INSULAR VS FAR EAST

G.R. No. 141818

This petition for review on certiorari1 assails the November 9 1999 !r"er# of the Re$ional Trial %o&rt of 'a(ati
%it) *ranch 1+, in %ivil %ase No- 9#.1/, which "ismisse" the petition for review for lac( of 0&ris"iction an" its
Febr&ar) 1 #111 !r"er+ "en)in$ reconsi"eration thereof-
The antece"ent facts are as follows2
!n 3ecember 11 1991 Far East *an( an" Tr&st %ompan) 4Respon"ent5 file" a complaint a$ainst 6ome *an(ers
Tr&st an" %ompan) 46*T%5/ with the 7hilippine %learin$ 6o&se %orporation8s 47%6%5 Arbitration %ommittee
"oc(ete" as Arbicom %ase No- 91.199-, Respon"ent so&$ht to recover from the petitioner the s&m of 7#,#11111-11
representin$ the total amo&nt of the three chec(s "rawn an" "ebite" a$ainst its clearin$ acco&nt- 6*T% sent these
chec(s to respon"ent for clearin$ b) operation of the 7%6% clearin$ s)stem- Thereafter respon"ent "ishonore" the
chec(s for ins&fficienc) of f&n"s an" ret&rne" the chec(s to 6*T%- 6owever the latter ref&se" to accept them since
the chec(s were ret&rne" b) respon"ent after the re$lementar) re$ional clearin$ perio"-9
'eanwhile on :an&ar) 1; 199# before the termination of the arbitration procee"in$s respon"ent file" another
complaint b&t this time with the Re$ional Trial %o&rt 4RT%5 in 'a(ati %it) "oc(ete" as %ivil %ase No- 9#.1/, for
S&m of 'one) an" 3ama$es with 7reliminar) Attachment- The complaint was file" not onl) a$ainst 6*T% b&t also
a$ainst Robert <o&n$ E&$ene Arries$a"o an" Victor Tanc&an 4collectivel) (nown as 3efen"ants5 who were the
presi"ent an" "epositors of 6*T% respectivel)-; Aware of the arbitration procee"in$s between respon"ent an"
petitioner the RT% in an !mnib&s !r"er "ate" April +1 199#= s&spen"e" the procee"in$s in the case a$ainst all the
"efen"ants pen"in$ the "ecision of the Arbitration %ommittee to wit2
>6EREF!RE the %o&rt hereb) or"ers2
4a5 6ome *an(ers ? Tr&st %o- to pro"&ce an" permit plaintiff to inspect cop) an"@or photo$raph the
chec(in$ acco&nt "eposit le"$er of Victor Tanc&an8s Acco&nt No- 1=1+.1191,.+A
4b5 The 'otions to 3ismiss file" b) all "efen"ants "enie" for lac( of meritA an"
(c) Proceedings in this case against all defendants be suspended pending award/decision in the
arbitration proceedings against Hoe !an"ers and #rust $o.
S! !R3ERE3-9 4Emphasis s&pplie"5
The above !mnib&s !r"er was amen"e" b) the trial co&rt in its !ctober 1 199# !r"er11 the "ispositive portion of
which rea"s as follows2
>6EREF!RE the !mnib&s !r"er "ate" +1 April 199# is hereb) reconsi"ere" b) "eletin$ the phrase Bsince the
complaint also see(s eCemplar) "ama$es attorne)8s fees liti$ation eCpenses an" costs of s&it a$ainst 6*TB on pa$e
/ thereof an" par- % of its "ispositive portion is amen"e" to rea"2
4c5 B7roce"in$s a$ainst 6ome *an(ers an" Tr&st %o- are s&spen"e" pen"in$ awar"@"ecision in the arbitration
procee"in$s while those a$ainst in"ivi"&al "efen"ants be imme"iatel) reinstate" an" contin&e"-B
6*T an" Tanc&an8s separate 'otions for Reconsi"erations are hereb) "enie" for lac( of merit-
S! !R3ERE3-11
!n Febr&ar) # 199= the 7%6% Arbitration %ommittee ren"ere" its "ecision in favor of respon"ent1# th&s2
IN VIE> !F ALL T6E F!RED!IND 0&"$ment is hereb) ren"ere" in favor of the plaintiff an" a$ainst the "efen"ant
sentencin$ the latter to pa) the plaintiff the s&m of 7#,-# million as principal- In view of the fact however that this
amo&nt was split between the plaintiff an" the "efen"ant in the co&rse of the procee"in$s the amo&nt to be pai" b)
the "efen"ant to the plaintiff sho&l" onl) be 71#911111-11 pl&s interest on this latter amo&nt at the rate of 1#E per
ann&m from Febr&ar) 11 199# the "ate when the total amo&nt of 7#,-# 'illion was split between plaintiff an"
"efen"ant &p to the "ate of pa)ment-
In view of the facts fo&n" b) the committee no attorne)8s fees nor other "ama$es are awar"e"-
S! !R3ERE3-1+
The motion for reconsi"eration file" b) petitioner was "enie" b) the Arbitration %ommittee- 1/ %onseF&entl) to
appeal the "ecision of the Arbitration %ommittee in Arbicom %ase No- 91.199 petitioner file" a petition for review in
the earlier case file" b) respon"ent in *ranch 1+, of the RT% of 'a(ati an" "oc(ete" as %ivil %ase No- 9#.1/,- 1, In
an or"er "ate" :an&ar) #1 1999 the RT% "irecte" both petitioner an" respon"ent to file their respective memoran"a
after which sai" petition wo&l" be "eeme" s&bmitte" for resol&tion-19
*oth parties file" several plea"in$s- !n Febr&ar) = 1999 respon"ent file" a 'otion to 3ismiss 7etition for Review
for Lac( of :&ris"iction1; which was oppose" b) the petitioner-1= Respon"ent then file" its Repl) to the
opposition19 to which petitioner file" a Re0oin"er-#1 !n A&$&st 19 1999 respon"ent s&bmitte" its S&rre0oin"er-#1
!n November 9 1999 the RT% ren"ere" the assaile" !r"er which hel" th&s2
Actin$ on plaintiff Far East *an( an" Tr&st %ompan)8s B'otion To 3ismiss 7etition For Review For Lac( !f
:&ris"ictionB consi"erin$ that the petition for review is a separate an" "istinct case the same m&st compl) with all the
reF&irements for filin$ initiator) plea"in$s for civil actions before this %o&rt so that since the commencement of the
s&b0ect petition lac(s the man"ator) reF&irements provi"e" for eCcept the pa)ment of "oc(et fees for lac( of
0&ris"iction the petition for review is hereb) "ismisse"-
S! !R3ERE3-##
The RT% "enie" petitioner8s motion for reconsi"eration#+ hence this petition on the sole $ro&n" to wit2
T6E REDI!NAL TRIAL %!URT ERRE3 IN 3IS'ISSIND T6E 7ETITI!N !F 7ETITI!NER F!R LA%G !F
:URIS3I%TI!N !N T6E DR!UN3 T6AT IT S6!UL3 6AVE *EEN 3!%GETE3 AS A SE7ARATE %ASE-#/
7etitioner conten"s that %ivil %ase No- 9#.1/, was merel) s&spen"e" to await the o&tcome of the arbitration case
pen"in$ before the 7%6%- Th&s an) petition F&estionin$ the "ecision of the Arbitration %ommittee m&st be file" in
%ivil %ase No- 9#.1/, an" sho&l" not be "oc(ete" as a separate action- Li(ewise petitioner avers that ha" it file" a
separate action Bthis wo&l" have res&lte" in a m&ltiplicit) of s&its which is abhorre" in proce"&re-B
'eanwhile respon"ent avers that the RT% correctl) "ismisse" the appeal from the awar" of private arbitrators since
there is no stat&tor) basis for s&ch appeal- Respon"ent ar$&es that petitioner8s claim that the parties b) a$reement ha"
conferre" on the RT% appellate 0&ris"iction over "ecisions of private arbitrators is erroneo&s beca&se the) cannot
confer a non.eCistent 0&ris"iction on the RT% or an) co&rt- F&rthermore the petition for review file" b) petitioner
violate" the r&le on commencin$ an ori$inal action &n"er Section , R&le 1 an" the raffle of cases &n"er Section #
R&le #1 of the R&les of %o&rt when it file" the same in *ranch 1+, of the RT% of 'a(ati where there was alrea") a
pen"in$ ori$inal action i-e- %ivil %ase No- 9#.1/,-
The petition lac(s merit-
The 7hilippine %learin$ 6o&se %orporation was create" to facilitate the clearin$ of chec(s of member ban(s- Amon$
these member ban(s eCists a compromissoire#, or an arbitration a$reement embe""e" in their contract wherein the)
consent that an) f&t&re "isp&te or controvers) between its 7%6% participants involvin$ an) chec( wo&l" be s&bmitte"
to the Arbitration %ommittee for arbitration- 7etitioner an" respon"ent are members of 7%6% th&s the) &n"erwent
arbitration procee"in$s-
The 7%6% has its own R&les of 7roce"&re for Arbitration 47%6% R&les5- 6owever this is $overne" b) Rep&blic Act
No- =;9 also (nown as The Arbitration Law#9 an" s&pplemente" b) the R&les of %o&rt-#; Th&s we first thresh o&t
the reme") of petition for review availe" of b) the petitioner to appeal the or"er of the Arbitration %ommittee-
Sections #+ #/ an" #9 of The Arbitration Law an" Section 1+ of the 7%6% R&les provi"e2
SE%- #+- %onfirmation of awar"- H At an) time within one month after the awar" is ma"e an% part% to the
controvers) which was arbitrate" a% appl% to the court ha&ing 'urisdiction as provi"e" in Section #= for an
order confiring the awardA and thereupon the court ust grant such order unless the award is &acated(
odified or corrected( as prescribed herein. Notice of s&ch motion m&st be serve" &pon the a"verse part) or his
attorne) as prescribe" b) law for the service of s&ch notice &pon an attorne) in action in the same co&rt-
SE%- #/- Dro&n"s for vacatin$ awar"- H In an) one of the followin$ cases the co&rt m&st ma(e an or"er vacatin$ the
awar" &pon the petition of an) part) to the controvers) when s&ch part) proves affirmativel) that in the arbitration
procee"in$s2
4a5 The awar" was proc&re" b) corr&ption fra&" or other &n"&e meansA or
4b5 That there was evi"ent partialit) or corr&ption in the arbitrators or an) of themA or
4c5 That the arbitrators were $&ilt) of miscon"&ct in ref&sin$ to postpone the hearin$ &pon s&fficient ca&se
shown or in ref&sin$ to hear evi"ence pertinent an" material to the controvers)A that one or more of the
arbitrators was "isF&alifie" to act as s&ch &n"er section nine hereof an" willf&ll) refraine" from "isclosin$
s&ch "isF&alification or of an) other misbehavior b) which the ri$hts of an) part) have been materiall)
pre0&"ice"A or
4"5 That the arbitrators eCcee"e" their powers or so imperfectl) eCec&te" them that a m&t&al final an"
"efinite awar" &pon the s&b0ect matter s&bmitte" to them was not ma"e-
C C C C
SE%- #,- Dro&n"s for mo"if)in$ or correctin$ awar"- H In an) one of the followin$ cases the co&rt m&st ma(e an
or"er mo"if)in$ or correctin$ the awar" &pon the application of an) part) to the controvers) which was arbitrate"2
4a5 >here there was an evi"ent miscalc&lation of fi$&res or an evi"ent mista(e in the "escription of an)
person thin$ or propert) referre" to in the awar"A or
4b5 >here the arbitrators have awar"e" &pon a matter not s&bmitte" to them not affectin$ the merits of the
"ecision &pon the matter s&bmitte"A or
4c5 >here the awar" is imperfect in a matter of form not affectin$ the merits of the controvers) an" if it ha"
been a commissioner8s report the "efect co&l" have been amen"e" or "isre$ar"e" b) the co&rt-
The or"er ma) mo"if) an" correct the awar" so as to effect the intent thereof an" promote 0&stice between the parties-
SE%- #9- Appeals- H )n appeal a% be ta"en from an or"er ma"e in a procee"in$ &n"er this Act or from 0&"$ment
entere" &pon an awar" thro&$h certiorari procee"in$s b&t s&ch appeals shall be liited to *uestions of law- The
procee"in$s &pon s&ch an appeal incl&"in$ the 0&"$ment thereon shall be $overne" b) the R&les of %o&rt insofar as
the) are applicable-
A'EN3E3 AR*ITRATI!N RULES !F 7R!%E3URE !F 7%6%
Sec- 1+- H #he findings of facts of the decision or award rendered b% the )rbitration $oittee or b% the sole
)rbitrator as the case a% be shall be final and conclusi&e upon all the parties in said arbitration dispute. The
"ecision or awar" of the Arbitration %ommittee or of the Sole Arbitrator or of the *oar" of 3irectors as the case ma)
be shall be appealable onl% on *uestions of law to an% of the Regional #rial $ourts in the National $apital
Region where the Head +ffice of an% of the parties is located. The appellant shall perfect his appeal b) filin$ a
notice of appeal to the Arbitration Secretariat an" filin$ a 7etition with the Re$ional Trial %o&rt of the National
%apital Re$ion for the review of the "ecision or awar" of the committee or sole arbitrator or of the *oar" of 3irectors
as the case ma) be within a non.eCten"ible perio" of fifteen 41,5 "a)s from an" after its receipt of the or"er "en)in$
or $rantin$ sai" motion for reconsi"eration or new trial ha" been file" within a non.eCten"ible perio" of fifteen 41,5
"a)s from an" after its receipt of the or"er "en)in$ or $rantin$ sai" motion for reconsi"eration or of the "ecision
ren"ere" after the new trial if one ha" been $rante"-
C C C C- 4Emphasis s&pplie"5
As provi"e" in the 7%6% R&les the fin"in$s of facts of the "ecision or awar" ren"ere" b) the Arbitration %ommittee
shall be final an" concl&sive &pon all the parties in sai" arbitration "isp&te-#= Un"er Article #1//#9 of the New %ivil
%o"e the vali"it) of an) stip&lation on the finalit) of the arbitrators8 awar" or "ecision is reco$niIe"- 6owever where
the con"itions "escribe" in Articles #1+=+1 #1+9+1 an" #1/1+# applicable to both compromises an" arbitrations are
obtainin$ the arbitrators8 awar" ma) be ann&lle" or rescin"e"-++ %onseF&entl) the "ecision of the Arbitration
%ommittee is s&b0ect to 0&"icial review-
F&rthermore petitioner ha" several 0&"icial reme"ies available at its "isposal after the Arbitration %ommittee "enie"
its 'otion for Reconsi"eration- It ma) petition the proper RT% to iss&e an or"er vacatin$ the awar" on the $ro&n"s
provi"e" for &n"er Section #/ of the Arbitration Law-+/ 7etitioner li(ewise has the option to file a petition for review
&n"er R&le /+ of the R&les of %o&rt with the %o&rt of Appeals on F&estions of fact of law or miCe" F&estions of fact
an" law-+, Lastl) petitioner ma) file a petition for certiorari &n"er R&le 9, of the R&les of %o&rt on the $ro&n" that
the Arbitrator %ommittee acte" witho&t or in eCcess of its 0&ris"iction or with $rave ab&se of "iscretion amo&ntin$ to
lac( or eCcess of 0&ris"iction- Since this case involves acts or omissions of a F&asi.0&"icial a$enc) the petition sho&l"
be file" in an" co$niIable onl) b) the %o&rt of Appeals-+9
In this instance petitioner "i" not avail of an) of the abovementione" reme"ies available to it- Instea" it file" a
petition for review with the RT% where %ivil %ase No- 9#.1/, is pen"in$ p&rs&ant to Section 1+ of the 7%6% R&les
to s&stain its action- %learl) it erre" in the proce"&re it chose for 0&"icial review of the arbitral awar"-
6avin$ establishe" that petitioner faile" to avail of the abovementione" reme"ies we now "isc&ss the iss&e of the
0&ris"iction of the trial co&rt with respect to the petition for review file" b) petitioner-
:&ris"iction is the a&thorit) to hear an" "etermine a ca&se . the ri$ht to act in a case-+; :&ris"iction over the s&b0ect
matter is the power to hear an" "etermine the $eneral class to which the procee"in$s in F&estion belon$- :&ris"iction
over the s&b0ect matter is conferre" b) law an" not b) the consent or acF&iescence of an) or all of the parties or b)
erroneo&s belief of the co&rt that it eCists-+=
In the instant case petitioner an" respon"ent have a$ree" that the 7%6% R&les wo&l" $overn in case of controvers)-
6owever since the 7%6% R&les came abo&t onl) as a res&lt of an a$reement between an" amon$ member ban(s of
7%6% an" not b) law it cannot confer 0&ris"iction to the RT%- Th&s the portion of the 7%6% R&les $rantin$
0&ris"iction to the RT% to review arbitral awar"s onl) on F&estions of law cannot be $iven effect-
%onseF&entl) the proper reco&rse of petitioner from the "enial of its motion for reconsi"eration b) the Arbitration
%ommittee is to file either a motion to vacate the arbitral awar" with the RT% a petition for review with the %o&rt of
Appeals &n"er R&le /+ of the R&les of %o&rt or a petition for certiorari &n"er R&le 9, of the R&les of %o&rt- In the
case at bar petitioner file" a petition for review with the RT% when the same sho&l" have been file" with the %o&rt of
Appeals &n"er R&le /+ of the R&les of %o&rt- Th&s the RT% of 'a(ati "i" not err in "ismissin$ the petition for
review for lac( of 0&ris"iction b&t not on the $ro&n" that petitioner sho&l" have file" a separate case from %ivil %ase
No- 9#.1/, b&t on the necessit) of filin$ the correct petition in the proper co&rt- It is immaterial whether petitioner
file" the petition for review in %ivil %ase No- 9#.1/, as an appeal of the arbitral awar" or whether it file" a separate
case in the RT% consi"erin$ that the RT% will onl) have 0&ris"iction over an arbitral awar" in cases of motions to
vacate the same- !therwise as el&ci"ate" herein the %o&rt of Appeals retains 0&ris"iction in petitions for review or in
petitions for certiorari- %onseF&entl) petitioner8s ar$&ments with respect to the filin$ of separate action from %ivil
%ase No- 9#.1/, res&ltin$ in a m&ltiplicit) of s&its cannot be $iven "&e co&rse-
Alternative "isp&te resol&tion metho"s or A3Rs H li(e arbitration me"iation ne$otiation an" conciliation H are
enco&ra$e" b) the S&preme %o&rt- *) enablin$ parties to resolve their "isp&tes amicabl) the) provi"e sol&tions that
are less time.cons&min$ less te"io&s less confrontational an" more pro"&ctive of $oo"will an" lastin$
relationships-+9 It m&st be borne in min" that arbitration procee"in$s are mainl) $overne" b) the Arbitration Law an"
s&ppletoril) b) the R&les of %o&rt-
>6EREF!RE in li$ht of the fore$oin$ the petition is 3ENIE3- The November 9 1999 !r"er of the Re$ional Trial
%o&rt of 'a(ati %it) *ranch 1+, in %ivil %ase No- 9#.1/, which "ismisse" the petition for review for lac( of
0&ris"iction an" the Febr&ar) 1 #111 !r"er "en)in$ its reconsi"eration are AFFIR'E3-
S! !R3ERE3-
H
G.R. No. 1418,, -arch ./( .00,
1- P+23R 3NG4N33R4NG $+RP+R)#4+N( petitioner
vs-
$)P4#+1 4N567#R4)1 $+N7#R6$#4+N GR+6P7( 4N$.( respon"ent-
P)NG)N4!)N( J.8
Alternative "isp&te resol&tion metho"s or A3Rs .. li(e arbitration me"iation ne$otiation an" conciliation .. are
enco&ra$e" b) the S&preme %o&rt- *) enablin$ parties to resolve their "isp&tes amicabl) the) provi"e sol&tions that
are less time.cons&min$ less te"io&s less confrontational an" more pro"&ctive of $oo"will an" lastin$
relationships-1
The Case
*efore &s is a 7etition for Review on %ertiorari# &n"er R&le /, of the R&les of %o&rt see(in$ to set asi"e the :an&ar)
#= #111 3ecision of the %o&rt of Appeals+ 4%A5 in %A.DR %V No- ,/#+#- The "ispositive portion of the 3ecision
rea"s as follows2
B>6EREF!RE the 0&"$ment appeale" from is REVERSE3 an" SET ASI3E- The parties are !R3ERE3 to
present their "isp&te to arbitration in accor"ance with their S&b.contract A$reement- The s&ret) bon" poste"
b) Jrespon"entK is J"Kischar$e"-B/
The Facts
!n Febr&ar) ## 19=+ 7etitioner L' 7ower En$ineerin$ %orporation an" Respon"ent %apitol In"&strial %onstr&ction
Dro&ps Inc- entere" into a BS&bcontract A$reementB involvin$ electrical wor( at the Thir" 7ort of Lamboan$a-,
!n April #, 19=, respon"ent too( over some of the wor( contracte" to petitioner-9 Alle$e"l) the latter ha" faile" to
finish it beca&se of its inabilit) to proc&re materials-;
Upon completin$ its tas( &n"er the %ontract petitioner bille" respon"ent in the amo&nt of 79;11=1+-91-=%ontestin$
the acc&rac) of the amo&nt of a"vances an" billable accomplishments liste" b) the former the latter ref&se" to pa)-
Respon"ent also too( ref&$e in the termination cla&se of the A$reement-9 That cla&se allowe" it to set off the cost of
the wor( that petitioner ha" faile" to &n"erta(e .. "&e to termination or ta(e.over .. a$ainst the amo&nt it owe" the
latter-
*eca&se of the "isp&te petitioner file" with the Re$ional Trial %o&rt 4RT%5 of 'a(ati 4*ranch 1/15 a %omplaint 11for
the collection of the amo&nt representin$ the alle$e" balance "&e it &n"er the S&bcontract- Instea" of s&bmittin$ an
Answer respon"ent file" a 'otion to 3ismiss11 alle$in$ that the %omplaint was premat&re beca&se there was no
prior reco&rse to arbitration-
In its !r"er1# "ate" September 1, 19=; the RT% "enie" the 'otion on the $ro&n" that the "isp&te "i" not involve
the interpretation or the implementation of the A$reement an" was therefore not covere" b) the arbitral cla&se-1+
After trial on the merits the RT%1/ r&le" that the ta(e.over of some wor( items b) respon"ent was not eF&ivalent to a
termination b&t a mere mo"ification of the S&bcontract- The latter was or"ere" to $ive f&ll pa)ment for the wor(
complete" b) petitioner-
Ruling of the Court of Appeals
!n appeal the %A reverse" the RT% an" or"ere" the referral of the case to arbitration- The appellate co&rt hel" as
arbitrable the iss&e of whether respon"ent8s ta(e.over of some wor( items ha" been inten"e" to be a termination of the
ori$inal contract &n"er Letter BGB of the S&bcontract- It r&le" li(ewise on two other iss&es2 whether petitioner was
liable &n"er the warrant) cla&se of the A$reement an" whether it sho&l" reimb&rse respon"ent for the wor( the latter
ha" ta(en over-1,
6ence this 7etition-19
The Issues
In its 'emoran"&m petitioner raises the followin$ iss&es for the %o&rt8s consi"eration2
BA
>hether or not there eCistJsK a controvers)@"isp&te between petitioner an" respon"ent re$ar"in$ the interpretation an"
implementation of the S&b.%ontract A$reement "ate" Febr&ar) ## 19=+ that reF&ires prior reco&rse to vol&ntar)
arbitrationA
B*
In the affirmative whether or not the reF&irements provi"e" in Article III 1 of %IA% Arbitration R&les re$ar"in$
reF&est for arbitration haJveK been complie" withJ-KB1;
The Courts Ruling
The 7etition is &nmeritorio&s-
First Issue:
Whether Dispute Is Arbitrable
7etitioner claims that there is no conflict re$ar"in$ the interpretation or the implementation of the A$reement- Th&s
witho&t havin$ to resort to prior arbitration it is entitle" to collect the val&e of the services it ren"ere" thro&$h an
or"inar) action for the collection of a s&m of mone) from respon"ent- !n the other han" the latter conten"s that there
is a nee" for prior arbitration as provi"e" in the A$reement- This is beca&se there are some "isparities between the
parties8 positions re$ar"in$ the eCtent of the wor( "one the amo&nt of a"vances an" billable accomplishments an"
the set off of eCpenses inc&rre" b) respon"ent in its ta(e.over of petitioner8s wor(-
>e si"e with respon"ent- Essentiall) the "isp&te arose from the parties8 ncon$r&ent positions on whether certain
provisions of their A$reement co&l" be applie" to the facts- The instant case involves technical "iscrepancies that are
better left to an arbitral bo") that has eCpertise in those areas- In an) event the incl&sion of an arbitration cla&se in a
contract "oes not ipso facto "ivest the co&rts of 0&ris"iction to pass &pon the fin"in$s of arbitral bo"ies beca&se the
awar"s are still 0&"iciall) reviewable &n"er certain con"itions-1=
In the case before &s the S&bcontract has the followin$ arbitral cla&se2
B9- The 7arties hereto a$ree that any dispute or conflict as regards to interpretation and implementation of
this Agreement which cannot be settle" between Jrespon"entK an" JpetitionerK amicabl) shall be settled by
means of arbitration C C C-B19
%learl) the resol&tion of the "isp&te between the parties herein reF&ires a referral to the provisions of their
A$reement- >ithin the scope of the arbitration cla&se are "iscrepancies as to the amo&nt of a"vances an" billable
accomplishments the application of the provision on termination an" the conseF&ent set.off of eCpenses-
A review of the fact&al alle$ations of the parties reveals that the) "iffer on the followin$ F&estions2 415 3i" a ta(e.
over@termination occ&rM 4#5 'a) the eCpenses inc&rre" b) respon"ent in the ta(e.over be set off a$ainst the amo&nts it
owe" petitionerM 4+5 6ow m&ch were the a"vances an" billable accomplishmentsM
The resol&tion of the fore$oin$ iss&es lies in the interpretation of the provisions of the A$reement- Accor"in$ to
respon"ent the ta(e.over was ca&se" b) petitioner8s "ela) in completin$ the wor(- S&ch "ela) was in violation of the
provision in the A$reement as to time sche"&le2
BD- TIM !C"D#$
BJ7etitionerK shall a"here strictl) to the sche"&le relate" to the >!RG an" complete the >!RG within the
perio" set forth in AnneC % hereof- N! time eCtension shall be $rante" b) Jrespon"entK to JpetitionerK &nless
a correspon"in$ time eCtension is $rante" b) Jthe 'inistr) of 7&blic >or(s an" 6i$hwa)sK to the
%!NS!RTIU'-B#1
*eca&se of the "ela) respon"ent alle$es that it too( over some of the wor( contracte" to petitioner p&rs&ant to the
followin$ provision in the A$reement2
BG- TRMI%ATI&% &F A'RM%T
BJRespon"entK has the right to terminate and(or ta)e o*er this A$reement for an) of the followin$ ca&ses2
C C C C C C C C C
N9- If "espite previo&s warnin$s b) Jrespon"entK JpetitionerK "oes not eCec&te the >!RG in
accor"ance with this A$reement or persistently or flagrantly neglects to carry out +its, obligations
under this Agreement-B#1
S&ppose"l) as a res&lt of the Bta(e.overB respon"ent inc&rre" eCpenses in eCcess of the contracte" price- It so&$ht to
set off those eCpenses a$ainst the amo&nt claime" b) petitioner for the wor( the latter accomplishe" p&rs&ant to the
followin$ provision2
BIf the total "irect an" in"irect cost of completin$ the remainin$ part of the >!RG eCcee" the s&m which
wo&l" have been pa)able to JpetitionerK ha" it complete" the >!RG the amo&nt of s&ch eCcess Jma) beK
claime" b) Jrespon"entK from either of the followin$2
N1- An) amo&nt "&e JpetitionerK from Jrespon"entK at the time of the termination of this A$reement-B##
The iss&e as to the correct amo&nt of petitioner8s a"vances an" billable accomplishments involves an eval&ation of the
manner in which the parties complete" the wor( the eCtent to which the) "i" it an" the eCpenses each of them
inc&rre" in connection therewith- Arbitrators also nee" to loo( into the comp&tation of forei$n an" local costs of
materials forei$n an" local a"vances retention fees an" letters of cre"it an" taCes an" "&ties as set forth in the
A$reement- These "ata can be $athere" from a review of the A$reement pertinent portions of which are repro"&ce"
here&n"er2
B%- C&%TRACT -RIC A%D TRM! &F -A.M%T
C C C C C C C C C
BAll pro$ress pa)ments to be ma"e b) Jrespon"entK to JpetitionerK shall be s&b0ect to a retention s&m of ten
percent 411E5 of the val&e of the approve" F&antities- An) claims b) Jrespon"entK on JpetitionerK ma) be
"e"&cte" b) Jrespon"entK from the pro$ress pa)ments an"@or retaine" amo&nt- An) eCcess from the retaine"
amo&nt after "e"&ctin$ Jrespon"ent8sK claims shall be release" b) Jrespon"entK to JpetitionerK after the
iss&ance of Jthe 'inistr) of 7&blic >or(s an" 6i$hwa)sK of the %ertificate of %ompletion an" final
acceptance of the >!RG b) Jthe 'inistr) of 7&blic >or(s an" 6i$hwa)sK-
C C C C C C C C C
B3- I'7!RTE3 'ATERIALS AN3 EOUI7'ENT
BJRespon"ent shall open the letters of cre"it for the importation of eF&ipment an" materials liste" in AnneC E
hereof after the "rawin$s broch&res an" other technical "ata of each items in the list have been formall)
approve" b) Jthe 'inistr) of 7&blic >or(s an" 6i$hwa)sK- 6owever petitioner will still be f&ll) responsible
for all importe" materials an" eF&ipment-
BAll eCpenses inc&rre" b) Jrespon"entK both in forei$n an" local c&rrencies in connection with the openin$ of
the letters of cre"it shall be "e"&cte" from the %ontract 7rices-
C C C C C C C C C
BN- &T"R C&%DITI&%!
C C C C C C C C C
B#- All c&stoms "&ties import "&ties contractor8s taCes income taCes an" other taCes that ma) be reF&ire"
b) an) $overnment a$encies in connection with this A$reement shall be for the sole acco&nt of
JpetitionerK-B#+
*ein$ an ineCpensive spee") an" amicable metho" of settlin$ "isp&tes#/ arbitration .. alon$ with me"iation
conciliation an" ne$otiation .. is enco&ra$e" b) the S&preme %o&rt- Asi"e from &nclo$$in$ 0&"icial "oc(ets
arbitration also hastens the resol&tion of "isp&tes especiall) of the commercial (in"-#, It is th&s re$ar"e" as the Bwave
of the f&t&reB in international civil an" commercial "isp&tes-#9 *r&shin$ asi"e a contract&al a$reement callin$ for
arbitration between the parties wo&l" be a step bac(war"-#;
%onsistent with the above.mentione" polic) of enco&ra$in$ alternative "isp&te resol&tion metho"s co&rts sho&l"
liberall) constr&e arbitration cla&ses- 7rovi"e" s&ch cla&se is s&sceptible of an interpretation that covers the asserte"
"isp&te an or"er to arbitrate sho&l" be $rante"-#= An) "o&bt sho&l" be resolve" in favor of arbitration-#9
!econd Issue:
-rior Re/uest for Arbitration
Accor"in$ to petitioner ass&min$ arguendo that the "isp&te is arbitrable the fail&re to file a formal reF&est for
arbitration with the %onstr&ction In"&str) Arbitration %ommission 4%IA%5 precl&"e" the latter from acF&irin$
0&ris"iction over the F&estion- To bolster its position petitioner even cites o&r r&lin$ in Tesco !er*ices Incorporated *0
1era-+1 >e are not pers&a"e"-
Section 1 of Article II of the ol" R&les of 7roce"&re Dovernin$ %onstr&ction Arbitration in"ee" reF&ire" the
s&bmission of a reF&est for arbitration as follows2
BSE%TI!N- 1- !ubmission to Arbitration .. An) part) to a constr&ction contract wishin$ to have reco&rse to
arbitration b) the %onstr&ction In"&str) Arbitration %ommission 4%IA%5 shall s&bmit its ReF&est for
Arbitration in s&fficient copies to the Secretariat of the %IA%A 7R!VI3E3 that in the case of $overnment
constr&ction contracts all a"ministrative reme"ies available to the parties m&st have been eCha&ste" within
91 "a)s from the time the "isp&te arose-B
Tesco was prom&l$ate" b) this %o&rt &sin$ the fore$oin$ provision as reference-
!n the other han" Section 1 of Article III of the new R&les of 7roce"&re Dovernin$ %onstr&ction Arbitration has
"ispense" with this reF&irement an" reco&rse to the %IA% ma) now be availe" of whenever a contract Bcontains a
cla&se for the s&bmission of a f&t&re controvers) to arbitrationB in this wise2
BSE%TI!N 1- !ubmission to CIAC 2urisdiction P An arbitration cla&se in a constr&ction contract or a
s&bmission to arbitration of a constr&ction "isp&te shall be "eeme" an a$reement to s&bmit an eCistin$ or
f&t&re controvers) to %IA% 0&ris"iction notwithstan"in$ the reference to a "ifferent arbitration instit&tion or
arbitral bo") in s&ch contract or s&bmission- >hen a contract contains a cla&se for the s&bmission of a f&t&re
controvers) to arbitration it is not necessar) for the parties to enter into a s&bmission a$reement before the
claimant ma) invo(e the 0&ris"iction of %IA%-B
The fore$oin$ amen"ments in the R&les were formaliIe" b) %IA% Resol&tion Nos- #.91 an" +.9+-+1
The "ifference in the two provisions was clearl) eCplaine" in China Chang 2iang nergy Corporation 3-hilippines4 *0
Rosal Infrastructure 5uilders et al-+# 4an eCten"e" &nsi$ne" Resol&tion5 an" reiterate" in %ational Irrigation
Administration *0 Court of Appeals++ from which we F&ote th&s2
BUn"er the present R&les of 7roce"&re for a partic&lar constr&ction contract to fall within the 0&ris"iction of
%IA% it is merel) reF&ire" that the parties a$ree to s&bmit the same to vol&ntar) arbitration Unli(e in the
ori$inal version of Section 1 as applie" in the Tesco case the law as it now stan"s "oes not provi"e that the
parties sho&l" a$ree to s&bmit "isp&tes arisin$ from their a$reement specificall) to the %IA% for the latter to
acF&ire 0&ris"iction over the same- Rather it is plain an" clear that as lon$ as the parties a$ree to s&bmit to
vol&ntar) arbitration re$ar"less of what for&m the) ma) choose their a$reement will fall within the
0&ris"iction of the %IA% s&ch that even if the) specificall) choose another for&m the parties will not be
precl&"e" from electin$ to s&bmit their "isp&te before the %IA% beca&se this ri$ht has been veste" &pon each
part) b) law i-e- E-!- No- 111=-B+/
%learl) there is no more nee" to file a reF&est with the %IA% in or"er to vest it with 0&ris"iction to "eci"e a
constr&ction "isp&te-
The arbitral cla&se in the A$reement is a commitment on the part of the parties to s&bmit to arbitration the "isp&tes
covere" therein- *eca&se that cla&se is bin"in$ the) are eCpecte" to abi"e b) it in $oo" faith- +, An" beca&se it covers
the "isp&te between the parties in the present case either of them ma) compel the other to arbitrate-+9
Since petitioner has alrea") file" a %omplaint with the RT% witho&t prior reco&rse to arbitration the proper proce"&re
to enable the %IA% to "eci"e on the "isp&te is to reF&est the sta) or s&spension of s&ch action as provi"e" &n"er RA
=;9 Jthe Arbitration LawK-+;
>6EREF!RE the 7etition is 3ENIE3 an" the assaile" 3ecision AFFIR'E3- %osts a$ainst petitioner-
S! !R3ERE3-
H