CASE DIGESTS

ALTERNATIVE DISPUTE RESOLUTION

PREPARED BY:
JARED MARK LAGAHIT
JD L31

SUBMITTED TO:
ATTY. JONATHAN ALTUBAR

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TRANSFIELD PHILIPPINES, INC., petitioner, vs. LUZON
HYDRO CORPORATION, AUSTRALIA AND NEW
ZEALAND BANKING GROUP LIMITED and SECURITY
BANK CORPORATION, respondents.

G.R. No. 146717. May 19, 2006.

FACTS:

Petitioner entered into a turnkey contract with Luzon Hydro

Corporation (LHC) and provided in the contract is that whenever
disputes arise, it shall be resolved through mediation, conciliation and
the like.

In the contract, petitioner undertook to construct a hydro-electric

power station, and are entitled to claim extensions of time (EOT).

Several disputes arose regarding the EOT and calls for arbitration
were initiated by both parties multiple times.

LHC finally called on Securities and claimed that petitioner no longer

has the right for extensions and that the project failed to complete.
Petitioner then filed a petition for injunction with prayer for issuance of
writ of preliminary injunction to prevent LHC from calling on Securities
and withdrawing the amount deposited for the project.

The petition was denied in the RTC but was granted by the CA but
the delay in the latter’s action has caused the withdrawal of the
amount deposited in the bank as securities when LHC trooped to the
bank and withdrew a huge portion of the deposit.

Several motions and appeals were then filed and all this happened
during the pendency of an arbitration proceeding.

ISSUE:

Whether or not the pendency of the arbitration proceeding would

make withdrawal of the Securities wrongful and fraudulent on part of
the LHC

RULING:

As a fundamental point, the pendency of arbitral proceedings does

not foreclose resort to the courts for provisional reliefs. The Rules of
the International Chamber of Commerce (ICC), which governs the
parties’ arbitral dispute, allows the application of a party to a judicial
authority for interim or conservatory measures.

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In addition, R.A. 9285, otherwise known as the Alternative Dispute
Resolution Act of 2004, allows the filing of provisional or interim
measures with the regular courts whenever the arbitral tribunal has
no power to act or to act effectively.

The fact that the ICC Arbitral tribunal included the proceeds of the
securities shows that it intended to make a final determination/award
as to the said issue only in the Final Award and not in the previous
partial awards. This supports LHC’s position that when the Third
Partial Award was released and Civil Case No. 04-332 was filed, TPI
was not yet authorized to seek the issuance of a writ of execution
since the quantification of the amounts due to TPI had not yet been
settled by the ICC Arbitral tribunal. Notwithstanding the fact that the
amount of proceeds drawn on the securities was not disputed the
application for the enforcement of the Third Partial Award was
precipitately filed. To repeat, the declarations made in the Third
Partial Award do not constitute orders for the payment of money.
Anent the claim of TPI that it was LHC which committed forum
shopping, suffice it to say that its bare allegations are not sufficient to
sustain the charge.

WHEREFORE, the Court RESOLVES to DISMISS the charges of

forum shopping filed by both parties against each other.

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FEDERAL EXPRESS CORPORATION AND RHICKE S. JENNINGS,
PETITIONERS, VS. AIRFREIGHT 2100, INC. AND ALBERTO D.
LINA, RESPONDENTS.

G.R. No. 216600. November 21, 2016

FACTS:

The case involves Federal Express Corporation (FedEx) and Rhicke

S. Jennings (Jennings) as petitioners, and Airfreight 2100, Inc. (Air21)
and Alberto D. Lina as respondents.

FedEx is a foreign corporation engaged in international air carriage,

logistics, and freight forwarding, while Air21 is a domestic corporation
involved in the freight forwarding business.

The dispute between the parties arose from various issues relating to
their Global Service Program (GSP) contracts, which involved the
delivery and pick-up services of packages within the Philippines.

In an effort to settle their commercial dispute, FedEx and Air21

agreed to submit themselves to arbitration before the Philippine
Dispute Resolution Center (PDRC).

During the arbitration proceedings, Jennings, as a witness for FedEx,

made statements regarding the suspension of FedEx's International
Freight Forwarder's (IFF) license and the alleged proxy relationship
between Air21 and two other freight forwarding companies.

These statements led to a complaint for grave slander filed by Lina

against Jennings.

ISSUE:

Whether the statements made during the arbitration proceedings

should be considered confidential information.

RULING:

The Supreme Court granted the petition and held that the statements
made during the arbitration proceedings should be regarded as
confidential and privileged information.

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ABS-CBN BROADCASTING CORPORATION, Petitioner, vs.
WORLD INTERACTIVE NETWORK SYSTEMS (WINS) JAPAN CO.,
LTD., Respondent.

G.R. No. 169332. February 11, 2008

FACTS:

ABS-CBN Broadcasting Corporation (petitioner) and World Interactive

Network Systems (WINS) Japan Co., Ltd. (respondent) are involved
in a dispute over the unauthorized insertion of episodes into "The
Filipino Channel" (TFC) in Japan.

ABS-CBN entered into a licensing agreement with WINS, granting the

latter the exclusive license to distribute and sublicense TFC in Japan.

ABS-CBN accused WINS of inserting unauthorized episodes into

TFC programming, leading to the termination of the agreement.
WINS filed an arbitration suit, claiming that the airing of the episodes
was authorized and that ABS-CBN threatened to terminate the
agreement to renegotiate the terms.

The parties appointed an arbitrator who ruled in favor of WINS,

stating that ABS-CBN had given its approval and that any breach was
seasonably cured.

ABS-CBN filed a petition for review in the Court of Appeals (CA),

while WINS filed a petition for confirmation of the arbitral award in the
Regional Trial Court (RTC).

ISSUE:

Whether an aggrieved party in a voluntary arbitration dispute may

directly file a petition for review under Rule 43 or a petition for
certiorari under Rule 65 in the CA, 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 Section 24 of the Rules of Court.

RULING:

Section 24 of RA 876 provides for the specific grounds for a petition

to vacate an award made by an arbitrator:

Sec. 24. Grounds for vacating award. - In any one of the following
cases, the court must make an order vacating the award upon the

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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.

Based on the foregoing provisions, the law itself clearly provides that
the RTC must issue an order vacating an arbitral award only “in any
one of the . . . cases” enumerated therein. Under the legal maxim in
statutory construction expressio unius est exclusio alterius, the
explicit mention of one thing in a statute means the elimination of
others not specifically mentioned.

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.

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.

Petition is hereby denied; the decision and resolution of the Court of

Appeals directing the Regional Trial Court of Quezon City, Branch 93
to proceed with the trial of the petition for confirmation of arbitral
award is AFFIRMED.

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DEPARTMENT OF FOREIGN AFFAIRS, PETITIONER, VS. BCA
INTERNATIONAL CORPORATION, RESPONDENT.

G.R. No. 210858, June 29, 2016

FACTS:

The case involves a dispute between the Department of Foreign

Affairs (DFA) and BCA International Corporation (BCA) regarding the
termination of a Build-Operate-Transfer Agreement for the Machine
Readable Passport and Visa Project.

BCA filed a Request for Arbitration opposing the termination and

sought the issuance of a subpoena to compel the DFA to produce
certain witnesses and documents.

The ad hoc arbitral tribunal approved BCA's request for the

subpoena.

The DFA filed a petition before the Regional Trial Court (RTC) to
quash the subpoena, claiming that the information sought was
protected by the deliberative process privilege.

The RTC ruled in favor of BCA, stating that the evidence sought was
no longer covered by the privilege as the DFA had already made a
definite proposition and entered into a contract.

The DFA appealed to the Supreme Court.

ISSUE/S:

Whether or not the 1976 UNCITRAL Arbitration Rules apply to the

proceeding and not RA 9285;

Whether or not specific witnesses are prohibited from disclosing

information before the Ad Hoc Arbitral Tribunal on the basis of
Deliberative Process Privilege

RULING:

The Court held that RA 9285 applies to the case since it is a

procedural law and as a general rule, has retroactive effects on the
grounds that no personal are violated since no vested rights has
attached or arisen from them.

On the second issue: deliberative process privilege is one kind of

privileged information, which is within the exceptions of the
constitutional right to information.
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"Deliberative process privilege contains three policy bases: first, the
privilege protects candid discussions within an agency; second, it
prevents public confusion from premature disclosure of agency
opinions before the agency establishes final policy; and third, it
protects the integrity of an agency's decision; the public should not
judge officials based on information they considered prior to issuing
their final decisions."

The Supreme Court partially granted the DFA's petition, remanding

the case to the RTC to determine whether the documents and
records sought to be subpoenaed are protected by the deliberative
process privilege.

The Court clarified that the privilege applies to predecisional and

deliberative documents that are part of the decision-making process
and are intended to protect the frank exchange of ideas and opinions.

The Court emphasized that the privilege cannot be waived and that
the burden falls on the government agency asserting the privilege to
prove that the information satisfies the requirements of being
predecisional and deliberative.

The Court directed the parties to specify their claims before the RTC,
which will then determine which evidence is covered by the privilege.

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KOREA TECHNOLOGIES CO., LTD., petitioner, vs. HON. ALBERTO
A. LERMA, in his capacity as Presiding Judge of Branch 256 of
Regional Trial Court of Muntinlupa City, and PACIFIC GENERAL
STEEL MANUFACTURING CORPORATION, respondents.

G.R. No. 143581. January 7, 2008

FACTS:

The dispute involves Korea Technologies Co., Ltd. (KOGIES), a

Korean corporation, and Pacific General Steel Manufacturing Corp.
(PGSMC), a domestic corporation.

On March 5, 1997, KOGIES and PGSMC entered into a contract for

KOGIES to establish an LPG Cylinder Manufacturing Plant in
Carmona, Cavite, Philippines.

The contract was amended on April 7, 1997, in Korea, to modify the

payment terms.

The total contract price was USD 1,530,000, with PGSMC paying
USD 1,224,000 for machinery and facilities and issuing two postdated
checks for the remaining USD 306,000.

These checks were dishonored due to "PAYMENT STOPPED."

PGSMC alleged that KOGIES delivered a different brand of hydraulic

press and failed to deliver several equipment parts, leading PGSMC
to cancel the contract and file an Affidavit-Complaint for Estafa
against KOGIES' President.

KOGIES insisted on arbitration as per the contract's arbitration

clause.
The Regional Trial Court (RTC) of Muntinlupa City denied KOGIES'
application for a writ of preliminary injunction and declared the
arbitration clause invalid.

The Court of Appeals (CA) affirmed the RTC's decision, prompting

KOGIES to file a Petition for Review on Certiorari with the Supreme
Court.

ISSUE:

Whether or not the Arbitration Clause is contrary to public policy.

RULING:

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Petitioner claims the RTC and the CA erred in ruling that the
arbitration clause is null and void.

Petitioner is correct.

Established in this jurisdiction is the rule that the law of the place
where the contract is made governs. Lex loci contractus.

The arbitration clause which stipulates that the arbitration must be

done in Seoul, Korea in accordance with the Commercial Arbitration
Rules of the Korean Commercial Arbitration Board (KCAB), and that
the arbitral award is final and binding, is not contrary to public policy.

While RA 9285 was passed only in 2004, it nonetheless applies in the

instant case since it is a procedural law which has a retroactive effect.
Likewise, KOGIES filed its application for arbitration before the KCAB
on July 1, 1998 and it is still pending because no arbitral award has
yet been rendered. Thus, RA 9285 is applicable to the instant case.
Well-settled is the rule that procedural laws are construed to be
applicable to actions pending and undetermined at the time of their
passage, and are deemed retroactive in that sense and to that extent.
As a general rule, the retroactive application of procedural laws does
not violate any personal rights because no vested right has yet
attached nor arisen from them.

Among the pertinent features of RA 9285 applying and incorporating

the UNCITRAL Model Law are the following:

(1) The RTC must refer to arbitration in proper cases

(2) Foreign arbitral awards must be confirmed by the RTC
(3) The RTC has jurisdiction to review foreign arbitral awards
(4) Grounds for judicial review different in domestic and foreign
arbitral awards
(5) RTC decision of assailed foreign arbitral award appealable

WHEREFORE, this petition is PARTLY GRANTED: The parties are

hereby ORDERED to submit themselves to the arbitration of their
dispute and differences arising from the subject Contract before the
KCAB; and PGSMC is hereby ALLOWED to dismantle and transfer
the equipment and machineries, if it had not done so, and ORDERED
to preserve and maintain them until the finality of whatever arbitral
award is given in the arbitration proceedings.

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MABUHAY HOLDINGS CORPORATION, petitioner, vs. SEMBCORP
LOGISTICS, LIMITED, respondent.

G.R. No. 212734. December 5, 2018

FACTS:

The case involves a dispute between Mabuhay Holdings Corporation

and Sembcorp Logistics Limited over a joint venture agreement.’

The joint venture agreement was entered into by the parties to

engage in the venture of carrying passengers on a common carriage
by inter-island fast ferry.

The agreement included an arbitration clause, stating that any

dispute arising from the agreement shall be settled through
arbitration.

After special audits, it was revealed that the joint venture corporations
incurred losses.

Sembcorp requested payment of its guaranteed return from Mabuhay

and IDHI.

Mabuhay admitted liability but asserted that it is only liable for fifty
percent of the claim.

Sembcorp filed a request for arbitration before the International Court

of Arbitration of the International Chamber of Commerce (ICC)
seeking payment of the guaranteed return, damages, interest, and
costs of arbitration.

The ICC appointed Dr. Anan Chantara-Opakorn as the sole arbitrator.

The arbitrator rendered a final award in favor of Sembcorp.

The final award directed Mabuhay to make the payment of the

guaranteed return, interest, and costs of arbitration.

Sembcorp filed a petition for recognition and enforcement of the

foreign arbitral award before the Regional Trial Court (RTC) of Makati
City.

The RTC dismissed the petition.

Sembcorp appealed to the Court of Appeals (CA), which reversed the

RTC decision and remanded the case for proper execution.
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Mabuhay filed a petition before the Supreme Court, arguing that the
CA erred in not dismissing the appeal for lack of jurisdiction and in
recognizing and enforcing the foreign arbitral award.

ISSUE:

Whether or not the CA erred in recognizing and enforcing the foreign

arbitral award.

RULING:

The Supreme Court held that the CA had jurisdiction to act on the
appeal and that Mabuhay failed to establish any ground for refusing
the enforcement of the foreign arbitral award.

The Court emphasized the pro-arbitration policy of the State and the
presumption in favor of enforcement of a foreign arbitral award.

The Court discussed the grounds for refusing enforcement or

recognition of an arbitral award, including incapacity of the parties,
lack of proper notice or opportunity to present a case, exceeding the
scope of the submission to arbitration, improper composition of the
arbitral authority, non-binding or set aside award, and violation of
public policy.

The Court ruled that enforcing the award is not contrary to public
policy, elucidating through Justice Laurel: “public policy” is vague and
uncertain in meaning, floating and changeable in connotation. It may
be said, however, that, in general, a contract which is neither
prohibited by law nor condemned by judicial decision, nor contrary to
public morals, contravenes no public policy. Contrary to public policy
are those that has a tendency to injure the public, is against the
public good, or contravenes some established interests of society, or
is inconsistent with sound policy and good morals, or tends clearly to
undermine the security of individual rights, whether of personal
liability or of private property.

On a final note, the Supreme Court implored the lower courts to apply
the ADR Act and the Special ADR Rules accordingly. Arbitration, as a
mode of alternative dispute resolution, is undeniably one of the viable
solutions to the longstanding problem of clogged court dockets.
International arbitration, as the preferred mode of dispute resolution
for foreign companies, would also attract foreign investors to do
business in the country that would ultimately boost Philippine’s
economy.

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EQUITABLE PCI BANKING CORPORATION, GEORGE L. GO,
PATRICK D. GO, GENEVIEVE W.J. GO, FERDINAND MARTIN G.
ROMUALDEZ, OSCAR P. LOPEZ-DEE, RENE J. BUENAVENTURA,
GLORIA L. TAN-CLIMACO, ROGELIO S. CHUA, FEDERICO C.
PASCUAL, LEOPOLDO S. VEROY, WILFRIDO V. VERGARA,
EDILBERTO V. JAVIER, ANTHONY F. CONWAY, ROMULAD U. DY
TANG, WALTER C. WESSMER, AND ANTONIO N. COTOCO,
PETITIONERS, VS. RCBC CAPITAL CORPORATION,
RESPONDENT.

G.R. No. 182248. December 18, 2008

FACTS:

The parties involved in the case are Equitable PCI Banking

Corporation (EPCIB) and RCBC Capital Corporation (RCBC).

The dispute revolves around a Share Purchase Agreement (SPA) for

the purchase of EPCIB's interests in Bankard, Inc.

The SPA stated that the audited financial statements of Bankard for
the specified years were fair, accurate, and complete in all material
respects.

RCBC claimed that there was an overstatement of valuation of

accounts, resulting in an overpayment of the purchase price.

RCBC alleges that EPCIB breached their warranties under the SPA
by improperly recording Bankard's receivables and deviating from
generally accepted accounting principles (GAAP).

The case was brought before the International Chamber of

Commerce International Court of Arbitration (ICC-ICA).

RCBC filed a Request for Arbitration with the International Chamber

of Commerce-International Court of Arbitration (ICC-ICA), seeking
rescission of the SPA and restitution of the purchase price, among
other damages.

The ICC-ICA rendered a Partial Award, finding that EPCIB breached

its warranties and that RCBC's claim was not time-barred.

EPCIB filed a petition for review, arguing that RCBC's claim was
time-barred and that they were denied due process.

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The court ruled that RCBC's claim was not time-barred and that they
were afforded due process.

The court upheld the Partial Award and denied EPCIB's petition.

ISSUE:

Whether or not the trial court erred in refusing to vacate the award
considering the claim in arbitration was already time-barred.

Whether or not there was failure to accord due process by the trial
court in denying petitioners a hearing on basic factual matter upon
which their liability is predicated.

RULING:

The claim in the arbitration was not time-barred as there are two
options available to RCBC and one allows for demands to be made
within 3 years in case there was overvaluation.

RCBC presented its written claim on May 5, 2003, or a little less than
a month before closing date, well within the three (3)-year prescriptive
period provided under Sec. 7 for the exercise of the right provided
under Sec. 5 (g).

Petitioners Were Not Denied Due Process.

The events unequivocally demonstrate ample opportunity for

petitioners to verify and examine RCBC's summaries, accounting
records, and reports. The pleadings reveal that RCBC granted
petitioners' requests for production of documents and accounting
records. More so, they had more than three (3) years to prepare for
their defense after RCBC's submission of its brief of evidence.
Finally, it must be emphasized that petitioners had the opportunity to
appeal the Partial Award to the RTC, which they in fact did. Later,
petitioners even moved for the reconsideration of the denial of their
appeal. Having been able to appeal and move for a reconsideration
of the assailed rulings, petitioners cannot claim a denial of due
process.

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RCBC CAPITAL CORPORATION, petitioner, vs. BANCO
DE ORO UNIBANK, INC., respondent.

G.R. No. 196171. December 10, 2012

BANCO DE ORO UNIBANK, INC., petitioner, vs. COURT

OF APPEALS and RCBC CAPITAL CORPORATION, respondents.

G.R. No. 199238. December 10, 2012

FACTS:

The dispute is between RCBC Capital Corporation (RCBC) and

Banco de Oro Unibank, Inc. (BDO) over an arbitration award.

On May 24, 2000, RCBC entered into a Share Purchase Agreement

(SPA) with Equitable-PCI Bank, Inc. (EPCIB), George L. Go, and
individual shareholders of Bankard, Inc. (Bankard) for the sale of
226,460,000 shares of Bankard.

RCBC claimed an overpayment due to an overstatement of valuation

of accounts amounting to P478 million, alleging a breach of warranty
under the SPA.

RCBC initiated arbitration proceedings with the International

Chamber of Commerce-International Court of Arbitration (ICC-ICA)
after failing to settle the dispute.

The arbitration tribunal, composed of Mr. Neil Kaplan, Justice

Santiago M. Kapunan, and Sir Ian Barker, issued a Partial Award on
September 27, 2007, finding breaches by the respondents but
denying RCBC's claim for rescission of the SPA.

RCBC sought confirmation of the Partial Award in the Regional Trial

Court (RTC) of Makati City, which was granted. The respondents'
motion to vacate the award was denied.

The Arbitral Tribunal rendered the Second Partial Award declaring

EPCIB pay the claimant $290,000.00 and the former’s counterclaim
to be withdrawn.

EPCIB raised the following grounds for vacating the Second Partial
Award: (a) the award is void ab initio having been rendered by the
arbitrators who exceeded their power or acted without it; and (b) the
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award was procured by undue means or issued with evident partiality
or attended by misbehavior on the part of the Tribunal which resulted
in a material prejudice to the rights of the Respondents.

ISSUE:

Whether or not there was evident partiality for vacating the award to
be valid

RULING:

Yes, there was evident partiality on the part of the Arbitral Tribunal.

Mr. Secomb’s (the arbitrator) article, "Awards and Orders Dealing

With the Advance on Costs in ICC Arbitration: Theoretical Questions
and Practical Problems" specifically dealt with the situation when one
of the parties to international commercial arbitration refuses to pay its
share on the advance on costs.

By furnishing the parties with a copy of this article, Chairman Barker

practically armed RCBC with supporting legal arguments under the
"contractual approach" discussed by Secomb. True enough, RCBC in
its Application for Reimbursement of Advance Costs Paid utilized said
approach as it singularly focused on Article 30(3) of the ICC Rules
and fiercely argued that BDO was contractually bound to share in the
advance costs fixed by the ICC.

Indeed, fairness dictates that Chairman Barker refrain from

suggesting to or directing RCBC towards a course of action to
advance the latter’s cause, by providing it with legal arguments
contained in an article written by a lawyer who serves at the ICC
Secretariat and was involved or had participation -- insofar as the
actions or recommendations of the ICC – in the case. Though done
purportedly to assist both parties, Chairman Barker’s act clearly
violated Article 15 of the ICC Rules declaring that "[i]n all cases, the
Arbitral Tribunal shall act fairly and impartially and ensure that each
party has a reasonable opportunity to present its case." Having pre-
judged the matter in dispute, Chairman Barker had lost his objectivity
in the issuance of the Second Partial Award.

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FRUEHAUF ELECTRONICS PHILIPPINES CORPORATION,
petitioner, vs. TECHNOLOGY ELECTRONICS ASSEMBLY and
MANAGEMENT PACIFIC CORPORATION, respondent.

G.R. No. 204197. November 23, 2016

FACTS:

The case involves a dispute over a lease agreement between

Fruehauf Electronics Philippines Corp. (Fruehauf) and Technology
Electronics Assembly and Management Pacific Corp. (TEAM).

Fruehauf leased several parcels of land to Signetics Filipinas

Corporation, which was later bought by TEAM.

After the lease expired, Fruehauf filed a petition for arbitration,

claiming that TEAM failed to return the leased premises and pay rent.

The dispute was referred to a three-member Arbitral Tribunal which

then awarded Fruehauf unpaid rent and damages.

TEAM filed a petition with the RTC to vacate the award however the
latter confirmed the award.

TEAM then appealed the decision with the CA which initially

dismissed but then later on amended and reversed the arbitral award
declaring that TEAM is not liable to pay for damages since they own
the equipment and buildings as they bought them from the previous
owner, Signet.

TEAM argued that an ordinary appeal was proper remedy but

Fruehauf emphasized the autonomy of arbitration and that courts do
not have power to review the merits of the award.

ISSUE:

Whether or not the courts have power to review the merits of the
award;

Whether or not ordinary appeal is available as remedy in the case at

bar.

RULING:

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The petition is meritorious.

The errors of an arbitral tribunal are not subject to correction by the

judiciary. As a private alternative to court proceedings, arbitration is
meant to be an end, not the beginning, of litigation. Thus, the arbitral
award is final and binding on the parties by reason of their contract -
the arbitration agreement.

An arbitral tribunal does not exercise quasi-judicial powers. As a

contractual and consensual body, the arbitral tribunal does not have
any inherent powers over the parties. It has no power to issue
coercive writs or compulsory processes. Thus, there is a need to
resort to the regular courts for interim measures of protection and for
the recognition or enforcement of the arbitral award.

The Special ADR Rules allow the RTC to correct or modify an arbitral
award pursuant to Section 25 of the Arbitration Law. However, this
authority cannot be interpreted as jurisdiction to review the merits of
the award.

Not even the Court's expanded certiorari jurisdiction under the

Constitution can justify judicial intrusion into the merits of arbitral
awards. While the Constitution expanded the scope of certiorari
proceedings, this power remains limited to a review of the acts of
"any branch or instrumentality of the Government." As a purely
private creature of contract, an arbitral tribunal remains outside the
scope of certiorari.

Lastly, the Special ADR Rules are a self-contained body of rules. The
parties cannot invoke remedies and other provisions from the Rules
of Court unless they were incorporated in the Special ADR Rules:

Rule 22.1. Applicability of Rules of Court. The provisions of the Rules

of Court that are applicable to the proceedings enumerated in Rule
1.1 of these Special ADR Rules have either been included and
incorporated in these Special ADR Rules or specifically referred to
herein.

In Connection with the above proceedings, the Rules of Evidence

shall be liberally construed to achieve the objectives of the Special
ADR Rules.

Contrary to TEAM'S position, the Special ADR Rules actually

forecloses against other remedies outside of itself. Thus, a losing
party cannot assail an arbitral award through a petition for review
under Rule 43 or a petition for certiorari under Rule 65 because these
remedies are not specifically permitted in the Special ADR Rules.

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In sum, the only remedy against a final domestic arbitral award is to
file petition to vacate or to modify/correct the award not later than
thirty (30) days from the receipt of the award. Unless a ground to
vacate has been established, the RTC must confirm the arbitral
award as a matter of course.
G.R. No. 196072. September 20, 2017

STEAMSHIP MUTUAL UNDERWRITING ASSOCIATION

(BERMUDA) LIMITED, petitioner, vs. SULPICIO LINES,
INC., respondent.

G.R. No. 208603. September 20, 2017

SULPICIO LINES, INC., petitioner, vs. STEAMSHIP

MUTUAL UNDERWRITING ASSOCIATION (BERMUDA)
LIMITED, respondent.

FACTS:

Steamship was a Bermuda-based Protection and Indemnity Club,

managed outside London, England. It insures its members-
shipowners against "third party risks and liabilities" for claims arising
from (a) death or injury to passengers; (b) loss or damage to cargoes;
and (c) loss or damage from collisions.

Sulpicio insured its fleet of inter-island vessels with Steamship for

Protection & Indemnity risks through local insurance agents, Pioneer
Insurance and Surety Corporation (Pioneer Insurance) or Seaboard-
Eastern Insurance Co., Inc. (Seaboard-Eastern).

Sulpicio claimed indemnity from Steamship under the Protection &

Indemnity insurance policy. Steamship denied the claim and
subsequently rescinded the insurance coverage of Sulpicio's other
vessels on the ground that "Sulpicio was grossly negligent in
conducting its business regarding safety, maintaining the
seaworthiness of its vessels as well as proper training of its crew."

On June 28, 2007, Sulpicio filed a Complaint with the Regional Trial
Court of Makati City against Steamship; one (1) of its directors, Gary
Rynsard; and its local insurance agents Pioneer Insurance and
Seaboard-Eastern for specific performance and damages.

Steamship filed its Motion to Dismiss and/or to Refer Case to

Arbitration pursuant to Republic Act No. 9285, or the Alternative
Dispute Resolution Act of 2004 (ADR Law), and to Rule 47 of the
2005/2006 Club Rules, which supposedly provided for arbitration in
London of disputes between Steamship and its members.
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Branch 149, Regional Trial Court, Makati City denied the motions to
dismiss.

Steamship assailed trial court orders before the Court of Appeals

through a Rule 65 Petition.

The Court of Appeals dismissed the petition and found no grave

abuse of discretion on the part of the trial court in denying
Steamship's 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.

Sulpicio alleges that Steamship initiated and concluded an arbitration

proceeding in London during the pendency of the resolution of the
case.

ISSUE:

Whether or not there is a valid and binding arbitration agreement

between Sulpicio and Steamship.

RULING:

Yes, there is a valid arbitration agreement between Sulpicio and

Steamship.

The Court finds no dear 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 London is but a bona fide attempt to
preserve and enforce its rights under the Club Rules.

There was no legal impediment at the time Steamship initiated

London arbitration proceedings. Steamship commenced arbitration
on July 31, 2007 even before the Regional Trial Court denied its
Motion to Dismiss and/or Refer Case to Arbitration on July 11, 2008.
There was no order from the Regional Trial Court enjoining
Steamship from initiating arbitration proceedings in London. Besides,
the 2009 Special ADR Rules specifically provided that arbitration
proceedings may be commenced or continued and an award may be
made, while the motion for the stay of civil action and for referral to
arbitration is pending resolution by the court.

The Court notes that while the arbitration proceeding was

commenced as early as July 31, 2007, it is only six (6) years later that
Sulpicio filed its Petition to cite Steamship for indirect contempt.
Sulpicio cannot invoke lack of knowledge of the London arbitration
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proceedings due to several reasons. First, it received and replied to
the notice of commencement of arbitration proceedings dated July
31, 2007. Second, Steamship presented evidence showing Sulpicio's
refusal to receive any notices, orders, or communications related to
the arbitration proceedings. Lastly, the pendency of the London
arbitration was made known to the Court of Appeals and this Court
through Steamship's petitions. Sulpicio's belated filing of its Petition,
only after Steamship has deducted from the refund due it the alleged
"arbitration costs," indicates its lack of sincerity and good faith.

The dispute between Sulpicio Lines, Inc. and Steamship Mutual

Underwriting (Bermuda) Limited is referred to arbitration in London in
accordance with Rule 47 of the 2005/2006 Club Rules.

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