Adr Cases - Arbitration

8/12/2019 Adr Cases - Arbitration

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G.R. No. 126619 December 20, 2006

UNIWIDE SALES REALTY AND RESOURCES CORPORATION, petitioner,vs.TITAN-I EDA CONSTRUCTION AND DE!ELOP"ENT CORPORATION, respondent.

D E C I S I O N

TINGA, J .#

This Petition for Review on Certiorari under Rule 45 see s the partial reversal of the !" #e$ruar%"&&' De(ision " of the Court of )ppeals #ifteenth Division in C)*+.R. SP No. -&5- whi(hodified the "- )pril "&&5 De(ision ! of the Constru(tion Industr% )r$itration Co ission/CI)C0.

The (ase ori1inated fro an a(tion for a su of one% filed $% Titan*I eda Constru(tion andDevelop ent Corporation /Titan0 a1ainst 2niwide Sales Realt% and Resour(es Corporation/2niwide0 with the Re1ional Trial Court /RTC0, 3ran(h ""& , Pasa% Cit% arisin1 fro 2niwide s

non*pa% ent of (ertain (lai s $illed $% Titan after (o pletion of three pro e(ts (overed $%a1ree ents the% entered into with ea(h other. 2pon 2niwide s otion to dis iss6suspendpro(eedin1s and Titan s open (ourt anifestation a1reein1 to the suspension, Civil Case No. &7*87"4 was suspended for it to under1o ar$itration. 4 Titan s (o plaint was thus re*filed with theCI)C .5 3efore the CI)C, 2niwide filed an answer whi(h was later a ended and re*a ended,den%in1 the aterial alle1ations of the (o plaint, with (ounter(lai s for refund of overpa% ents,a(tual and e9e plar% da a1es, and attorne% s fees. The a1ree ents $etween Titan and2niwide are $riefl% des(ri$ed $elow.

PROJECT 1 . '

The first a1ree ent /Pro e(t "0 was a written :Constru(tion Contra(t: entered into $% Titan and2niwide so eti e in ;a% "&&" where$% Titan undertoo to (onstru(t 2niwide s <arehouseClu$ and )d inistration 3uildin1 in =i$is, >ue?on Cit% for a fee of P"!8,& ',5&".58, pa%a$le in

onthl% pro1ress $illin1s to $e (ertified to $% 2niwide s representative .-

The parties stipulatedthat the $uildin1 shall $e (o pleted not later than 8 Nove $er "&&". )s found $% the CI)C, the$uildin1 was eventuall% finished on "5 #e$ruar% "&&! 7 and turned over to 2niwide.

PROJECT 2.

So eti e in @ul% "&&!, Titan and 2niwide entered into the se(ond a1ree ent /Pro e(t !0where$% the for er a1reed to (onstru(t an additional floor and to r enovate the latter swarehouse lo(ated at the EDS) Central ;ar et )rea in ;andalu%on1 Cit%. There was no written(ontra(t e9e(uted $etween the parties for this pro e(t. Constru(tion was alle1edl% to $e on the$asis of drawin1s and spe(ifi(ations provided $% 2niwide s stru(tural en1ineers. The partiespro(eeded on the $asis of a (ost esti ate of P!", 8",8-5.-- in(lusive of Titan s !8A ar *up.Titan (on(eded in its (o plaint to havin1 re(eived P"5,888,888.88 of this a ount. This pro e(twas (o pleted in the latter part of O(to$er "&&! and turned over to 2niwide.

PROJECT 3 .&

The parties e9e(uted the third a1ree ent /Pro e(t 0 in ;a% "&&!. In a written :Constru(tionContra(t,: Titan undertoo to (onstru(t the 2niwide Sales Depart ent Store 3uildin1 inBaloo an Cit% for the pri(e of P""7,888,888.88 pa%a$le in pro1ress $illin1s to $e (ertified to $%2niwide s representative ."8 It was stipulated that the pro e(t shall $e (o pleted not later than !7#e$ruar% "&& . The pro e(t was (o pleted and turned over to 2niwide in @une "&& .

2niwide asserted in its petition that /a0 it overpaid Titan for unauthori?ed additional wor s inPro e(t " and Pro e(t /$0 it is not lia$le to pa% the alue*)dded Ta9 / )T0 for Pro e(t " /(0 it i sentitled to liFuidated da a1es for the dela% in(urred in (onstru(tin1 Pro e(t " and Pro e(t and/d0 it should not have $een found lia$le for defi(ien(ies in the defe(tivel% (onstru(ted Pro e(t !.

)n )r$itral Tri$unal (onsistin1 of a (hair an and two e$ers was (reated in a((ordan(e withthe CI)C Rules of Pro(edure +overnin1 Constru(tion )r$itration. It (ondu(ted a preli inar%(onferen(e with the parties and thereafter issued a Ter s of Referen(e /TOR0 whi(h wassi1ned $% the parties. The tri$unal also (ondu(ted an o(ular inspe(tion, hearin1s, and re(eivedthe eviden(e of the parties (onsistin1 of affidavits whi(h were su$ e(t to (ross*e9a ination. On"- )pril "&&5, after the parties su$ itted their respe(tive e oranda, the )r$itral Tri$unalpro ul1ated a De(ision ,"" the de(retal portion of whi(h is as follows

:<GERE#ORE, ud1 ent is here$% rendered as follows

On Pro e(t " H =i$is

2niwideJ is a$solved of an% lia$ilit% for the (lai s ade $% TitanJ on this Pro e(t.

Pro e(t ! H Edsa Central

2niwideJ is a$solved of an% lia$ilit% for )T pa% ent on this pro e(t, the sa e $ein1for the a((ount of the TitanJ. On the other hand, TitanJ is a$solved of an% lia$ilit% onthe (ounter(lai for defe(tive (onstru(tion of this pro e(t.

2niwideJ is held lia$le for the unpaid $alan(e in the a ount of P

', 8",8-5.-- whi(h isordered to $e paid to the TitanJ with "!A interest per annu (o en(in1 fro "&De(e $er "&&! until the date of pa% ent.

On Pro e(t H Baloo an

2niwideJ is held lia$le for the unpaid $alan(e in the a ount of P

5,"57, '4.' whi(h isordered to $e paid to the TitanJ with "!A interest per annu (o en(in1 fro 87Septe $er "&& until the date of pa% ent.

2niwideJ is held lia$le to pa% in full the )T on this pro e(t, in su(h a ount as a% $e(o puted $% the 3ureau of Internal Revenue to $e paid dire(tl% thereto. The 3IR ishere$% notified that 2niwideJ Sales Realt% and Resour(es Corporation has assu edresponsi$ilit% and is held lia$le for )T pa% ent on this pro e(t. This a((ordin1l%e9e pts Clai ant Titan*I eda Constru(tion and Develop ent Corporation fro thiso$li1ation.

=et a (op% of this De(ision $e furnished the Gonora$le )urora P. Navarette Re(ina,Presidin1 @ud1e, 3ran(h ""&, Pasa% Cit%, in Civil Case No. &4*87"4 entitled Titan-Ikeda Construction Development Corporation Plainti!! " versus " #ni$ide %ales

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Realt& and Resources Corporation , Defendant, pendin1 $efore said (ourt forinfor ation and proper a(tion.

SO ORDERED.: "!

2niwide filed a otion for re(onsideration of the "- )pril "&&5 de(ision whi(h was denied $% theCI)C in its Resolution dated ' @ul% "&&5. 2niwide a((ordin1l% filed a petition for review with theCourt of )ppeals, " whi(h rendered the assailed de(ision on !" #e$ruar% "&&'. 2niwide s otionfor re(onsideration was li ewise denied $% the Court of )ppeals in its assailed Resolution "4 dated 8 Septe $er "&&'.

Gen(e, 2niwide (o es to this Court via a petition for review under Rule 45. The issuessu$ itted for resolution of this Court are as follows "5 /"0 <hether 2niwide is entitled to a returnof the a ount it alle1edl% paid $% ista e to Titan for additional wor s done on Pro e(t " /!0<hether 2niwide is lia$le for the pa% ent of the alue*)dded Ta9 / )T0 on Pro e(t " / 0<hether 2niwide is entitled to liFuidated da a1es for Pro e(ts " and and /40 <hether2niwide is lia$le for defi(ien(ies in Pro e(t !.

)s a rule, findin1s of fa(t of ad inistrative a1en(ies and Fuasi* udi(ial $odies, whi(h havea(Fuired e9pertise $e(ause their urisdi(tion is (onfined to spe(ifi( atters, are 1enerall%a((orded not onl% respe(t, $ut also finalit%, espe(iall% when affir ed $% the Court of )ppeals. "' In parti(ular, fa(tual findin1s of (onstru(tion ar$itrators are final and (on(lusive and notreviewa$le $% this Court on appeal. "- This rule, however ad its of (ertain e9(eptions.

In David v. Construction Industr& and 'r(itration Commission "7 we ruled that, as e9(eptions,fa(tual findin1s of (onstru(tion ar$itrators a% $e reviewed $% this Court when the petitionerproves affir ativel% that /"0 the award was pro(ured $% (orruption, fraud or other undue eans/!0 there was evident partialit% or (orruption of the ar$itrators or of an% of the / 0 thear$itrators were 1uilt% of is(ondu(t in refusin1 to hear eviden(e pertinent and aterial to the(ontrovers% /40 one or ore of the ar$itrators were disFualified to a(t as su(h under Se(tionnine of Repu$li( )(t No. 7-' and willfull% refrained fro dis(losin1 su(h disFualifi(ations or ofan% other is$ehavior $% whi(h the ri1hts of an% part% have $een ateriall% pre udi(ed or /50the ar$itrators e9(eeded their powers, or so i perfe(tl% e9e(uted the , that a utual, final anddefinite award upon the su$ e(t atter su$ itted to the was not ade. "&

Other re(o1ni?ed e9(eptions are as follows /"0 when there is a ver% (lear showin1 of 1ravea$use of dis(retion !8 resultin1 in la( or loss of urisdi(tion as when a part% was deprived of a fairopportunit% to present its position $efore the )r$itral Tri$unal or when an award is o$tainedthrou1h fraud or the (orruption of ar$itrators ,!" /!0 when the findin1s of the Court of )ppeals are(ontrar% to those of the CI)C ,!! and / 0 when a part% is deprived of ad inistrative due pro(ess .!

Thus, in )i-Precision %teel Center Inc. v. *im +im ,uilders Inc .,!4 we refused to review thefindin1s of fa(t of the CI)C for the reason that petitioner was reFuirin1 the Court to 1o over ea(hindividual (lai and (ounter(lai su$ itted $% the parties in the CI)C. ) review of the CI)C sfindin1s of fa(t would have had the effe(t of :settin1 at nau1ht the $asi( o$ e(tive of a voluntar%ar$itration and would redu(e ar$itration to a lar1el% inutile institution.: #urther, petitioner thereinfailed to show an% serious error of law a ountin1 to 1rave a$use of dis(retion resultin1 in la( of

urisdi(tion on the part of the )r$itral Tri$unal, in either the ethods e plo%ed or the resultsrea(hed $% the )r$itral Tri$unal, in disposin1 of the detailed (lai s of the respe(tive parties. Inetro Construction Inc. v. C at am Properties Inc. ,!5 we reviewed the findin1s of fa(t of theCourt of )ppeals $e(ause its findin1s on the issue of whether petitioner therein was in dela%were (ontrar% to the findin1s of the CI)C. #inall%, in e/a$orld 0lo(us 'sia Inc. v. D%

Construction and Development Corporation!'

we de(lined to depart fro the findin1s of the )r$itral Tri$unal (onsiderin1 that the (o putations, as well as the propriet% of the awards, are

unFuestiona$l% fa(tual issues that have $een dis(ussed $% the )r$itral Tri$unal and affir ed $%the Court of )ppeals.

In the present (ase, onl% the first issue presented for resolution of this Court is a Fuestion of lawwhile the rest are fa(tual in nature. Gowever, we do not hesitate to inFuire into these fa(tualissues for the reason that the CI)C and the Court of )ppeals, in so e atters, differed in theirfindin1s.

<e now pro(eed to dis(uss the issues in seriati .

Pa&ment (& istake !or Pro ect 1

The first issue refers to the P5,7! ,47".-5 paid $% 2niwide for additional wor s done on Pro e(t". 2niwide asserts that Titan was not entitled to $e paid this a ount $e(ause the additionalwor s were without an% written authori?ation.

It should $e noted that the (ontra(ts do not (ontain stipulations on :additional wor s,: 2niwide slia$ilit% for :additional wor s,: and prior approval as a reFuire ent $efore Titan (ould perfor:additional wor s.:

Nonetheless, 2niwide (ites )rti(le /)rt. 0 "-!4 of the New Civil Code as $asis for its (lai that itis not lia$le to pa% for :additional wor s: it did not authori?e or a1ree upon in writin1. Theprovision states

)rt. "-!4. The (ontra(tor who underta es to $uild a stru(ture or an% other wor for astipulated pri(e, in (onfor it% with plans and spe(ifi(ations a1reed upon with thelandowner, (an neither withdraw fro the (ontra(t nor de and an in(rease in thepri(e on a((ount of the hi1her (ost of la$or or aterials, save when there has $een a(han1e in the plans and spe(ifi(ations, provided

/"0 Su(h (han1e has $een authori?ed $% the proprietor in writin1 and

/!0 The additional pri(e to $e paid to the (ontra(tor has $een deter ined in writin1 $%$oth parties.

The Court of )ppeals did ta e note of this provision, $ut dee ed it inappli(a$le to the (ase at$ar $e(ause 2niwide had alread% paid, al$eit with unwritten reservations, for the :additionalwor s.: The provision would have $een operative had 2niwide refused to pa% for the (osts of the:additional wor s.: Instead, the Court of )ppeals applied )rt. "4! !- of the New Civil Code and(hara(teri?ed 2niwide s pa% ent of the said a ount as a voluntar% fulfill ent of a naturalo$li1ation. The situation was (hara(teri?ed as $ein1 a in to 2niwide $ein1 a de$tor who paid ade$t even while it new that i t was not le1all% (o pelled to do so. )s su(h de$tor, 2niwide (ouldno lon1er de and the refund of the a ount alread% paid.

2niwide (ounters that )rt. "-!4 a es no distin(tion as to whether pa% ent for the :additionalwor s: had alread% $een ade. It (lai s that it had ade the pa% ents, su$ e(t to reservations,upon the false representation of Titan*I eda that the :additional wor s: were authori?ed inwritin1. 2niwide (hara(teri?es the pa% ent as a : ista e,: and not a :voluntar%: fulfill ent under

)rt. "4! of the Civil Code. Gen(e, it ur1es the appli(ation, instead, of the prin(iple of solutioinde(iti under )rts. !"54 !7 and !"5' !& of the Civil Code.
























































To $e (ertain, this Court has not $een wont to 1ive an e9pansive (onstru(tion of )rt. "-!4,den%in1, for e9a ple, (lai s that it applies to (onstru(tions ade of ship vessels , 8 or that it (anvalidl% den% the (lai for pa% ent of professional fees to the ar(hite(t. " The present situationthou1h presents a thornier pro$le . Clearl%, )rt. "-!4 denies, as a atter of ri1ht, pa% ent tothe (ontra(tor for additional wor s whi(h were not authori?ed in writin1 $% the proprietor, and theadditional pri(e of whi(h was not deter ined in writin1 $% the parties.

Ket the distin(tion pointed out $% the Court of )ppeals is aterial. The issue is no lon1er(entered on the ri1ht of the (ontra(tor to de and pa% ent for additional wor s underta en$e(ause pa% ent, whether ista en or not, was alread% ade $% 2niwide. Thus, it would not

an% ore $e in(u $ent on Titan to esta$lish that it had the ri1ht to de and or re(eive su(hpa% ent.

3ut, even if the Court a((epts )rt. "-!4 as appli(a$le in this (ase, su(h re(o1nition does notipso !acto a((ord 2niwide the ri1ht to $e rei $ursed for pa% ents alread% ade, sin(e )rt. "-!4does not effe(t su(h ri1ht of rei $urse ent. It has to $e understood that )rt. "-!4 does notpre(lude the pa% ent to the (ontra(tor who perfor s additional wor s without an% prior writtenauthori?ation or a1ree ent as to the pri(e for su(h wor s if the owner de(ides an%wa% to a esu(h pa% ent. <hat the provision does pre(lude is the ri1ht of the (ontra(tor to insist uponpa% ent for unauthori?ed additional wor s.

)((ordin1l%, 2niwide, as the owner who did pa% the (ontra(tor for su(h additional wor s even ifthe% had not $een authori?ed in writin1, has to esta$lish its own ri1ht to rei $urse ent notunder )rt. "-!4, $ut under a different provision of law. 2niwide s $urden of esta$lishin1 its le1al

ri1ht to rei $urse ent $e(o es even ore (ru(ial in the li1ht of the 1eneral presu ption(ontained in Se(tion /f0, Rule " " of the Rules of Court that : one% paid $% one to another wasdue to the latter.:

2niwide underta es su(h a tas $efore this Court, (itin1 the provisions on solutio inde(iti under )rts. !"54 and !"5' of the Civil Code. Gowever, it is not enou1h to prove that the pa% entsade $% 2niwide to Titan were :not due: $e(ause there was no prior authori?ation or a1ree entwith respe(t to additional wor s. There is a further reFuire ent that the pa% ent $% the de$torwas ade either throu1h ista e or under a (loud of dou$t. In short, for the provisions onsolutio inde(iti to appl%, there has to $e eviden(e esta$lishin1 the fra e of ind of the pa%or atthe ti e the pa% ent was ade. !

The CI)C refused to a( nowled1e that the additional wor s on Pro e(t " were indeedunauthori?ed $% 2niwide. Neither did the Court of )ppeals arrive at a (ontrar% deter ination.

There would thus $e so e diffi(ult% for this Court to a1ree with this ost $asi( pre isesu$ itted $% 2niwide that it did not authori?e the additional wor s on Pro e(t " underta en $%Titan. Still, 2niwide does (ite testi onial eviden(e fro the re(ord alludin1 to a (on(ession $%e plo%ees of Titan that these additional wor s on Pro e(t " were either authori?ed ordo(u ented .

Ket even (on(edin1 that the additional wor s on Pro e(t " were not authori?ed or (o itted intowritin1, the undisputed fa(t re ains that 2niwide paid for these additional wor s. Thus, to (laia refund of pa% ents ade under the prin(iple of solutio inde(iti 2niwide ust $e a$le toesta$lish that these pa% ents were ade throu1h ista e. )1ain, this is a fa(tual atter thatwould have a(Fuired a antle of invulnera$ilit% had it $een deter ined $% $oth the CI)C andthe Court of )ppeals. Gowever, $oth $odies failed to arrive at su(h a (on(lusion. ;oreover,2niwide is una$le to dire(t our attention to an% pertinent part of the re(ord that would indeedesta$lish that the pa% ents were ade $% reason of ista e.

<e note that 2niwide alle1ed in its petition that the CI)C award in favor of Titan in the a ountP5,"57, '4.' as the unpaid $alan(e in Pro e(t in(luded (lai s for additional wor s of

P",87-,!"4."7 for whi(h no written authori?ation was presented. 2nfortunatel%, this issue wasnot in(luded in its e orandu as one of the issues su$ itted for the resolution of the Court.

*ia(ilit& !or t e alue-'dded Ta 4 'T5

The se(ond issue ta es us into an inFuir% on who, under the law, is lia$le for the pa% ent of the)T, in the a$sen(e of a written stipulation on the atter. 2niwide (lai s that the )T wasalread% in(luded in the (ontra(t pri(e for Pro e(t ". Citin1 Se(s. && and "8! of the NationalInternal Revenue Code, 2niwide asserts that )T, $ein1 an indire(t ta9, a% $e shifted to the$u%er $% in(ludin1 it in the (ash or sellin1 pri(e and it is entirel% up to the $u%er to a1ree or notto a1ree to a$sor$ the )T . 4 Thus, 2niwide (on(ludes, if there is no provision in the (ontra(t asto who should pa% the )T, it is presu ed that it would $e the seller. 5

The (ontra(t for Pro e(t " is silent on whi(h part% should shoulder the )T while the (ontra(t forPro e(t (ontained a provision to the effe(t that 2niwide is the part% responsi$le for thepa% ent of the )T. ' Thus, when 2niwide paid the a ount of P!,488,888.88 as $illed $% Titanfor )T, it assu ed that it was the )T for Pro e(t . Gowever, the CI)C and the Court of

)ppeals found that the sa e was for Pro e(t ".

<e a1ree with the (on(lusions of $oth the CI)C and the Court of )ppeals that the a ount ofP!,488,888.88 was paid $% 2niwide as )T for Pro e(t ". This (on(lusion was drawn fro anOrder of Pa% en t - dated - O(to$er "&&! wherein Titan $illed 2niwide the a ount ofP!,488,888.88 as : alue )dded Ta9 $ased on P

'8,888,888.88 Contra(t,: (o puted on the$asis of 4A of P

'8,888,888.88. Said do(u ent whi(h was approved $% the President of 2niwidee9pressl% indi(ated that the pro e(t involved was the :2NI<IDE S)=ES <)REGO2SE C=23 L

)D;IN 3=D+.: lo(ated at :&8 E. RODRI+2EM @R. ) E., =I3IS, >.C.: The redu(ed $ase for the(o putation of the ta9, a((ordin1 to the Court of )ppeals, was an indi(ation that the partiesa1reed to pass the )T for Pro e(t " to 2niwide $ut $ased on a lower (ontra(t pri(e. Indeed, theCI)C found as follows

<ithout an% do(u entar% eviden(e than E9hi$it :G: to show the e9tent of ta9 lia$ilit%assu ed $% 2niwideJ, the Tri$unal holds that the parties is si(J o$li1ed to pa% onl% ashare of the )T pa% ent up to P

'8,888,888.88 out of the total (ontra(t pri(e ofP"!8,& ',5&".58. A$ e%&'()*e+ b )mm Go , !AT )$ &()+ o* '(bor o*' /orco*$ r c )o* co* r(c $ $)*ce !AT (+ ('re(+ bee* &()+ o* e m( er)('$& rc ($e+. S)*ce '(bor co$ $ )$ 3$)c4 &ro&or )o*( e' &'(ce+ ( 605- 05 o/ eco* r(c &r)ce, $)m&')/)e+ (cco * )*7 com& e$ !AT ( 5 o/ e co* r(c &r)ce.<hatever is the $alan(e for )T that re ains to $e paid on Pro e(t " H =i$is shall

re ain the o$li1ation of TitanJ. / E phasis supplied.07

=iFuidated Da a1es

On the third issue of liFuidated da a1es, the CI)C re e(ted su(h (lai while the Court of )ppeals held that the atter should $e left for deter ination in future pro(eedin1s where theissue has $een ade (lear.

In re e(tin1 2niwide s (lai for liFuidated da a1es, the CI)C held that there is no le1al $asis forpassin1 upon and resolvin1 2niwide s (lai for the followin1 reasons /"0 no (lai for liFuidatedda a1es arisin1 fro the alle1ed dela% was ever ade $% 2niwide at an% ti e $efore the(o en(eent of T itan s (o plaint /!0 the (lai for liFuidated da a1es was not in(luded inthe (ounter(lai s stated in 2niwide s answer to Titan s (o plaint / 0 the (lai was notfor ulated as an issue to $e resolved $% the CI)C in the T OR & and /40 no atte pt was ade toodif% the TOR to a((o odate the sa e as an issue to $e resolved.


































2niwide insists that the CI)C should have applied Se(tion 5, Rule "8 of the Rules of Court. 48 Onthis atter, the Court of )ppeals held that the CI)C is an ar$itration $od%, whi(h is notne(essaril% $ound $% the Rules of Court. )lso, the Court of )ppeals found that the issue hasnever $een ade (on(rete enou1h to a e Titan and the CI)C aware that it will $e an issue. Infa(t, 2niwide onl% introdu(ed and Fuantified its (lai for liFuidated da a1es in its ;e orandusu$ itted to the CI)C at the end of the ar$itration pro(eedin1. The Court of )ppeals also notedthat the onl% eviden(e on re(ord to prove dela% in the (onstru(tion of Pro e(t " is the testi on%of Titan s en1ineer re1ardin1 the date of (o pletion of the pro e(t while the onl% eviden(e ofdela% in the (onstru(tion of Pro e(t is the affidavit of 2niwide s President.

)((ordin1 to 2niwide, the rulin1 of the Court of )ppeals on the issue of liFuidated daa1es1oes a1ainst the esta$lished udi(ial poli(% that a (ourt should alwa%s strive to settle in onepro(eedin1 the entire (ontrovers% leavin1 no root or $ran(h to $ear the seeds of futureliti1ations .4" 2niwide (lai s that the reFuired eviden(e for an affir ative rulin1 on its (lai isalread% on the re(ord. It (ites the pertinent provisions of the written (ontra(ts whi(h (ontaineddeadlines for liFuidated da a1es. 2niwide also noted that the eviden(e show that Pro e(t " was(o pleted either on "5 #e$ruar% "&&!, as found $% the CI)C, or "! ;ar(h "&&!, as shown $%Titan s own eviden(e, while Pro e(t , a((ordin1 to 2niwide s President, was (o pleted in @une"&& . #urther ore, 2niwide asserts, the CI)C should have applied pro(edural rules su(h asSe(tion 5, Rule "8 with ore li$eralit% $e(ause it was an ad inistrative tri$unal free fro theri1id te(hni(alities of re1ular (ourts .4!

On this point, the CI)C held

The Rule of Pro(edure +overnin1 Constru(tion )r$itration pro ul1ated $% the CI)C(ontains no provision on the appli(ation of the Rules of Court to ar$itrationpro(eedin1s, even in a suppletor% (apa(it%. G%potheti(all% ad ittin1 that there is su(ha provision, suppletor% appli(ation is ade onl% if it would not (ontravene a spe(ifi(provision in the ar$itration rules and the spirit thereof. The Tri$unal holds that $ c)m&or ( )o* o/ e R 'e$ o/ Co r &ro8)$)o* o* (me*+me* o co*/orm oe8)+e*ce o '+ co* r(8e*e e $&)r) , )/ *o e 'e er o/ e CIAC r 'e$. This isfor the reason that the for ulation of the Ter s of Referen(e is done with the a(tiveparti(ipation of the parties and their (ounsel the selves. The TOR is further reFuiredto $e si1ned $% all the parties, their respe(tive (ounsel and all the e $ers of the

)r$itral Tri$unal. 2nless the issues thus (arefull% for ulated in the Ter s ofReferen(e were e9pressl% showed si(J to $e a ended, issues outside thereof a%not $e resolved. )s alread% noted in the De(ision, :no atte pt was ever ade $% the2niwideJ to odif% the TOR in order to a((o odate the issues related to its $elated(ounter(lai : on this issue. /E phasis supplied.0

)r$itration has $een defined as :an arran1eent for ta in1 and a$idin1 $% the ud1ent ofsele(ted persons in so e disputed atter, instead of (arr%in1 it to esta$lished tri$unals of

usti(e, and is intended to avoid the foralities, the dela%, the e9pense and ve9ation of ordinar%liti1ation.:4 oluntar% ar$itration, on the other hand, involves the referen(e of a dispute to ani partial $od%, the e $ers of whi(h are (hosen $% the parties the selves, whi(h parties freel%(onsent in advan(e to a$ide $% the ar$itral award issued after pro(eedin1s where $oth partieshad the opportunit% to $e heard. The $asi( o$ e(tive is to provide a speed% and ine9pensiveethod of settlin1 disputes $% allowin1 the parties to avoid the for alities, dela%, e9pense anda11ravation whi(h (o onl% a((o pan% ordinar% liti1ation, espe(iall% liti1ation whi(h 1oesthrou1h the entire hierar(h% of (ourts. 44 )s an ar$itration $od%, the CI)C (an onl% resolve issues$rou1ht $efore it $% the parties throu1h the TOR whi(h fun(tions si ilarl% as a pre*trial $rief.Thus, if 2niwide s (lai for liFuidated da a1es was not raised as an issue in the TOR or in an%odified or a ended version of it, the CI)C (annot a e a rulin1 on it. The Rules of Court(annot $e used to (ontravene the spirit of the CI)C rules, whose poli(% and o$ e(tive is to:provide a fair and e9peditious settle ent of (onstru(tion disputes throu1h a non* udi(ial pro(esswhi(h ensures har onious and friendl% relations $etween or a on1 the parties.: 45

#urther, a part% a% not $e deprived of due pro(ess of law $% an a end ent of the (o plaintas provided in Se(tion 5, Rule "8 of the Rules of Court. In this (ase, as noted $% the Court of

)ppeals, 2niwide onl% introdu(ed and Fuantified its (lai for liFuidated da a1es in itse orandu su$ itted to the CI)C at the end of the ar$itration pro(eedin1. eril%, Titan wasnot 1iven a (han(e to present eviden(e to (ounter 2niwide s (lai for liFuidated da a1es.

2niwide alludes to an alle1ed udi(ial ad ission ade $% En1r. =u?on Ta$lante wherein hestated that Pro e(t " was (o pleted on "8 ;ar(h "&&!. It now (lai s that $% virtue of En1r.Ta$lante s state ent, Titan had ad itted that it was in dela%. <e disa1ree. The testi on% ofEn1r. Ta$lante was offered onl% to prove that Pro e(t " was indeed (o pleted. It was not offered

to prove the fa(t of dela%. It ust $e re e $ered that the purpose for whi(h eviden(e is offeredust $e spe(ified $e(ause su(h eviden(e a% $e ad issi$le for several purposes under thedo(trine of ultiple ad issi$ilit%, or a% $e ad issi$le for one purpose and not for another,otherwise the adverse part% (annot interpose the proper o$ e(tion. Eviden(e su$ itted for onepurpose a% not $e (onsidered for an% other purpose. 4' #urther ore, even assu in1, for thesa e of ar1u ent, that said testi on% on the date of (o pletion of Pro e(t " is ad itted, theesta$lish ent of the ere fa(t of dela% is not suffi(ient for the i position of liFuidated da a1es.It ust further $e shown that dela% was attri$uta$le to the (ontra(tor if not otherwise ustifia$le.Contraril%, 2niwide s $elated (lai (onstitutes an ad ission that the dela% was ustified andi plies a waiver of its ri1ht to su(h da a1es.

Pro ect 26 7as-(uilt7 plans overpricin/ de!ective construction

To deter ine whether or not 2niwide is lia$le for the unpaid $alan(e of P

', 8",8-5.-- for

Pro e(t !, we need to resolve four su$*issues, na el% /"0 whether or not it was ne(essar% forTitan to su$ it :as*$uilt: plans $efore it (an $e paid $% 2niwide /!0 whether or not there wasoverpri(in1 of the pro e(t / 0 whether or not the P"5,888,888.88 paid $% 2niwide to Titan forPro e(t ! (onstitutes full pa% ent and /40 whether or not Titan (an $e held lia$le for defe(tive(onstru(tion of Pro e(t !.

The CI)C, as affir ed $% the Court of )ppeals, held 2niwide lia$le for defi(ien(% relatin1 toPro e(t ! in the a ount of P

', 8",8-5.--. It is nonetheless alle1ed $% 2niwide that Titan failedto su$ it an% :as*$uilt: plans for Pro e(t !, su(h plans alle1edl% servin1 as a (ondition pre(edentfor pa% ent. 2niwide further (lai s that Titan had su$stantiall% over(har1ed 2niwide for Pro e(t!, there $ein1 un(ontradi(ted e9pert testi on% that the total (ost of Pro e(t ! did not e9(eedP-,7"!,"!.'8. #urther ore, 2niwide alle1ed that the wor s perfor ed were stru(turall%defe(tive, as eviden(ed $% the stru(tural da a1e on four (olu ns as o$served on o(ularinspe(tion $% the CI)C and (onfir ed $% Titan s pro e(t ana1er.

On the ne(essit% of su$ ittin1 :as*$uilt: plans, this Court rules that the su$ ission of su(h plansis not a pre*reFuisite for Titan to $e paid $% 2niwide. The ar1u ent that said plans are reFuired$% Se(tion 87 of Presidential De(ree No. "8&7 /National 3uildin1 Code0 and $% Se(tion !."" ofits I ple entin1 Rules $efore pa% ent (an $e ade is untena$le. The purpose of the law is :tosafe1uard life, health, propert%, and pu$li( welfare, (onsistent with the prin(iples of soundenviron ental ana1e ent and (ontrol.: The su$ ission of these plans is ne(essar% onl% infurtheran(e of the law s purpose $% settin1 ini u standards and reFuire ents to (ontrol the:lo(ation, site, desi1n, Fualit% of aterials, (onstru(tion, use, o((upan(%, and aintenan(e: of$uildin1s (onstru(ted and not as a reFuire ent for pa% ent to the (ontra(tor .4- The testi on% ofEn1r. Ta$lante to the effe(t that the :as*$uilt: plans are reFuired $efore pa% ent (an $e (lai ed$% Titan is a ere le1al (on(lusion whi(h is not $indin1 on this Court.

2niwide (lai s that, a((ordin1 to one of its (onsultants, the true pri(e for Pro e(t ! i s onl%P-,7"!,"!.'8. The CI)C and the Court of )ppeals, however, found the testi on% of this(onsultant suspe(t and ruled that the total (ontra(t pri(e for Pro e(t ! is P!", 8",8-5.--. TheCI)C held




























The Cost Esti ate for )r(hite(tural and Site Develop ent <or s for the EDS)Central, Dau 3ran(h Pro e(t /E9hi$it :!*): for 2niwideJ and ade as a (o one9hi$it $% TitanJ who had it ar ed at 8sic9its own E9hi$it :2:0, whi(h was ad ittedl%prepared $% #er indo?a and )sso(iates, 2niwideJ s own ar(hite(ts, shows that thea ount of P"-,-58,7&'.47 was arrived at. To1ether with the a1reed upon ar *up of!8A on said a ount, the total pro e(t (ost was P!", 8",8-5.--.

The Tri$unal holds that the fore1oin1 do(u ent is $indin1 upon the 2niwideJ, it $ein1the ode a1reed upon $% whi(h its lia$ilit% for the pro e(t (ost was to $e deter ined .47

/E phasis supplied.0

Indeed, 2niwide is $ound $% the a ount indi(ated in the a$ove do(u ent. Clai s of (onnivan(eor fraudulent (onspira(% $etween Titan and 2niwide s representatives whi(h, it is alle1ed,1rossl% e9a11erated the pri(e a% properl% $e dis issed. )s held $% the CI)C

The Tri$unal holds that 2niwideJ has not introdu(ed an% eviden(e to sustain its(har1e of fraudulent (onspira(%. )s a atter of fa(t, 2niwideJ s own prin(ipal witness,@i % +ow, ad itted on (ross*e9a ination that he does not have an% dire(t eviden(eto prove his (har1e of (onnivan(e or (o pli(it% $etween the TitanJ and his ownrepresentatives. Ge onl% ade that (on(lusion $% the pro(ess of his own :lo1i(alreasonin1: arisin1 fro his (onsultation with other (ontra(tors who 1ave hi a u(hlower esti ate for the (onstru(tion of the Dau Pro e(t. T here is thus no reason toinvalidate the $indin1 (hara(ter of E9hi$it :!*): whi(h, it is si1nifi(ant to point out, is2niwideJ s own eviden(e. 4& /E phasis supplied.0

)((ordin1l%, dedu(tin1 the P"5,888,888.88 alread% paid $% 2niwide fro the total (ontra(t pri(eof P!", 8",8-5.--, the unpaid $alan(e due for Pro e(t ! is P

', 8",8-5.--. This is the sa ea ount refle(ted in the Order of Pa% ent prepared $% 2niwide s representative, =e Consulte(h,In(. and si1ned $% no less than four top offi(ers and ar(hite(ts of =e Consulte(h, In(. endorsin1for pa% ent $% 2niwide to Titan the a ount of P

', 8",8-5.-- .58

2niwide asserts that Titan should not have $een allowed to r e(over on Pro e(t ! $e(ause thesaid pro e(t was defe(tive and would reFuire repairs in the a ount of P

788,888.88. It (lai s thatthe CI)C and the Court of )ppeals should have applied :akpil and %ons v. Court o! 'ppeals 5" and )rt. "-! of the New Civil Code holdin1 a (ontra(tor responsi$le for da a1es if the edifi(e(onstru(ted falls within fifteen %ears fro (o pletion on a((ount of defe(ts in the (onstru(tion orthe use of aterials of inferior Fualit% furnished $% hi or due to an% violation of the ter s of the(ontra(t.

On this atter, the CI)C (ondu(ted an o(ular inspe(tion of the pre ises on 8 @anuar% "&&5.<hat transpired in the said o(ular inspe(tion is des(ri$ed thus

On 8 @anuar% "&&5, an o(ular inspe(tion was (ondu(ted $% the )r$itral Tri$unal asreFuested $% 2niwideJ. Photo1raphs were ta en of the alle1ed (onstru(tion defe(ts,an a(tual rippin1 off of the plaster of a (ertain (olu n to e9pose the alle1ed stru(turaldefe(t that is (lai ed to have resulted in its $ein1 :heavil% da a1ed: was done,(larifi(ator% Fuestions were as ed and anifestations on o$servations were ade $%the parties and their respe(tive (ounsels. The entire pro(eedin1s were re(orded ontape and su$seFuentl% trans(ri$ed. The photo1raphs and trans(ript of the o(ularinspe(tion for part of the re(ords and (onsidered as eviden(e .5!

)nd, a((ordin1 to these eviden(e, the CI)C (on(luded as follows

It is li ewise the holdin1 of this Tri$unal that 2niwideJ s (ounter(lai of defe(tive(onstru(tion has not $een suffi(ientl% proven. The (redi$ilit% of En1r. Cru?, 2niwideJ sprin(ipal witness on this issue, has $een severel% i paired. Durin1 the o(ularinspe(tion of the pre ises, he 1ave su(h assuran(e of the soundness of his opinionas an e9pert that a (ertain (olu n was heavil% da a1ed ud1in1 fro the e9ternal(ra( s that was readil% apparent 9 9 9

9 9 9 9

On insisten(e of the Tri$unal, the plaster was (hipped off and revealed a stru(turall%sound (olu n 9 9 9

#urther, it turns out that what was $ein1 passed off as a defe(tive (onstru(tion $%TitanJ, was in fa(t an old (olu n, as ad itted $% ;r. +ow hi self 9 9 9 9 5 /E phasissupplied.0

2niwide had the $urden of provin1 that there was defe(tive (onstru(tion in Pro e(t ! $ut it failedto dis(har1e this $urden. Even the (redi$ilit% of its own witness was severel% i paired. #urther, itwas found that the (on(rete sla$ pla(ed $% Titan was not atta(hed to the old (olu ns where(ra( s were dis(overed. The CI)C held that the post*tensionin1 of the new (on(rete sla$ (ouldnot have (aused an% of the defe(ts anifested $% the old (olu ns. <e are $ound $% this findin1of fa(t $% the CI)C.

It is worth% to stress our rulin1 in )i-Precision %teel Center Inc. v. *im +im %teel ,uilders Inc.54

whi(h was reiterated in David v. Construction Industr& and 'r(itration Commission 55 that

9 9 9 E9e(utive Order No. "887 (reated an ar$itration fa(ilit% to whi(h the (onstru(tionindustr% in the Philippines (an have re(ourse. T e E%ec )8e Or+er ($ e*(c e+ oe*co r(7e e e(r' (*+ e%&e+) )o $ $e 'eme* o/ +)$& e$ )* e co*$ r c )o*)*+ $ r , ( & b')c &o')c e )m&'eme* ( )o* o/ )c )$ *ece$$(r (*+)m&or (* /or e re(') ( )o* o/ *( )o*(' +e8e'o&me* 7o('$.

)ware of the o$ e(tive of voluntar% ar$itration in the la$or field, in the (onstru(tionindustr%, and in an% other area for that atter, the Court will not assist one or the otheror even $oth parties in an% effort to su$vert or defeat that o$ e(tive for their privatepurposes. The Court will not review the fa(tual findin1s of an ar$itral tri$unal upon theartful alle1ation that su(h $od% had : isapprehended fa(ts: and will not pass upon

issues whi(h are, at $otto , issues of fa(t, no atter how (leverl% dis1uised the%i1ht $e as :le1al Fuestions.: The parties here had r e(ourse to ar$itration and (hosethe ar$itrators the selves the% ust have had (onfiden(e in su(h ar$itrators. TheCourt will not, therefore, per it the parties to reliti1ate $efore it the issues of fa(tspreviousl% presented and ar1ued $efore the )r$itral Tri$unal, save onl% where a (learshowin1 is ade that, in rea(hin1 its fa(tual (on(lusions, the )r$itral Tri$unal(o itted an error so e1re1ious and hurtful to one part% as to (onstitute a 1ravea$use of dis(retion resultin1 in la( or loss of urisdi(tion. Protot%pi(al e9a ples would$e fa(tual (on(lusions of the Tri$unal whi(h resulted in deprivation of one or the otherpart% of a fair opportunit% to present its position $efore the )r$itral Tri$unal, and anaward o$tained throu1h fraud or the (orruption of ar$itrators. )n% other, ore rela9edrule would result in settin1 at nau1ht the $asi( o$ e(tive of a voluntar% ar$itration andwould redu(e ar$itration to a lar1el% inutile institution. /E phasis supplied.0

<GERE#ORE, pre ises (onsidered, the petition is DENIED and the De(ision of the Court of )ppeals dated !" #e$ruar% "&&' in C)*+.R. SP No. -&5- is here$% )##IR;ED.


























SO ORDERED.

G.R. No. 16:101 ;ebr (r 1:, 200<

=ENGUET CORPORATION, petitioner,vs.DEPART"ENT O; EN!IRON"ENT AND NATURAL RESOURCES -"INES AD UDICATION=OARD (*+ .G. REALTY AND "INING CORPORATION, respondents.

D E C I S I O N

!ELASCO, R., J .#

The instant petition under Rule '5 of the Rules of Court see s the annul ent of the De(e $er!, !88! De(ision " and ;ar(h "-, !884 Resolution ! of the Depart ent of Environ ent andNatural Resour(es*;inin1 )d udi(ation 3oard /DENR*;)30 in ;)3 Case No. 8"!4*8" /;ines

)d inistrative Case No. R*;*!888*8"0 entitled ,en/uet Corporation 4,en/uet5 v. J.0. Realt&and inin/ Corporation 4J.0. Realt&5. The De(e $er !, !88! De(ision upheld the ;ar(h "&,!88" De(ision of the ;)3 Panel of )r$itrators /PO)0 whi(h (an(eled the Ro%alt% )1ree entwith Option to Pur(hase /R)<OP0 dated @une ", "&7- 4 $etween 3en1uet and @.+. Realt%, ande9(luded 3en1uet fro the oint ;ineral Produ(tion Sharin1 )1ree ent /;PS)0 appli(ation overfour inin1 (lai s. The ;ar(h "-, !884 Resolution denied 3en1uet s ;otion forRe(onsideration.

T e ;(c $

On @une ", "&7-, 3en1uet and @.+. Realt% entered into a R)<OP, wherein @.+. Realt% wasa( nowled1ed as the owner of four inin1 (lai s respe(tivel% na ed as 3onito*I, 3onito*II,3onito*III, and 3onito*I , with a total area of !77.7'5' he(tares, situated in 3aran1a% =u lu a ,Sitio 3a1on1 3a%an, ;uni(ipalit% of @ose Pan1ani$an, Ca arines Norte. The parties alsoe9e(uted a Supple ental )1ree ent 5 dated @une ", "&7-. The inin1 (lai s were (overed $%;PS) )ppli(ation No. )PS)* *888& ointl% filed $% @.+. Realt% as (lai owner and 3en1uet asoperator.

In the R)<OP, 3en1uet o$li1ated itself to perfe(t the ri1hts to the inin1 (lai s and6orotherwise a(Fuire the inin1 ri1hts to the ineral (lai s. <ithin !4 onths fro the e9e(utionof the R)<OP, 3en1uet should also (ause the e9a ination of the inin1 (lai s for the purposeof deter inin1 whether or not the% are worth developin1 with reasona$le pro$a$ilit% of profita$leprodu(tion. 3en1uet undertoo also to furnish @.+. Realt% with a report on the e9a ination,within a reasona$le ti e after the (o pletion of the e9a ination. ;oreover, also within thee9a ination period, 3en1uet shall (ondu(t all ne(essar% e9ploration in a((ordan(e with aprepared e9ploration pro1ra. If it (hooses to do so and $efore the e9piration of the e9a inationperiod, 3en1uet a% underta e to develop the inin1 (lai s upon written noti(e to @.+. Realt%.3en1uet ust then pla(e the inin1 (lai s into (o er(ial produ(tive sta1e within !4 onthsfro the written noti(e. ' It is also provided in the R)<OP that if the inin1 (lai s were pla(ed in(o er(ial produ(tion $% 3en1uet, @.+. Realt% should $e entitled to a ro%alt% of five per(ent/5A0 of net reali?a$le value, and to ro%alt% for an% produ(tion done $% 3en1uet whether durin1the e9a ination or develop ent periods.

Thus, on )u1ust &, "&7&, the E9e(utive i(e*President of 3en1uet, )ntonio N. Ta(hulin1, issueda letter infor in1 @.+. Realt% of its intention to develop the inin1 (lai s. Gowever, on #e$ruar%

&, "&&&, @.+. Realt%, throu1h its President, @ohnn% =. Tan, then sent a letter to the President of3en1uet infor in1 the latter that it was ter inatin1 the R)<OP on the followin1 1rounds

a. The fa(t that %our (o pan% has failed to perfor the o$li1ations set forth in theR)<OP, i.e., to underta e develop ent wor s within ! %ears fro the e9e(ution ofthe )1ree ent

$. iolation of the Contra(t $% allowin1 hi1h 1raders to operate on our (lai .

(. No stipulation was provided with respe(t to the ter li it of the R)<OP.

d. Non*pa% ent of the ro%alties thereon as provided in the R)<OP .-

In response, 3en1uet s ;ana1er for =e1al Servi(es, Re%naldo P. ;endo?a, wrote @.+. Realt% aletter dated ;ar(h 7, "&&&, 7 therein alle1in1 that 3en1uet (o plied with its o$li1ations under theR)<OP $% investin1 PhP 4!.4 illion to reha$ilitate the ines, and that the (o er(ialoperation was ha pered $% the non*issuan(e of a ;ines Te porar% Per it $% the ;ines and+eos(ien(es 3ureau /;+30 whi(h ust $e (onsidered as !orce ma eure , entitlin1 3en1uet to ane9tension of ti e to prose(ute su(h per it. 3en1uet further (lai ed that the hi1h 1radersentioned $% @.+. Realt% were alread% operatin1 prior to 3en1uet s ta in1 over of the pre ises,and that @.+. Realt% had the o$li1ation of e e(tin1 su(h s all s(ale iners. 3en1uet also alle1edthat the nature of the inin1 $usiness ade it diffi(ult to spe(if% a ti e li it for the R)<OP.3en1uet then ar1ued that the ro%alties due to @.+. Realt% were in fa(t in its offi(e and read% to$e pi( ed up at an% ti e. It appeared that, previousl%, the pra(ti(e $% @.+. Realt% was to pi( *up(he( s fro 3en1uet representin1 su(h ro%alties. Gowever, startin1 )u1ust "&&4, @.+. Realt%alle1edl% refused to (olle(t su(h (he( s fro 3en1uet. Thus, 3en1uet posited that there was novalid 1round for the ter ination of the R)<OP. It also re inded @.+. Realt% that it should su$ itthe disa1ree ent to ar$itration rather than unilaterall% ter inatin1 the R)<OP.

On @une -, !888, @.+. Realt% filed a Petition for De(laration of Nullit%6Can(ellation of theR)<OP & with the =e1aspi Cit% PO), Re1ion , do( eted as DENR Case No. !888*8" andentitled J.0. Realt& v. ,en/uet.

On ;ar(h "&, !88", the PO) issued a De(ision ,"8 dwellin1 upon the issues of /"0 whether thear$itrators had urisdi(tion over the (ase and /!0 whether 3en1uet violated the R)<OP

ustif%in1 the unilateral (an(ellation of the R)<OP $% @.+. Realt%. The dispositive portion stated

<GERE#ORE, pre ises (onsidered, the @une 8", "&7- R)<OPJ and itsSupple ental )1ree ent is here$% de(lared (an(elled and without effe(t. 3EN+2ETis here$% e9(luded fro the oint ;PS) )ppli(ation over the ineral (lai s

deno inated as :3ONITO*I:, :3ONITO*II:, :3ONITO*III: and :3ONITO*I :.

SO ORDERED.

Therefro , 3en1uet filed a Noti(e of )ppeal "" with the ;)3 on )pril ! , !88", do( eted as;ines )d inistrative Case No. R*;*!888*8". Thereafter, the ;)3 issued the assailedDe(e $er !, !88! De(ision. 3en1uet then filed a ;otion for Re(onsideration of the assailedDe(ision whi(h was denied in the ;ar(h "-, !884 Resolution of the ;)3. Gen(e, 3en1uet filedthe instant petition.

T e I$$ e$

". There was serious and palpa$le error when the Gonora$le 3oard failed to rule that

the (ontra(tual o$li1ation of the parties to ar$itrate under the Ro%alt% )1ree ent isandator%.

http://lawphil.net/judjuris/juri2008/feb2008/gr_163101_2008.html#fnt1































!. The Gonora$le 3oard e9(eeded its urisdi(tion when it sustained the (an(ellation ofthe Ro%alt% )1ree ent for alle1ed $rea(h of (ontra(t despite the a$sen(e ofeviden(e.

. The >uestioned De(ision of the Gonora$le 3oard in (an(ellin1 the R)<OPpre udi(e dJ the su$stantial ri1hts of 3en1uet under the (ontra(t to the un ustenri(h ent of @+ Realt%. "!

Restated, the issues are /"0 Should the (ontrovers% have first $een su$ itted to ar$itration$efore the PO) too (o1ni?an(e of the (ase /!0 <as the (an(ellation of the R)<OPsupported $% eviden(e and / 0 Did the (an(ellation of the R)<OP a ount to un ustenri(h ent of @.+. Realt% at the e9pense of 3en1uet

T e Co r >$ R ')*7

3efore we dwell on the su$stantive issues, we find that the instant petition (an $e deniedoutri1ht as 3en1uet resorted to an i proper re ed%.

The last para1raph of Se(tion -& of Repu$li( )(t No. /R)0 -&4! or the :Philippine ;inin1 )(t of"&&5: states, :) petition for review $% (ertiorari and Fuestion of law a% $e filed $% thea11rieved part% with the Supre e Court within thirt% / 80 da%s fro re(eipt of the order orde(ision of the ;)3J.:

Gowever, this Court has alread% invalidated su(h provision in Carpio v. %ulu ResourcesDevelopment Corp .," rulin1 that a de(ision of the ;)3 ust first $e appealed to the Court of

)ppeals /C)0 under Rule 4 of the Rules of Court, $efore re(ourse to this Court a% $e had.<e held, thus

To su ari?e, there are suffi(ient le1al footin1s authori?in1 a review of the ;)3De(ision under Rule 4 of the Rules of Court. ;irst Se(tion 8 of )rti(le I of the"&7- Constitution, andates that : nJo law shall $e passed in(reasin1 the appellate

urisdi(tion of the Supre e Court as provided in this Constitution without its advi(eand (onsent.: On the other hand, Se(tion -& of R) No. -&4! provides that de(isionsof the ;)3 a% $e reviewed $% this Court on a :petition for review $% (ertiorari.: Thisprovision is o$viousl% an e9pansion of the Court s appellate urisdi(tion, an e9pansionto whi(h this Court has not (onsented. Indis(ri inate ena(t ent of le1islationenlar1in1 the appellate urisdi(tion of this Court would unne(essaril% $urden it.

%econd when the Supre e Court, in the e9er(ise of i ts rule* a in1 power, transfersto the C) pendin1 (ases involvin1 a r eview of a Fuasi* udi(ial $od% s de(isions, su(htransfer relates onl% to pro(edure hen(e, it does not i pair the su$stantive andvested ri1hts of the parties. The a11rieved part% s ri1ht to appeal is preserved what is(han1ed is onl% the pro(edure $% whi(h the appeal is to $e ade or de(ided. Theparties still have a re ed% and a (o petent tri$unal to 1rant this re ed%.

T ird the Revised Rules of Civil Pro(edure in(luded Rule 4 to provide a unifor ruleon appeals fro Fuasi* udi(ial a1en(ies. 2nder the rule, appeals fro their ud1 entsand final orders are now r eFuired to $e $rou1ht to the C) on a verified petition forreview. ) Fuasi* udi(ial a1en(% or $od% has $een defined as an or1an of 1overn ent,other than a (ourt or le1islature, whi(h affe(ts the ri1hts of private parties throu1heither ad udi(ation or rule* a in1. ;)3 falls under this definition hen(e, it is no

different fro the other Fuasi* udi(ial $odies enu erated under Rule 4 . 3esides, theintrodu(tor% words in Se(tion " of Cir(ular No. "*&"HH:a on1 these a1en(ies are:HHindi(ate that the enu eration is not e9(lusive or (on(lusive and a( nowled1e the

e9isten(e of other Fuasi* udi(ial a1en(ies whi(h, thou1h not e9pressl% listed, should$e dee ed in(luded therein.

;ourt the Court reali?es that under 3atas Pa $ansa /3P0 3l1. "!& as a ended $%R) No. -&8!, fa(tual (ontroversies are usuall% involved in de(isions of Fuasi* udi(ial$odies and the C), whi(h is li ewise tas ed to resolve Fuestions of fa(t, has oreel$ow roo to resolve the . 3% in(ludin1 Fuestions of fa(t a on1 the issues that a%$e raised in an appeal fro Fuasi* udi(ial a1en(ies to the C), Se(tion of Revised

)d inistrative Cir(ular No. "*&5 and Se(tion of Rule 4 e9pli(itl% e9panded the listof su(h issues.

)((ordin1 to Se(tion of Rule 4 , : aJn appeal under this Rule a% $e ta en to theCourt of )ppeals within the period and in the anner herein provided whether theappeal involves Fuestions of fa(t, of law, or i9ed Fuestions of fa(t and law.: Gen(e,appeals fro Fuasi* udi(ial a1en(ies even onl% on Fuestions of law a% $e $rou1ht tothe C).

;i!t , the udi(ial poli(% of o$servin1 the hierar(h% of (ourts di(tates that dire(t resortfro ad inistrative a1en(ies to this Court will not $e entertained, unless the redressdesired (annot $e o$tained fro the appropriate lower tri$unals, or unless e9(eptionaland (o pellin1 (ir(u stan(es ustif% avail ent of a re ed% fallin1 within and (allin1for the e9er(ise of our pri ar% urisdi(tion ."4

The a$ove prin(iple was reiterated in 'sap il Construction and Development Corporation v.Tuason Jr. 4'sap il5 ."5 Gowever, the Carpio rulin1 was not applied to 'sap il as the petition inthe latter (ase was filed in "&&& or three %ears $efore the pro ul1ation of Carpio in !88!. Gere,the petition was filed on )pril !7, !884 when the Carpio de(ision was alread% appli(a$le, thus3en1uet should have filed the appeal with the C).

Petitioner havin1 failed to properl% appeal to the C) under Rule 4 , the de(ision of the ;)3 has$e(o e final and e9e(utor%. On this 1round alone, the instant petition ust $e denied.

Even if we entertain the petition althou1h 3en1uet s irted the appeal to the C) via Rule 4 , still,the De(e $er !, !88! De(ision and ;ar(h "-, !884 Resolution of the DENR*;)3 in ;)3 CaseNo. 8"!4*8" should $e aintained.

;)r$ I$$ e# T e c($e $ o '+ (8e /)r$ bee* bro 7 o

8o' * (r (rb) r( )o* be/ore e POA

Se(s. "".8" and "".8! of the R)<OP pertinentl% provide

"".8" )r$itration

)n% disputes, differen(es or disa1ree ents $etween 3EN+2ET and the O<NER withreferen(e to an%thin1 whatsoever pertainin1 to this )1ree ent that (annot $ea i(a$l% settled $% the shall not $e (ause of an% a(tion of an% ind whatsoever inan% (ourt or ad inistrative a1en(% $ut shall, upon noti(e of one part% to the other, $ereferred to a 3oard of )r$itrators (onsistin1 of three / 0 e $ers, one to $e sele(ted$% 3EN+2ET, another to $e sele(ted $% the O<NER and the third to $e sele(ted $%the afore entioned two ar$itrators so appointed.

9 9 9 9
















"".8! Court )(tion

No a(tion shall $e instituted in (ourt as to an% atter in dispute as hereina$ove stated,e9(ept to enfor(e the de(ision of the a orit% of the )r$itrators ."'

Thus, 3en1uet ar1ues that the PO) should have first referred the (ase to voluntar% ar$itration$efore ta in1 (o1ni?an(e of the (ase, (itin1 Se(. ! of R) 7-' on persons and atters su$ e(t toar$itration.

On the other hand, in den%in1 su(h ar1u ent, the PO) ruled that

<hile the parties a% esta$lish su(h stipulations (lauses, ter s and (onditions as the% a%dee (onvenient, the sa e ust not $e (ontrar% to law and pu$li( poli(%. )t a 1lan(e, there isnothin1 wron1 with the ter s and (onditions of the a1ree ent. 3ut to state that an a11rievedpart% (annot initiate an a(tion without 1oin1 to ar$itration would $e t%in1 one s hand even if thereis a law whi(h allows hi to do so. "-

The ;)3, eanwhile, denied 3en1uet s (ontention on the 1round of estoppel, statin1

3esides, $% its own a(t, 3en1uet is alread% estopped in Fuestionin1 the urisdi(tion ofthe Panel of )r$itrators to hear and de(ide the (ase. )s pointed out in the appealedDe(ision, 3en1uet initiated and filed an )dverse Clai do( eted as ;)C*R*;*!888*8! over the sa e inin1 (lai s without under1oin1 (ontra(tual ar$itration. In thisparti(ular (ase /;)C*R*;*!888*8!0 now su$ e(t of the appeal, 3en1uet is li ewise inestoppel fro Fuestionin1 the (o peten(e of the Panel of )r$itrators to hear andde(ide in the su ar% pro(eedin1s @.+. Realt% s petition, when 3en1uet itself did noterel% ove for the dis issal of the (ase $ut also filed an )nswer with (ounter(laisee in1 affir ative reliefs fro the Panel of )r$itrators. "7

;oreover, the ;)3 ruled that the (ontra(tual provision on ar$itration erel% provides for anadditional foru or venue and does not divest the PO) of the urisdi(tion to hear the (ase ."&

In its @ul% !8, !884 Co ent, !8 @.+. Realt% reiterated the a$ove rulin1s of the PO) and ;)3. Itar1ued that R) -&4! or the :Philippine ;inin1 )(t of "&&5: is a spe(ial law whi(h should prevailover the stipulations of the parties and over a 1eneral law, su(h as R) 7-'. It also ar1ued thatthe PO) (annot $e (onsidered as a :(ourt: under the (onte plation of R) 7-' and that

urispruden(e sa%in1 that there ust $e prior resort to ar$itration $efore filin1 a (ase with the(ourts is inappli(a$le to the instant (ase as the PO) is itself alread% en1a1ed in ar$itration.

On this issue, we rule for 3en1uet.

Se(. ! of R) 7-' elu(idates the s(ope of ar$itration

Se(tion !. Persons and matters su( ect to ar(itration. HHT o or more &er$o*$ or&(r )e$ m( $ bm) o e (rb) r( )o* o/ o*e or more (rb) r( or$ (* co* ro8er$e%)$ )*7 be ee* em ( e )me o/ e $ bm)$$)o* (*+ )c m( be e$ b?ec o/ (* (c )o*, or e &(r )e$ o (* co* r(c m( )* $ c co* r(c (7ree o$e 'e b (rb) r( )o* ( co* ro8er$ ere(/ er (r)$)*7 be ee* em. S c$ bm)$$)o* or co* r(c $ ('' be 8(')+, e*/orce(b'e (*+ )rre8oc(b'e, $(8e &o*$ c 7ro *+$ ($ e%)$ ( '( /or e re8oc( )o* o/ (* co* r(c .

Su(h su$ ission or (ontra(t a% in(lude Fuestion sJ arisin1 out of valuations,appraisals or other (ontroversies whi(h a% $e (ollateral, in(idental, pre(edent orsu$seFuent to an% issue $etween the parties. /E phasis supplied.0

In R) &!75 or the :)lternative Dispute Resolution )(t of !884,: the Con1ress reiterated theeffi(a(% of ar$itration as an alternative ode of dispute resolution $% statin1 in Se(. ! thereofthat do esti( ar$itration shall still $e 1overned $% R) 7-'. Clearl%, a (ontra(tual stipulation thatreFuires prior resort to voluntar% ar$itration $efore the parties (an 1o dire(tl% to (ourt is notille1al and is in fa(t pro oted $% the State. Thus, petitioner (orre(tl% (ites several (aseswhere$% ar$itration (lauses have $een upheld $% this Court .!"

;oreover, the (ontention that R) -&4! prevails over R) 7-' presupposes a (onfli(t $etween thetwo laws. Su(h is not the (ase here. To reiterate, avail ent of voluntar% ar$itration $efore resortis ade to the (ourts or Fuasi* udi(ial a1en(ies of the 1overn ent is a valid (ontra(tualstipulation that ust $e adhered to $% the parties. )s stated in Se(s. ' and - of R) 7-'

Se(tion '. )earin/ (& court. HHA &(r (77r)e8e+ b e /()' re, *e7'ec or re/ $('o/ (*o er o &er/orm *+er (* (7reeme* )* r) )*7 &ro8)+)*7 /or (rb) r( )o*m( &e ) )o* e co r /or (* or+er +)rec )*7 ( $ c (rb) r( )o* &rocee+ )* em(**er &ro8)+e+ /or )* $ c (7reeme* . #ive da%s noti(e in writin1 of the hearin1of su(h appli(ation shall $e served either personall% or $% re1istered ail upon thepart% in default. T e co r $ ('' e(r e &(r )e$, (*+ &o* be)*7 $( )$/)e+ ( em(@)*7 o/ e (7reeme* or $ c /()' re o com&' ere ) )$ *o )* )$$ e,$ ('' m(@e (* or+er +)rec )*7 e &(r )e$ o &rocee+ o (rb) r( )o* )* (ccor+(*ce

) e erm$ o/ e (7reeme* . I/ e m(@)*7 o/ e (7reeme* or +e/( ' be )*)$$ e e co r $ ('' &rocee+ o $ mm(r)' e(r $ c )$$ e. I/ e /)*+)*7 be( *o (7reeme* )* r) )*7 &ro8)+)*7 /or (rb) r( )o* ($ m(+e, or ( ere )$

*o +e/( ' )* e &rocee+)*7 ere *+er, e &rocee+)*7 $ ('' be +)$m)$$e+. I/e /)*+)*7 be ( ( r) e* &ro8)$)o* /or (rb) r( )o* ($ m(+e (*+ ere )$ (

+e/( ' )* &rocee+)*7 ere *+er, (* or+er $ ('' be m(+e $ mm(r)' +)rec )*7e &(r )e$ o &rocee+ ) e (rb) r( )o* )* (ccor+(*ce ) e erm$ ereo/.

9 9 9 9

Se(tion -. %ta& o! civil action. HHIf an% suit or pro(eedin1 $e $rou1ht upon an issuearisin1 out of an a1ree ent providin1 for the ar$itration thereof, the (ourt in whi(hsu(h suit or pro(eedin1 is pendin1, upon $ein1 satisfied that the issue involved insu(h suit or pro(eedin1 is refera$le to ar$itration, shall sta% the a(tion or pro(eedin1

until an ar$itration has $een had in a((ordan(e with the ter s of the a1ree entProvided, That the appli(ant, for the sta% is not in default in pro(eedin1 with su(har$itration. /E phasis supplied.0

In other words, in the event a (ase that should properl% $e the su$ e(t of voluntar% ar$itration iserroneousl% filed with the (ourts or Fuasi* udi(ial a1en(ies, on otion of the defendant, the (ourtor Fuasi* udi(ial a1en(% shall deter ine whether su(h (ontra(tual provision for ar$itration issuffi(ient and effe(tive. If in affir ative, the (ourt or Fuasi* udi(ial a1en(% shall then order theenfor(e ent of said provision. 3esides, in ,; Corporation v. Court o! 'ppeals , we alread% ruled

In this (onne(tion, it $ears stressin1 that the lower (ourt has not lost its urisdi(tionover the (ase. Se(tion - of Repu$li( )(t No. 7-' provides that pro(eedin1s thereinhave onl% $een sta%ed. )fter the spe(ial pro(eedin1 of ar$itration has $een pursuedand (o pleted, then the lower (ourt a% (onfir the award ade $% the ar$itrator .!!





















@.+. Realt% s (ontention, that prior resort to ar$itration is unavailin1 in the instant (ase $e(ausethe PO) s andate is to ar$itrate disputes involvin1 ineral a1ree ents, is ispla(ed. )distin(tion ust $e ade $etween voluntar% and (o pulsor% ar$itration. In *udo and *u&mCorporation v. %aordino , the Court had the o((asion to distin1uish $etween the two t%pes ofar$itrations

Co parativel%, in Re!ormist #nion o! R.,. *iner Inc. vs. :*RC , (o pulsor% ar$itrationhas $een defined $oth as :the pro(ess of settle ent of la$or disputes b (7o8er*me* (7e*c )c ($ e ( or) o )*8e$ )7( e (*+ o m(@e (*( (r+ whi(h is $indin1 on all the parties, and as a ode of ar$itration where the

parties are (o pelled to a((ept the resolution of their dispute throu1h ar$itration $% athird part%.: <hile a voluntar% ar$itrator is *o &(r o/ e 7o8er*me* (' *) or'(bor +e&(r me* >$ &er$o**e', said ar$itrator renders ar$itration servi(es providedfor under la$or laws .! /E phasis supplied.0

There is a (lear distin(tion $etween (o pulsor% and voluntar% ar$itration. The ar$itrationprovided $% the PO) is (o pulsor%, while the nature of the ar$itration provision in the R)<OPis voluntar%, not involvin1 an% 1overn ent a1en(%. Thus, @.+. Realt% s ar1u ent on this atterust fail.

)s to @.+. Realt% s (ontention that the provisions of R) 7-' (annot appl% to the instant (asewhi(h involves an ad inistrative a1en(%, it ust $e pointed out that Se(tion "".8" of theR)<OP states that

)n% (ontrovers% with re1ard to the (ontra(tJ shall not $e (ause of an% a(tion of an%ind whatsoever in an% (ourt or (+m)*)$ r( )8e (7e*c $ut shall, upon noti(e of onepart% to the other, $e r eferred to a 3oard of )r$itrators (onsistin1 of three / 0e $ers, one to $e sele(ted $% 3EN+2ET, another to $e sele(ted $% the O<NERand the third to $e sele(ted $% the afore entioned two ar$iters so appointed .!4 /E phasis supplied.0

There (an $e no Fui$$lin1 that PO) is a Fuasi* udi(ial $od% whi(h for s part of the DENR, anad inistrative a1en(%. Gen(e, the provision on andator% resort to ar$itration, freel% enteredinto $% the parties, ust $e held $indin1 a1ainst the . !5

In su , on the issue of whether PO) should have referred the (ase to voluntar% ar$itration, wefind that, indeed, PO) has no urisdi(tion over the dispute whi(h is 1overned $% R) 7-', thear$itration law.

Gowever, we find that 3en1uet is alread% estopped fro Fuestionin1 the PO) s urisdi(tion. )s itwere, when @.+. Realt% filed DENR Case No. !888*8", 3en1uet filed its answer and parti(ipatedin the pro(eedin1s $efore the PO), Re1ion . Se(ondl%, when the adverse ;ar(h "&, !88"PO) De(ision was rendered, it filed an appeal with the ;)3 in ;ines )d inistrative Case No.R*;*!888*8" and a1ain parti(ipated in the ;)3 pro(eedin1s. <hen the adverse De(e $er !,!88! ;)3 De(ision was pro ul1ated, it filed a otion for r e(onsideration with the ;)3. <henthe adverse ;ar(h "-, !884 ;)3 Resolution was issued, 3en1uet filed a petition with this Courtpursuant to Se(. -& of R) -&4! i pliedl% re(o1ni?in1 ;)3 s urisdi(tion. In this fa(tual ilieu,the Court rules that the urisdi(tion of PO) and that of ;)3 (an no lon1er $e Fuestioned $%3en1uet at this late hour. <hat 3en1uet should have done was to i ediatel% (hallen1e thePO) s urisdi(tion $% a spe(ial (ivil a(tion for (ertiorari when PO) ruled that i t has urisdi(tionover the dispute. To redo the pro(eedin1s full% parti(ipated in $% the parties after the lapse ofseven %ears fro date of institution of the ori1inal a(tion with the PO) would $e anathe a to thespeed% and effi(ient ad inistration of usti(e.

Seco*+ I$$ e# T e c(*ce''( )o* o/ e RAWOP($ $ &&or e+ b e8)+e*ce

The (an(ellation of the R)<OP $% the PO) was $ased on two 1rounds /"0 3en1uet s failure topa% @.+. Realt% s ro%alties for the inin1 (lai s and /!0 3en1uet s failure to seriousl% pursue;PS) )ppli(ation No. )PS)* *888& over the inin1 (lai s.

)s to the ro%alties, 3en1uet (lai s that the (he( s representin1 pa%ents for the ro%alties of@.+. Realt% were availa$le for pi( *up in its offi(e and it is the latter whi(h r efused to (lai the .3en1uet then thus (on(ludes that it did not violate the R)<OP for nonpa% ent of ro%alties.#urther, 3en1uet reasons that @.+. Realt% has the $urden of provin1 that the for er did not pa%su(h ro%alties followin1 the prin(iple that the (o plainants ust prove their affir ativealle1ations.

<ith re1ard to the failure to pursue the ;PS) appli(ation, 3en1uet (lai s that the len1th% ti eof approval of the appli(ation is due to the failure of the ;+3 to approve it. In other words,3en1uet ar1ues that the approval of the appli(ation is solel% in the hands of the ;+3.

3en1uet s ar1u ents are $ereft of erit.

Se(. "4.85 of the R)<OP provides

"4.85 3an )((ount

O<NER shall aintain a $an a((ount at or an% other $an fro ti eto ti e sele(ted $% O<NER with noti(e in writin1 to 3EN+2ET where 3EN+2ETshall deposit to the O<NER s (redit an% and all advan(es and pa% ents whi(h a%$e(o e due the O<NER under this )1ree ent as well as the pur(hase pri(e hereina1reed upon in the event that 3EN+2ET shall e9er(ise the option to pur(haseprovided for in the )1ree ent. A* (*+ ('' +e&o$) $ $o m(+e b =ENGUET $ (''be ( / '' (*+ com&'e e (c ) (*ce (*+ re'e($e o si( 4 =ENGUET /rom (*/ r er ')(b)') o e OWNER o/ e (mo * $ re&re$e* e+ b $ c +e&o$) $. /E phasis supplied.0

Evidentl%, the R)<OP itself provides for the ode of ro%alt% pa% ent $% 3en1uet. The fa(t thatthere was the previous pra(ti(e where$% @.+. Realt% pi( ed*up the (he( s fro 3en1uet isunavailin1. The ode of pa% ent is e $odied in a (ontra(t $etween the parties. )s su(h, the(ontra(t ust $e (onsidered as the law $etween the parties and $indin1 on $oth .!' Thus, after@.+. Realt% infor ed 3en1uet of the $an a((ount where deposits of its ro%alties a% $e ade,3en1uet had the o$li1ation to deposit the (he( s. @.+. Realt% had no o$li1ation to furnish3en1uet with a 3oard Resolution (onsiderin1 that the R)<OP itself provided for su(h pa% ents(he e.

Nota$l%, 3en1uet s (lai that @.+. Realt% ust prove nonpa% ent of its ro%alties is $oth illo1i(aland unsupported $% law and urispruden(e.

The alle1ation of nonpa% ent is not a positive alle1ation as (lai ed $% 3en1uet. Rather, su(h isa ne1ative alle1ation that does not reFuire proof and in fa(t transfers the $urden of proof to3en1uet. Thus, this Court ruled in Jimene< v . :ational *a(or Relations Commission

)s a 1eneral rule, one who pleads pa%ent has the $urden of provin1 it. Even wherethe plaintiff ust alle1e non*pa% ent, the 1eneral rule is that the $urden rests on the

















defendant to prove pa% ent, rather than on the plaintiff to prove non*pa% ent. T e+eb or ($ e b r+e* o/ $ o )*7 ) 'e7(' cer ()* ( e ob')7( )o* ($bee* +)$c (r7e+ b &( me* .!- /E phasis supplied.0

In the instant (ase, the o$li1ation of 3en1uet to pa% ro%alties to @.+. Realt% has $een ad ittedand supported $% the provisions of the R)<OP. Thus, the $urden to prove su(h o$li1ation restson 3en1uet.

It should also $e $orne in ind that ;PS) )ppli(ation No. )PS)* *888& has $een pendin1 withthe ;+3 for a (onsidera$le len1th of ti e. 3en1uet, in the R)<OP, o$li1ated itself to perfe(tthe ri1hts to the inin1 (lai s and6or otherwise a(Fuire the inin1 ri 1hts to the ineral (lai s$ut failed to present an% eviden(e showin1 that it e9erted efforts to speed up and have theappli(ation approved. In fa(t, 3en1uet never even alle1ed that it (ontinuousl% followed*up theappli(ation with the ;+3 and that it was in (onstant (o uni(ation with the 1overn ent a1en(%for the e9peditious resolution of the appli(ation. Su(h alle1ations would show that, indeed,3en1uet was re iss in prose(utin1 the ;PS) appli(ation and (learl% failed to (o pl% with itso$li1ation in the R)<OP.

T )r+ I$$ e# T ere )$ *o *? $ e*r)c me* )* e )*$ (* c($e

3ased on the fore1oin1 dis(ussion, the (an(ellation of the R)<OP was $ased on valid 1roundsand is, therefore, ustified. The ne(essar% i pli(ation of the (an(ellation is the (essation of3en1uet s ri1ht to prose(ute ;PS) )ppli(ation No. )PS)* *888& and to further develop su(hinin1 (lai s.

In Car Cool P ilippines Inc. v. #s io Realt& and Development Corporation , we defined un ustenri(h ent, as follows

<e have held that : tJhere is un ust enri(h ent when a person *? $ ' retains a$enefit to the loss of another, or when a person retains one% or propert% of anothera1ainst the funda ental prin(iples of usti(e, eFuit% and 1ood (ons(ien(e.: )rti(le !!of the Civil Code provides that : eJver% person who throu1h an a(t of perfor an(e $%another, or an% other eans, a(Fuires or (o es into possession of so ethin1 at thee9pense of the latter without ust or le1al 1round, shall return the sa e to hi .: Theprin(iple of un ust enri(h ent under )rti(le !! reFuires two (onditions /"0 that aperson is $enefited without a valid $asis or ustifi(ation, and /!0 that su(h $enefit isderived at another s e9pense or da a1e.

T ere )$ *o *? $ e*r)c me* e* e &er$o* o )'' be*e/) ($ ( 8(')+c'()m o $ c be*e/) .!7 /E phasis supplied.0

Clearl%, there is no un ust enri(h ent in the instant (ase as the (an(ellation of the R)<OP,whi(h left 3en1uet without an% le1al ri1ht to parti(ipate in further developin1 the inin1 (lai s,was $rou1ht a$out $% its violation of the R)<OP. Gen(e, 3en1uet has no one to $la e $ut itselffor its predi(a ent.

WBERE;ORE, we DIS"ISS the petition, and A;;IR" the De(e $er !, !88! De(ision and;ar(h "-, !884 Resolution of the DENR*;)3 in ;)3 Case No. 8"!4*8" upholdin1 the(an(ellation of the @une ", "&7- R)<OP. No (osts.

SO ORDERED.

G.R. No. 1 : <1 (* (r , 200<

OREA TECBNOLOGIES CO., LTD., petitioner,vs.BON. AL=ERTO A. LER"A, )* )$ c(&(c) ($ Pre$)+)*7 +7e o/ =r(*c 2 6 o/ Re7)o*('Tr)(' Co r o/ " * )*' &( C) , (*+ PACI;IC GENERAL STEEL "ANU;ACTURINGCORPORATION, respondents.

D E C I S I O N

!ELASCO, R., J. #

In our urisdi(tion, the poli(% is to favor alternative ethods of resolvin1 disputes, parti(ularl% in(ivil and (o er(ial disputes. )r$itration alon1 with ediation, (on(iliation, and ne1otiation,$ein1 ine9pensive, speed% and less hostile ethods have lon1 $een favored $% this Court. Thepetition $efore us puts at issue an ar$itration (lause in a (ontra(t utuall% a1reed upon $% theparties stipulatin1 that the% would su$ it the selves to ar$itration in a forei1n (ountr%.Re1retta$l%, instead of hastenin1 the resolution of their dispute, the parties wittin1l% orunwittin1l% prolon1ed the (ontrovers%.

Petitioner Borea Te(hnolo1ies Co., =td. /BO+IES0 is a Borean (orporation whi(h is en1a1ed inthe suppl% and installation of =iFuefied Petroleu +as /=P+0 C%linder anufa(turin1 plants,while private respondent Pa(ifi( +eneral Steel ;anufa(turin1 Corp. /P+S;C0 is a do esti(

(orporation.

On ;ar(h 5, "&&-, P+S;C and BO+IES e9e(uted a Contra( t" where$% BO+IES would set upan =P+ C%linder ;anufa(turin1 Plant in Car ona, Cavite. The (ontra(t was e9e(uted in thePhilippines. On )pril -, "&&-, the parties e9e(uted, in Borea, an ) end ent for Contra(t No.B=P*&-8 8" dated ;ar(h 5, "&&- ! a endin1 the ter s of pa% ent. The (ontra(t and itsa end ent stipulated that BO+IES will ship the a(hiner% and fa(ilities ne(essar% foranufa(turin1 =P+ (%linders for whi(h P+S;C would pa% 2SD ",!!4,888. BO+IES wouldinstall and initiate the operation of the plant for whi(h P+S;C $ound itself to pa% 2SD 8',888upon the plant s produ(tion of the ""* 1. =P+ (%linder sa ples. Thus, the total (ontra(t pri(ea ounted to 2SD ",5 8,888.

On O(to$er "4, "&&-, P+S;C entered into a Contra(t of =ease with <orth Properties, In(./<orth0 for use of <orth s 5,8-&*sFuare eter propert% with a 4,8 !*sFuare eter warehouse

$uildin1 to house the =P+ anufa(turin1 plant. The onthl% rental was PhP !!,5'8(o en(in1 on @anuar% ", "&&7 with a "8A annual in(re ent (lause. Su$seFuentl%, thea(hineries, eFuip ent, and fa(ilities for the anufa(ture of =P+ (%linders were shipped,delivered, and installed in the Car ona plant. P+S;C paid BO+IES 2SD ",!!4,888.

Gowever, 1leaned fro the Certifi(ate 4 e9e(uted $% the parties on @anuar% !!, "&&7, after theinstallation of the plant, the initial operation (ould not $e (ondu(ted as P+S;C en(ounteredfinan(ial diffi(ulties affe(tin1 the suppl% of aterials, thus for(in1 the parties to a1ree thatBO+IES would $e dee ed to have (o pletel% (o plied with the ter s and (onditions of the;ar(h 5, "&&- (ontra(t.

#or the re ainin1 $alan(e of 2SD 8',888 for the installation and initial operation of the plant,P+S;C issued two postdated (he( s /"0 3PI Che( No. 8 "'4"! dated @anuar% 8, "&&7 forPhP 4,588,888 and /!0 3PI Che( No. 8 "'4" dated ;ar(h 8, "&&7 for PhP 4,588,888. 5





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<hen BO+IES deposited the (he( s, these were dishonored for the reason :P)K;ENTSTOPPED.: Thus, on ;a% 7, "&&7, BO+IES sent a de and letter ' to P+S;C threatenin1(ri inal a(tion for violation of ,atas Pam(ansa ,l/. !! in (ase of nonpa% ent. On the sa edate, the wife of P+S;C s President fa9ed a letter dated ;a% -, "&&7 to BO+IES Presidentwho was then sta%in1 at a ;a ati Cit% hotel. She (o plained that not onl% did BO+IES deliver adifferent $rand of h%drauli( press fro that a1reed upon $ut it had not delivered severaleFuip ent parts alread% paid for.

On ;a% "4, "&&7, P+S;C replied that the two (he( s it issued BO+IES were full% funded $utthe pa% ents were stopped for reasons previousl% ade nown to BO+IES .-

On @une ", "&&7, P+S;C infor ed BO+IES that P+S;C was (an(elin1 their Contra(t dated;ar(h 5, "&&- on the 1round that BO+IES had altered the Fuantit% and lowered the Fualit% ofthe a(hineries and eFuip ent it delivered to P+S;C, and that P+S;C would dis antle andtransfer the a(hineries, eFuip ent, and fa(ilities installed in the Car ona plant. #ive da%slater, P+S;C filed $efore the Offi(e of the Pu$li( Prose(utor an )ffidavit*Co plaint for Esta!ado( eted as I.S. No. &7*8 7" a1ainst ;r. Dae G%un Ban1, President of BO+IES.

On @une "5, "&&7, BO+IES wrote P+S;C infor in1 the latter that P+S;C (ould notunilaterall% res(ind their (ontra(t nor dis antle and transfer the a(hineries and eFuip ent onere i a1ined violations $% BO+IES. It also insisted that their disputes should $e settled $%ar$itration as a1reed upon in )rti(le "5, the ar$itration (lause of their (ontra(t.

On @une ! , "&&7, P+S;C a1ain wrote BO+IES reiteratin1 the (ontents of its @une ", "&&7letter threatenin1 that the a(hineries, eFuip ent, and fa(ilities installed in the plant would $edis antled and transferred on @ul% 4, "&&7. Thus, on @ul% ", "&&7, BO+IES instituted an

)ppli(ation for )r$itration $efore the Borean Co er(ial )r$itration 3oard /BC)30 in Seoul,Borea pursuant to )rt. "5 of the Contra(t as a ended.

On @ul% , "&&7, BO+IES filed a Co plaint for Spe(ifi( Perfor an(e, do( eted as Civil CaseNo. &7*""- 7 a1ainst P+S;C $efore the ;untinlupa Cit% Re1ional Trial Court /RTC0. The RTC1ranted a te porar% restrainin1 order /TRO0 on @ul% 4, "&&7, whi(h was su$seFuentl% e9tendeduntil @ul% !!, "&&7. In i ts (o plaint, BO+IES alle1ed that P+S;C had initiall% ad itted that the(he( s that were stopped were not funded $ut later on (lai ed that it stopped pa% ent of the(he( s for the reason that :their value was not re(eived: as the for er alle1edl% $rea(hed their(ontra(t $% :alterin1 the Fuantit% and lowerin1 the Fualit% of the a(hiner% and eFuip ent:installed in the plant and failed to a e the plant operational althou1h it earlier (ertified to the(ontrar% as shown in a @anuar% !!, "&&7 Certifi(ate. =i ewise, BO+IES averred that P+S;C

violated )rt. "5 of their Contra(t, as a ended, $% unilaterall% res(indin1 the (ontra(t withoutresortin1 to ar$itration. BO+IES also as ed that P+S;C $e restrained fro dis antlin1 andtransferrin1 the a(hiner% and eFuip ent installed in the plant whi(h the latter threatened to doon @ul% 4, "&&7.

On @ul% &, "&&7, P+S;C filed an opposition to the TRO ar1uin1 that BO+IES was not entitledto the TRO sin(e )rt. "5, the ar$itration (lause, was null and void for $ein1 a1ainst pu$li( poli(%as it ousts the lo(al (ourts of urisdi(tion over the instant (ontrovers%.

On @ul% "-, "&&7, P+S;C filed its )nswer with Co pulsor% Counter(lai & assertin1 that it hadthe full ri1ht to dis antle and transfer the a(hineries and eFuip ent $e(ause it had paid forthe in full as stipulated in the (ontra(t that BO+IES was not entitled to the PhP &,888,888(overed $% the (he( s for failin1 to (o pletel% install and a e the plant operational and thatBO+IES was lia$le for da a1es a ountin1 to PhP 4,588,888 for alterin1 the Fuantit% andlowerin1 the Fualit% of the a(hineries and eFuip ent. ;oreover, P+S;C averred that it hasalread% paid PhP !,!5-,&!8 in rent /(overin1 @anuar% to @ul% "&&70 to <orth and it was not

willin1 to further shoulder the (ost of rentin1 the pre ises of the plant (onsiderin1 that the =P+(%linder anufa(turin1 plant never $e(a e operational.

)fter the parties su$ itted their ;e oranda, on @ul% !, "&&7, the RTC issued an Orderden%in1 the appli(ation for a writ of preli inar% in un(tion, reasonin1 that P+S;C had paidBO+IES 2SD ",!!4,888, the value of the a(hineries and eFuip ent as shown in the (ontra(tsu(h that BO+IES no lon1er had proprietar% ri1hts over the . )nd finall%, the RTC held that )rt."5 of the Contra(t as a ended was invalid as it tended to oust the trial (ourt or an% other (ourt

urisdi(tion over an% dispute that a% arise $etween the parties. BO+IES pra%er for anin un(tive writ was denied. "8 The dispositive portion of the Order stated

<GERE#ORE, in view of the fore1oin1 (onsideration, this Court $elieves and soholds that no (o1ent reason e9ists for this Court to 1rant the writ of preli inar%in un(tion to restrain and r efrain defendant fro dis antlin1 the a(hineries andfa(ilities at the lot and $uildin1 of <orth Properties, In(orporated at Car ona, Caviteand transfer the sa e to another site and therefore denies plaintiff s appli(ation for awrit of preli inar% in un(tion.

On @ul% !&, "&&7, BO+IES filed its Repl% to )nswer and )nswer to Counter(lai ."" BO+IESdenied it had altered the Fuantit% and lowered the Fualit% of the a(hiner%, eFuip ent, andfa(ilities it delivered to the plant. It (lai ed that it had perfor ed all the underta in1s under the(ontra(t and had alread% produ(ed (ertified sa ples of =P+ (%linders. It averred that whateverwas unfinished was P+S;C s fault sin(e it failed to pro(ure raw aterials due to la( of funds.BO+IES, rel%in1 on C un/ ;u Industries 4P ils.5 Inc. v. Court o! 'ppeals ,"! insisted that the

ar$itration (lause was without Fuestion valid.

)fter BO+IES filed a Supple ental ;eorandu with ;otion to Dis iss " answerin1 P+S;C se orandu of @ul% !!, "&&7 and see in1 dis issal of P+S;C s (ounter(lai s, BO+IES, on

)u1ust 4, "&&7, filed its ;otion for Re(onsideration "4 of the @ul% ! , "&&7 Order den%in1 itsappli(ation for an in un(tive writ (lai in1 that the (ontra(t was not erel% for a(hiner% andfa(ilities worth 2SD ",!!4,888 $ut was for the sale of an :=P+ anufa(turin1 plant: (onsistin1 of:suppl% of all the a(hiner% and fa(ilities: and :transfer of te(hnolo1%: for a total (ontra(t pri(e of2SD ",5 8,888 su(h that the dis antlin1 and transfer of the a(hiner% and fa(ilities wouldresult in the dis antlin1 and transfer of the ver% plant itself to the 1reat pre udi(e of BO+IES asthe still unpaid owner6seller of the plant. ;oreover, BO+IES points out that the ar$itration (lauseunder )rt. "5 of the Contra(t as a ended was a valid ar$itration stipulation under )rt. !844 ofthe Civil Code and as held $% this Court in C un/ ;u Industries 4P ils.5 Inc ."5

In the eanti e, P+S;C filed a ;otion for Inspe(tion of Thin1s"'

to deter ine whether therewas indeed alteration of the Fuantit% and lowerin1 of Fualit% of the a(hineries and eFuip ent,and whether these were properl% installed. BO+IES opposed the otion positin1 that theFueries and issues raised in the otion for inspe(tion fell under the (overa1e of the ar$itration(lause in their (ontra(t.

On Septe $er !", "&&7, the trial (ourt issued an Order / "0 1rantin1 P+S;C s otion forinspe(tion /!0 den%in1 BO+IES otion for re(onsideration of the @ul% ! , "&&7 RTC Order and/ 0 den%in1 BO+IES otion to dis iss P+S;C s (o pulsor% (ounter(lai s as these(ounter(lai s fell within the reFuisites of (o pulsor% (ounter(lai s.

On O(to$er !, "&&7, BO+IES filed an 2r1ent ;otion for Re(onsideration "- of the Septe $er !","&&7 RTC Order 1rantin1 inspe(tion of the plant and den%in1 dis issal of P+S;C s (o pulsor%(ounter(lai s.




































Ten da%s after, on O(to$er "!, "&&7, without waitin1 for the resolution of its O(to$er !, "&&7ur1ent otion for re(onsideration, BO+IES filed $efore the Court of )ppeals /C)0 a petition for(ertiorar i"7 do( eted as C)*+.R. SP No. 4&!4&, see in1 annul ent of the @ul% ! , "&&7 andSepte $er !", "&&7 RTC Orders and pra%in1 for the issuan(e of writs of prohi$ition,anda us, and preli inar% in un(tion to en oin the RTC and P+S;C fro inspe(tin1,dis antlin1, and transferrin1 the a(hineries and eFuip ent in the Car ona plant, and to dire(tthe RTC to enfor(e the spe(ifi( a1ree ent on ar$itration to resolve the dispute.

In the eanti e, on O(to$er "&, "&&7, the RTC denied BO+IES ur1ent otion forre(onsideration and dire(ted the 3ran(h Sheriff to pro(eed with the inspe(tion of the

a(hineries and eFuip ent in the plant on O(to$er !7, "&&7."&

Thereafter, BO+IES filed a Supple ent to the Petition !8 in C)*+.R. SP No. 4&!4& infor in1 theC) a$out the O(to$er "&, "&&7 RTC Order. It also reiterated its pra%er for the issuan(e of thewrits of prohi$ition, anda us and preli inar% in un(tion whi(h was not a(ted upon $% the C).BO+IES asserted that the 3ran(h Sheriff did not have the te(hni(al e9pertise to as(ertainwhether or not the a(hineries and eFuip ent (onfor ed to the spe(ifi(ations in the (ontra(tand were properl% i nstalled.

On Nove $er "", "&&7, the 3ran(h Sheriff filed his Sheriff s Repor t!" findin1 that theenu erated a(hineries and eFuip ent were not full% and properl% installed.

T e Co r o/ A&&e('$ (//)rme+ e r)(' co r (*+ +ec'(re+e (rb) r( )o* c'( $e (7()*$ & b')c &o')c

On ;a% 8, !888, the C) rendered the assailed De(ision !! affir in1 the RTC Orders anddis issin1 the petition for (ertiorari filed $% BO+IES. The C) found that the RTC did not 1ravel%a$use its dis(retion in issuin1 the assailed @ul% ! , "&&7 and Septe $er !", "&&7 Orders.;oreover, the C) reasoned that BO+IES (ontention that the total (ontra(t pri(e for 2SD",5 8,888 was for the whole plant and had not $een full% paid was (ontrar% to the findin1 of theRTC that P+S;C full% paid the pri(e of 2SD ",!!4,888, whi(h was for all the a(hineries andeFuip ent. )((ordin1 to the C), this deter ination $% the RTC was a fa(tual findin1 $e%ond thea $it of a petition for (ertiorari.

On the issue of the validit% of the ar$itration (lause, the C) a1reed with the lower (ourt that anar$itration (lause whi(h provided for a final deter ination of the le1al ri1hts of the parties to the(ontra(t $% ar$itration was a1ainst pu$li( poli(%.

On the issue of nonpa% ent of do( et fees and non*atta(h ent of a (ertifi(ate of non*forushoppin1 $% P+S;C, the C) held that the (ounter(lai s of P+S;C were (o pulsor% ones andpa% ent of do( et fees was not reFuired sin(e the )nswer with (ounter(lai was not aninitiator% pleadin1. #or the sa e reason, the C) said a (ertifi(ate of non*foru shoppin1 wasalso not reFuired.

#urther ore, the C) held that the petition for (ertiorari had $een filed pre aturel% sin(eBO+IES did not wait for the resolution of its ur1ent otion for re(onsideration of the Septe $er!", "&&7 RTC Order whi(h was the plain, speed%, and adeFuate re ed% availa$le. )((ordin1 tothe C), the RTC ust $e 1iven the opportunit% to (orre(t an% alle1ed error it has (o itted,and that sin(e the assailed orders were interlo(utor%, these (annot $e the su$ e(t of a petitionfor (ertiorari.

Gen(e, we have this Petition for Review on Certiorari under Rule 45.

T e I$$ e$

Petitioner posits that the appellate (ourt (o itted the followin1 errors

a. PRONO2NCIN+ TGE >2ESTION O# O<NERSGIP O ER TGE ;)CGINERK )ND #)CI=ITIES )S :) >2ESTION O# #)CT: :3EKOND TGE );3IT O# )PETITION #OR CERTIOR)RI: INTENDED ON=K #OR CORRECTION O# ERRORSO# @2RISDICTION OR +R) E )32SE O# DISCRETION );O2NTIN+ TO =)CBO# /SIC0 EQCESS O# @2RISDICTION, )ND CONC=2DIN+ TG)T TGE TRI)=CO2RT S #INDIN+ ON TGE S);E >2ESTION <)S I;PROPER=K R)ISED INTGE PETITION 3E=O<

$. DEC=)RIN+ )S N2== )ND OID TGE )R3ITR)TION C=)2SE IN )RTIC=E "5O# TGE CONTR)CT 3ET<EEN TGE P)RTIES #OR 3EIN+ :CONTR)RK TOP23=IC PO=ICK: )ND #OR O2STIN+ TGE CO2RTS O# @2RISDICTION

(. DECREEIN+ PRI )TE RESPONDENT S CO2NTERC=)I;S TO 3E )==CO;P2=SORK NOT NECESSIT)TIN+ P)K;ENT O# DOCBET #EES )NDCERTI#IC)TION O# NON*#OR2; SGOPPIN+

d. R2=IN+ TG)T TGE PETITION <)S #I=ED PRE;)T2RE=K <ITGO2T <)ITIN+#OR TGE RESO=2TION O# TGE ;OTION #OR RECONSIDER)TION O# TGEORDER D)TED SEPTE;3ER !", "&&7 OR <ITGO2T +I IN+ TGE TRI)= CO2RT

)N OPPORT2NITK TO CORRECT ITSE=#

e. PROC=)I;IN+ TGE T<O ORDERS D)TED @2=K ! )ND SEPTE;3ER !","&&7 NOT TO 3E PROPER S23@ECTS O# CERTIOR)RI )ND PROGI3ITION #OR3EIN+ :INTER=OC2TORK IN N)T2RE :

f. NOT +R)NTIN+ TGE RE=IE#S )ND RE;EDIES PR)KED #OR IN GE /SIC0PETITION )ND, INSTE)D, DIS;ISSIN+ TGE S);E #OR )==E+ED=K :<ITGO2T;ERIT.: !

T e Co r >$ R ')*7

The petition is partl% eritorious.

3efore we delve into the su$stantive issues, we shall first ta( le the pro(edural issues.

T e r 'e$ o* e &( me* o/ +oc@e /ee$ /or co * erc'()m$(*+ cro$$ c'()m$ ere (me*+e+ e//ec )8e A 7 $ 16, 200

BO+IES stron1l% ar1ues that when P+S;C f iled the (ounter(lai s, it should have paid do( etfees and filed a (ertifi(ate of non*foru shoppin1, and that its failure to do so was a fatal defe(t.

<e disa1ree with BO+IES.

)s aptl% ruled $% the C), the (ounter(lais of P+S;C were in(orporated in its )nswer withCo pulsor% Counter(lai dated @ul% "-, "&&7 in a((ordan(e with Se(tion 7 of Rule "", "&&-Revised Rules of Civil Pro(edure, the rule that was effe(tive at the ti e the )nswer withCounter(lai was filed. Se(. 7 on e9istin1 (ounter(lai or (ross*(lai states, :) (o pulsor%




















(ounter(lai or a (ross*(lai that a defendin1 part% has at the ti e he files his answer shall $e(ontained therein.:

On @ul% "-, "&&7, at the ti e P+S;C filed its )nswer in(orporatin1 its (ounter(lai s a1ainstBO+IES, it was not lia$le to pa% filin1 fees for said (ounter(lai s $ein1 (o pulsor% in nature.<e stress, however, that effe(tive )u1ust "', !884 under Se(. -, Rule "4", as a ended $%

).;. No. 84*!*84*SC, do( et fees are now reFuired to $e paid in (o pulsor% (ounter(lai or(ross*(lai s.

)s to the failure to su$ it a (ertifi(ate of foru shoppin1, P+S;C s )nswer is not an initiator%pleadin1 whi(h reFuires a (ertifi(ation a1ainst foru shoppin1 under Se(. 5 !4 of Rule -, "&&-Revised Rules of Civil Pro(edure. It is a responsive pleadin1, hen(e, the (ourts a =uo did not(o it reversi$le error in den%in1 BO+IES otion to dis iss P+S;C s (o pulsor%(ounter(lai s.

I* er'oc or or+er$ &ro&er $ b?ec o/ cer )or(r)

Citin1 0am(oa v. Cru< ,!5 the C) also pronoun(ed that :(ertiorari and Prohi$ition are neither there edies to Fuestion the propriet% of an interlo(utor% order of the tri al (ourt.: !' The C) erred onits relian(e on 0am(oa . 0am(oa involved the denial of a otion to a(Fuit in a (ri inal (asewhi(h was not assaila$le in an a(tion for (ertiorari sin(e the denial of a otion to Fuash reFuiredthe a((used to plead and to (ontinue with the trial, and whatever o$ e(tions the a((used had inhis otion to Fuash (an then $e used as part of his defense and su$seFuentl% (an $e raised aserrors on his appeal if the ud1 ent of the trial (ourt is adverse to hi . The 1eneral rule is thatinterlo(utor% orders (annot $e (hallen1ed $% an appeal. !- Thus, in >amaoka v. Pescaricanu!acturin/ Corporation , we held

The proper re ed% in su(h (ases is an ordinar% appeal fro an adverse ud1 ent on the merits , in(orporatin1 in said appeal the 1rounds for assailin1 the interlo(utor%orders. )llowin1 appeals fro interlo(utor% orders would result in the sorr% spe(ta(leof a (ase $ein1 su$ e(t of a (ounterprodu(tive pin/-pon/ to and fro the appellate(ourt as often as a trial (ourt is per(eived to have ade an error in an% of itsinterlo(utor% rulin1s. Gowever, where the assailed interlo(utor% order was issued with1rave a$use of dis(retion or patentl% erroneous and the re ed% of appeal would notafford adeFuate and e9peditious relief, the Court allows (ertiorari as a ode ofredress. !7

)lso, appeals fro interlo(utor% orders would open the flood1ates to endless o((asions fordilator% otions. Thus, where the interlo(utor% order was issued without or in e9(ess of

urisdi(tion or with 1rave a$use of dis(retion, the re ed% is (ertiorari .!&

The alle1ed 1rave a$use of dis(retion of the respondent (ourt eFuivalent to la( of urisdi(tion inthe issuan(e of the two assailed orders (oupled with the fa(t that there is no plain, speed%, andadeFuate re ed% in the ordinar% (ourse of law a pl% provides the $asis for allowin1 the resortto a petition for (ertiorari under Rule '5.

Prem( r) o/ e &e ) )o* be/ore e CA

Neither do we thin that BO+IES was 1uilt% of foru shoppin1 in filin1 the petition for (ertiorari.Note that BO+IES otion for re(onsideration of the @ul% ! , "&&7 RTC Order whi(h denied theissuan(e of the in un(tive writ had alread% $een denied. Thus, BO+IES onl% re ed% was toassail the RTC s interlo(utor% order via a petition for (ertiorari under Rule '5.

<hile the O(to$er !, "&&7 otion for re(onsideration of BO+IES of the Septe $er !", "&&7RTC Order relatin1 to the inspe(tion of thin1s, and the allowan(e of the (o pulsor%(ounter(lai s has not %et $een resolved, the (ir(u stan(es in this (ase would allow ane9(eption to the rule that $efore (ertiorari a% $e availed of, the petitioner ust have filed aotion for re(onsideration and said otion should have $een first resolved $% the (ourt a Fuo.The reason $ehind the rule is :to ena$le the lower (ourt, in the first instan(e, to pass upon and(orre(t its ista es without the intervention of the hi1her (ourt.: 8

The Septe $er !", "&&7 RTC Order dire(tin1 the $ran(h sheriff to inspe(t the plant, eFuip ent,and fa(ilities when he is not (o petent and nowled1ea$le on said atters is evidentl% flawed

and devoid of an% le1al support. ;oreover, there is an ur1ent ne(essit% to resolve the issue onthe dis antlin1 of the fa(ilities and an% further dela% would pre udi(e the interests of BO+IES.Indeed, there is real and i inent threat of irrepara$le destru(tion or su$stantial da a1e toBO+IES eFuip ent and a(hineries. <e find the resort to (ertiorari $ased on the 1ravel%a$usive orders of the trial (ourt sans the rulin1 on the O(to$er !, "&&7 otion forre(onsideration to $e proper.

T e Core I$$ e# Ar )c'e 1 o/ e Co* r(c

<e now 1o to the (ore issue of the validit% of )rt. "5 of the Contra(t, the ar$itration (lause. Itprovides

)rti(le "5. 'r(itration . )ll disputes, (ontroversies, or differen(es whi(h a% arise$etween the parties, out of or in relation to or in (onne(tion with this Contra(t or forthe $rea(h thereof, shall finall% $e settled $% ar$itration in Seoul, Borea in a((ordan(ewith the Co er(ial )r$itration Rules of the Borean Co er(ial )r$itration 3oard.T e ( (r+ re*+ere+ b e (rb) r( )o* $F $ ('' be /)*(' (*+ b)*+)*7 &o* bo&(r )e$ co*cer*e+ . /E phasis supplied.0

Petitioner (lai s the RTC and the C) erred in rulin1 that the ar$itration (lause is null and void.

Petitioner is (orre(t.

Esta$lished in this urisdi(tion is the rule that the law of the pla(e where the (ontra(t is ade1overns. *e loci contractus . The (ontra(t in this (ase was perfe(ted here in the Philippines.Therefore, our laws ou1ht to 1overn. Nonetheless, )rt. !844 of the Civil Code san(tions thevalidit% of utuall% a1reed ar$itral (lause or the finalit% and $indin1 effe(t of an ar$itral award.

)rt. !844 provides, : A* $ )& '( )o* ( e (rb) r( or$> ( (r+ or +ec)$)o* $ ('' be /)*(', )$8(')+ , without pre udi(e to )rti(les !8 7, !8 & and !848.: /E phasis supplied.0

)rts. !8 7, " !8 & , ! and !848 a$ove(ited refer to instan(es where a (o pro ise or an ar$itralaward, as applied to )rt. !844 pursuant to )rt. !84 , 4 a% $e voided, res(inded, or annulled,$ut these would not deni1rate the finalit% of the ar$itral award.

The ar$itration (lause was utuall% and voluntaril% a1reed upon $% the parties. It has not $eenshown to $e (ontrar% to an% law, or a1ainst orals, 1ood (usto s, pu$li( order, or pu$li( poli(%.There has $een no showin1 that the parties have not dealt with ea(h other on eFual footin1. <efind no reason wh% the ar$itration (lause should not $e respe(ted and (o plied with $% $othparties. In 0on<ales v. Clima inin/ *td ., 5 we held that su$ ission to ar$itration is a (ontra(tand that a (lause in a (ontra(t providin1 that all atters in dispute $etween the parties shall $ereferred to ar$itration is a (ontra(t . ' )1ain in Del onte Corporation-#%' v. Court o! 'ppeals ,we li ewise ruled that : tJhe provision to su$ it to ar$itration an% dispute arisin1 therefro andthe relationship of the parties is part of that (ontra(t and is itself a (ontra(t.: -











































Arb) r( )o* c'( $e *o co* r(r o & b')c &o')c

The ar$itration (lause whi(h stipulates that the ar$itration ust $e done in Seoul, Borea ina((ordan(e with the Co er(ial )r$itration Rules of the BC)3, and that the ar$itral award isfinal and $indin1, is not (ontrar% to pu$li( poli(%. This Court has san(tioned the validit% ofar$itration (lauses in a catena of (ases. In the "&5- (ase of East(oard :avi/ation *td. v. Juan>smael and Co. Inc. , 7 this Court had o((asion to rule that an ar$itration (lause to resolvedifferen(es and $rea(hes of utuall% a1reed (ontra(tual ter s is valid. In ,; Corporation v.Court o! 'ppeals , we held that : iJn this urisdi(tion, ar$itration has $een held valid and(onstitutional. Even $efore the approval on @une "&, "&5 of Repu$li( )(t No. 7-', this Court

has (ountenan(ed the settle ent of disputes throu1h ar$itration. Repu$li( )(t No. 7-' wasadopted to supple ent the New Civil Code s provisions on ar$itration.: & )nd in * Po$erEn/ineerin/ Corporation v. Capitol Industrial Construction 0roups Inc ., we de(lared that

3ein1 an ine9pensive, speed% and a i(a$le ethod of settlin1 disputes, ar$itrationHHalon1 with ediation, (on(iliation and ne1otiationHHis en(oura1ed $% the Supre eCourt. )side fro un(lo11in1 udi(ial do( ets, ar$itration also hastens the resolutionof disputes, espe(iall% of the (o er(ial ind. It is thus re1arded as the :wave of thefuture: in international (ivil and (o er(ial disputes. 3rushin1 aside a (ontra(tuala1ree ent (allin1 for ar$itration $etween the parties would $e a step $a( ward.

Consistent with the a$ove* entioned poli(% of en(oura1in1 alternative disputeresolution ethods, (ourts should li$erall% (onstrue ar$itration (lauses. Provided su(h(lause is sus(epti$le of an interpretation that (overs the asserted dispute, an order to

ar$itrate should $e 1ranted. )n% dou$t should $e resolved in favor of ar$itration.48

Gavin1 said that the instant ar$itration (lause is not a1ainst pu$li( poli(%, we (o e to theFuestion on what 1overns an ar$itration (lause spe(if%in1 that in (ase of an% dispute arisin1fro the (ontra(t, an ar$itral panel will $e (onstituted in a forei1n (ountr% and the ar$itrationrules of the forei1n (ountr% would 1overn and i ts award shall $e final and $indin1.

RA 92< )*cor&or( e+ e UNCITRAL "o+e' '(o )c e (re ( $)7*( or

#or do esti( ar$itration pro(eedin1s, we have parti(ular a1en(ies to ar$itrate disputes arisin1fro (ontra(tual relations. In (ase a forei1n ar$itral $od% is (hosen $% the parties, the ar$itrationrules of our do esti( ar$itration $odies would not $e applied. )s si1nator% to the )r$itrationRules of the 2NCITR)= ;odel =aw on International Co er(ial )r$itration 4" of the 2nitedNations Co ission on International Trade =aw /2NCITR)=0 in the New Kor Convention on@une !", "&75, the Philippines (o itted itself to $e $ound $% the ;odel =aw. <e have evenin(orporated the ;odel =aw in Repu$li( )(t No. /R)0 &!75, otherwise nown as the )lternativeDispute Resolution )(t of !884 entitled 'n 'ct to Institutionali<e t e #se o! an 'lternativeDispute Resolution %&stem in t e P ilippines and to Esta(lis t e O!!ice !or 'lternative DisputeResolution and !or Ot er Purposes , pro ul1ated on )pril !, !884. Se(s. "& and !8 of Chapter 4of the ;odel =aw are the pertinent provisions

CG)PTER 4 * INTERN)TION)= CO;;ERCI)= )R3ITR)TION

SEC. "&. 'doption o! t e odel *a$ on International Commercial 'r(itration .HHInternational (o er(ial ar$itration shall $e 1overned $% the ;odel =aw onInternational Co er(ial )r$itration /the :;odel =aw:0 adopted $% the 2nited NationsCo ission on International Trade =aw on @une !", "&75 /2nited Nations Do(u ent

)6486"-0 and re(o ended for ena(tent $% the +eneral )sse $l% in Resolution No.

486-! approved on De(e $er "", "&75, (op% of whi(h is hereto atta(hed as )ppendi9:):.

SEC. !8. Interpretation o! odel *a$ .HHIn interpretin1 the ;odel =aw, re1ard shall $ehad to its international ori1in and to the need for unifor it% in its interpretation andresort a% $e ade to the travau preparatories and the report of the Se(retar%+eneral of the 2nited Nations Co ission on International Trade =aw dated ;ar(h!5, "&75 entitled, :International Co er(ial )r$itration )nal%ti(al Co entar% onDraft Trade identified $% referen(e nu $er )6CN. &6!'4.:

<hile R) &!75 was passed onl% in !884, it nonetheless applies in the instant (ase sin(e it is apro(edural law whi(h has a retroa(tive effe(t. =i ewise, BO+IES filed its appli(ation forar$itration $efore the BC)3 on @ul% ", "&&7 and i t is still pendin1 $e(ause no ar$itral award has%et $een rendered. Thus, R) &!75 is appli(a$le to the instant (ase. <ell*settled is the rule thatpro(edural laws are (onstrued to $e appli(a$le to a(tions pendin1 and undeter ined at the ti eof their passa1e, and are dee ed retroa(tive in that sense and to that e9tent. )s a 1eneral rule,the retroa(tive appli(ation of pro(edural laws does not violate an% personal ri1hts $e(ause novested ri1ht has %et atta(hed nor arisen fro the .4!

) on1 the pertinent features of R) &!75 appl%in1 and in(orporatin1 the 2NCITR)= ;odel =aware the followin1

1F T e RTC m $ re/er o (rb) r( )o* )* &ro&er c($e$

2nder Se(. !4, the RTC does not have urisdi(tion over disputes that are properl% the su$ e(t ofar$itration pursuant to an ar$itration (lause, and andates the referral to ar$itration in su(h(ases, thus

SEC. !4. Re!erral to 'r(itration .HH) (ourt $efore whi(h an a(tion is $rou1ht in aatter whi(h is the su$ e(t atter of an ar$itration a1ree ent shall, if at least onepart% so reFuests not later than the pre*trial (onferen(e, or upon the reFuest of $othparties thereafter, refer the parties to ar$itration unless it finds that the ar$itrationa1ree ent is null and void, inoperative or in(apa$le of $ein1 perfor ed.

2F ;ore)7* (rb) r(' ( (r+$ m $ be co*/)rme+ b e RTC

#orei1n ar$itral awards while utuall% stipulated $% the parties in the ar$itration (lause to $efinal and $indin1 are not i ediatel% enfor(ea$le or (annot $e i ple ented i ediatel%. Se(.5 4 of the 2NCITR)= ;odel =aw stipulates the reFuire ent for the ar$itral award to $ere(o1ni?ed $% a (o petent (ourt for enfor(e ent, whi(h (ourt under Se(. ' of the 2NCITR)=;odel =aw a% refuse re(o1nition or enfor(e ent on the 1rounds provided for. R) &!75in(orporated these provisos to Se(s. 4!, 4 , and 44 relative to Se(s. 4- and 47, thus

SEC. 4!. 'pplication o! t e :e$ >ork Convention .HHThe New Kor Convention shall1overn the re(o1nition and enfor(e ent of ar$itral awards (overed $% saidConvention.

The re(o1nition and enfor(e ent of su(h ar$itral awards shall $e filed with theRe7)o*(' Tr)(' Co r in a((ordan(e with the rules of pro(edure to $e pro ul1ated $%the Supre e Court. Said pro(edural rules shall provide that the part% rel%in1 on theaward or appl%in1 for its enfor(e ent shall file with the (ourt the ori1inal or

authenti(ated (op% of the award and the ar$itration a1ree ent. If the award or


















a1ree ent is not ade in an% of the offi(ial lan1ua1es, the part% shall suppl% a dul%(ertified translation thereof into an% of su(h lan1ua1es.

The appli(ant shall esta$lish that the (ountr% in whi(h forei1n ar$itration award wasade in part% to the New Kor Convention.

9 9 9 9

SEC. 4 . Reco/nition and En!orcement o! ;orei/n 'r(itral '$ards :ot Covered (&

t e :e$ >ork Convention .HHThe re(o1nition and enfor(e ent of forei1n ar$itralawards not (overed $% the New Kor Convention shall $e done in a((ordan(e withpro(edural rules to $e pro ul1ated $% the Supre e Court. The Court a%, on1rounds of (o it% and re(ipro(it%, re(o1ni?e and enfor(e a non*(onvention award asa (onvention award.

SEC. 44. ;orei/n 'r(itral '$ard :ot ;orei/n Jud/ment .HH) forei1n ar$itral awardwhen (onfir ed $% a (ourt of a forei1n (ountr%, shall $e re(o1ni?ed and enfor(ed as aforei1n ar$itral award and not as a ud1 ent of a forei1n (ourt.

) forei1n ar$itral award, when (onfir ed $% the Re1ional Trial Court, shall $eenfor(ed in the sa e anner as final and e9e(utor% de(isions of (ourts of law of thePhilippines

9 9 9 9

SEC. 4-. enue and Jurisdiction .HHPro(eedin1s for re(o1nition and enfor(e ent ofan ar$itration a1ree ent or for va(ations, settin1 aside, (orre(tion or odifi(ation ofan ar$itral award, and an% appli(ation with a (ourt for ar$itration assistan(e andsupervision shall $e dee ed as spe(ial pro(eedin1s and shall $e filed with theRe1ional Trial Court /i0 where ar$itration pro(eedin1s are (ondu(ted /ii0 where theasset to $e atta(hed or levied upon, or the a(t to $e en oined is lo(ated /iii0 where an%of the parties to the dispute resides or has his pla(e of $usiness or /iv0 in the National@udi(ial Capital Re1ion, at the option of the appli(ant.

SEC. 47. :otice o! Proceedin/ to Parties .HHIn a spe(ial pro(eedin1 for re(o1nitionand enfor(e ent of an ar$itral award, the Court shall send noti(e to the parties at theiraddress of re(ord in the ar$itration, or if an% part (annot $e served noti(e at su(haddress, at su(h part% s last nown address. The noti(e shall $e sent al least fifteen/"50 da%s $efore the date set for the initial hearin1 of the appli(ation.

It is now (lear that forei1n ar$itral awards when (onfir ed $% the RTC are dee ed not as a ud1 ent of a forei1n (ourt $ut as a forei1n ar$itral award, and when (onfir ed, are enfor(ed asfinal and e9e(utor% de(isions of our (ourts of law.

Thus, it (an $e 1leaned that the (on(ept of a final and $indin1 ar$itral award i s si ilar to ud1 ents or awards 1iven $% so e of our Fuasi* udi(ial $odies, li e the National =a$orRelations Co ission and ;ines )d udi(ation 3oard, whose final ud1 ents are stipulated to$e final and $indin1, $ut not i ediatel% e9e(utor% in the sense that the% a% still $e udi(iall%reviewed, upon the instan(e of an% part%. Therefore, the final forei1n ar$itral awards are si ilarl%situated in that the% need first to $e (onfir ed $% the RTC.

:F T e RTC ($ ? r)$+)c )o* o re8)e /ore)7* (rb) r(' ( (r+$

Se(. 4! in relation to Se(. 45 of R) &!75 desi1nated and vested the RTC with spe(ifi( authorit%and urisdi(tion to set aside, re e(t, or va(ate a forei1n ar$itral award on 1rounds provided under

)rt. 4/!0 of the 2NCITR)= ;odel =aw. Se(s. 4! and 45 provide

SEC. 4!. 'pplication o! t e :e$ >ork Convention .HHThe New Kor Convention shall1overn the re(o1nition and enfor(e ent of ar$itral awards (overed $% saidConvention.

The re(o1nition and enfor(e ent of su(h ar$itral awards shall $e filed with theRe7)o*(' Tr)(' Co r in a((ordan(e with the rules of pro(edure to $e pro ul1ated $%the Supre e Court. Said pro(edural rules shall provide that the part% rel%in1 on theaward or appl%in1 for its enfor(e ent shall file with the (ourt the ori1inal orauthenti(ated (op% of the award and the ar$itration a1ree ent. If the award ora1ree ent is not ade in an% of the offi(ial lan1ua1es, the part% shall suppl% a dul%(ertified translation thereof into an% of su(h lan1ua1es.

The appli(ant shall esta$lish that the (ountr% in whi(h forei1n ar$itration award wasade is part% to the New Kor Convention.

If the appli(ation for re e(tion or suspension of enfor(e ent of an award has $eenade, the Re1ional Trial Court a%, if it (onsiders it proper, va(ate its de(ision anda% also, on the appli(ation of the part% (lai in1 re(o1nition or enfor(e ent of theaward, order the part% to provide appropriate se(urit%.

9 9 9 9

SEC. 45. Re ection o! a ;orei/n 'r(itral '$ard .HH) part% to a forei1n ar$itrationpro(eedin1 a% oppose an appli(ation for re(o1nition and enfor(e ent of the ar$itralaward in a((ordan(e with the pro(edures and rules to $e pro ul1ated $% theSupre e Court onl% on those 1rounds enu erated under )rti(le of the New KorConvention. )n% other 1round raised shall $e disre1arded $% the Re1ional Trial Court.

Thus, while the RTC does not have urisdi(tion over disputes 1overned $% ar$itration utuall%a1reed upon $% the parties, still the forei1n ar$itral award is su$ e(t to udi(ial review $% the RTCwhi(h (an set aside, re e(t, or va(ate it. In this sense, what this Court held in C un/ ;uIndustries 4P ils.5 Inc . relied upon $% BO+IES is appli(a$le insofar as the forei1n ar$itralawards, while final and $indin1, do not oust (ourts of urisdi(tion sin(e these ar$itral awards arenot a$solute and without e9(eptions as the% are still udi(iall% reviewa$le. Chapter - of R) &!75has ade it (lear that all ar$itral awards, whether do esti( or forei1n, are su$ e(t to udi(ialreview on spe(ifi( 1rounds provided for.

F Gro *+$ /or ? +)c)(' re8)e +)//ere* )* +ome$ )c (*+ /ore)7* (rb) r(' ( (r+$

The differen(es $etween a final ar$itral award fro an international or forei1n ar$itral tri$unaland an award 1iven $% a lo(al ar$itral tri$unal are the spe(ifi( 1rounds or (onditions that vest

urisdi(tion over our (ourts to review the awards.

#or forei1n or international ar$itral awards whi(h ust first $e (onfir ed $% the RTC, the1rounds for settin1 aside, re e(tin1 or va(atin1 the award $% the RTC are provided under )rt.4/!0 of the 2NCITR)= ;odel =aw.



#or final do esti( ar$itral awards, whi(h also need (onfir ation $% the RTC pursuant to Se(. !of R) 7-' 44 and shall $e re(o1ni?ed as final and e9e(utor% de(isions of the RTC ,45 the% a%onl% $e assailed $efore the RTC and va(ated on the 1rounds provided under Se(. !5 of R)7-' .4'

F RTC +ec)$)o* o/ ($$()'e+ /ore)7* (rb) r(' ( (r+ (&&e('(b'e

Se(. 4' of R) &!75 provides for an appeal $efore the C) as the re ed% of an a11rieved part% in(ases where the RTC sets aside, re e(ts, va(ates, odifies, or (orre(ts an ar$itral award, thus

SEC. 4'. 'ppeal !rom Court Decision or 'r(itral '$ards . ) de(ision of the Re1ionalTrial Court (onfir in1, va(atin1, settin1 aside, odif%in1 or (orre(tin1 an ar$itralaward a% $e appealed to the Court of )ppeals in a((ordan(e with the rules andpro(edure to $e pro ul1ated $% the Supre e Court.

The losin1 part% who appeals fro the ud1 ent of the (ourt (onfir in1 an ar$itralaward shall $e reFuired $% the appellate (ourt to post a (ounter$ond e9e(uted in favorof the prevailin1 part% eFual to the a ount of the award in a((ordan(e with the rulesto $e pro ul1ated $% the Supre e Court.

Thereafter, the C) de(ision a% further $e appealed or reviewed $efore this Court throu1h apetition for review under Rule 45 of the Rules of Court.

PGS"C ($ reme+)e$ o &ro ec ) $ )* ere$ $

Thus, $ased on the fore1oin1 features of R) &!75, P+S;C ust su$ it to the forei1nar$itration as it $ound itself throu1h the su$ e(t (ontra(t. <hile it a% have is1ivin1s on theforei1n ar$itration done in Borea $% the BC)3, it has availa$le re edies under R) &!75. Itsinterests are dul% prote(ted $% the law whi(h reFuires that the ar$itral award that a% $erendered $% BC)3 ust $e (onfir ed here $% the RTC $efore it (an $e enfor(ed.

<ith our disFuisition a$ove, petitioner is (orre(t in its (ontention that an ar$itration (lause,stipulatin1 that the ar$itral award is final and $indin1, does not oust our (ourts of urisdi(tion asthe international ar$itral award, the award of whi(h is not a$solute and without e9(eptions, is still

udi(iall% reviewa$le under (ertain (onditions provided for $% the 2NCITR)= ;odel =aw on IC)as applied and in(orporated in R) &!75.

#inall%, it ust $e noted that there is nothin1 in the su$ e(t Contra(t whi(h provides that theparties a% dispense with the ar$itration (lause.

U*)'( er(' re$c)$$)o* )m&ro&er (*+ )''e7('

Gavin1 ruled that the ar$itration (lause of the su$ e(t (ontra(t is valid and $indin1 on the parties,and not (ontrar% to pu$li( poli(% (onseFuentl%, $ein1 $ound to the (ontra(t of ar$itration, a part%a% not unilaterall% res(ind or ter inate the (ontra(t for whatever (ause without first resortin1 toar$itration.

<hat this Court held in #niversit& o! t e P ilippines v. De *os 'n/eles 4- and reiterated insu((eedin1 (ases, 47 that the a(t of treatin1 a (ontra(t as res(inded on a((ount of infra(tions $%the other (ontra(tin1 part% is valid al$eit provisional as it (an $e udi(iall% assailed, is not

appli(a$le to the instant (ase on a((ount of a valid stipulation on ar$itration. <here anar$itration (lause in a (ontra(t is availin1, neither of the parties (an unilaterall% treat the (ontra(t

as res(inded sin(e whatever infra(tions or $rea(hes $% a part% or differen(es arisin1 fro the(ontra(t ust $e $rou1ht first and resolved $% ar$itration, and not throu1h an e9tra udi(ialres(ission or udi(ial a(tion.

The issues arisin1 fro the (ontra(t $etween P+S;C and BO+IES on whether the eFuip entand a(hineries delivered and installed were properl% installed and operational in the plant inCar ona, Cavite the ownership of eFuip ent and pa% ent of the (ontra(t pri(e and whetherthere was su$stantial (o plian(e $% BO+IES in the produ(tion of the sa ples, 1iven thealle1ed fa(t that P+S;C (ould not suppl% the raw aterials reFuired to produ(e the sa ple=P+ (%linders, are atters proper for ar$itration. Indeed, we note that on @ul% ", "&&7, BO+IES

instituted an )ppli(ation for )r$itration $efore the BC)3 in Seoul, Borea pursuant to )rt. "5 ofthe Contra(t as a ended. Thus, it is in(u $ent upon P+S;C to a$ide $% its (o it ent toar$itrate.

Corollaril%, the trial (ourt 1ravel% a$used its dis(retion in 1rantin1 P+S;C s ;otion forInspe(tion of Thin1s on Septe $er !", "&&7, as the su$ e(t atter of the otion is under thepri ar% urisdi(tion of the utuall% a1reed ar$itral $od%, the BC)3 in Borea.

In addition, whatever findin1s and (on(lusions ade $% the RTC 3ran(h Sheriff fro theinspe(tion ade on O(to$er !7, "&&7, as ordered $% the trial (ourt on O(to$er "&, "&&7, is of noworth as said Sheriff is not te(hni(all% (o petent to as(ertain the a(tual status of the eFuip entand a(hineries as installed in the plant.

#or these reasons, the Septe $er !", "&&7 and O(to$er "&, "&&7 RTC Orders pertainin1 to the1rant of the inspe(tion of the eFuip ent and a(hineries have to $e re(alled and nullified.

I$$ e o* o *er$ )& o/ &'(* &ro&er /or (rb) r( )o*

Petitioner assails the C) rulin1 that the issue petitioner raised on whether the total (ontra(t pri(eof 2SD ",5 8,888 was for the whole plant and its installation is $e%ond the a $it of a Petition forCertiorari.

Petitioner s position is untena$le.

It is settled that Fuestions of fa(t (annot $e raised in an ori1inal a(tion for (ertiorari. 4& <hether ornot there was full pa% ent for the a(hineries and eFuip ent and installation is indeed a fa(tualissue prohi$ited $% Rule '5.

Gowever, what appears to (onstitute a 1rave a$use of dis(retion is the order of the RTC inresolvin1 the issue on the ownership of the plant when it is the ar$itral $od% /BC)30 and not theRTC whi(h has urisdi(tion and authorit% over the said issue. The RTC s deter ination of su(hfa(tual issue (onstitutes 1rave a$use of dis(retion and ust $e reversed and set aside.

RTC ($ )* er)m ? r)$+)c )o* o &ro ec e r)7 $ o/ e &(r )e$

)nent the @ul% ! , "&&7 Order den%in1 the issuan(e of the in un(tive writ pavin1 the wa% forP+S;C to dis antle and transfer the eFuip ent and a(hineries, we find it to $e in order(onsiderin1 the fa(tual ilieu of the instant (ase.

#irstl%, while the issue of the proper installation of the eFuip ent and a(hineries i1ht well $e

under the pri ar% urisdi(tion of the ar$itral $od% to de(ide, %et the RTC under Se(. !7 of R)





















&!75 has urisdi(tion to hear and 1rant interi easures to prote(t vested ri1hts of the parties.Se(. !7 pertinentl% provides

SEC. !7. 0rant o! interim easure o! Protection . /a0 I )$ *o )*com&( )b'e ) (*(rb) r( )o* (7reeme* /or ( &(r o re e$ , be/ore co*$ ) )o* o/ e r)b *(',/rom ( Co r o 7r(* $ c me($ re . )fter (onstitution of the ar$itral tri$unal anddurin1 ar$itral pro(eedin1s, a reFuest for an interi easure of prote(tion, orodifi(ation thereof, a% $e ade with the ar$itral or o e e% e* ( e (rb) r('r)b *(' ($ *o &o er o (c or )$ *(b'e o (c e//ec )8) , e re e$ m( bem(+e ) e Co r . The ar$itral tri$unal is dee ed (onstituted when the sole

ar$itrator or the third ar$itrator, who has $een no inated, has a((epted theno ination and written (o uni(ation of said no ination and a((eptan(e has $eenre(eived $% the part% a in1 the reFuest.

/$0 The followin1 rules on interi or provisional relief shall $e o$served

)n% part% a% reFuest that provisional relief $e 1ranted a1ainst the adverse part%.

Su(h relief a% $e 1ranted

/i0 o &re8e* )rre&(r(b'e 'o$$ or )*? r

/ii0 to provide se(urit% for the perfor an(e of an% o$li1ation

/iii0 to produ(e or preserve an% eviden(e or

/iv0 to (o pel an% other appropriate a(t or o ission.

/(0 The order 1rantin1 provisional relief a% $e (onditioned upon the provision ofse(urit% or an% a(t or o ission spe(ified in the order.

/d0 Interi or provisional relief is reFuested $% written appli(ation trans itted $%reasona$le eans to the Court or ar$itral tri$unal as the (ase a% $e and the part%a1ainst who the relief is sou1ht, des(ri$in1 in appropriate detail the pre(ise relief,the part% a1ainst who the relief is reFuested, the 1rounds for the relief, and theeviden(e supportin1 the reFuest.

/e0 T e or+er $ ('' be b)*+)*7 &o* e &(r )e$ .

/f0 Either part% a% appl% with the Court for assistan(e in i ple entin1 or enfor(in1an interi easure ordered $% an ar$itral tri$unal.

/10 ) part% who does not (o pl% with the order shall $e lia$le for all da a1es resultin1fro non(o plian(e, in(ludin1 all e9penses, and reasona$le attorne% s fees, paid ino$tainin1 the order s udi(ial enfor(e ent. /E phasis ours.0

)rt. "-/!0 of the 2NCITR)= ;odel =aw on IC) defines an :interi easure: of prote(tion as

'rticle 1?. Po$er o! ar(itral tri(unal to order interim measures

999 999 999

/!0 )n )* er)m me($ re is an% te porar% easure, whether in the for of an awardor in another for , $% whi(h, at an% ti e prior to the issuan(e of the award $% whi(hthe dispute is finall% de(ided, the ar$itral tri$unal orders a part% to

4a5 ;aintain or restore the status Fuo pendin1 deter ination of the dispute

4(5 Ta e a(tion that would prevent, or refrain fro ta in1 a(tion that is li el% to (ause,

(urrent or i inent har or pre udi(e to the ar$itral pro(ess itself

4c5Provide a eans of preservin1 assets out of whi(h a su$seFuent award a% $esatisfied or

4d5Preserve eviden(e that a% $e relevant and aterial to the resolution of thedispute.

)rt. "- @ of 2NCITR)= ;odel =aw on IC) also 1rants (ourts power and urisdi(tion to issueinteri easures

'rticle 1? J. Court-ordered interim measures

) (ourt shall have the sae power of issuin1 an interi easure in relation toar$itration pro(eedin1s, irrespe(tive of whether their pla(e is in the territor% of thisState, as it has in relation to pro(eedin1s in (ourts. The (ourt shall e9er(ise su(hpower in a((ordan(e with its own pro(edures in (onsideration of the spe(ifi( featuresof international ar$itration.

In the re(ent !88' (ase of Trans!ield P ilippines Inc. v. *u<on )&dro Corporation , we weree9pli(it that even :the penden(% of an ar$itral pro(eedin1 does not fore(lose resort to the (ourtsfor provisional reliefs.: <e e9pli(ated this wa%

)s a fundaental point, the penden(% of ar$itral pro(eedin1s does not fore(loseresort to the (ourts for provisional reliefs. The Rules of the ICC, whi(h 1overns theparties ar$itral dispute, allows the appli(ation of a part% to a udi(ial authorit% forinteri or (onservator% easures. =i ewise, Se(tion "4 of Repu$li( )(t /R.).0 No. 7-'/The )r$itration =aw0 re(o1ni?es the ri1hts of an% part% to petition the (ourt to ta eeasures to safe1uard and6or (onserve an% atter whi(h is the su$ e(t of the disputein ar$itration. In addition, R.). &!75, otherwise nown as the :)lternative DisputeResolution )(t of !884,: allows the filin1 of provisional or interi easures with there1ular (ourts whenever the ar$itral tri$unal has no power to a(t or to a(t effe(tivel% .58

It is thus $e%ond (avil that the RTC has authorit% and urisdi(tion to 1rant interi easures ofprote(tion.

Se(ondl%, (onsiderin1 that the eFuip ent and a(hineries are in the possession of P+S;C, ithas the ri1ht to prote(t and preserve the eFuip ent and a(hineries in the $est wa% it (an.Considerin1 that the =P+ plant was non*operational, P+S;C has the ri1ht to dis antle andtransfer the eFuip ent and a(hineries either for their prote(tion and preservation or for the$etter wa% to a e 1ood use of the whi(h is inelu(ta$l% within the ana1e ent dis(retion of

P+S;C.






Thirdl%, and of 1reater i port is the reason that aintainin1 the eFuip ent and a(hineries in<orth s propert% is not to the $est interest of P+S;C due to the prohi$itive rent while the =P+plant as set*up is not operational. P+S;C was losin1 PhP !!,5'8 as onthl% rentals orPhP .7-; for "&&7 alone without (onsiderin1 the "8A annual rent in(re ent in aintainin1 theplant.

#ourthl%, and (orollaril%, while the BC)3 (an rule on otions or petitions relatin1 to thepreservation or transfer of the eFuip ent and a(hineries as an interi easure, %et onhindsi1ht, the @ul% ! , "&&7 Order of the RTC allowin1 the transfer of the eFuip ent anda(hineries 1iven the non*re(o1nition $% the lower (ourts of the ar$itral (lause, has a((orded

an interi easure of prote(tion to P+S;C whi(h would otherwise $een irrepara$l% da a1ed.

#ifth, BO+IES is not un ustl% pre udi(ed as it has alread% $een paid ( su$stantial a ount $asedon the (ontra(t. ;oreover , BO+IES is a pl% prote(ted $% the ar$itral a(tion it has instituted$efore the BC)3, the award of whi(h (an $e enfor(ed in our urisdi(tion throu1h the RTC.3esides, $% our de(ision, P+S;C is (o pelled to su$ it to ar$itration pursuant to the validar$itration (lause of its (ontra(t with BO+IES.

PGS"C o &re$er8e e $ b?ec e )&me* (*+ m(c )*er)e$

#inall%, while P+S;C a% have $een 1ranted the ri1ht to dis antle and transfer the su$ e(teFuip ent and a(hineries, it does not have the ri1ht to (onve% or dispose of the sa e(onsiderin1 the pendin1 ar$itral pro(eedin1s to settle the differen(es of the parties. P+S;Ctherefore ust preserve and aintain the su$ e(t eFuip ent and a(hineries with the dili1en(eof a 1ood father of a fa il% 5" until final resolution of the ar$itral pro(eedin1s and enfor(eent ofthe award, if an%.

WBERE;ORE , this petition is PARTLY GRANTED , in that

/"0 The ;a% 8, !888 C) De(ision in C)*+.R. SP No. 4&!4& is RE!ERSED and SET ASIDE

/!0 The Septe $er !", "&&7 and O(to$er "&, "&&7 RTC Orders in Civil Case No. &7*""- areRE!ERSED and SET ASIDE

/ 0 The parties are here$% ORDERED to su$ it the selves to the ar$itration of their disputeand differen(es arisin1 fro the su$ e(t Contra(t $efore the BC)3 and

/40 P+S;C is here$% ALLOWED to dis antle and transfer the eFuip ent and a(hineries, if ithad not done so, and ORDERED to preserve and aintain the until the finalit% of whateverar$itral award is 1iven in the ar$itration pro(eedin1s.

No pronoun(e ent as to (osts.

SO ORDERED .

G.R. No. 1 6660 A 7 $ 2 , 2009

OR"OC SUGARCANE PLANTERS ASSOCIATION, INC. OSPAF,OCCIDENTAL LEYTE;AR"ERS "ULTI-PURPOSE COOPERATI!E, INC. OL;A"CAF, UNI;AR" "ULTI-PURPOSE COOPERATI!E, INC. UNI;AR"F (*+ OR"OC NORTB DISTRICT IRRIGATION"ULTI-PURPOSE COOPERATI!E, INC. ONDI"COF, Petitioners,

vs.TBE COURT O; APPEALS S&ec)(' ;ormer S)% D)8)$)o*F, BIDECO SUGAR "ILLING CO.,INC., (*+ OR"OC SUGAR "ILLING CO., INC., Respondents.

D E C I S I O N

LEONARDO-DE CASTRO, J.:

3efore the Court is a spe(ial (ivil a(tion for (ertiorari assailin1 the De(ision " dated De(e $er -,

!88" and the Resolution dated O(to$er 8, !88! of the Court of )ppeals /C)0 in C)*+.R. SPNo. 5'"'' whi(h set aside the @oint Orders ! dated )u1ust !', "&&& and O(to$er !&, "&&&issued $% the Re1ional Trial Court /RTC0 of Or o( Cit%, 3ran(h "! upholdin1 petitioners le1alpersonalit% to de and ar$itration fro respondents and dire(tin1 respondents to no inate twoar$itrators to represent the in the 3oard of )r$itrators.

Petitioners are asso(iations or1ani?ed $% and whose e $ers are individual su1ar planters/Planters0. The e $ership of ea(h asso(iation follows !'4 Planters were e $ers of OSP)5 Planters $elon1 to O=#);C) '"- Planters oined 2NI#)R; -'8 Planters enlisted withONDI;CO and the rest $elon1 to 3)P*;PC whi(h did not oin the lawsuit.

Respondents Gide(o Su1ar ;illin1 Co., In(. /Gide(o0 and Or o( Su1ar ;illin1 Co, In(. / OSCO0are su1ar (entrals en1a1ed in 1rindin1 and illin1 su1ar(ane delivered to the $% nu erousindividual su1ar planters, who a% or a% not $e e $ers of an asso(iation su(h aspetitioners.

Petitioners assert that the relationship $etween respondents and the individual su1ar planters is1overned $% illin1 (ontra(ts. To $uttress this (lai , petitioners presented representativesa ples of the illin1 (ontra(ts.

Nota$l%, )rti(le II of the illin1 (ontra(ts provides that 4A of the su1ar and olassesprodu(ed fro illin1 the Planter s su1ar(ane shall $elon1 to the (entrals /respondents0 as(o pensation, '5A thereof shall 1o to the Planter and the re ainin1 "A shall 1o theasso(iation to whi(h the Planter (on(erned $elon1s, as aid to the said asso(iation. The "A aidshall $e used $% the asso(iation for an% purpose that it a% dee fit for its e $ers, la$orersand their dependents. If the Planter was not a e $er of an% asso(iation, then the said "Ashall revert to the (entrals. )rti(le QI , para1raph 3 4 states that the (entrals a% not, durin1 thelife of the illin1 (ontra(t, si1n or e9e(ute an% (ontra(t or a1ree ent that will provide $etter orore $enefits to a Planter, without the written (onsent of the e9istin1 and re(o1ni?edasso(iations e9(ept to Planters whose plantations are situated in areas $e%ond thirt% / 80ilo eters fro the ill. )rti(le QQ provides that all differen(es and (ontroversies whi(h a%arise $etween the parties (on(ernin1 the a1ree ent shall $e su$ itted for dis(ussion to a 3oardof )r$itration, (onsistin1 of five /50 e $ers two /!0 of whi(h shall $e appointed $% the(entrals, two /!0 $% the Planter and the fifth to $e appointed $% the four appointed $% the parties.

On @une 4, "&&&, petitioners, without i pleadin1 an% of their individual e $ers, filed twinpetitions with the RTC for )r$itration under R.). 7-', Re(over% of EFual )dditional 3enefits,

)ttorne% s #ees and Da a1es, a1ainst GIDECO and OSCO, do( eted as Civil Case Nos. '&'*O and '&-*O, respe(tivel%.

Petitioners (lai ed that respondents violated the ;illin1 Contra(t when the% 1ave toindependent planters who do not $elon1 to an% asso(iation the "A share, instead of revertin1said share to the (entrals. Petitioners (ontended that respondents undul% a((orded theindependent Planters ore $enefits and thus pra%ed that an order $e issued dire(tin1 theparties to (o en(e with ar$itration in a((ordan(e with the ter s of the illin1 (ontra(ts. The%


http://lawphil.net/judjuris/juri2009/aug2009/gr_156660_2009.html#fnt1














also de anded that respondents $e penali?ed $% in(reasin1 their e $er Planters '5A shareprovided in the illin1 (ontra(t $% "A, to ''A.

Respondents filed a otion to dis iss on 1round of la( of (ause of a(tion $e(ause petitionershad no illin1 (ontra(t with respondents. )((ordin1 to respondents, onl% so e ei1ht% /780Planters who were e $ers of OSP), one of the petitioners, e9e(uted illin1 (ontra(ts.Respondents and these 78 Planters were the si1natories of the illin1 (ontra(ts. Thus, it wasthe individual Planters, and not petitioners, who had le1al standin1 to invo e the ar$itration(lause in the illin1 (ontra(ts. Petitioners, not $ein1 priv% to the illin1 (ontra(ts, had no le1alstandin1 whatsoever to de and or sue for ar$itration.

On )u1ust !', "&&&, the RTC issued a @oint Order 5 den%in1 the otion to dis iss, de(larin1 thee9isten(e of a illin1 (ontra(t $etween the parties, and dire(tin1 respondents to no inate twoar$itrators to the 3oard of )r$itrators, to wit

<hen these (ases were (alled for hearin1 toda%, (ounsels for the petitioners and respondentsar1ued their respe(tive stand. The Court is (onvin(ed that there is an e9istin1 illin1 (ontra(t$etween the petitioners and respondents and these planters are represented $% the offi(ers ofthe asso(iations. The petitioners have the ri1ht to sue in $ehalf of the planters.

This Court, a(tin1 on the petitions, dire(ts the r espondents to no inate two ar$itrators torepresent GIDECO6GIS2;CO and OSCO in the 3oard of )r$itrators within fifteen /"50 da%sfro re(eipt of this Order. 999

Gowever, if the respondents fail to no inate their two ar$itrators, upon proper otion $% thepetitioners, then the Court will $e (o pelled to use its dis(retion to appoint the two /!0ar$itrators, as e $odied in the ;illin1 Contra(t and R.). 7-'.

9 9 9

Their su$seFuent otion for re(onsideration havin1 $een denied $% the RTC in its @oint Order ' dated O(to$er !&, "&&&, respondents elevated the (ase to the C) throu1h a Petition forCertiorari with Pra%er for the Issuan(e of Te porar% Restrainin1 Order and6or <rit ofPreli inar% In un(tion.

On De(e $er -, !88", the C) rendered its (hallen1ed De(ision, settin1 aside the assailedOrders of the RTC. The C) held that petitioners neither had an e9istin1 (ontra(t with

respondents nor were the% priv% to the illin1 (ontra(ts $etween respondents and the individualPlanters. In the ain, the C) (on(luded that petitioners had no le1al personalit% to $rin1 thea(tion a1ainst respondents or to de and for ar$itration.

Petitioners filed a otion for re(onsideration, $ut it too was denied $% the C) in its Resolution - dated O(to$er 8, !88!. Thus, the instant petition.

)t the outset, it ust $e noted that petitioners filed the instant petition for (ertiorari under Rule'5 of the Rules of Court, to (hallen1e the ud1 ent of the C). Se(tion " of Rule '5 states

Se(tion ". Petition for Certiorari. H <hen an% tri$unal, $oard or offi(er e9er(isin1 udi(ial orFuasi* udi(ial fun(tions has a(ted without or in e9(ess of its urisdi(tion, or with 1rave a$use ofdis(retion a ountin1 to la( or e9(ess of its or his urisdi(tion and there is no appeal, or an%plain, speed% and adeFuate re ed% in the (ourse of law, a person a11rieved there$% a% file averified petition in the proper (ourt, alle1in1 the fa(ts with (ertaint% and pra%in1 that ud1 ent $e

rendered annullin1 or odif%in1 the pro(eedin1s of su(h tri$unal, $oard or offi(er, and 1rantin1su(h in(idental relief as law and usti(e reFuire. 999 999 999 /e phasis ours0

The instant re(ourse is i proper $e(ause the resolution of the C) was a final order fro whi(hthe re ed% of appeal was availa$le under Rule 45 in relation to Rule 5'. The e9isten(e andavaila$ilit% of the ri1ht of appeal pros(ri$es resort to (ertiorari $e(ause one of the reFuire entsfor avail ent of the latter is pre(isel% that there should $e no appeal. It is ele entar% that for(ertiorari to prosper, it is not enou1h that the trial (ourt (o itted 1rave a$use of dis(retiona ountin1 to la( or e9(ess of urisdi(tion the reFuire ent that there is no appeal, nor an%plain, speed% and adeFuate re ed% in the ordinar% (ourse of law ust li ewise $e satisfied .7

The proper ode of re(ourse for petitioners was to file a petition for review of the C) s de(isionunder Rule 45.

Petitioners prin(ipall% ar1ue that the C) (o itted a 1rave error in settin1 aside the (hallen1ed@oint Orders of the RTC whi(h alle1edl% undul% (urtailed the ri1ht of petitioners to represent theirplanters* e$ers and enfor(e the illin1 (ontra(ts with respondents. Petitioners assert the saidwhi(h orders were issued in a((ordan(e with )rti(le QQ of the ;illin1 Contra(t and theappli(a$le provisions of Repu$li( )(t /R.).0 No. 7-'.

<here the issue or Fuestion involved affe(ts the wisdo or le1al soundness of the de(ision Hnot the urisdi(tion of the (ourt to render said de(ision H the sa e is $e%ond the provin(e of aspe(ial (ivil a(tion for (ertiorari. Erroneous findin1s and (on(lusions do not render the appellate(ourt vulnera$le to the (orre(tive writ of (ertiorari. #or where the (ourt has urisdi(tion over the(ase, even if its findin1s are not (orre(t, the% would, at ost (onstitute errors of law and nota$use of dis(retion (orre(ta$le $% (ertiorari .&

;oreover, even if this Court overloo s the pro(edural lapse (o itted $% petitioners andde(ides this atter on the erits, the present petition will still not prosper.

Stripped to the (ore, the pivotal issue here is whether or not petitioners su1ar plantersasso(iations are (lothed with le1al personalit% to file a suit a1ainst, or de and ar$itrationfro , respondents in their own na e without i pleadin1 the individual Planters.

On this point, we a1ree with the findin1s of the C).

Se(tion ! of R.). No. 7-' /the )r$itration =aw 0"8 pertinentl% provides

Se(. !. Persons and atters su$ e(t to ar$itration. H Two or ore persons or parties a% su$ itto the ar$itration of one or ore ar$itrators an% (ontrovers% e9istin1 $etween the at the ti e ofthe su$ ission and whi(h a% $e the su$ e(t of an a(tion, or the parties to an% (ontra(t a% insu(h (ontra(t a1ree to settle $% ar$itration a (ontrovers% thereafter arisin1 $etween the . Su(hsu$ ission or (ontra(t shall $e valid, enfor(ea$le and irrevo(a$le, save upon su(h 1rounds ase9ist at law for the revo(ation of an% (ontra(t. 999 /E phasis ours0

The fore1oin1 provision spea s of two odes of ar$itration /a0 an a1ree ent to su$ it toar$itration so e future dispute, usuall% stipulated upon in a (ivil (ontra(t $etween the parties,and nown as an a1ree ent to su$ it to ar$itration, and /$0 an a1ree ent su$ ittin1 ane9istin1 atter of differen(e to ar$itrators, ter ed the su$ ission a1ree ent. )rti(le QQ of theillin1 (ontra(t is an a1ree ent to su$ it to ar$itration $e(ause it was ade in anti(ipation of adispute that i1ht arise $etween the parties after the (ontra(t s e9e(ution.

E9(ept where a (o pulsor% ar$itration is provided $% statute, the first step toward the settle entof a differen(e $% ar$itration is the entr% $% the parties into a valid a1ree ent to ar$itrate. )n





















a1ree ent to ar$itrate is a (ontra(t, the relation of the parties is (ontra(tual, and the ri1hts andlia$ilities of the parties are (ontrolled $% the law of (ontra(ts ."" In an a1ree ent for ar$itration,the ordinar% ele ents of a valid (ontra(t ust appear, in(ludin1 an a1ree ent to ar$itrate so espe(ifi( thin1, and an a1ree ent to a$ide $% the award, either i n e9press lan1ua1e or $%i pli(ation.

The reFuire ents that an ar$itration a1ree ent ust $e written and su$s(ri$ed $% the partiesthereto were enun(iated $% the Court in 3.#. Corporation v. C). "!

Durin1 the pro(eedin1s $efore the C), it was esta$lished that there were ore than twothousand /!,8880 Planters in the distri(t at the ti e the (ase was (o en(ed at the RTC in"&&&. The C) further found that of those !,888 Planters, onl% a$out ei1ht% /780 Planters, whowere all e $ers of petitioner OSP), in fa(t individuall% e9e(uted illin1 (ontra(ts withrespondents. No illin1 (ontra(ts si1ned $% e $ers of the other petitioners were presented$efore the C).

3% their own alle1ation, petitioners are asso(iations dul% e9istin1 and or1ani?ed under Philippinelaw, i.e. the% have uridi(al personalities separate and distin(t fro that of their e $erPlanters. It is li ewise undisputed that the ei1ht% /780 illin1 (ontra(ts that were presented weresi1ned onl% $% the e $er Planter (on(erned and one of the Centrals as parties. In otherwords, none of the petitioners were parties or si1natories to the illin1 (ontra(ts. This(ir(u stan(e is fatal to petitioners (ause sin(e the% an(hor their ri1ht to de and ar$itrationfro the respondent su1ar (entrals upon the ar$itration (lause found in the illin1 (ontra(ts.There is no le1al $asis for petitioners purported ri1ht to de and ar$itration when the% are notparties to the illin1 (ontra(ts, espe(iall% when the lan1ua1e of the ar$itration (lause e9pressl%1rants the ri1ht to de and ar$itration onl% to the parties to the (ontra(t.

Si pl% put, petitioners do not have an% a1ree ent to ar$itrate with respondents. Onl% ei1ht%/780 Planters who were all e $ers of OSP) were shown to have su(h an a1ree ent toar$itrate, in(luded as a stipulation in their individual illin1 (ontra(ts. The other petitioners failedto prove that an% of their e $ers had illin1 (ontra(ts with respondents, u(h less, thatrespondents had an a1ree ent to ar$itrate with the petitioner asso(iations the selves.

Even assu in1 that all the petitioners were a$le to present illin1 (ontra(ts in favor of theire $ers, it is undenia$le that under the ar$itration (lause in these (ontra(ts it is the partiesthereto who have the ri1ht to su$ it a (ontrovers% or dispute to ar$itration.

Se(tion 4 of R.). 7-' provides

Se(tion 4. #or of )r$itration )1ree ent H ) (ontra(t to ar$itrate a (ontrovers% thereafterarisin1 $etween the parties, as well as a su$ ission to ar$itrate an e9istin1 (ontrovers%, shall $ein writin1 and su$s(ri$ed $% the part% sou1ht to $e (har1ed, or $% his lawful a1ent.

The a in1 of a (ontra(t or su$ ission for ar$itration des(ri$ed in se(tion two hereof, providin1for ar$itration of an% (ontrovers%, shall $e dee ed a (onsent of the parties to the urisdi(tion ofthe Court of #irst Instan(e of the provin(e or (it% where an% of the parties resides, to enfor(esu(h (ontra(t of su$ ission.

The for al reFuire ents of an a1ree ent to ar$itrate are therefore the followin1 /a0 it ust $ein writin1 and /$0 it ust $e su$s(ri$ed $% the parties or their representatives. To su$s(ri$eeans to write underneath, as one s na e to si1n at the end of a do(u ent. That word a%so eti es $e (onstrued to ean to 1ive (onsent to or to attest ."

Petitioners would ar1ue that the% (ould sue respondents, notwithstandin1 the fa(t that the% werenot si1natories in the illin1 (ontra(ts $e(ause the% are the re(o1ni?ed representatives of thePlanters.

This (lai has no le1 to stand on sin(e petitioners did not si1n the illin1 (ontra(ts at all,whether as a part% or as a representative of their e $er Planters. The individual Planter andthe appropriate (entral were the onl% si1natories to the (ontra(ts and there is no provision in theillin1 (ontra(ts that the individual Planter is authori?in1 the asso(iation to represent hi 6her ina le1al a(tion in (ase of a dispute over the illin1 (ontra(ts.

;oreover, even assu in1 that petitioners are indeed representatives of the e $er Planterswho have illin1 (ontra(ts with the respondents and assu in1 further that petitioners si1ned theillin1 (ontra(ts as representatives of their e $ers, petitioners (ould not initiate ar$itrationpro(eedin1s )* e)r o * *(me as the% had done in the present (ase. )s ere a1ents, the%should have $rou1ht the suit in the na e of the prin(ipals that the% purportedl% represent. Evenif Se(tion 4 of R.). No. 7-' allows the a1ree ent to ar$itrate to $e si1ned $% a representative,the prin(ipal is still the one who has the ri1ht to de and ar$itration.

Indeed, Rule , Se(tion ! of the Rules of Court reFuires suits to $e $rou1ht in the na e of thereal part% in interest, to wit

Se(. !. Parties in interest. ) real part% in interest is the part% who stands to $e $enefited orin ured $% the ud1 ent in the suit, or the part% entitled to the avails of the suit. 2nless otherwiseauthori?ed $% law or these Rules, ever% a(tion ust $e prose(uted or defended in the na e of

the real part% in interest.

<e held in Oco v. *im(arin/ "4 that

)s applied to the present (ase, this provision has two reFuire ents "0 to institute an a(tion, theplaintiff ust $e the real part% in interest and !0 the a(tion ust $e prose(uted in the na e ofthe real part% in interest. Ne(essaril%, the purposes of this provision are "0 to prevent theprose(ution of a(tions $% persons without an% ri1ht, title or interest in the (ase !0 to reFuire thatthe a(tual part% entitled to le1al relief $e the one to prose(ute the a(tion 0 to avoid a ultipli(it%of suits and 40 to dis(oura1e liti1ation and eep it within (ertain $ounds, pursuant to soundpu$li( poli(%.

Interest ) )* e me(*)*7 o/ e R 'e$ me(*$ m( er)(' )* ere$ or (* )* ere$ )* )$$ e obe (//ec e+ b e +ecree or ? +7me* o/ e c($e , as distin1uished fro ere (uriosit%a$out the Fuestion involved. One havin1 no aterial interest to prote(t (annot invo e the

urisdi(tion of the (ourt as the plaintiff in an a(tion. W e* e &'()* )// )$ *o e re(' &(r )*)* ere$ , e c($e )$ +)$m)$$)b'e o* e 7ro *+ o/ '(c@ o/ c( $e o/ (c )o*.

9 9 9 9 9 9 9 9 9

T e &(r )e$ o ( co* r(c (re e re(' &(r )e$ )* )* ere$ )* (* (c )o* &o* ) , ($co*$)$ e* ' e'+ b e Co r . Onl% the (ontra(tin1 parties are $ound $% the stipulations inthe (ontra(t e (re e o*e$ o o '+ be*e/) /rom (*+ co '+ 8)o'( e ) . Thus, one whois not a part% to a (ontra(t, and for whose $enefit it was not e9pressl% ade, c(**o m()* ()*(* (c )o* o* ) . One (annot do so, e8e* )/ e co* r(c &er/orme+ b e co* r(c )*7 &(r )e$o '+ )*c)+e* ('' )* re o o*e>$ be*e/) . /e phasis ours0















In #& v. Court o! 'ppeals ,"5 this Court held that the a1ents of the parties to a (ontra(t do nothave the ri1ht to $rin1 an a(tion even if the% rendered so e servi(e on $ehalf of their prin(ipals.To Fuote fro that de(ision

U PetitionersJ are ere a1ents of the owners of the land su$ e(t of the sale. )s a1ents, the%onl% render so e servi(e or do so ethin1 in representation or on $ehalf of their prin(ipals. T ere*+er)*7 o/ $ c $er8)ce +)+ *o m(@e em &(r )e$ o e co* r(c $ of sale e9e(uted in$ehalf of the latter. Sin(e a (ontra(t a% $e violated onl% $% the parties thereto as a1ainst ea(hother, e re(' &(r )e$-)*-)* ere$ , e) er ($ &'()* )// or +e/e*+(* , )* (* (c )o* &o* (co* r(c m $ , 7e*er('' , e) er be &(r )e$ o $()+ co* r(c t. /e phasis and words in $ra( etsours0

The ain (ause of a(tion of petitioners in their reFuest for ar$itration with the RTC is the alle1edviolation of the (lause in the illin1 (ontra(ts involvin1 the proportionate sharin1 in the pro(eedsof the harvest. Petitioners essentiall% de and that respondents in(rease the share of thee $er Planters to ''A to eFuali?e their situation with those of the non* e $er Planters.eril%, fro petitioners own alle1ations, the part% who would $e in ured or $enefited $% ade(ision in the ar$itration pro(eedin1s will $e the e $er Planters involved and *o&e ) )o*er$. In su , petitioners are not the real parties in interest in the present (ase.

)ssu in1 petitioners had properl% $rou1ht the (ase in the na e of their e $ers who hade9istin1 illin1 (ontra(ts with respondents, petitioners ust still prove that the% were indeedauthori?ed $% the said e $ers to institute an a(tion for and on the e $ers $ehalf. In thesa e anner that an offi(er of the (orporation (annot $rin1 a(tion in $ehalf of a (orporationunless it is (lothed with a $oard resolution authori?in1 an offi(er to do so, an authori?ation frothe individual e $er planter is a sine Fua non for the asso(iation or an% of its offi(ers to $rin1an a(tion $efore the (ourt of law. The ere fa(t that petitioners were or1ani?ed for the purposeof advan(in1 the interests and welfare of their e $ers does not ne(essaril% ean thatpetitioners have the authorit% to represent their e $ers in le1al pro(eedin1s, in(ludin1 thepresent ar$itration pro(eedin1s.

)s we see it, petitioners had no intention to liti1ate the (ase in a representative (apa(it%, as the%(ontend. )ll the pleadin1s fro the RTC to this Court $elie this (lai . 2nder Se(tion of Rule ,where the a(tion is allowed to $e prose(uted $% a representative, the $enefi(iar% shall $ein(luded in the title of the (ase and shall $e dee ed to $e the real part% in interest. )srepeatedl% pointed out earlier, the individual Planters were not even i pleaded as parties to this(ase. In addition, petitioners need a power*of*attorne% to represent the Planters whether in thelawsuit or to de and ar$itration. "' None was ever presented here.

=astl%, petitioners theori?e that the% (ould de and and sue for ar$itration independentl% of thePlanters $e(ause the illin1 (ontra(t is a (ontra(t pour autrui under )rti(le " "" of the CivilCode.

)RT. " "". Contra(ts ta e effe(t onl% $etween the parties, their assi1ns and heirs, e9(ept in(ase where the ri1hts and o$li1ations arisin1 fro the (ontra(t are not trans issi$le $% theirnature, or $% stipulation or $% provision of law. The heir is not lia$le $e%ond the value of thepropert% he re(eived fro the de(edent.

If a (ontra(t should (ontain so e stipulation in favor of a third person, he a% de and itsfulfill ent provided he (o uni(ated his a((eptan(e to the o$li1or $efore its revo(ation. ) erein(idental $enefit or interest of a person is not suffi(ient. The (ontra(tin1 parties ust have(learl% and deli$eratel% (onferred a favor upon a third person.

To su ari?e, the reFuisites of a stipulation pour autrui or a stipulation in favor of a third personare the followin1 /"0 there ust $e a stipulation in favor of a third person, /!0 the stipulationust $e a part, not the whole, of the (ontra(t, / 0 the (ontra(tin1 parties ust have (learl% anddeli$eratel% (onferred a favor upon a third person, not a ere in(idental $enefit or interest, /40the third person ust have (o uni(ated his a((eptan(e to the o$li1or $efore its revo(ation,and /50 neither of the (ontra(tin1 parties $ears the le1al representation or authori?ation of thethird part%."- These reFuisites are not present in this (ase.

)rti(le I of the ;illin1 Contra(t is the solitar% provision that entions so e $enefit in favor ofthe asso(iation of whi(h the planter is a e $er and we Fuote

ISG)RE IN TGE S2+)R

Thirt% four per (entru / 4A0 of the su1ar ad olasses resultin1 fro the illin1 of theP=)NTER s su1ar(ane, as (o puted fro the wei1ht and anal%sis of the su1ar(ane delivered$% the P=)NTER, shall $elon1 to the CENTR)= si9t% five per (entu /'5A0 thereof to theP=)NTER, and one per (entu /"A0 as aid to the asso(iation of the P=)NTER provided that, ifthe P=)NTER is not a e $er of an% asso(iation re(o1ni?ed $% the CENTR)=, said one per(entu /"A0 shall revert to the CENTR)=. T he "A aid shall $e used $% the asso(iation for an%purpose that it a% dee fit for its e $ers, la$orers and their dependents, or for its otherso(io*e(onoi( pro e(ts.

The fore1oin1 provision (annot, $% an% stret(h of the i a1ination, $e (onsidered as a stiputation

pour autrui or for the $enefit of the petitioners. The pri ar% rationale for the said stipulation is toensure a ust share in the pro(eeds of the harvest to the Planters. In other words, it is astipulation eant to $enefit the Planters. Even the "A share to $e 1iven to the asso(iation asaid does not redound to the $enefit of the asso(iation $ut is intended to $e used for its e $erPlanters. Not onl% that, it is e9pli(it that said share reverts $a( to respondent su1ar (entrals ifthe (ontra(tin1 Planter is not affiliated with an% re(o1ni?ed asso(iation.

To $e (onsidered a pour autrui provision, an i n(idental $enefit or interest, whi(h another person1ains, is not suffi(ient. The (ontra(tin1 parties ust have (learl% and deli$eratel% (onferred afavor upon a third person ."7 Even the (lause statin1 that respondents ust se(ure the (onsent ofthe asso(iation if respondents 1rant $etter $enefits to a Planter has for its rationale theprote(tion of the e $er Planter. The onl% interest of the asso(iation therein is that its e $erPlanter will not $e put at a disadvanta1e vis a vis other Planters. Thus, the asso(iations interestin these illin1 (ontra(ts is onl% in(idental to their avowed purpose of advan(in1 the welfare andri1hts of their e $er Planters.

In all, the Court finds no 1rave a$use of dis(retion nor reversi$le error (o itted $% the C) insettin1 aside the @oint Orders issued $% the RTC.

<GERE#ORE, petition is here$% DIS;ISSED.

Costs a1ainst petitioners.

SO ORDERED.















G.R. No. 1 0 (* (r :1, 2011

CARGILL PBILIPPINES, INC., Petitioner,vs.SAN ;ERNANDO REGALA TRADING, INC., Respondent.

D E C I S I O N

PERALTA, J.:

3efore us is a petition for review on certiorari see in1 to reverse and set aside the De(ision " dated @ul% ", !88' and the Resolution ! dated Nove $er " , !88' of the Court of )ppeals /C)0in C) +.R. SP No. 58 84.

The fa(tual ante(edents are as follows

On @une "7, "&&7, respondent San #ernando Re1ala Tradin1, In(. filed with the Re1ional TrialCourt /RTC0 of ;a ati Cit% a Co plaint for Res(ission of Contra(t with Da a1es a1ainstpetitioner Car1ill Philippines, In(. In its Co plaint, respondent alle1ed that it was en1a1ed in$u%in1 and sellin1 of olasses and petitioner was one of its various sour(es fro who itpur(hased olasses. Respondent alle1ed that it entered into a (ontra(t dated @ul% "", "&&' withpetitioner, wherein it was a1reed upon that respondent would pur(hase fro petitioner "!,888etri( tons of Thailand ori1in (ane $la( strap olasses at the pri(e of 2SV"&! per etri( ton

that the deliver% of the olasses was to $e ade in @anuar%6#e$ruar% "&&- and pa% ent was to$e ade $% eans of an Irrevo(a$le =etter of Credit pa%a$le at si1ht, to $e opened $%Septe $er "5, "&&' that so eti e prior to Septe $er "5, "&&', the parties a1reed that insteadof @anuar%6#e$ruar% "&&-, the deliver% would $e ade in )pril6;a% "&&- and that pa% entwould $e $% an Irrevo(a$le =etter of Credit pa%a$le at si1ht, to $e opened upon petitioner sadvi(e. Petitioner, as seller, failed to (o pl% with i ts o$li1ations under the (ontra(t, despitede ands fro respondent, thus, the latter pra%ed for res(ission of the (ontra(t and pa% ent ofda a1es.

On @ul% !4, "&&7, petitioner filed a ;otion to Dis iss6Suspend Pro(eedin1s and To ReferControvers% to oluntar% )r$itration, 4 wherein it ar1ued that the alle1ed (ontra(t $etween theparties, dated @ul% "", "&&', was never (onsu ated $e(ause respondent never returned theproposed a1ree ent $earin1 its written a((eptan(e or (onfor it% nor did respondent open theIrrevo(a$le =etter of Credit at si1ht. Petitioner (ontended that the (ontrovers% $etween theparties was whether or not the alle1ed (ontra(t $etween the parties was le1all% in e9isten(e andthe RTC was not the proper foru to ventilate su(h issue. It (lai ed that the (ontra(t (ontainedan ar$itration (lause, to wit

)R3ITR)TION

)n% dispute whi(h the 3u%er and Seller a% not $e a$le to settle $% utual a1reeent shall $esettled $% ar$itration in the Cit% of New Kor $efore the ) eri(an )r$itration )sso(iation. The

)r$itration )ward shall $e final and $indin1 on $oth parties. 5

that respondent ust first (o pl% with the ar$itration (lause $efore resortin1 to (ourt, thus, theRTC ust either dis iss the (ase or suspend the pro(eedin1s and dire(t the parties to pro(eedwith ar$itration, pursuant to Se(tions ' ' and - - of Repu$li( )(t /R.).0 No. 7-', or the )r$itration=aw.

Respondent filed an Opposition, wherein it ar1ued that the RTC has urisdi(tion over the a(tionfor res(ission of (ontra(t and (ould not $e (han1ed $% the su$ e(t ar$itration (lause. It (ited(ases wherein ar$itration (lauses, su(h as the su$ e(t (lause in the (ontra(t, had $een stru(down as void for $ein1 (ontrar% to pu$li( poli(% sin(e it provided that the ar$itration award shall$e final and $indin1 on $oth parties, thus, oustin1 the (ourts of urisdi(tion.

In its Repl%, petitioner aintained that the (ited de(isions were alread% inappli(a$le, havin1$een rendered prior to the effe(tivit% of the New Civil Code in "&58 and the )r$itration =aw in"&5 .

In its Re oinder, respondent ar1ued that the ar$itration (lause relied upon $% petitioner is invalidand unenfor(ea$le, (onsiderin1 that the reFuire ents i posed $% the provisions of the

)r$itration =aw had not $een (o plied with.

3% wa% of Sur*Re oinder, petitioner (ontended that respondent had even (larified that the issue$oiled down to whether the ar$itration (lause (ontained in the (ontra(t su$ e(t of the (o plaintis valid and enfor(ea$le that the ar$itration (lause did not violate an% of the (ited provisions ofthe )r$itration =aw.

On Septe $er "-, "&&7, the RTC rendered an Order, 7 the dispositive portion of whi(h reads

Pre ises (onsidered, defendant s :;otion To Dis iss6Suspend Pro(eedin1s and To ReferControvers% To oluntar% )r$itration: is here$% DENIED. Defendant is dire(ted to file its answerwithin ten /"80 da%s fro re(eipt of a (op% of this order .&

In den%in1 the otion, the RTC found that there was no (lear $asis for petitioner s plea todis iss the (ase, pursuant to Se(tion - of the )r$itration =aw. The RTC said that the provisiondire(ted the (ourt (on(erned onl% to sta% the a(tion or pro(eedin1 $rou1ht upon an issue arisin1out of an a1ree ent providin1 for the ar$itration thereof, $ut did not i pose the san(tion ofdis issal. Gowever, the RTC did not find the suspension of the pro(eedin1s warranted, sin(ethe )r$itration =aw (onte plates an ar$itration pro(eedin1 that ust $e (ondu(ted in thePhilippines under the urisdi(tion and (ontrol of the RTC and $efore an ar$itrator who resides inthe (ountr% and that the ar$itral award is su$ e(t to (ourt approval, disapproval andodifi(ation, and that there ust $e an appeal fro the ud1 ent of the RTC. The RTC foundthat the ar$itration (lause in Fuestion (ontravened these pro(edures, i.e. , the ar$itration (lause(onte plated an ar$itration pro(eedin1 in New Kor $efore a non*resident ar$itrator /) eri(an

)r$itration )sso(iation0 that the ar$itral award shall $e final and $indin1 on $oth parties. TheRTC said that to appl% Se(tion - of the )r$itration =aw to su(h an a1ree ent would result in

disre1ardin1 the other se(tions of the sa e law and rendered the useless and eresurplusa1es.

Petitioner filed its ;otion for Re(onsideration, whi(h the RTC denied in an Order "8 datedNove $er !5, "&&7.

Petitioner filed a petition for certiorari with the C) raisin1 the sole issue that the RTC a(ted ine9(ess of urisdi(tion or with 1rave a$use of dis(retion in refusin1 to dis iss or at least suspendthe pro(eedin1s a =uo , despite the fa(t that the part% s a1ree ent to ar$itrate had not $een(o plied with.

Respondent filed its Co ent and Repl%. The parties were then reFuired to file their respe(tive;e oranda.
































On @ul% ", !88', the C) rendered its assailed De(ision den%in1 the petition and affir in1 theRTC Orders.

In den%in1 the petition, the C) found that stipulation providin1 for ar$itration in (ontra(tualo$li1ation is $oth valid and (onstitutional that ar$itration as an alternative ode of disputeresolution has lon1 $een a((epted in our urisdi(tion and e9pressl% provided for in the CivilCode that R.). No. 7-' /the )r$itration =aw0 also e9pressl% authori?ed the ar$itration ofdo esti( disputes. The C) found error in the RTC s holdin1 that Se(tion - of R.). No. 7-' wasinappli(a$le to ar$itration (lause si pl% $e(ause the (lause failed to (o pl% with thereFuire ents pres(ri$ed $% the law. The C) found that there was nothin1 in the Civil Code, orR.). No. 7-', that reFuire that ar$itration pro(eedin1s ust $e (ondu(ted onl% in the Philippinesand the ar$itrators should $e Philippine residents. It also found that the RTC rulin1 effe(tivel%invalidated not onl% the disputed ar$itration (lause, $ut all other a1ree ents whi(h provide forforei1n ar$itration. The C) did not find ille1al or a1ainst pu$li( poli(% the ar$itration (lause so asto render it null and void or ineffe(tual.

Notwithstandin1 su(h findin1s, the C) still held that the (ase (annot $e $rou1ht under the )r$itration =aw for the purpose of suspendin1 the pro(eedin1s $efore the RTC, sin(e in its;otion to Dis iss6Suspend pro(eedin1s, petitioner alle1ed, as one of the 1rounds thereof, thatthe su$ e(t (ontra(t $etween the parties did not e9ist or it was invalid that the said (ontra(t$earin1 the ar$itration (lause was never (onsu ated $% the parties, thus, it was proper thatsu(h issue $e first resolved $% the (ourt throu1h an appropriate trial that the issue involved aFuestion of fa(t that the RTC should first resolve. )r$itration is not proper when one of theparties repudiated the e9isten(e or validit% of the (ontra(t.

Petitioner s otion for re(onsideration was denied in a Resolution dated Nove $er " , !88'.

Gen(e, this petition.

Petitioner alle1es that the C) (o itted an error of law in rulin1 that ar$itration (annot pro(eeddespite the fa(t that /a0 it had ruled, in its assailed de(ision, that the ar$itration (lause is valid,enfor(ea$le and $indin1 on the parties /$0 the (ase of 0on<ales v. Clima inin/ *td ."" isinappli(a$le here /(0 parties are 1enerall% allowed, under the Rules of Court, to adopt severaldefenses, alternativel% or h%potheti(all%, even if su(h

defenses are in(onsistent with ea(h other and /d0 the (o plaint filed $% respondent with the trial(ourt is pre ature.

Petitioner alle1es that the C) adopted in(onsistent positions when it found the ar$itration (lause$etween the parties as valid and enfor(ea$le and %et in the sa e $reath de(reed that thear$itration (annot pro(eed $e(ause petitioner assailed the e9isten(e of the entire a1ree ent(ontainin1 the ar$itration (lause. Petitioner (lai s the inappli(a$ilit% of the (ited 0on<ales (asede(ided in !885, $e(ause in the present (ase, it was respondent who had filed the (o plaint forres(ission and da a1es with the RTC, whi(h $ased its (ause of a(tion a1ainst petitioner on thealle1ed a1ree ent dated @ul% "", !88' $etween the parties and that the sa e a1ree ent(ontained the ar$itration (lause sou1ht to $e enfor(ed $% petitioner in this (ase. Thus, whetherpetitioner assails the 1enuineness and due e9e(ution of the a1ree ent, the fa(t re ains that thea1ree ent sued upon provides for an ar$itration (lause that respondent (annot use theprovisions favora$le to hi and (o pletel% disre1ard those that are unfavora$le, su(h as thear$itration (lause.

Petitioner (ontends that as the defendant in the RTC, it presented two alternative defenses, i.e. ,

the parties had not entered into an% a1ree ent upon whi(h respondent as plaintiff (an sueupon and, assu in1 that su(h a1ree ent e9isted, there was an ar$itration (lause that should

$e enfor(ed, thus, the dispute ust first $e su$ itted to ar$itration $efore an a(tion (an $einstituted in (ourt. Petitioner ar1ues that under Se(tion "/ 0 of Rule "' of the Rules of Court,in(luded as a 1round to dis iss a (o plaint is when a (ondition pre(edent for filin1 the(o plaint has not $een (o plied with and that su$ ission to ar$itration when su(h has $eena1reed upon is one su(h (ondition pre(edent. Petitioner su$ its that the pro(eedin1s in theRTC ust $e dis issed, or at least suspended, and the parties $e ordered to pro(eed withar$itration.

On ;ar(h "!, !88-, petitioner filed a ;anifestation "! sa%in1 that the C) s rationale in de(linin1 toorder ar$itration $ased on the !885 0on<ales rulin1 had $een odified upon a otion forre(onsideration de(ided in !88- that the C) de(ision lost its le1al $asis, $e(ause it had $eenruled that the ar$itration a1ree ent (an $e i ple ented notwithstandin1 that one of the partiesthereto repudiated the (ontra(t whi(h (ontained su(h a1ree ent $ased on the do(trine ofsepara$ilit%.

In its Co ent, respondent ar1ues that certiorari under Rule '5 is not the re ed% a1ainst anorder den%in1 a ;otion to Dis iss6Suspend Pro(eedin1s and To Refer Controvers% to oluntar%

)r$itration. It (lai s that the )r$itration =aw whi(h petitioner invo ed as $asis for its ;otionpres(ri$ed, under its Se(tion !&, a re ed%, i.e. , appeal $% a petition for review on certiorariunder Rule 45. Respondent (ontends that the 0on<ales (ase, whi(h was de(ided in !88-, isinappli(a$le in this (ase, espe(iall% as to the do(trine of separa$ilit% enun(iated therein.Respondent ar1ues that even if the e9isten(e of the (ontra(t and the ar$itration (lause is(on(eded, the de(isions of the RTC and the C) de(linin1 referral of the dispute $etween theparties to ar$itration would still $e (orre(t. T his is so $e(ause respondent s (o plaint filed inCivil Case No. &7*" -' presents the prin(ipal issue of whether under the fa(ts alle1ed in the

(o plaint, respondent is entitled to res(ind i ts (ontra(t with petitioner and for the latter to pa%da a1es that su(h issue (onstitutes a udi(ial Fuestion or one that reFuires the e9er(ise of udi(ial fun(tion and (annot $e the su$e(t of ar$itration.

Respondent (ontends that Se(tion 7 of the Rules of Court, whi(h allowed a defendant to adoptin the sa e a(tion several defenses, alternativel% or h%potheti(all%, even if su(h defenses arein(onsistent with ea(h other refers to alle1ations in the pleadin1s, su(h as (o plaint,(ounter(lai , (ross*(lai , third*part% (o plaint, answer, $ut not to a otion to dis iss. #inall%,respondent (lai s that petitioner s ar1uent is pre ised on the e9isten(e of a (ontra(t withrespondent (ontainin1 a provision for ar$itration. Gowever, its relian(e on the (ontra(t, whi(h itrepudiates, is inappropriate.

In its Repl%, petitioner insists that respondent filed an a(tion for res(ission and da a1es on the$asis of the (ontra(t, thus, respondent ad itted the e9isten(e of all the provisions (ontained

thereunder, in(ludin1 the ar$itration (lause that if respondent relies on said (ontra(t for its(ause of a(tion a1ainst petitioner, it ust also (onsider itself $ound $% the rest of the ter s and(onditions (ontained thereunder notwithstandin1 that respondent a% find so e provisions to$e adverse to its position that respondent s (itation of the 0on<ales (ase, de(ided in !885, toshow that the validit% of the (ontra(t (annot $e the su$ e(t of the ar$itration pro(eedin1 and thatit is the RTC whi(h has the urisdi(tion to resolve the situation $etween the parties herein, is not(orre(t sin(e in the resolution of the +on?ales otion for re(onsideration in !88-, it had $eenruled that an ar$itration a1ree ent is effe(tive notwithstandin1 the fa(t that one of the partiesthereto repudiated the ain (ontra(t whi(h (ontained it.

<e first address the pro(edural issue raised $% respondent that petitioner s petition for certiorariunder Rule '5 filed in the C) a1ainst an RTC Order den%in1 a ;otion to Dis iss6SuspendPro(eedin1s and to Refer Controvers% to oluntar% )r$itration was a wron1 re ed% invo in1Se(tion !& of R.). No. 7-', whi(h provides

Se(tion !&.










9 9 9 )n appeal a% $e ta en fro an order ade in a pro(eedin1 under this )(t, or fro a ud1 ent entered upon an award throu1h certiorari pro(eedin1s, $ut su(h appeals shall $eli ited to Fuestion of law. 9 9 9.

To support its ar1u ent, respondent (ites the (ase of 0on<ales v. Clima inin/ *td . " /+on?ales (ase0, wherein we ruled the i propriet% of a petition for certiorari under Rule '5 as aode of appeal fro an RTC Order dire(tin1 the parties to ar$itration.

<e find the (ited (ase not in point.

In the 0on<ales (ase, Cli a9*)ri (o filed $efore the RTC of ;a ati a petition to (o pelar$itration under R.). No. 7-', pursuant to the ar$itration (lause found in the )ddenduContra(t it entered with +on?ales. @ud1e Os(ar Pi entel of the RTC of ;a ati then dire(ted theparties to ar$itration pro(eedin1s. +on?ales filed a petition for certiorari with 2s (ontendin1 that@ud1e Pi entel a(ted with 1rave a$use of dis(retion in i ediatel% orderin1 the parties topro(eed with ar$itration despite the proper, valid and ti el% raised ar1u ent in his )nswer with(ounter(lai that the )ddendu Contra(t (ontainin1 the ar$itration (lause was null and void.Cli a9*)ri (o assailed the ode of review availed of $% +on?ales, (itin1 Se(tion !& of R.). No.7-' (ontendin1 that certiorari under Rule '5 (an $e availed of onl% if there was no appeal or an%adeFuate re ed% in the ordinar% (ourse of law that R.). No. 7-' provides for an appeal frosu(h order. <e then ruled that +on?ales petition for certiorari should $e dis issed as it wasfiled in lieu of an appeal $% certiorari whi(h was the pres(ri$ed re ed% under R.). No. 7-' andthe petition was filed far $e%ond the re1le entar% period.

<e found that +on?ales petition for certiorari raises a Fuestion of law, $ut not a Fuestion of urisdi(tion that @ud1e Pi entel a(ted in a((ordan(e with the pro(edure pres(ri$ed in R.). No.7-' when he ordered +on?ales to pro(eed with ar$itration and appointed a sole ar$itrator aftera in1 the deter ination that there was indeed an ar$itration a1ree ent. It had $een held thatas lon1 as a (ourt a(ts within its urisdi(tion and does not 1ravel% a$use its dis(retion in thee9er(ise thereof, an% supposed error (o itted $% it will a ount to nothin1 ore than an errorof ud1 ent reviewa$le $% a ti el% appeal and not assaila$le $% a spe(ial (ivil a(tion ofcertiorari ."4

In this (ase, petitioner raises $efore the C) the issue that the respondent @ud1e a(ted in e9(essof urisdi(tion or with 1rave a$use of dis(retion in refusin1 to dis iss, or at least suspend, thepro(eedin1s a =uo despite the fa(t that the part% s a1ree ent to ar$itrate had not $een(o plied with. Nota$l%, the RTC found the e9isten(e of the ar$itration (lause, sin(e it said in itsde(ision that :hardl% disputed is the fa(t that the ar$itration (lause in Fuestion (ontravenesseveral provisions of the )r$itration =aw 9 9 9 and to appl% Se(tion - of the )r$itration =aw tosu(h an a1ree ent would result in the disre1ard of the afore*(ited se(tions of the )r$itration=aw and render the useless and ere surplusa1es.: Gowever, notwithstandin1 the findin1 thatan ar$itration a1ree ent e9isted, the RTC denied petitioner s otion and dire(ted petitioner tofile an answer.

In *a :aval Dru/ Corporation v. Court o! 'ppeals ,"5 it was held that R.). No. 7-' e9pli(itl%(onfines the (ourt s authorit% onl% to the deter ination of whether or not there is an a1ree entin writin1 providin1 for ar$itration. In the affir ative, the statute ordains that the (ourt shall issuean order su aril% dire(tin1 the parties to pro(eed with the ar$itration in a((ordan(e with theter s thereof. If the (ourt, upon the other hand, finds that no su(h a1ree ent e9ists, thepro(eedin1s shall $e dis issed.

In issuin1 the Order whi(h denied petitioner s ;otion to Dis iss6Suspend Pro(eedin1s and toRefer Controvers% to oluntar% )r$itration, the RTC went $e%ond its authorit% of deter inin1onl% the issue of whether or not there is an a1ree ent in writin1 providin1 for ar$itration $%dire(tin1 petitioner to file an answer, instead of orderin1 the parties to pro(eed to ar$itration. In

so doin1, it a(ted in e9(ess of its urisdi(tion and sin(e there is no plain, speed%, and adeFuatere ed% in the ordinar% (ourse of law, petitioner s resort to a petition for certiorari is the properre ed%.

<e now pro(eed to the su$stantive issue of whether the C) erred in findin1 that this (ase(annot $e $rou1ht under the ar$itration law for the purpose of suspendin1 the pro(eedin1s in theRTC.

<e find erit in the petition.

)r$itration, as an alternative ode of settlin1 disputes, has lon1 $een re(o1ni?ed and a((eptedin our urisdi(tion ."' R.). No. 7-' "- authori?es ar$itration of do esti( disputes. #orei1nar$itration, as a s%ste of settlin1 (o er(ial disputes of an international (hara(ter, is li ewisere(o1ni?ed ."7 The ena(t ent of R.). No. &!75 on )pril !, !884 further institutionali?ed the use ofalternative dispute resolution s%ste s, in(ludin1 ar$itration, in the settle ent of disputes ."&

) (ontra(t is reFuired for ar$itration to ta e pla(e and to $e $indin1 .!8 Su$ ission to ar$itration isa (ontra(t !" and a (lause in a (ontra(t providin1 that all atters in dispute $etween the partiesshall $e referred to ar$itration is a (ontra(t. !! The provision to su$ it to ar$itration an% disputearisin1 therefro and the relationship of the parties is part of the (ontra(t and is itself a(ontra(t. !

In this (ase, the (ontra(t sued upon $% respondent provides for an ar$itration (lause, to wit

)R3ITR)TION

)n% dispute whi(h the 3u%er and Seller a% not $e a$le to settle $% utual a1ree ent shall $esettled $% ar$itration in the Cit% of New Kor $efore the ) eri(an )r$itration )sso(iation, The

)r$itration )ward shall $e final and $indin1 on $oth parties.

The C) ruled that ar$itration (annot $e ordered in this (ase, sin(e petitioner alle1ed that the(ontra(t $etween the parties did not e9ist or was invalid and ar$itration is not proper when oneof the parties repudiates the e9isten(e or validit% of the (ontra(t. Thus, said the C)

Notwithstandin1 our rulin1 on the validit% and enfor(ea$ilit% of the assailed ar$itration (lauseprovidin1 for forei1n ar$itration, it is our (onsidered opinion that the (ase at $en(h still (annot $e$rou1ht under the )r$itration =aw for the purpose of suspendin1 the pro(eedin1s $efore the trial(ourt. <e note that in its ;otion to Dis iss6Suspend Pro(eedin1s, et(, petitioner Car1ill alle1ed,as one of the 1rounds thereof, that the alle1ed (ontra(t $etween the parties do not le1all% e9istor is invalid. )s posited $% petitioner, it is their (ontention that the said (ontra(t, $earin1 thear$itration (lause, was never (onsu ated $% the parties. That $ein1 the (ase, it is $ut properthat su(h issue $e first resolved $% the (ourt throu1h an appropriate trial. The issue involves aFuestion of fa(t that the trial (ourt should first resolve.

)r$itration is not proper when one of the parties repudiates the e9isten(e or validit% of the(ontra(t. )propos is +on?ales v. Cli a9 ;inin1 =td., 45! SCR) '8-, /+.R.No."'"&5-0, wherethe Supre e Court held that

T e e$ )o* o/ 8(')+) o/ e co* r(c co* ()*)*7 e (7reeme* o $ bm) o (rb) r( )o*)'' (//ec e (&&')c(b)') o/ e (rb) r( )o* c'( $e ) $e'/. A &(r c(**o re' o* eco* r(c (*+ c'()m r)7 $ or ob')7( )o*$ *+er ) (*+ ( e $(me )me )m& 7* ) $e%)$ e*ce or 8(')+) . I*+ee+, ') )7(* $ (re e*?o)*e+ /rom (@)*7 )*co*$)$ e* &o$) )o*$....









































ConseFuentl%, the petitioner herein (annot (lai that the (ontra(t was never (onsu ated and,at the sa e ti e, invo es the ar$itration (lause provided for under the (ontra(t whi(h it alle1esto $e non*e9istent or invalid. Petitioner (lai s that private respondent s (o plaint la( s a (auseof a(tion due to the a$sen(e of an% valid (ontra(t $etween the parties. )pparentl%, thear$itration (lause is $ein1 invo ed erel% as a fall$a( position. The petitioner ust first addu(eeviden(e in support of its (lai that there is no valid (ontra(t $etween the and should the (ourta Fuo find the (lai to $e eritorious, the parties a% then $e spared the ri1ors and e9pensesthat ar$itration in a forei1n land would surel% entail .!4

Gowever, the 0on<ales (ase ,!5 whi(h the C) relied upon for not orderin1 ar$itration, had $eenodified upon a otion for re(onsideration in this wise

9 9 9 T e (+? +)c( )o* o/ e &e ) )o* )* G.R. No. 16 99 e//ec )8e' mo+)/)e$ &(r o/ eDec)$)o* +( e+ 2< ;ebr (r 200 )* G.R. No. 1619 . Be*ce, e *o o'+ ( e 8(')+)o/ e co* r(c co* ()*)*7 e (7reeme* o $ bm) o (rb) r( )o* +oe$ *o (//ec e(&&')c(b)') o/ e (rb) r( )o* c'( $e ) $e'/. A co* r(r r ')*7 o '+ $ 77e$ ( ( &(r $mere re& +)( )o* o/ e m()* co* r(c )$ $ //)c)e* o (8o)+ (rb) r( )o*. T ( )$ e%(c ' e$) ( )o* ( e $e&(r(b)') +oc r)*e, ($ e'' ($ ? r)$&r +e*ce (&&' )*7 ) , $ee@$ o(8o)+. <e add that when it was de(lared in +.R. No. "'"&5- that the (ase should not $e$rou1ht for ar$itration, it should $e (larified that the (ase referred to is the (ase a(tuall% filed $%+on?ales $efore the DENR Panel of )r$itrators, whi(h was for the nullifi(ation of the ain(ontra(t on the 1round of fraud, as it had alread% $een deter ined that the (ase should have$een $rou1ht $efore the re1ular (ourts involvin1 as it did udi(ial issues .!'

In so rulin1 that the validit% of the (ontra(t (ontainin1 the ar$itration a1ree ent does not affe(tthe appli(a$ilit% of the ar$itration (lause itself, we then applied the do(trine of separa$ilit%, thus

The do(trine of separa$ilit%, or severa$ilit% as other writers (all it, enun(iates that an ar$itrationa1ree ent is independent of the ain (ontra(t. The ar$itration a1ree ent is to $e treated as aseparate a1ree ent and the ar$itration a1ree ent does not auto ati(all% ter inate when the(ontra(t of whi(h it is a part (o es to an end.

The separa$ilit% of the ar$itration a1ree ent is espe(iall% si1nifi(ant to the deter ination ofwhether the invalidit% of the ain (ontra(t also nullifies the ar$itration (lause. Indeed, thedo(trine denotes that the invalidit% of the ain (ontra(t, also referred to as the :(ontainer:(ontra(t, does not affe(t the validit% of the ar$itration a1ree ent. Irrespe(tive of the fa(t that theain (ontra(t is invalid, the ar$itration (lause6a1ree ent still re ains valid and enfor(ea$le. !-

Respondent ar1ues that the separa$ilit% do(trine is not appli(a$le in petitioner s (ase, sin(e inthe 0on<ales (ase, Cli a9*)ri (o sou1ht to enfor(e the ar$itration (lause of its (ontra(t with+on?ales and the for er s ove was pre ised on the e9isten(e of a valid (ontra(t while+on?ales, who resisted the ove of Cli a9*)ri (o for ar$itration, did not den% the e9isten(e ofthe (ontra(t $ut erel% assailed the validit% thereof on the 1round of fraud and oppression.Respondent (lai s that in the (ase $efore 2s, petitioner who is the part% insistent on ar$itrationalso (lai ed in their ;otion to Dis iss6Suspend Pro(eedin1s that the (ontra(t sou1ht $%respondent to $e res(inded did not e9ist or was not (onsu ated thus, there is no roo for theappli(ation of the separa$ilit% do(trine, sin(e there is no (ontainer or ain (ontra(t or anar$itration (lause to spea of.

<e are not persuaded.

)ppl%in1 the 0on<ales rulin1, an ar$itration a1ree ent whi(h for s part of the ain (ontra(t

shall not $e re1arded as invalid or non*e9istent ust $e(ause the ain (ontra(t is invalid or didnot (o e into e9isten(e, sin(e the ar$itration a1ree ent shall $e treated as a separate

a1ree ent independent of the ain (ontra(t. To reiterate. a (ontrar% rulin1 would su11est that apart% s ere repudiation of the ain (ontra(t is suffi(ient to avoid ar$itration and that is e9a(tl%the situation that the separa$ilit% do(trine sou1ht to avoid. Thus, we find that even the part% whohas repudiated the ain (ontra(t is not prevented fro enfor(in1 its ar$itration (lause.

;oreover, it is worth% to note that respondent filed a (o plaint for res(ission of (ontra(t andda a1es with the RTC. In so doin1, respondent alle1ed that a (ontra(t e9ists $etweenrespondent and petitioner. It is that (ontra(t whi(h provides for an ar$itration (lause whi(h statesthat :an% dispute whi(h the 3u%er and Seller a% not $e a$le to settle $% utual a1ree entshall $e settled $efore the Cit% of New Kor $% the ) eri(an )r$itration )sso(iation. Thear$itration a1ree ent (learl% e9pressed the parties intention that an% dispute $etween the as$u%er and seller should $e referred to ar$itration. It is for the ar$itrator and not the (ourts tode(ide whether a (ontra(t $etween the parties e9ists or is valid.

Respondent (ontends that assu in1 that the e9isten(e of the (ontra(t and the ar$itration (lauseis (on(eded, the C) s de(ision de(linin1 referral of the parties dispute to ar$itration is still(orre(t. It (lai s that its (o plaint in the RTC presents the issue of whether under the fa(tsalle1ed, it is entitled to res(ind the (ontra(t with da a1es and that issue (onstitutes a udi(ialFuestion or one that reFuires the e9er(ise of udi(ial fun(tion and (annot $e the su$ e(t of anar$itration pro(eedin1. Respondent (ites our rulin1 in 0on<ales wherein we held that a panel ofar$itrator is $ereft of urisdi(tion over the (o plaint for de(laration of nullit%6or ter ination of thesu$ e(t (ontra(ts on the 1rounds of fraud and oppression attendant to the e9e(ution of theaddendu (ontra(t and the other (ontra(ts e anatin1 fro it, and that the (o plaint shouldhave $een filed with the re1ular (ourts as it involved issues whi(h are udi(ial in nature.

Su(h ar1u ent is ispla(ed and respondent (annot rel% on the 0on<ales (ase to support itsar1u ent.

In 0on<ales , petitioner +on?ales filed a (o plaint $efore the Panel of )r$itrators, Re1ion II,;ines and +eos(ien(es 3ureau, of the Depart ent of Environ ent and Natural Resour(es/DENR0 a1ainst respondents Cli a9* ;inin1 =td, Cl i a9*)ri (o and )ustralasian Philippines;inin1 In(, see in1 the de(laration of nullit% or ter ination of the addendu (ontra(t and theother (ontra(ts e anatin1 fro it on the 1rounds of fraud and oppression. The Panel dis issedthe (o plaint for la( of urisdi(tion. Gowever, the Panel, upon petitioner s otion forre(onsideration, ruled that it had urisdi(tion over the dispute aintainin1 that it was a inin1dispute, sin(e the su$ e(t (o plaint arose fro a (ontra(t $etween the parties whi(h involvedthe e9ploration and e9ploitation of inerals over the disputed area. 1@$p i1 Respondentsassailed the order of the Panel of )r$itrators via a petition for certiorari $efore the C). The C)1ranted the petition and de(lared that the Panel of )r$itrators did not have urisdi(tion over the

(o plaint, sin(e its urisdi(tion was li ited to the resolution of inin1 disputes, su(h as thosewhi(h raised a Fuestion of fa(t or atter reFuirin1 the te(hni(al nowled1e and e9perien(e ofinin1 authorities and not when the (o plaint alle1ed fraud and oppression whi(h (alled for theinterpretation and appli(ation of laws. The C) further ruled that the petition should have $eensettled throu1h ar$itration under R.). No. 7-' W the )r$itration =aw W as provided under theaddendu (ontra(t.

On a review on certiorari , we affir ed the C) s findin1 that the Panel of )r$itrators who, underR.). No. -&4! of the Philippine ;inin1 )(t of "&&5, has e9(lusive and ori1inal urisdi(tion to hearand de(ide inin1 disputes, su(h as inin1 areas, ineral a1ree ents, #T))s or per its andsurfa(e owners, o((upants and (lai holders6(on(essionaires, is $ereft of urisdi(tion over the(o plaint for de(laration of nullit% of the addendu (ontra(t thus, the Panels urisdi(tion isli ited onl% to those inin1 disputes whi(h raised Fuestion of fa(ts or atters reFuirin1 thete(hni(al nowled1e and e9perien(e of inin1 authorities. <e then said















In Pearson v. Inter ediate )ppellate Court, this Court o$served that the trend has $een to a ethe ad udi(ation of inin1 (ases a purel% ad inistrative atter. De(isions of the Supre e Courton inin1 disputes have re(o1ni?ed a distin(tion $etween /"0 the pri ar% powers 1ranted $%pertinent provisions of law to the then Se(retar% of )1ri(ulture and Natural Resour(es /and the$ureau dire(tors0 of an e9e(utive or ad inistrative nature, su(h as 1rantin1 of li(ense, per its,lease and (ontra(ts, or approvin1, re e(tin1, reinstatin1 or (an(elin1 appli(ations, or de(idin1(onfli(tin1 appli(ations, and /!0 (ontroversies or disa1ree ents of (ivil or (ontra(tual nature$etween liti1ants whi(h are Fuestions of a udi(ial nature that a% $e ad udi(ated onl% $% the(ourts of usti(e. This distin(tion is (arried on even in Rep. )(t No. -&4! .!7

<e found that sin(e the (o plaint filed $efore the DENR Panel of )r$itrators (har1edrespondents with disre1ardin1 and i1norin1 the addendu (ontra(t, and a(tin1 i n a fraudulentand oppressive anner a1ainst petitioner, the (o plaint filed $efore the Panel was not a disputeinvolvin1 ri1hts to inin1 areas, or was it a dispute involvin1 (lai holders or (on(essionaires,$ut essentiall% udi(ial issues. <e then said that the Panel of )r$itrators did not have urisdi(tionover su(h issue, sin(e it does not involve the appli(ation of te(hni(al nowled1e and e9pertiserelatin1 to inin1. It is in this (onte9t that we said that

)r$itration $efore the Panel of )r$itrators is proper onl% when there is a disa1ree ent $etweenthe parties as to so e provisions of the (ontra(t $etween the , whi(h needs the interpretationand the appli(ation of that parti(ular nowled1e and e9pertise possessed $% e $ers of thatPanel. It is not proper when one of the parties repudiates the e9isten(e or validit% of su(h(ontra(t or a1ree ent on the 1round of fraud or oppression as in this (ase. The validit% of the(ontra(t (annot $e su$ e(t of ar$itration pro(eedin1s. )lle1ations of fraud and duress in thee9e(ution of a (ontra(t are atters within the urisdi(tion of the ordinar% (ourts of law. These

Fuestions are le1al in nature and reFuire the appli(ation and interpretation of laws and urispruden(e whi(h is ne(essaril% a udi(ial fun(tion. !&

In fa(t, <e even (larified in our resolution on +on?ales otion for re(onsideration that :whenwe de(lared that the (ase should not $e $rou1ht for ar$itration, it should $e (larified that the(ase referred to is the (ase a(tuall% filed $% +on?ales $efore the DENR Panel of )r$itrators,whi(h was for the nullifi(ation of the ain (ontra(t on the 1round of fraud, as it had alread% $eendeter ined that the (ase should have $een $rou1ht $efore the re1ular (ourts involvin1 as it did

udi(ial issues.: <e ade su(h (larifi(ation in our resolution of the otion for re(onsiderationafter rulin1 that the parties in that (ase (an pro(eed to ar$itration under the )r$itration =aw, asprovided under the )r$itration Clause in their )ddendu Contra(t.

<GERE#ORE, the petition is GRANTED . The De(ision dated @ul% ", !88' and the Resolutiondated Nove $er " , !88' of the Court of )ppeals in C)*+.R. SP No. 58 84 are RE!ERSED

(*+ SET ASIDE . The parties are here$% ORDERED to SU="IT the selves to the ar$itration oftheir dispute, pursuant to their @ul% "", "&&' a1ree ent.

SO ORDERED.

G.R. No. 1619 (* (r 22, 200

ORGE GONHALES (*+ PANEL O; AR=ITRATORS, Petitioners,vs.CLI"A "INING LTD., CLI"A -ARI"CO "INING CORP., (*+ AUSTRALASIANPBILIPPINES "INING INC., Respondents.

9********************************************************************************* 9

G.R. No. 16 99 (* (r 22, 200

ORGE GONHALES, Petitioner,vs.BON. OSCAR =. PI"ENTEL, )* )$ c(&(c) ($ PRESIDING UDGE o/ =R. 1 < o/ eREGIONAL TRIAL COURT o/ "A ATI CITY, (*+ CLI"A -ARI"CO "ININGCORPORATION, Respondents.

R E S O = 2 T I O N

TINGA, J.:

This is a (onsolidation of two petitions rooted in the sa e disputed )ddendu Contra(t enteredinto $% the parties. In +.R. No. "'"&5-, the Court in its De(ision of !7 #e$ruar% !885 " denied theRule 45 petition of petitioner @or1e +on?ales /+on?ales0. It held that the DENR Panel of

)r$itrators had no urisdi(tion over the (o plaint for the annul ent of the )ddendu Contra(ton 1rounds of fraud and violation of the Constitution and that the a(tion should have $een$rou1ht $efore the re1ular (ourts as it involved udi(ial issues. 3oth parties filed separateotions for re(onsideration. +on?ales avers in his ;otion for Re(onsideration ! that the Courterred in holdin1 that the DENR Panel of )r$itrators was $ereft of urisdi(tion, reiteratin1 itsar1u ent that the (ase involves a inin1 dispute that properl% falls within the a $it of thePanel s authorit%. +on?ales adds that the Court failed to rule on other issues he raised relatin1to the suffi(ien(% of his (o plaint $efore the DENR Panel of )r$itrators and the ti eliness of itsfilin1.

Respondents Cli a9 ;inin1 =td., et al., /respondents0 filed their ;otion for Partial

Re(onsideration and6or Clarifi(ation see in1 re(onsideration of that part of the De(ision holdin1that the (ase should not $e $rou1ht for ar$itration under Repu$li( )(t /R.).0 No. 7-', alsonown as the )r$itration =aw. 4 Respondents, (itin1 ) eri(an urispruden(e 5 and the 2NCITR)=;odel =aw, ' ar1ue that the ar$itration (lause in the )ddendu Contra(t should $e treated as ana1ree ent independent of the other ter s of the (ontra(t, and that a (lai ed res(ission of theain (ontra(t does not avoid the dut% to ar$itrate. Respondents add that +on?ales s ar1u entrelatin1 to the alle1ed invalidit% of the )ddendu Contra(t still has to $e proven and ad udi(atedon in a proper pro(eedin1 that is, an a(tion separate fro the otion to (o pel ar$itration.Pendin1 ud1 ent in su(h separate a(tion, the )ddendu Contra(t re ains valid and $indin1and so does the ar$itration (lause therein. Respondents add that the holdin1 in the De(ision that:the (ase should not $e $rou1ht under the a $it of the )r$itration =aw: appears to $e pre isedon +on?ales s havin1 :i pu1n edJ the e9isten(e or validit%: of the addendu (ontra(t. If so, itsupposedl% (onve%s the idea that +on?ales s unilateral repudiation of the (ontra(t or erealle1ation of its invalidit% is all it ta es to avoid ar$itration. Gen(e, respondents su$ it that the(ourt s holdin1 that :the (ase should not $e $rou1ht under the a $it of the )r$itration =aw: $e

understood or (larified as operative onl% where the (hallen1e to the ar$itration a1ree ent has$een sustained $% final ud1 ent.

3oth parties were reFuired to file their respe(tive (o ents to the other part% s otion forre(onsideration6(larifi(ation .- Respondents filed their Co ent on "- )u1ust !885 ,7 while+on?ales filed his onl% on !5 @ul% !88'. &

On the other hand, +.R. No. "'-&&4 is a Rule '5 petition filed on ' ;a% !885, or while theotions for re(onsideration in +.R. No. "'"&5- "8 were pendin1, wherein +on?ales (hallen1edthe orders of the Re1ional Trial Court /RTC0 reFuirin1 hi to pro(eed with the ar$itrationpro(eedin1s as sou1ht $% Cli a9*)ri (o ;inin1 Corporation /Cli a9*)ri (o0.

On 5 @une !88', the two (ases, +.R. Nos. "'"&5- and "'-&&4, were (onsolidated upon there(o endation of the )ssistant Division Cler of Court sin(e the (ases are rooted in the sa e

)ddendu Contra(t.





































filed within "5 da%s fro noti(e of the final order or resolution appealed fro or of the denial ofthe otion for re(onsideration filed in due ti e. +on?ales has not denied that the relevant "5*da% period for an appeal had elapsed lon1 $efore he filed this petition for (ertiorari. Ge (annotuse the spe(ial (ivil a(tion of (ertiorari as a re ed% for a lost appeal.

Cli a9*)ri (o adds that an appli(ation to (o pel ar$itration under Se(. ' of R.). No. 7-'(onfers on the trial (ourt onl% a li ited and spe(ial urisdi(tion, i.e. , a urisdi(tion solel% todeter ine /a0 whether or not the parties have a written (ontra(t to ar$itrate, and /$0 if thedefendant has failed to (o pl% with that (ontra(t. Respondent (ites *a :aval Dru/ Corporationv. Court o! 'ppeals ,!! whi(h holds that in a pro(eedin1 to (o pel ar$itration, : tJhe ar$itration lawe9pli(itl% (onfines the (ourt s authorit% onl% to pass upon the i ssue of whether there is or there isno a1ree ent in writin1 providin1 for ar$itration,: and : iJn the affir ative, the statute ordains thatthe (ourt shall issue an order su aril% dire(tin1 the parties to pro(eed with the ar$itration ina((ordan(e with the ter s thereof. : ! Cli a9*)ri (o ar1ues that R.). No. 7-' 1ives no roo foran% other issue to $e dealt with in su(h a pro(eedin1, and that the (ourt presented with anappli(ation to (o pel ar$itration a% order ar$itration or dis iss the sa e, dependin1 solel% onits findin1 as to those two li ited issues. If either of these atters is disputed, the (ourt isreFuired to (ondu(t a su ar% hearin1 on it. +on?ales s proposition (ontradi(ts $oth the trial(ourt s li ited urisdi(tion and the su ar% nature of the pro(eedin1 itself.

Cli a9*)ri (o further notes that +on?ales s atta( on or repudiation of the )ddendu Contra(talso is not a 1round to den% effe(t to the ar$itration (lause in the Contra(t. The ar$itrationa1ree ent is separate and severa$le fro the (ontra(t eviden(in1 the parties (o er(ial ore(ono i( transa(tion, it stresses. Gen(e, the alle1ed defe(t or failure of the ain (ontra(t is nota 1round to den% enfor(e ent of the parties ar$itration a1ree ent. Even the part% who has

repudiated the ain (ontra(t is not prevented fro enfor(in1 its ar$itration provision. R.). No.7-' itself treats the ar$itration (lause or a1ree ent as a (ontra(t separate fro the (o er(ial,e(ono i( or other transa(tion to $e ar$itrated. The statute, in parti(ular para1raph " of Se(. !thereof, (onsiders the ar$itration stipulation an independent (ontra(t in its own ri 1ht whoseenfor(e ent a% $e prevented onl% on 1rounds whi(h le1all% a e the ar$itration a1ree entitself revo(a$le, thus

Se(. !. Persons and matters su( ect to ar(itration. Two or ore persons or parties a% su$ itto the ar$itration of one or ore ar$itrators an% (ontrovers% e9istin1, $etween the at the ti e ofthe su$ ission and whi(h a% $e the su$ e(t of an a(tion, or the parties to an% (ontra(t a% insu(h (ontra(t a1ree to settle $% ar$itration a (ontrovers% thereafter arisin1 $etween the . Su(hsu$ ission or (ontra(t shall $e valid, enfor(ea$le and irrevo(a$le, save upon su(h 1rounds ase9ist at law for the revo(ation of an% (ontra(t.

9 9 9 9

The 1rounds +on?ales invo es for the revo(ation of the )ddendu Contra(tfraud andoppression in the e9e(ution thereof are also not 1rounds for the revo(ation of the ar$itration(lause in the Contra(t, Cli a9*)ri (o notes. Su(h 1rounds a% onl% $e raised $% wa% ofdefense in the ar$itration itself and (annot $e used to frustrate or dela% the (ondu(t of ar$itrationpro(eedin1s. Instead, these should $e raised in a separate a(tion for res(ission, it (ontinues.

Cli a9*)ri (o e phasi?es that the su ar% pro(eedin1 to (o pel ar$itration under Se(. ' ofR.). No. 7-' should not $e (onfused with the pro(edure in Se(. !4 of R.). No. &!75. Se(. ' ofR.). No. 7-' refers to an appli(ation to (o pel ar$itration where the (ourt s authorit% is li itedto resolvin1 the issue of whether there is or there is no a1ree ent in writin1 providin1 forar$itration, while Se(. !4 of R.). No. &!75 refers to an ordinar% a(tion whi(h (overs a atterthat appears to $e ar$itra$le or su$ e(t to ar$itration under the ar$itration a1ree ent. In the

latter (ase, the statute is (lear that the (ourt, instead of tr%in1 the (ase, a%, on reFuest of eitheror $oth parties, refer the parties to ar$itration, unless it finds that the ar$itration a1ree ent is null

and void, inoperative or in(apa$le of $ein1 perfor ed. )r$itration a% even $e ordered in thesa e suit $rou1ht upon a atter (overed $% an ar$itration a1ree ent even without waitin1 forthe out(o e of the issue of the v alidit% of the ar$itration a1ree ent. )rt. 7 of the 2NCITR)=;odel =aw !4 states that where a (ourt $efore whi(h an a(tion is $rou1ht in a atter whi(h issu$ e(t of an ar$itration a1ree ent refers the parties to ar$itration, the ar$itral pro(eedin1s a%pro(eed even while the a(tion is pendin1.

Thus, the ain issue raised in the Petition for Certiorari is whether it was proper for the RTC, inthe pro(eedin1 to (o pel ar$itration under R.). No. 7-', to order the parties to ar$itrate eventhou1h the defendant therein has raised the twin issues of validit% and nullit% of the )ddenduContra(t and, (onseFuentl%, of the ar$itration (lause therein as well. The resolution of $othCli a9*)ri (o s ;otion for Partial Re(onsideration and6or Clarifi(ation in +.R. No. "'"&5- and+on?ales s Petition for Certiorari in +.R. No. "'-&&4 essentiall% turns on whether the Fuestionof validit% of the )ddendu Contra(t $ears upon the appli(a$ilit% or enfor(ea$ilit% of thear$itration (lause (ontained therein. The two pendin1 atters shall thus $e ointl% resolved.

<e address the Rule '5 petition in +.R. No. "'-&&4 first fro the re edial law perspe(tive. Itdeserves to $e dis issed on pro(edural 1rounds, as it was filed in lieu of appeal whi(h is thepres(ri$ed re ed% and at that far $e%ond the re1le entar% period. It is ele entar% in re ediallaw that the use of an erroneous ode of appeal is (ause for dis issal of the petition for(ertiorari and it has $een repeatedl% stressed that a petition for (ertiorari is not a su$stitute for alost appeal. )s its nature, a petition for (ertiorari lies onl% where there is :no appeal,: and :noplain, speed% and adeFuate re ed% in the ordinar% (ourse of law. : !5 The )r$itration =awspe(ifi(all% provides for an appeal $% (ertiorari, i.e. , a petition for review under (ertiorari underRule 45 of the Rules of Court that raises pure Fuestions of l aw .!' There is no erit to +on?ales s

ar1u ent that the use of the per issive ter : a%: in Se(. !&, R.). No. 7-' in the filin1 ofappeals does not prohi$it nor dis(ount the filin1 of a petition for (ertiorari under Rule '5 .!- Properinterpretation of the aforesaid provision of law shows that the ter : a%: refers onl% to the filin1of an appeal, not to the ode of review to $e e plo%ed. Indeed, the use of : a%: erel%reiterates the prin(iple that the ri1ht to appeal is not part of due pro(ess of law $ut is a erestatutor% privile1e to $e e9er(ised onl% in the anner and in a((ordan(e with law.

Neither (an 3# Corporation v. Court of )ppeals !7 (ited $% +on?ales support his theor%.+on?ales ar1ues that said (ase re(o1ni?ed and allowed a petition for (ertiorari under Rule '5:appealin1 the order of the Re1ional Trial Court disre1ardin1 the ar$itration a1ree ent as ana((epta$le re ed%.: !& The 3# Corporation (ase had its ori1ins in a (o plaint for (olle(tion ofsu of one% filed $% therein petitioner 3# Corporation a1ainst Shan1ri*la Properties, In(. /SPI0.SPI oved to suspend the pro(eedin1s alle1in1 that the (onstru(tion a1ree ent or the )rti(lesof )1ree ent $etween the parties (ontained a (lause reFuirin1 prior resort to ar$itration $efore

udi(ial intervention. The trial (ourt found that an ar$itration (lause was in(orporated in theConditions of Contra(t appended to and dee ed an inte1ral part of the )rti(les of )1ree ent.Still, the trial (ourt denied the otion to suspend pro(eedin1s upon a findin1 that the Conditionsof Contra(t were not dul% e9e(uted and si1ned $% the parties. The trial (ourt also found that SPIhad failed to file an% written noti(e of de and for ar$itration within the period spe(ified in thear$itration (lause. The trial (ourt denied SPI s otion for re(onsideration and ordered it to file itsresponsive pleadin1. Instead of filin1 an answer, SPI filed a petition for (ertiorari under Rule '5,whi(h the Court of )ppeals, favora$l% a(ted upon. In a petition for review $efore this Court, 3#Corporation alle1ed, a on1 others, that the Court of )ppeals should have dis issed the petitionfor (ertiorari sin(e the order of the trial (ourt den%in1 the otion to suspend pro(eedin1s :is aresolution of an in(ident on the erits: and upon the (ontinuation of the pro(eedin1s, the trial(ourt would eventuall% render a de(ision on the erits, whi(h de(ision (ould then $e elevated toa hi1her (ourt :in an ordinar% appeal.: 8

The Court did not uphold 3# Corporation s ar1u ent. The issue raised $efore the Court was

whether SPI had ta en the proper ode of appeal $efore the Court of )ppeals. The Fuestion$efore the Court of )ppeals was whether the trial (ourt had pre aturel% assu ed urisdi(tion































over the (ontrovers%. The Fuestion of urisdi(tion in turn depended on the Fuestion of e9isten(eof the ar$itration (lause whi(h is one of fa(t. <hile on its fa(e the Fuestion of e9isten(e of thear$itration (lause is a Fuestion of fa(t that is not proper in a petition for (ertiorari, %et sin(e thedeter ination of the Fuestion o$li1ed the Court of )ppeals as it did to interpret the (ontra(tdo(u ents in a((ordan(e with R.). No. 7-' and e9istin1 urispruden(e, the Fuestion is li ewisea Fuestion of law whi(h a% $e properl% ta en (o1ni?an(e of in a petition for (ertiorari underRule '5, so the Court held . "

The situation in 3.#. Corporation is not availin1 in the present petition. The disFuisition in 3.#.Corporation led to the (on(lusion that in order that the Fuestion of urisdi(tion a% $e resolved,the appellate (ourt had to deal first with a Fuestion of law whi(h (ould $e addressed in a(ertiorari pro(eedin1. In the present (ase, +on?ales s petition raises a Fuestion of law, $ut not aFuestion of urisdi(tion. @ud1e Pi entel a(ted in a((ordan(e with the pro(edure pres(ri$ed inR.). No. 7-' when he ordered +on?ales to pro(eed with ar$itration and appointed a solear$itrator after a in1 the deter ination that there was indeed an ar$itration a1ree ent. It has$een held that as lon1 as a (ourt a(ts within its urisdi(tion and does not 1ravel% a$use itsdis(retion in the e9er(ise thereof, an% supposed error (o itted $% it will a ount to nothin1ore than an error of ud1 ent reviewa$le $% a ti el% appeal and not assaila$le $% a spe(ial(ivil a(tion of (ertiorari . ! Even if we overloo the e plo% ent of the wron1 r e ed% in the$roader interests of usti(e, the petition would nevertheless $e dis issed for failure of +on?ale?to show 1rave a$use of dis(retion.

)r$itration, as an alternative ode of settlin1 disputes, has lon1 $een re(o1ni?ed and a((eptedin our urisdi(tion. The Civil Code is e9pli(it on the atter . R.). No. 7-' also e9pressl%authori?es ar$itration of do esti( disputes. #orei1n ar$itration, as a s%ste of settlin1

(o er(ial disputes of an international (hara(ter, was li ewise re(o1ni?ed when the Philippinesadhered to the 2nited Nations :Convention on the Re(o1nition and the Enfor(e ent of #orei1n )r$itral )wards of "&57,: under the "8 ;a% "&'5 Resolution No. -" of the Philippine Senate,1ivin1 re(ipro(al re(o1nition and allowin1 enfor(e ent of international ar$itration a1ree ents$etween parties of different nationalities within a (ontra(tin1 state . 4 The ena(t ent of R.). No.&!75 on ! )pril !884 further institutionali?ed the use of alternative dispute resolution s%stes,in(ludin1 ar$itration, in the settle ent of disputes.

Disputes do not 1o to ar$itration unless and until the parties have a1reed to a$ide $% thear$itrator s de(ision. Ne(essaril%, a (ontra(t is reFuired for ar$itration to ta e pla(e and to $e$indin1. R.). No. 7-' re(o1ni?es the (ontra(tual nature of the ar$itration a1ree ent, thus

Se(. !. Persons and matters su( ect to ar(itration. Two or ore persons or parties a% su$ itto the ar$itration of one or ore ar$itrators an% (ontrovers% e9istin1, $etween the at the ti e of

the su$ ission and whi(h a% $e the su$ e(t of an a(tion, or the parties to an% (ontra(t a% insu(h (ontra(t a1ree to settle $% ar$itration a (ontrovers% thereafter arisin1 $etween the . Su(hsu$ ission or (ontra(t shall $e valid, enfor(ea$le and irrevo(a$le, save upon su(h 1rounds ase9ist at law for the revo(ation of an% (ontra(t.

Su(h su$ ission or (ontra(t a% in(lude Fuestion arisin1 out of valuations, appraisals or other(ontroversies whi(h a% $e (ollateral, in(idental, pre(edent or su$seFuent to an% issue $etweenthe parties.

) (ontrovers% (annot $e ar$itrated where one of the parties to the (ontrovers% is an infant, or aperson udi(iall% de(lared to $e in(o petent, unless the appropriate (ourt havin1 urisdi(tionapprove a petition for per ission to su$ it su(h (ontrovers% to ar$itration ade $% the 1eneral1uardian or 1uardian ad lite of the infant or of the in(o petent. E phasis added.J

Thus, we held in ;anila Ele(tri( Co. v. Pasa% Transportation Co . 5 that a su$ ission toar$itration is a (ontra(t. ) (lause in a (ontra(t providin1 that all atters in dispute $etween the

parties shall $e referred to ar$itration is a (ontra(t , ' and in Del ;onte Corporation*2S) v. Courtof )ppeals - that : tJhe provision to su$ it to ar$itration an% dispute arisin1 therefro and therelationship of the parties is part of that (ontra(t and is itself a (ontra(t. )s a rule, (ontra(ts arerespe(ted as the law $etween the (ontra(tin1 parties and produ(e effe(t as $etween the , theirassi1ns and heirs.: 7

The spe(ial pro(eedin1 under Se(. ' of R.). No. 7-' re(o1ni?es the (ontra(tual nature ofar$itration (lauses or a1ree ents. It provides

Se(. '. )earin/ (& court. ) part% a11rieved $% the failure, ne1le(t or refusal of another to

perfor under an a1ree ent in writin1 providin1 for ar$itration a% petition the (ourt for anorder dire(tin1 that su(h ar$itration pro(eed in the anner provided for in su(h a1ree ent. #iveda%s noti(e in writin1 of the hearin1 of su(h appli(ation shall $e served either personall% or $%re1istered ail upon the part% in default. The (ourt shall hear the parties, and upon $ein1satisfied that the a in1 of the a1ree ent or su(h failure to (o pl% therewith is not in issue,shall a e an order dire(tin1 the parties to pro(eed to ar$itration in a((ordan(e with the ter sof the a1ree ent. If the a in1 of the a1ree ent or default $e in issue the (ourt shall pro(eed tosu aril% hear su(h issue. If the findin1 $e that no a1ree ent in writin1 providin1 for ar$itrationwas ade, or that there is no default in the pro(eedin1 thereunder, the pro(eedin1 shall $edis issed. If the findin1 $e that a written provision for ar$itration was ade and there is adefault in pro(eedin1 thereunder, an order shall $e ade su aril% dire(tin1 the parties topro(eed with the ar$itration in a((ordan(e with the ter s thereof.

The (ourt shall de(ide all otions, petitions or appli(ations filed under the provisions of this )(t,within ten da%s after su(h otions, petitions, or appli(ations have $een heard $% it. E phasisadded.J

This spe(ial pro(eedin1 is the pro(edural e(hanis for the enfor(e ent of the (ontra(t toar$itrate. The urisdi(tion of the (ourts in relation to Se(. ' of R.). No. 7-' as well as the natureof the pro(eedin1s therein was e9pounded upon in =a Naval Dru1 Corporation v. Court of

)ppeals . & There it was held that R.). No. 7-' e9pli(itl% (onfines the (ourt s authorit% onl% to thedeter ination of whether or not there is an a1ree ent in writin1 providin1 for ar$itration. In theaffir ative, the statute ordains that the (ourt shall issue an order :su aril% dire(tin1 the partiesto pro(eed with the ar$itration in a((ordan(e with the ter s thereof.: If the (ourt, upon the otherhand, finds that no su(h a1ree ent e9ists, :the pro(eedin1 shall $e dis issed.: 48 The (ited (asealso stressed that the pro(eedin1s are su ar% in nature .4" The sa e thrust was ade in theearlier (ase of ;indanao Portland Ce ent Corp. v. ;(Donou1h Constru(tion Co. of #lorida 4! whi(h held, thus

Sin(e there o$tains herein a written provision for ar$itration as well as failure on respondent spart to (o pl% therewith, the (ourt a Fuo ri1htl% ordered the parties to pro(eed to ar$itration ina((ordan(e with the ter s of their a1ree ent /Se(. ', Repu$li( )(t 7-'0. Respondent sar1u ents tou(hin1 upon the erits of the dispute are i properl% raised herein. The% should $eaddressed to the ar$itrators. This pro(eedin1 is erel% a su ar% re ed% to enfor(e thea1ree ent to ar$itrate. The dut% of the (ourt in this (ase is not to resolve the erits of theparties (lai s $ut onl% to deter ine if the% should pro(eed to ar$itration or not. 9 9 9 9 4

I pli(it in the su ar% nature of the udi(ial pro(eedin1s is the separa$le or independent(hara(ter of the ar$itration (lause or a1ree ent. This was hi1hli1hted in the (ases of ;anilaEle(tri( Co. v. Pasa% Trans. Co .44 and Del ;onte Corporation*2S) v. Court of )ppeals .45

The do(trine of separa$ilit%, or severa$ilit% as other writers (all it, enun(iates that an ar$itrationa1ree ent is independent of the ain (ontra(t. The ar$itration a1ree ent is to $e treated as aseparate a1ree ent and the ar$itration a1ree ent does not auto ati(all% ter inate when the(ontra(t of whi(h it is part (o es to an end. 4'



























































the Civil Code. 55 2nder )rt. " &" of the Code, an a(tion for annul ent shall $e $rou1ht withinfour %ears, in the (ase of fraud, $e1innin1 fro the ti e of the dis(over% of the sa e. Gowever,the ti e of the dis(over% of the alle1ed fraud is not (lear fro the alle1ations of +on?ales s(o plaint. That $ein1 the situation (oupled with the fa(t that this Court is not a trier of fa(ts, an%rulin1 on the issue of pres(ription would $e un(alled for or even unne(essar%.

<GERE#ORE, the Petition for Certiorari in +.R. No. "'-&&4 is DIS;ISSED. Su(h dis issaleffe(tivel% renders superfluous for al a(tion on the ;otion for Partial Re(onsideration and6orClarifi(ation filed $% Cli a9 ;inin1 =td., et al. in +.R. No. "'"&5-.

The ;otion for Re(onsideration filed $% @or1e +on?ales in +.R. No. "'"&5- is DENIED <ITG#IN)=ITK.

SO ORDERED.

G.R. No. 169::2 ;ebr (r 11, 200<

A=S-C=N =ROADCASTING CORPORATION, petitioner,vs.WORLD INTERACTI!E NETWOR SYSTE"S WINSF APAN CO., LTD., respondent.

D E C I S I O N

CORONA, J. #

This petition for review on (ertiorari under Rule 45 of the Rules of Court see s to set aside the#e$ruar% "', !885 de(ision " and )u1ust "', !885 resolution ! of the Court of )ppeals /C)0 inC)*+.R. SP No. 7"&48.

On Septe $er !-, "&&&, petitioner )3S*C3N 3road(astin1 Corporation entered into a li(ensin1a1ree ent with respondent <orld Intera(tive Networ S%ste s /<INS0 @apan Co., =td., aforei1n (orporation li(ensed under the laws of @apan. 2nder the a1ree ent, respondent was1ranted the e9(lusive li(ense to distri$ute and su$li(ense the distri$ution of the television servi(enown as :The #ilipino Channel: /T#C0 in @apan. 3% virtue thereof, petitioner undertoo totrans it the T#C pro1ra in1 si1nals to respondent whi(h the latter re(eived throu1h itsde(oders and distri$uted to its su$s(ri$ers.

) dispute arose $etween the parties when petitioner a((used respondent of insertin1 nineepisodes of <INS <EEB=K, a wee l% 5* inute (o unit% news pro1ra for #ilipinos in@apan, into the T#C pro1ra in1 fro ;ar(h to ;a% !88!. Petitioner (lai ed that these were:unauthori?ed insertions: (onstitutin1 a aterial $rea(h of their a1ree ent. ConseFuentl%, on;a% &, !88! ,4 petitioner notified respondent of i ts intention to ter inate the a1ree ent effe(tive@une "8, !88!.

Thereafter, respondent filed an ar$itration suit pursuant to the ar$itration (lause of its a1ree entwith petitioner. It (ontended that the airin1 of <INS <EEB=K was ade with petitioner s priorapproval. It also alle1ed that petitioner onl% threatened to ter inate their a1ree ent $e(ause itwanted to rene1otiate the ter s thereof to allow it to de and hi1her fees. Respondent alsopra%ed for da a1es for petitioner s alle1ed 1rant of an e9(lusive distri$ution li(ense to anotherentit%, NGB /@apan 3road(astin1 Corporation0. 5

The parties appointed Professor )lfredo #. Tadiar to a(t as sole ar$itrator. The% stipulated onthe followin1 issues in their ter s of referen(e /TOR0 '

". <as the $road(ast of <INS <EEB=K $% the (lai ant dul% authori?ed $% therespondent herein petitionerJ

!. Did su(h $road(ast (onstitute a aterial $rea(h of the a1ree ent that is a 1roundfor ter ination of the a1ree ent in a((ordan(e with Se(tion " /a0 thereof

. If so, was the $rea(h seasona$l% (ured under the sa e (ontra(tual provision ofSe(tion " /a0

4. <hi(h part% is entitled to the pa% ent of da a1es the% (lai and to the otherreliefs pra%ed for

999 999 999

The ar$itrator found in favor of respondent .- Ge held that petitioner 1ave its approval torespondent for the airin1 of <INS <EEB=K as shown $% a series of written e9(han1es $etweenthe parties. Ge also ruled that, had there reall% $een a aterial $rea(h of the a1ree ent,petitioner should have ter inated the sa e instead of sendin1 a ere noti(e to ter inate saida1ree ent. The ar$itrator found that petitioner threatened to ter inate the a1ree ent due to itsdesire to (o pel respondent to re*ne1otiate the ter s thereof for hi1her fees. Ge further stated

that even if respondent (o itted a $rea(h of the a1ree ent, the sa e was seasona$l% (ured.Ge then allowed respondent to re(over te perate da a1es, attorne% s fees and one*half of thea ount it paid as ar$itrator s fee.

Petitioner filed in the C) a petition for review under Rule 4 of the Rules of Court or, in thealternative, a petition for (ertiorari under Rule '5 of the sa e Rules, with appli(ation forte porar% restrainin1 order and writ of preli inar% in un(tion. It was do( eted as C)*+.R. SPNo. 7"&48. It alle1ed serious errors of fa(t and law and6or 1rave a$use of dis(retion a ountin1to la( or e9(ess of urisdi(tion on the part of the ar$itrator.

Respondent, on the other hand, filed a petition for (onfir ation of ar$itral award $efore theRe1ional Trial Court /RTC0 of >ue?on Cit%, 3ran(h & , do( eted as Civil Case No. >*84*5"7!!.

ConseFuentl%, petitioner filed a supple ental petition in the C) see in1 to en oin the RTC of>ue?on Cit% fro further pro(eedin1 with the hearin1 of respondents petition for (onfir ation ofar$itral award. )fter the petition was ad itted $% the appellate (ourt, the RTC of >ue?on Cit%issued an order holdin1 in a$e%an(e an% further a(tion on respondent s petition as the assailedde(ision of the ar$itrator had alread% $e(o e the su$ e(t of an appeal in the C). Respondentfiled a otion for re(onsideration $ut no resolution has $een issued $% the lower (ourt to date .7

On #e$ruar% "', !885, the C) rendered the assailed de(ision dis issin1 )3S*C3N s petition forla( of urisdi(tion. It stated that as the TOR itself provided that the ar$itrator s de(ision shall $efinal and unappeala$le and that no otion for re(onsideration shall $e filed, then the petition forreview ust fail. It ruled that it is the RTC whi(h has urisdi(tion over Fuestions relatin1 toar$itration. It held that the onl% instan(e it (an e9er(ise urisdi(tion over an ar$itral award is anappeal fro the trial (ourt s de(ision (onfir in1, va(atin1 or odif%in1 the ar$itral award. Itfurther stated that a petition for (ertiorari under Rule '5 of the Rules of Court is proper inar$itration (ases onl% if the (ourts refuse or ne1le(t to inFuire into the fa(ts of an ar$itrator s

award. The dispositive portion of the C) de(ision read





























Co ission, e9(ept those fallin1 within the appellate urisdi(tion of the Supre eCourt in a((ordan(e with the Constitution, the =a$or Code of the Philippines underPresidential De(ree No. 44!, as a ended, the provisions of this )(t and ofsu$para1raph /"0 of the third para1raph and su$para1raph /40 of the fourth para1raphof Se(tion "- of the @udi(iar% )(t of "&47. /E phasis supplied0

)s su(h, de(isions handed down $% voluntar% ar$itrators fall within the e9(lusive appellate urisdi(tion of the C). This de(ision was ta en into (onsideration in approvin1 Se(tion " of Rule4 of the Rules of Court. "! Thus

SECTION ". %cope . * This Rule shall appl% to appeals fro ud1 ents or final ordersof the Court of Ta9 )ppeals and fro awards, ud1 ents, final orders or resolutions ofor authori?ed $% an% Fuasi* udi(ial a1en(% in the e9er(ise of its Fuasi* udi(ialfun(tions. ) on1 these a1en(ies are the Civil Servi(e Co ission, Central 3oard of

)ssess ent )ppeals, Se(urities and E9(han1e Co ission, Offi(e of the President,=and Re1istration )uthorit%, So(ial Se(urit% Co ission, Civil )eronauti(s 3oard,3ureau of Patents, Trade ar s and Te(hnolo1% Transfer, National Ele(trifi(ation

)d inistration, Ener1% Re1ulator% 3oard, National Tele(o uni(ations Co ission,Depart ent of )1rarian Refor under Repu$li( )(t Nu $er ''5-, +overn entServi(e Insuran(e S%ste , E plo%ees Co pensation Co ission, )1ri(ulturalInventions 3oard, Insuran(e Co ission, Philippine )to i( Ener1% Co ission,3oard of Invest ents, Constru(tion Industr% )r$itration Co ission, and 8o' * (r(rb) r( or$ ( or) e+ b '( . /E phasis supplied0

This rule was (ited in %evilla Tradin/ Compan& v. %emana ," anila idto$n )otel v.,orromeo ,"4 and :ippon Paint Emplo&ees #nion-Olalia v. Court o! 'ppeals. "5 These (ases heldthat the proper re ed% fro the adverse de(ision of a voluntar% ar$itrator, if errors of fa(t and6orlaw are raised, is a petition for review under Rule 4 of the Rules of Court. Thus, petitioner s(ontention that it a% avail of a petition for review under Rule 4 under the (ir(u stan(es of this(ase is (orre(t.

)s to petitioner s ar1u ents that a petition for (ertiorari under Rule '5 a% also $e resorted to,we hold the sa e to $e in a((ordan(e with the Constitution and urispruden(e.

Se(tion " of )rti(le III of the "&7- Constitution provides that

SECTION ". The udi(ial power shall $e vested in one Supre e Court and in su(hlower (ourts as a% $e esta$lished $% law.

+)c)(' &o er )*c' +e$ e + o/ e co r $ o/ ? $ )ce to settle a(tual(ontroversies involvin1 ri1hts whi(h are le1all% de anda$le and enfor(ea$le, and o+e erm)*e e er or *o ere ($ bee* ( 7r(8e (b $e o/ +)$cre )o* (mo * )*7o '(c@ or e%ce$$ o/ ? r)$+)c )o* o* e &(r o/ (* br(*c or )*$ r me* (') o/e Go8er*me* . /E phasis supplied0

)s a% $e 1leaned fro the a$ove stated provision, it is well within the power and urisdi(tion ofthe Court to inFuire whether an% instru entalit% of the +overn ent, su(h as a voluntar%ar$itrator, has 1ravel% a$used its dis(retion in the e9er(ise of its fun(tions and prero1atives. )n%a1ree ent stipulatin1 that :the de(ision of the ar$itrator shall $e final and unappeala$le: and:that no further udi(ial re(ourse if either part% disa1rees with the whole or an% part of thear$itrator s award a% $e availed of: (annot $e held to pre(lude in proper (ases the power of

udi(ial review whi(h is inherent in (ourts ."' <e will not hesitate to review a voluntar% ar$itrator s

award where there is a showin1 of 1rave a$use of authorit% or dis(retion and su(h is properl%

raised in a petition for (ertiorari "- and there is no appeal, nor an% plain, speed% re ed% in the(ourse of law ."7

Si1nifi(antl%, Insular %avin/s ,ank v. ;ar East ,ank and Tru st Compan& "& definitivel% outlinedseveral udi(ial re edies an a11rieved part% to an ar$itral award a% underta e

/"0 a petition in the proper RTC to issue an order to va(ate the award on the 1roundsprovided for in Se(tion !4 of R) 7-'

/!0 a petition for review in the C) under Rule 4 of the Rules of Court on Fuestions offa(t, of law, or i9ed Fuestions of fa(t and law and

/ 0 a petition for (ertiorari under Rule '5 of the Rules of Court should the ar$itratorhave a(ted without or in e9(ess of his urisdi(tion or with 1rave a$use of dis(retiona ountin1 to la( or e9(ess of urisdi(tion.

Nevertheless, althou1h petitioner s position on the udi(ial re edies availa$le to it was (orre(t,we sustain the dis issal of its petition $% the C). The re ed% petitioner availed of, entitled:alternative petition !or revie$ under Rule A3 or petition !or certiorari under Rule B ,: was wron1.

Ti e and a1ain, we have ruled that the re edies of appeal and (ertiorari are utuall% e9(lusiveand not alternative or su((essive. !8

Proper issues that a% $e raised in a petition for review under Rule 4 pertain to errors of fa(t,law or i9ed Fuestions of fa(t and law .!" <hile a petition for (ertiorari under Rule '5 should onl%li it itself to errors of urisdi(tion, that is, 1rave a$use of dis(retion a ountin1 to a la( or e9(essof urisdi(tion. !! ;oreover, it (annot $e availed of where appeal is the proper re ed% or as asu$stitute for a lapsed appeal. !

In the (ase at $ar, the Fuestions raised $% petitioner in its alternative petition $efore the C) werethe followin1

). TGE SO=E )R3ITR)TOR CO;;ITTED SERIO2S ERROR )ND6OR +R)E=K )32SED GIS DISCRETION IN R2=IN+ TG)T TGE 3RO)DC)ST O# :<INS<EEB=K: <)S D2=K )2TGORIMED 3K )3S*C3N.

3. TGE SO=E )R3ITR)TOR CO;;ITTED SERIO2S ERROR )ND6OR +R) E=K )32SED GIS DISCRETION IN R2=IN+ TG)T TGE 2N)2TGORIMED 3RO)DC)STDID NOT CONSTIT2TE ;)TERI)= 3RE)CG O# TGE )+REE;ENT.

C. TGE SO=E )R3ITR)TOR CO;;ITTED SERIO2S ERROR )ND6OR +R) E=K )32SED GIS DISCRETION IN R2=IN+ TG)T <INS SE)SON)3=K C2RED TGE3RE)CG.

D. TGE SO=E )R3ITR)TOR CO;;ITTED SERIO2S ERROR )ND6OR +R) E=K )32SED GIS DISCRETION IN R2=IN+ TG)T TE;PER)TE D);)+ES IN TGE );O2NT O# P","'',&55.88 ;)K 3E )<)RDED TO <INS.

E. TGE SO=E )R3ITR)TOR CO;;ITTED SERIO2S ERROR )ND6OR +R) E=K )32SED GIS DISCRETION IN )<)RDIN+ )TTORNEKS #EES IN TGE2NRE)SON)3=E );O2NT )ND 2NCONSCION)3=E );O2NT O# P 758,888.88.






































#. TGE ERROR CO;;ITTED 3K TGE SO=E )R3ITR)TOR IS NOT ) SI;P=EERROR O# @2D+;ENT OR )32SE O# DISCRETION. IT IS +R) E )32SE O#DISCRETION T)NT);O2NT TO =)CB OR EQCESS O# @2RISDICTION.

) (areful readin1 of the assi1ned errors reveals that the real issues (allin1 for the C) sresolution were less the alle1ed 1rave a$use of dis(retion e9er(ised $% the ar$itrator and orea$out the ar$itrator s appre(iation of the issues and eviden(e presented $% the parties.Therefore, the issues (learl% fall under the (lassifi(ation of errors of fa(t and law Fuestionswhi(h a% $e passed upon $% the C) via a petition for review under Rule 4 . Petitioner (leverl%(rafted its assi1n ent of errors in su(h a wa% as to straddle $oth udi(ial re edies, that is, $%alle1in1 serious errors of fa(t and law /in whi(h (ase a petition for review under Rule 4 would$e proper0 and 1rave a$use of dis(retion /$e(ause of whi(h a petition for (ertiorari under Rule'5 would $e per issi$le0.

It ust $e e phasi?ed that ever% law%er should $e fa iliar with the distin(tions $etween the twore edies for it is not the dut% of the (ourts to deter ine under whi(h rule the petition shouldfall.!4 Petitioner s plo% was fatal to its (ause. )n appeal ta en either to this Court or the C) $%the wron1 or inappropriate ode shall $e dis issed .!5 Thus, the (' er*( )8e petition filed in theC), $ein1 an inappropriate ode of appeal, should have $een dis issed outri1ht $% the C).

WBERE;ORE , the petition is here$% DENIED . The #e$ruar% "', !885 de(ision and )u1ust "',!885 resolution of the Court of )ppeals in C)*+.R. SP No. 7"&48 dire(tin1 the Re1ional TrialCourt of >ue?on Cit%, 3ran(h & to pro(eed with the trial of the petition for (onfir ation ofar$itral award is A;;IR"ED .

Costs a1ainst petitioner.

SO ORDERED.

G.R. No. 1 6 1 "( 19, 2006

TRANS;IELD PBILIPPINES, INC., Petitioner,vs.LUHON BYDRO CORPORATION, AUSTRALIA AND NEW HEALAND =AN ING GROUPLI"ITED (*+ SECURITY =AN CORPORATION, Respondents.

R E S O = 2 T I O N

TINGA, J.:

The ad udi(ation of this (ase proved to $e a two*sta1e pro(ess as its (onstituent parts involvetwo se1re1ate $ut eFuall% i portant issues. The first sta1e relatin1 to the erits of the (ase,spe(ifi(all% the Fuestion of the propriet% of (allin1 on the se(urities durin1 the penden(% of thear$itral pro(eedin1s, was resolved in favor of =u?on G%dro Corporation /=GC0 with the Court sDe(ision " of !! Nove $er !884. The se(ond sta1e involvin1 the issue of foru *shoppin1 onwhi(h the Court reFuired the parties to su$ it their respe(tive e oranda ! is disposed of in thisResolution.

The disposal of the foru *shoppin1 (har1e is (ru(ial to the parties to this (ase on a((ount of its

profound effe(t on the final out(o e of the international ar$itral pro(eedin1s whi(h the% have(hosen as their prin(ipal dispute resolution e(hanis .







http://lawphil.net/judjuris/juri2006/may2006/gr_146717_2006.html#fnt1













=GC (lai s that Transfield Philippines, In(. /TPI0 is 1uilt% of foru *shoppin1 when it filed thefollowin1 suits

". Civil Case No. 84* ! filed on "& ;ar(h !884, pendin1 $efore the Re1ional TrialCourt /RTC0 of ;a ati, 3ran(h 5' for (onfir ation, re(o1nition and enfor(eent of theThird Partial )ward in (ase ""!'4 TE6;<, ICC International Court of )r$itration,entitled Trans!ield P ilippines Inc. v. *u<on )&dro Corporation .4

!. ICC Case No. ""!'46TE6;<, Trans!ield P ilippines Inc. v. *u<on )&droCorporation filed $efore the International Court of )r$itration, International Cha $er of

Co er(e /ICC0 a reFuest for ar$itration dated Nove $er !888 pursuant to theTurn e% Contra(t $etween =GC and TPI

. +.R. No. "4'-"-, Trans!ield P ilippines Inc. v. *u<on )&dro Corporation 'ustraliaand :e$ ealand ,ankin/ 0roup *imited and %ecurit& ,ank Corp. filed on 5 #e$ruar%!88", whi(h was an appeal $% (ertiorari with pra%er for TRO6preli inar% prohi$itor%and andator% in un(tion, of the Court of )ppeals De(ision dated " @anuar% !88" inC)*+.R. SP No. '"&8".

a. C)*+.R. SP No. '"&8" was a petition for review of the De(ision in CivilCase No. 88*" "!, wherein TPI (lai ed that =GC s (all on the se(uritieswas pre ature (onsiderin1 that the issue of default has not %et $eenresolved with finalit% the petition was however denied $% the Court of

)ppeals

$. Civil Case No. 88*" "! was a (o plaint for in un(tion with pra%er forte porar% restrainin1 order and6or writ of preli inar% in un(tion dated 5Nove $er !888, whi(h sou1ht to restrain =GC fro (allin1 on the se(uritiesand respondent $an s fro transferrin1 or pa%in1 of the se(urities the(o plaint was denied $% the RTC.

On the other hand, TPI (lai s that it is =GC whi(h is 1uilt% of foru *shoppin1 when it raised theissue of foru *shoppin1 not onl% in this (ase, $ut also in Civil Case No. 84* !, and even as edfor the dis issal of the other (ase $ased on this 1round. ;oreover, TPI ar1ues that =GC isreliti1atin1 in Civil Case No. 84* ! the ver% sa e (auses of a(tion in ICC Case No.""!'46TE6;<, and even anifestin1 therein that it will present eviden(e earlier presented$efore the ar$itral tri$unal .5

;eanwhile, )NM 3an and Se(urit% 3an oved to $e e9(used fro filin1 a e orandu .The% (lai that with the finalit% of the Court s De(ision dated !! Nove $er !884, an% resolution$% the Court on the issue of foru *shoppin1 will not ateriall% affe(t their role as the $an in1entities involved are (on(erned . ' The Court 1ranted their respe(tive otions.

On " )u1ust !885, TPI oved to set the (ase for oral ar1u ent, positin1 that the resolution ofthe Court on the issue of foru *shoppin1 a% have si1nifi(ant i pli(ations on the interpretationof the )lternative Dispute Resolution )(t of !884, as well as the via$ilit% of international(o er(ial ar$itration as an alternative ode of dispute resolution in the (ountr%. - Said otionwas opposed $% =GC in its opposition filed on ! Septe $er !885, with =GC ar1uin1 that therespe(tive e oranda of the parties are suffi(ient for the Court to r esolve the issue of foru *shoppin1. 7 On !7 O(to$er !885, TPI filed its ;anifestation and Reiterative ;otion & to set the(ase for oral ar1u ent, where it anifested that the International Cha $er of Co er(e /ICC0ar$itral tri$unal had issued its #inal )ward orderin1 =GC to pa% TPI 2SV!4,5 ,- 8.88/in(ludin1 the 2SV"-,&--,7"5.88 pro(eeds of the two stand$% letters of (redit0. T PI also

su$ itted a (op% thereof with a Supple ental Petition "8 to the Re1ional Trial Court /RTC0,see in1 re(o1nition and enfor(e ent of the said award. ""

The essen(e of foru *shoppin1 is the filin1 of ultiple suits involvin1 the sa e parties for thesa e (ause of a(tion, either si ultaneousl% or su((essivel%, for the purpose of o$tainin1 afavora$le ud1 ent ."! #oru *shoppin1 has li ewise $een defined as the a(t of a part% a1ainstwho an adverse ud1 ent has $een rendered in one foru , see in1 and possi$l% 1ettin1 afavora$le opinion in another foru , other than $% appeal or the spe(ial (ivil a(tion of (ertiorari, orthe institution of two or ore a(tions or pro(eedin1s 1rounded on the sa e (ause on thesupposition that one or the other (ourt would a e a favora$le disposition. "

Thus, for foru *shoppin1 to e9ist, there ust $e /a0 identit% of parties, or at least su(h parties asrepresent the sa e interests in $oth a(tions /$0 identit% of r i1hts asserted and relief pra%ed for,the relief $ein1 founded on the sa e fa(ts and /(0 the identit% of the two pre(edin1 parti(ulars issu(h that an% ud1 ent rendered in the other a(tion will, re1ardless of whi(h part% is su((essful,a ount to res udicata in the a(tion under (onsideration. "4

There is no identit% of (auses of a(tion $etween and a on1 the ar$itration (ase, the instantpetition, and Civil Case No. 84* !.

The ar$itration (ase, ICC Case No. ""!'4 TE6;<, is an ar$itral pro(eedin1 (o en(edpursuant to the Turn e% Contra(t $etween TPI and =GC, to deter ine the pri ar% issue ofwhether the dela%s in the (onstru(tion of the pro e(t were e9(used dela%s, whi(h would(onseFuentl% render valid TPI s (lai s for e9tension of ti e to finish the pro e(t. To1ether with

the pri ar% issue to $e settled in the ar$itration (ase is the eFuall% i portant Fuestion ofonetar% awards to the a11rieved part%.

On the other hand, Civil Case No. 88*" "!, the pre(ursor of the instant petition, was filed toen oin =GC fro (allin1 on the se(urities and respondent $an s fro transferrin1 or pa%in1 these(urities in (ase =GC (alls on the . Gowever, in view of the fa(t that =GC (olle(ted thepro(eeds, TPI, in its appeal and petition for review as ed that the sa e $e returned and pla(edin es(row pendin1 the resolution of the disputes $efore the ICC ar$itral tri$unal. "5

<hile the ICC (ase thus (alls for a thorou1h review of the fa(ts whi(h led to the dela% in the(onstru(tion of the pro e(t, as well as the attendant responsi$ilities of the parties therein, in(ontrast, the present petition puts in issue the propriet% of drawin1 on the letters of (redit durin1the penden(% of the ar$itral (ase, and of (ourse, a$sent a final deter ination $% the ICC )r$itraltri$unal. ;oreover, as pointed out $% TPI, it did not pra% for the return of the pro(eeds of the

letters of (redit. <hat it as ed instead is that the said one%s $e pla(ed in es(row until the finalresolution of the ar$itral (ase. ;eanwhile, in Civil Case No. 84* !, TPI no lon1er see s theissuan(e of a provisional relief, $ut rather the issuan(e of a writ of e9e(ution to enfor(e the ThirdPartial )ward.

Neither is there an identit% of parties $etween and a on1 the three / 0 (ases. The ICC (aseonl% involves TPI and =GC lo1i(all% sin(e the% are the parties to the Turn e% Contra(t. In(o parison, the instant petition in(ludes Se(urit% 3an and )NM 3an , the $an s sou1ht to $een oined fro releasin1 the funds of the letters of (redit. The Court a1rees with TPI that i t would$e ineffe(tual to as the ICC to issue writs of preli inar% in un(tion a1ainst Se(urit% 3an and

)NM 3an sin(e these $an s are not parties to the ar$itration (ase, and that the ICC )r$itraltri$unal would not even $e a$le to (o pel =GC to o$e% an% writ of preli inar% in un(tion issuedfro its end ."' Civil Case No. 84* !!, on the other hand, lo1i(all% involves TPI and =GC onl%,the% $ein1 the parties to the ar$itration a1ree ent whose partial award is sou1ht to $e enfor(ed.





































)s a fundaental point, the penden(% of ar$itral pro(eedin1s does not fore(lose resort to the(ourts for provisional reliefs. The Rules of the ICC, whi(h 1overns the parties ar$itral dispute,allows the appli(ation of a part% to a udi(ial authorit% for interi or (onservator% easures ."- =i ewise, Se(tion "4 of Repu$li( )(t /R.).0 No. 7-' /The )r$itration =aw0 "7 re(o1ni?es the ri1htsof an% part% to petition the (ourt to ta e easures to safe1uard and6or (onserve an% atterwhi(h is the su$ e(t of the dispute in ar$itration. In addition, R.). &!75, otherwise nown as the:)lternative Dispute Resolution )(t of !884,: allows the filin1 of provisional or interi easureswith the re1ular (ourts whenever the ar$itral tri$unal has no power to a(t or to a(t effe(tivel% ."&

TPI s verified petition in Civil Case No. 84* !, filed on "& ;ar(h !884, was (aptioned as one:#or Confir ation, Re(o1nition and Enfor(e ent of #orei1n )r$itral )ward in Case ""!'4TE6;<, ICC International Court of )r$itration, Transfield Philippines, In(. v. =u?on G%droCorporation /Pla(e of ar$itration Sin1apore0.: !8 In the said petition, TPI pra%ed

". That the TGIRD P)RTI)= )<)RD dated #e$ruar% "7, !884 in Case No.""!'46TE6;< ade $% the ICC International Court of )r$itration, the si1ned ori1inal(op% of whi(h is hereto atta(hed as )nne9 :G: hereof, $e (onfir ed, re(o1ni?ed andenfor(ed in a((ordan(e with law.

!. That the (orrespondin1 writ of e9e(ution to enfor(e >uestion " of the said ThirdPartial )ward, $e issued, also in a((ordan(e with law.

. That TPI $e 1ranted su(h other relief as a% $e dee ed ust and eFuita$le, andallowed, in a((ordan(e with law .!"

The pertinent portion of the Third Partial )ward !! relied upon $% TPI were the answers to>uestions "8 to !', to wit

:>uestion 8 Did TPI =GCJ wron1full% draw upon the se(urit%

Kes

:>uestion " Is TPI entitled to have returned to it an% su wron1full% ta en $% =GC forliFuidated da a1es

Kes

:>uestion ! Is TPI entitled to an% a((eleration (osts

TPI is entitled to the reasona$le (osts TPI in(urred after T%phoon Me$ as a result of =GC s 5#e$ruar% "&&& Noti(e to Corre(t .!

)((ordin1 to =GC, the filin1 of the a$ove (ase (onstitutes foru *shoppin1 sin(e it is the sa e(lai for the return of 2SV"-.& ;illion whi(h TPI ade $efore the ICC )r$itral Tri$unal and$efore this Court. =GC adds that while Civil Case No. 84* ! is st%led as an a(tion for one%,the Third Partial )ward used as $asis of the suit does not authori?e TPI to see a writ ofe9e(ution for the su s drawn on the letters of (redit. Said award does not even (ontain an orderfor the pa% ent of one%, $ut instead has reserved the Fuantifi(ation of the a ounts for asu$seFuent deter ination, =GC ar1ues. In fa(t, even the #ifth Partial )ward ,!4 dated 8 ;ar(h!885, does not (ontain su(h orders. =GC insists that the de(larations or the partial awards

issued $% the ICC )r$itral Tri$unal do not (onstitute orders for the pa% ent of one% and arenot intended to $e enfor(ea$le as su(h, $ut erel% (onstitute a ounts whi(h will $e in(luded in

the #inal )ward and will $e ta en into a((ount in deter inin1 the a(tual a ount pa%a$le to theprevailin1 part%.!5

R.). No. &7!5 provides that international (o er(ial ar$itrations shall $e 1overned shall $e1overned $% the ;odel =aw on International Co er(ial )r$itration /:;odel =aw:0 adopted $%the 2nited Nations Co ission on International Trade =aw /2NCITR)=0 .!' The 2NCITR)=;odel =aw provides

)RTIC=E 5. Reco/nition and en!orcement

/"0 )n ar$itral award, irrespe(tive of the (ountr% in whi(h it was ade, shall $ere(o1ni?ed as $indin1 and, upon appli(ation in writin1 to the (o petent (ourt, shall $eenfor(ed su$ e(t to the provisions of this arti(le and of arti(le '.

/!0 The part% rel%in1 on an award or appl%in1 for its enfor(e ent shall suppl% the dul%authenti(ated ori1inal award or a dul% (ertified (op% thereof, and the ori1inalar$itration a1ree ent referred to in arti(le - or a dul% (ertified (op% thereof. If theaward or a1ree ent is not ade in an offi(ial lan1ua1e of this State, the part% shallsuppl% a dul% (ertified translation thereof into su(h lan1ua1e.

;oreover, the New Kor Convention ,!- to whi(h the Philippines is a si1nator%, 1overns there(o1nition and enfor(eent of forei1n ar$itral awards. The appli(a$ilit% of the New KorConvention in the Philippines was (onfir ed in Se(tion 4! of R.). &!75. Said law also providesthat the appli(ation for the re(o1nition and enfor(e ent of su(h awards shall $e filed with theproper RTC. <hile TPI s resort to the RTC for r e(o1nition and enfor(eent of the Third Partial

)ward is san(tioned $% $oth the New Kor Convention and R.). &!75, its appli(ation forenfor(e ent, however, was pre ature, to sa% the least. True, the ICC )r$itral Tri$unal hadindeed ruled that =GC wron1full% drew upon the se(urities, %et there is no order for the pa% entor return of the pro(eeds of the said se(urities. In fa(t, Para1raph !"4!, whi(h is the finalpara1raph of the Third Partial )ward, reads

!"4!. )ll other issues, in(ludin1 an% issues as to Fuantu and (osts, are reserved to a futureaward. !7

;eanwhile, the tri$unal issued its #ifth Partial )ward !& on 8 ;ar(h !885. It (ontains, a on1others, a de(laration that while =GC wron1full% drew on the se(urities, the drawin1 was ade in1ood faith, under the ista en assu ption that the (ontra(tor, TPI, was in default. Thus, thetri$unal ruled that while the a ount drawn ust $e returned, TPI is not entitled to an% da a1esor interests due to =GC s drawin1 on the se(urities. 8 In the #ifth Partial )ward, the tri$unalordered

'. Order

'." +eneral

"''. This #ifth Partial )ward deals with an% issues of Fuantu . 1avvp il.net Gowever, it doesnot resolve the all. T e o $ (*+)*7 (* m )$$ e$ )'' be +e erm)*e+ )* ( / re ( (r+. It will (ontain a re(on(iliation of the a ounts awarded to ea(h part% and a deter ination of thenet a ount pa%a$le to Clai ant or Respondent, as the (ase a% $e.

"'-. In view of this the Tri$unal will a e no orders for pa% ent in this #ifth Partial )ward. TheTri$unal will a e a nu $er of de(larations (on(ernin1 the Fuantu issues it has resolved in

















































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