EUROPEAN RESOURCES AND TECHNOLOGIES, INC. VS. INGENIEUBURO BIRKHAHN ABS-CBN V. WORLD INTERACTIVE NETWORK SYSTEMS (G.R. NO.
WORK SYSTEMS (G.R. NO. 169332)
+ NOLTE
G.R. No. 159586, July 26, 2004, 435 SCRA 246, 255
FACTS: German Consortium submitted its bid to Clark Development Corporation
whereby the former will construct, manage and operate Integrated Waste
Management for the Clark Special Economic Zone. After its approval, German
Consortium entered into a Memorandum of Understanding with other
corporations for the purposes of establishing a joint venture. From this MOU, the
European Resources and Technologies (Petitioner) was incorporated. After which,
German Consortium executed a MOA with the petitioner whereby the German
Consortium ceded its rights and obligation to perform the contract of services with
the Clark Development Corporation. In accordance with the said agreement, the
petitioner started performing the construction, management and operation of
Integrated Waste Management in behalf of the German Consortium. But after a
period of time, German Consortium filed an injunction against the petitioner
contending that the latter is usurping its authority to perform its contract with
CDC. It alleged that the MOA between them did not materialize since CDC opposed
to the same alleging that the MOA was in violation of its original contract
regarding the Integrated Waste Management. Also, German Consortium alleged
that the other corporations did not comply with the memorandum of
understanding since they failed to finalize a shareholders sharing agreement after
incorporating the petitioner (European Resources and Technologies). The
petitioner filed a motion to dismiss and prayed that the dispute be referred to the
arbitration pursuant to its MOA with German Consortium.
RTC denied it and its MR.
CA: Petition for Certiorari under rule 65 was then filed to the CA but the same was
denied. Hence an appeal based on rule 45 was filed to the SC.
ISSUE: WON arbitration is proper in this case?
HELD: No. We have ruled in several cases that arbitration agreements are valid,
binding, enforceable and not contrary to public policy such that when there
obtains a written provision for arbitration which is not complied with, the trial
court should suspend the proceedings and order the parties to proceed to
arbitration in accordance with the terms of their agreement. In the case at bar, the
MOA between petitioner ERTI and respondent German Consortium provided:
Should there be a disagreement between or among the Parties relative to the
interpretation or implementation of this Agreement and the collateral documents
including but not limited to the Contract for Services between GERMAN
CONSORTIUM and CDC and the Parties cannot resolve the same by themselves, the
same shall be endorsed to a panel of arbitrators which shall be convened in
accordance with the process ordained under the Arbitration Law of the Republic of
the Philippines. Indeed, to brush aside a contractual agreement calling for
arbitration in case of disagreement between parties would be a step backward. But
there are exceptions to this rule. Even if there is an arbitration clause, there are
instances when referral to arbitration does not appear to be the most prudent
action. The object of arbitration is to allow the expeditious determination of a
dispute. Clearly, the issue before us could not be speedily and efficiently resolved in
its entirety if we allow simultaneous arbitration proceedings and trial, or
suspension of trial pending arbitration. As discussed earlier, the dispute between
respondent German Consortium and petitioners involves the disapproval by the
CDC of the assignment by the German Consortium of its rights under the Contract
for Services to petitioner ERTI. Admittedly, the arbitration clause is contained in
the MOA to which only the German Consortium and petitioner ERTI were parties.
Even if the case is brought before an arbitration panel, the decision will not be
binding upon CDC who is a non-party to the arbitration agreement. What is more,
the arbitration panel will not be able to completely dispose of all the issues of this
case without including CDC in its proceedings. Accordingly, the interest of justice
would only be served if the trial court hears and adjudicates the case in a single
and complete proceeding.
Facts:
Petitioner ABS-CBN Broadcasting Corporation entered into a licensing agreement
with respondent World Interactive Network Systems (WINS) Japan Co., Ltd., a
foreign corporation licensed under the laws of Japan, in that the former granted
respondent the exclusive license to distribute and sublicense the distribution of
the television service known as “The Filipino Channel” (TFC) in Japan. By virtue
thereof, petitioner undertook to transmit the TFC programming signals to
respondent which the latter received through its decoders and distributed to its
subscribers. A dispute arose between the parties when petitioner accused
respondent of inserting nine episodes of WINS WEEKLY, a weekly 35-minute
community news program for Filipinos in Japan, into the TFC programming.
Petitioner claimed that these were “unauthorized insertions” constituting a
material breach of their agreement. Consequently, petitioner notified respondent
of its intention to terminate the agreement. Thereafter, respondent filed an
arbitration suit pursuant to the arbitration clause of its agreement with petitioner.
The parties appointed Professor Alfredo F. Tadiar to act as sole arbitrator who then
rendered a decision in favor of respondent holding that petitioner gave its
approval for the airing of WINS WEEKLY as shown by a series of written exchanges
between the parties and that petitioner threatened to terminate the agreement
due to its desire to compel respondent to re-negotiate the terms thereof for
higher fees. He then allowed respondent to recover temperate damages,
attorney’s fees and one-half of the amount it paid as arbitrator’s fee. Petitioner
filed in the CA a petition for review under Rule 43 of the Rules of Court or, in the
alternative, a petition for certiorari under Rule 65 of the same Rules, with
application for temporary restraining order and writ of preliminary injunction.
Respondent, on the other hand, filed a petition for confirmation of arbitral award.
The CA rendered the assailed decision dismissing ABS-CBN’s petition for lack of
jurisdiction. Petitioner moved for reconsideration but the same was denied.
Issue:
The issue before us is whether or not an aggrieved party in a voluntary arbitration
dispute may avail of, directly in the CA, a petition for review under Rule 43 or a
petition for certiorari under Rule 65 of the Rules of Court, instead of filing a
petition to vacate the award in the RTC when the grounds invoked to overturn the
arbitrator’s decision are other than those for a petition to vacate an arbitral award
enumerated under RA 876.
Ruling:
RA 876 itself mandates that it is the Court of First Instance, now the RTC, which has
jurisdiction over questions relating to arbitration, such as a petition to vacate an
arbitral award. As RA 876 did not expressly provide for errors of fact and/or law
and grave abuse of discretion (proper grounds for a petition for review under Rule
43 and a petition for certiorari under Rule 65, respectively) as grounds for
maintaining a petition to vacate an arbitral award in the RTC, it necessarily follows
that a party may not avail of the latter remedy on the grounds of errors of fact
and/or law or grave abuse of discretion to overturn an arbitral award. Adamson v.
Court of Appeals gave ample warning that a petition to vacate filed in the RTC
which is not based on the grounds enumerated in Section 24 of RA 876 should be
dismissed.
In cases not falling under any of the aforementioned grounds to vacate an award,
the Court has already made several pronouncements that a petition for review
under Rule 43 or a petition for certiorari under Rule 65 may be availed of in the CA.
Which one would depend on the grounds relied upon by petitioner.
Nevertheless, although petitioner’s position on the judicial remedies available to it
was correct, we sustain the dismissal of its petition by the CA. The remedy
petitioner availed of, entitled “alternative petition for review under Rule 43 or
petition for certiorari under Rule 65,” was wrong. Time and again, we have ruled
that the remedies of appeal and certiorari are mutually exclusive and not
alternative or successive.
A careful reading of the assigned errors reveals that the real issues calling for the
CA’s resolution were less the alleged grave abuse of discretion exercised by the
arbitrator and more about the arbitrator’s appreciation of the issues and evidence
presented by the parties. Therefore, the issues clearly fall under the classification
of errors of fact and law — questions which may be passed upon by the CA via a
petition for review under Rule 43. Petitioner cleverly crafted its assignment of
errors in such a way as to straddle both judicial remedies, that is, by alleging
serious errors of fact and law (in which case a petition for review under Rule 43
would be proper) and grave abuse of discretion (because of which a petition for
certiorari under Rule 65 would be permissible).
Wherefore, the petition is hereby denied. The decision and resolution of the CA
directing the RTC to proceed with the trial of the petition for confirmation of
arbitral award is affirmed.
DR. LUCAS G. ADAMSON AND ADAMSON MANAGEMENT CORPORATION VS HON.
COURT OF APPEALS G.R. No. 106879 May 27, 1994
FACTS: On June 15, 1990, the parties, Adamson Management Corporation and
Lucas Adamson on the one hand, and APAC Holdings Limited on the other, entered
into a contract whereby the former sold 99.97% of outstanding common shares of
stocks of Adamson and Adamson, Inc. to the latter for P24, 384,600.00 plus the
Net Asset Value (NAV) of Adamson and Adamson, Inc. as of June 19, 1990. But the
parties failed to agree on a reasonable Net Asset Value. This prompted them to
submit the case for arbitration in accordance with Republic Act No. 876, otherwise
known as the Arbitration Law. The Arbitral Tribunal rendered the award in favor of
APAC Holdings Limited. Thereafter, APAC Holdings Ltd. filed a petition for
confirmation of the arbitration award before the Regional Trial Court of Makati.
Herein petitioners opposed the petition and prayed for the nullification,
modification and/or correction of the same, alleging that the arbitrators
committed evident partiality and grave abuse of discretion. The Regional Trial
Court rendered a decision vacating the arbitration award. Thereafter, the Court of
Appeals, in reversing the trial court's decision held that the nullification of the
decision of the Arbitration Committee was not based on the grounds provided by
the Arbitration Law and that private respondents [petitioners herein] have failed to
substantiate with any evidence their claim of partiality. Significantly, even as
respondent judge ruled against the arbitrators' award, he could not find fault with
their impartiality and integrity. Evidently, the nullification of the award rendered at
the case at bar was made not on the basis of any of the grounds provided by law.
ISSUE:
Whether or not, the Court of Appeals err in affirming the arbitration award and in
reversing the decision of the trial court?
HELD:
No. Section 24 of the Arbitration Law provides as follows: Sec. 24. Grounds for
vacating award. - In any one of the following cases, the court must make an order
vacating the award upon the petition of any party to the controversy when such
party proves affirmatively that in the arbitration proceedings: (b) That there was
evident partiality or corruption in the arbitrators or any of them; Petitioners herein
failed to prove their allegation of partiality on the part of the arbitrators. Proofs
other than mere inferences are needed to establish evident partiality. That they
were disadvantaged by the decision of the Arbitration Committee does not prove
evident partiality. Too much reliance has been accorded by petitioners on the
decision of the trial court. However, we find that the same is but an adaptation of
the arguments of petitioners to defeat the petition for confirmation of the arbitral
award in the trial court by herein private respondent. It is clear therefore, that the
award was vacated not because of evident partiality of the arbitrators but because
the latter interpreted the contract in a way which was not favourable to herein
petitioners and because it considered that herein private respondents, by
submitting the controversy to arbitration, was seeking to renege on its obligations
under the contract. That the award was unfavourable to petitioners herein did not
prove evident partiality. That the arbitrators resorted to contract interpretation
neither constituted a ground for vacating the award because under the
circumstances, the same was necessary to settle the controversy between the
parties regarding the amount of the NAV. In any case, this Court finds that the
interpretation made by the arbitrators did not create a new contract, as alleged by
herein petitioners but was a faithful application of the provisions of the
Agreement. Neither was the award arbitrary for it was based on the statements
prepared by the SGV which was chosen by both parties to be the "auditors."
Korea Technologies Co. Ltd vs Lerma
GR No. 143581 January 7, 2008
Facts: Petitioner Korea Technologies Co., Ltd. (KOGIES) is a Korean corporation
which is engaged in the supply and installation of Liquefied Petroleum Gas (LPG)
Cylinder manufacturing plants, while private respondent Pacific General Steel
Manufacturing Corp. (PGSMC) is a domestic corporation. On March 5, 1997,
PGSMC and KOGIES executed a Contract whereby KOGIES would set up an LPG
Cylinder Manufacturing Plant in Carmona, Cavite. The contract was executed in the
Philippines. On April 7, 1997, the parties executed, in Korea, an Amendment for
Contract No. KLP-970301 dated March 5, 1997 amending the terms of payment.
The contract and its amendment stipulated that KOGIES will ship the machinery
and facilities necessary for manufacturing LPG cylinders for which PGSMC would
pay USD 1,224,000. KOGIES would install and initiate the operation of the plant for
which PGSMC bound itself to pay USD 306,000 upon the plants production of the
11-kg. LPG cylinder samples. Thus, the total contract price amounted to USD
1,530,000. On October 14, 1997, PGSMC entered into a Contract of Lease with
Worth Properties, Inc. (Worth) for use of Worths 5,079-square meter property
with a 4,032-square meter warehouse building to house the LPG manufacturing
plant. The monthly rental was PhP 322,560 commencing on January 1, 1998 with a
10% annual increment clause. Subsequently, the machineries, equipment, and
facilities for the manufacture of LPG cylinders were shipped, delivered, and
installed in the Carmona plant. PGSMC paid KOGIES USD 1,224,000. However,
gleaned from the Certificate executed by the parties on January 22, 1998, after the
installation of the plant, the initial operation could not be conducted as PGSMC
encountered financial difficulties affecting the supply of materials, thus forcing the
parties to agree that KOGIES would be deemed to have completely complied with
the terms and conditions of the March 5, 1997 contract. For the remaining balance
of USD306,000 for the installation and initial operation of the plant, PGSMC issued
two postdated checks: (1) BPI Check No. 0316412 dated January 30, 1998 for PhP
4,500,000; and (2) BPI Check No. 0316413 dated March 30, 1998 for PhP
4,500,000. When KOGIES deposited the checks, these were dishonored for the
reason PAYMENT STOPPED. Thus, on May 8, 1998, KOGIES sent a demand letter to
PGSMC threatening criminal action for violation of Batas Pambansa Blg. 22 in case
of nonpayment. On the same date, the wife of PGSMCs President faxed a letter
dated May 7, 1998 to KOGIES President who was then staying at a Makati City
hotel. She complained that not only did KOGIES deliver a different brand of
hydraulic press from that agreed upon but it had not delivered several equipment
parts already paid for.
Issue: Whether or not the arbitration clause in the contract of the parties should
govern.
Held: Yes. Established in this jurisdiction is the rule that the law of the place where
the contract is made governs. Lex loci contractus. The contract in this case was
perfected here in the Philippines. Therefore, our laws ought to govern.
Nonetheless, Art. 2044 of the Civil Code sanctions the validity of mutually agreed
arbitral clause or the finality and binding effect of an arbitral award. Art. 2044
provides, Any stipulation that the arbitrators award or decision shall be final, is
valid, without prejudice to Articles 2038, 2039 and 2040.

The arbitration clause was mutually and voluntarily agreed upon by the parties. It
has not been shown to be contrary to any law, or against morals, good customs,
public order, or public policy. There has been no showing that the parties have not
dealt with each other on equal footing. We find no reason why the arbitration
clause should not be respected and complied with by both parties. In Gonzales v.
Climax Mining Ltd., we held that submission to arbitration is a contract and that a
clause in a contract providing that all matters in dispute between the parties shall
be referred to arbitration is a contract. Again in Del Monte Corporation-USA v.
Court of Appeals, we likewise ruled that [t]he provision to submit to arbitration any
dispute arising therefrom and the relationship of the parties is part of that contract
and is itself a contract.
Having said that the instant arbitration clause is not against public policy, we come
to the question on what governs an arbitration clause specifying that in case of any
dispute arising from the contract, an arbitral panel will be constituted in a foreign
country and the arbitration rules of the foreign country would govern and its
award shall be final and binding.
Thus, it can be gleaned that the concept of a final and binding arbitral award is
similar to judgments or awards given by some of our quasi-judicial bodies, like the
National Labor Relations Commission and Mines Adjudication Board, whose final
judgments are stipulated to be final and binding, but not immediately executory in
the sense that they may still be judicially reviewed, upon the instance of any party.
Therefore, the final foreign arbitral awards are similarly situated in that they need
first to be confirmed by the RTC.
JORGE GONZALES and PANEL OF ARBITRATORS vs. CLIMAX MINING LTD., CLIMAX-
ARIMCO MINING CORP. and AUSTRALASIAN PHILIPPINES MINING INC., G.R. No.
161957, January 22, 2007
Facts: This is a consolidation of two petitions rooted in the same disputed
Addendum Contract entered into by the parties. In one case, the Court held that
the DENR Panel of Arbitrators had no jurisdiction over the complaint for the
annulment of the Addendum Contract on grounds of fraud and violation of the
Constitution and that the action should have been brought before the regular
courts as it involved judicial issues. Gonzales averred that the DENR Panel of
Arbitrators Has jurisdiction because the case involvesa mining dispute that
properly falls within the ambit of the Panel’s authority.
Respondents Climax Mining Ltd., et al., on the other hand, seek
reconsideration/clarification on the decision holding that the case should not be
brought for arbitration under R.A. No. 876. They argued that the arbitration clause
in the Addendum Contract should be treated as an agreement independent of the
other terms of the contract, and that a claimed rescission of the main contract
does not avoid the duty to arbitrate. On another case, Gonzales challenged the
order of the RTC requiring him to proceed with the arbitration proceedings while
the complaint for the nullification of the Addendum Contract was pending before
the DENR Panel of Arbitrators. He contended that any issue as to the nullity,
inoperativeness, or incapability of performance of the arbitration
clause/agreement raised by one of the parties to the alleged arbitration agreement
must be determined by the court prior to referring them to arbitration. While
Climax-Arimco contended that an application to compel arbitration under Sec. 6 of
R.A. No. 876 confers on the trial court only a limited and special jurisdiction,
i.e., a jurisdiction solely to determine (a) whether or not the parties have a written
contract to arbitrate, and (b) if the defendant has failed to comply with that
contract
Issue:
Whether or not arbitration is proper even though issues of validity and nullity of
the Addendum Contract and, consequently, of the arbitration clause were raised.
Ruling:
Positive. In La Naval Drug Corporation v. Court of Appeals,the Court held that R.A.
No. 876 explicitly confines the court's authority only to the determination of
whether or not there is an agreement in writing providing for arbitration. In the
affirmative, the statute ordains that the court shall issue an order "summarily
directing the parties to proceed with the arbitration in accordance with the terms
thereof." If the court, upon the other hand, finds that no such agreement exists,
"the proceeding shall be dismissed." The cited case also stressed that the
proceedings are summary in nature.
. NATIONAL POWER CORP (NPC) VS. HON. ALONZO-LEGASTO
G.R. No. 148318, November 22, 2004, 443 SCRA 342
FACTS: NPC and First United Construction Corporation (FUCC) entered into a
contract for the construction of power facilities. These constructions are to be
performed in Cawayan and Bacman (located in sorsogon). The project was
commenced in accordance with the agreement, but later on, after FUCC excavated
5.0 meters for plant elevation, it requested for some changes in work since its
rippers and dozers could no longer excavate. It likewise requested for additional
payment per cubic meter for the excavation. The said proposal however did not
materialize since the NPC alleged that the prices are too high. As a result of
irreconcilable proposals, FUCC stop performing the construction. On the other
hand, to prevent further losses, the BOD of NPC passed a resolution allowing its
President to assume the construction project. FUCC then filed an action for specific
performance with preliminary injunction against NPC in the RTC. The RTC granted
the preliminary injunction. NPC elevated the case to the CA by filing a petition for
certiorari under rule 65 for grave abuse of discretion. The CA granted it and issued
a TRO. Meanwhile, FUCC filed a case to the Ombudsman for graft and corruption
against NPC officials. It also filed an appeal to the SC. During the pendency of
appeal, the parties entered into a compromise. The arbitrator rendered its
judgment but the NPC did not agree to it hence it filed a petition to vacate in the
RTC.
RTC: The RTC approved the compromise and denied the petition to vacate.
CA: Petition for certiorari again was filed in the CA but the same was denied.
Appeal was then brought to the SC.
ISSUE: WON the decision of the arbitrator should be vacated?
HELD: No. The parties in the present case mutually agreed to submit to arbitration
the settlement of the price of blasting, the parties claims for damages, delay and
interests and all other unresolved claims including the exact volume of blasted
rocks. They further mutually agreed that the decision of the Arbitration Board shall
be final and immediately executory. A stipulation submitting an ongoing dispute to
arbitration is valid. As a rule, the arbitrators’ award cannot be set aside for mere
errors of judgment either as to the law or as to the facts. Courts are generally
without power to amend or overrule merely because of disagreement with
matters of law or facts determined by the arbitrators. They will not review the
findings of law and fact contained in an award, and will not undertake to substitute
their judgment for that of the arbitrators. A contrary rule would make an
arbitration award the commencement, not the end, of litigation. Errors of law and
fact, or an erroneous decision on matters submitted to the judgment of the
arbitrators, are insufficient to invalidate an award fairly and honestly made. Judicial
review of an arbitration award is, thus, more limited than judicial review of a trial.
However, an arbitration award is not absolute and without exceptions. Where the
conditions described in Articles 2038, 2039 and 2040 of the Civil Code applicable to
both compromises and arbitrations are obtaining, the arbitrators’ award may be
annulled or rescinded. Additionally, judicial review of an arbitration award is
warranted when the complaining party has presented proof of the existence of any
of the grounds for vacating, modifying or correcting an award outlined under
Sections 24 and 25 of R.A. 876, viz: Section 24: Grounds for vacating an award: In
any of the following cases, the court must make an order vacating the award upon
the petition of any party to the controversy when such party proves affirmatively
that in the arbitration proceedings: (a) The award was procured by corruption,
fraud, or other undue means; or (b) That there was evident partiality or corruption
in the arbitrators or any of them; or (c) That the arbitrators were guilty of
misconduct in refusing to postpone the hearing upon sufficient cause shown, or in
refusing to hear evidence pertinent and material to the controversy; that one or
more of the arbitrators was disqualified to act as such under section nine hereof,
and willfully refrained from disclosing such disqualifications or of any other
misbehavior by which the rights of any party have been materially prejudiced; or (d)
That the arbitrators exceeded their powers, or so imperfectly executed them, that a
mutual, final and definite award upon the subject matter submitted to them was
not made. When an award is vacated, the court, in its discretion, may direct a new
hearing either before the same arbitrators or before a new arbitrator or arbitrators
to be chosen in the manner provided in the submission or contract for the
selection of the original arbitrator or arbitrators, and any provision limiting the
time in which the arbitrators may make a decision shall be deemed applicable to
the new arbitration to commence from the date of the court’s order. Where the
court vacates an award, costs not exceeding fifty pesos and disbursements may be
awarded to the prevailing party and the payment thereof may be enforced in like
manner as the payment of costs upon the motion in an action. Section 25: Grounds
for modifying or correcting an award: In any one of the following cases, the court
must make an order modifying or correcting the award, upon the application of
any party to the controversy which was arbitrated: (a) Where there was an evident
miscalculation of figures, or an evident mistake in the description of any person,
thing or property referred to in the award; or (b) Where the arbitrators have
awarded upon a matter not submitted to them, not affecting the merits of the
decision upon the matter submitted; or (c) Where the award is imperfect in a
matter of form not affecting the merits of the controversy, and if it had been a
commissioners report, the defect could have been amended or disregarded by the
court. The order may modify and correct the award so as to effect the intent
thereof and promote justice between the parties. In this case, petitioner does not
specify which of the foregoing grounds it relies upon for judicial review. Petitioner
avers that if and when the factual circumstances referred to in the provisions
aforementioned are present, judicial review of the award is warranted. From its
presentation of issues, however, it appears that the alleged evident partiality of
Mr. Sison is singled out as a ground to vacate the board’s decision. We note,
however, that the Court of Appeals found that petitioner did not present any proof
to back up its claim of evident partiality on the part of Mr. Sison. Its averments to
the effect that Mr. Sison was biased and had prejudged the case do not suffice to
establish evident partiality. Neither does the fact that a party was disadvantaged
by the decision of the arbitration committee prove evident partiality. According to
the appellate court, petitioner was never deprived of the right to present evidence
nor was there any showing that the Board showed signs of any bias in favor of
FUCC. As correctly found by the trial court, this Court cannot find its way to
support petitioners’ contention that there was evident partiality in the assailed
Award of the Arbitrator in favor of the respondent because the conclusion of the
Board, which the Court found to be well-founded, is fully supported by substantial
evidence