Tribi Law

Advocate at the Court

Rm 201, Rosary Bldg, Iznart Street, Iloilo City Proper, Iloilo City
Telephone number: (033) 321 - 7442
Tribi_law@gmail.com

2 August 2019

By courier
The Secretariat of the Philippine Arbitration Center in the Visayas
Rada Hall, University of San Agustin
General Luna St.,Iloilo City
Philippines

Dear Mr. Mallare,

On behalf of my client, Ador Fund, Ltd., I hereby submit the

enclosed Notice of Arbitration pursuant to Article 4 of PACV Rules,
as adopted from PDRCI Rules. Further, this Notice of Arbitration is
hereby treated as Statement of Claim pursuant to Article 27,
Paragraph 1 of PACV Rules, as adopted from PDRCI Rules. A copy
of the Secretary’s Certificate authorizing me to represent Ador
Fund, Ltd. in this arbitration is also enclosed.

The registration fee has been paid.

The CLAIMANT demands the RESPONDENTS to pay the damages

incurred.

The contract giving rise to the arbitration provides that the seat of
arbitration shall be Iloilo City, Philippines and that the arbitration
shall be conducted in English.

The required documents are attached.

Sincerely yours,

Lcid Crescent Fernandez

Ador Fund, Ltd. as represented by Tribi Law

Attachments:
Claimant’s Exhibits
Corporate Secretary’s Certificate of Board Resolution
Proof of Payment of Registration Fee

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 2 August 2019

Tribi Law
Advocate at the Court
Rm 201, Rosary Bldg, Iznart Street, Iloilo City Proper, Iloilo City
Telephone number: (033) 321 - 7442
Tribi_law@gmail.com

By courier
The Secretariat of the Philippine Arbitration Center in the Visayas
(PACV)
Rada Hall, University of San Agustin
General Luna St., Iloilo City
Philippines

Philippine Pacific Airlines vs. Bowing Airtech Inc.

Notice of Arbitration/Statement of Claim
Pursuant to Articles 4 and 27 (1) of PACV Rules, as adopted from
PDRCI Rules

Ador Fund, Ltd.

PNB Financial Center,
Diosdado Macapagal Boulevard
Pasay City, Metro Manila
Philippines
CLAIMANT -

Represented in this arbitration by Tribi Law

Don Jhonny Walker

35 Brgy. Kasing Kasing
Molo, Iloilo City
Philippines
RESPONDENT -

Empire Conglomerate
Penthouse 9, Arthur Suites
Iloilo City
Philippines
RESPONDENT -

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 Statement of Facts

1. Ador Fund, Ltd. (“ADOR”), the CLAIMANT, is a company

incorporated under the laws of the Philippines, with principal
office located at PNB Financial Center, Diosdado Macapagal
Blvd, Pasay, Metro Manila. ADOR has 120-years of experience
as a brewery that exports to thirty-eight countries in
Southeast Asia, East Asia, Middle East, Oceania, North
America and Europe.

2. Don Jhonny Walker (“DON”), the RESPONDENT, Filipino

citizen, of legal age, single, and presently residing at 35 Brgy.
Kasing Kasing, Molo, Iloilo City Philippines, and with office
address at 53 Gen Luna St Iloilo City Philippines.

3. Empire Conglomerate (“EMPIRE”), the RESPONDENT, is a

corporation incorporated under the laws of the Philippines,
with address at Penthouse 9, Arthur Suites, Iloilo City,
Philippines.

4. In June 2015, Ador Fund Ltd. (herewith referred to as “ADOR”)

began negotiations with Don Jhonny Walker (herewith
referred to as “DON”) to acquire shares in Empire Brandy
Refinery Corporation (herewith referred to as “BRAND”).
DON owns Empire Conglomerate (herewith referred to as
EMPIRE). EMPIRE owns BRAND.

5. By February 2016, a Sale and Purchase Agreement (herewith

referred to as “SPA”) was executed. In this document, ADOR
buys 95.8% shareholding of BRAND from EMPIRE for US$
280.7-million.

6. On 25 February 2016, ADOR and EMPIRE signed the SPA as

buyer and seller, respectively. DON also signed the SPA,
although not named as a party. On the same date, a Deed of
Guaranty and Indemnity (herewith referred to as
“GUARANTY”) was signed by DON but was not signed by
ADOR. Lastly, on that same date, a Cover Agreement
(herewith referred to as “COVER”) was signed between DON
and EMPIRE.

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7. After the negotiations of June 2015 to February 2016, ADOR and
DON agreed that ADOR would acquire 95.8% of BRAND from
EMPIRE at US$ 280.7-million.

8. ADOR and EMPIRE signed an SPA on 25 February 2016. DON

also signed the SPA but was not a party to it.

9. Article 25 of the SPA provides: “any dispute arising between the

parties should be first resolved by negotiations between the
management of both parties. If such dispute is not resolved
within 60 days it shall finally be settled under the Rules of
Arbitration of the PACV by three arbitrators appointed in
accordance with the said rules.”

10. On the day SPA was signed, DON signed a Guaranty (herewith
referred to as GUARANTY). The GUARANTY ensured
EMPIRE’s obligation to ADOR under the SPA.

11. Article 17 of the GUARANTY provides: “Any dispute arising out

of this guarantee shall be finally resolved under PACV
rules.”

12. In June 2016, ADOR paid EMPIRE US$ 250-million for the
purchase of the agreed shares of BRAND. Then, ADOR paid
another US$ 30-million into an escrow account. The escrow
amount was to be released to Empire conglomerate by 1 July
2017 on the condition that no additional liability of BRAND
was discovered.

13. On 20 January 2017, BRAND was made to pay US$ 82-million

as additional taxes and penalties.

14. ADOR argues that the purchase price of the shares should be
reduced accordingly.

15. ADOR set off US$ 30-million from the escrow account against
the additional liability of US$ 82-million. EMPIRE was to
reimburse the remaining US$ 52-million within 20-days as
provided by the SPA. As EMPIRE did not comply, ADOR
demanded from DON to pay the amount under GUARANTY.

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16. DON alleges that the guarantee is not valid because it was not
signed by ADOR, that it violated his obligation to his bank not
to issue any guarantees without the bank’s consent as the
whole of his property has been pledged under a credit
agreement.

17. The Regional Trial Court of Iloilo City has issued a decision
rendering the Guarantee invalid. This is pending on appeal at
the CA.

18. DON also alleges that it was EMPIRE’s fault that BRAND did not
pay its taxes - thus is primarily and solely liable for any claims
raised by ADOR. DON alleges that if he is ordered to pay any
amount, such amount should be compensated to him by
EMPIRE under the COVER signed by both.

19. The COVER provides: “All disputes shall be settled by the ICC
Court in Singapore.” ADOR’s CEO was present at the signing
of the COVER and wrote ‘Agreed’ on the signature page of the
Cover Agreement below the signatures of DON and EMPIRE,
put a date, affixed his signature, and used ADOR’s seal.

20. EMPIRE sent an email to parties, agreeing to settle the dispute

by way of arbitration. However, EMPIRE argues that it
administered and paid the proper tax of BRAND. EMPIRE
contends that the cause of the problem was ADOR’s improper
investment policy. EMPIRE believes that while the SPA was
being negotiated, ADOR promised that it would increase
BRAND’s production by 70% within two years of acquisition.
However, due to massive rally of use of alcohol by minors,
ADOR decreased BRAND’s production by 40% and dismissed
30% of its employees. These changes allegedly caused serious
instability in the market. EMPIRE alleges that ADOR’s action
breached the SPA which provides: “that within three years
from the closing date, Purchaser should not commit any
action which could materially affect the business of Empire
Brandy.”

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 Points at issue

Whether the PACV has jurisdiction over the case.

Whether RESPONDENTS are liable to ADOR for US$ 52-million for
reimbursement of additional liabilities of BRAND.

Legal Evaluation

Merits

21. The CLAIMANT contends that the PACV Arbitral Tribunal has
jurisdiction as per Art. 25 of the SPA and Art. 17 of the
GUARANTY.

22. Since the disputed provision of the GUARANTY was not

followed, resort to the Civil Code was made in accord with the
provision on Choice of Law for the SPA and the Cover
Agreement. This is enshrined in Article 2047 of the New Civil
Code which provides: "By guaranty a person, called the
guarantor, binds himself to the creditor to fulfill the
obligation of the principal debtor in case the latter should fail
to do so. xxx"

23. The CLAIMANT believes that RESPONDENTS are liable for

US$ 52-million for reimbursement of additional liabilities of
BRAND. The SPA provides that additional liabilities will be
reimbursed from the contract price. On 20 January 2017,
Empire Conglomerate paid US$ 82-million in additional taxes
and penalties. These exactions amount to additional liabilities
contemplated by the SPA. Thus, Empire Conglomerate is
liable to ADOR in the amount of US$ 52-million after the US$
30-million in escrow had been withdrawn.

24. EMPIRE is liable to ADOR for damages pursuant to Article 1170

of the NCC because of causal fraud. ADOR was led to believe
that BRAND was free of additional liabilities upon signing the
SPA. This is provided for under Art. 1170 of the New Civil Code
which states: “Those who in the performance of their
obligations are guilty of fraud, negligence, or delay, and
those who in any manner contravene the tenor thereof, are
liable for damages. (1101)”.

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 Nomination of Arbitrator

25. In accordance with the Arbitration Clause in the contract and

Section III, Articles 11 and 14 of the PACV Rules, as adopted
from PDRCI Rules, we surrender the choice of arbitrator to
the good judgement of the Officials of the PACV.

Jurisdiction

26. The Arbitral Tribunal has jurisdiction over the dispute by virtue
of the Arbitration Agreement contained in the SPA
[Claimant’s Exhibit 2]. The clause found in Article 25 provides
as follows:

“Any dispute arising between the parties should be first

resolved by negotiations between the management of both
parties. If such dispute is not resolved within 60 days it shall
finally be settled under the Rules of Arbitration of the PACV
by three arbitrators appointed in accordance with the said
rules.”

27. The same jurisdiction is vested on the Arbitral Tribunal through

Art. 17 of the GUARANTY [Claimant’s Exhibit 3], stating:

“Any dispute arising out of this guarantee shall be finally

resolved under PACV rules.”

Relief sought

28. Based on the above, CLAIMANT requests the Arbitral Tribunal

to:

a. Order the RESPONDENTS to reimburse ADOR for $US

52-million due to BRAND’s liabilities.

b. Order RESPONDENTS to bear the costs of arbitration.

c. Order RESPONDENTS to pay for damages in the amount

of $US 50-million.

d. Grant other reliefs that are just and equitable.

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As prepared by the associates of Tribi Law.

Enclosures: Claimant’s Exhibits C1-C7

Corporate Secretary’s Certificate of Board Resolution (C1)

Sale and Purchase Agreement (C2)
Guaranty and Indemnity Agreement (C3)
Demand Letters to EMPIRE and DON (C4)
Bank Account Statement (C5)
Withdrawal and Deposit Slip (C6)
Proof of Payment of Registration Fee (C7)

COPY FURNISHED:

NORWIN DIAZ
Chairman of the Board of Directors, EMPIRE CONGLOMERATE.
Penthouse 9, Arthur Suites
Iloilo City
Philippines

DON JHONNY WALKER

35 Brgy. Kasing Kasing
Molo, Iloilo City
Philippines

PERSONAL SERVICE

Received by: ___________________________

Date received: __________________________