ADR Digested Cases

Submitted by: DENNIS SEBASTIAN B. DAVIDE

ADR

DECEMBER 18, 2014

G.R. No. 169332 February 11, 2008 ABS-CBN vs. WORLD INTERACTIVE NETWORK SYSTEMS (WINS) JAPAN CO., LTD. FACTS: Petitioner FACTS: Petitioner ABS-CBN entered into an agreement with respondent World Interactive Network Systems (WINS). Under the agreement, respondent was granted the exclusive license to distribute and sublicense the distribution of the television service known as "The Filipino Channel" (TFC) in Japan. A dispute arose when petitioner petitioner accused respondent respondent of inserting nine episodes of WINS WEEKLY, into the TFC programming from f rom March to May 2002, claiming that such insertions were unauthorized thus constituting a material breach of their agreement. As a result, petitioner notified respondent of its intention to terminate their licensing agreement. Thereafter, respondent filed an arbitration suit pursuant to the arbitration clause of its i ts agreement with petitioner and contended that the airing of WINS WEEKLY was made with petitioner's prior approval. It also alleged that petitioner only threatened to terminate their agreement because it wanted to renegotiate the terms thereof to allow it to demand higher fees. Respondent also prayed for damages for petitioner's alleged grant of an exclusive distribution license to another entity, NHK (Japan Broadcasting Corporation). The parties appointed a sole arbitrator in the person of Professor Alfredo F. Tadiar and the latter reached a decision in favor of respondent. 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. The CA rendered the assailed decision dismissing ABS-CBN’s ABS- CBN’s petition for lack of jurisdiction. It ruled that it is the RTC which has jurisdiction over questions relating to arbitration. It held that t he only instance it can exercise jurisdiction over an arbitral award is an appeal from the trial court's decision confirming, vacating or modifying the arbitral award. It further stated that a petition for certiorari under Rule 65 of the Rules of Court is proper in ar bitration cases only if the courts refuse or neglect to inquire into the facts of an arbitrator's award. ISSUE: Whether or not an aggrieved party in a voluntary voluntary arbitration dispute may avail 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 petit ion to vacate the award in the. RULING: The CA’s decision is sound. A petition for review under Rule 43 or a petition for certiorari under Rule 65 directly in the CA is NOT the proper remedy. RA 876 itself mandates that it is the Court of First Instance, now the RTC, which has jurisdiction over questions relating relating to arbitration, such as a petition to vacate an arbitral award. As RA 876 did not expressly expressly provide that errors of fact and/or law and grave grave abuse of discretion, which is the proper grounds for a petition for review under Rule 43 and a petition for certiorari under Rule 65, 65, This means that such ground is not acceptable acceptable for maintaining a petition to to vacate an arbitral award in the RTC. Thus, it follows fol lows that a party may not avail of the remedies under Rule 43 and Rule 65 on the grounds of errors of fact and/or law or grave abuse of discretion to overturn an arbitral award. ADR Case Digests by Dennis Sebastian B. Davide

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ADR

DECEMBER 18, 2014

G.R. No. 141818 June 22, 2006 INSULAR SAVINGS BANK VS. FAR EAST BANK FACTS: On December 11, 1991, Far East Bank and Trust Company (Respondent) filed a complaint against Home Bankers Trust and Company (HBTC) with the Philippine Clearing House Corporation’s (PCHC) Arbitration Committee Respondent sought to recover from the petitioner, the sum of P25,200,000.00 representing the total amount of the three checks drawn and debited against its clearing account. HBTC sent these checks to respondent for clearing by operation of the PCHC clearing system. Thereafter, respondent dishonored the checks for insufficiency of funds and returned the checks to HBTC. However, the latter refused to accept them since the checks were returned by respondent after the reglementary regional clearing period. Meanwhile, on January 17, 1992, before the termination of the arbitration proceedings, respondent filed another complaint but this time with the Regional Trial Court (RTC) in Makati City docketed as Civil Case No. 92-145 for Sum of Money and Damages with Preliminary Attachment. The complaint was filed not only against HBTC but also against Robert Young, Eugene Arriesgado and Victor Tancuan (collectively known as Defendants), who were the president and depositors of HBTC respectively. Aware of the arbitration proceedings between respondent and petitioner, the RTC, in an Omnibus Order dated April 30, 1992. suspended the proceedings in the case against all the defendants pending the decision of the Arbitration Committee. On February 2, 1998, the PCHC Arbitration Committee rendered its decision in favor of respondent. The motion for reconsideration filed by petitioner was denied by the Arbitration Committee. Consequently, to appeal the decision of the Arbitration Committee in Arbicom Case No. 91-069, petitioner filed a petition for review in the earlier case filed by respondent in Branch 135 of the RTC of Makati and docketed as Civil Case No. 92-145. ISSUE: Whether or not the RTC has jurisdiction on the petition for review filed by petitioner. RULING: No. THe proper recourse of petitioner from the denial of its motion for reconsideration by the Arbitration Committee is to file either a m otion to vacate the arbitral award with the RTC, a petition for review with the Court of Appeals under Rule 43 of th e Rules of Court, or a petition for certiorari under Rule 65 of the Rules of Court. In the case at bar, petitioner filed a petition for review with the RTC when the same should have been filed with the Court of Appeals under Rule 43 of the Rules of Court. Thus, the RTC of Makati did not err in dismissing the petition for review for lack of jurisdiction but not on the ground that petitioner should have filed a separate case from Civil Case No. 92-145 but on the necessity of filing the correct petition in the proper court. It is immaterial whether petitioner filed the petition for review in Civil Case No. 92 -145 as an appeal of the arbitral award or whether it filed a separate case in the RTC, considering that the RTC will only have jurisdiction over an arbitral award in cases of motions to vacate the same. Otherwise, as elucidated herein, the Court of Appeals retains jurisdiction in petitions for review or in petitions for certiorari. Consequently, petitioner’s arguments, with respect to the filing of separate action from Civil Case No. 92-145 resulting in a multiplicity of suits, cannot be given due course.

ADR Case Digests by Dennis Sebastian B. Davide

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ADR

DECEMBER 18, 2014

G.R. No. 163101 February 13, 2008 Benguet Corp. vs DENR FACTS: Benguet and J.G. Realty entered into a RAWOP, wherein J.G. Realty was acknowledged as the owner of four mining claims. In the RAWOP, Benguet obligated itself to perfect the rights to the mining claims and/or otherwise acquire the mining rights to the mineral claims. One day, Benguet informed J.G. Realty of its intention to develop the mining claims. However, J.G. Realty informed Benguet that it was terminating the RAWOP. J.G. Realty filed a Petition for Declaration of Nullity/Cancellation of the RAWOP with the Legaspi City POA The POA issued a Decision cancelling the RAWOP. ISSUE: Whether or not the controversy has to be first submitted to arbitration before the POA took cognizance of the case. RULING:. YES. POA has no jurisdiction over the dispute which is governed by RA 876, the arbitration law. In the event a case that should properly be the subject of voluntary arbitration is erroneously filed with the courts or quasi-judicial agencies, on motion of the defendant, the court or quasi-judicial agency shall determine whether such contractual provision for ar bitration is sufficient and effective. If in affirmative, the court or quasi-judicial agency shall then order the enforcement of said provision However, we find that Benguet is already estopped from questioning the POA’s jurisdiction. As it were, when J.G. Realty filed DENR Case No. 2000-01, Benguet filed its answer and participated in the proceedings before the POA, Region V. Secondly, when the adverse March 19, 2001 POA Decision was rendered, it filed an appeal with the MAB in Mines Administrative Case No. R-M-2000-01 and again participated in the MAB proceedings. When the adverse December 2, 2002 MAB Decision was promulgated, it f iled a motion for reconsideration with the MAB. When the adverse March 17, 2004 MAB Resolution was issued, Benguet filed a petition with this Court pursuant to Sec. 79 of RA 7942 impliedly recognizing MAB’s jurisdiction. In this factual milieu, the Court rules that the jurisdiction of POA and that of MAB can no longer be questioned by Benguet at this late hour. W hat Benguet should have done was to immediately challenge the POA’s jurisdiction by a special civil action for certiorari when POA ruled that it has jurisdiction over the dispute.


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ADR

DECEMBER 18, 2014

G.R. No. 126619 December 20, 2006 UNIWIDE SALES REALTY AND RESOURCES CORPORATION vs.TITAN-IKEDA CONSTRUCTION AND DEVELOPMENT CORPORATION FACTS: Titan-Ikeda entered into 3 construction agreement with Uniwide. Titan-Ikeda then filed with the RTC an action for a sum of money against Uniwide because the latter failed to pay certain claims billed by Titan after the completion of the 3 projects. Uniwide moved for the dismissal/suspension of the proceeding in order for them to proceed with arbitration. The Arbitrators issued terms of reference which was signed by the parties. Uniwide did not attempt to modify the TOR to accommodate its belated counterclaim on deadlines for liquidated damages. Titan then filedthe case with CIAC. In its decision, the CIAC declared the following: That in Project 1, Uniwide is absolved of any liability. In Project 2, Uniwide is absolved of any liability for VAT payment and for the account of Titan, and Titan is absolved from liability for defective construction. In Project 3, Uniwide is held liable for unpaid balance (5,158,364.63) plus 12% interest/annum and to pay the full VAT for the additional work where no written authorization was presented. CIAC likewise rejected the claim on liquidated damages. After Uniwide’s motion for reconsideration was denied by CIAC, it filed a petition for review with CA but same was denied, thus, Uniwide filed a petition for review under rule 45 to seek partial reversal of the decision of CA which modified the decision of CIAC. Uniwide claims that CIAC should have applied procedural rules such as section 5, Rule 10 with more liberality because it was an administrative tribunal which free from all rigid technicalities of regular courts because the CA held that the issue on liquidated damages should be left for determination in future proceedings. ISSUE: Whether or not CIAC should have applied the Rules of Court in the arbitration proceeding. RULING: No. The rule of Procedure Governing Construction Arbitration promulgated by the CIAC contains no provision on the application of the Rules of Court to arbitration proceedings, even in a suppletory capacity. Such importation of the Rules of Court provision on amendment to conform to evidence would contravene the spirit, if not the letter of the CIAC rules. This is for the reason that the formulation of the Terms of Reference is done with the active participation of the parties and their counsel themselves. The TOR is further required to be signed by all the parties, their respective counsel and all the members of the Arbitral Tribunal. Unless the issues thus carefully formulated in the Terms of Reference were expressly showed to be amended, issues outside thereof may not be resolved. As already noted in the Decision, "no attempt was ever made by the [Uniwide] to modify the TOR in order to accommodate the issues related to its belated counterclaim" on this issue. Arbitration has been defined as "an arrangement for taking and abiding by the judgment of selected persons in some disputed matter, instead of carrying it to established tribunals of justice, and is intended to avoid the formalities, the delay, the expense and vexation of ordinary litigation.


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ADR

DECEMBER 18, 2014

G.R. No. 182248 December 18, 2008 EQUITABLE PCI BANKING vs. RCBC CAPITAL CORPORATION FACTS: RCBC Capital Corporation (RCBC), as buyer, executed a Share Purchase Agreement (SPA) for the purchase of petitioners’ interests in Bankard, representing 226,460,000 shares, for the price of PhP 1,786,769,400. To expedite then purchase, RCBC agreed to dispense with the conduct of a due diligence audit on the financial status of Bankard. RCBC deposited the stipulated down-payment amount in an escrow account after which i t was given full management and operational control of Bankard. June 2, 2000 is also considered by the parties as the Closing Date referred to in the SPA. Sometime in September 2000, RCBC had Bankard’s accounts audited, creating for the purpose an audit team and the conclusion was that the warranty, as contained in Section 5(h) of the SPA (simply Sec. 5[h] hereinafter), was correct. RCBC paid the balance of the contract price. The corresponding deeds of sale for the shares in question were executed in January 2001. Thereafter RCBC informed petitioners of its having overpaid the purchase price of the subject shares, claiming that there was an overstatement of valuation of accounts amounting to PhP 478 million, resulting in the overpayment of over PhP 616 million. Thus, RCBC claimed that petitioners violated their warranty, as sellers, embodied in Sec. 5(g) of the SPA (Sec. 5[g] hereinafter). RCBC, in accordance with Sec. 10 of the SPA, filed a Request for Arbitration dated May 12, 2004 with the ICC-ICA. In the request, RCBC charged Bankard with deviating from, contravening and not following generally accepted accounting principles and practices in maintaining their books. Arbitration in the ICC-ICA proceeded after the formation of the arbitration tribunal consisting of retired Justice Santiago M. Kapunan, nominated by petitioners; Neil Kaplan, RCBC’s nominee; and Sir Ian Barker, appointed by the ICC-ICA. After drawn out proceedings with each party alleging deviation and non-compliance by the other with arbitration rules, the tribunal, with Justice Kapunan dissenting, rendered a Partial Award . On the matter of prescription, the tribunal held that RCBC’s claim is not time-barred, the claim properly falling under the contemplation of Sec. 5(g) and not Sec. 5(h). As such, the tribunal concluded, RCBC’s claim was filed within the three (3)-year period under Sec. 5(g) and that the six (6)-month period under Sec. 5(h) did not apply.The tribunal also exonerated RCBC from laches, the latter having sought relief within the three (3)-year period prescribed in the SPA. Notably, the tribunal considered the rescission of the SPA and ASPA as impracticable and "totally out of the question." RCBC filed with the RTC a Motion to Confirm Partial Award. The RTC issued the fir st assailed order confirming the Partial Award and denying the adverted separate motions to vacate and to suspend and inhibit. From this order, petitioners sought reconsideration, but their motion was denied by the RTC . ISSUE: Whether or not Rule 45 is the proper remedy.


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ADR

DECEMBER 18, 2014

RULING: The petition must be denied. Rule 45 is not the remedy available to petitioners as the proper mode of appeal assailing the decision of the RTC confirming as arbitral award is an appeal before the CA pursuant to Sec. 46 of Republic Act No. (RA) 9285, otherwise known as the Alternative Dispute Resolution Act of 2004. The Court Will Not Overturn an Arbitral Award Unless It Was Made in Manifest Disregard of the law. Errors in law and fact would not generally justify the reversal of an arbitral award. A party asking for the vacation of an arbitral award must show that any of the grounds for vacating, rescinding, or modifying an award are present or that the arbitral award was made in manifest disregard of the law. Otherwise, the Court is duty-bound to uphold an arbitral award. The instant petition dwells on the alleged manifest disregard of the law by the ICC-ICA. The US case of Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Jaros18 expounded on the phrase "manifest disregard of the law" in the following wise: This court has emphasized that manifest disregard of the law is a very narrow standard of review. Anaconda Co. v. District Lodge No. 27, 693 F.2d 35 (6th Cir.1982). A mere error in interpretation or application of the law is insufficient. Anaconda, 693 F.2d at 37-38. Rather, the decision must fly in the face of clearly established legal precedent. When faced with questions of law, an arbitration panel does not act in manifest disregard of the law unless (1) the applicable legal principle is clearly defined and not subject to reasonable debate; and (2) the arbitrators refused to heed that legal principle. Thus, to justify the vacation of an arbitral award on account of "manifest disregard of the law," the arbiter’s findings must clearly and unequivocally violate an established legal precedent. Anything less would not suffice.


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ADR Digested Cases

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