrator or a panel of such arbitrators is
quite limited compared to the original jurisdiction of the labor arbiter and the appellate jurisdiction of the
NLRC for that matter. The “(d)ecision, awards, or orders of the Labor Arbiter are final and executory unless
appealed to the Commission …” Hence, while there is an express mode of appeal from the decision of a labor
arbiter, Republic Act No. 6715 is silent with respect to an appeal from the decision of a voluntary arbitrator.

Yet, past practice shows that a decision or award of a voluntary arbitrator is, more often than not, elevated to
the SC itself on a petition for certiorari, in effect equating the voluntary arbitrator with the NLRC or the CA.
In the view of the Court, this is illogical and imposes an unnecessary burden upon it.

In Volkschel Labor Union, et al. v. NLRC, et al., 8 on the settled premise that the judgments of courts and
awards of quasi-judicial agencies must become final at some definite time, this Court ruled that the awards of
voluntary arbitrators determine the rights of parties; hence, their decisions have the same legal effect as
judgments of a court. In Oceanic Bic Division (FFW), et al. v. Romero, et al., this Court ruled that “a voluntary
arbitrator by the nature of her functions acts in a quasi-judicial capacity.” Under these rulings, it follows that
the voluntary arbitrator, whether acting solely or in a panel, enjoys in law the status of a quasi-judicial agency
but independent of, and apart from, the NLRC since his decisions are not appealable to the latter.

Section 9 of B.P. Blg. 129, as amended by Republic Act No. 7902, provides that the Court of Appeals shall
exercise:

(B) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders or awards of RTC s
and quasi-judicial agencies, instrumentalities, boards or commissions, including the Securities and Exchange
Commission, the Employees Compensation Commission and the Civil Service Commission, except those
falling within the appellate jurisdiction of the Supreme Court in accordance with the Constitution, the Labor
Code of the Philippines under Presidential Decree No. 442, as amended, the provisions of this Act, and of
subparagraph (1) of the third paragraph and subparagraph (4) of the fourth paragraph of Section 17 of the
Judiciary Act of 1948.

Assuming arguendo that the voluntary arbitrator or the panel of voluntary arbitrators may not strictly be
considered as a quasi-judicial agency, board or commission, still both he and the panel are comprehended within
the concept of a “quasi-judicial instrumentality.”
An “instrumentality” is anything used as a means or agency. Thus, the terms governmental “agency” or
“instrumentality” are synonymous in the sense that either of them is a means by which a government acts, or
by which a certain government act or function is performed. The word “instrumentality,” with respect to a
state, contemplates an authority to which the state delegates governmental power for the performance of a state
function. An individual person, like an administrator or executor, is a judicial instrumentality in the settling of
an estate, in the same manner that a sub-agent appointed by a bankruptcy court is an instrumentality of the
court, and a trustee in bankruptcy of a defunct corporation is an instrumentality of the state.

The voluntary arbitrator no less performs a state function pursuant to a governmental power delegated to him
under the provisions therefor in the Labor Code and he falls, therefore, within the contemplation of the term
“instrumentality” in the aforequoted Sec. 9 of B.P. 129. The fact that his functions and powers are provided
for in the Labor Code does not place him within the exceptions to said Sec. 9 since he is a quasi-judicial
instrumentality as contemplated therein.

It will be noted that, although the Employees Compensation Commission is also provided for in the Labor
Code, Circular No. 1-91, which is the forerunner of the present Revised Administrative Circular No. 1-95, laid
down the procedure for the appealability of its decisions to the CA under the foregoing rationalization, and this
was later adopted by Republic Act No. 7902 in amending Sec. 9 of B.P. 129. A fortiori, the decision or award
of the voluntary arbitrator or panel of arbitrators should likewise be appealable to the CA, in line with the
procedure outlined in Revised Administrative Circular No. 1-95, just like those of the quasi-judicial agencies,
boards and commissions enumerated therein.

In the same vein, it is worth mentioning that under Section 22 of Republic Act No. 876, also known as the
Arbitration Law, arbitration is deemed a special proceeding of which the court specified in the contract or
submission, or if none be specified, the RTC for the province or city in which one of the parties resides or is
doing business, or in which the arbitration is held, shall have jurisdiction.
TOYOTA MOTOR PHILIPPINES CORPORATION VS. THE COURT OF APPEALS
G.R. NO. 102881
DECEMBER 7, 1992

FACTS: This case involves a boundary dispute between Toyota Motor Phil. Corporation and Sun Valley
Manufacturing and Development Corporation. Both Toyota and Sun Valley are the registered owners of two
(2) adjoining parcels of land situated in La Huerta, Parañaque, Metro Manila which they purchased from the
Asset Privatization Trust (APT). The properties in question formerly belonged to Delta Motors Corporation
(DMC). They were foreclosed by the Philippine National Bank (PNB) and later transferred to the national
government through the APT for disposition.

APT then proceeded to classify the DMC properties according to the existing improvements, i.e., buildings,
driveways, parking areas, perimeter fence, walls and gates and the land on which the improvements stood. The
entire DMC property is called GC III-Delta Motors Corporation. Further subdivisions for the separate
catalogues were made for each division. After this classification, APT parcelled out and catalogued the
properties for bidding and sale.

Part of the duly parcelled property was sold to Toyota through public bidding. After its purchase, Toyota
constructed a concrete hollow block perimeter fence around its alleged property. Another part of the parcelled
covering an area of 55,236 square meters was purchased by Sun Valley from APT. Relying upon the title
description of its property and the surveys it had commissioned, Sun Valley claimed that Toyota's perimeter
fence overlaps Sun Valley's property along corners 11 to 15 by 322 square meters and corners 19 to 1 by 401
square meters for a total of 723 square meters.

Negotiations between the two (2) corporations for a possible settlement of the dispute bogged down. Court
battles ensued, grounded on purely procedural issues. In pursuing the resolution of the dispute, both Toyota
and Sun Valley opted to file separate actions. Much of the complications that arose and are now before us can
be traced to the two separate cases pursued by both parties.

ISSUE: Whether or not Judge Tensuan committed a grave abuse of discretion.

RULING: Yes. Attention must first be brought to the fact that the contract of sale executed between APT
and Toyota provides an arbitration clause which states that:

In case of disagreement or conflict arising out of this Contract, the parties hereby undertake to submit the
matter for determination by a committee of experts, acting as arbitrators, the composition of which shall be as
follows: a) One member to be appointed by the VENDOR; b) One member to be appointed by the VENDEE;
c) One member, who shall be a lawyer, to be appointed by both of the aforesaid parties;
The contention that the arbitration clause has become dysfunctional because of the presence of third parties is
untenable.

Toyota filed an action for reformation of its contract with APT, the purpose of which is to look into the real
intentions/agreement of the parties to the contract and to determine if there was really a mistake in the
designation of the boundaries of the property as alleged by Toyota. Such questions can only be answered by
the parties to the contract themselves. This is a controversy which clearly arose from the contract entered into
by APT and Toyota. Inasmuch as this concerns more importantly the parties APT and Toyota themselves, the
arbitration committee is therefore the proper and convenient forum to settle the matter as clearly provided in
the deed of sale. Having been apprised of the presence of the arbitration clause in the motion to dismiss filed
by APT, Judge Tensuan should have at least suspended the proceedings and directed the parties to settle their
dispute by arbitration. Judge Tensuan should have not taken cognizance of the case.
HEIRS OF AUGUSTO L. SALAS, JR. vs. LAPERAL REALTY CORPORATION
G.R. No. 135362
December 13, 1999

FACTS: Petitioner Salas Jr. and Respondent Laperal Realty Corporation entered into anagreement for the latter
to develop and provide complete construction services on formersland. Petitioner executed a special power of
attorney in favor of Respondent Corporation toexercise general control, supervision and management of the
sale of his land. On June 10,1989 Petitioner left his home for a business trip in Nueva Ecija but never returned
again.
Petitioner’s wife filed a petition for presumptive death of her husba nd after seven years of absence. The trial
court granted her petition.On the otherhand, Respondent Corporation already subdivided the property owned
by SalasJr. to different lot buyers. The heirs of Salas Jr. filed in the RTC of Lipa City a Complaint for nullity of
sale, reconveyance, cancellation of contract and damages against Laperal RealtyCorporation and lot buyers.
Laperal Realty Corporation filed a motion to dismiss on theground that the heirs of Salas Jr. failed to submit
their grievance to arbitration as stated inthe agreement executed by Salas Jr. and Laperal Realty Corporation.
The lot buyers alsofiled a motion to dismiss based on the same ground.
ISSUE: Whether or not the arbitration clause in the agreement between Salas Jr. andLaperal Realty binds the
heirs of the former.
RULING: A submission to arbitration is a contract. As such, the Agreement, containing the stipulation on
arbitration, binds the parties thereto, as well as their assigns and heirs. But only they. Petitioners, as heirs of
Salas Jr., and respondent Laperal Realty Corporation are certainly bound by the agreement.
The arbitration agreement is valid, binding and enforceable and not contrary to public policy so much so when
there obtains a written provision for arbitration which is not complied with, the trial court should suspend the
proceedings and order the parties to proceed to arbitration in accordance with the terms of their agreement.
However it would be in the interest of justice if the trial court hears the complaint against all herein respondents
and adjudicates petitioners rights as against theirs in a singles and complete proceeding. The petition is granted
the trial court must proceed with the hearing of the case.
HOME BANKERS SAVINGS AND TRUST COMPANY vs. COURT OF APPEALS
G.R No. 115412
November 19 1999

FACTS: Victor Tancuan issued Home Bankers Savings and Trust Company (HBSTC) a check for
25,250,000.00 Pesos while Eugene Arriesgrado issued Far & East Bank and Trust Company (FEBTC) checks
for 8.6 Million pesos, 8.5 Million pesos and 8.1 Million pesos, respectively, the three checks amounting to
25,200,000 pesos. Tancuan and Arriesgrado exchanged each other’s checks and deposited them with their
respective banks for collection. When FEBTC presented Tancuan’s HBSTC check for clearing, HBSTC
dishonored it for being “Drawn against insufficient funds”. After that, HBSTC sent Arriesgrado’s 3 FEBTC
checks through the Philippine Clearing House Corporation (PCHC) to FEBTC but was returned for being
“Drawn against insufficient funds”. HBSTC received the notification of dishonor but refused to accept them
and instead returned them to FEBTC through PCHC for the reason “Beyond Reglementary Period” implying
that HBSTC already treated the 3 FEBTC checks as cleared and allowed the proceeds thereof to be withdrawn.
FEBTC demanded reimbursement for the returned checks and inquired form HBSTC whether it had permitted
any withdrawal of funds against the unfunded checks and if so, on what date. HBSTC refused to make any
reimbursement.
FEBTC submitted the dispute for arbitration with PCHC. While the arbitration proceedings was still pending,
FEBTC filed and action for sum of money and damages with preliminary attachment against HBSTC, Robert
Tancuan, Victor Tancuan and Eugene Arriesgrado. HBTSC filed a motion to dismiss and said that the
complaint stated no cause of action and that it should be dismissed because it seeks to enforce an arbitral award
which as yet does not exist.
ISSUE: Whether or not FEBTC which commenced the arbitration proceeding under PCHC may subsequently
file a separate case in court over the same subject matter or arbitration despite the pendency of the arbitration
to obtain the provisional remedy of attachment against the bank, the adverse party in the arbitration proceeding
RULING: No. Section 14 of the Arbitration Law allows any party to the proceeding to petition the court to
take measures to safeguard or conserve any matter which is the subject of the dispute. The civil action was not
a simple case of money claim since private respondent has included a prayer for a writ of preliminary attachment
which is sanctioned by the Arbitration Law (Sec 14). Also, the participants cannot bypass the arbitration process
laid out by the body and seek relief directly from the courts. In the case at bar, the private respondent has
initiated arbitration proceedings as required by the PCHC rules and regulations, and pending arbitration has
sought relief from the trial court for measures to safeguard the subject of the dispute.
CHUNG FU INDUSTRIES (PHILIPPINES) INC. vs. COURT OF APPEALS
G.R. No. 96283
February 25, 1992

FACTS: Petitioner Chung Fu Industries and private respondents Roblecor Philippines forged a construction
agreement wherein Roblecor committed to construct and finish on Dec. 31, 1989, Chung Fu’s
industrial/factory complex in Tanawan, Cavite in consideration of P42M . It was stipulated also that in the
event of disputes, the parties will be subjected to an arbitration resolution, wherein the arbitrator will be chosen
by both parties.
Apart from the construction agreement, the parties also entered into ancillary contracts for the construction of
a dormitory and support facilities with a contract price of 3, 875, 285.00 to be completed on or before October
31, 1989 and the other dated Aug. 12, 1989 for the installation of electrical, water and hydrant systems at the
plant site, priced at 12.1M and requiring completion thereof one month after civil works have been finished.
However, Roblecor failed to complete the work despite the extension allowed by Chung Fu
Subsequently, Chung Fu had to take over the construction when it had become evident that Roblecor was not
in a position to fulfill the obligation. Claiming an unsatisfied account of P10, 500, 000 and unpaid progress
billings of P 2, 370, 179.23, Roblecor filed a petition for Compulsory Arbitration with prayer for TRO before
respondent RTC , pursuant to the arbitration clause in the construction agreement
Chung Fu moved to dismiss the petition and further prayed for the quashing of the restraining order.
Subsequent negotiations between the parties eventually led to the formulation of an arbitration agreement
which includes that the “decision of the arbitrator shall be final and unappealable, therefore, there shall be no
further judicial recourse if either party disagrees with the whole or any part of the arbitrator’s award”
RTC approved the arbitration agreement and Asuncion was appointed as the sole arbitrator. Arbitrator ruled
in favor of the contractor Roblecor . Chung Fu moved to remand the case for further hearing and asked for a
reconsideration of the judgment award claiming that Asuncion committed 12 instances of grave error by
disregarding the provisions of the parties’ contract
ISSUES: Whether or not the subject arbitration award is beyond the ambit of the court’s power of judicial
review.
RULING: No. It’s stated explicitly under Art. 2044 of the Civil Code that the finality of the arbitrator’s award
is not absolute and without exceptions. Where the conditions described in Arts. 2038, 2039 and 2040 applicable
to both compromises and arbitrations are obtaining, the arbitrators’ award may be annulled or rescinded.
Additionally, Sections 24 and 25 of the Arbitration Law provide grounds for vacating, Modifying or rescinding
an arbitrator’s award. Even decisions of administrative agencies which are declared “final” by law are not
exempt from judicial review when so warranted. SC finds that Chung Fu has amply made out a case where the
voluntary arbitrator failed to apply the terms and provisions of the Construction Agreement which forms part
of the law applicable as between the parties, thus committing a grave abuse of discretion. Furthermore, in
granting unjustified extra compensation to responded for several items, he exceeded his powers – all of which
would have constituted ground for vacating the award under Section 24(d) of the Arbitration Law.
LUCAS ADAMSON VS. COURT OF APPEALS
G.R. No. 106879
May 27, 1994

FACTS: The parties, Adamson Management Corporation and Lucas Adamson on the one hand, and APAC
Holdings Limited on the other, entered into a contract whereby the former sold 99.97% of outstanding
common shares of stocks of Adamson and Adamson, Inc. to the latter for P24,384,600.00 plus the Net Asset
Value (NAV) of Adamson and Adamson, Inc. But the parties failed to agree on a reasonable Net Asset Value.
This prompted them to submit the case for arbitration in accordance with Republic Act No. 876, otherwise
known as the Arbitration Law.

The Arbitration Committee rendered a decision finding the Net Asset Value of the Company which was
computed on the basis of a pro-forma balance sheet submitted by SGV and which was the difference between
the total assets of the Company and total liabilities.

In so holding that NAV equals P167,118.00, the Arbitration Committee disregarded petitioners' argument that
there was a fixed NAV amounting to P5,146,000.00 which should be added the value of intangible assets. The
increment of tangible assets excluding land, the 1987 tax savings, and estimated net income from, later
increased. According to the Committee, however, the amount which was claimed as initial NAV by petitioners,
was merely an estimate of the Company's NAV as of February 28, 1990 which was still subject to financial
developments until June 19, 1990, the cut-off date. Furthermore, the Committee held that the parties used the
figures in the pro-forma balance sheet to arrive at the said amount; that the same had already included the value
of the intangible assets and of the Cuervo appraisal of the tangible assets so that the latter items could not be
added again to what Vendor claimed to be the initial NAV; and that apart from being an estimate, the amount
of P5,146,000.00 was tentative as it was still subject to the adjustments to be made thereto to reflect subsequent
financial events up to the cut-off date.

In the computation of the NAV, the Committee deemed it proper to appreciate in favor of petitioners the 1987
tax savings because as of the date of the proceedings, no assessment was ever made by the BIR and the three-
year prescriptive period had already expired. However, it did not consider the estimated net income for the
period beginning February 28, 1990 to June 19, 1990 as part of the NAV because it found that as of June 1990,
the books of the company carried a net loss which increased after the proposed adjustments were included in
the computation of the NAV. The Committee pointed out that although petitioners herein contested the
adjustments, they were, however, not able to prove that these were not valid, except with respect to the tax
savings.

Aside from deciding the amount of NAV, the Committee also held that any ambiguity in the contract should
not necessarily be interpreted against herein private respondents because the parties themselves had stipulated
that the draft of the agreement was submitted to petitioners for approval and that the latter even proposed
changes which were eventually incorporated in the final form of the Agreement. Thereafter, APAC Holdings
Ltd. filed a petition for confirmation of the arbitration award before the Regional Trial Court. Herein petitioners
opposed the petition and prayed for the nullification, modification and/or correction of the same, alleging that
the arbitrators committed evident partiality and grave abuse of discretion.

ISSUE: Whether or not he arbitrators committed evident partiality and grave abuse of discretion.

RULING: No. It is clear therefore, that the award was vacated not because of evident partiality of the
arbitrators but because the latter interpreted the contract in a way which was not favorable to herein petitioners
and because it considered that herein private respondents, by submitting the controversy to arbitration, was
seeking to renege on its obligations under the contract.
That the award was unfavorable to petitioners herein did not prove evident partiality. That the arbitrators
resorted to contract interpretation neither constituted a ground for vacating the award because under the
circumstances, the same was necessary to settle the controversy between the parties regarding the amount of
the NAV. In any case, this Court finds that the interpretation made by the arbitrators did not create a new
contract, as alleged by herein petitioners but was a faithful application of the provisions of the Agreement.
Neither was the award arbitrary for it was based on the statements prepared by the SGV which was chosen by
both parties to be the "auditors."

The trial court held that herein private respondent could not shirk from performing its obligations on account
of the difficulty of complying with the terms of the contract. It said further that the contract may be harsh but
private respondent could not excuse itself from performing its obligations on account of the ambiguity of the
contract because as its drafter, private respondent was well aware of the implications of the Agreement. We
note herein that during the arbitration proceedings, the parties agreed that the contract as prepared by private
respondent, was submitted to petitioners for approval. Petitioners, therefore, are presumed to have studied the
provisions of the Agreement and agreed to its import when they approved and signed the same. When it was
submitted to arbitration to settle the issue regarding the computation of the NAV, petitioners agreed to be
bound by the judgment of the arbitration committee, except in cases where the grounds for vacating the award
existed. Petitioners cannot now refuse to perform its obligation after realizing that it had erred in its
understanding of the Agreement.

Petitioners also assailed the arbitrator's reliance upon the financial statements submitted by SGV as they
allegedly served the interests of private respondents and did not reflect the true intention of the parties. We
agree with the observation made by the arbitrators that SGV, being a reputable firm, it should be presumed to
have prepared the statements in accordance with sound accounting principles. Petitioners have presented no
proof to establish that SGV's computation was erroneous and biased.
NATIONAL STEEL CORPORATION V. RTC OF LANAO DEL NORTE
G.R. No. 127004
March 11, 1999

FACTS: Respondent Edward Willkom Enterprises Inc. (EWEI) and Ramiro Construction executed a contract
with petitioner National Steel Corporation (NSC) whereby the former jointly undertook the Contract for Site
Development for the latter’s Integrated Iron and Steel Mills Complex. Sometime in 1983, the services of Ramiro
Construction was terminated and EWEI took over the contractual obligation. Due to this and to other causes
deemed sufficient by EWEI, extensions of time for the termination of the project were granted by NSC.
Differences later arose, EWEI filed a case before the RTC praying essentially for payments with interest from
the time of delay; the price adjustment as provided by PD 1594; and exemplary damages and attorney’s fees.
NSC filed an answer with counterclaim to plaintiffs complaints. The court upon joint motion of both parties
had issued an order dismissing the said complaint and counterclaim in view of the desire of both parties to
implement Sec. 19 of the contract, providing for a resolution of any conflict by arbitration. In accordance with
the aforesaid order and pursuant to Sec. 19 of the Contract, herein parties constituted an Arbitration Board
after which of a series of hearings, rendered the decision directing NSC to pay EWEI. The RTC affirmed and
confirmed the award of the arbitrators. NSC’s Motion for Reconsideration was denied, hence has come to this
court via the present petition.
ISSUE: Whether or not the lower court acted with grave abuse of discretion in not vacating the arbitrator’s
award.

RULING: No. Petitioner’s allegation that there was evident partiality is untenable. It is anemic of evidentiary
support. In the case of Adamson vs. Court of Appeals, in upholding the decision of the Board of Arbitrators,
this Court ruled that the fact that a party was disadvantaged by the decision of the Arbitration Committee does
not prove evident partiality. Proofs other than mere inference are needed to establish evident partiality. Here,
petitioner merely averred evident partiality without any proof to back it up. Petitioner was never deprived of
the right to present evidence nor was there any showing that the Board showed signs of any bias in favor of
EWEI.
Parentethically, and in the light of the record above-mentioned, this Court hereby holds that the Board of
Arbitrators did not commit any “evident partiality” imputed by petitioner NSC. Above all, this Court must
sustain the said decision for it is a well-settled rule that the actual findings of an administrative body should be
affirmed if there is substantial evidence to support them and the conclusions stated in the decision are not
clearly against the law and jurisprudence, similar to the instant case, Henceforth, every reasonable intendment
will be indulged to give effect such proceedings and in favor of the regulatory and integrity of the arbitrators
act. Indeed, the allegation of evident partiality is not well-taken because the petitioner failed to substantiate the
same.
CHUNG FU INDUSTRIES VS. COURT OF APPEALS
G.R. No. 96283
February 25, 1992

FACTS: May 17, 1989: petitioner Chung Fu Industries and private respondents Roblecor Philippines forged
a construction agreement wherein Roblecor committed to construct and finish on Dec. 31, 1989, Chung Fu’s
industrial/factory complex in Tanawan, Cavite in consideration of P42M . It was stipulated also that in the
event of disputes, the parties will be subjected to an arbitration resolution, wherein the arbitrator will be chosen
by both parties.

Apart from the construction agreement, the parties also entered into ancillary contracts for the construction of
a dormitory and support facilities with a contract price of 3, 875, 285.00 to be completed on or before October
31, 1989 and the other dated Aug. 12, 1989 for the installation of electrical, water and hydrant systems at the
plant site, priced at 12.1M and requiring completion thereof one month after civil works have been finished.
However, Roblecor failed to complete the work despite the extension allowed by Chung Fu.

Subsequently, Chung Fu had to take over the construction when it had become evident that Roblecor was not
in a position to fulfill the obligation. Claiming an unsatisfied account of P10, 500, 000 and unpaid progress
billings of P 2, 370, 179.23, Roblecor filed a petition for Compulsory Arbitration with prayer for TRO before
respondent RTC , pursuant to the arbitration clause in the construction agreement. Chung Fu moved to dismiss
the petition and further prayed for the quashing of the restraining order. Subsequent negotiations between the
parties eventually led to the formulation of an arbitration agreement which includes that the “decision of the
arbitrator shall be final and unappealable, therefore, there shall be no further judicial recourse if either party
disagrees with the whole or any part of the arbitrator’s award”. RTC approved the arbitration agreement and
Asuncion was appointed as the sole arbitrator. Arbitrator ruled in favor of the contractor Roblecor. Chung Fu
moved to remand the case for further hearing and asked for a reconsideration of the judgment award claiming
that Asuncion committed 12 instances of grave error by disregarding the provisions of the parties’ contract.
RTC denied Chung Fu’s Motion to Remand and approved Roblecor’s Motion for Confirmation of Award.
Chung Fu elevated the case to CA which denied the petition.

ISSUE: Whether or not the subject arbitration award is beyond the ambit of the court’s power of judicial
review

RULING: No. It’s stated explicitly under Art. 2044 of the Civil Code that the finality of the arbitrator’s award
is not absolute and without exceptions. Where the conditions described in Arts. 2038, 2039 and 2040 applicable
to both compromises and arbitrations are obtaining, the arbitrators’ award may be annulled or rescinded.
Additionally, Sections 24 and 25 of the Arbitration Law provide grounds for vacating, Modifying or rescinding
an arbitrator’s award. Even decisions of administrative agencies which are declared “final” by law are not
exempt from judicial review when so warranted SC finds that Chung Fu has amply made out a case where the
voluntary arbitrator failed to apply the terms and provisions of the Construction Agreement which forms part
of the law applicable as between the parties, thus committing a grave abuse of discretion. Furthermore, in
granting unjustified extra compensation to responded for several items, he exceeded his powers – all of which
would have constituted ground for vacating the award under Section 24(d) of the Arbitration Law
CHINA CHANG JIANG ENERGY CORP. vs ROSAL INFRASTRUCTURE BUILDERS
G.R. No. 125706
September 30, 1996

FACTS: China Chang is the operator of the Binga Hydroelectric Plant in Itogon, Benguet, which is under a
Rehabilitate Operate and Leaseback Contract with the National Power Corporation (NAPOCOR) and was
engaged in the rehabilitation of the power plant, including the construction of check dams.
On February 1994, petitioner China Chang engaged the services of Rosal Infrastructure Builders for the
construction of a Dam in Itogon, Benguet. In this contract, the parties agreed to submit disputes arising
therefrom to arbitration before the Arbitration of the International Chamber of Commerce.
When a dispute arose between the parties, Rosal filed a complaint before the Construction Industry Arbitration
Commission (CIAC) for arbitration. China Chang filed its answer with compulsory counterclaim and raised
therein the issue of lack of jurisdiction on the part of CIAC. In August 1995, the CIAC considered the question
of jurisdiction merely as a special defense which can be included as part of the issues of the Terms of Reference.
China Chang filed a motion for reconsideration which was denied by CIAC in October 1995.
China Chang raised the issue of lack of jurisdiction with the CA. In February 1996, the CA dismissed the
petition. China Chang filed a Motion for Reconsideration, but was denied by the CA. China Chang now
questions the validity of Construction Industry Arbitration Commission (CIAC) Resolution 3- 93 amending
Section 1, Article III of CIAC Rules of Procedure Governing Construction Arbitration promulgated by the
CIAC pursuant to its rule-making power granted under Section 21 of Executive Order No. 1008, which
pertinently provides as follows:
Article III Effect of the Agreement to Arbitrate Section 1. Submission to CIAC Jurisdiction – An
arbitration clause in a construction contract or a submission to arbitration of a construction dispute
shall be deemed an agreement to submit an existing or future controversy to the CIAC jurisdiction,
notwithstanding the reference to a different arbitral institution or arbitral body in such contract or
submission.
ISSUES: Whether or not the CIAC has acquired jurisdiction over the dispute.
RULING: YES. There is no restriction whatsoever on any party from submitting a dispute for arbitration to
an arbitral body other than the CIAC. On the contrary, the new rule, as amended merely implements the letter
and the spirit of its enabling law, E.O. No. 1008, which vests jurisdiction upon the CIAC:
Section 4: Jurisdiction - The CIAC shall have the original and exclusive jurisdiction over
disputes arising from, or connected with, contracts entered into by the parties involved in the
construction in the Philippines, whether the dispute arises before or after the completion of
the contracts, or after the abandonment or breach thereof. These disputes may involve
government or private contracts. For the Board to acquire jurisdiction, the parties to a dispute
must agree to submit the same to voluntary arbitration. (Emphasis supplied)
What the law merely requires for a particular construction contract to fall within the jurisdiction of
CIAC is for the parties to agree to submit the same to voluntary arbitration.
Now that Section 1, Article III, as amended, is submitted to test in the present petition, the Supreme
Court ruled to uphold its validity with full certainty.
HI-PRECISION STEEL CENTER, INC. vs. LIM KIM STEEL BUILDERS, INC.
G.R. No. 110434
December 13, 1993

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, however, when the date came, only
75.8674% of the project was actually completed. Petitioner attributed this non-completion to Steel Builders
which allegedly incurred delays both during the original contract and period of extension. On the other hand,
the Steel Builders 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. The said project was taken over and completed by Hi-
Precision.

Steel Builders requested for an adjudication with 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 then asks the court to set aside the award on the basis of misapprehension of facts.

Issue: Whether or not it was correct should set aside the ruling of the Arbitral Tribunal.

Ruling: No. The court said that it will not assist one or the other or even both parties in an effort to subvert
or defeat the objective for their private purposes and also, that it will not review the factual findings of an
arbitral tribunal upon the allegation that such body misapprehended facts. 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 hurtful to one party as to constitute a grave abuse of discretion resulting on lack or loss
of jurisdiction.
ABS-CBN BROADCASTING CORP. VS. WORLD INTERACTIVE NETWORK SYSTEMS
JAPAN CO., LTD.,
G.R. No. 169332
February 11, 2008

Facts: Petitioner ABS-CBN Broadcasting Corporation entered into a licensing agreement with respondent
World Interactive Network Systems (WINS) Japan Co., Ltd., a foreign corporation licensed under the laws of
Japan. Under the agreement, respondent was granted the exclusive license to distribute and sublicense the
distribution of the television service known as The Filipino Channel (TFC) in Japan.

A dispute arose between the parties when petitioner accused respondent of inserting nine episodes of WINS
WEEKLY into the TFC programming. Petitioner claimed that these were unauthorized insertions constituting
a material breach of their agreement.

The parties entered in to arbitration and the arbitrator found in favor of respondent. He held that petitioner
gave its approval to respondent for the airing of WINS WEEKLY as shown by a series of written exchanges
between the parties. He also ruled that, had there really been a material breach of the agreement, petitioner
should have terminated the same instead of sending a mere notice to terminate said agreement. The arbitrator
found that petitioner threatened to terminate the agreement due to its desire to compel respondent to re-
negotiate the terms thereof for higher fees. He further stated that even if respondent committed a breach of
the agreement, the same was seasonably cured. He then allowed respondent to recover temperate damages,
attorney's fees and one-half of the amount it paid as arbitrator's fee.

Petitioner filed in the CA a petition for review under Rule 43 of the Rules of Court or, in the alternative, a
petition for certiorari under Rule 65 of the same Rules, with application for temporary restraining order and
writ of preliminary injunction. It alleged serious errors of fact and law and/or grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of the arbitrator.

Issue: Whether or not an aggrieved party in a voluntary arbitration dispute may avail of, directly in the CA, a
petition for review under Rule 43 or a petition for certiorari under Rule 65 of the Rules of Court, instead of
filing a petition to vacate the award in the RTC when the grounds invoked to overturn the arbitrators decision
are other than those for a petition to vacate an arbitral award enumerated under RA 876.

Ruling: No. RA 876 itself mandates that it is the Court of First Instance, now the RTC, which has jurisdiction
over questions relating to arbitration, such as a petition to vacate an arbitral award. The law itself clearly provides
that the RTC must issue an order vacating an arbitral award only in any one of the . . . cases enumerated therein.
Under the legal maxim in statutory construction expressio unius est exclusio alterius, the explicit mention of
one thing in a statute means the elimination of others not specifically mentioned. As RA 876 did not expressly
provide for errors of fact and/or law and grave abuse of discretion (proper grounds for a petition for review
under Rule 43 and a petition for certiorari under Rule 65, respectively) as grounds for maintaining a petition to
vacate an arbitral award in the RTC, it necessarily follows that a party may not avail of the latter remedy on the
grounds of errors of fact and/or law or grave abuse of discretion to overturn an arbitral award.