1st Assignment

1. Tourism Infrastructure and Enterprise Zone Authority vs. Global-V Builders Co., GR No. 219708,
October 03, 2018 - ​Dyann
FACTS:`

Philippine Tourism Authority (PTA) entered into 5 Memoranda of Agreement (MOA) with respondent Global-V
Builders Co. (Global-V). The MOAs refer to construction of roads and drainage in the Boracay Isaland.

Global-V filed a Request for Arbitration​[9] and a Complaint​[10] before the Construction Industry Arbitration
Commission (CIAC), seeking payment from the Tourism Infrastructure and Enterprise Zone Authority (TIEZA),
the office that took over the functions of PTA, of unpaid bills in connection with the five projects, as well as
payment of interest, moral and exemplary damages, and attorney's fees.

TIEZA filed a Refusal of Arbitration (Motion to Dismiss for Lack of Jurisdiction). TIEZA argued that CIAC has
no jurisdiction over the case filed by Global-V because the Complaint does not allege an agreement to arbitrate
and the contracts do not contain an arbitration agreement in accordance with Sections 2.3 and 2.3.1​[13] of the
CIAC Revised Rules of Procedure Governing Construction Arbitration (CIAC Rules).

Global-V countered that R.A. No. 9184 vests on CIAC jurisdiction over disputes involving government
infrastructure projects like the projects in this case. Section 59 of R.A. No. 9184 provides that "​[a]ny and all
disputes arising from the implementation of a contract covered by this Act shall be submitted to arbitration in
the Philippines according to the provisions of Republic Act No. 876, otherwise known as the "Arbitration Law":
Provided, however, That, disputes that are within the competence of the Construction Industry Arbitration
Commission to resolve shall be referred thereto​."

Global-V asserted that the pertinent provisions of R.A. No. 9184 governing the subject infrastructure projects
are deemed part of the contracts entered into by the parties. It cited ​Guadines v. Sandiganbayan​,[15]
​ which held
that "[b]asic is the rule that provisions of existing laws and regulations are read into and form an integral part of
contracts, [more so] in the case of government contracts."

Arbitral Tribunal dismissed TIEZA's motion to dismiss for lack of merit, to wit:

Respondent [TIEZA] filed its Motion to Dismiss on the ground that the CIAC has no jurisdiction over the instant
case in the absence of an arbitration clause in the MOA between the parties.

Claimant asserts that the absence of an arbitration clause in the MOA does not deprive the CIAC of jurisdiction
in view of a provision in R.A. 9184.

It is Claimant's position that being provisions of law, are deemed part of the MOA between the parties and
therefore the requirement under Section 2.3 of CIAC Rules has been effectively met.

We rule in favor of the Claimant. The absence of an arbitration clause in the main body of the MOA is not fatal
to the case of the Claimant. Claimant has correctly pointed out that the above-cited provisions in R.A. 9184 are
deemed incorporated in the MOA. To rule otherwise would frustrate the intention of the law. In any case, the
applicable provisions of R.A. 9184 are found in "The General Conditions of Contract".

TIEZA filed a motion for reconsideration. The Arbitral Tribunal denied the motion, thus:
This Tribunal stands by its previous ruling that the provisions of Section 59 of R.A. No. 9184 are deemed
incorporated in the contract between the parties. There are several alternative modes of dispute resolution;
arbitration is one of them. This Tribunal['s] reading of the cited provisions of R.A. No. 9184 is that the parties
reduce their agreement in writing should they choose to resort to alternative modes of dispute resolution, other
than arbitration.

Arbitral Tribunal promulgated its Final Award​[32]​ in favor of Global-V.

TIEZA filed with the Court of Appeals a petition for review. It raised the issue that:

CIAC HAS NO JURISDICTION OVER THE CLAIM OF THE RESPONDENT.

Xxx

a.​ T
​ here was no agreement to arbitrate between the petitioner and the respondent.

b. ​Sec. 59 of R.A. No. 9184 does not ​ipso facto vest the CIAC with jurisdiction over disputes arising from the
construction contracts with the government, as it contains a condition that the parties 'incorporate the process
of arbitration in the contract.'

Court of Appeals granted the petition, nullified the Final Award of the Arbitral Tribunal and dismissed Global-V's
complaint on the ground that CIAC has no jurisdiction over the case under Section 4 of Executive Order (E.O.)
No. 1008, because the parties did not agree to submit to arbitration any and all of their disputes arising from
the construction contracts.

Global-V filed a motion for reconsideration, maintaining that CIAC has jurisdiction over the case.

In an Amended Decision, the Court of Appeals reversed and set aside its Decision and upheld the Final Award
of the Arbitral Tribunal.

Court of Appeals found that CIAC has jurisdiction over this case under Section 4​[37] of E.O. No. 1008, as the
parties agreed to submit their disputes arising from the construction contracts to voluntary arbitration. The
Court of Appeals explained:

Clause 20 of the General Conditions of Contract (GCC) which accompanied the memoranda of agreement
reads -

20. Resolution of Dispute

xxx

20.2 ​Any and all disputes arising from the implementation of this Contract covered by R.A. 9184 and its
IRR-A ​shall be submitted to arbitration in the Philippines according to the provisions of [R]epublic Act 9285,
otherwise known as the "Alternative Dispute Resolution Act 2004"; ​x x x

The agreement of the parties to submit their disputes arising from the implementation of the memoranda of
agreement to arbitration under RA 9285 is apparent from the aforementioned stipulation.

The mere presence of an arbitration clause in their contract is sufficient to clothe CIAC [with] the authority to
hear and decide the construction suit. On this score, WE cannot subscribe to TIEZA's claim that Section 59 of
RA 9184 does not ​ipso facto vest the CIAC with jurisdiction over disputes arising from construction contracts
with the government, as they contain a condition that the parties incorporate the process of arbitration in the
contract.

This was the ruling of the Supreme Court in ​Hutama-Rsea Joint Operations, Inc. v. Citra Metro Manila Tollways
Corp.

xxx

It bears to emphasize that the mere existence of an arbitration clause in the construction contract is considered
by law as an agreement by the parties to submit existing or future controversies between them to CIAC
jurisdiction, ​without any qualification or condition precedent.

Court of Appeals ruled that it is the stipulation of the parties to submit their construction dispute to arbitration
that determines whether CIAC could exercise jurisdiction over the case; such that, the failure of the
complainant to allege in the Complaint or Request for Arbitration such agreement will not deny CIAC of such
power conferred on it by law.

TIEZA's motion for reconsideration was denied by the Court of Appeals.

Hence, TIEZA filed this petition.

TIEZA’s contention:

TIEZA contends that the Court of Appeals erred in ruling that CIAC had jurisdiction over the dispute. It
maintains that the five MOAs between the parties do not contain an arbitration agreement as required by E.O.
No. 1008, R.A. No. 9184, and the CIAC Rules.

Although the Court of Appeals found that there was an agreement to arbitrate in Clause 20 of the General
Conditions of Contract, TIEZA contends that a suspensive condition for its effectivity is provided: ​that the
process of arbitration be incorporated in the MOAs.​ Hence, for the agreement to arbitrate to arise, the
suspensive condition - its incorporation in the MOA ​ must first be complied with. Since the suspensive
condition was not complied with, there is no effective arbitration clause present in this case. Hence, the dispute
cannot be considered to be within the jurisdiction of CIAC, and the arbitration should have not proceeded
pursuant to Section 4.3​[41]​ of the CIAC Rules.

ISSUE: Whether or not CA erred in ruling that CIAC has jurisdiction over the dispute?

RULING: NO.

E.O. No. 1008​[42] created the CIAC as an arbitral machinery to settle disputes in the construction industry
expeditiously in order to maintain and promote a healthy partnership between the government and the private
sector in the furtherance of national development goals. It was therein declared to be the policy of the State to
encourage the early and expeditious settlement of disputes in the Philippine construction industry. CIAC's
jurisdiction over disputes arising from construction contracts is contained in E.O. No. 1008.

In this case, the pertinent provisions of the CIAC Rules are as follows:

SECTION 2.1 ​Jurisdiction​. - The ​CIAC shall have original and exclusive jurisdiction over construction
disputes​, which arose from, or is connected with contracts entered into by parties involved in construction in
the Philippines whether the dispute arose before or after the completion of the contract, or after the
abandonment or breach thereof. These disputes may involve government or private contracts.
xxx

SECTION 2.3 ​Condition for exercise of jurisdiction.​ - ​For the CIAC to acquire jurisdiction, the parties to a
dispute must be bound by an arbitration agreement in their contract or subsequently agree to submit
the same to voluntary arbitration​.

xxx

SECTION 4.1 ​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 CIAC jurisdiction​, notwithstanding the reference to a different arbitration institution or
arbitral body in such contract or submission.

From the foregoing, it is evident that for CIAC to acquire jurisdiction over a construction controversy, the
parties to a dispute must be bound by an arbitration agreement in their contract or subsequently agree to
submit the same to voluntary arbitration, and that 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 CIAC's jurisdiction.

In this case, the Court of Appeals found that there was an agreement to arbitrate in the General Conditions of
Contract, particularly in Clause 20.2 thereof, which formed part of the

Undoubtedly, Clause 20.2 of the General Conditions of Contract is an arbitration clause that clearly provides
that all disputes arising from the implementation of the contract ​covered by R.A. No. 9184 shall be submitted to
arbitration in the Philippines. In accordance with Section 4.1 of the CIAC Rules, the existence of the arbitration
clause in the General Conditions of Contract that formed part of the said MOAs shall be deemed an agreement
of the parties to submit existing or future controversies to CIAC's jurisdiction. Since CIAC's jurisdiction 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.​[44] Hence, the fact that the process of
arbitration was not incorporated in the contract by the parties is of no moment. Moreover, the contracts in this
case are expressly covered by R.A. No. 9184 (The Government Procurement Reform Act), which provides
under Section 59​[45] thereof that all disputes arising from the implementation of a contract covered by it shall be
submitted to arbitration in the Philippines, and disputes that are within the competence of CIAC to resolve shall
be referred thereto.

As CIAC's jurisdiction over the disputes arising from the said MOAs is conferred by E.O. No. 1008 and R.A.
No. 9184, the process of arbitration questioned to not have been incorporated in the contracts could then only
refer to the process of arbitration by CIAC, as provided in the CIAC Rules. Therefore, there is no vagueness in
the process of arbitration to follow even if it was not incorporated as a provision in the contracts.

By virtue of R.A. No. 9184, which is the law that authorized the negotiated procurement of the construction
contracts entered into by the parties, CIAC is vested with jurisdiction over the dispute. Applicable laws form
part of, and are read into contracts;​[46] hence, the provision on settlement of disputes by arbitration under
Section 59 of R.A. No. 9184 formed part of the MOAs in this case.

2. Dale Strickland vs. Punongbayan & Araullo, GR No. 193782, 210695 – ​Emman

FACTS:
Consolidated petitions for review on certiorari were filed by petitioner Dale Strickland (Strickland): (1) G.R. No.
193782 is against respondent Ernst & Young LLP (EYLLP) assailing the Decision dated June 17, 2010 of the
Court of Appeals (CA) in CA-G.R. SP No. 102805 which annulled and set aside the Orders of the Regional
Trial Court, Branch 150, Makati City, ordered EYLLP to be dropped as defendant in Civil Case No. 05-692, and
referred the dispute between Strickland and EYLLP to arbitration; and (2) G.R. No. 210695, which is against
respondent Punongbayan & Araullo (PA), and assails the Decision dated August 5, 2013 of the CA in CA-G.R.
SP No. 120897 which declared null and void the Orders of the RTC and directed it to suspend proceedings in
the same Civil Case No. 05-692.

Civil Case No. 05-692 is a complaint filed by Strickland against, among others, respondents PA and EYLLP
praying for collection of sum of money.

On March 26, 2002, National Home Mortgage Finance Corporation (NHMFC) and PA entered into a Financial
Advisory Services Agreement (FASA) for the liquidation of the NHMFC's Unified Home Lending Program
(UHLP). At the time of the engagement, PA was the Philippine member of respondent global company, EYLLP.
In the March 26, 2002 letter of PA to NHMFC confirming their engagement as exclusive Financial Advisor for
the UHLP Project, PA is designated as P&A/Ernst & Young.

During this period, Strickland was a partner of EYLLP seconded to respondent Ernst & Young Asia Pacific
Financial Solutions (EYAPFS), who was listed in the FASA as member of the Engagement Team.
Significantly, Strickland played a role in negotiating the FASA between PA and NHMFC. In a letter dated April
15, 2002, PA wrote Strickland to formalize the working relationship between PA/EYLLP and EY/APFS for the
FASA with NHMFC.

By June 6, 2002, EYLLP wrote PA of the termination of its membership in EYLLP. Despite the termination, the
working relationship among the parties continued. In an assignment letter dated November 15, 2002, EYLLP
confirmed Strickland's assignment to Manila as a partner and summarized the working arrangement.

In July 2004, the transactional relationship between the parties went awry. In an exchange of letters, notice
was given to NHMFC of PA's intention to remove Strickland from the NHMFC Engagement Team as a result of
Strickland's resignation from EYLLP and/or EYAPFS effective on July 2, 2004.

Responding to NHMFC's concerns on the removal of Strickland from the UHLP Project and his replacement by
Mark Grinis (Grinis), EYAPFS' Managing Director, EYLLP reiterated Grinis' qualifications and affirmed its team
of professionals' dedication of "all the time necessary to close this transaction and to make NHMFC [their
team's, headed by Grinis,] first priority."

Since NHMFC was intent on retaining Strickland's services despite his separation from EYLLP and/or
EYAPFS, the parties entered into negotiations to define Strickland's possible continued participation in the
UHLP Project. PA, NHMFC, and Strickland exchanged letters containing proposed amendments to cover the
new engagement and Strickland's participation within the UHLP Project. No actual written and final agreement
among the parties amending the original engagement letter of March 26, 2002 materialized. On August 20,
2004, PA wrote a letter, signed by its President/Chairman & CEO, Benjamin R. Punongbayan, to NHMFC to
initiate discussions on a "mutual voluntary termination of the NHMFC Agreement." On November 18, 2003, PA
and NHMFC executed an addendum to the March 26, 2002 original engagement letter covering additional
terms of the financial advisory services. Subsequently, conflict on Strickland's actual participation and
concurrent designation on the project arose among PA, NHMFC, and Strickland as reflected in the proposed
revisions to the "Draft Financial Advisory Services" initially prepared by PA. PA objected to Strickland's
proposed amendments, specifically on the terms of compensation, which now contemplated PA's engagement
of Strickland as subcontractor for the closing of the UHLP Project.

By May 23, 2005, counsel for Strickland wrote PA asking for "equitable compensation for professional
services" rendered to NHMFC on the UHLP Project from the time of his separation from EYLLP and/or
EYAPFS in July 2004 "up and through the recent Signing and Closing Ceremony held on 22 April 2004 and his
continued provision of services as the final closing approaches."

On June 2, 2005, counsel for PA responded, categorically denying any contractual relationship with Strickland
and his assertion that he effectively substituted EYLLP and/or EYAPFS for the portion of the work he carried
out in the UHLP Project. Thus, [Strickland] filed a Complaint, dated May 17, 2005, which included [EYAPFS],
[PA] and NHMFC among the defendants, seeking P18 million as equitable compensation for services
rendered.

Subsequent to the complaint, [EYLLP and/or EYAPFS] filed a "Motion to Refer to Arbitration," dated February
27, 2006. In the meantime, x x x Strickland filed an Amended Complaint, dated June 29, 2006, adding more
causes of action and including Strickland's replacement Mark Grinis as a party defendant while deleting
several defendants but retaining [EYLLP and/or EYAPFSJ, NHMFC and [PA].The trial court admitted the
Amended Complaint in its Order, dated December 6, 2006. Subsequently, it also issued an Order, dated
January 2, 2007, denying [EYAPFS'] Motion To Refer to Arbitration.

EYLLP and/or EYAPFS] sought reconsideration of the aforequoted Order, which was also denied by the trial
court, prompting it to file a Petition for Certiorari before this Court, docketed as CA-G.R. SP No. 102805. The
same was resolved by the Seventh Division in a Decision, dated June 17, 2010, annulling the ruling of the trial
court. Pursuant to the said ruling, x x x [PA] filed a Motion to Suspend with Motion to Reset Pre-Trial
Conference on the ground that any settlement during the arbitration between [EYLLP] and Strickland may
cause prejudice to [PA] ifthe trial court proceedings are continued as Strickland's cause of action against [PA]
was merely incidental to that against [EYLLP]. [PA's] Motion, however, was denied in the first assailed Order,
dated March 11, 2011.

PA filed a motion for reconsideration which the RTC denied in its May 19, 2011 Order. Thus, PA filed a petition
for certiorari before the CA docketed as CA-G.R. SP No. 120897, alleging grave abuse of discretion in the
RTC's Orders denying its motion to suspend proceedings. As adverted to, the CA annulled the March 11 and
May 19, 2011 Orders. Hence, these consolidated petitions filed by Strickland.

ISSUE:

Whether the CA erred in referring the dispute (G.R. 193782) to arbitration and its modification and suspension
of another civil case (G.R. 210695) due to the aforementioned arbitration.

RULING:

No. Plainly, considering that the arbitration clause is in itself a contract, the setting forth of its provisions in
EYLLP's answer and in its motion to refer to arbitration, coupled with the actual submission by EYLLP of the
Partnership Agreement, complies with the requirements of Section 7, Rule 8 of the Rules of Court which
Strickland should have specifically denied.
Thus, we agree with the CA's ruling on the nature of the contract between Strickland and EYLLP, and its
application of our commercial arbitration laws to this case.

The following factors further militate against Strickland's insistence on Philippine courts to primarily adjudicate
his claims of tortious conduct, and not commercial arbitration, as stipulated in the Partnership Agreement:

1. From his complaint and amended complaint, Strickland's causes of action against EYLLP and PA hinge
primarily on contract, i.e., the Partnership Agreement, and the resulting transactions and working relationship
among the parties, where Strickland seeks to be paid.

2. The Partnership Agreement is bolstered by the assignment letter of EYLLP to Strickland confirming his
assignment to Manila as partner and which assignment letter contains a choice of law provision

3. The allegations in Strickland's complaint, specifically his narration of facts, admit that the entire controversy
stems from his working relationship with EYLLP as a partner.

Strickland's causes of action against all the defendants are intricately intertwined such that the separate
causes of action against PA and the other impleaded defendants cannot independently proceed from the
arbitration between Strickland and EYLLP Strickland's allegations in both the complaint and amended
complaint are undoubtedly hinged, and unavoidably linked, to his former contractual relationship with EYLLP to
which the present controversy among all the parties can be traced.

The designation in Strickland's amended complaint of "Additional Cause of Action Against [respondent
EYLLP]" further demonstrates that the totality of his causes of action are actually anchored on the
disintegration of his working relationship with EYLLP whom he faults for his failure to receive compensation
from the other defendants.

The following circumstances underscore the high probability of an expeditious resolution of the conflict with the
referral to arbitration of the dispute between EYLLP and Strickland and the succeeding suspension of the
proceedings before the RTC in Civil Case No. 05-692:

1. As previously stated, these cases comprise of a foreign element, involving foreign parties and international
transactions. While the parties have not questioned the jurisdiction of our courts, the RTC may still refuse to
assume jurisdiction.

2. As previously discussed, the causes of action cited by Strickland in his complaint (and amended complaint)
all undoubtedly relate to his Partnership Agreement with EYLLP which is subject to arbitration. This very same
Partnership Agreement is even reiterated in the November 15, 2002 Assignment Letter assigning Strickland to
Manila.

3. Strickland himself admits that as Partner of EYLLP, he was assigned to various parts of Asia. He has also
not denied that he was seconded to EYAPFS because of certain tax consequences of his different
assignments. In fact, in his additional cause of action against EYLLP, Strickland alleged, among others, that
EYLLP did not pay his correct taxes making him liable for these. Evidently, the real dispute between Strickland
and EYLLP falls within its Partnership Agreement involving its own choice of law provision.

Notes:
A contract is required for arbitration to take place and to be binding. Submission to arbitration is a contract and
a clause in a contract providing that all matters in dispute between the parties shall be referred to arbitration is
a contract. The provision to submit to arbitration any dispute arising therefrom and the relationship of the
parties is part of the contract and is itself a contract.

We have consistently affirmed that commercial relationships covered by our arbitration laws are purely private
and contractual in nature. Article 1306 of the Civil Code provides for autonomy of contracts where the parties
are free to stipulate on such terms and conditions except for those which go against law, morals, and public
policy. In our jurisdiction, commercial arbitration is a purely private system of adjudication facilitated by private
citizens which we have consistently recognized as valid, binding, and enforceable.

3. Federal Builders, Inc. vs. Power Factors, Inc., GR No. 211504 – ​Larn

Doctrine: ​An agreement to submit to voluntary arbitration for purposes of vesting jurisdiction over a
construction dispute in the Construction Industry Arbitration Commission (CIAC) need not be contained in the
construction contract, or be signed by the parties. It is enough that the agreement be in writing.

Facts​: Federal was the general contractor of the Bullion Mall under a construction agreement with Bullion
Investment and Development Corporation. ​Federal engaged respondent Power Factors Inc. (Power) as its
subcontractor​ for the electric works at the Bullion Mall and the Precinct Building for ₱18,000,000.00.

Power sent a demand letter to Federal claiming the unpaid amount of ₱11,444,658.97 for work done by
Power for the Bullion Mall and the Precinct Building. Federal replied that its outstanding balance under the
original contract only amounted to ₱1,641,513.94

Power filed a request for arbitration in the Construction Industry Arbitration Commission​ (​CIAC)
invoking the arbitration clause of the Contract of Service.

Atty. Vivencio Albano, the counsel of Federal, submitted a letter to the CIAC manifesting that Federal
agreed to arbitration.

Atty. Albano filed his withdrawal of appearance stating that Federal had meanwhile engaged another
counsel.

Federal, represented by new counsel, moved to dismiss the case on the ground that CIAC had no
jurisdiction over the case inasmuch as the Contract of Service between Federal and Power had been a mere
draft that was never finalized or signed by the parties. Federal contended that in the absence of the agreement
for arbitration, the CIAC had no jurisdiction to hear and decide the case

CIAC issued an order setting the case for hearing, and directing that Federal's motion to dismiss be
resolved after the reception of evidence of the parties

Federal did not thereafter participate in the proceedings until the CIAC rendered the Final Award in
which Federal Builders, Inc. is ordered to pay claimant Power Factors, Inc. ₱9,369,238.87

Federal appealed the award to the CA but CA affirmed with modification the CIAC's decision.

Main issue​: WON the CIAC had jurisdiction over the dispute
Ruling: YES.​ The parties had an effective agreement to submit to voluntary arbitration; hence, the CIAC had
jurisdiction.

The need to establish a proper arbitral machinery to settle disputes expeditiously was recognized by
the Government in order to promote and maintain the development of the country's construction industry. With
such recognition came the creation of the CIAC through E.O. No. 1008, also known as ​The Construction
​ ection 4 of E.O. No. 1008 provides:
Industry Arbitration Law. S

“Sec. 4. ​Jurisdiction. ​- The CIAC shall have original and exclusive jurisdiction over ​disputes
arising from, or connected with, contracts entered into by parties involved in construction in the
Philippines, whether the dispute arises before or after the completion of the contract, 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​”

Under the CIAC ​Revised Rules of Procedure Governing Construction Arbitration (​ CIAC ​Revised Rules)​ ,
all that is required for the CIAC to acquire jurisdiction is for the parties of any construction contract to
agree to submit their dispute to arbitration.

The ​liberal application of procedural rules​ as to the form by which the agreement is embodied is the
objective of the CIAC ​Revised Rules. ​Such liberality conforms to the letter and spirit of E.O. No. 1008 itself
which emphasizes that the modes of voluntary dispute resolution like arbitration are always preferred because
they settle disputes in a speedy and amicable manner. They likewise help in alleviating or unclogging the
judicial dockets. Verily, E.O. No. 1008 recognizes that the expeditious resolution of construction disputes will
promote a healthy partnership between the Government and the private sector as well as aid in the continuous
growth of the country considering that the construction industry provides employment to a large segment of the
national labor force aside from its being a leading contributor to the gross national product.

Worthy to note is that ​the jurisdiction of the CIAC is over the dispute, not over the contract
between the parties. Accordingly, the execution of the contracts and the effect of the agreement to submit to
arbitration are different matters, and the signing or non-signing of one does not necessarily affect the other. In
other words, ​the formalities of the contract have nothing to do with the jurisdiction of the CIAC​.

The ​agreement contemplated​ in the CIAC R ​ evised Rules t​ o vest jurisdiction of the CIAC over the
parties' dispute ​is not necessarily an arbitration clause to be contained only in a signed and finalized
construction contract​. ​The agreement could also be in a separate agreement, or any other form of
written communication, as long as their ​intent​ to submit their dispute to arbitration is clear​. The fact
that a contract was signed by both parties has nothing to do with the jurisdiction of the CIAC.

Although the agreement to submit to arbitration has been expressly required to be in writing and signed
by the parties therein by Section 4 of Republic Act No. 876 ​(Arbitration Law), t​ he requirement is conspicuously
absent from the CIAC ​Revised Rules, ​which even expressly allows such agreement not to be signed by the
parties therein. Brushing aside the obvious contractual agreement in this case warranting the submission to
arbitration is surely a step backward.​25​ Consistent with the policy of encouraging alternative dispute resolution
methods, therefore, ​any doubt should be resolved in favor of arbitration​.26​ ​ In this connection, the CA
correctly observed that the act of Atty. Albano in manifesting that Federal had agreed to the form of arbitration
was unnecessary and inconsequential considering the recognition of the value of the Contract of Service
despite its being an unsigned draft.
Issue 2​: WON there was no mutual consent and no meeting of the minds between Federal and Power as to
the operation and binding effect of the arbitration clause because they had rejected the draft service contract

Ruling 2: NO​, there was mutual consent and meeting of the minds as to the operation and binding effect of the
arbitration clause.

The contention of Federal deserves no consideration.

Pursuant to Article 1356 and Article 1357 of the ​Civil Code, c​ ontracts shall be obligatory in whatever
form they may have been entered into, provided that all the essential requisites for their validity are present.
Indeed, there was a contract between Federal and Power even if the Contract of Service was unsigned. Such
contract was obligatory and binding between them by virtue of all the essential elements for a valid contract
being present.

It clearly appears that the works promised to be done by Power were already executed albeit still
incomplete; that Federal paid Power ₱1,000,000.00 representing the originally proposed downpayment, and
the latter accepted the payment; and that the subject of their dispute concerned only the amounts still due to
Power. The records further show that Federal admitted having drafted the Contract of Services containing the
following clause on submission to arbitration, to wit:

“15. ARBITRATION COMMITTEE -All disputes, controversies or differences, which may arise
between the Parties herein, out of or in relation to or in connection with this Agreement, or for
breach thereof shall be settled by the Construction Industry Arbitration Commission (CIAC)
which shall have original and exclusive jurisdiction over the aforementioned disputes.”

With the parties having no issues on the provisions or parts of the Contract of Service other than that
pertaining to the downpayment that Federal was supposed to pay, Federal could not validly insist on the lack of
a contract in order to defeat the jurisdiction of the CIAC. As earlier pointed out, the CIAC ​Revised Rules
specifically allows any written mode of communication to show the parties' intent or agreement to submit to
arbitration their present or future disputes arising from or connected with their contract.

The CIAC and the CA both found that the ​parties had disagreed on the amount of the
downpayment​. On its part, Power indicated after receiving and reviewing the draft of the Contract of Service
that it wanted 30% as the downpayment. Even so, Power did not modify anything else in the draft, and
returned the draft to Federal after signing it. It was Federal that did not sign the draft because it was not
amenable to the amount as modified by Power. ​It is notable that the arbitration clause written in the draft
of Federal was unchallenged by the parties until their dispute arose.

Moreover, Federal asserted the original contract to support its claim against Power. If Federal would
insist that the remaining amount due to Power was only ₱1,641,513.94 based on the original contract, it was
really inconsistent for Federal to rely on the draft when it is beneficial to its side, and to reject its efficacy and
existence just to relieve itself from the CIAC's unfavorable decision.

Notes​: Section 2.3 of the CIAC ​Revised Rules s​ tates that the agreement may be reflected in an arbitration
clause in their contract or by subsequently agreeing to submit their dispute to voluntary arbitration. ​The CIAC
Revised Rules ​clarifies​, however,​ that the agreement of the parties to submit their dispute to arbitration
need not be signed or be formally agreed upon in the contract because it can also be in the form of
other modes of communication in writing.

RULE 4 - EFFECT OF AGREEMENT TO ARBITRATE

SECTION 4.1. 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 CIAC jurisdiction, notwithstanding the reference to a different
arbitration institution or arbitral body in such contract or submission.

4.1.1 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.

4.1.2 An arbitration agreement or a submission to arbitration shall be in writing, but it need not
be signed by the parties, as long as the intent is clear that the parties agree to submit a present
or future controversy arising from a construction contract to arbitration. It may be in the form of
exchange of letters sent by post or by telefax, telexes, telegrams, electronic mail or any other
mode of communication

4. Steamship Mutual Underwriting Association(Bermuda) Limited vs. Sulpicio Lines, Inc., GR No.
196072, 208603 – ​Monique
FACTS: ​Sulpicio Lines insured one of its inter-island vessels, MV Princess of the World, with Steamship, a
Bermuda based Protection and Indemnity Club, under a ​Certificate of Entry and Acceptance​. M/V Princess
of the World was gutted by fire resulting in total loss of its cargoes. Sulpicio claimed indemnity from Steamship
which it denied and subsequently rescinded the insurance coverage of Sulpicio’s other vessels.

Sulpicio filed a Complaint docketed as ​Civil Case No. 07-577 with the RTC. ​Steamship filed its Motion to
Dismiss and/or to ​Refer Case to Arbitration pursuant to R.A. No. 9285, or ADR Law and to ​Rule 47 of the
2005/2006 Club Rules providing for arbitration in London of disputes between Steamship and its
members which is incorporated in the Certificate of Entry and Acceptance​; the motion was denied
because arbitration does not appear to be the most prudent Action considering that the other defendants
already filed their respective answers.

Steamship filed a petition for certiorari under Rule 65 with the CA which was dismissed ruling that there was
no grave abuse of discretion on the part of the trial court in denying the Motion to Dismiss and/or to Refer
Case to Arbitration or ​any convincing evidence to show that a valid arbitration agreement existed
between the parties​. The CA also ruled that the arbitration agreement in the 2005/2006 Club Rules is not
valid because it was not signed by the parties.

Steamship filed before this Court this Petition for Review, docketed as ​G.R. No. 196072.

Meanwhile, Sulpicio filed with this Court a Petition for Indirect Contempt against Steamship docketed as ​G.R.
No. 208603​. It alleges that it settled its judgment liability of P4,121,600.00 or US$96,958.47 in Civil Case No.
CEB-24783, entitled ​Verna Unabia v. Sulpicio Lines, ​Inc. However, the actual amount reimbursed by
Steamship was only US$27,387.48. Steamship deducted US$69,570.99 representing Sulpicio’s share in the
arbitration costs for the arbitration in London of the dispute in ​Civil Case No. 07-577. ​Sulpicio alleges that
Steamship’s act of initiating the arbitration proceeding in London without its knowledge and consent during the
pendency of the case is contumacious.

The court has now consolidated ​G.R. No. 196072 and​ ​G.R. No. 208603.

Steamship contends that the arbitration agreement set forth in its Club Rules, incorporated by reference in
the Certificate of Entry and Acceptance is valid and binding upon Sulpicio; that Sulpicio was furnished with
copies of the Club Rules on an annual basis and since Sulpicio has been its member for almost 20 years, it is
aware of the terms of the Club Rules and is estopped to deny knowledge.

Sulpicio counters that the arbitration clause in the Club Rules is not valid and binding for failure to comply
with Section 4 of the ADR Law, which requires that an arbitration agreement be in writing and subscribed by
the parties or their lawful agent and that it never received a copy of the Club Rules.

ISSUE #1: ​Is there a valid arbitration agreement between Sulpicio and Steamship?

RULING: YES. ​By entering its vessels in Steamship, Sulpicio not only obtains insurance coverage for its
vessels but also becomes a member of Steamship. A protection and indemnity club, like Steamship, is an
association composed of shipowners generally formed for the specific purpose of providing insurance cover
against third-party liabilities of its members.

A shipowner wishing to enter its fleet of vessels to Steamship must fill in an application for entry form, which
states:

PLEASE ENTER IN THE ASSOCIATION, ​SUBJECT TO THE RULES​, ​RECEIPT OF WHICH WE

ACKNOWLEDGE​, ​THE UNDERMENTIONED VESSEL(S).

The ​application form is signed by the shipowner or its authorized representative. Steamship then issues a
Certificate of Entry and Acceptance of the vessels, showing its acceptance of the entry. Thus, a contract of
insurance is perfected between the parties upon Steamship’s issuance of the Certificate of Entry and
Acceptance.

The Certificate of Entry and Acceptance plainly provides that the Class 1 protection and indemnity coverage
would be to the extent specified and in accordance with the Act, the By-Laws, and ​the Rules of the Club in
force at the time of the coverage​. The “Notes” in the bottom portion of the Certificate states that these ​Rules
“are printed annually in book form” and disseminated to all members. ​M/V Princess of the World was
insured from February 20, 2005 to February 20, 2006. Hence, the 2005/2006 Club Rules apply.

Sulpicio’s acceptance of the Certificate of Entry and Acceptance manifests its acquiescence to all its
provisions. Its acceptance, likewise, operated as an acceptance of the entire provisions of the Club
Rules.

The Certificate of Entry and Acceptance does not contain the details of the insurance coverage. A person
would have to refer to the Club Rules to have a complete understanding of the contract between the parties.

The arbitration clause is found in Rule 47 of the 2005/2006 Club Rules under which any dispute concerning the
insurance afforded by Steamship must first be brought by a claiming member to the Directors for adjudication.
If this member disagrees with the decision of the Director, the dispute must be referred to arbitration in London.
Despite the member’s disagreement, the Managers of Steamship may refer the dispute to arbitration without
adjudication of the Directors. This procedure must be complied with before the member can pursue legal
proceedings against Steamship.

There is no ambiguity in the terms and clauses of the Certificate of Entry Acceptance. The incorporation of the
Club Rules in the insurance policy is without any qualification. This includes the clause even if not particularly
stipulated. A basic rule in construction is that the entire contract, and each and all of its parts, must be read
together and given effect, with all its clauses and provisions harmonized with one another.

ISSUE #2: ​Is the arbitration agreement still valid even if not in writing and signed by the parties pursuant to the
ADR law?

RULING: YES. ​In domestic arbitration, the formal requirements of an arbitration agreement are that it must “be
in writing and subscribed by the party sought to be charged, or by his lawful agent.​” In international
commercial arbitration, it is likewise required that the arbitration agreement must be ​in writing.

An arbitration agreement is in writing if it is contained (1) in a document signed by the parties, (2) in an
exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the
agreement, or (3) in an exchange of statements of claim and defense in which the existence of an agreement
is alleged by a party and not denied by another.

The reference in a contract to a document containing an arbitration clause constitutes an arbitration

agreement ​provided that the contract is in writing and the reference is such as to make that clause part
of the contract.

In ​BF Corp. v. Court of Appeals,​ it was held that:

A contract may be encompassed in several instruments even though every instrument is not
signed by the parties, since it is sufficient if the unsigned instruments are clearly identified or
referred to and made part of the signed instrument or instruments​. Similarly, a written ​agreement
of which there are two copies, one signed by each of the ​parties, is binding on both to the same extent
as though there had​ ​been only one copy of the agreement and both had signed it.

Thus, an arbitration agreement that was not embodied in the main agreement but set forth in another
document is binding upon the parties, where the document was incorporated by reference to the main
agreement. The arbitration agreement contained in the Club Rules, which in turn was referred to in the
Certificate of Entry and Acceptance, is binding upon Sulpicio even though there was no specific stipulation on
dispute resolution in this Certificate. Furthermore, as stated earlier, Sulpicio became a member of Steamship
by the very act of making a contract of insurance with it.

Sulpicio’s agreement to abide by Steamship’s Club Rules, including its arbitration clause, can be reasonably
inferred from its submission of an application for entry of its vessels to Steamship “subject to the Rules, receipt
of which we acknowledge.” In this case, by its act of entering its fleet of vessels to Steamship and accepting
without objection the Certificate of Entry and Acceptance covering its vessels, Sulpicio manifests its consent to
be bound by the Club Rules.

ISSUE #3 (factual issue): ​Is Sulpicio estopped from denying knowledge of the Club Rules?
RULING: YES. Sulpicio cannot feign ignorance of the arbitration clause since it was already charged with
notice of the Club Rules due to an appropriate reference to it in the Certificate of Entry and Acceptance.
Assuming its contentions were true that it was not furnished a copy of the 2005/2006 Club Rules, by the
exercise of ordinary diligence, it could have easily obtained a copy of them from Pioneer Insurance or
Seaboard-Eastern.

In any case, Sulpicio’s bare denials cannot succeed in light of the preponderance of evidence submitted by
Steamship.

The affidavits and the attached supporting documents submitted in evidence consistently declared that Sulpicio
was given copies of the Rulebook on an annual basis and had even invoked its provisions in making a claim
from Steamship​. Sulpicio’s previous letters to Steamship referring to provisions of the Club Rules show
its knowledge. Sulpicio was also reminded of the arbitration clause during the negotiations preceding the
institution of the present case. “A party is not relieved of the duty to exercise the ordinary care and prudence
that would be exacted in relation to other contracts. The conformity of the insured to the terms of the policy is
implied from [its] failure to express any disagreement with what is provided for. The agreement to submit all
disputes to arbitration is a longstanding provision in the Club Rules. ​It was incumbent upon Sulpicio to
familiarize itself with the Club Rules, under the presumption that a person takes due care of its
concerns. Being a member of Steamship for 20 years,182 it has been bound by its Rules and has been
expected to abide by them in good faith.

Sulpicio is estopped from denying knowledge of the Rulebook by its own acts and representations, as
evidenced by its various letters to Steamship, showing its familiarity with the Rulebook and its provisions.

Hence, this Court finds a preponderance of evidence showing that Sulpicio was given a copy and had
knowledge of the 2005/2006 Club Rules. Moreover, the 2005/2006 Club
Rules’ provision on arbitration is valid and binding upon Sulpicio.

ISSUE #4: ​Did the RTC act in excess of its jurisdiction in denying the Motion to Dismiss/ Refer the Case to
arbitration filed by Steamship?

RULING: YES. ​The Regional Trial Court should suspend proceedings to give way to arbitration. Even if there
are other defendants who are not parties to the arbitration agreement ​(note: because some already filed
their answers in the Civil Case),​ arbitration is still proper.

Republic Act No. 9285 was approved on April 2, 2004 and was the controlling law at the time the original and
amended complaints were filed. Section 25 of Republic Act No. 9285 is explicit that:

[W]here action is commenced by or against multiple parties, one or more of whom are parties to an
arbitration agreement​, the court shall refer to arbitration those parties who are bound by the
arbitration agreement although the civil action may continue as to those who are not bound by
such arbitration agreement.

Rule 4.7 of the Special Rules on Alternative Dispute Resolution187 (2009 Special ADR Rules) further
expresses:
 The court shall not decline to refer some or all of the parties to arbitration for any of the following
reasons: x x x b. Not all of the parties to the civil action are bound by the arbitration agreement and
referral to arbitration would result in multiplicity of suits; x x x

The present rule on multiple parties manifests due regard to the policy of the law in favor of arbitration. In light
of the express mandate of Republic Act No. 9285 and
the subsequent 2009 Special ADR Rules

Where a motion is filed in court for the referral of a dispute to arbitration, Section 24 of Republic Act No. 9285
ordains that the dispute shall be referred, to arbitration unless it finds that the arbitration agreement is null and
void, inoperative or incapable of being performed. Thus, the Regional Trial Court went beyond its authority of
determining only the issue of whether or not there was a valid arbitration agreement between the parties when
it denied Steamship’s Motion to Dismiss and/or to Refer Case to Arbitration solely on the ground that it would
not be the most prudent action under the
circumstances of the case. The Regional Trial Court went against the express mandate of Republic Act No.
9285. Consequently, the Court of Appeals erred in finding no grave abuse of discretion on the part of the trial
court in denying referral to arbitration.

ISSUE #5: ​Does Steamship’s act of initiating arbitration proceedings without waiting for resolution on its
“Motion to Dismiss/ Refer the case to arbitration” constitute contempt of court?

RULING: NO. Steamship’s commencement of arbitration even before the Regional Trial Court had ruled on its
motion to dismiss and suspend proceedings does not constitute an “improper conduct” that “impede[s],
obstruct[s] or degrade[s] the administration of justice.”

In ​Heirs of Trinidad de Leon Vda. de Roxas v. Court of Appeals​,210 this Court explained the concept of
contempt of​ ​court:
Contempt of court is a defiance of the authority, justice or dignity of the court; such conduct as tends to
bring the authority and administration of the law into disrespect or to interfere with or prejudice parties
litigant or their witnesses during litigation . . .

Contempt of court is defined as a disobedience to the Court by acting in opposition to its authority,
justice and dignity. It signifies not only a willful disregard or disobedience of the court’s orders, but such
conduct as tends to bring the authority of the court and the administration of law into disrepute or in
some manner to impede the due administration of justice . . .
This Court has thus repeatedly declared that the power to punish for contempt is inherent in all courts
and is essential to the preservation of order in judicial proceedings and to the enforcement of
judgments, orders, and mandates of the court, and consequently, to the due administration of justice.

The court’s contempt power should be exercised with restraint and for a preservative, and not a vindictive,
purpose. “Only in cases of clear and contumacious refusal to obey should the power be exercised.” This Court
finds no clear and contumacious conduct on the part of Steamship. It does not appear that Steamship was
motivated by bad faith in initiating the arbitration proceedings. Rather, its act of commencing arbitration in
​ ttempt to preserve and enforce its rights under the Club Rules. There was no legal
London is but a ​bona fide a
impediment at the time Steamship initiated London arbitration proceedings.
6. Metro Rail Transit Development Corporation vs. Gammon Philippines, Inc., GR No. 200401 – ​Jeck

Facts: This case involves MRTs MRT-3 North Triangle Description Project (Project), covering 54 hectares of
land, out of which 16 hectares were allotted for a commercial center. Half of the commercial center would be
used for a podium structure (Podium), which was meant to provide the structure for the Projectss Leasable
Retail Development and to serve as the maintenance depot of the rail transit system.

Parsons Interpro JV (Parsons) was the Management Team authorized to oversee the constructions execution
Gammon received from Parsons an invitation to bid for the complete concrete works of the Podium. The scope
of the work involved supplying the necessary materials, labor, plants, tools, equipment, facilities, supervision,
and services for the construction.

Gammon won the bid and Parsons issued 3 notice of awards and notice to proceed.

On April 22, 1998, Parsons wrote Gammon, stating that “since the building ha[d] been revised . . . structural
changes [would] be needed and quantities may change.” Which gammon readily agreed.

Gammon received from Parsons the Contract for the Construction and Development of the Superstructure,
MRT-3 North Triangle · Amended Notice to Proceed dated June 10, 1998 (Fourth Notice to Proceed)

The terms of the Fourth Notice to Proceed were different from those of the First and the Third Notices to
Proceed. The Fourth Notice to Proceed also expressly cancelled the First and Third Notices to Proceed.

Gammon qualifiedly accepted the Fourth Notice to Proceed. MRT treated Gammons qualified acceptance as a
new offer. MRT rejected Gammons qualified acceptance and informed Gammon that the contract would be
awarded instead to Filsystems if Gammon would not accept the Fourth Notice to Proceed within five (5) days.

Gammon wrote to MRT, acknowledging the latters intent to grant the Fourth Notice to Proceed to another party
despite having granted the First Notice to Proceed to Gammon. Thus, it notified MRT of its claims for
reimbursement for costs, losses, charges, damages, and expenses it had incurred due to the rapid mobilization
program in response to MRTs additional work instructions.

MRT expressed its disagreement with Gammon and its amenability to discussing claims for reimbursement.

MRT agreed to reimbursing gammon but only to the amount of 5% of its total claim Gammon informed MRT
that its offer was not enough and wrote several communications to MRT to follow up on its evaluation request.
Gammon filed a Notice of Claim before CIAC against MRT. CIAC issued an Order directing MRT to file its
Answer and submit the names of its nominees to the Arbitral Tribunal.

MRT filed a Motion to Dismiss, arguing that CIAC had no jurisdiction to arbitrate the dispute. This Motion was
denied and this matter was elevated to this Court.

The court In Gammon v. Metro Rail Transit Development Corporation 2006, this Court held that CIAC had
jurisdiction over the case.
the Arbital Tribunal was formed. A preliminary conference was set to finalize the Terms of Reference, which
would regulate the conduct of the proceedings
CIAC ruled in favor of Gammon thus MRT assailed the CIACs Decision before the Court of Appeals. However,
the Court of Appeals affirmed the CIACs Decision.
Thus the instant petition.

Issue​: WON the findings of the CIAC are binding in this case?
Ruling: Yes. CIAC was created under Executive Order No. 100892 to establish an arbitral machinery that will
settle expeditiously problems arising from, or connected with, contracts in the construction industry its
jurisdiction includes construction disputes between or among parties to an arbitration agreement, or those who
are otherwise bound by the latter, directly or by reference. Thus, any project owner, contractor, subcontractor,
fabricator, or project manager of a construction project who is bound by an arbitration agreement in a
construction contract is under CIACÊs jurisdiction in case of any dispute.
CIAC is a quasi-judicial body exercising quasi-judicial powers. A quasi-judicial agency is a government body,
not part of the judiciary or the legislative branch, which adjudicates disputes and creates rules which affect
private parties rights. It is created by an enabling statute, and thus, its existence continues beyond the
resolution of a dispute and is independent from the will of the parties. Its powers are limited to those expressly
granted or necessarily implied in the enabling law.

Quasi-judicial or administrative adjudicatory power has been defined as the power: „(1) to hear and determine
questions of fact to which legislative policy is to apply, and (2) to decide in accordance with the standards laid
down by the law itself in enforcing and administering the same law. Arbitration under a quasi-judicial body is
similar to commercial arbitration in that its factual findings are generally accorded respect and finality.
However, commercial arbitration is conducted by ad hoc bodies created by stipulation of parties for the
purpose of settling disputes concerning their private or proprietary interests. In general, the findings in
commercial arbitration are respected to uphold the autonomy of arbitral awards.99 On the other hand,
quasi-judicial agencies were created for a speedier resolution of controversies on matters of state interest that
require specialized knowledge and expertise.

CIAC exercises quasi-judicial powers over arbitration disputes concerning construction contracts. Thus, its
findings are accorded respect because it comes with the presumption that CIAC is technically proficient in
efficiently and speedily resolving conflicts in the construction industry. Thus, under the Construction Industry
Arbitration Law, arbitral awards are binding and shall be final and unappealable, except on pure questions of
law.

Issue 2: Are arbitration proceedings bound by technical rules on evidence?

Ruling: No. Gammon insists that its claim for lost profits was sufficiently substantiated. It asserts that there
need not be absolute certainty in its amount to be able to recover lost profits. Gammon asserts that MRT did
not refute the 5% amount given by Delos Santos or quantify how much Gammon is actually entitled to.

This Court affirms the findings of CIAC and of the Court of Appeals.

MRT is raising questions of fact. Questions of fact are not proper in a Petition for Review under Rule 45. This
Court can no longer entertain factual issues, unless there are compelling and cogent reasons, as when the
findings were drawn from a vacuum or arbitrarily reached, or are grounded entirely on speculation or
conjectures, are conflicting or are premised on the supposed evidence and contradicted by the evidence on
record or when the inference made is manifestly mistaken or absurd.
The findings of fact in the case at bar was arrived at by CIAC, a quasi-judicial body, the jurisdiction of which is
confined to construction disputes.

Moreover, arbitration proceedings are not bound by the technical rules of evidence in judicial proceedings.
Arbitrators are to ascertain the facts in each case by all reasonable means without regard to technicalities of
law or procedure.

Thus, under Section 13.5 of the CIAC Revised Rules of Procedure Governing Construction Arbitration:

Section 13.5. Evidence: The parties may offer such evidence as they desire and shall produce such additional
documents and witnesses as the Arbitral Tribunal may deem necessary to clear understanding of facts issues
for a judicious determination of the dispute(s). The Arbitral Tribunal shall act according to justice and equity
and merits of the case, without regard to technicalities or legal forms and need not be bound by any technical
rule of evidence. Evidence shall be taken in the presence of the Arbitral Tribunal and all of the parties, except
where any of​ he parties is absent, or has waived his right to be present.

Thus, the findings of fact of CIAC are binding, respected, and final. They are not reviewable by this Court,
especially when affirmed by the Court of Appeals.
A review of the CIACs findings of fact would have had the effect of setting at naught the basic objective of a
voluntary arbitration and would reduce arbitration to a largely inutile institution.

NOTE: The only exceptions subject to this rule were laid out in Uniwide Sales Realty and Resources Corp. v.
Titan-Ikeda Construction and Development Corporation:
as exceptions, factual findings of construction arbitrators may be reviewed by this Court when the petitioner
proves affirmatively that: (1) the award was procured by corruption, fraud or other undue means; (2) there was
evident partiality or corruption of the arbitrators or of any of them; (3) the arbitrators were guilty of misconduct
in refusing to hear evidence pertinent and material to the controversy; (4) one or more of the arbitrators were
disqualified to act as such under Section Nine of Republic Act No. 876 and willfully refrained from disclosing
such disqualifications or of any other misbehavior by which the rights of any party have been materially
prejudiced; or (5) 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. Other recognized exceptions are
as follows: (1) when there is a very clear showing of grave abuse of discretion resulting in lack or loss of
jurisdiction as when a party was deprived of a fair opportunity to present its position before the Arbitral Tribunal
or when an award is obtained through fraud or the corruption of arbitrators, (2) when the findings of the Court
of Appeals are contrary to those of the CIAC, and (3) when a party is deprived of administrative due
process.231 (Citations omitted)

However, petitioner failed to prove that any of these exceptions are present in the case at bar. Thus, this Court
will no longer disturb CIACÊs factual findings, which were affirmed by the Court of Appeals.
7. Mabuhay Holdings Corp. vs. Sembcorp Logistics Limited, GR No. 212734 – ​Rachelle
FACTS:​ In 1996, Sembcorp Logistics Limited (“Sembcorp”) and two Philippine corporations (Mabuhay
Holdings Corporation, “Mabuhay” and IDHI) entered into an agreement under which Sembcorp would receive
a minimum accounting return (the “Guaranteed Return”) in exchange for its investment in a joint venture. ​The
Agreement included an arbitration clause, ​viz:​
Article XIX. APPLICABLE LAW; ARBITRATION

19.1 This Agreement and the validity and performance thereof shall be governed by the laws of the Republic of the
Philippines.

19.2 Any dispute, controversy or claim arising out of or relating to this Agreement, or a breach thereof, ​other than
intra-corporate controversies​, shall be finally settled by arbitration in accordance with the rules of conciliation and
arbitration of the International Chamber of Commerce by one arbitrator with expertise in the matter at issue appointed in
accordance with said rules. The arbitration proceeding including the rendering of the award shall take place in Singapore and
shall be conducted in the English Language. This arbitration shall survive termination of this Agreement. Judgment upon the
award rendered may be entered in any court having jurisdiction or application may be made to such court for a judicial
acceptance of the award and an order of enforcement, as the case may be.

When Mabuhay failed to pay the Guaranteed Return, Sembcorp commenced a Singapore-seated arbitration
under the 1998 ICC Rules. In 2004, the sole arbitrator, a Thai national, rendered a final award in favor of
Sembcorp. Sembcorp commenced enforcement proceedings against Mabuhay in Philippine courts. Mabuhay
opposed the enforcement on the three grounds. ​Mabuhay argued that the dispute is an intra-corporate
controversy, hence, excluded from the scope of the arbitration clause in the Agreement. It alleged that on March
13, 1997, Sembcorp became the controlling stockholder of IDHI by acquiring substantial shares of stocks
through its nominee, Mr. Pablo N. Sare. Mabuhay thus claimed that it has already been released from the joint
obligation with IDHI as Sembcorp assumed the risk of loss when it acquired absolute ownership over the
aforesaid shares. Moreover, Mabuhay argued that the appointment of Dr. Chantara-Opakorn was not in
accordance with the arbitral clause as he did not have the expertise in the matter at issue, which involved
application of Philippine law. Finally, Mabuhay argued that the imposition of twelve percent (12%) interest
from the date of the Final Award was contrary to the Philippine law and jurisprudence.

T​he RTC dismissed the petition and ruled that the Final Award could not be enforced.​ ​Sembcorp appealed to
the CA via a Notice of Appeal.​ ​CA promulgated its Decision reversing and setting aside the RTC Decision.

ISSUE: ​Whether the CA had jurisdiction to act on the appeal?

RULING:​ YES.
Mabuhay contends that filing a petition for review and not a notice of appeal is the proper remedy to contest the
RTC's refusal to enforce the Final Award.

The Court notes, however, that the Special ADR Rules took effect in 2009. Sembcorp's notice of appeal was
filed only in 2008. The ADR Act, which was already in effect at that time, did not specify the proper remedy of
appeal from the RTC to the CA. It merely provides that "a decision of the regional trial court confirming,
vacating, setting aside, modifying or correcting an arbitral award may be appealed to the CA in accordance with
the rules of procedure to be promulgated by the Supreme Court."

The Special ADR Rules shall retroactively apply to all pending cases provided that no vested rights are
impaired or prejudiced. In this case, Sembcorp filed a notice of appeal in accordance with Section 2 of Rule 41
as it is the only applicable rule existing at that time. Sembcorp had a vested right to due process in relying on
the said rule. Consequently, the CA had jurisdiction to act on Sembcorp's appeal.

ISSUE:​ Whether or not the composition of the arbitral authority was not in accordance with the agreement of
the parties?

RULING:​ NO. Recognition and enforcement may be refused if the arbitration procedure followed was not in
accordance with the parties’ agreement. This is in line with the policy to respect party autonomy and their
arbitration agreements. Parties may agree to submit their dispute to an institution’s arbitration rules and agree to
its procedure, including the procedure in the appointment of an arbitrator.

The Supreme Court denied the contention of Petitioner Mabuhay against the appointment of a Thai arbitrator.
Petitioner Mabuhay contended that the arbitration clause calls for an arbitrator with an expertise on Philippine
law and on the subject matter, thereby excluding a Thai national without a background on Philippine law.

The Court, however, pointed out that the arbitration clause provides that the arbitrator shall be appointed in
accordance with the ICC Arbitration Rules with the ICC as the appointing authority. “Where the parties have
agreed to submit their dispute to institutional arbitrational rules, and unless they have agreed to a different
procedure, they shall be deemed to have agreed to procedure under such arbitration rules for the selection and
appointment of arbitrators.” As such, the appointment of the Thai arbitrator was in accordance with the
arbitration clause since under the ICC Arbitration Rules, the sole arbitrator shall be of a nationality other than
those of the parties.

At any rate, Mabuhay's contention that the sole arbitrator must have the expertise on Philippine law fails to
persuade. If the intent of the parties is to exclude foreign arbitrators due to the substantive law of the contract,
they could have specified the same considering that the ICC Rules provide for appointment of a sole arbitrator
whose nationality is other than those of the parties.

ISSUE: ​Whether or not the dispute is an intra-corporate controversy which is expressly excluded from the
scope of disputes submitted to arbitration under the Agreement?

RULING:​ NO. A court may refuse enforcement of a foreign arbitral award when it deals with an issue not
contemplated by the arbitration agreement. Related to this is the principle of competence-competence, which
provides that an arbitral tribunal has the competence and first opportunity to rule on objections to its jurisdiction
to hear and decide a dispute before it.

The Supreme Court denied Petitioner Mabuhay’s claim that the Final Award should not be enforced because the
dispute that gave rise to the award was an intra-corporate dispute – a dispute specifically excluded from the
arbitration clause. The Court cited the Special Rules of Court on Alternative Dispute Resolution, which
provides that courts shall not disturb an arbitral tribunals’ determination of facts and interpretation of law.

The Final Award, among others, disposed that the dispute was not an intra-corporate controversy. Thus, the
factual and legal determination by the arbitral tribunal regarding its jurisdiction was no longer subject to review.

Even granting that the court may rule on the issue of whether the dispute is an intra-corporate controversy,
Mabuhay's argument is premised on the factual issue of whether Sembcorp indeed acquired the shares of IDHI.
Mabuhay failed to establish such fact before the arbitral tribunal. The RTC, on the other hand, concluded that
Sembcorp acquired the subject shares but failed to explain the basis for such conclusion. In the absence of
sufficient evidence that Sembcorp acquired the shares of IDHI, the Court finds no cogent reason to disturb the
arbitral tribunal's ruling in favor of the latter's jurisdiction over the dispute.

Pertinent claims of Mabuhay in relation to public policy.

-Violation of partnership law

ISSUE:​ Whether or not Mabuhay entered into a joint venture, which is akin to a particular partnership, with
Sembcorp?

RULING:​ NO. Mabuhay contends that applying the laws on partnership, the payment of the Guaranteed Return
to Sembcorp is a violation of Article 1799 of the Civil Code, as it shields the latter from sharing in the losses of
the partnership. Ergo, enforcement of the Final Award would be contrary to public policy as it upholds a void
stipulation.

The restrictive approach to public policy necessarily implies that not all violations of the law may be deemed
contrary to public policy. It is not uncommon for the courts in Contracting States of the New York Convention
to enforce awards which does not conform to their domestic laws.

At any rate, Mabuhay's contention is bereft of merit. The joint venture between Mabuhay, IDHI, and Sembcorp
was pursued under the Joint Venture Corporations, WJSC and WJNA. By choosing to adopt a corporate entity
as the medium to pursue the joint venture enterprise, the parties to the joint venture are bound by corporate law
principles under which the entity must operate. Among these principles is the limited liability doctrine. The use
of a joint venture corporation allows the co-venturers to take full advantage of the limited liability feature of the
corporate vehicle which is not present in a formal partnership arrangement. In fine, Mabuhay's application of
Article 1799 is erroneous.

-Imposition of interest
ISSUE:​ Whether the twelve percent (12%) annual interest imposed under the Final Award is contrary to the
Philippine law and jurisprudence?
RULING: ​NO. To reiterate, the only ground for refusing enforcement of a foreign arbitral award is when
enforcement of the same would be contrary to public policy.

Mere incompatibility of a foreign arbitral award with domestic mandatory rules on interest rates does not
amount to a breach of public policy. However, some jurisdictions refused to recognize and enforce awards, or
the part of the award which was considered to be contrary to public policy, where they considered that the
awarded interest was unreasonably high. In this case, the twelve percent (12%) interest rate imposed under the
Final Award is not unreasonably high or unconscionable such that it violates our fundamental notions of justice.

8. Federal Express Corporation vs. Airfreight 2100, Inc., GR No. 216600 – ​Job

FACTS: ​FedEx, having lost its International Freight Forwarder’s (IFF) license to engage in international freight
forwarding in the Philippines, executed various Global Service Program (GSP) contracts with Air21, an
independent contractor, to primarily undertake its delivery and pickup services within the country. In the
implementation of these contracts, however, several issues relating to money remittance, value-added taxes,
dynamic fuel charge, trucking costs, interests, and penalties ensued between the parties.

In an effort to settle their commercial dispute, FedEx and Air21 agreed to submit themselves to
arbitration before the Philippine Dispute Resolution Center (PDRC). As part of the arbitration proceedings,
Jennings, Holmes and Ross executed their respective statements as witnesses for FedEx. Ross and Holmes
deposed that FedEx’s license was suspended pending a case in court filed by Merit International, Inc. (Merit)
and Ace Logistics, Inc. (Ace), which questioned the issuance of the IFF to FedEx. Holmes and Ross averred
that Merit and Ace were either owned or controlled by Air21 employees or persons connected with the Lina
Group of Companies, which included Air21. Jennings, in his cross-examination, was identified as the source of
the information that Merit and Ace were Air21’s proxies. Jennings said that Merit and Ace were just very small
companies with meager resources, yet they were able to finance and file a case to oppose the grant of IFF
license to FedEx. Jennings also disclosed that one of the directors of Ace was a friend of Lina and that Lorna
Orbe, the President of Merit, was the former “boss”of Lito Alvarez, who was also associated with Air21.

Feeling aggrieved by those statements, Lina for himself and on behalf of Air21, filed a complaint for grave
slander against Jennings. Lina claimed that the defamatory imputation of Jennings that Merit and Ace were
Air21’s proxies brought dishonor, discredit and contempt to his name and that of Air21. Lina quoted certain
portions of the written statements of Holmes and Ross and the Transcript of Stenographic Notes of the April
25, 2013 arbitration hearing reflecting Jennings’ testimony to support his complaint.

Contention of Petitioner: ​FedEx asserted that the testimony of Jennings, a witness in the arbitration
proceedings, should not be divulged and used to bolster the complaint-affidavit for grave slander as this
was inadmissible in evidence. Jennings’ oral statements form part of the records of arbitration and
must, therefore, be considered confidential information.

Contention of Respondent: ​While the Alternative Dispute Resolution Act of 2004 confers communications
made during arbitration the privilege against disclosure, otherwise known as the confidentiality principle, such
privilege is not absolute. It cannot be invoked to shield any party from criminal responsibility.
ISSUE: ​Whether the testimony of Jennings given during the arbitration proceedings falls within the ambit of
confidential information and, therefore, covered by the mantle of a confidentiality/protection order.

RULING: ​Yes. ​Section 3(h) of Republic Act (R.A.) No. 9285 or the Alternative Dispute Resolution of 2004
(ADR Act) defines confidential information as follows: “Confidential information" means any information,
relative to the subject of mediation or arbitration​, expressly intended by the source not to be disclosed, or
obtained under circumstances that would create a reasonable expectation on behalf of the source that the
information shall not be disclosed. ​It shall include (1) communication, oral or written, made in a dispute
resolution proceedings​, including any memoranda, notes or work product of the neutral party or nonparty
participant, as defined in this Act; (2) an oral or written statement made or which occurs during mediation or for
purposes of considering, conducting, participating, initiating, continuing of reconvening mediation or retaining a
mediator; and ​(3) pleadings, motions manifestations, ​witness statements, reports filed or submitted in an
arbitration ​or for expert evaluation. The said list is not exclusive and may include other information as long as
they satisfy the requirements of express confidentiality or implied confidentiality.

Rule 10.1 of A.M. No. 07-11-08-SC or the Special Rules of Court on Alternative Dispute Resolution
(Special ADR Rules) allows “[a] party, counsel or witness who disclosed or who was compelled to disclose
information relative to the subject of ADR under circumstances that would create a reasonable expectation, on
behalf of the source, that the information shall be kept confidential x x x the right to prevent such information
from being further disclosed without the express written consent of the source or the party who made the
disclosure.”

Gauged by the said parameters, the written statements of witnesses Ross, Holmes and Jennings, as well as
the latter’s oral testimony, both fall under Section 3(h)[1] and [3] of the ADR Act. Notably, both the parties and
the Arbitral Tribunal had agreed to the Terms of Reference (TOR) that „the arbitration proceedings should be
kept strictly confidential as provided in Section 23 of the ADR Act and Article 25-A19 of the PDRCI Arbitration
Rules (Arbitration Rules) and that they should all be bound by such confidentiality requirements. Thus, the
general rule is that information disclosed by a party or witness in an ADR proceeding is considered privileged
and confidential.

The SC also said that “In evaluating the merits of the petition, ​Rule 10.8 of the Special ADR Rules mandates
that courts should be guided by the principle that confidential information shall not be subject to discovery and
shall be inadmissible in any adversarial proceeding.

Moreover, Article 5.42 of the Implementing Rules and Regulations (IRR) 21 of the ADR Act ​likewise
echoes that arbitration proceedings, records, evidence and the arbitral award and other confidential information
are privileged and confidential and shall not be published except [i] with the consent of the parties; or [ii] for the
limited purpose of disclosing to the court relevant documents where resort to the court is allowed.

Given that the witness statements of Ross, Holmes and Jennings, and the latter’s arbitration testimony, fall
within the ambit of confidential information, they must, as a general rule, remain confidential.

ISSUE: ​Whether the RTC and CA erred when they denied the said application for confidentiality/protection
order on the ground that the declarations by Jennings were not confidential as they were not at all related to
the subject of mediation as the arbitration proceedings revolved around the parties’ claims for sum of money.
RULING: ​Yes. Suffice it to say that the phrase “relative to the subject of mediation or arbitration” need not be
strictly confined to the discussion of the core issues in the arbitral dispute. By definition, “relative” simply
means “connected to,” which means that parties in arbitration proceedings are encouraged to discuss openly
their grievances and explore the circumstances which might have any connection in identifying the source of
the conflict in the hope of finding a better alternative to resolve the parties’ dispute. An ADR proceeding is
aimed at resolving the parties’ conflict without court intervention. It was not designed to be strictly technical or
legally confined at all times. By mutual agreement or consent of the parties to a controversy or dispute, they
acquiesce to submit their differences to arbitrators for an informal hearing and extrajudicial determination and
resolution. Usually, an ADR hearing is held in private and the decision of the persons selected to comprise the
tribunal will take the place of a court judgment. This avoids the formalities, delays and expenses of an ordinary
litigation. Arbitration, as envisioned by the ADR Act, must be taken in this
perspective.