1. 2. 3. *. 5. 6. (. 0. !. 1). 11. 12. 13. 14. 15. 16. 1(. 10. 1!. 2). 21. 22. 23. 24.

25. 26. 2(. 20. 2!. 3). 31.

Heirs of Augusto Salas vs. Laperal Realty Corp., GR No. 135362, De . 13, 1!!! Del Monte Corp USA vs. CA, 351 S 373,381 Natio"al Steel Corp. vs. #$e R#C of La"ao %el Norte, &ra" $ 2, 'liga" City, GR No. 12())*, +ar $ 11, 1!!! Asset ,rivati-atio" #rust vs. CA, GR No. 1211(1, De e./er 2!, 1!!0 N'A vs. CA a"% C'AC a"% Hy%ro Resour es Corp., GR No. 12!16! Aga" vs. ,$il '"t Air #er.i"als Co., '" 1,'A#C23 GR No. 155))1, +ay 5, 2))3 L+ ,o4er 5"gi"eeri"g Corp vs. Capitol Co"stru tio" Groups, '" ., GR No. 1*1033, +ar $ 26, 2))3 C$arles &er"ar% H. Reyes vs. A"to"io 6ulo &al%e '', GR No. 16030* +a. Luisa ,ar7 Ass" vs. Al.e"%ras, GR No. 1(1(63, 8u"e 5, 2))! 9ort &o"ifa io Devt. Corp vs Do.i"go, GR Nop. 10)(65, 50) S 3!( 9ort &o"ifa io Devt Corp vs Soro"go" a"% 9o"g, GR No. 1(6()! Huta.a:Rsea 8oi"t 2peratio"s, '" . vs. Citra +etro +a"ila #oll4ays Corp, GR No. 10)6*), April 2!, 2))! 5;uita/le ,C' vs RC&C, GR No. 1022*0, De . 10, 2))0 Luzon Hy ro Corp vs. Ho. !"y#"y, CA$%& Sp. 'o. (4318, 'ov. 2(, 2))5 5.pire 5ast La"%$il%i"gs, '" . vs. Capitol '"%ustrial Co"stru tio" Groups, GR No. 160)(*, Sept 26, 2))0 A&S:C&N vs. <orl% '"tera tive Net4or7 syste.s, GR No. 16!332 Diesel Co"stru tio" Co, '" . vs. =,S' ,roperty Hol%i"gs, GR No. 15*005 >orea #e $"oligies Co., Lt% vs. Ho". Ler.a et al, GR No. 1*3501 Natio"al ="io" 9ire '"sura" e vs. Salt:Nielse", GR No. 0(!50 ,uro.i"es '" . vs. CA, GR No. !1220, +ar $ 22, 1!!3 +eral o vs. ,asay #ra"sportatio" Co.pa"y, 5( , 6)) <ester" +i"ol o vs. CA, 16( S 5!2 ,AL vs. NLRC, 10) S 555 *H+,+D-C vs. ,elez, 1(( S 4)5 #oyota vs CA, 216 S 236 Asia" Co"stru tio" vs C'AC, 210 S 52! Sea La"% Servi e, '" vs. CA, 32( S 135 ,$il 5 o"o.i ?o"e vs. 5%iso" 1&ataa"3 Coge"eratio" Corp, GR No. 1(!53( 5state of Nelso" R. Dulay vs. A/oiti- 8e"se" +ariti.e '" , GR No. 1(26*2, 8u"e 13, 2)12 Sa" +iguel Corp vs. NLRC, GR No. 1)0))1 A e Navigtio" Co., '" ., vs. 9er"a"%e-, GR No. 1!(3)!, 2 t. 1), 2)12

.%.&. '/. 135302. De1e2#er 13, 1(((3 H-+&S /4 AU%US5/ L. SALAS, 6&., n"2ely7 5-&-S+5A D. SALAS 8or 9ersel8 "n "s le:"l :u"r ;"n o8 t9e 2;nor 4A!&+C- C<&+LL D. SALAS, MA. C&+S5+'A S. L-SACA, "n =A&+'A 5-&-SA D. SALAS, petitioners, vs. LA*-&AL &-AL5< C/&*/&A5+/', &/C=>A< &-AL -S5A5C/&*/&A5+/', S/U5H &+D%- ,+LLA%-, +'C., MAHA&AM+ D-,-L/*M-'5 C/&*/&A5+/', Spouses 5H-LMA D. A!&A6A'/ "n %&-%/&+/ A!&A6A'/, /SCA& DAC+LL/, Spouses ,+&%+'+A D. LA,A "n &/D-L LA,A, -DUA&D/ A. ,ACU'A, 4L/&A'5- D- LA C&U?, 6-SUS ,+C-'5- !. CA*-LLA', "n t9e &-%+S5-& /4 D--DS 4/& L+*A C+5<, respondents. D-C+S+/' D- L-/', 6&., J.7 &efore us is a petitio" for revie4 o" certiorari of t$e 2r%er@1A of &ra" $ 05 of t$e Regio"al #rial Court of Lipa City@2A %is.issi"g petitio"ersB o.plai"t@3A for res issio" of several sale tra"sa tio"s i"volvi"g la"% o4"e% /y Augusto L. Salas, 8r., t$eir pre%e essor:i":i"terest, o" t$e grou"% t$at t$ey faile% to first resort to ar/itratio". Salas, 8r. 4as t$e registere% o4"er of a vast tra t of la"% i" Lipa City, &ata"gas spa""i"g 1,*0*,35* s;uare .eters. 2" +ay 15, 1!0(, $e e"tere% i"to a" 24"er:Co"tra tor Agree.e"t@*A 1$erei"after referre% to as t$e Agree.e"t3 4it$ respo"%e"t Laperal Realty Corporatio" 1$erei"after referre% to as Laperal Realty3 to re"%er a"% provi%e o.plete 1$ori-o"tal3 o"stru tio" servi es o" $is la"%. 2" Septe./er 23, 1!00, Salas, 8r. eCe ute% a Spe ial ,o4er of Attor"ey i" favor of respo"%e"t Laperal Realty to eCer ise ge"eral o"trol, supervisio" a"% .a"age.e"t of t$e sale of $is la"%, for as$ or o" i"stall.e"t /asis. 2" 8u"e 1), 1!0!, Salas, 8r. left $is $o.e i" t$e .or"i"g for a /usi"ess trip to Nueva 5 iDa. He "ever retur"e%. 2" August 6, 1!!6, #eresita Dia- Salas file% 4it$ t$e Regio"al #rial Court of +a7ati City a verifie% petitio" for t$e %e laratio" of presu.ptive %eat$ of $er $us/a"%, Salas, 8r., 4$o $a% t$e" /ee" .issi"g for .ore t$a" seve" 1(3 years. 't 4as gra"te% o" De e./er 12, 1!!6.@5A +ea"ti.e, respo"%e"t Laperal Realty su/%ivi%e% t$e la"% of Salas, 8r. a"% sol% su/%ivi%e% portio"s t$ereof to respo"%e"ts Ro 74ay Real 5state Corporatio" a"% Sout$ Ri%ge Eillage, '" . o" 9e/ruary 22, 1!!)F to respo"%e"t spouses A/raDa"o a"% Lava a"% 2s ar Da illo o" 8u"e 2(, 1!!1F a"% to respo"%e"ts 5%uar%o Ea u"a, 9lora"te %e la Cru- a"% 8esus Ei e"te Capala" o" 8u"e *, 1!!6 1all of 4$o. are $erei"after referre% to as respo"%e"t lot /uyers3. 2" 9e/ruary 3, 1!!0, petitio"ers as $eirs of Salas, 8r. file% i" t$e Regio"al #rial Court of Lipa City a Co.plai"t @6A for %e laratio" of "ullity of sale, re o"veya" e, a" ellatio" of o"tra t, a ou"ti"g a"% %a.ages agai"st $erei" respo"%e"ts 4$i $ 4as %o 7ete% as Civil Case No. !0:))*(. 2" April 2*, 1!!0, respo"%e"t Laperal Realty file% a +otio" to Dis.iss@(Ao" t$e grou"% t$at petitio"ers faile% to su/.it t$eir grieva" e to ar/itratio" as re;uire% u"%er Arti le E' of t$e Agree.e"t 4$i $ provi%esG HAR#'CL5 E'. AR&'#RA#'2N.

All ases of %ispute /et4ee" C2N#RAC#2R a"% 2<N5RBS represe"tative s$all /e referre% to t$e o..ittee represe"te% /yG a. 2"e represe"tative of t$e 2<N5RF /. 2"e represe"tative of t$e C2N#RAC#2RF . 2"e represe"tative a epta/le to /ot$ 2<N5R a"% C2N#RAC#2R.I@0A 2" +ay 5, 1!!0, respo"%e"t spouses A/raDa"o a"% Lava a"% respo"%e"t Da illo file% a 8oi"t A"s4er 4it$ Cou"ter lai. a"% Cross lai.@!A prayi"g for %is.issal of petitio"ersB Co.plai"t for t$e sa.e reaso". 2" August !, 1!!0, t$e trial ourt issue% t$e $erei" assaile% 2r%er %is.issi"g petitio"ersB Co.plai"t for "o": o.plia" e 4it$ t$e foregoi"g ar/itratio" lause. He" e t$is petitio". ,etitio"ers argue, t$usG H#$e petitio"ersB auses of a tio" %i% "ot e.a"ate fro. t$e 24"er:Co"tra tor Agree.e"t.I H#$e petitio"ersB auses of a tio" for a" ellatio" of o"tra t a"% a ou"ti"g are overe% /y t$e eC eptio" u"%er t$e Ar/itratio" La4.I H9ailure to ar/itrate is "ot a grou"% for %is.issal.I@1)A '" a ate"a of ases@11A i"spire% /y 8usti e +al ol.Bs provo ative %isse"t i" Vega v. San Carlos Milling Co.@12A, t$is Court $as re og"i-e% ar/itratio" agree.e"ts as vali%, /i"%i"g, e"for ea/le a"% "ot o"trary to pu/li poli y so .u $ so t$at 4$e" t$ere o/tai"s a 4ritte" provisio" for ar/itratio" 4$i $ is "ot o.plie% 4it$, t$e trial ourt s$oul% suspe"% t$e pro ee%i"gs a"% or%er t$e parties to pro ee% to ar/itratio" i" a or%a" e 4it$ t$e ter.s of t$eir agree.e"t @13A Ar/itratio" is t$e H4ave of t$e futureI i" %ispute resolutio".@1*A #o /rus$ asi%e a o"tra tual agree.e"t alli"g for ar/itratio" i" ase of %isagree.e"t /et4ee" parties 4oul% /e a step /a 74ar%.@15A No"et$eless, 4e gra"t t$e petitio". A su/.issio" to ar/itratio" is a o"tra t.@16A As su $, t$e Agree.e"t, o"tai"i"g t$e stipulatio" o" ar/itratio", /i"%s t$e parties t$ereto, as 4ell as t$eir assig"s a"% $eirs. @1(A &ut o"ly t$ey. ,etitio"ers, as $eirs of Salas, 8r., a"% respo"%e"t Laperal Realty are ertai"ly /ou"% /y t$e Agree.e"t. 'f respo"%e"t Laperal Realty, $a% assig"e% its rig$ts u"%er t$e Agree.e"t to a t$ir% party, .a7i"g t$e for.er, t$e assig"or, a"% t$e latter, t$e assig"ee, su $ assig"ee 4oul% also /e /ou"% /y t$e ar/itratio" provisio" si" e assig".e"t i"volves su $ tra"sfer of rig$ts as to vest i" t$e assig"ee t$e po4er to e"for e t$e. to t$e sa.e eCte"t as t$e assig"or oul% $ave e"for e% t$e. agai"st t$e %e/tor@10A or i" t$is ase, agai"st t$e $eirs of t$e origi"al party to t$e Agree.e"t. Ho4ever, respo"%e"ts Ro 74ay Real 5state Corporatio", Sout$ Ri%ge Eillage, '" ., +a$ara.i Develop.e"t Corporatio", spouses A/raDa"o, spouses Lava, 2s ar Da illo, 5%uar%o Ea u"a, 9lora"te %e la Cru- a"% 8esus Ei e"te Capella" are not assig"ees of t$e rig$ts of respo"%e"t Laperal Realty u"%er t$e Agree.e"t to %evelop Salas, 8r.Bs la"% a"% sell t$e sa.e. #$ey are, rat$er, /uyers of t$e la"% t$at respo"%e"t Laperal Realty 4as give" t$e aut$ority to %evelop a"% sell u"%er t$e Agree.e"t. As su $, t$ey are not Hassig"sI o"te.plate% i" Art. 1311 of t$e Ne4 Civil Co%e 4$i $

provi%es t$at H o"tra ts ta7e effe t o"ly /et4ee" t$e parties, t$eir assig"s a"% $eirsI. ,etitio"ers lai. t$at t$ey suffere% lesio" of .ore t$a" o"e:fourt$ 11J*3 of t$e value of Salas, 8r.Bs la"% 4$e" respo"%e"t Laperal Realty su/%ivi%e% it a"% sol% portio"s t$ereof to respo"%e"t lot /uyers. #$us, t$ey i"stitute% a tio"@1!Aagai"st /ot$ respo"%e"t Laperal Realty a"% respo"%e"t lot /uyers for res issio" of t$e sale tra"sa tio"s a"% re o"veya" e to t$e. of t$e su/%ivi%e% lots. #$ey argue t$at res issio", /ei"g t$eir ause of a tio", falls u"%er t$e eC eptio" lause i" Se . 2 of Repu/li A t No. 0(6 4$i $ provi%es t$at Hsu $ su/.issio" @toA or o"tra t @of ar/itratio"A s$all /e vali%, e"for ea/le a"% irrevo a/le, s"ve upon su19 :roun s "s e@;st "t l"A 8or t9e revo1"t;on o8 "ny 1ontr"1tI. #$e petitio"ersB o"te"tio" is 4it$out .erit. 9or 4$ile res issio", as a ge"eral rule, is a" ar/itra/le issue, @2)A t$ey i.plea%e% i" t$e suit for res issio" t$e respo"%e"t lot /uyers 4$o are "eit$er parties to t$e Agree.e"t "or t$e latterBs assig"s or $eirs. Co"se;ue"tly, t$e rig$t to ar/itrate as provi%e% i" Arti le E' of t$e Agree.e"t 4as "ever veste% i" respo"%e"t lot /uyers. Respo"%e"t Laperal Realty, as a o"tra ti"g party to t$e Agree.e"t, $as t$e rig$t to o.pel petitio"ers to first ar/itrate /efore see7i"g Du%i ial relief. Ho4ever, to split t$e pro ee%i"gs i"to ar/itratio" for respo"%e"t Laperal Realty a"% trial for t$e respo"%e"t lot /uyers, or to $ol% trial i" a/eya" e pe"%i"g ar/itratio" /et4ee" petitio"ers a"% respo"%e"t Laperal Realty, 4oul% i" effe t result i" .ultipli ity of suits, %upli itous pro e%ure a"% u""e essary %elay. 2" t$e ot$er $a"%, it 4oul% /e i" t$e i"terest of Dusti e if t$e trial ourt $ears t$e o.plai"t agai"st all $erei" respo"%e"ts a"% a%Du%i ates petitio"ersB rig$ts as agai"st t$eirs i" a si"gle a"% o.plete pro ee%i"g. >H-&-4/&-, t$e i"sta"t petitio" is $ere/y GRAN#5D. #$e 2r%er %ate% August 1!, 1!!0 of &ra" $ 05 of t$e Regio"al #rial Court of Lipa City is $ere/y N=LL'9'5D a"% S5# AS'D5. Sai% ourt is $ere/y or%ere% to pro ee% 4it$ t$e $eari"g of Civil Case No. !0:))*(. Costs agai"st private respo"%e"ts. S/ /&D-&-D. Bellosillo, (Chairman), Buena, JJ., concur. Mendoza, Quisumbing, and

.%.&. 'o. 127))4. M"r19 11, 1(((3 'A5+/'AL S5--L C/&*/&A5+/', petitioner, vs. 5H&-%+/'AL 5&+AL C/U&5 /4 LA'A/ D-L '/&5-, !&A'CH 2, +L+%A' C+5< "n -. >+LL=/M -'5-&*&+S-S, +'C., respondents. D-C+S+/' *U&+S+MA, J.7 &efore t$e Court is a ,etitio" for Certiorari 4it$ ,rayer for ,reli.i"ary '"Du" tio" K #e.porary Restrai"i"g 2r%er u"%er Rule 65 of t$e Revise% Rules of Court assaili"g t$e %e isio" of t$e Regio"al #rial Court of La"ao %el Norte, &ra" $ 2, 'liga" City, o" t$e follo4i"g o"soli%ate% ases G 1a3 Spe ial ,ro ee%i"g Case No. 22)6 e"title% National Steel Cor oration vs !. "ill#om !nter rise $nc to Ea ate Ar/itrators A4ar%F a"%F

1/3 Civil Case No. 21!0 e"title% to !. "ill#om !nter rises $nc. vs National Steel Cor oration for Su. of +o"ey 4it$ appli atio" for Co"fir.atio" of Ar/itrators A4ar%. #$e fa ts as fou"% /elo4 are, as follo4sG LCCC 2" Nov. 10, 1!!2, petitio"er:%efe"%a"t 5%4ar% <il7o. 5"terprises '" . 15<5' for /revity3 toget$er 4it$ o"e Ra.iro Co"stru tio" a"% respo"%e"t:petitio"er Natio"al Steel Corporatio" 1NSC for s$ort3 eCe ute% a o"tra t 4$ere/y t$e for.er Doi"tly u"%ertoo7 t$e Co"tra t for Site Develop.e"t 15C$s. L3L K LDL3 for t$e latterMs '"tegrate% 'ro" a"% Steel +ills Co.pleC to /e esta/lis$e% at 'liga" City. So.eti.e i" t$e year 1!03, t$e servi es of Ra.iro Co"stru tio" 4as ter.i"ate% a"% o" +ar $ (, 1!03, petitio"er: %efe"%a"t 5<5' too7 over Ra.iroMs o"tra tual o/ligatio". Due to t$is a"% to ot$er auses %ee.e% suffi ie"t /y 5<5', eCte"sio"s of ti.e for t$e ter.i"atio" of t$e proDe t, i"itially agree% to /e fi"is$e% o" 8uly 1(, 1!03, 4ere gra"te% /y NSC. Differe" es later arose, ,lai"tiff:%efe"%a"t 5<5' file% Civil Case No. 1615 /efore t$e Regio"al #rial Court of La"ao %el Norte, &ra" $ )6, 15C$s. LAL a"% L1L3 prayi"g esse"tially for t$e pay.e"ts of ,*50,301.))1 4it$ i"terest fro. t$e ti.e of %elayF t$e pri e a%Dust.e"t as provi%e% /y ,D 15!*F a"% eCe.plary %a.ages i" t$e a.ou"t of ,5),))).)) a"% attor"eyMs fees. Defe"%a"t:petitio"er NSC file% a" a"s4er 4it$ ou"ter lai. to plai"tiffMs o.plai"ts o" +ay 10, 1!!). 2" August 21, 1!!), t$e Ho"ora/le Court t$roug$ ,resi%i"g 8u%ge Ealario +. Sala-ar upo" Doi"t .otio" of /ot$ parties $a% issue% a" or%er 15C$s. LCL a"% L3L3 %is.issi"g t$e sai% o.plai"t a"% ou"ter lai. C C C i" vie4 of t$e %esire of /ot$ parties to i.ple.e"t Se . 1! of t$e o"tra t, provi%i"g for a resolutio" of a"y o"fli t /y ar/itratio" C C C . 1 u"%ers ori"g supplie%3. '" a or%a" e 4it$ t$e aforesai% or%er, a"% pursua"t to Se . 1! of t$e Co"tra t for Site Develop.e"t 1i%3 t$e $erei" parties o"stitute% a" Ar/itratio" &oar% o.pose% of t$e follo4i"gG 1a3 5"gr. ,af"u io +. +eDia as C$air.a", 4$o 4as "o.i"ate% /y t$e t4o ar/itrators earlier "o.i"ate% /y 5<5' a"% NSC 4it$ a" 2at$ of 2ffi e 15C$. L5L3F 1/3 5"gr. 5uta;uio ). Lagapa, 8r., .e./er, 4$o 4as "o.i"ate% /y 5<5' 4it$ a" oat$ offi e 15C$. L9L3 1 3 5"gr. Gil A. A/erilia, a .e./er 4$o 4as "o.i"ate% /y NSC, 4it$ a" 2at$ of 2ffi e 15C$. LGL3. After series of $eari"gs, t$e Ar/itrators re"%ere% t$e %e isio" 15C$. LHL K L*L3 4$i $ is t$e su/De t .atter of t$ese prese"t auses of a tio", /ot$ i"itiate% separately /y t$e $erei" o"te"%i"g parties, su/sta"tial portio" of 4$i $ %ire ts NSC to pay 5<5', as follo4sG

1a3 ,*50,301.)) represe"ti"g 5<5'Ms last /illi"g No. 16 4it$ i"terest t$ereo" at t$e rate of 1:1J*N per .o"t$ fro. 8a"uary 1, 1!05 to a tual %ate of pay.e"tF 1/3 ,1,335,51*.2) represe"ti"g pri e es alatio" a%Dust.e"t u"%er ,D No. 15!*, 4it$ i"terest t$ereo" at t$e rate of 1:1J* N per .o"t$ fro. 8a"uary 1, 1!05 to a tual %ate of pay.e"tF 1 3 1%3 1e3 ,5),))) as a"% for eCe.plary %a.agesF ,35),))) as a"% for attor"eyMs fees.F a"% ,35,))).)) as a"% for ost of ar/itratio".L@1A

#$e Regio"al #rial Court of La"ao %el Norte &ra" $ 2, 'liga" City t$roug$ 8u%ge +aCi.o &. Ratu"il, re"%ere% Du%g.e"t as follo4sG 113 '" Civil Case No. 11:21!0, %e lari"g t$e a4ar% of t$e &oar% of Ar/itrators, %ate% April 21, 1!!2 to /e %uly A99'R+5D a"% C2N9'R+5D L en toto% F t$at a" e"try of Du%g.e"t /e e"tere% t$ere4it$ pursua"t to Repu/li A t No. 0(6 1t$e Ar/itratio" La43F a"% osts agai"st respo"%e"t Natio"al Steel Corporatio". 123 '" Spe ial ,ro ee%i"g No. 11:22)6, or%eri"g t$e petitio" to va ate t$e aforesai% a4ar% /e D'S+'SS5D. S2 2RD5R5D.@2A L <it$ t$e %e"ial o" 2 to/er 10, 1!!6 of its +otio" for Re o"si%eratio", t$e Natio"al Steel Corporatio" 1NSC3 $as o.e to t$is ourt via t$e prese"t petitio". After %eli/erati"g o" t$e petitio" as 4ell as t$e o..e"t a"% reply t$ereo", t$e ourt gave %ue ourse to t$e petitio" a"% o"si%ere% t$e ase ripe for %e isio". 59e p;vot o8 ;nBu;ry 9ere ;s A9et9er or not t9e loAer 1ourt "1te A;t9 :r"ve "#use o8 ;s1ret;on ;n not v"1"t;n: t9e "r#;tr"torCs "A"r . A stipulatio" to refer all future %isputes or to su/.it a" o"goi"g %ispute to a" ar/itrator is vali%. Repu/li A t 0(6, ot$er4ise 7"o4" as t$e Ar/itratio" La4, 4as e"a te% /y Co"gress si" e t$ere 4as a gro4i"g "ee% for a la4 regulati"g ar/itratio" i" ge"eral. #$e parties i" t$e prese"t ase, upo" e"teri"g i"to a Co"tra t for Site Develop.e"t, .utually agree% t$at a"y %ispute arisi"g fro. t$e sai% o"tra t s$all /e su/.itte% for ar/itratio". 5Cpli it is ,aragrap$ 1! of su/De t o"tra t, 4$i $ rea%sG L*"r":r"p9 1(. A&!+5&A5+/'. All %isputes ;uestio"s or %iffere" es 4$i $ .ay at a"y ti.e arise /et4ee" t$e parties $ereto i" o""e tio" 4it$ or relati"g to t$is Agree.e"t or t$e su/De t .atter $ereof, i" lu%i"g ;uestio"s of i"terpretatio" or o"stru tio", s$all /e referre% to a" Ar/itratio" &oar% o.pose% of t$ree 133 ar/itrators, o"e to /e appoi"te% /y ea $ party, a"% t$e t$ir%, to /e appoi"te% /y t$e t4o 123 ar/itrators. #$e appoi"t.e"t of ar/itrators a"% pro e%ure for ar/itratio" s$all /e gover"e% /y t$e provisio"s of t$e Ar/itratio" La4 1Repu/li A t No. 0(63. #$e &oar% s$all apply ,$ilippi"e La4 i" a%Du%i ati"g t$e %ispute. #$e %e isio" of a

.aDority of t$e .e./ers of t$e Ar/itratio" &oar% s$all /e vali%, /i"%i"g, fi"al a"% o" lusive upo" t$e parties, a"% fro. 4$i $ t$ere 4ill /e "o appeal, su/De t to t$e provisio"s o" va ati"g, .o%ifyi"g, or orre ti"g a" a4ar% u"%er t$e sai% Repu/li A t No. 0(6.@3A #$ereu"%er, if a %ispute s$oul% arise fro. t$e o"tra t, t$e Ar/itratio" &oar% s$all assu.e Duris%i tio" a"% o"%u t $eari"gs. After t$e &oar% o.es up 4it$ a %e isio", t$e parties .ay i..e%iately i.ple.e"t t$e sa.e /y treati"g it as a" a.i a/le settle.e"t. Ho4ever, if o"e of t$e parties refuses to o.ply or is %issatisfie% 4it$ t$e %e isio", $e .ay file a ,etitio" to Ea ate t$e Ar/itratorMs %e isio" /efore t$e trial ourt. 2" t$e ot$er $a"%, t$e 4i""i"g party .ay as7 t$e trial ourtMs o"fir.atio" to $ave su $ %e isio" e"for e%. 't s$oul% /e stresse% t$at volu"tary ar/itrators, /y t$e "ature of t$eir fu" tio"s, a t i" a ;uasi:Du%i ial apa ity. @*A As a rule, fi"%i"gs of fa ts /y ;uasi:Du%i ial /o%ies, 4$i $ $ave a ;uire% eCpertise /e ause t$eir Duris%i tio" is o"fi"e% to spe ifi .atters, are a or%e% "ot o"ly respe t /ut eve" fi"ality if t$ey are supporte% /y su/sta"tial evi%e" e, @5A eve" if "ot over4$el.i"g or prepo"%era"t.@6A As t$e petitio"er $as availe% of Rule 65, t$e Court 4ill "ot revie4 t$e fa ts fou"% "or eve" of t$e la4 as i"terprete% or applie% /y t$e ar/itrator u"less t$e suppose% errors of fa ts or of la4 are so pate"t a"% gross a"% preDu%i ial as to a.ou"t to a grave a/use of %is retio" or a" e&cess de ouvoir o" t$e part of t$e ar/itrators.@(A #$us, i" a ,etitio" to Ea ate Ar/itratorMs De isio" /efore t$e trial ourt, regularity i" t$e perfor.a" e of offi ial fu" tio"s is presu.e% a"% t$e o.plai"i"g party $as t$e /ur%e" of provi"g t$e eCiste" e of a"y of t$e grou"%s for va ati"g t$e a4ar%, as provi%e% for /y Se tio"s 2* of t$e Ar/itratio" La4, to 4itG LSe1. 24 %&/U'DS 4/& ,ACA5+'% 5H- A>A&D : '" a"y o"e of t$e follo4i"g ases, t$e ourt .ust .a7e a" or%er va ati"g t$e a4ar% upo" t$e petitio" of a"y party to t$e o"troversy 4$e" su $ party proves affir.atively t$at i" t$e ar/itratio" pro ee%i"gsG 1a3 #$e a4ar% 4as pro ure% /y orruptio", frau% or ot$er u"%ue .ea"sF 1/3 #$at t$ere 4as evi%e"t partiality or ar/itrators of a"y of t$e.F or orruptio" i" t$e

,etitio" to Ea ate t$e Ar/itratio" A4ar% a"% 4$i $ petitio"er is reiterati"g i" t$is petitio" u"%er s ruti"y. ,etitio"erMs allegatio" t$at t$ere 4as evi%e"t partiality is u"te"a/le. 't is a"e.i of evi%e"tiary support. '" t$e ase of 'damson vs. Court o( ' eals, 232 SCRA 6)2, i" up$ol%i"g t$e %e isio" of t$e &oar% of Ar/itrators, t$is Court rule% t$at t$e fa t t$at a party 4as %isa%va"tage% /y t$e %e isio" of t$e Ar/itratio" Co..ittee %oes "ot prove evi%e"t partiality. ,roofs ot$er t$a" .ere i"fere" e are "ee%e% to esta/lis$ evi%e"t partiality. Here, petitio"er .erely averre% evi%e"t partiality 4it$out a"y proof to /a 7 it up. ,etitio"er 4as "ever %eprive% of t$e rig$t to prese"t evi%e" e "or 4as t$ere a"y s$o4i"g t$at t$e &oar% s$o4e% sig"s of a"y /ias i" favor of 5<5'. As orre tly fou"% /y t$e trial ourtG L#$ir%ly, t$is Court a""ot fi"% its 4ay to support NSCMs o"te"tio" t$at t$ere 4as evi%e"t partiality i" t$e assaile% A4ar% of t$e Ar/itrator i" favor of t$e respo"%e"t /e ause t$e o" lusio" of t$e &oar%, 4$i $ t$e Court fou"% to /e 4ell: fou"%e%, is fully supporte% /y su/sta"tial evi%e" e, as follo4sG LCCC #$e testi.o"ies of 4it"esses fro. /ot$ parties 4ere $ear% to larify fa ts a"% to t$reas$ 1si 3 out t$e %ispute i" t$e $eari"gs. =po" .otio" /y NSC ou"sel, t$e $eari"g of testi.o"y fro. 4it"esses 4as ter.i"ate% o" 22 8a"uary 1!!2. #o e"% t$e testi.o"ies i" t$e $eari"g /ot$ litiga"t parties upo" ;uery /y Ar/itrator:C$air.a" freely %e lare% t$at t$ere $as /ee" "o partiality i" t$e .a""er t$e Ar/itrators o"%u te% t$e $eari"g, t$at t$ere $as /ee" "o i"sta" e, 4$ere Ar/itrators refuse% to postpo"e re;ueste% or to $earJa ept evi%e" e perti"e"t a"% .aterial to t$e %ispute. CCC 1u"%ers ori"g supplie%3 ,are"tet$i ally, a"% i" t$e lig$t of t$e re or% a/ove:.e"tio"e%, t$is Court $ere/y $ol%s t$at t$e &oar% of Ar/itrators %i% "ot o..it a"y Mevi%e"t partialityM i.pute% /y petitio"er NSC. A/ove all, t$is Court .ust sustai" t$e sai% %e isio" for it is a 4ell settle% rule t$at t$e a tual fi"%i"gs of a" a%.i"istrative /o%y s$oul% /e affir.e% if t$ere is su/sta"tial evi%e" e to support t$e. a"% t$e o" lusio"s state% i" t$e %e isio" are "ot learly agai"st t$e la4 a"% Durispru%e" e si.ilar to t$e i"sta"t ase. He" efort$, every reaso"a/le i"te"%.e"t 4ill /e i"%ulge% to give effe t su $ pro ee%i"gs a"% i" favor of t$e regulatory a"% i"tegrity of t$e ar/itrators a t. 1Corpus 8uris, Eol. 5, p. 2)3L@0A '"%ee%, t$e allegatio" of evi%e"t partiality is "ot 4ell: ta7e" /e ause t$e petitio"er faile% to su/sta"tiate t$e sa.e. A"e"t t$e issue of .ista7e" appre iatio" of fa ts a"% la4 of t$e ase, t$e petitio"er t$eori-es t$at t$e a4ar%s .a%e /y t$e &oar% 4ere u"su/sta"tiate% a"% t$e sa.e 4ere a plai" .isappli atio" of t$e la4 a"% eve" o"trary to Durispru%e" e. #o $ave a learer u"%ersta"%i"g of t$e petitio", t$is Court 4ill try to %is uss i"%ivi%ually t$e a4ar%s .a%e /y t$e &oar%, a"% %eter.i"e if t$ere 4as grave a/use of %is retio" o" t$e part of t$e trial ourt 4$e" it a%opte% su $ a4ar%s in toto.

1 3 #$at t$e ar/itrators 4ere guilty of .is o"%u t i" refusi"g to postpo"e t$e $eari"g upo" suffi ie"t ause s$o4", or i" refusi"g to $ear evi%e" e perti"e"t a"% .aterial to t$e o"troversyF t$at o"e or .ore of t$e ar/itrators 4as %is;ualifie% to a t as su $ u"%er se tio" "i"e $ereof, a"% 4ilfully refrai"e% fro. %is losi"g su $ %is;ualifi atio" or of a"y ot$er .is/e$avior /y 4$i $ t$e rig$ts of a"y party $ave /ee" .aterially preDu%i e%F or 1%3 #$at t$e ar/itrators eC ee%e% t$eir po4ers, or so i.perfe tly eCe ute% t$e., t$at a .utual, fi"al a"% %efi"ite a4ar% upo" t$e su/De t .atter su/.itte% to t$e. 4as "ot .a%e. CCCL #$e grou"%s relie% upo" /y t$e petitio"er 4ere t$e follo4i"g 1a3 #$at t$ere 4as evi%e"t partiality i" t$e assaile% %e isio" of t$e Ar/itrators i" favor of t$e respo"%e"tF a"% 1/3 #$at t$ere 4as .ista7e" appre iatio" of t$e fa ts a"% appli atio" of t$e la4 /y t$e Ar/itrators. #$ese 4ere t$e very sa.e grou"%s allege% /y NSC /efore t$e trial ourt i" t$eir

+.

P458,381.00 representing EWEI's last billing No. 16

it! interest t!ereon at t!e rate o" 1 1#4$

per %ont! "ro% Jan&ar' 1, 1(85 to a)t&al date o" pa'%ent*

,etitio"er see7s to /ar pay.e"t of t$e sai% a.ou"t to 5<5'. Si" e t$e latter faile% to o.plete t$e 4or7s as agree%

upo", NSC $a% t$e rig$t to 4it$$ol% su $ a.ou"t. #$e sa.e 4ill /e use% to over t$e ost %iffere"tial pai% to a"ot$er o"tra tor 4$o fi"is$e% t$e 4or7 allege%ly left u" o.plete% /y 5<5'. Sai% 4or7 ost NSC ,1,225,))), a"% s$oul% /e .a%e $argea/le to 5<5'Ms re eiva/les o" 9i"al &illi"g No. 16 issue% to NSC. #$e ;uery $ere t$erefore is 4$et$er t$ere 4as failure o" t$e part of 5<5' to o.plete t$e 4or7 agree% upo". #$is 4ill %eter.i"e 4$et$er 9i"al &illi"g No. 16 a" /e .a%e $argea/le to t$e ost %iffere"tial pai% /y NSC to a"ot$er o"tra tor. After a series of $eari"gs, t$e &oar% of Ar/itrators o" lu%e% t$at t$e 4or7 4as o.plete% /y 5<5'. As orre tly state%G L#o aut$e"ti ate t$e eCte"t of u"fi"is$e% 4or7, ;ua"tity, u"it ost %iffere"tial a"% a.ou"t, NSC 4as re;uire% to su/.it opies of pay.e"t vou $ers a"%Jor Do/ a4ar%s eCte"%e% to t$e ot$er o"tra tor e"gage% to o.plete t$e 4or7s. #$e /est efforts /y NSC %espite t$e .ultipli ity of a ou"ti"gJau%iti"gJe"gi"eeri"g re or%s re;uire% i" a orporate o.pleC faile% to pro%u e %o u.e"tary proofs fro. t$eir 'liga" or +a7ati offi e %espite repeate% re;uests. NSC faile% to su/sta"tiate su $ allusio" of o.pletio" /y a"ot$er o"tra tor t$ree u"fi"is$e% ite.s of 4or7s, a tual ;ua"tities a o.plis$e% a"% u"it ost %iffere"tial pai% $argea/le agai"st 5<5'. CCC CCC CCC

C2S# 9R2+ 5<5' 92R #H5 SA+5 =NS=&S#AN#'A#5D <2R> D2N5 &6 AN2#H5R C2N#RAC#2R.L 1ANN5O LCL AR&'#RA#'2N, page 06:00 of Rollo.3 9urt$er.ore, u"%er t$e o"tra t sue% upo", it is lear t$at s$oul% t$e 24"er feel t$at t$e 4or7 agree% upo" 4as "ot o.plete% /y t$e o"tra tor, it is i" u./e"t upo" t$e 2<N5R to se"% to C2N#RAC#2R a letter 4it$i" seve" 1(3 %ays after o.pletio" of t$e i"spe tio" to spe ify t$e o/De tio"s t$ereto@!A NSC faile% to o.ply 4it$ su $ re;uire.e"t, a"% t$erefore it 4oul% /e u"fair to refuse pay.e"t to 5<5', o"si%eri"g t$at t$e latter $a% fait$fully su/.itte% 9i"al &illi"g No.16 /elievi"g t$at its 4or7 $a% /ee" o.plete% /e ause NSC %i% "ot all its atte"tio" to a"y o/De tio"a/le aspe t of t$eir proDe t. &ut, 4$at a""ot /e up$el% is t$e &oar%Ms i.positio" of a 1:1J*N i"terest per .o"t$ fro. 8a"uary 1, 1!05 to a tual %ate of pay.e"t. #$ere is "ot$i"g i" t$e sai% o"tra t to Dustify or aut$ori-e su $ a" a4ar%. #$e trial ourt s$oul% $ave t$erefore %isregar%e% t$e sa.e a"% i"stea%, applie% t$e legal rate of 6N per a""u., fro. 8a". 1, 1!05 u"til t$is %e isio" /e o.es fi"al a"% eCe utory. #$is is so /e ause t$e legal rate of i"terest o" .o"etary o/ligatio"s "ot arisi"g fro. loa"s or fore/eara" e of re%its or goo%s is 6N@1)A per a""u. i" t$e a/se" e of a"y stipulatio" to t$e o"trary.

+II,

Pri)e es)alation

it! t!e interest rate o" 1-1#4$ per %ont! "ro% 1 Jan&ar' 1(85 to a)t&al date

o" pa'%ent.

#$e latest evaluatio" o" re or% of t$e ite.s of 4or7 o.plete% /y 5<5' u"%er t$e o"tra t is %ra4" fro. t$e NSC report 15C$i/it L11:%L3 %ate% 12 Nove./er 1!05 su/.itte% 4it$ t$e 5<5' &illi"g No. 16:9i"al i" t$e ourse of pro essi"g lai. o" ite.s of 4or7 a o.plis$e%. #$ere is "o su $ report or .e"tio" of u"fi"is$e% 4or7 of !),))) +# of %u.pe% riprap, 1)),))) u. .. of site gra%i"g a"% 3)),))) u. .. of sprea%i"g o..o" eC avate% .aterials i" t$e 5<5' o"tra t allu%e% to /y t$e NSC as u"fi"is$e% 4or7 ot$er4ise 5<5' &illi"g No. 16: 9i"al 4oul% "ot $ave passe% pro essi"g for pay.e"t u"less t$ere is really "o su $ u"fi"is$e% 4or7 NSC evaluatio" report 4it$ "o a%verse fi"%i"gs of u"fi"is$e% 4or7 o"si%er t$e o"tra t as o.plete%. #o affir. t$e 4or7 ite.s, ;ua"tity, u"it ost %iffere"tial a"% a.ou"t of u"fi"is$e% 4or7 left /e$i"% /y 5<5', NSC i" servi"g "oti e of o"tra t ter.i"atio" to 5<5' s$oul% $ave i"stea% spe ifi ally ite% t$ese o/ligatio"s i" %etail for 5<5' to perfor.J o.ply 4it$i" 3) %ays, su $ failure to perfor.J o.ply s$oul% $ave o"stitute% as a" eve"t i" %efault t$at 4oul% $ave Dustifie% ter.i"atio" of o"tra t of NSC 4it$ 5<5'. 'f at all, t$is u"fi"is$e% 4or7 .ay /e a%%itio"alJeCtra 4or7 a4ar%e% i" 1!0* to a"ot$er o"tra tor at pri es $ig$er t$a" t$e u"it pri e te"%ere% /y 5<5' i" 1!02 a"%Jor t$e %is repa" y /et4ee" a tual ;ua"tities of 4or7 a o.plis$e% per pla"s versus esti.ate% ;ua"tities of 4or7 overe% /y separate o"tra t as eCpa"sio" of t$e origi"al proDe t.L CCC CCC CCC

,etitio"er o"te"%s t$at 5<5' is "ot e"title% to pri e es alatio" a/se"t a"y stipulatio" to t$at effe t i" t$e o"tra t u"%er 4$i $, t$e o"tra t pri e is fiCe%, iti"g ,aragrap$ 2 t$ereof, 4$i $ stipulatesG 2. C/'5&AC5 *&+C- : CCC CCC #$e appli a/le u"it pri es a/ove fiCe% are /ase% o" t$e assu.ptio" t$at t$e %isposal areas for leare%, gru//e% .aterials, %e/ris, eC ess filli"g .aterials a"% ot$er .atters t$at are to /e %ispose% of or are 4it$i" t$e /ou"%ary li.its of t$e site, as %esig"ate% i" A""eC A $ereof. '" t$e eve"t t$at %isposal areas fiCe% a"% %esig"ate% i" A""eC A are %iverte% a"% tra"sferre% to su $ ot$er areas as 4oul% /e outsi%e t$e li.its of t$e site as 4oul% re;uire a%%itio"al osts to t$e o"tra tor, t$e" 24"er s$all /e lia/le for su $ a%%itio"al $auli"g osts of ,1.*5J7.J.3.L 1A""eC LAL, Co"tra t for Site Develop.e"t, page 55 of Rollo3 #$e p$rase Lpri es a/ove fiCe%L .ea"s t$at t$e o"tra t pri e of t$e 4or7 s$all /e t$at agree% upo" /y t$e parties at t$e ti.e of t$e eCe utio" of t$e o"tra t, 4$i $ is t$e la4 /et4ee" t$e. provi%e% it is "ot o"trary to la4, .orals, goo% usto.s, pu/li or%er, or pu/li poli y. 1Arti le 13)6, Ne4 Civil Co%e3. 't a""ot /e i"ferre% t$erefro., $o4ever, t$at t$e parties are pro$i/ite% fro. i.posi"g future i" reases or pri e es alatio". 't is a ar%i"al rule i" t$e i"terpretatio" of o"tra ts t$at Lif t$e ter.s of a o"tra t are lear a"% leave "o %ou/t upo" t$e i"te"tio" of t$e o"tra ti"g parties, t$e literal .ea"i"g of its stipulatio"s s$all o"trol.L@11A &ut pri e es alatio" is eCpressly allo4e% u"%er ,resi%e"tial De ree 15!*, 4$i $ la4 allo4s pri e es alatio" i" all o"tra ts i"volvi"g gover".e"t proDe ts i" lu%i"g o"tra ts e"tere% i"to /y gover".e"t e"tities a"% i"stru.e"talities a"% Gover".e"t 24"e% or Co"trolle% Corporatio"s 1G2CCs3. 't is a /asi rule i" o"tra ts t$at t$e la4 is %ee.e% 4ritte" i"to t$e

'N E'5< 29 #H5 92R5G2'NG, #H5 S2:CALL5D =N9'N'SH5D <2R>S 'N #H5 C2N#RAC# &6 5<5' ALL=D5D #2 &6 NSC 'S N2# C2NS'D5R5D AN 2&L'GA#'2N #2 ,5R92R+JC2+,L6 #H=S A&S2LE'NG 5<5' 29 AN6 9A'L=R5 #2 ,5R92R+JC2+,L6 AND #H5R592R5 CANN2# &5 AEA'L5D 29 AS A R'GH# 2R R5+5D6 &6 NSC #2 R5C2E5R =N'# D'995R5N#'AL

o"tra t /et4ee" t$e parties. A"% 4$e" t$ere is "o pro$i/itory lause o" pri e es alatio", t$e Court 4ill allo4 pay.e"t t$erefor. #$us, petitio"er a""ot rely o" t$e ase of )lama *evelo ment Cor oration vs. Court o( ' eals and National Steel Cor oration, +, --./0, ,esolution, 1hird *ivision, 2. Se t 3/-/. 't is "ot appli a/le $ere si" e i" t$at ase, t$e o"tra t eCpli itly provi%e% t$at t$e o"tra t pri e stipulate% 4as fiCe%, i" lusive of all osts a"% not su#De1t to es1"l"t;on, 1e.p$asis supplie%3. #$is, i" effe t, 4aive% t$e provisio"s of ,D 15!*. #$e ase u"%er s ruti"y is %iffere"t as t$e %ispute% o"tra t %oes "ot o"tai" a si.ilar provisio". '" a vai" atte.pt to eva%e sai% la4Ms appli atio", t$ey 4oul% li7e t$e Court to /elieve t$at it is a" a ;uire% asset orporatio" a"% "ot a gover".e"t o4"e% or o"trolle% orporatio" so t$at t$ey are "ot 4it$i" t$e overage of ,D 15!*. <$et$er NSC is a" asset:a ;uire% orporatio" or a gover".e"t o4"e% or o"trolle% orporatio" is of "o .o.e"t. 't is "ot %eter.i"ative of t$e pivot of i";uiry. 't /ears e.p$asi-i"g t$at %uri"g t$e $eari"gs o"%u te% /y t$e &oar% of Ar/itrators, t$ere 4as prese"te% %o u.e"tary evi%e" e to s$o4 t$at NSC, %espite its /ei"g allege%ly a" asset a ;uire% orporatio", allo4e% pri e es alatio" to a"ot$er o"tra tor, Geo #ra"sport a"% Co"stru tio", '" . 1G#C'3. As sai% i" t$e %e isio" of t$e &oar% of Ar/itratorsG L2" t$e ot$er $a"%, t$ere 4as %o u.e"tary evi%e" e prese"te% t$at NSC gra"te% Geo #ra"sport a"% Co"stru tio", '" . 1G#C'3, t$e ot$er favore% o"tra tor 4or7i"g si%e /y si%e 4it$ 5<5' o" t$e site %evelop.e"t proDe t %uri"g t$e sa.e perio% t$e G#C5 4as gra"te% upo" re;uest a"% pai% /y NSC a" a tual su. of ,6.! .illio" as pri e a%Dust.e"t o.pe"satio" eve" 4it$out t$e /e"efit of es alatio" provisio" i" t$e o"tra t /ut allo4e% i" a or%a" e 4it$ ,D N2. 15!* e"for ea/le a.o"g gover".e"t o"trolle% or o4"e% orporatio". #$e state.e"t is e./o%ie% i" a" affi%avit 15C$i/it L111:$L3 su/.itte% /y affia"t 8ose +. +esi"a, Asst. to t$e ,resi%e"t a"% Legal Cou"sel of G#C', su/.itte% to t$e Ar/itrators upo" soli itatio" of 5<5', opy to NSC, o" 3 2 to/er 1!!1. NSC %i% "ot assail t$e affi%avit upo" re eipt of su $ %o u.e"t as evi%e" e u"til t$e $eari"g of 1! De e./er 1!!1 4$e" t$e affi%avit 4as /ra"%e% /y NSC ou"sel as i" orre t a"% $earsay. <it$i" ( %ays regla.e"tary perio% after re eipt of affi%avit i" 3 2 to/er 1!!1, t$e NSC $a% t$e re ourse to o"test t$e affi%avit eve" prefera/ly $arge t$e affia"t for sla"%er if NSC oul% %isprove t$e state.e"ts as u"true.L@12A 'f ,etitio"er see7s to refute su $ evi%e" e, it s$oul% $ave %o"e so /efore t$e &oar% of Ar/itrators, %uri"g t$e $eari"gs. #o raise t$e issue "o4 is futile. Ho4ever, t$e sa.e li"e of reaso"i"g 4it$ respe t to t$e first a4ar% s$oul% /e use% i" %isregar%i"g t$e i"terest rate of 1:1J*N. #$e legal rate of 6N per a""u. s$oul% /e si.ilarly applie% to t$e pri e es alatio" to /e o.pute% fro. 8a". 1, 1!05 u"til t$is %e isio" /e o.es fi"al a"% eCe utory.

as a .atter of rig$t, t$eir %eter.i"atio" %epe"%i"g upo" t$e a.ou"t of o.pe"satory %a.ages t$at .ay /e a4ar%e% to t$e lai.a"tF 133 t$e a t .ust /e a o.pa"ie% /y /a% fait$ or %o"e i" a 4a"to", frau%ule"t, oppressive or .alevole"t .a""er.@13A 5<5' a""ot lai. t$at NSC a te% i" /a% fait$ or i" a 4a"to" .a""er 4$e" it refuse% pay.e"t of t$e 9i"al &illi"g No. 16. #$e /elief t$at t$e 4or7 4as "ever o.plete% /y 5<5' a"% t$at it 1NSC3 $a% t$e rig$t to .a7e it $argea/le to t$e ost %iffere"tial pai% /y t$e latter to a"ot$er o"tra tor 4as "eit$er 4a"to" "or %o"e i" evi%e"t /a% fait$. #$e pay.e"t of legal rate of i"terest 4ill suffi e to o.pe"sate 5<5' of 4$atever preDu%i e it suffere% /y reaso" of t$e %elay ause% /y NSC. As regar%s t$e a4ar% of attor"eyMs fees, a4ar% for attor"eyMs fees 4it$out Dustifi atio" is a L o" lusio" 4it$out a pre.ise, its /asis /ei"g i.properly left to spe ulatio" a"% o"De" ture.@1*A #$e LfiCe% ou"selMs feeL of,35),))) s$oul% /e %isallo4e%. #$e trial ourt a te% 4it$ grave a/use of %is retio" 4$e" it a%opte% t$e sa.e in toto. >H-&-4/&-, t$e a4ar%s .a%e /y t$e &oar% of Ar/itrators 4$i $ t$e trial ourt a%opte% i" its %e isio" of 8uly 31,1!!6, are .o%ifie%, t$usG 113 #$e a4ar% of ,*(*,(0).23 for &illi"g No. 16: 9i"al a"% ,1,335,51*.2) for pri e a%Dust.e"t s$all /e pai% 4it$ legal i"terest of siC 16 N3 per e"t per a""u., fro. 8a"uary 1, 1!05 u"til t$is %e isio" s$all $ave /e o.e fi"al a"% eCe utoryF 123 #$e a4ar% of ,5),))) for eCe.plary %a.ages a"% attor"eyMs fees of ,35),))) are %elete%F a"% 133 #$e ost of ar/itratio" of ,35,))) to supple.e"t ar/itratio" agree.e"t $as to /e pai%. No pro"ou" e.e"t as to osts. S/ /&D-&-D. ,omero (Chairman), Vitug, 4anganiban, a"% +onzaga5 ,e6es, JJ., o" ur. .%.&. 'o. 121171. De1e2#er 2(, 1((83 ASS-5 *&+,A5+?A5+/' 5&US5, petitioner, vs., C/U&5 /4 A**-ALS, 6-SUS S. CA!A&&US, S&., 6-SUS S. CA!A&&US, 6&., 6A+M- 5. CA!A&&US, 6/SM+%U-L CA!A&&US, AL-6A'D&/ S. *AS5/&, 6&., A'5/'+/ U. M+&A'DA, "n M+%U-L M. A'5/'+/, "s M;nor;ty Sto1E Hol ers o8 M"r;n uBue M;n;n: "n +n ustr;"l Corpor"t;on, respondents. D-C+S+/' =A*U'A', J.7

+III,

.!e a ard o" P50,000 as e/e%plar' da%ages and P350,000 as attorne''s "ees*

#$e eCe.plary %a.ages a"% attor"eys fees a4ar%e% /y t$e &oar% of Ar/itrators s$oul% /e %elete% i" lig$t of t$e ir u.sta" es surrou"%i"g t$e ase. #$e re;uire.e"ts for a" a4ar% of eCe.plary %a.ages, areG 113 t$ey .ay /e i.pose% /y 4ay of eCa.ple i" a%%itio" to o.pe"satory %a.ages, a"% o"ly after t$e lai.a"ts rig$t to t$e. $as /ee" esta/lis$e%F 123 t$at t$ey a""ot /e re overe%

#$e petitio" for revie4 o" certiorari /efore us see7s us to reverse a"% set asi%e t$e %e isio" of t$e Court of Appeals 4$i $ %e"ie% %ue ourse to t$e petitio" for certiorari file% /y t$e Asset ,rivati-atio" #rust 1A,#3 assaili"g t$e or%er of t$e Regio"al #rial Court 1R#C3 &ra" $ 62, +a7ati City. #$e +a7ati R#CBs or%er up$el% a"% o"fir.e% t$e a4ar% .a%e /y t$e Ar/itratio" Co..ittee i" favor of +ari"%u;ue +i"i"g a"% '"%ustrial Corporatio" 1++'C3 a"% agai"st t$e Gover".e"t, represe"te% /y $erei" petitio"er A,# for %a.ages i" t$e

a.ou"t of ,2.5 &'LL'2N 1or approCi.ately ,*.5 &'LL'2N, i" lu%i"g i"terest3. 'ro"i ally, t$e staggeri"g a.ou"t of %a.ages 4as i.pose% o" t$e Gover".e"t for eCer isi"g its legiti.ate rig$t of fore losure as re%itor agai"st t$e %e/tor ++'C as a o"se;ue" e of t$e latterBs failure to pay its over%ue a"% u"pai% o/ligatio" of ,22 /illio" to t$e ,$ilippi"e Natio"al &a"7 1,N&3 a"% t$e Develop.e"t &a"7 of t$e ,$ilippi"es 1D&,3.

59e "nte1e ent 8"1ts o8 t9e 1"se

#$e %evelop.e"t, eCploratio" a"% utili-atio" of t$e .i"eral %eposits i" t$e Surigao +i"eral Reservatio" $ave /ee" aut$ori-e% /y Repu/li A t No. 1020, as a.e"%e% /y Repu/li A ts No. 2)(( a"% *16(, /y virtue of 4$i $ la4s, a +e.ora"%u. of Agree.e"t 4as %ra4" o" 8uly 3, 1!60, 4$ere/y t$e Repu/li of t$e ,$ilippi"es t$ru t$e Surigao +i"eral Reservatio" &oar%, gra"te% ++'C t$e eC lusive rig$t to eCplore, %evelop a"% eCploit "i 7el, o/alt a"% ot$er .i"erals i" t$e Surigao .i"eral reservatio".@1A ++'C is a %o.esti orporatio" e"gage% i" .i"i"g 4it$ respo"%e"ts 8esus S. Ca/arrus, Sr. as ,resi%e"t a"% a.o"g its origi"al sto 7$ol%ers. #$e ,$ilippi"e Gover".e"t u"%ertoo7 to support t$e fi"a" i"g of ++'C /y pur $ase of ++'C %e/e"ture a"% eCte"sio" of guara"tees. 9urt$er, t$e ,$ilippi"e Gover".e"t o/tai"e% a fir., o..it.e"t fro. t$e D&, a"%Jor ot$er gover".e"t fi"a" i"g i"stitutio"s to su/s ri/e% i" ++'C a"% issue guara"teeJs for foreig" loa"s or %eferre% pay.e"t arra"ge.e"ts se ure% fro. t$e =S 5Ci./a"7, Asia" Develop.e"t &a"7, >o/e Steel, of a.ou"t "ot eC ee%i"g =SP1)) +illio".@2A D&, approve% guara"tees i" favor of ++'C a"% su/se;ue"t re;uests for guara"tees 4ere /ase% o" t$e u"utili-e% portio" of t$e Gover".e"t o..it.e"t. #$ereafter, t$e Gover".e"t eCte"%e% a o..o%atio"s to ++'C i" various a.ou"ts. 2" 8uly 13, 1!01, ++'C, ,N& a"% D&, eCe ute% a +ortgage #rust Agree.e"t@3A 4$ere/y ++'C, as .ortgagor, agree% to o"stitute a .ortgage i" favor of ,N& a"% D&, as .ortgagees, over all ++'CBs assets, su/De t of real estate a"% $attel .ortgage eCe ute% /y t$e .ortgagor, a"% a%%itio"al assets %es ri/e% a"% i%e"tifie%, i" lu%i"g assets of 4$atever 7i"%, "ature or %es riptio", 4$i $ t$e .ortgagor .ay a ;uire 4$et$er i" su/stitutio" of, i" reple"is$.e"t, or i" a%%itio" t$ereto. Arti le 'E of t$e +ortgage #rust Agree.e"t provi%es for 5ve"ts of Default, 4$i $ eCpressly i" lu%es t$e eve"t t$at t$e +2R#GAG2R s$all fail to pay a"y a.ou"t se ure% /y t$is +ortgage #rust Agree.e"t 4$e" %ue.@*A Arti le E of t$e +ortgage #rust Agree.e"t pres ri/es i" %etail, a"% i" a%%itio" to t$e e"u.erate% eve"ts of %efaults, ir u.sta" es /y 4$i $ t$e .ortgagor .ay /e %e lare% i" %efault, t$e pro e%ure t$erefor, 4aiver of perio% to fore lose, aut$ority of #rustee /efore, %uri"g a"% after fore losure, i" lu%i"g ta7i"g possessio" of t$e .ortgage% properties.@5A '" various re;uest for a%va" esJre.itta" es of loa"s of $uge a.ou"ts, Dee%s of ="%erta7i"gs, ,ro.issory Notes, Loa"s Do u.e"ts, Dee%s of Real 5state +ortgages, ++'C i"varia/ly o..itte% to pay eit$er o" %e.a"% or u"%er ertai" ter.s t$e loa"s a"% a o..o%atio"s se ure% fro. or guara"tee% /y /ot$ D&, a"% ,N&.

&y 1!0*, D&, a"% ,N&Bs fi"a" ial eCposure /ot$ i" loa"s a"% i" e;uity i" ++'C $a% rea $e% tre.e"%ous proportio"s, a"% ++'C 4as $avi"g a %iffi ult ti.e .eeti"g its fi"a" ial o/ligatio"s. ++'C $a% a" outsta"%i"g loa" 4it$ D&, i" t$e a.ou"t of ,13,(!2,6)(,565.!2 as of August 31, 1!0* a"% i" t$e a.ou"t of ,0,(0!,)20,2*!.30 as of 8uly 15, 1!0* or a total Gover".e"t eCposure of #4e"ty #4o &illio" SiC Hu"%re% SiCty:5ig$t +illio" 9ive Hu"%re% #$irty:Seve" #$ousa"% Seve" Hu"%re% Seve"ty a"% )5J1)) 1,22,660,53(,(().)53, ,$ilippi"e Curre" y.@6A #$us, a fi"a" ial restru turi"g pla" 19R,3 %esig"e% to re%u e ++'CMB i"terest eCpe"se t$roug$ %e/t o"versio" to e;uity 4as %rafte% /y t$e Sy ip Gorres Eelayo a ou"ti"g fir.. @(A 2" April 3), 1!0*, t$e 9R, 4as approve% /y t$e &oar% of Dire tors of t$e ++'C.@0A Ho4ever, t$e propose% 9R, $a% "ever /ee" for.ally a%opte%, approve% or ratifie% /y eit$er ,N& or D&,.@!A '" August a"% Septe./er 1!0*, as t$e various loa"s a"% a%va" es .a%e /y D&, a"% ,N& to ++'C $a% /e o.e over%ue a"% si" e a"y restru turi"g progra. relative to t$e loa"s 4as "o lo"ger feasi/le, a"% i" o.plia" e 4it$ t$e %ire tive of ,resi%e"tial De ree No. 305, D&, a"% ,N& as .ortgagees of ++'C assets, %e i%e% to eCer ise t$eir rig$t to eCtraDu%i ially fore lose t$e .ortgages i" a or%a" e 4it$ t$e +ortgage #rust Agree.e"t.@1)A #$e fore lose% assets 4ere sol% to ,N& as t$e lo"e /i%%er a"% 4ere assig"e% to t$ree "e4ly for.e% orporatio"s, "a.ely, No"o +i"i"g Corporatio", +ari alu. +i"i"g a"% '"%ustrial Corporatio", a"% 'sla"% Ce.e"t Corporatio". '" 1!06, t$ese assets 4ere tra"sferre% to t$e Asset ,rivati-atio" #rust 1A,#3.@11A 2" 9e/ruary 20, 1!05, 8esus S. Ca/arrus, Sr., toget$er 4it$ t$e ot$er sto 7$ol%ers of ++'C, file% a %erivative suit agai"st D&, a"% ,N& /efore t$e R#C of +a7ati, &ra" $ 62, for A""ul.e"t of 9ore losures, Spe ifi ,erfor.a" e a"% Da.ages.@12A #$e suit, %o 7ete% as Civil Case No. !!)), praye% t$at t$e ourtG 113 a""ul t$e fore losure, restore t$e fore lose% assets to ++'C, a"% re;uire t$e /a"7s to a ou"t for t$eir use a"% operatio" i" t$e interimF 123 %ire t t$e /a"7s to $o"or a"% perfor. t$eir o..it.e"ts u"%er t$e allege% 9R,F a"% 133 pay .oral a"% eCe.plary %a.ages, attor"eyBs fees, litigatio" eCpe"ses a"% osts. '" t$e ourse of t$e trial, private respo"%e"ts a"% petitio"er A,#, as su essor of t$e D&, a"% ,N&Bs i"terest i" ++'C, .utually agree% to su/.it t$e ase to ar/itratio" /y e"teri"g i"to a HCo.pro.ise a"% Ar/itratio" Agree.e"t,I stipulati"g, inter aliaG N2<, #H5R592R5, for a"% i" o"si%eratio" of t$e foregoi"g pre.ises a"% t$e .utual ove"a"ts o"tai" $erei", t$e parties agree% as follo4sG 1. <it$%ra4al a"% Co.pro.ise. #$e parties $ave agree% to 4it$%ra4 t$eir respe tive lai.s fro. t$e #rial Court a"% to resolve t$eir %ispute t$roug$ ar/itratio" /y prayi"g to t$e #rial Court to issue a Co.pro.ise 8u%g.e"t /ase% o" t$is Co.pro.ise a"% Ar/itratio" Agree.e"t. '" 4it$%ra4i"g t$eir %ispute for. t$e ourt a"% i" $oosi"g to resolve it t$roug$ ar/itratio", t$e parties $ave agree% t$atG 1a3 t$eir respe tive .o"ey lai.s s$all /e re%u e% to purely .o"ey lai.sF a"% 1/3 as su essor a"% assig"ee of t$e ,N& a"% D&, i"terest i" ++'C a"% t$e ++'C a ou"ts, A,# s$all li7e4ise su ee%

to t$e rig$ts a"% o/ligatio"s of ,N& a"% D&, i" respe t of t$e o"troversy su/De t of Civil Case No. !!)) to /e tra"sferre% to ar/itratio" a"% a"y ar/itral a4ar%Jor%er agai"st eit$er ,N& a"%Jor D&, s$all /e t$e respo"si/ility of, /e %is $arge% /y a"% /e e"for ea/le agai"st A,#, t$e partie% $avi"g agree% to %rop ,N& a"% D&, fro. t$e ar/itratio". 2. Su/.issio". #$e parties $ere/y agree t$at 1a3 t$e o"troversy i" Civil Case No. !!)) s$all /e su/.itte% i"stea% to ar/itratio" u"%er RA 0(6 a"% 1/3 t$e reliefs praye% for i" Civil Case No. !!)) s$all, 4it$ t$e approval of t$e #rial Court of t$is Co.pro.ise a"% Ar/itratio" Agree.e"t, /e tra"sferre% a"% re%u e% to pure pe u"iaryJ.o"ey lai.s 4it$ t$e parties 4aivi"g a"% foregoi"g all ot$er for.s of reliefs 4$i $ t$ey praye% for or s$oul% $ave paye% for i" Civil Case No. !!)).@13A #$e Co.pro.ise a"% Ar/itratio" Agree.e"t li.ite% t$e issues to t$e follo4i"gG 5. 'ssues. #$e issues to /e su/.itte% for t$e Co..itteeBs resolutio" s$all /eG 1a3 <$et$er ,LA'N#'99S $ave t$e apa ity or t$e perso"ality to i"stitute t$is %erivative suit i" /e$alf of t$e ++'C or its %ire torsF 1/3 <$et$er or "ot t$e a tio"s lea%i"g to, a"% i" lu%i"g, t$e ,N&:D&, fore losure of t$e ++'C assets 4ere proper, vali% a"% i" goo% fait$.@1*A #$is agree.e"t 4as prese"te% for approval to t$e trial ourt. 2" 2 to/er 1*, 1!!2, t$e +a7ati R#C, &ra" $ 62, issue% a" or%er, to 4itG <H5R592R5, t$is Court or%ersG 1. Su/stituti"g ,N& a"% D&, 4it$ t$e Asset ,rivati-atio" #rust as party %efe"%a"t. Approvi"g t$e Co.pro.ise a"% Ar/itratio" Agree.e"t %ate% 2 to/er 6, 1!!2, atta $e% as A""eC HCI of t$e 2."i/us +otio". Approvi"g t$e #ra"sfor.atio" of t$e reliefs praye% for @/yA t$e plai"tiffs i" t$is ase i"to pure .o"ey lai.sF a"% #$e Co.plai"t is $ere/y D'S+'SS5D.@15A

/e retur"e% eve" if t$e fore losure 4ere fou"% to /e "ull a"% voi%. #$e %o u.e"tary evi%e" e su/.itte% a"% a%opte% /y /ot$ parties 15C$i/its H3I, H3:&IF 5C$i/its H1))IF a"% also 5C$i/it H???I3 as t$eir eC$i/its 4oul% s$o4 t$at t$e total outsta"%i"g o/ligatio" %ue to D&, a"% ,N& as of t$e %ate of fore losure is ,22,660,53(,(().)5, .ore or less. #$erefore, %efe"%a"t A,# a", a"% is still e"title% to, olle t t$e outsta"%i"g o/ligatio"s of ++'C to ,N& a"% D&, a.ou"ti"g to ,22,660.53(,(().)5, .ore or less, 4it$ i"terest t$ereo" as stipulate% i" t$e loa" %o u.e"ts fro. t$e %ate of fore losure up to t$e ti.e t$ey are fully pai% less t$e proportio"ate lia/ility of D&, as o4"er of 0(N of t$e total apitali-atio" of ++'C u"%er t$e 9R,. Si.ply put, D&, s$all s$are i" t$e a4ar% of %a.ages to, a"% i" o/ligatio"s of ++'C i" proportio" to its 0(N e;uity i" t$e total apital sto 7 of ++'C. C C C. As t$is Co..ittee $ol%s t$at t$e 9R, is vali%, D&,Bs e;uity i" ++'C is raise% to 0(N. So pursua"t to t$e a/ove provisio" of t$e Co.pro.ise a"% Ar/itratio" Agree.e"t, t$e 0(N e;uity of D&, is $ere/y %e%u te% fro. t$e a tual %a.ages of ,1!,*06,110,65*.)) resulti"g i" t$e "et a tual %a.ages of ,2,531,635,*25.)2 plus i"terest. D'S,2S'#'2N <H5R592R5, pre.ises re"%ere%G o"si%ere%, Du%g.e"t is $ere/y

2.

3.

*.

#$e Ar/itratio" Co..ittee 4as o.pose% of retire% Supre.e Court 8usti e A/ra$a. Sar.ie"to as C$air.a", Atty. 8ose C. Siso" a"% for.er Court of Appeals 8usti e +ag%a"gal 5l.a as +e./ers. 2" Nove./er 2*, 1!!3, after o"%u ti"g several $eari"gs, t$e Ar/itratio" Co..ittee re"%ere% a .aDority %e isio" i" favor of ++'C, t$e perti"e"t portio"s of 4$i $ rea% as follo4sG Si" e, as t$is Co..ittee fi"%s, t$ere is "o fore losure at all 4as "ot legally a"% vali%ly %o"e, t$e Co..ittee $ol%s a"% so %e lares t$at t$e loa"s of ,N& a"% D&, to ++'C, for t$e pay.e"t a"% re overy of 4$i $ t$e voi% fore losure sales 4ere u"%erta7e", o"ti"ue to re.ai" outsta"%i"g a"% u"pai%. Defe"%a"t A,# as t$e su essor:i":i"terest of ,N& a"% D&, to t$e sai% loa"s is t$erefore e"title% a"% retai"s t$e rig$t, to olle t t$e sa.e fro. ++'C pursua"t to a"% /ase% o" t$e loa" %o u.e"ts sig"e% /y ++'C, su/De t to t$e legal a"% vali% %efe"ses t$at t$e latter .ay %uly a"% seaso"a/ly i"terpose. Su $ loa"s s$all, $o4ever, /e re%u e% /y t$e a.ou"t 4$i $ A,# .ay $ave reali-e% fro. t$e sale of t$e sei-e% assets of ++'C 4$i $ /y agree.e"t s$oul% "o lo"ger

1. 2r%eri"g t$e %efe"%a"t to pay to t$e +ari"%u;ue +i"i"g a"% '"%ustrial Corporatio", eC ept t$e D&,, t$e su. of ,2,531,635,*25.)2 4it$ i"terest t$ereo" at t$e legal rate of siC per e"t 16N3 per a""u. re 7o"e% fro. August 3, !, a"% 2*, 1!0*, ari assu, as a"% for a tual %a.ages. ,ay.e"t of t$ese a tual %a.ages s$all /e offset /y A,# fro. t$e outsta"%i"g a"% u"pai% loa"s of t$e ++'C 4it$ D&, a"% ,N&, 4$i $ $ave "ot /ee" o"verte% i"to e;uity. S$oul% t$ere /e a"y /ala" e %ue to t$e ++'C after t$e offsetti"g, t$e sa.e s$all /e satisfie% fro. t$e fu"%s represe"ti"g t$e pur $ase pri e of t$e sale of t$e s$ares of 'sla"% Ce.e"t Corporatio" i" t$e a.ou"t of ,5)3,))),))).)) $el% u"%er es ro4 pursua"t to t$e 5s ro4 Agree.e"t %ate% April 22, 1!00 or to su $ su/se;ue"t es ro4 agree.e"t t$at 4oul% super e%e @si A it pursua"t to paragrap$ 1!3 of t$e Co.pro.ise a"% Ar/itratio" Agree.e"tF 2. 2r%eri"g t$e %efe"%a"t to pay to t$e +ari"%u;ue +i"i"g a"% '"%ustrial Corporatio", eC ept t$e D&,, t$e su. of ,13,))),))).)) as a"% for .oral a"% eCe.plary %a.ages. ,ay.e"t of t$ese .oral a"% eCe.plary %a.ages s$all /e offset /y A,# fro. t$e outsta"%i"g a"% u"pai% loa"s of ++'C 4it$ D&, a"% ,N&, 4$i $ $ave "ot /ee" o"verte% i"to e;uity. S$oul% t$ere /e a"y /ala" e %ue to ++'C after t$e offsetti"g, t$e sa.e s$all /e satisfie% fro. t$e fu"%s represe"ti"g t$e pur $ase pri e of t$e sale of t$e s$ares of 'sla"% Ce.e"t Corporatio" i" t$e of ,5)3,))),))).)) $el% u"%er es ro4 pursua"t to t$e 5s ro4 Agree.e"t %ate% April 22, 1!00 or to su $ su/se;ue"t es ro4 agree.e"t t$at 4oul% super e%e @si A it pursua"t to paragrap$ 1!3 of t$e Co.pro.ise a"% Ar/itratio" Agree.e"tF

3. 2r%eri"g t$e %efe"%a"t to pay to t$e plai"tiff, 8esus Ca/arrus, Sr., t$e su. of ,1),))),))).)), to /e satisfie% li7e4ise fro. t$e fu"%s $el% u"%er es ro4 pursua"t to t$e 5s ro4 Agree.e"t %ate% April 22, 1!00 or to su $ su/se;ue"t es ro4 agree.e"t t$at 4oul% super e%e it, pursua"t to paragrap$ 1!3 of t$e Co.pro.ise a"% Ar/itratio" Agree.e"t, as a"% for .oral %a.agesF a"% *. 2r%eri"g t$e %efe"%a"t to pay ar/itratio" osts. #$is De isio" is 9'NAL a"% 5O5C=#2R6. '# 'S S2 2RD5R5D.@16A +otio"s for re o"si%eratio"s 4ere file% /y /ot$ parties, /ut t$e sa.e 4ere %e"ie%. 2" 2 to/er 1(, 1!!*, private respo"%e"ts file% i" t$e sa.e Civil Case No. !!)) a" HAppli atio"J+otio" for Co"fir.atio" of Ar/itratio" A4ar%.I ,etitio"er ou"tere% 4it$ a" H2ppositio" a"% +otio" to Ea ate 8u%g.e"tI raisi"g t$e follo4i"g grou"%sG 1. #$e plai"tiffBs Appli atio"J+otio" is i.properly file% 4it$ t$is /ra" $ of t$e Court, o"si%eri"g t$at t$e sai% .otio" is "eit$er a part "or t$e o"ti"uatio" of t$e pro ee%i"gs i" Civil Case No. !!)) 4$i $ 4as %is.isse% upo" .otio" of t$e parties. '" fa t, t$e %efe"%a"ts i" t$e sai% Civil Case No. !!)) 4ere t$e Develop.e"t &a"7 of t$e ,$ilippi"es a"% t$e ,$ilippi"e Natio"al &a"7 1,N&3F 2. ="%er Se tio" 22 of Rep. A t 0(6, a" ar/itratio" u"%er a o"tra t or su/.issio" s$all /e %ee.e% a spe ial pro ee%i"gs a"% a party to t$e o"troversy 4$i $ 4as ar/itrate% .ay apply to t$e ourt $avi"g Duris%i tio", 1"ot "e essarily 4it$ t$is Ho"ora/le Court3 for a" or%er o"fir.i"g t$e a4ar%F 3. #$e issues su/.itte% for ar/itratio" $ave /ee" li.ite% to t4oG 113 propriety of t$e plai"tiffs fili"g t$e %erivative suit a"% 123 t$e regularity of t$e fore losure pro ee%i"gs. #$e ar/itratio" a4ar% soug$t to /e o"fir.e% $erei" far eC ee%e% t$e issues su/.itte% a"% eve" gra"te% .oral %a.ages to o"e of t$e $erei" plai"tiffsF *. ="%er Se tio" 2* of Rep. A t 0(6, t$e Court .ust .a7e a" or%er va ati"g t$e a4ar% 4$ere t$e ar/itrators eC ee%e% t$eir po4ers, or so i.perfe tly eCe ute% t$e., t$at a .utual fi"al a"% %efi"ite a4ar% upo" t$e su/De t .atter su/.itte% to t$e. 4as "ot .a%e.@1(A ,rivate respo"%e"ts file% a HR5,L6 AND 2,,2S'#'2NI %ate% Nove./er 1), 1!0*, argui"g t$at a %is.issal of Civil ase No. !!)) 4as .erely a H;ualifie% %is.issalI to pave t$e 4ay for t$e su/.issio" of t$e o"troversy to ar/itratio", a"% operate% si.ply as Ha .ere suspe"sio" of t$e pro ee%i"gs.I #$ey %e"ie% t$at t$e Ar/itratio" Co..ittee $a% eC ee%e% its po4ers. '" a" 2r%er %ate% Nove./er 20, 1!!*, t$e trial ourt o"fir.e% t$e a4ar% of t$e Ar/itratio" Co..ittee. #$e %ispositive portio" of sai% or%er rea%sG <H5R592R5, pre.ises o"si%ere%, a"% i" t$e lig$t of t$e parties @si A Co.pro.ise a"% Ar/itratio" Agree.e"t %ate% 2 to/er 6, 1!!2, t$e De isio" of t$e Ar/itratio" Co..ittee pro.ulgate% o" Nove./er 2*, 1!!3, as affir.e% i" a Resolutio" %ate% 8uly 26, 1!!*, a"% fi"ally settle% a"% larifie%

i" t$e Separate 2pi"io" %ate% Septe./er 2, 1!!* of Co..ittee +e./er 5l.a, a"% t$e perti"e"t provisio"s of RA 0(6,also 7"o4" as t$e Ar/itratio" La4, t$is Court GRAN#S ,LA'N#'99SB A,,L'CA#'2N AND #H=S C2N9'R+S #H5 AR&'#RA#'2N A<ARD, AND 8=DG+5N# 'S H5R5&6 R5ND5R5DG 1a3 2r%eri"g t$e %efe"%a"t A,# to t$e +ari"%u;ue +i"i"g a"% '"%ustrial Corporatio" 1++'C, eC ept t$e D&,, t$e su. of ,3,011,(5(,*25.)), as a"% for a tual %a.ages, 4$i $ s$all /e partially satisfie% fro. t$e fu"%s $el% u"%er es ro4 i" t$e a.ou"t of ,5)3,))),))).)) pursua"t to t$e 5s ro4 Agree.e"t %ate% April 22, 1!00. #$e &ala" e of t$e a4ar%, after t$e es ro4 fu"%s are fully applie%, s$all /e eCe ute% agai"st t$e A,#F 1/3 2r%eri"g t$e %efe"%a"t to pay to t$e ++'C, eC ept t$e D&,, t$e su. of ,13,))),))).)) as a"% .oral a"% eCe.plary %a.agesF 1 3 2r%eri"g t$e %efe"%a"t to pay to 8esus S. Ca/arrus, Sr., t$e su. of ,1),))),))).)) as a"% for .oral %a.agesF a"% 1%3 2r%eri"g t$e %efe"%a"t to pay t$e $erei" plai"tiffsJappli a"tsJ.ova"ts t$e su. of ,1,()5,*1).22 as ar/itratio" osts. '" reiteratio" of t$e .a"%ates of Stipulatio" No. 1) a"% Stipulatio" No. 0 paragrap$ 2 of t$e Co.pro.ise a"% Ar/itratio" Agree.e"t, a"% t$e fi"al e%i t of t$e Ar/itratio" Co..itteeBs %e isio", a"% 4it$ t$is CourtBs Co"fir.atio", t$e issua" e of t$e Ar/itratio" Co..itteeBs A4ar% s$all $e" efort$ /e fi"al a"% eCe utory. S2 2RD5R5D.@10A 2" De e./er 2(, 1!!*, petitio"er file% its .otio" for re o"si%eratio" of t$e 2r%er %ate% Nove./er 20, 1!!*. ,rivate respo"%e"ts, i" tur", su/.itte% t$eir reply a"% oppositio" t$ereto. 2" 8a"uary 10, 1!!5, t$e trial ourt $a"%e% %o4" its or%er %e"yi"g A,#Bs .otio" for re o"si%eratio" for la 7 of .erit a"% for $avi"g /ee" file% out of ti.e. #$e trial ourt %e lare% t$at H o"si%eri"g t$at t$e %efe"%a"t A,# t$roug$ ou"sel, offi ially a"% a tually re eive% a opy of t$e 2r%er of t$is Court %ate% Nove./er 20, 1!!* o" De e./er 6, 1!!*, t$e +otio" for Re o"si%eratio" t$ereof file% /y t$e %efe"%a"t A,# o" De e./er 2(, 1!!*, or after t$e lapse of 21 %ays, 4as learly file% /eyo"% t$e 15:%ay regle.e"tary perio% pres ri/e% or provi%e% for /y la4 for t$e fili"g of a" appeal fro. fi"al or%ers, resolutio"s, a4ar%s, Du%g.e"ts or %e isio"s of a"y ourt i" all ases, a"% /y "e essary i.pli atio" for t$e filli"g of a .otio" for re o"si%eratio" t$ereof.I 2" 9e/ruary (, 1!!5, petitio"er re eive% private respo"%e"tsB .otio" for 5Ce utio" a"% Appoi"t.e"t of Custo%ia" of ,ro ee%s of 5Ce utio" %ate% 9e/ruary 6, 1!!5. ,etitio"er t$ereafter file% 4it$ t$e Court of Appeals a spe ial ivil a tio" for certiorari 4it$ te.porary restrai"i"g or%er a"%Jor preli.i"ary i"Du" tio" %ate% 9e/ruary 13, 1!!6 to a""ul a"% %e lare as voi% t$e 2r%ers of t$e R#C:+a7ati %ate% Nove./er 20, 1!!* a"% 8a"uary 10, 1!!5 for $avi"g /ee" issue% 4it$out or i" eC ess of Duris%i tio" a"%Jor 4it$ grave a/use of %is retio".@1!A As grou"% t$erefor, petitio"er allege% t$atG

+ #H5 R5S,2ND5N# 8=DG5 HAS N2# EAL'DL6 ACQ='R5D 8=R'SD'C#'2N +=CH L5SS, HAS #H5 C2=R# A=#H2R'#6, #2 C2N9'R+ #H5 AR&'#RAL A<ARD C2NS'D5R'NG #HA# #H5 2R'G'NAL CAS5, C'E'L CAS5 N2. !!)), HAD ,R5E'2=SL6 &55N D'S+'SS5D. ++ #H5 R5S,2ND5N# 8=DG5 C2++'##5D GRAE5 A&=S5 29 D'SCR5#'2N AND AC#5D <'#H2=# 2R 'N 5OC5SS 29 8=R'SD'C#'2N, 'N 'SS='NG #H5 Q=5S#'2N5D 2RD5RS C2N9'R+'NG #H5 AR&'#RAL A<ARD AND D5N6'NG #H5 +2#'2N 92R R5C2NS'D5RA#'2N 29 2RD5R 29 A<ARD. +++ #H5 R5S,2ND5N# 8=DG5 GR2SSL6 A&=S5D H'S D'SCR5#'2N AND AC#5D <'#H2=# 2R 'N 5OC5SS 29 AND <'#H2=# 8=R'SD'C#'2N 'N R5C>2N'NG #H5 C2=N#'NG 29 #H5 ,5R'2D #2 9'L5 +2#'2N 92R R5C2NS'D5RA#'2N, N2# 9R2+ #H5 DA#5 29 S5RE'C5 29 #H5 C2=R#BS C2,6 C2N9'R+'NG #H5 A<ARD, &=# 9R2+ R5C5',# 29 A O5R2O C2,6 29 <HA# ,R5S=+A&L6 'S #H5 2,,2S'NG C2=NS5LBS C2,6 #H5R529.@2)A 2" 8uly 12, 1!!5, t$e Court of Appeals, t$roug$ its fift$ Divisio" %e"ie% %ue ourse a"% %is.isse% t$e petitio" for certiorari. He" e, t$e i"sta"t petitio" for revie4 o" certiorari i.puti"g to t$e Court of Appeals t$e follo4i"g errors. ASS'GN+5N# 29 5RR2RS + #H5 C2=R# 29 A,,5ALS 5RR5D 'N N2# H2LD'NG #HA# #H5 +A>A#' R5G'2NAL #R'AL C2=R#, &RANCH 62 <H'CH HAS ,R5E'2=LS6 D'S+'SS5D C'E'L CAS5 N2. !!)) HAD L2S# 8=R'SD'C#'2N #2 C2N9'R+ #H5 AR&'#RAL A<ARD =ND5R #H5 SA+5 C'E'L CAS5 AND 'N N2# R=L'NG #HA# #H5 A,,L'CA#'2N 92R C2N9'R+A#'2N SH2=LD HAE5 &55N 9'L5D AS A N5< CAS5 #2 &5 RA99L5D 299 A+2NG #H5 D'995R5N# &RANCH5S 29 #H5 R#C. ++ #H5 C2=R# 29 A,,5ALS L'>5<'S5 5RR5D 'N H2LD'NG #HA# ,5#'#'2N5R <AS 5S#2,,5D 9R2+ Q=5S#'2N'NG #H5 AR&'#RA#'2N A<ARD, <H5N ,5#'#'2N5R Q=5S#'2N5D #H5 8=R'SD'C#'2N 29 #H5 R#C:+A>A#', &RANCH 62 AND A# #H5 SA+5 #'+5 +2E5D #2 EACA#5 #H5 AR&'#RAL A<ARD. +++ #H5 C2=R# 29 A,,5ALS 5RR5D 'N N2# H2LD'NG #HA# #H5 R5S,2ND5N# #R'AL C2=R# SH2=LD HAE5 5'#H5R D'S+'SS5DJD5N'5D ,R'EA#5 R5S,2ND5N#SB +2#'2NJ,5#'#'2N 92R C2N9'R+A#'2N 29 AR&'#RA#'2N A<ARD ANDJ2R SH2=LD HAE5 C2NS'D5R5D #H5 +5R'#S 29 #H5 +2#'2N #2 EACA#5 AR&'#RAL A<ARD. +

+, #H5 C2=R# 29 A,,5ALS 5RR5D 'N N2# #R5A#'NG ,5#'#'2N5R A,#BS ,5#'#'2N 92R C!,1$7,',$ AS AN A,,5AL #A>5N 9R2+ #H5 2RD5R C2N9'R+'NG #H5 A<ARD , #H5 C2=R# 29 A,,5ALS 5RR5D 'N N2# R=L'NG 2N #H5 L5GAL 'SS=5 29 <H5N #2 R5C>2N #H5 C2=N#'NG 29 #H5 ,5R'2D #2 9'L5 A +2#'2N 92R R5C2NS'D5RA#'2N.@21A #$e petitio" is i.presse% 4it$ .erit.

59e &5C o8 M"E"t;, !r"n19 02, ; not 9"ve Dur;s ;1t;on to 1on8;r2 t9e "r#;tr"l "A"r

#$e use of t$e ter. H%is.isse%I is "ot a H.ere se.a"ti i.perfe tio".I #$e %ispositive portio" of t$e 2r%er of t$e trial ourt %ate% 2 to/er 1*, 1!!2 state% i" "o u" ertai" ter.sG *. #$e Co.plai"t is $ere/y D'S+'SS5D.@22A #$e ter. H%is.issI $as a pre ise %efi"itio" i" la4. H#o %ispose of a" a tio" suit, or .otio" 4it$out trial o" t$e issues i"volve%. Co" lu%e, %is o"ti"ue, ter.i"ate, ;uas$.I@23A A%.itte%ly t$e orre t pro e%ure 4as for t$e parties to go /a 7 to t$e ourt 4$ere t$e ase 4as pe"%i"g to $ave t$e a4ar% o"fir.e% /y sai% ourt. Ho4ever, &ra" $ 62 .a%e t$e (atal .ista7e of issui"g a fi"al or%er %is.issi"g t$e ase. <$ile &ra" $ 62 s$oul% $ave .erely suspe"%e% t$e ase a"% "ot %is.isse% it,@2*A "eit$er of t$e parties ;uestio"e% sai% %is.issal. #$us, /ot$ parties as 4ell as sai% ourt are /ou"% /y su $ error. 't is erro"eous t$e" to argue, as private respo"%e"ts %o, t$at petitio"er A,# 4as $arge% 4it$ t$e 7"o4le%ge t$at t$e H ase 4as .erely staye% u"til ar/itratio" fi"is$e%,I as agai", t$e or%er of &ra" $ 62 i" very lear ter.s state% t$at t$e H o.plai"t 4as %is.isse%.I &y its o4" a tio", &ra" $ 62 $a% lost Duris%i tio" over t$e vase. 't oul% "ot $ave vali%ly rea ;uire% Duris%i tio" over t$e sai% ase o" .ere .otio" of o"e of t$e parties. #$e Rules of Court is spe ifi o" $o4 a "e4 ase .ay /e i"itiate% a"% su $ is "ot %o"e /y .ere .otio" i" a parti ular /ra" $ of t$e R#C. Co"se;ue"tly, as t$ere 4as "o Hpe"%i"g a tio"I to spea7 of, t$e petitio" to o"fir. t$e ar/itral a4ar% s$oul% $ave /ee" file% as a "e4 ase a"% raffle% a or%i"gly to o"e of t$e /ra" $es of t$e Regio"al #rial Court. ++

*et;t;oner A"s not estoppe 8ro2 Buest;on;n: t9e Dur;s ;1t;on o8 !r"n19 02 o8 t9e &5C o8 M"E"t;.

#$e Court of Appeals rule% t$at A,# 4as alrea%y estoppe% to ;uestio" t$e Duris%i tio" of t$e R#C to o"fir. t$e ar/itral a4ar% /e ause it soug$t affir.ative relief i" sai% ourt /y as7i"g t$at t$e ar/itral a4ar% /e va ate%. #$e rule is t$at H<$ere t$e ourt itself learly $as "o Duris%i tio" over t$e su/De t .atter or t$e "ature of t$e a tio", t$e i"vo atio" of t$is %efe"se .ay %e %o"e at a"y ti.e. 't is "eit$er for t$e ourts "or for t$e parties to violate or %isregar% t$at rule, let alo"e to o"fer t$at Duris%i tio", t$is .atter /ei"g legislative i" $ara ter.I@25A As a rule t$e, "eit$er 4aiver "or

estoppel s$all apply to o"fer Duris%i tio" upo" a ourt barring highl6 meritorious and e&ce tional circumstances.@26A 2"e su $ eC eptio" 4as e"u" iate% i" 1i8am vs. Sibonghano6,@2(A 4$ere it 4as $el% t$at Hafter volu"tarily su/.itti"g a ause a"% e" ou"teri"g a" a%verse %e isio" o" t$e .erits, it is too late for t$e loser to ;uestio" t$e Duris%i tio" or po4er of t$e ourt.L ,etitio"erBs situatio" is %iffere"t /e ause fro. t$e outset, it $as o"siste"tly $el% t$e positio" t$at t$e R#C, &ra" $ 62 $a% "o Duris%i tio" to o"fir. t$e ar/itral a4ar%F o"se;ue"tly, it a""ot /e sai% t$at it 4as estoppe% fro. ;uestio"i"g t$e R#CBs Duris%i tio". ,etitio"erBs prayer for t$e setti"g asi%e of t$e ar/itral a4ar% 4as "ot i" o"siste"t 4it$ its %isavo4al of t$e ourtBs Duris%i tio". +++

59e n"ture "n l;2;ts o8 t9e Ar#;tr"torsF poAers.

As a rule, t$e a4ar% of a" ar/itrator a""ot /e set asi%e for .ere errors of Du%g.e"t eit$er as to t$e la4 or as to t$e fa ts.@2!A Courts are 4it$out po4er to a.e"% or overrule .erely /e ause of %isagree.e"t 4it$ .atters of la4 or fa ts %eter.i"e% /y t$e ar/itrators. @3)A #$ey 4ill "ot revie4 t$e fi"%i"gs of la4 a"% fa t o"tai"e% i" a" a4ar%, a"% 4ill "ot u"%erta7e to su/stitute t$eir Du%g.e"t for t$at of t$e ar/itrators, si" e a"y ot$er rule 4oul% .a7e a" a4ar% t$e o..e" e.e"t, "ot t$e e"%, of litigatio".@31A 5rrors of la4 a"% fa t, or a" erro"eous %e isio" of .atters su/.itte% to t$e Du%g.e"t of t$e ar/itrators, are i"suffi ie"t to i"vali%ate a" a4ar% fairly a"% $o"estly .a%e.@32A 8u%i ial revie4 of a" ar/itratio" is, t$us, .ore li.ite% t$a" Du%i ial revie4 of a trial.@33A No"et$eless, t$e ar/itratorsB a4ar%s is "ot a/solute a"% 4it$out eC eptio"s. #$e ar/itrators a""ot resolve issues /eyo"% t$e s ope of t$e su/.issio" agree.e"t. @3*A #$e parties to su $ a" agree.e"t are /ou"% /y t$e ar/itratorsB a4ar% o"ly to t$e eCte"t a"% i" t$e .a""er pres ri/e% /y t$e o"tra t a"% o"ly if t$e a4ar% is re"%ere% i" o"for.ity t$ereto. @35A #$us, Se tio"s 2* a"% 25 of t$e Ar/itratio" La4 provi%e grou"%s for va ati"g, res i"%i"g or .o%ifyi"g a" ar/itratio" a4ar%. <$ere t$e o"%itio"s %es ri/e% i" Arti les 2)30,@36A 2)3!@3(A a"% 2)*)@30A of t$e Civil Co%e appli a/le to o.pro.ises a"% ar/itratio" are atte"%a"t, t$e ar/itratio" a4ar% .ay also /e a""ulle%. '" Chung :u $ndustries (4hils.) vs. Court o( ' eals, @3!A 4e $el%G C C C. 't is state% eCpli itly u"%er Art. 2)** of t$e Civil Co%e t$at t$e fi"ality of t$e ar/itratorsB a4ar%s is "ot a/solute a"% 4it$out eC eptio"s. <$ere t$e o"%itio"s %es ri/e% i" Arti les 2)30, 2)3!, a"% 2)*) appli a/le to /ot$ o.pro.ises a"% ar/itratio" are o/tai"i"g, t$e ar/itratorsM a4ar% .ay /e a""ulle% or res i"%e%. A%%itio"ally, u"%er Se tio"s 2* a"% 25, of t$e Ar/itratio" La4, t$ere are grou"%s for va ati"g, .o%ifyi"g or res i"%i"g a" ar/itratorBs a4ar%. #$us, if a"% 4$e" t$e fa tual ir u.sta" es referre% to i" t$e a/ove: ite% provisio"s are prese"t, Du%i ial revie4 of t$e a4ar% is properly 4arra"te%. A or%i"gly, Se tio" 2) of R.A. 0(6 provi%esG

Appe"l o8 pet;t;oner to t9e Court o8 Appe"ls t9ru )ertiorari un er &ule 05 A"s proper.

#$e Court of Appeals i" %is.issi"g A,#Bs petitio" for certiorari up$el% t$e trial ourtBs %e"ial of A,#Bs .otio" for re o"si%eratio" of t$e trial ourtBs or%er o"fir.i"g t$e ar/itral a4ar%, o" t$e grou"% t$at sai% .otio" 4as file% /eyo"% t$e 15: %ay regle.e"tary perio%F o"se;ue"tly, t$e petitio" for certiorari oul% "ot /e resorte% to as su/stitute to t$e lost rig$t of appeal. <e %o "ot agree. Se tio" 2! of Repu/li A t No. 0(6,
@20A

provi%es t$atG

C C C A" appeal .ay /e ta7e" fro. a" or%er .a%e i" a pro ee%i"g u"%er t$is A t, or fro. a Du%g.e"t e"tere% upo" a" a4ar% t$roug$ certiorari pro ee%i"gs, /ut su $ appeals s$all /e li.ite% to ;uestio" of la4. C C C. #$e afore;uote% provisio", $o4ever, %oes "ot pre lu%e a party aggrieve% /y t$e ar/itral a4ar% fro. resorti"g to t$e eCtraor%i"ary re.e%y of certiorari u"%er Rule 65 of t$e Rules of Court 4$ere, as i" t$is ase, t$e Regio"al #rial Court to 4$i $ t$e a4ar% 4as su/.itte% for o"fir.atio" $as a te% 4it$out Duris%i tio", or 4it$ grave a/use of %is retio" a"% t$ere is "o appeal, "or a"y plai", spee%y re.e%y i" t$e ourse of la4. #$us, Se tio" 1 of Rule 65 provi%esG S5C 1. 4etition (or Certiorari9 : <$e" a"y tri/u"al, /oar% or offi er eCer isi"g Du%i ial fu" tio"s, $as a te% 4it$out or i" eC ess of its or $is Duris%i tio", or 4it$ grave a/use of %is retio" a"% t$ere is "o appeal, "or a"y plai", spee%y, a"% a%e;uate re.e%y i" t$e or%i"ary ourse of la4, a perso" aggrieve% t$ere/y .ay file a verifie% petitio" i" t$e proper ourt allegi"g t$e fa ts 4it$ ertai"ty a"% prayi"g t$at Du%g.e"t /e re"%ere% a""ulli"g or .o%ifyi"g t$e pro ee%i"gs, as t$e la4 re;uires, of su $ tri/u"al, /oar% or offi er. '" t$e i"sta"t ase, t$e respo"%e"t ourt erre% i" %is.issi"g t$e spe ial ivil a tio" for certiorari, it /ei"g fro. t$e plea%i"gs a"% t$e evi%e" e t$at t$e trial ourt la 7e% Duris%i tio" a"%Jor o..itte% grave a/use of %is retio" i" ta7i"g og"i-a" e of private respo"%e"tB .otio" to o"fir. t$e ar/itral a4ar% a"%, 4orse, i" o"fir.i"g sai% a4ar% 4$i $ is grossly a"% pate"tly "ot i" a or% 4it$ t$e ar/itratio" agree.e"t, as 4ill /e $erei"after %e.o"strate%. +,

S5C. 2). :orm and contents o( a;ard. R #$e a4ar% .ust /e .a%e i" 4riti"g a"% sig"e% a"% a 7"o4le%ge% /y a .aDority of t$e ar/itrators, if .ore t$a" o"eF a"% /y t$e sole ar/itrator, if t$ere is o"ly o"e. 5a $ party s$all /e fur"is$e% 4it$ a opy of t$e a4ar%. #$e ar/itrators i" t$eir a4ar% .ay gra"t a"y re.e%y or relief 4$i $ t$ey %ee. Dust a"% e;uita/le a"% 4it$i" t$e s ope of t$e agree.e"t of t$e parties, 4$i $ s$all i" lu%e, /ut "ot /e li.ite% to, t$e spe ifi perfor.a" e of a o"tra t. CCC #$e ar/itrators s$all $ave t$e po4er to %e i%e o"ly t$ose .atters 4$i $ $ave /ee" su/.itte% to t$e.. #$e ter.s of t$e a4ar% s$all /e o"fi"e% to su $ %isputes. 1="%ers ori"g ours3. CCC. Se tio" 2* of t$e sa.e la4 e"u.erati"g t$e grou"%s for va ati"g a" a4ar% statesG S5C. 2*. +rounds (or vacating a;ard. R '" a"y o"e of t$e follo4i"g ases, t$e ourt .ust .a7e a" or%er va ati"g t$e a4ar% upo" t$e petitio" of a"y party to t$e o"troversy 4$e"

su $ party proves affir.atively t$at pro ee%i"gsG 1a3 #$e a4ar% 4as pro ure% /y u"%ue .ea"sF or

i"

t$e ar/itratio"

orruptio", frau%, or ot$er

4$ose o/ligatio"s 4ere past %ue. #$e fore losure 4as "ot a 4ro"gful a t of t$e /a"7s a"%, t$erefore, oul% "ot /e t$e /asis of a"y a4ar% of %a.ages. #$ere 4as "o fi"a" ial restru turi"g agree.e"t to spea7 of t$at oul% $ave o"stitute% a" i.pe%i.e"t to t$e eCer ise of t$e /a"7Bs rig$t to fore lose. As orre tly state% /y +r. 8ose C. Siso", a .e./er of t$e Ar/itratio" Co..ittee 4$o 4rote a separate opi"io"G 1. #$e various loa"s a"% a%va" es .a%e /y D&, a"% ,N& to ++'C $ave /e o.e over%ue a"% re.ai" u"pai%. #$e fa t t$at a 9R, 4as %ra4" up is e"oug$ to esta/lis$ t$at ++'C $as "ot /ee" o.plyi"g 4it$ t$e ter.s of t$e loa" agree.e"t. Restru turi"g si.ply o""otes t$at t$e o/ligatio"s are past %ue t$at is 4$y it is Hrestru tura/leIF 2. <$e" ++'C t$ru its /oar% a"% t$e sto 7$ol%ers agree% a"% a%opte% t$e 9R,, it o"ly .ea"s t$at ++'C $a% /ee" i"for.e% or "otifie% t$at its o/ligatio"s 4ere past %ue a"% t$at fore losure is fort$ o.i"gF 3. At t$at stage, ++'C also 7"e4 t$at ,N&:D&, $a% t$e optio" of eit$er approvi"g t$e 9R, or pro ee%i"g 4it$ t$e fore losure. Ca/arrus, 4$o file% t$is ase suppose%ly i" /e$alf of ++'C s$oul% $ave i"siste% o" t$e 9R,. 6et Ca/arrus $i.self oppose% t$e 9R,F *. So 4$e" ,N&:D&, pro ee%e% 4it$ t$e fore losure, it 4as %o"e 4it$out /a% fait$ /ut 4it$ $o"est a"% si" ere /elief t$at fore losure 4as t$e o"ly alter"ativeF a %e isio" furt$er eCplai"e% /y Dr. ,la i%o +apa 4$o testifie% t$at fore losure 4as, i" t$e Du%g.e"t of ,N&, t$e /est .ove to save ++'C itself. HQ G No4 i" t$is portio" of 5C$. HLI 4$i $ 4as .ar7e% as 5C$. HL:1I, a"% 4e a%opte% as 5C$. 3(:A for t$e respo"%e"t, .ay ' 7"o4 fro. you, Dr. +apa 4$at you .ea"t /y Ht$at t$e %e isio" to fore lose 4as "eit$er pre ipitate "or ar/itraryIS G <ell, it is "ot a 4$i.si al %e isio" /ut rat$er %e isio" arrive% at after 4eig$ty o"si%eratio"s of t$e i"for.atio" t$at 4e $ave re eive%, a"% liste"i"g to t$e prospe ts 4$i $ reporte% to us t$at 4e $a% assu.e% 4oul% /e t$e pre.ises of t$e fi"a" ial re$a/ilitatio" pla" 4as "ot .ateriali-e% "or eCpe te% to .ateriali-e%. G A"% t$is state.e"t t$at Hit 4as pre.ise% upo" t$e 7"o4" fa tI t$at .ea"s, it 4as referri"g to t$e %e isio" to fore lose, 4as pre.ise% upo" t$e 7"o4" fa t t$at t$e re$a/ilitatio" pla" earlier approve% /y t$e sto 7$ol%ers 4as "o lo"ger feasi/le, Dust 4$at is .ea"t H/y "o lo"ger feasi/leIS G &e ause t$e reve"ue t$at t$ey 4ere ou"ti"g o" to .a7e t$e re$a/ilitatio" pla" possi/le, 4as "ot a"y.ore eCpe te% to /e fort$ o.i"g /e ause it 4ill result i" a s$ort fall o.pare% to t$e pri es t$at 4ere a tually ta7i"g pla e i" t$e .ar7et. G A"% ' suppose% t$at 4as you 4ere referri"g to 4$e" you state% t$at t$e pro%u tio" targets a"% assu.e% pri es of ++'CBs pro%u ts, a.o"g ot$er proDe tio"s, use% i" t$e fi"a" ial reorga"i-atio" progra. t$at 4ill .a7e it via/le 4ere "ot .et "or eCpe te% to /e .etS G 6es.I

1/3 #$at t$ere 4as evi%e"t partiality or orruptio" i" ar/itrators or a"y of t$e.F or 1 3 #$at t$e ar/itrators 4ere guilty of .is o"%u t i" refusi"g to postpo"e t$e $eari"g upo" suffi ie"t ause s$o4", or i" refusi"g to $ear evi%e" e perti"e"t a"% .aterial to t$e o"troversyF t$at o"e or .ore of t$e ar/itrators 4as %is;ualifie% to a t as su $ u"%er se tio" "i"e $ereof, a"% 4illfully refrai"e% fro. %is losi"g su $ %is;ualifi atio"s or a"y ot$er .is/e$avior /y 4$i $ t$e rig$ts of a"y party $ave /ee" .aterially preDu%i e%F or 1%3 #$at t$e ar/itrators eC ee%e% t$eir po4ers, or so i.perfe tly eCe ute% t$e., t$at a .utual, fi"al a"% %efi"ite a4ar% upo" t$e su/De t .atter su/.itte% to t$e. 4as "ot .a%e. 1="%ers ori"g ours3. CCC. Se tio" 25 4$i $ e"u.erates t$e grou"%s for .o%ifyi"g t$e a4ar% provi%esG S5C. 25. +rounds (or modi(6ing or correcting a;ard R '" a"yo"e of t$e follo4i"g ases, t$e ourt .ust .a7e a" or%er .o%ifyi"g or orre ti"g t$e a4ar%, upo" t$e appli atio" of a"y party to t$e o"troversy 4$i $ 4as ar/itrate%G 1a3 <$ere t$ere 4as a" evi%e"t .is al ulatio" of figures, or a" evi%e"t .ista7e i" t$e %es riptio" of a"y perso", t$i"g or property referre% to i" t$e a4ar%F or 1/3 <$ere t$e ar/itrators $ave a4ar%e% upo" a .atter "ot su/.itte% to t$e., "ot affe ti"g t$e .erits of t$e %e isio" upo" t$e .atter su/.itte%F or 1 3 <$ere t$e a4ar% is i.perfe t i" a .atter of for. "ot affe ti"g t$e .erits of t$e o"troversy, a"% if it $a% /ee" a o..issio"erBs report, t$e %efe t oul% $ave /ee" a.e"%e% or %isregar%e% /y t$e ourt. C C C. 9i"ally, it s$oul% /e stresse% t$at 4$ile a ourt is pre lu%e% fro. overtur"i"g a" a4ar% for errors i" %eter.i"atio" of fa tual issues, "evert$eless, if a" eCa.i"atio" of t$e re or% reveals "o support 4$atever for t$e ar/itratorsB %eter.i"atio"s, t$eir a4ar% .ust /e va ate%.@*)A '" t$e sa.e .a""er, a" a4ar% .ust /e va ate% if it 4as .a%e i" H mani(est disregard o( the la;.<@*1A Agai"st t$e /a 7%rop of t$e foregoi"g provisio"s a"% pri" iples, 4e fi"% t$at t$e ar/itrators a.e out 4it$ a" a4ar% i" eC ess of t$eir po4ers a"% palpa/ly %evoi% of fa tual a"% legal /asis. ,

59ere A"s no 8;n"n1;"l stru1tur;n: pro:r"2G 8ore1losure o8 2ort:":e A"s 8ully Dust;8;e .

A CCC

#$e poi"t "ee% "ot /e /ela/ore% t$at ,N& a"% D&, $a% t$e legiti.ate rig$t to fore lose of t$e .ortgages of ++'C

<$i $ /ri"gs .e to .y last poi"t i" t$is separate opi"io". <as ,N& a"% D&, a/solutely u"Dustifie% i" fore losi"g t$e .ortgagesS '" t$is o""e tio", it a" rea%ily /e see" a"% it a""ot ;uite /e %e"ie% t$at ++'C a ou"ts i" ,N&:D&, 4ere past %ue. #$e %ra4i"g up of t$e 9R, is t$e /est proof of t$is. <$e" ++'C a%opte% a restru turi"g progra. for its loa", it o"ly .ea"t t$at t$ese loa"s 4ere alrea%y %ue a"% u"pai%. 'f t$ese loa"s 4ere restru tura/le /e ause t$ey 4ere alrea%y %ue a"% u"pai%, t$ey are li7e4ise Hfore losea/leI. #$e optio" is 4it$ t$e ,N&:D&, o" 4$at steps to ta7e. #$e .ere fa t t$at ++'C a%opte% t$e 9R, %oes "ot .ea" t$at D&,:,N& lost t$e optio" to fore lose. Neit$er %oes it .ea" t$at t$e 9R, is legally /i"%i"g a"% i.ple.e"ta/le. 't .ust /e poi"te% t$at sai% 9R, 4ill, i" effe t, superse%e t$e eCisti"g a"% past %ue loa"s of ++'C 4it$ ,N&:D&,. 't 4ill /e o.e t$e "e4 loa" agree.e"t /et4ee" t$e le"%ers a"% t$e /orro4ers. As i" all ot$er o"tra ts, t$ere .ust t$erefore /e a .eeti"g of .i"%s of t$e partiesF t$e ,N& a"% D&, .ust $ave to vali%ly a%opt a"% ratify su $ 9R, /efore t$ey a" /e /ou"% /y itF /efore it a" /e i.ple.e"te%. '" t$is ase, "ot a" iota of proof $as /ee" prese"te% /y t$e ,LA'N#'99S s$o4i"g t$at ,N& a"% D&, ratifie% a"% a%opte% t$e 9R,. ,LA'N#'99S si.ply relie% o" a legal %o tri"e of pro.issory estoppel to support its allegatio" i" t$is regar%.@*2A +oreover, ,N& a"% D&, $a% to i"itiate fore losure pro ee%i"gs as .a"%ate% /y ,.D. No. 305, 4$i $ too7 effe t o" 8a"uary 31, 1!(*. #$e %e ree re;uires gover".e"t fi"a" ial i"stitutio"s to fore lose ollaterals for loa"s 4$ere t$e arrearages a.ou"t to 2)N of t$e total outsta"%i"g o/ligatio"s. #$e perti"e"t provisio"s of sai% %e ree rea% as follo4sG S5C. 1. 't s$all /e .a"%atory for gover".e"t fi"a" ial i"stitutio"s, after t$e lapse of siCty 16)3 %ays fro. t$e issua" e of t$is De ree to fore lose t$e ollaterals a"%Jor se urities for a"y loa", re%it, a o..o%atio"s, a"%Jor guara"tees gra"te% /y t$e. 4$e"ever t$e arrearages o" su $ a ou"t, i" lu%i"g a rue% i"terest a"% ot$er $arges, a.ou"t to at least t4e"ty per e"t 12)N3 of t$e total outsta"%i"g o/ligatio"s, i" lu%i"g i"terest a"% ot$er $arges, as appeari"g i" t$e /oo7s of a ou"t a"%Jor relate% re or%s of t$e fi"a" ial i"stitutio"s o" er"e%. #$is s$all /e 4it$out preDu%i e to t$e eCer ise /y t$e gover".e"t fi"a" ial i"stitutio"s of su $ rig$ts a"%Jor re.e%ies availa/le to t$e. u"%er t$eir respe tive o"tra ts 4it$ t$eir %e/tor, i" lu%i"g t$e rig$t to fore losure o" loa"s, re%its, a o..o%atio"s a"%Jor guara"tees o" 4$i $ t$e arrearages are less t$a" t4e"ty per e"t 12)N3. S5C. 2. No restrai"i"g or%er, te.porary or per.a"e"t i"Du" tio" s$all /e issue% /y t$e ourt agai"st a"y gover".e"t fi"a" ial i"stitutio" i" a"y a tio" ta7e" /y su $ i"stitutio" i" o.plia" e 4it$ t$e .a"%atory fore losure provi%e% i" Se tio" 1 $ereof, 4$et$er su $ restrai"i"g or%er, te.porary or per.a"e"t i"Du" tio" is soug$t /y t$e /orro4er1s3 or a"y t$ir% party or parties, eC ept after %ue $eari"g i" 4$i $ it is esta/lis$e% /y t$e /orro4er a"% a%.itte% /y t$e gover".e"t fi"a" ial i"stitutio" o" er"e% t$at t4e"ty per e"t 12)N3 of t$e outsta"%i"g arrearages $as /ee" pai% after t$e fili"g of fore losure pro ee%i"gs. 1="%ers ori"g supplie%.3 ,rivate respo"%e"tsB t$esis t$at t$e fore losure pro ee%i"gs 4ere "ull a"% voi% /e ause of la 7 of pu/li atio" i" t$e "e4spaper is "ot$i"g .ore t$a" a .ere u"su/sta"tiate% allegatio" "ot /or"e out /y t$e evi%e" e. '" a"y ase, a

%isputa/le presu.ptio" eCists i" favor of petitio"er t$at offi ial %uty $as /ee" regularly perfor.e% a"% or%i"ary ourse of /usi"ess $as /ee" follo4e%.@*3A ,+ Not o"ly 4as t$e fore losure rig$tfully eCer ise% /y t$e ,N& a"% D&,, /ut also, fro. t$e fa ts of t$e ase, t$e ar/itrators i" .a7i"g t$e a4ar% 4e"t /eyo"% t$e ar/itratio" agree.e"t. '" t$eir o.plai"t file% /efore t$e trial ourt, private respo"%e"t Ca/arrus, et al. praye% for Du%g.e"t i" t$eir favorG 1. De lari"g t$e fore losure effe te% /y t$e %efe"%a"ts D&, a"% ,N& o" t$e assets of ++'C "ull a"% voi% a"% %ire ti"g sai% %efe"%a"ts to restore t$e fore lose% assets to t$e possessio" of ++'C, to re"%er a" a ou"ti"g of t$eir use a"%Jor operatio" of sai% assets a"% to i"%e."ify ++'C for t$e loss o asio"e% /y its %ispossessio" or t$e %eterioratio" t$ereofF 2. Dire ti"g t$e %efe"%a"ts D&, a"% ,N& to $o"or a"% perfor. t$eir o..it.e"ts u"%er t$e fi"a" ial reorga"i-atio" pla" 4$i $ 4as approve% at t$e a""ual sto 7$ol%ersB .eeti"g of ++'C o" 3) April 1!0*F 3. Co"%e."i"g t$e %efe"%a"ts D&, a"% ,N&, Doi"tly a"% severally to pay t$e plai"tiffs a tual %a.ages o"sisti"g of t$e loss of value of t$eir i"vest.e"t a.ou"ti"g to "ot less t$a" ,0),))),))).)), t$e %a."u. e.erges a"% lu ru. essa"s i" su $ a.ou"t as .ay /e esta/lis$ %uri"g t$e trial, .oral %a.ages i" su $ a.ou"t as t$is Ho"ora/le Court .ay %ee. Dust a"% e;uita/le i" t$e pre.ises, eCe.plary %a.ages i" su $ a.ou"t as t$is Ho"ora/le Court .ay o"si%er appropriate for t$e purpose of setti"g a" eCa.ple for t$e pu/li goo%, attor"eyBs fees a"% litigatio" eCpe"ses i" su $ a.ou"ts as .ay /e prove" %uri"g t$e trial, a"% t$e osts legally taCa/le i" t$is litigatio". 9urt$er, ,lai"tiffs pray for su $ ot$er reliefs as .ay /e Dust a"% e;uita/le i" t$e pre.ises.@**A =po" su/.issio" for ar/itratio", t$e Co.pro.ise a"% Ar/itratio" Agree.e"t of t$e parties learly a"% eCpli itly %efi"e% a"% li.ite% t$e issues to t$e follo4i"gG 1a3 4$et$er ,LA'N#'99S $ave t$e apa ity or t$e perso"ality to i"stitute t$is %erivative suit i" /e$alf of t$e ++'C or its %ire torsF 1/3 4$et$er or "ot t$e a tio"s lea%i"g to, a"% i" lu%i"g, t$e ,N&:D&, fore losure of t$e ++'C assets 4ere proper, vali% a"% i" goo% fait$.@*5A 'te. No. 0 of t$e Agree.e"t provi%es for t$e perio% /y 4$i $ t$e Co..ittee 4as to re"%er its %e isio", as 4ell as t$e "ature t$ereofG 0. De isio". #$e o..ittee s$all issue a %e isio" o" t$e o"troversy "ot later t$a" siC 163 .o"t$s fro. t$e %ate of its o"stitutio". '" t$e eve"t t$e o..ittee fi"%s t$at ,LA'N#'99S $ave t$e perso"ality to file t$is suit a"% eCtra:Du%i ial fore losure of t$e ++'C assets 4ro"gful, it s$all .a7e a" a4ar% i" favor of t$e ,LA'N#'99S 1eC lu%i"g D&,3, i" a" a.ou"t as .ay /e esta/lis$e% or 4arra"te% /y t$e evi%e" e 4$i $ s$all /e paya/le i" ,$ilippi"e ,esos at t$e ti.e of t$e a4ar%. Su $ a4ar% s$all /e pai% /y t$e A,# or its su essor:i":i"terest

4it$i" siCty 16)3 %ays fro. t$e %ate of t$e a4ar% i" a or%a" e 4it$ t$e provisio"s of par. ! $ereu"%er. C C C. #$e ,LA'N#'99SB re.e%ies u"%er t$is Se tio" s$all /e i" a%%itio" to ot$er re.e%ies t$at .ay /e availa/le to t$e ,LA'N#'99S, all su $ re.e%ies /ei"g u.ulative a"% "ot eC lusive of ea $ ot$er. 2" t$e ot$er $a"%, i" ase t$e ar/itratio" o..ittee fi"%s t$at ,LA'N#'99S $ave "o apa ity to sue a"%Jor t$at t$e eCtra: Du%i ial fore losure is vali% a"% legal, it s$all also .a7e a" a4ar% i" favor of A,# /ase% o" t$e ou"ter lai.s of D&, a"% ,N& i" a" a.ou"t as .ay /e esta/lis$e% or 4arra"te% /y t$e evi%e" e. #$is %e isio" of t$e ar/itratio" o..ittee i" favor of A,# s$all li7e4ise fi"ally settle all issues regar%i"g t$e fore losure of t$e ++'C assets so t$at t$e fu"%s $el% i" es ro4 .e"tio"e% i" par. ! $ereu"%er 4ill t$us /e release% i" full i" favor of A,#.@*6A #$e lear a"% eCpli it ter.s of t$e su/.issio" "ot4it$sta"%i"g, t$e Ar/itratio" Co..ittee learly eC ee%e% its po4ers or so i.perfe tly eCe ute% t$e.G 1a3 i" ruli"g o" a"% %e lari"g vali% t$e 9R,F 1/3 i" a4ar%i"g %a.ages to ++'C 4$i $ 4as "ot a party to t$e %erivative suitF a"% 1 3 i" a4ar%i"g .oral %a.ages to 8esus S. Ca/arrus, Sr.

t$e D&, a" "ot vali%ly re"ege o" its o..it.e"ts si.ply /e ause at t$e sa.e ti.e, it $el% i"terest agai"st t$e ++'C. #$e fa t, of ourse, is t$at as A,# itself asserte%, t$e 9R, 4as /ei"g H arrie% outI alt$oug$ appare"tly, it 4oul% suppose%ly fall s$ort of its targets. Assu.i"g t$at t$e 9R, 4oul% fail to .eet its targets, t$e D&,:a"% so t$is Co..ittee $ol%s: a" "ot, i" a"y eve"t, /roo7 a"y %e"ial t$at it 4as /ou"% to /egi" 4it$, a"% t$e fa t is t$at a%e;uate or "ot 1t$e 9R,3, t$e gover".e"t is still /ou"% /y virtue of its a ts. #$e 9R,, of ourse, %i% "ot itself pro.ise a resou"%i"g su ess, alt$oug$ it raise% D&,Bs e;uity i" ++'C to 0(N. 't is "ot eC use, $o4ever, for t$e gover".e"t to %e"y its o..it.e"ts.@52A Atty. Siso", $o4ever, %i% "ot agree a"% o/serve% t$atG orre tly

59e "r#;ters oversteppe *ro:r"2.

t9e;r poAers #y

e1l"r;n: "s v"l;

propose

4;n"n1;"l &estru1tur;n:

#$e Ar/itratio" Co..ittee 4e"t /eyo"% its .a"%ate a"% t$us a te% i" eC ess of its po4ers 4$e" it rule% o" t$e vali%ity of, a"% gave effe t to, t$e propose% 9R,. '" su/.itti"g t$e ase to ar/itratio", t$e parties $a% .utually agree% to li.it t$e issue to t$e Hvali%ity of t$e fore losureI a"% to tra"sfor. t$e reliefs praye% for t$erei" i"to pure .o"ey lai.s. #$ere is a/solutely "o evi%e" e t$at t$e D&, a"% ,N& agree%, eCpressly or i.plie%ly, to t$e propose% 9R,. 't a""ot /e overe.p$asi-e% t$at a 9R,, as a o"tra t, re;uires t$e o"se"t of t$e parties t$ereto.@*(A #$e o"tra t .ust /i"% /ot$ o"tra ti"g parties.@*0A ,rivate respo"%e"ts eve" /y t$eir o4" a%.issio" re og"i-e% t$at t$e 9R, $a% yet "ot /ee" arrie% out a"% t$at t$e loa"s of ++'C $a% "ot yet /ee" o"verte% i"to e;uity.@*!A Ho4ever, t$e ar/itratio" Co..ittee "ot o"ly %e lare% t$e 9R, vali% a"% effe tive, /ut also o"verte% t$e loa"s of ++'C i"to e;uity raisi"g t$e e;uity of D&, to 0(N.@5)A #$e Ar/itratio" Co..ittee rule% t$at t$ere 4as Ha o..it.e"t to arry out t$e 9R,I@51A o" t$e grou"% of pro.issory estoppel. Si.ilarly, t$e pri" iple of pro.issory estoppel applies i" t$e prese"t ase o"si%eri"g as 4e o/serve%, t$e fa t t$at t$e gover".e"t 1t$at is Alfre%o Eelayo3 4as t$e 9R,Bs propo"e"t. Alt$oug$ t$e plai"tiffs are agree% t$at t$e gover".e"t eCe ute% "o for.al agree.e"t, t$e fa t re.ai"s t$at t$e D&, itself 4$i $ .a%e represe"tatio"s t$at t$e 9R, o"stitute% a H4ay outI for ++'C. #$e Co..ittee /elieves t$at alt$oug$ t$e D&, %i% "ot for.ally agree 1assu.i"g t$at t$e /oar% a"% sto 7$ol%ersB approvals 4ere "ot for.al e"oug$3, it is /ou"% "o"et$eless if o"ly for its o"spi uous represe"tatio"s. Alt$oug$ t$e D&, sat i" t$e /oar% i" a %ual apa ity:as $ol%er of 36N of ++'CBs e;uity 1at t$at ti.e3 a"% as ++'CBs re%itor:

&ut t$e %o tri"e of pro.issory estoppel a" $ar%ly fi"% appli atio" $ere. #$e "earest t$at t$ere a" /e sai% of a"y estoppel /ei"g prese"t i" t$is ase is t$e fa t t$at t$e /oar% of ++'C 4as, at t$e ti.e t$e 9R, 4as a%opte%, .ostly o.pose% of ,N& a"% D&, represe"tatives. &ut t$ose represe"tatives, si"gly or olle tively, are "ot t$e.selves ,N& or D&,. #$ey are i"%ivi%uals 4it$ perso"alities separate a"% %isti" t fro. t$e /a"7s t$ey represe"t. ,N& a"% D&, $ave %iffere"t /oar%s 4it$ %iffere"t .e./ers 4$o .ay $ave %iffere"t %e isio"s. 't is u"fair to i.pose upo" t$e. t$e %e isio" of t$e /oar% of a"ot$er o.pa"y a"% t$us pi" t$e. %o4" o" t$e e;uita/le pri" iple of estoppel. 5stoppel is a pri" iple /ase% o" e;uity a"% it is ertai"ly "ot e;uita/le to apply it i" t$is parti ular situatio". 2t$er4ise t$e rig$ts of e"tirely separate, %isti" t a"% auto"o.ous legal e"tities li7e ,N& a"% D&, 4it$ t$ousa"%s of sto 7$ol%ers 4ill /e suppresse% a"% re"%ere% "ugatory.@53A As a rule, a orporatio" eCer ises its po4ers, i" lu%i"g t$e po4er to e"ter i"to o"tra ts, t$roug$ its /oar% of %ire tors. <$ile a orporatio" .ay appoi"t age"ts to e"ter i"to a o"tra t i" its /e$alf, t$e age"t, s$oul% "ot eC ee% $is aut$ority.@5*A '" t$e ase at /ar, t$ere 4as "o s$o4i"g t$at t$e represe"tatives of ,N& a"% D&, i" ++'C eve" $a% t$e re;uisite aut$ority to e"ter i"to a %e/t:for:e;uity s4ap. A"% if t$ey $a% su $ aut$ority, t$ere 4as "o s$o4i"g t$at t$e /a"7s, t$roug$ t$eir /oar% of %ire tors, $a% ratifie% t$e 9R,. 9urt$er, $o4 oul% t$e ++'C /e e"title% to a /ig a.ou"t of .oral %a.ages 4$e" its re%it reputatio" 4as "ot eCa tly so.et$i"g to /e o"si%ere% sou"% a"% 4$oleso.e. ="%er Arti le 221( of t$e Civil Co%e, .oral %a.ages i" lu%e /es.ir $e% reputatio" 4$i $ a orporatio" .ay possi/ly suffer. A orporatio" 4$ose over%ue a"% u"pai% %e/ts to t$e Gover".e"t alo"e rea $e% a tre.e"%ous a.ou"t of ,22 &illio" ,esos a""ot ertai"ly $ave a soli% /usi"ess reputatio" to /rag a/out. As Atty. Siso" i" $is separate opi"io" persuasively put itG &esi%es, it is "ot yet a 4ell settle% Durispru%e" e t$at orporatio"s are e"title% to .oral %a.ages. <$ile t$e Supre.e Court .ay $ave a4ar%e% .oral %a.ages to a orporatio" for /es.ir $e% reputatio" i" +a./ulao vs. ,N& 22 SCRA 35!, su $ ruli"g a""ot fi"% appli atio" i" t$is ase. 't .ust /e poi"te% out t$at 4$e" t$e suppose% 4ro"gful a t of fore losure 4as %o"e, ++'CBs re%it reputatio" 4as "o lo"ger a %esira/le o"e. #$e o.pa"y t$e" 4as alrea%y sufferi"g fro. serious fi"a" ial risis 4$i $ %efi"itely proDe ts a" i.age "ot o.pati/le 4it$ goo% a"% 4$oleso.e reputatio". So it oul%

"ot /e sai% t$at t$ere 4as a Hreputatio"I /es.ir $es /y t$e a t of fore losure.@55A

153 it 4oul% i"volve o"fusio" i" a as ertai"i"g t$e effe t of partial re overy /y a" i"%ivi%ual o" t$e %a.ages re overa/le /y t$e orporatio" for t$e sa.e a t.@50A 'f at all a" a4ar% 4as %ue ++'C, 4$i $ it 4as "ot, t$e sa.e s$oul% $ave /ee" give" sans %e%u tio", regar%less of 4$et$er or "ot t$e party lia/le $a% e;uity i" t$e orporatio", i" vie4 of t$e %o tri"e t$at a orporatio" $as a perso"ality separate a"% %isti" t fro. its i"%ivi%ual sto 7$ol%ers or .e./ers. D&,Bs allege% e;uity, eve" if it 4ere i"%ee% 0(N, %i% "ot give it o4"ers$ip over a"y orporate property, i" lu%i"g t$e .o"etary a4ar%, its rig$t over sai% orporate property /ei"g a .ere eCpe ta" y or i" $oate rig$t.@5!ANota/ly, t$e stipulatio" eve" $a% t$e effe t of preDu%i i"g t$e ot$er re%itors of ++'C.

59e "r#;ters e@1ee e

t9e;r "ut9or;ty ;n "A"r ;n:

"2":es to MM+C, A9;19 ;s not ;2ple" e

"s "

p"rty to t9e er;v"t;ve su;t.

Civil Co%e No. !!)) file% /efore t$e R#C /ei"g a %erivative suit, ++'C s$oul% $ave /ee" i.plea%e% as a party. 't 4as "ot Doi"e% as a party plai"tiff or party %efe"%a"t at a"y stage of t$e pro ee%i"gs. As it is, t$e a4ar% of %a.ages to ++'C, 4$i $ 4as "ot a party /efore t$e Ar/itratio" Co..ittee, is a o.plete "ullity. Settle% is t$e %o tri"e t$at i" a %erivative suit, t$e orporatio" is t$e real party i" i"terest 4$ile t$e sto 7$ol%er fili"g suit for t$e orporatio"Bs /e$alf is o"ly "o.i"al party. #$e orporatio" s$oul% /e i" lu%e% as a party i" t$e suit. A" i"%ivi%ual sto 7$ol%er is per.itte% to i"stitute a %erivative suit o" /e$alf of t$e orporatio" 4$erei" $e $ol%s sto 7 i" or%er to prote t or vi"%i ate orporate rig$ts, 4$e"ever t$e offi ials of t$e orporatio" refuse to sue, or are t$e o"es to /e sue% or $ol% t$e o"trol of t$e orporatio". '" su $ a tio"s, t$e sui"g sto 7$ol%er is regar%e% as a "o.i"al party, 4it$ t$e orporatio" as t$e real party i" i"terest. C C C.@56A 't is a o"%itio" sine =ua non t$at t$e i.plea%e% as a party /e ause: orporatio" /e

59e "r#;ters, l;EeA;se, e@1ee e t9e;r "ut9or;ty ;n "A"r ;n: 2or"l "2":es to 6esus C"#"rrus, Sr.

't is perpleCi"g $o4 t$e Ar/itratio" Co..ittee a" i" o"e /reat$ rule t$at t$e ase /efore it is a %erivative suit, i" 4$i $ t$e aggrieve% party or t$e real party i" i"terest is suppose%ly t$e ++'C, a"% at t$e sa.e ti.e a4ar% .oral %a.ages to a" i"%ivi%ual sto 7$ol%er, to 4itG <H5R592R5, pre.ises re"%ere%G CCC. 3. 2r%eri"g t$e %efe"%a"t to pay to t$e plai"tiff, 8esus S. Ca/arrus, Sr., t$e su. of ,1),))),))).)), to /e satisfie% li7e4ise fro. t$e fu"%s $el% u"%er es ro4 pursua"t to t$e 5s ro4 Agree.e"t %ate% April 22, 1!00 or to su $ su/se;ue"t es ro4 agree.e"t t$at 4oul% superse%e it, pursua"t to paragrap$ 1!3, Co.pro.ise a"% Ar/itratio" Agree.e"t, as a"% for .oral %a.agesF C C C@6)A #$e .aDority %e isio" of t$e Ar/itratio" Co..ittee soug$t to Dustify its a4ar% of .oral %a.ages to 8esus S. Ca/arrus, Sr. /y poi"ti"g to t$e fa t t$at a.o"g t$e assets sei-e% /y t$e gover".e"t 4ere assets /elo"gi"g to '"%ustrial 5"terprise '" . 1'5'3, of 4$i $ Ca/arrus is t$e .aDority sto 7$ol%er. 't t$e" a 7"o4le%ge t$at Ca/arrus $a% alrea%y re overe% sai% assets i" t$e R#C, /ut t$at H$e 4o" "o .ore t$a" a tual %a.ages. <$ile t$e Co..ittee a""ot possi/ly spea7 for t$e R#C, t$ere is "o %ou/t t$at 8esus S. Ca/arrus, Sr., suffere% .oral %a.ages o" a ou"t of t$at spe ifi fore losure, %a.ages t$e Co..ittee /elieves a"% so $ol%s, $e 8esus S. Ca/arrus, Sr., .ay /e a4ar%e% i" t$is pro ee%i"g.I@61A Ca/arrusB ause of a tio" for t$e sei-ure of t$e assets /elo"gi"g to '5', of 4$i $ $e is t$e .aDority sto 7$ol%er, $avi"g /ee" ve"tilate% i" a o.plai"t $e previously file% 4it$ t$e R#C, fro. 4$i $ $e o/tai"e% a tual %a.ages, $e 4as /arre% res 8udicata fro. fili"g a si.ilar ase i" a"ot$er ourt, t$is ti.e as7i"g for .oral %a.ages 4$i $ $e faile% to get fro. t$e earlier ase.@62A <orse, private respo"%e"ts violate% t$e rule agai"st "o":foru. s$oppi"g. 't is a /asi postulate t$at s orporatio" $as a perso"ality separate a"% %isti" t fro. its sto 7$ol%ers.@63A #$e properties fore lose% /elo"ge% to ++'C, "ot to its sto 7$ol%ers. He" e, if 4ro"g 4as o..itte% i" t$e fore losure, it 4as %o"e agai"st t$e orporatio". A"ot$er reaso" is t$at 8esus S. Ca/arrus, Sr. a""ot %ire tly lai. t$ose %a.ages for $i.self t$at 4oul% result i" t$e appropriatio" /y, a"% t$e %istri/utio" to, $i. part of t$e orporatio"Bs assets /efore t$e %issolutio" of t$e orporatio" a"% t$e li;ui%atio" of its %e/ts a"% lia/ilities. #$e o"si%ere%, Du%g.e"t is $ere/y

C C C. Not o"ly is t$e orporatio" a" i"%ispe"si/le party, /ut it is also t$e prese"t rule t$at it .ust /e serve% 4it$ pro ess. #$e reaso" give" is t$at t$e Du%g.e"t .ust /e .a%e /i"%i"g upo" t$e orporatio" a"% i" or%er t$at t$e orporatio" .ay get t$e /e"efit of t$e suit a"% .ay "ot /ri"g a su/se;ue"t suit agai"st t$e sa.e %efe"%a"ts for t$e sa.e ause of a tio". '" ot$er 4or%s t$e orporatio"s .ust /e Doi"e% as party /e ause it is its ause of a tio" t$at is /ei"g litigate% a"% /e ause Du%g.e"t .ust /e a res a8udicata agai"st it.@5(A #$e reaso"s give" for "ot allo4i"g %ire t i"%ivi%ual suit areG 113 C C C Ht$e u"iversally re og"i-e% %o tri"e t$at a sto 7$ol%er i" a orporatio" $as "o title legal or e;uita/le to t$e orporate propertyF t$at /ot$ of t$ese are i" t$e orporatio" itself for t$e /e"efit of t$e sto 7$ol%ers.I '" ot$er 4or%s, to allo4 s$are$ol%ers to sue separately 4oul% o"fli t 4it$ t$e separate orporate e"tity pri" ipleF 123 C C C t$at t$e prior rig$ts of t$e re%itors .ay /e preDu%i e%. #$us, our Supre.e Court $el% i" t$e ase of !vangelista v. Santos, t$at Ht$e sto 7$ol%ers .ay "ot %ire tly lai. t$ose %a.ages for t$e.selves for t$at 4oul% result i" t$e appropriatio" /y, a"% t$e %istri/utio" a.o"g t$e. of part of t$e orporate assets /efore t$e %issolutio" of t$e orporatio" a"% t$e li;ui%atio" of its %e/ts a"% lia/ilities, so.et$i"g 4$i $ a""ot /e legally %o"e i" vie4 of se tio" 16 of t$e Corporatio" La4 CCCFI 133 t$e fili"g of su $ suits 4oul% o"fli t 4it$ t$e %uty of t$e .a"age.e"t to sue for t$e prote tio" of all o" er"e%F 1*3 it 4oul% pro%u e 4asteful .ultipli ity of suitsF a"%

Ar/itratio" Co..ittee, t$erefore, passe% upo" .atters "ot su/.itte% to it. +oreover, sai% ause of a tio" $a% alrea%y /ee" %e i%e% i" a separate ase. 't is t$us ;uite pate"t t$at t$e ar/itratio" o..ittee eC ee%e% t$e aut$ority gra"te% to it /y t$e partiesB Co.pro.ise a"% Ar/itratio" Agree.e"t /y a4ar%i"g .oral %a.ages to 8esus S. Ca/arrus, Sr. Atty. Siso", i" $is separate opi"io", li7e4ise eCpresse% /efu%%le.e"t to t$e a4ar% of .oral %a.ages to 8esus S. Ca/arrus, Sr.G 't is lear a"% it a""ot /e %ispute% t$erefore t$at /ase% o" t$ese stipulate% issues, t$e parties t$e.selves $ave agree% t$at t$e /asi i"gre%ie"t of t$e auses of a tio" i" t$is ase is t$e 4ro"g o..itte% o" t$e orporatio"1++'C3 for t$e allege% illegal fore losure of its assets. &y agreei"g to t$is stipulatio", ,LA'N#'99S t$e.selves 1Ca/arrus, et al.3 a%.it t$at t$e ause of a tio" pertai"s o"ly to t$e orporatio" 1++'C3 a"% t$at t$ey are fili"g t$is for a"% i" /e$alf of ++'C. ,erfor e t$is $as to /e so /e ause it is t$e /asi rule i" Corporatio" La4 t$at Ht$e s$are$ol%ers $ave "o title, legal or e;uita/le to t$e property 4$i $ is o4"e% /y t$e orporatio" 113 A.. 8ur. 165F ,as ual vs. 2res o, 1* ,$il. 033. '" Ga"-o" K So"s vs. Register of Dee%s, 6 SCRA 3(3, t$e rule $as /ee" reiterate% t$at Ta sto 7$ol%er is "ot t$e o:o4"er of orporate property.B Si" e t$e property or assets fore lose% /elo"gs @si A to ++'C, t$e 4ro"g o..itte%, if a"y, is %o"e agai"st t$e orporatio". #$ere is t$erefore "o %ire t i"Dury or %ire t violatio" of t$e rig$ts of Ca/arrus et al. #$ere is "o 4ay, legal or e;uita/le, /y 4$i $ Ca/arrus et al. oul% re over %a.ages i" t$eir perso"al apa ities eve" assu.i"g or Dust /e ause t$e fore losure is i.proper or i"vali%. #$e Co.pro.ise a"% Ar/itratio" Agree.e"t itself a"% t$e ele.e"tary pri" iples of Corporatio" La4 say so. #$erefore, ' a. o"strai"e% to %isse"t fro. t$e a4ar% of .oral %a.ages to Ca/arrus.@6*A 9ro. t$e foregoi"g %is ussio"s, it is evi%e"t t$at, "ot o"ly %i% t$e ar/itratio" o..ittee eC ee% its po4ers or so i.perfe tly eCe ute t$e., /ut also, its fi"%i"gs a"% o" lusio"s are palpa/ly %evoi% of a"y fa tual /asis a"% i" .a"ifest %isregar% of t$e la4. <e %o "ot fi"% it "e essary to re.a"% t$is ase to t$e R#C for appropriate a tio". #$e plea%i"gs a"% .e.ora"%a file% 4it$ t$is Court, as 4ell as i" t$e Court of Appeals, raise% a"% eCte"sively %is usse% t$e issues o" t$e .erits. Su $ /ei"g t$e ase, t$ere is suffi ie"t /asis for us to resolve t$e o"troversy /et4ee" t$e parties a" $ore% o" t$e re or%s a"% t$e plea%i"gs /efore us.@65A >H-&-4/&-, t$e De isio" of t$e Court of Appeals %ate% 8uly 1(, 1!!5, as 4ell as t$e 2r%ers of t$e Regio"al #rial Court of +a7ati, &ra" $ 62, %ate% Nove./er 20, 1!!* a"% 8a"uary 1!, 1!!5, is $ere/y R5E5RS5D a"% S5# AS'D5, a"% t$e %e isio" of t$e Ar/itratio" Co..ittee is $ere/y EACA#5D. S/ /&D-&-D ,omero (Chairman) J., ,lease see Disse"ti"g 2pi"io". 4urisima, J., o" ur a"% also Doi"e% t$e separate o" urri"g opi"io" of 8. ,ar%o. 4ardo, J., see separate o" urri"g opi"io". 9'RS# D'E'S'2N

'A5+/'AL +&&+%A5+/' ADM+'+S5&A5+/' H'+AI, petitioner, vs. H/'/&A!L- C/U&5 /4 A**-ALS H4t9 D;v;s;onI, C/'S5&UC5+/' +'DUS5&< A&!+5&A5+/' C/MM+SS+/', "n H<D&/ &-S/U&C-S C/'5&AC5/&S C/&*/&A5+/', respondents. D-C+S+/' DA,+D-, 6&., 0.J.7 '" t$is spe ial ivil a tio" for certiorari u"%er Rule 65 of t$e Rules of Court, t$e Natio"al 'rrigatio" A%.i"istratio" 1$ereafter N'A3, see7s to a""ul a"% set asi%e t$e Resolutio"s@1Aof t$e Court of Appeals i" CA:GR. S, No. 3(10) %ate% 20 8u"e 1!!6 a"% 2* 9e/ruary 1!!(, 4$i $ %is.isse% respe tively N'ABs petitio" for certiorari a"% rohibition agai"st t$e Co"stru tio" '"%ustry Ar/itratio" Co..issio" 1$ereafter C'AC3, a"% t$e .otio" for re o"si%eratio" t$ereafter file%. Re or%s s$o4 t$at i" a o.petitive /i%%i"g $el% /y N'A i" August 1!(0, Hy%ro Resour es Co"tra tors Corporatio" 1$ereafter H6DR23 4as a4ar%e% Co"tra t +,':C:2 for t$e o"stru tio" of t$e .ai" ivil 4or7s of t$e +agat River +ulti: ,urpose ,roDe t. #$e o"tra t provi%e% t$at H6DR2 4oul% /e pai% partly i" ,$ilippi"e pesos a"% partly i" =.S. %ollars. H6DR2 su/sta"tially o.plete% t$e 4or7s u"%er t$e o"tra t i" 1!02 a"% fi"al a epta" e /y N'A 4as .a%e i" 1!0*. H6DR2 t$ereafter %eter.i"e% t$at it still $a% a" a ou"t re eiva/le fro. N'A represe"ti"g t$e %ollar rate %iffere"tial of t$e pri e es alatio" for t$e o"tra t.@2A After u"su essfully pursui"g its ase 4it$ N'A, H6DR2, o" ( De e./er 1!!*, file% 4it$ t$e C'AC a Re;uest for A%Du%i atio" of t$e aforesai% lai.. H6DR2 "o.i"ate% siC ar/itrators for t$e ar/itratio" pa"el, fro. a.o"g 4$o. C'AC appoi"te% 5"gr. Lauro +. Cru-. 2" 6 8a"uary 1!!5, N'A file% its A"s4er 4$erei" it ;uestio"e% t$e Duris%i tio" of t$e C'AC allegi"g la 7 of ause of a tio", la $es a"% estoppel i" vie4 of H6DR2Bs allege% failure to avail of its rig$t to su/.it t$e %ispute to ar/itratio" 4it$i" t$e pres ri/e% perio% as provi%e% i" t$e o"tra t. 2" t$e sa.e %ate, N'A file% a Co.plia" e 4$erei" it "o.i"ate% siC ar/itrators, fro. a.o"g 4$o. C'AC appoi"te% Atty. Custo%io 2. ,arla%e, a"% .a%e a ou"ter lai. for ,1,))),))) as .oral %a.agesF at least ,1)),))) as eCe.plary %a.agesF ,1)),))) as attor"eyBs feesF a"% t$e osts of t$e ar/itratio".@3A #$e t4o %esig"ate% ar/itrators appoi"te% Certifie% ,u/li A ou"ta"t 8ove" &. 8oa;ui" as C$air.a" of t$e Ar/itratio" ,a"el. #$e parties 4ere re;uire% to su/.it opies of t$e evi%e" e t$ey i"te"%e% to prese"t %uri"g t$e pro ee%i"gs a"% 4ere provi%e% t$e %raft #er.s of Refere" e.@*A At t$e preli.i"ary o"fere" e, N'A t$roug$ its ou"sel Atty. 8oy C. Legaspi of t$e 2ffi e of t$e Gover".e"t Corporate Cou"sel, .a"ifeste% t$at it oul% "ot a%.it t$e ge"ui"e"ess of H6DR2Bs evi%e" e si" e N'ABs re or%s $a% alrea%y /ee" %estroye%. N'A re;ueste% a" opportu"ity to eCa.i"e t$e origi"als of t$e %o u.e"ts 4$i $ H6DR2 agree% to provi%e.@5A After rea $i"g a" a or% o" t$e issues to /e o"si%ere% /y t$e ar/itratio" pa"el, t$e parties s $e%ule% t$e %ates of $eari"gs a"% of su/.issio" of si.ulta"eous .e.ora"%a.@6A 2" 13 +ar $ 1!!5, N'A file% a +otio" to Dis.iss@(Aallegi"g la 7 of Duris%i tio" over t$e %isputes. N'A o"te"%e% t$at t$ere 4as "o agree.e"t 4it$ H6DR2 to su/.it t$e %ispute to C'AC for ar/itratio" o"si%eri"g t$at t$e o"stru tio" o"tra t 4as eCe ute% i" 1!(0 a"% t$e proDe t o.plete% i" 1!02, 4$ereas t$e Co"stru tio" '"%ustry

.%.&. 'o. 12(10(. 'ove2#er 17, 1(((3

Ar/itratio" La4 reati"g C'AC 4as sig"e% o"ly i" 1!05F a"% t$at 4$ile t$ey $ave agree% to ar/itratio" as a .o%e of settle.e"t of %isputes, t$ey oul% "ot $ave o"te.plate% su/.issio" of t$eir %isputes to C'AC. N'A furt$er argue% t$at re or%s s$o4 t$at it $a% "ot volu"tarily su/.itte% itself to ar/itratio" /y C'AC iti"g #5SC2 Servi es, '" . v. Ho". A/ra$a. Eera, et al.,@0A 4$erei" it 4as rule%G C'AC %i% "ot a ;uire Duris%i tio" over t$e %ispute arisi"g fro. t$e su/: o"tra t agree.e"t /et4ee" petitio"er #5SC2 a"% private respo"%e"t LAR2SA. #$e re or%s %o "ot s$o4 t$at t$e parties agree% to su/.it t$e %isputes to ar/itratio" /y t$e C'AC CCCC. <$ile /ot$ parties i" t$e su/: o"tra t $a% agree% to su/.it t$e .atter to ar/itratio", t$is 4as o"ly /et4ee" t$e.selves, "o re;uest $avi"g /ee" .a%e /y /ot$ 4it$ t$e C'AC. He" e, as alrea%y state%, t$e C'AC, $as "o Duris%i tio" over t$e %ispute. CCCC. No4$ere i" t$e sai% arti le 1su/: o"tra t3 %oes it .e"tio" t$e C'AC, .u $ less, vest Duris%i tio" 4it$ t$e C'AC. 2" 11 April 1!!5, t$e ar/itral /o%y issue% a" or%er@!A 4$i $ %eferre% t$e %eter.i"atio" of t$e .otio" to %is.iss a"% resolve% to pro ee% 4it$ t$e $eari"g of t$e ase o" t$e .erits as t$e grou"%s ite% /y N'A %i% "ot see. to /e Hi"%u/ita/le.I N'A file% a .otio" for re o"si%eratio" of t$e aforesai% 2r%er. C'AC i" %e"yi"g t$e .otio" for re o"si%eratio" rule% t$at it $as Duris%i tio" over t$e H6DR2Bs lai. over N'A pursua"t to 5.2 1))0 a"% t$at t$e $eari"g s$oul% pro ee% as s $e%ule%.@1)A 2" 26 +ay 1!!6, N'A file% 4it$ t$e Court of Appeals a" origi"al a tio" of certiorari a"% pro$i/itio" 4it$ prayer for restrai"i"g or%er a"%Jor i"Du" tio", see7i"g to a""ul t$e 2r%ers of t$e C'AC for $avi"g /ee" issue% 4it$out or i" eC ess of Duris%i tio". '" support of its petitio" N'A allege% t$atG A R5S,2ND5N# C'AC HAS N2 A=#H2R'#6 2R 8=R'D'C#'2N #2 H5AR AND #R6 #H'S D'S,=#5 &5#<55N #H5 H5R5'N ,AR#'5S AS 5.2. N2. 1))0 HAD N2 R5#R2AC#'E5 5995C#. ! #H5 D'S,=#5 &5#<55N #H5 ,AR#'5S SH2=LD &5 S5##L5D 'N ACC2RDANC5 <'#H GC N2. 25, AR#. 2)*6 29 #H5 C'E'L C2D5 AND R.A. N2. 0(6 #H5 G2E5RN'NG LA<S A# #H5 #'+5 C2N#RAC# <AS 5O5C=#5D AND #5R+'NA#5D. C 5.2. N2. 1))0 'S A S=&S#AN#'E5 LA<, N2# +5R5L6 ,R2C5D=RAL AS R=L5D &6 #H5 C'AC. D AN 'ND2RS5+5N# 29 #H5 A=D'#2R G5N5RAL D5C'D'NG A C2N#R2E5RS6 'S A D5C'S'2N &5CA=S5 ALL #H5 5L5+5N#S 92R 8=DG+5N# AR5 #H5R5F #H5 C2N#R2E5RS6, #H5 A=#H2R'#6 #2 D5C'D5 AND #H5 D5C'S'2N. '9 '# 'S N2# A,,5AL5D S5AS2NA&L6, #H5 SA+5 &5C2+5S 9'NAL. -

N'A HAS #'+5L6 RA'S5D #H5 'SS=5 29 8=R'SD'C#'2N. '# D'D N2# <A'E5 N2R 'S '# 5S#2,,5D 9R2+ ASSA'L'NG #H5 SA+5. 4 #H5 L5GAL D2C#R'N5 #HA# 8=R'SD'C#'2N 'S D5#5R+'N5D &6 #H5 S#A#=#5 'N 92RC5 A# #H5 #'+5 29 #H5 C2++5NC5+5N# 29 #H5 AC#'2N D25S N2# 2NL6 A,,L6 #2 #H5 'NS#AN# CAS5.@11A #$e Court of Appeals, after fi"%i"g t$at t$ere 4as "o grave a/use of %is retio" o" t$e part of t$e C'AC i" issui"g t$e aforesai% 2r%ers, %is.isse% t$e petitio" i" its Resolutio" %ate% 20 8u"e 1!!6. N'ABs .otio" for re o"si%eratio" of t$e sai% %e isio" 4as li7e4ise %e"ie% /y t$e Court of Appeals o" 26 9e/ruary 1!!(. 2" 2 8u"e 1!!(, N'A file% /efore us a" origi"al a tio" for certiorari a"% pro$i/itio" 4it$ urge"t prayer for te.porary restrai"i"g or%er a"% 4rit of preli.i"ary i"Du" tio", prayi"g for t$e a""ul.e"t of t$e Resolutio"s of t$e Court of Appeals %ate% 20 8u"e 1!!6 a"% 2* 9e/ruary 1!!(. '" t$e sai% spe ial ivil a tio", N'A .erely reiterates t$e issues it raise% /efore t$e Court of Appeals. @12A <e ta7e Du%i ial "oti e t$at o" 1) 8u"e 1!!(, C'AC re"%ere% a %e isio" i" t$e .ai" ase i" favor of H6DR2. @13A N'A assaile% t$e sai% %e isio" 4it$ t$e Court of Appeals. '" vie4 of t$e pe"%e" y of t$e prese"t petitio"s /efore us t$e appellate ourt issue% a resolutio" %ate% 26 +ar $ 1!!0 $ol%i"g i" a/eya" e t$e resolutio" of t$e sa.e u"til after t$e i"sta"t petitio"s $ave /ee" fi"ally %e i%e%.@1*A At t$e outset, 4e "ote t$at t$e petitio" suffers fro. a pro e%ural %efe t t$at 4arra"ts its outrig$t %is.issal. #$e ;uestio"e% resolutio"s of t$e Court of Appeals $ave alrea%y /e o.e fi"al a"% eCe utory /y reaso" of t$e failure of N'A to appeal t$erefro.. '"stea% of fili"g t$is petitio" for certiorari u"%er Rule 65 of t$e Rules of Court, N'A s$oul% $ave file% a ti.ely petitio" for revie4 u"%er Rule *5. #$ere is "o %ou/t t$at t$e Court of Appeals $as Duris%i tio" over t$e spe ial ivil a tio" for certiorari u"%er Rule 65 file% /efore it /y N'A. #$e origi"al Duris%i tio" of t$e Court of Appeals over spe ial ivil a tio"s forcertiorari is veste% upo" it u"%er Se tio" !113 of &.,. 12!. #$is Duris%i tio" is o" urre"t 4it$ t$e Supre.e Court@15A a"% 4it$ t$e Regio"al #rial Court.@16A #$us, si" e t$e Court of Appeals $a% Duris%i tio" over t$e petitio" u"%er Rule 65, a"y allege% errors o..itte% /y it i" t$e eCer ise of its Duris%i tio" 4oul% /e errors of Du%g.e"t 4$i $ are revie4a/le /y ti.ely appeal a"% "ot /y a spe ial ivil a tio" of certiorari.@1(A 'f t$e aggrieve% party fails to %o so 4it$i" t$e regle.e"tary perio%, a"% t$e %e isio" a or%i"gly /e o.es fi"al a"% eCe utory, $e a""ot avail $i.self of t$e 4rit ofcertiorari, $is pre%i a.e"t /ei"g t$e effe t of $is %eli/erate i"a tio".@10A #$e appeal fro. a fi"al %ispositio" of t$e Court of Appeals is a petitio" for revie4 u"%er Rule *5 a"% "ot a spe ial ivil a tio" u"%er Rule 65 of t$e Rules of Court, "o4 Rule *5 a"% Rule 65, respe tively, of t$e 1!!( Rules of Civil ,ro e%ure.@1!A Rule *5 is lear t$at %e isio"s, fi"al or%ers or resolutio"s of t$e Court of Appeals i" a"y ase, i.e., regar%less of t$e "ature of t$e a tio" or pro ee%i"gs i"volve%, .ay /e appeale% to t$is Court /y fili"g a petitio" for revie4, 4$i $ 4oul% /e /ut a o"ti"uatio" of t$e appellate pro ess over t$e origi"al ase.@2)A ="%er Rule *5 t$e regle.e"tary perio% to appeal is fiftee" 1153 %ays fro. "oti e of Du%g.e"t or %e"ial of .otio" for re o"si%eratio".@21A

'" t$e i"sta"t ase t$e Resolutio" of t$e Court of Appeals %ate% 2* 9e/ruary 1!!( %e"yi"g t$e .otio" for re o"si%eratio" of its Resolutio" %ate% 20 8u"e 1!!( 4as re eive% /y N'A o" * +ar $1!!(. #$us, it $a% u"til 1! +ar $ 1!!( 4it$i" 4$i $ to perfe t its appeal. N'A %i% "ot appeal. <$at it %i% 4as to file a" origi"al a tio" for certiorari /efore t$is Court, reiterati"g t$e issues a"% argu.e"ts it raise% /efore t$e Court of Appeals. 9or t$e 4rit of certiorari u"%er Rule 65 of t$e Rules of Court to issue, a petitio"er .ust s$o4 t$at $e $as "o plai", spee%y a"% a%e;uate re.e%y i" t$e or%i"ary ourse of la4 agai"st its per eive% grieva" e.@22A A re.e%y is o"si%ere% Hplai", spee%y a"% a%e;uateI if it 4ill pro.ptly relieve t$e petitio"er fro. t$e i"Durious effe ts of t$e Du%g.e"t a"% t$e a ts of t$e lo4er ourt or age" y. @23A '" t$is ase, appeal 4as "ot o"ly availa/le /ut also a spee%y a"% a%e;uate re.e%y. 2/viously, N'A i"terpose% t$e prese"t spe ial ivil a tio" of certiorari "ot /e ause it is t$e spee%y a"% a%e;uate re.e%y /ut to .a7e up for t$e loss, t$roug$ o.issio" or oversig$t, of t$e rig$t of or%i"ary appeal. 't is ele.e"tary t$at t$e spe ial ivil a tio" of certiorari is "ot a"% a""ot /e a su/stitute for a" appeal, 4$ere t$e latter re.e%y is availa/le, as it 4as i" t$is ase. A spe ial ivil a tio" u"%er Rule 65 of t$e Rules of Court 4ill "ot /e a ure for failure to ti.ely file a petitio" for revie4 o" certiorari u"%er Rule *5 of t$e Rules of Court. @2*A Rule 65 is a" i"%epe"%e"t a tio" t$at a""ot /e availe% of as a su/stitute for t$e lost re.e%y of a" or%i"ary appeal, i" lu%i"g t$at u"%er Rule *5,@25A espe ially if su $ loss or lapse 4as o asio"e% /y o"eBs o4" "egle t or error i" t$e $oi e of re.e%ies.@26A 9or o/vious reaso"s t$e rules for/i% re ourse to a spe ial ivil a tio" for certiorari if appeal is availa/le, as t$e re.e%ies of appeal a"% certiorari are .utually eC lusive a"% "ot alter"ative or su essive.@2(A Alt$oug$ t$ere are eC eptio"s to t$e rules, "o"e is prese"t i" t$e ase at /ar. N'A faile% to s$o4 ir u.sta" es t$at 4ill Dustify a %eviatio" fro. t$e ge"eral rule as to .a7e availa/le a petitio" for certiorari i" lieu of ta7i"g a" appropriate appeal. &ase% o" t$e foregoi"g, t$e i"sta"t petitio" s$oul% /e %is.isse%. '" a"y ase, eve" if t$e issue of te $"i ality is %isregar%e% a"% re ourse u"%er Rule 65 is allo4e%, t$e sa.e result 4oul% /e rea $e% si" e a revie4 of t$e ;uestio"e% resolutio"s of t$e C'AC s$o4s t$at it o..itte% "o grave a/use of %is retio". Co"trary to t$e lai. of N'A, t$e C'AC $as Duris%i tio" over t$e o"troversy. 5Ce utive 2r%er No.1))0, ot$er4ise 7"o4" as t$e HCo"stru tio" '"%ustry Ar/itratio" La4I 4$i $ 4as pro.ulgate% o" * 9e/ruary 1!05, vests upo" C'AC origi"al a"% eC lusive Duris%i tio" over %isputes arisi"g fro., or o""e te% 4it$ o"tra ts e"tere% i"to /y parties i"volve% i" o"stru tio" i" t$e ,$ilippi"es, 4$et$er t$e %ispute arises /efore or after t$e o.pletio" of t$e o"tra t, or after t$e a/a"%o".e"t or /rea $ t$ereof. #$e %isputes .ay i"volve gover".e"t or private o"tra ts. 9or t$e &oar% to a ;uire Duris%i tio", t$e parties to a %ispute .ust agree to su/.it t$e sa.e to volu"tary ar/itratio".@20A #$e o.plai"t of H6DR2 agai"st N'A o" t$e /asis of t$e o"tra t eCe ute% /et4ee" t$e. 4as file% o" ( De e./er 1!!*, %uri"g t$e effe tivity of 5.2. No. 1))0. He" e, it is 4ell 4it$i" t$e Duris%i tio" of C'AC. #$e Duris%i tio" of a ourt is %eter.i"e% /y t$e la4 i" for e at t$e ti.e of t$e o..e" e.e"t of t$e a tio".@2!A N'ABs argu.e"t t$at C'AC $a% "o Duris%i tio" to ar/itrate o" o"tra t 4$i $ pre e%e% its eCiste" e is u"te"a/le. 5.2. 1))0 is lear t$at t$e C'AC $as Duris%i tio" over all %isputes

arisi"g fro. or o""e te% 4it$ o"stru tio" o"tra t 4$et$er t$e %ispute arises /efore or after t$e o.pletio" of t$e o"tra t. #$us, t$e %ate t$e parties e"tere% i"to a o"tra t a"% t$e %ate of o.pletio" of t$e sa.e, eve" if t$ese o urre% /efore t$e o"stitutio" of t$e C'AC, %i% "ot auto.ati ally %ivest t$e C'AC of Duris%i tio" as lo"g as t$e %ispute su/.itte% for ar/itratio" arose after t$e o"stitutio" of t$e C'AC. State% %iffere"tly, t$e Duris%i tio" of C'AC is over t$e %ispute, "ot t$e o"tra tF a"% t$e i"sta"t %ispute $avi"g arise" 4$e" C'AC 4as alrea%y o"stitute%, t$e ar/itral /oar% 4as a tually eCer isi"g urre"t, "ot retroa tive, Duris%i tio". As su $, t$ere is "o "ee% to pass upo" t$e issue of 4$et$er 5.2. No. 1))0 is a su/sta"tive or pro e%ural statute. N'A also o"te"%e% t$at t$e C'AC %i% "ot a ;uire Duris%i tio" over t$e %ispute si" e it 4as o"ly H6DR2 t$at re;ueste% for ar/itratio". 't asserts t$at to a ;uire Duris%i tio" over a ase, as provi%e% u"%er 5.2. 1))0, t$e re;uest for ar/itratio" file% 4it$ C'AC s$oul% /e .a%e /y /ot$ parties, a"% $e" e t$e re;uest /y o"e party is "ot e"oug$. 't is u"%ispute% t$at t$e o"tra ts /et4ee" H6DR2 a"% N'A o"tai"e% a" ar/itratio" lause 4$erei" t$ey agree% to su/.it to ar/itratio" a"y %ispute /et4ee" t$e. t$at .ay arise /efore or after t$e ter.i"atio" of t$e agree.e"t. Co"se;ue"tly, t$e lai. of H6DR2 $avi"g arise" fro. t$e o"tra t is ar/itra/le. N'ABs relia" e 4it$ t$e ruli"g o" t$e ase of #es o Servi es '" orporate% v. Eera, @3)A is .ispla e%. #$e 1!00 C'AC Rules of ,ro e%ure 4$i $ 4ere applie% /y t$is Court i" #es o ase $a% /ee" %uly a.e"%e% /y C'AC Resolutio"s No. 2:!1 a"% 3:!3, Se tio" 1 of Arti le ''' of 4$i $ rea% as follo4sG Submission to C$'C Jurisdiction : A" ar/itratio" lause i" a o"stru tio" o"tra t or a su/.issio" to ar/itratio" of a o"stru tio" o"tra t or a su/.issio" to ar/itratio" of a o"stru tio" %ispute s$all /e %ee.e% a" agree.e"t to su/.it a" eCisti"g or future o"troversy to C'AC Duris%i tio", "ot4it$sta"%i"g t$e refere" e to a %iffere"t ar/itratio" i"stitutio" or ar/itral /o%y i" su $ o"tra t or su/.issio". <$e" a o"tra t o"tai"s a lause for t$e su/.issio" of a future o"troversy to ar/itratio", it is "ot "e essary for t$e parties to e"ter i"to a su/.issio" agree.e"t /efore t$e lai.a"t .ay i"vo7e t$e Duris%i tio" of C'AC. ="%er t$e prese"t Rules of ,ro e%ure, for a parti ular o"stru tio" o"tra t to fall 4it$i" t$e Duris%i tio" of C'AC, it is .erely re;uire% t$at t$e parties agree to su/.it t$e sa.e to volu"tary ar/itratio". ="li7e i" t$e origi"al versio" of Se tio" 1, as applie% i" t$e 1esco ase, t$e la4 as it "o4 sta"%s %oes "ot provi%e t$at t$e parties s$oul% agree to su/.it %isputes arisi"g fro. t$eir agree.e"t spe ifi ally to t$e C'AC for t$e latter to a ;uire Duris%i tio" over t$e sa.e. Rat$er, it is plai" a"% lear t$at as lo"g as t$e parties agree to su/.it to volu"tary ar/itratio", regar%less of 4$at foru. t$ey .ay $oose, t$eir agree.e"t 4ill fall 4it$i" t$e Duris%i tio" of t$e C'AC, su $ t$at, eve" if t$ey spe ifi ally $oose a"ot$er foru., t$e parties 4ill "ot /e pre lu%e% fro. ele ti"g to su/.it t$eir %ispute /efore t$e C'AC /e ause t$is rig$t $as /ee" veste% upo" ea $ party /y la4, i.e., 5.2. No. 1))0.@31A +oreover, it is u"%e"ia/le t$at N'A agree% to su/.it t$e %ispute for ar/itratio" to t$e C'AC. N'A t$roug$ its ou"sel a tively parti ipate% i" t$e ar/itratio" pro ee%i"gs /y fili"g a" a"s4er 4it$ ou"ter lai., as 4ell as its o.plia" e 4$erei" it "o.i"ate% ar/itrators to t$e propose% pa"el, parti ipati"g i" t$e %eli/eratio"s o", a"% t$e for.ulatio" of, t$e #er.s of Refere" e of t$e ar/itratio" pro ee%i"g, a"% eCa.i"i"g t$e

%o u.e"ts su/.itte% /y H6DR2 after N'A as7e% for t$e origi"als of t$e sai% %o u.e"ts.@32A As to t$e %efe"ses of la $es a"% pres riptio", t$ey are evi%e"tiary i" "ature 4$i $ oul% "ot /e esta/lis$e% /y .ere allegatio"s i" t$e plea%i"gs a"% .ust "ot /e resolve% i" a .otio" to %is.iss. #$ose issues .ust /e resolve% at t$e trial of t$e ase o" t$e .erits 4$erei" /ot$ parties 4ill /e give" a.ple opportu"ity to prove t$eir respe tive lai.s a"% %efe"ses. @33A ="%er t$e rule@3*A t$e %efer.e"t of t$e resolutio" of t$e sai% issues 4as, t$us, i" or%er. A" allegatio" of pres riptio" a" effe tively /e use% i" a .otio" to %is.iss o"ly 4$e" t$e o.plai"t o" its fa e s$o4s t$at i"%ee% t$e a tio" $as alrea%y pres ri/e%.@35A '" t$e i"sta"t ase, t$e issue of pres riptio" a"% la $es a""ot /e resolve% o" t$e /asis solely of t$e o.plai"t. 't .ust, $o4ever, /e poi"te% t$at u"%er t$e "e4 rules,@36A %efer.e"t of t$e resolutio" is "o lo"ger per.itte%. #$e ourt .ay eit$er gra"t t$e .otio" to %is.iss, %e"y it, or or%er t$e a.e"%.e"t of t$e plea%i"g. >H-&-4/&-, t$e i"sta"t petitio" is D'S+'SS5D for la 7 of .erit. #$e Court of Appeals is $ere/y D'R5C#5D to pro ee% 4it$ reaso"a/le %ispat $ i" t$e %ispositio" of C.A. G.R. No. **52( a"% i" lu%e i" t$e resolutio" t$ereof t$e issue of la $es a"% pres riptio". S/ /&D-&-D. 4uno, >a unan, JJ., o" ur. 4ardo, a"% ?nares5Santiago,

SALAC'+! 4. !A5-&+'A, CLA,-L A. MA&5+'-? "n C/'S5A'5+'/ %. 6A&AULA, petitioners, vs. *H+L+**+'- +'5-&'A5+/'AL A+& 5-&M+'ALS C/., +'C., MA'+LA +'5-&'A5+/'AL A+&*/&5 AU5H/&+5<, D-*A&5M-'5 /4 5&A'S*/&5A5+/' A'D C/MMU'+CA5+/'S, D-*A&5M-'5 /4 *U!L+C >/&=S A'D H+%H>A<S, S-C&-5A&< L-A'D&/ M. M-'D/?A, ;n 9;s 1"p"1;ty "s He" o8 t9e Dep"rt2ent o8 5r"nsport"t;on "n Co22un;1"t;ons, "n S-C&-5A&< S+M-/' A. DA5UMA'/'%, ;n 9;s 1"p"1;ty "s He" o8 t9e Dep"rt2ent o8 *u#l;1 >orEs "n H;:9A"ys, respondents, 6AC+'5/ ,. *A&AS, &A4A-L *. 'A'5-S, -DUA&D/ C. ?+ALC+5A, >+LL< !U<S/' ,+LLA&AMA, *&/S*-&/ C. '/%&AL-S, *&/S*-&/ A. *+CHA<, 6&., HA&L+' CAS5 A!A</', "n !-'AS+'% /. MACA&A'!/', respondentsintervenors,

.%.&. 'o. 155001. M"y 5, 2))33 C-4-&+'/ C. L/*-?, &AM/' M. SAL-S, AL4&-D/ !. ,AL-'C+A, MA. 5-&-SA ,. %A-&LA', L-/'A&D/ D- LA &/SA, D+'A C. D- L-/', ,+&%+CA5AM+' &/'ALD SCHL/!/M, A'%-L+5/ SA'5/S, MA. LU+SA M. *ALC/' "n SAMAHA'% MA'%%A%A>A SA *AL+*A&A' '% *+L+*+'AS HSM**I, petitioners, vs. *H+L+**+'+'5-&'A5+/'AL A+& 5-&M+'ALS C/., +'C., MA'+LA +'5-&'A5+/'AL A+&*/&5 AU5H/&+5<, D-*A&5M-'5 /4 5&A'S*/&5A5+/' A'D C/MMU'+CA5+/'S, S-C&-5A&< L-A'D&/ M. M-'D/?A, ;n 9;s 1"p"1;ty "s He" o8 t9e Dep"rt2ent o8 5r"nsport"t;on "n Co22un;1"t;ons, respondents. D-C+S+/' *U'/, J.7 ,etitio"ers a"% petitio"ers:i":i"terve"tio" file% t$e i"sta"t petitio"s for pro$i/itio" u"%er Rule 65 of t$e Revise% Rules of Court see7i"g to pro$i/it t$e +a"ila '"ter"atio"al Airport Aut$ority 1+'AA3 a"% t$e Depart.e"t of #ra"sportatio" a"% Co..u"i atio"s 1D2#C3 a"% its Se retary fro. i.ple.e"ti"g t$e follo4i"g agree.e"ts eCe ute% /y t$e ,$ilippi"e Gover".e"t t$roug$ t$e D2#C a"% t$e +'AA a"% t$e ,$ilippi"e '"ter"atio"al Air #er.i"als Co., '" . 1,'A#C23G 113 t$e Co" essio" Agree.e"t sig"e% o" 8uly 12, 1!!(, 123 t$e A.e"%e% a"% Restate% Co" essio" Agree.e"t %ate% Nove./er 26, 1!!!, 133 t$e 9irst Supple.e"t to t$e A.e"%e% a"% Restate% Co" essio" Agree.e"t %ate% August 2(, 1!!!, 1*3 t$e Se o"% Supple.e"t to t$e A.e"%e% a"% Restate% Co" essio" Agree.e"t %ate% Septe./er *, 2))), a"% 153 t$e #$ir% Supple.e"t to t$e A.e"%e% a"% Restate% Co" essio" Agree.e"t %ate% 8u"e 22, 2))1 1 olle tively, t$e ,'A#C2 Co"tra ts3. #$e fa ts are as follo4sG '" August 1!0!, t$e D2#C e"gage% t$e servi es of Aeroport %e ,aris 1AD,3 to o"%u t a o.pre$e"sive stu%y of t$e Ni"oy A;ui"o '"ter"atio"al Airport 1NA'A3 a"% %eter.i"e 4$et$er t$e prese"t airport a" ope 4it$ t$e traffi %evelop.e"t up to t$e year 2)1). #$e stu%y o"siste% of t4o

5N &ANC

.%.&. 'o. 155))1. M"y 5, 2))33 D-M/S5H-'-S *. A%A', 6&., 6/S-*H !. CA5AHA', 6/S- MA&+ !. &-U'+LLA, MA'U-L A'5/'+/ !. !/J-, MAM-&5/ S. CLA&A, &-U-L -. D+MALA'5A, M/&< ,. D/MALA/', C/'&AD/ %. D+MAA'/, L/L+5A &. H+?/', &-M-D+/S *. AD/L4/, !+-',-'+D/ C. H+LA&+/, M+ASC/& >/&=-&S U'+/' $ 'A5+/'AL LA!/& U'+/' HM>U$'LUI, "n *H+L+**+'A+&L+'-S -M*L/<--S ASS/C+A5+/' H*AL-AI, petitioners, vs.*H+L+**+'- +'5-&'A5+/'AL A+& 5-&M+'ALS C/., +'C., MA'+LA +'5-&'A5+/'AL A+&*/&5 AU5H/&+5<, D-*A&5M-'5 /4 5&A'S*/&5A5+/' A'D C/MMU'+CA5+/'S "n S-C&-5A&< L-A'D&/ M. M-'D/?A, ;n 9;s 1"p"1;ty "s He" o8 t9e Dep"rt2ent o8 5r"nsport"t;on "n Co22un;1"t;ons, respondents, M+ASC/& %&/U'DHA'DL+'% C/&*/&A5+/', D'A5A$ >+'%S A,+A5+/' S<S5-MS C/&*/&A5+/', MAC&/AS+A$-U&-S5 S-&,+C-S, +'C., MAC&/AS+A$M-'?+-S A+&*/&5 S-&,+C-S C/&*/&A5+/', M+ASC/& CA5-&+'% S-&,+C-S C/&*/&A5+/', M+ASC/& A+&C&A45 MA+'5-'A'C- C/&*/&A5+/', "n M+ASC/& L/%+S5+CS C/&*/&A5+/', petitioners-inintervention,

.%.&. 'o. 155547. M"y 5, 2))33

partsG first, traffi fore asts, apa ity of eCisti"g fa ilities, NA'A future re;uire.e"ts, propose% .aster pla"s a"% %evelop.e"t pla"sF a"% se o"%, prese"tatio" of t$e preli.i"ary %esig" of t$e passe"ger ter.i"al /uil%i"g. #$e AD, su/.itte% a Draft 9i"al Report to t$e D2#C i" De e./er 1!0!. So.e ti.e i" 1!!3, siC /usi"ess lea%ers o"sisti"g of 8o$" Go7o"g4ei, A"%re4 Gotia"u", He"ry Sy, Sr., Lu io #a", George #y a"% Alfo"so 6u $e"g o .et 4it$ t$e" ,resi%e"t 9i%el E. Ra.os to eCplore t$e possi/ility of i"vesti"g i" t$e o"stru tio" a"% operatio" of a "e4 i"ter"atio"al airport ter.i"al. #o sig"ify t$eir o..it.e"t to pursue t$e proDe t, t$ey for.e% t$e AsiaBs 5.ergi"g Drago" Corp. 1A5DC3 4$i $ 4as registere% 4it$ t$e Se urities a"% 5C $a"ge Co..issio" 1S5C3 o" Septe./er 15, 1!!3. 2" 2 to/er 5, 1!!*, A5DC su/.itte% a" u"soli ite% proposal to t$e Gover".e"t t$roug$ t$e D2#CJ+'AA for t$e %evelop.e"t of NA'A '"ter"atio"al ,asse"ger #er.i"al ''' 1NA'A ',# '''3 u"%er a /uil%:operate:a"%:tra"sfer arra"ge.e"t pursua"t to RA 6!5( as a.e"%e% /y RA ((10 1&2# La43.@1A 2" De e./er 2, 1!!*, t$e D2#C issue% Dept. 2r%er No. !*:032 o"stituti"g t$e ,re;ualifi atio" &i%s a"% A4ar%s Co..ittee 1,&AC3 for t$e i.ple.e"tatio" of t$e NA'A ',# ''' proDe t. 2" +ar $ 2(, 1!!5, t$e" D2#C Se retary 8ose Gar ia e"%orse% t$e proposal of A5DC to t$e Natio"al 5 o"o.i a"% Develop.e"t Aut$ority 1N5DA3. A revise% proposal, $o4ever, 4as for4ar%e% /y t$e D2#C to N5DA o" De e./er 13, 1!!5. 2" 8a"uary 5, 1!!6, t$e N5DA '"vest.e"t Coor%i"ati"g Cou" il 1N5DA 'CC3 R #e $"i al &oar% favora/ly e"%orse% t$e proDe t to t$e 'CC R Ca/i"et Co..ittee 4$i $ approve% t$e sa.e, su/De t to ertai" o"%itio"s, o" 8a"uary 1!, 1!!6. 2" 9e/ruary 13, 1!!6, t$e N5DA passe% &oar% Resolutio" No. 2 4$i $ approve% t$e NA'A ',# ''' proDe t. 2" 8u"e (, 1*, a"% 21, 1!!6, D2#CJ+'AA ause% t$e pu/li atio" i" t4o %aily "e4spapers of a" i"vitatio" for o.petitive or o.parative proposals o" A5DCBs u"soli ite% proposal, i" a or%a" e 4it$ Se . *:A of RA 6!5(, as a.e"%e%. #$e alter"ative /i%%ers 4ere re;uire% to su/.it t$ree 133 seale% e"velopes o" or /efore 5G)) p... of Septe./er 2), 1!!6. #$e first e"velope s$oul% o"tai" t$e ,re;ualifi atio" Do u.e"ts, t$e se o"% e"velope t$e #e $"i al ,roposal, a"% t$e t$ir% e"velope t$e 9i"a" ial ,roposal of t$e propo"e"t. 2" 8u"e 2), 1!!6, ,&AC &ulleti" No. 1 4as issue%, postpo"i"g t$e avail.e"t of t$e &i% Do u.e"ts a"% t$e su/.issio" of t$e o.parative /i% proposals. '"tereste% fir.s 4ere per.itte% to o/tai" t$e Re;uest for ,roposal Do u.e"ts /egi""i"g 8u"e 20, 1!!6, upo" su/.issio" of a 4ritte" appli atio" a"% pay.e"t of a "o":refu"%a/le fee of ,5),))).)) 1=SP2,)))3. #$e &i% Do u.e"ts issue% /y t$e ,&AC provi%e% a.o"g ot$ers t$at t$e propo"e"t .ust $ave a%e;uate apa/ility to sustai" t$e fi"a" i"g re;uire.e"t for t$e %etaile% e"gi"eeri"g, %esig", o"stru tio", operatio", a"% .ai"te"a" e p$ases of t$e proDe t. #$e propo"e"t 4oul% /e evaluate% /ase% o" its a/ility to provi%e a .i"i.u. a.ou"t of e;uity to t$e proDe t, a"% its apa ity to se ure eCter"al fi"a" i"g for t$e proDe t. 2" 8uly 23, 1!!6, t$e ,&AC issue% ,&AC &ulleti" No. 2 i"viti"g all /i%%ers to a pre:/i% o"fere" e o" 8uly 2!, 1!!6. 2" August 16, 1!!6, t$e ,&AC issue% ,&AC &ulleti" No. 3 a.e"%i"g t$e &i% Do u.e"ts. #$e follo4i"g a.e"%.e"ts 4ere .a%e o" t$e &i% Do u.e"tsG

a. Asi%e fro. t$e fiCe% A""ual Guara"tee% ,ay.e"t, t$e propo"e"t s$all i" lu%e i" its fi"a" ial proposal a" a%%itio"al per e"tage of gross reve"ue s$are of t$e Gover".e"t, as follo4sG i. ii. iii. 9irst 5 years NeCt 1) years NeCt 1) years 5.)N (.5N 1).)N

/. #$e a.ou"t of t$e fiCe% A""ual Guara"tee% ,ay.e"t s$all /e su/De t of t$e pri e $alle"ge. ,ropo"e"t .ay offer a" A""ual Guara"tee% ,ay.e"t 4$i $ "ee% "ot /e of e;ual a.ou"t, /ut pay.e"t of 4$i $ s$all start upo" site possessio". . #$e proDe t propo"e"t .ust $ave a%e;uate apa/ility to sustai" t$e fi"a" i"g re;uire.e"t for t$e %etaile% e"gi"eeri"g, %esig", o"stru tio", a"%Jor operatio" a"% .ai"te"a" e p$ases of t$e proDe t as t$e ase .ay /e. 9or purposes of pre: ;ualifi atio", t$is apa/ility s$all /e .easure% i" ter.s ofG i. ,roof of t$e availa/ility of t$e proDe t propo"e"t a"%Jor t$e o"sortiu. to provi%e t$e .i"i.u. a.ou"t of e;uity for t$e proDe tF a"% ii. a letter testi.o"ial fro. reputa/le /a"7s attesti"g t$at t$e proDe t propo"e"t a"%Jor t$e .e./ers of t$e o"sortiu. are /a"7i"g 4it$ t$e., t$at t$e proDe t propo"e"t a"%Jor t$e .e./ers are of goo% fi"a" ial sta"%i"g, a"% $ave a%e;uate resour es. %. #$e /asis for t$e pre;ualifi atio" s$all /e t$e propo"e"tBs o.plia" e 4it$ t$e .i"i.u. te $"i al a"% fi"a" ial re;uire.e"ts provi%e% i" t$e &i% Do u.e"ts a"% t$e 'RR of t$e &2# La4. #$e .i"i.u. a.ou"t of e;uity s$all /e 3)N of t$e ,roDe t Cost. e. A.e"%.e"ts to t$e %raft Co" essio" Agree.e"t s$all /e issue% fro. ti.e to ti.e. Sai% a.e"%.e"ts s$all o"ly over ite.s t$at 4oul% "ot .aterially affe t t$e preparatio" of t$e propo"e"tBs proposal. 2" August 2!, 1!!6, t$e Se o"% ,re:&i% Co"fere" e 4as $el% 4$ere ertai" larifi atio"s 4ere .a%e. =po" t$e re;uest of prospe tive /i%%er ,eopleBs Air Cargo K <are$ousi"g Co., '" 1,air argo3, t$e ,&AC 4arra"te% t$at /ase% o" Se . 11.6, Rule 11 of t$e '.ple.e"ti"g Rules a"% Regulatio"s of t$e &2# La4, o"ly t$e propose% A""ual Guara"tee% ,ay.e"t su/.itte% /y t$e $alle"gers 4oul% /e reveale% to A5DC, a"% t$at t$e $alle"gersB te $"i al a"% fi"a" ial proposals 4oul% re.ai" o"fi%e"tial. #$e ,&AC also larifie% t$at t$e list of reve"ue sour es o"tai"e% i" A""eC *.2a of t$e &i% Do u.e"ts 4as .erely i"%i ative a"% t$at ot$er reve"ue sour es .ay /e i" lu%e% /y t$e propo"e"t, su/De t to approval /y D2#CJ+'AA. 9urt$er.ore, t$e ,&AC larifie% t$at o"ly t$ose fees a"% $arges %e"o.i"ate% as ,u/li =tility 9ees 4oul% /e su/De t to regulatio", a"% t$ose $arges 4$i $ 4oul% /e a tually %ee.e% ,u/li =tility 9ees oul% still /e revise%, %epe"%i"g o" t$e out o.e of ,&ACBs ;uery o" t$e .atter 4it$ t$e Depart.e"t of 8usti e. '" Septe./er 1!!6, t$e ,&AC issue% &i% &ulleti" No. 5, e"title% HA"s4ers to t$e Queries of ,A'RCARG2 as ,er Letter Date% Septe./er 3 a"% 1), 1!!6.I ,air argoBs ;ueries a"% t$e ,&ACBs respo"ses 4ere as follo4sG

3. $t is di((icult (or 4aircargo and 'ssociates to meet the re=uired minimum e=uit6 re=uirement as rescribed in Section -.0.@ o( the Bid *ocuments considering that the ca italization o( each member com an6 is so structured to meet the re=uirements and needs o( their current res ective business underta#ingAactivities. $n order to com l6 ;ith this e=uit6 re=uirement, 4aircargo is re=uesting 4B'C to 8ust allo; each member o( (sic) cor oration o( the Joint Venture to 8ust e&ecute an agreement that embodies a commitment to in(use the re=uired ca ital in case the ro8ect is a;arded to the Joint Venture instead o( increasing each cor orationBs current authorized ca ital stoc# 8ust (or re=uali(ication ur oses. '" pre;ualifi atio", t$e age" y is i"tereste% i" o"eBs fi"a" ial apa/ility at t$e ti.e of pre;ualifi atio", "ot future or pote"tial apa/ility. A o..it.e"t to put up e;uity o" e a4ar%e% t$e proDe t is "ot e"oug$ to esta/lis$ t$at Hprese"tI fi"a" ial apa/ility. Ho4ever, total fi"a" ial apa/ility of all .e./er o.pa"ies of t$e Co"sortiu., to /e esta/lis$e% /y su/.itti"g t$e respe tive o.pa"iesB au%ite% fi"a" ial state.e"ts, s$all /e a epta/le. 2. 't resent, 4aircargo is negotiating ;ith ban#s and other institutions (or the e&tension o( a 4er(ormance Securit6 to the 8oint venture in the event that the Concessions 'greement (sic) is a;arded to them. Co;ever, 4aircargo is being re=uired to submit a co 6 o( the dra(t concession as one o( the documentar6 re=uirements. 1here(ore, 4aircargo is re=uesting that the6Bd (sic) be (urnished co 6 o( the a roved negotiated agreement bet;een the 4B'C and the '!*C at the soonest ossible time. A opy of t$e %raft Co" essio" Agree.e"t is i" lu%e% i" t$e &i% Do u.e"ts. A"y .aterial $a"ges 4oul% /e .a%e 7"o4" to prospe tive $alle"gers t$roug$ /i% /ulleti"s. Ho4ever, a fi"al versio" 4ill /e issue% /efore t$e a4ar% of o"tra t. #$e ,&AC also state% t$at it 4oul% re;uire A5DC to sig" Supple.e"t C of t$e &i% Do u.e"ts 1A epta" e of Criteria a"% <aiver of Rig$ts to 5"Doi" ,roDe t3 a"% to su/.it t$e sa.e 4it$ t$e re;uire% &i% Se urity. 2" Septe./er 2), 1!!6, t$e o"sortiu. o.pose% of ,eopleBs Air Cargo a"% <are$ousi"g Co., '" . 1,air argo3, ,$il. Air a"% Grou"%s Servi es, '" . 1,AGS3 a"% Se urity &a"7 Corp. 1Se urity &a"73 1 olle tively, ,air argo Co"sortiu.3 su/.itte% t$eir o.petitive proposal to t$e ,&AC. 2" Septe./er 23, 1!!6, t$e ,&AC ope"e% t$e first e"velope o"tai"i"g t$e pre;ualifi atio" %o u.e"ts of t$e ,air argo Co"sortiu.. 2" t$e follo4i"g %ay, Septe./er 2*, 1!!6, t$e ,&AC pre;ualifie% t$e ,air argo Co"sortiu.. 2" Septe./er 26, 1!!6, A5DC i"for.e% t$e ,&AC i" 4riti"g of its reservatio"s as regar%s t$e ,air argo Co"sortiu., 4$i $ i" lu%eG a. #$e la 7 of orporate approvals a"% fi"a" ial apa/ility of ,A'RCARG2F /. #$e la 7 of orporate approvals a"% fi"a" ial apa/ility of ,AGSF . #$e pro$i/itio" i.pose% /y RA 33(, as a.e"%e% 1t$e Ge"eral &a"7i"g A t3 o" t$e a.ou"t t$at Se urity &a"7 oul% legally i"vest i" t$e proDe tF

%. #$e i" lusio" of Sie.e"s as a o"tra tor of t$e ,A'RCARG2 8oi"t Ee"ture, for pre;ualifi atio" purposesF a"% e. #$e appoi"t.e"t of Luft$a"sa as t$e fa ility operator, i" vie4 of t$e ,$ilippi"e re;uire.e"t i" t$e operatio" of a pu/li utility. #$e ,&AC gave its reply o" 2 to/er 2, 1!!6, i"for.i"g A5DC t$at it $a% o"si%ere% t$e issues raise% /y t$e latter, a"% t$at /ase% o" t$e %o u.e"ts su/.itte% /y ,air argo a"% t$e esta/lis$e% pre;ualifi atio" riteria, t$e ,&AC $a% fou"% t$at t$e $alle"ger, ,air argo, $a% pre;ualifie% to u"%erta7e t$e proDe t. #$e Se retary of t$e D2#C approve% t$e fi"%i"g of t$e ,&AC. #$e ,&AC t$e" pro ee%e% 4it$ t$e ope"i"g of t$e se o"% e"velope of t$e ,air argo Co"sortiu. 4$i $ o"tai"e% its #e $"i al ,roposal. 2" 2 to/er 3, 1!!6, A5DC reiterate% its o/De tio"s, parti ularly 4it$ respe t to ,air argoBs fi"a" ial apa/ility, i" vie4 of t$e restri tio"s i.pose% /y Se tio" 21:& of t$e Ge"eral &a"7i"g A t a"% Se tio"s 130) a"% 1301 of t$e +a"ual Regulatio"s for &a"7s a"% 2t$er 9i"a" ial '"ter.e%iaries. 2" 2 to/er (, 1!!6, A5DC agai" .a"ifeste% its o/De tio"s a"% re;ueste% t$at it /e fur"is$e% 4it$ eC erpts of t$e ,&AC .eeti"g a"% t$e a o.pa"yi"g te $"i al evaluatio" report 4$ere ea $ of t$e issues t$ey raise% 4ere a%%resse%. 2" 2 to/er 16, 1!!6, t$e ,&AC ope"e% t$e t$ir% e"velope su/.itte% /y A5DC a"% t$e ,air argo Co"sortiu. o"tai"i"g t$eir respe tive fi"a" ial proposals. &ot$ propo"e"ts offere% to /uil% t$e NA'A ,asse"ger #er.i"al ''' for at least P35) .illio" at "o ost to t$e gover".e"t a"% to pay t$e gover".e"tG 5N s$are i" gross reve"ues for t$e first five years of operatio", (.5N s$are i" gross reve"ues for t$e "eCt te" years of operatio", a"% 1)N s$are i" gross reve"ues for t$e last te" years of operatio", i" a or%a" e 4it$ t$e &i% Do u.e"ts. Ho4ever, i" a%%itio" to t$e foregoi"g, A5DC offere% to pay t$e gover".e"t a total of ,135 .illio" as guara"tee% pay.e"t for 2( years 4$ile ,air argo Co"sortiu. offere% to pay t$e gover".e"t a total of ,1(.(5 /illio" for t$e sa.e perio%. #$us, t$e ,&AC for.ally i"for.e% A5DC t$at it $a% a epte% t$e pri e proposal su/.itte% /y t$e ,air argo Co"sortiu., a"% gave A5DC 3) 4or7i"g %ays or u"til Nove./er 20, 1!!6 4it$i" 4$i $ to .at $ t$e sai% /i%, ot$er4ise, t$e proDe t 4oul% /e a4ar%e% to ,air argo. As A5DC faile% to .at $ t$e proposal 4it$i" t$e 3):%ay perio%, t$e" D2#C Se retary A.a%o Lag%a.eo, o" De e./er 11, 1!!6, issue% a "oti e to ,air argo Co"sortiu. regar%i"g A5DCBs failure to .at $ t$e proposal. 2" 9e/ruary 2(, 1!!(, ,air argo Co"sortiu. i" orporate% i"to ,$ilippi"e '"ter"atio"al Airport #er.i"als Co., '" . 1,'A#C23. A5DC su/se;ue"tly proteste% t$e allege% u"%ue prefere" e give" to ,'A#C2 a"% reiterate% its o/De tio"s as regar%s t$e pre;ualifi atio" of ,'A#C2. 2" April 11, 1!!(, t$e D2#C su/.itte% t$e o" essio" agree.e"t for t$e se o"%:pass approval of t$e N5DA:'CC. 2" April 16, 1!!(, A5DC file% 4it$ t$e Regio"al #rial Court of ,asig a ,etitio" for De laratio" of Nullity of t$e ,ro ee%i"gs, +a"%a.us a"% '"Du" tio" agai"st t$e Se retary of t$e D2#C, t$e C$air.a" of t$e ,&AC, t$e voti"g .e./ers of t$e ,&AC a"% ,a"taleo" D. Alvare-, i" $is apa ity as C$air.a" of t$e ,&AC #e $"i al Co..ittee.

2" April 1(, 1!!(, t$e N5DA:'CC o"%u te% a" ad re(erendum to fa ilitate t$e approval, o" a "o:o/De tio" /asis, of t$e &2# agree.e"t /et4ee" t$e D2#C a"% ,'A#C2. As t$e ad re(erendum gat$ere% o"ly four 1*3 of t$e re;uire% siC 163 sig"atures, t$e N5DA .erely "ote% t$e agree.e"t. 2" 8uly !, 1!!(, t$e D2#C issue% t$e "oti e of a4ar% for t$e proDe t to ,'A#C2. 2" 8uly 12, 1!!(, t$e Gover".e"t, t$roug$ t$e" D2#C Se retary Arturo #. 5"rile, a"% ,'A#C2, t$roug$ its ,resi%e"t, He"ry #. Go, sig"e% t$e HCo" essio" Agree.e"t for t$e &uil%: 2perate:a"%:#ra"sfer Arra"ge.e"t of t$e Ni"oy A;ui"o '"ter"atio"al Airport ,asse"ger #er.i"al '''I 11!!( Co" essio" Agree.e"t3. #$e Gover".e"t gra"te% ,'A#C2 t$e fra" $ise to operate a"% .ai"tai" t$e sai% ter.i"al %uri"g t$e o" essio" perio% a"% to olle t t$e fees, re"tals a"% ot$er $arges i" a or%a" e 4it$ t$e rates or s $e%ules stipulate% i" t$e 1!!( Co" essio" Agree.e"t. #$e Agree.e"t provi%e% t$at t$e o" essio" perio% s$all /e for t4e"ty:five 1253 years o..e" i"g fro. t$e i":servi e %ate, a"% .ay /e re"e4e% at t$e optio" of t$e Gover".e"t for a perio% "ot eC ee%i"g t4e"ty:five 1253 years. At t$e e"% of t$e o" essio" perio%, ,'A#C2 s$all tra"sfer t$e %evelop.e"t fa ility to +'AA. 2" Nove./er 26, 1!!0, t$e Gover".e"t a"% ,'A#C2 sig"e% a" A.e"%e% a"% Restate% Co" essio" Agree.e"t 1ARCA3. A.o"g t$e provisio"s of t$e 1!!( Co" essio" Agree.e"t t$at 4ere a.e"%e% /y t$e ARCA 4ereG Se . 1.11 pertai"i"g to t$e %efi"itio" of H ertifi ate of o.pletio"IF Se . 2.)5 pertai"i"g to t$e Spe ial 2/ligatio"s of GR,F Se . 3.)2 1a3 %eali"g 4it$ t$e eC lusivity of t$e fra" $ise give" to t$e Co" essio"aireF Se . *.)* o" er"i"g t$e assig".e"t /y Co" essio"aire of its i"terest i" t$e Develop.e"t 9a ilityF Se . 5.)0 1 3 %eali"g 4it$ t$e pro ee%s of Co" essio"aireBs i"sura" eF Se . 5.1) 4it$ respe t to t$e te.porary ta7e:over of operatio"s /y GR,F Se . 5.16 pertai"i"g to t$e taCes, %uties a"% ot$er i.posts t$at .ay /e levie% o" t$e Co" essio"aireF Se . 6.)3 as regar%s t$e perio%i a%Dust.e"t of pu/li utility fees a"% $argesF t$e e"tire Arti le E''' o" er"i"g t$e provisio"s o" t$e ter.i"atio" of t$e o"tra tF a"% Se . 1).)2 provi%i"g for t$e ve"ue of t$e ar/itratio" pro ee%i"gs i" ase a %ispute or o"troversy arises /et4ee" t$e parties to t$e agree.e"t. Su/se;ue"tly, t$e Gover".e"t a"% ,'A#C2 sig"e% t$ree Supple.e"ts to t$e ARCA. #$e 9irst Supple.e"t 4as sig"e% o" August 2(, 1!!!F t$e Se o"% Supple.e"t o" Septe./er *, 2)))F a"% t$e #$ir% Supple.e"t o" 8u"e 22, 2))1 1 olle tively, Supple.e"ts3. #$e 9irst Supple.e"t to t$e ARCA a.e"%e% Se . 1.36 of t$e ARCA %efi"i"g HReve"uesI or HGross Reve"uesIF Se . 2.)5 1%3 of t$e ARCA referri"g to t$e o/ligatio" of +'AA to provi%e suffi ie"t fu"%s for t$e up7eep, .ai"te"a" e, repair a"%Jor repla e.e"t of all airport fa ilities a"% e;uip.e"t 4$i $ are o4"e% or operate% /y +'AAF a"% furt$er provi%i"g a%%itio"al spe ial o/ligatio"s o" t$e part of GR, asi%e fro. t$ose alrea%y e"u.erate% i" Se . 2.)5 of t$e ARCA. #$e 9irst Supple.e"t also provi%e% a stipulatio" as regar%s t$e o"stru tio" of a surfa e roa% to o""e t NA'A #er.i"al '' a"% #er.i"al ''' i" lieu of t$e propose% a ess tu""el rossi"g Ru"4ay 13J31F t$e s4appi"g of o/ligatio"s /et4ee" GR, a"% ,'A#C2 regar%i"g t$e i.prove.e"t of Sales Roa%F a"% t$e $a"ges i" t$e ti.eta/le. 't also a.e"%e% Se . 6.)1 1 3 of t$e ARCA pertai"i"g to t$e Dispositio" of #er.i"al 9eesF Se . 6.)2 of t$e ARCA /y i"serti"g a" i"tro%u tory paragrap$F a"% Se . 6.)2 1a3 1iii3 of t$e ARCA referri"g to t$e ,ay.e"ts of ,er e"tage S$are i" Gross Reve"ues.

#$e Se o"% Supple.e"t to t$e ARCA o"tai"e% provisio"s o" er"i"g t$e leari"g, re.oval, %e.olitio" or %isposal of su/terra"ea" stru tures u" overe% or %is overe% at t$e site of t$e o"stru tio" of t$e ter.i"al /y t$e Co" essio"aire. 't %efi"e% t$e s ope of 4or7sF it provi%e% for t$e pro e%ure for t$e %e.olitio" of t$e sai% stru tures a"% t$e o"si%eratio" for t$e sa.e 4$i $ t$e GR, s$all pay ,'A#C2F it provi%e% for ti.e eCte"sio"s, i" re.e"tal a"% o"se;ue"tial osts a"% losses o"se;ue"t to t$e eCiste" e of su $ stru turesF a"% it provi%e% for so.e a%%itio"al o/ligatio"s o" t$e part of ,'A#C2 as regar%s t$e sai% stru tures. 9i"ally, t$e #$ir% Supple.e"t provi%e% for t$e o/ligatio"s of t$e Co" essio"aire as regar%s t$e o"stru tio" of t$e surfa e roa% o""e ti"g #er.i"als '' a"% '''. +ea"4$ile, t$e +'AA 4$i $ is $arge% 4it$ t$e .ai"te"a" e a"% operatio" of t$e NA'A #er.i"als ' a"% '', $a% eCisti"g o" essio" o"tra ts 4it$ various servi e provi%ers to offer i"ter"atio"al airli"e airport servi es, su $ as i":flig$t ateri"g, passe"ger $a"%li"g, ra.p a"% grou"% support, air raft .ai"te"a" e a"% provisio"s, argo $a"%li"g a"% 4are$ousi"g, a"% ot$er servi es, to several i"ter"atio"al airli"es at t$e NA'A. So.e of t$ese servi e provi%ers are t$e +ias or Group, DNA#A:<i"gs Aviatio" Syste.s Corp., a"% t$e +a roAsia Group. +ias or, DNA#A a"% +a roAsia, toget$er 4it$ ,$ilippi"e Airli"es 1,AL3, are t$e %o.i"a"t players i" t$e i"%ustry 4it$ a" aggregate .ar7et s$are of ()N. 2" Septe./er 1(, 2))2, t$e 4or7ers of t$e i"ter"atio"al airli"e servi e provi%ers, lai.i"g t$at t$ey sta"% to lose t$eir e.ploy.e"t upo" t$e i.ple.e"tatio" of t$e ;uestio"e% agree.e"ts, file% /efore t$is Court a petitio" for pro$i/itio" to e"Doi" t$e e"for e.e"t of sai% agree.e"ts.@2A 2" 2 to/er 15, 2))2, t$e servi e provi%ers, Doi"i"g t$e ause of t$e petitio"i"g 4or7ers, file% a .otio" for i"terve"tio" a"% a petitio":i":i"terve"tio". 2" 2 to/er 2*, 2))2, Co"gress.e" Sala "i/ &ateri"a, Clavel +arti"e- a"% Co"sta"ti"o 8araula file% a si.ilar petitio" 4it$ t$is Court.@3A 2" Nove./er 6, 2))2, several e.ployees of t$e +'AA li7e4ise file% a petitio" assaili"g t$e legality of t$e various agree.e"ts.@*A 2" De e./er 11, 2))2. a"ot$er group of Co"gress.e", Ho". 8a i"to E. ,aras, Rafael ,. Na"tes, 5%uar%o C. ?ial ita, <illie &. Eillara.a, ,rospero C. Nograles, ,rospero A. ,i $ay, 8r., Harli" Cast A/ayo" a"% &e"asi"g 2. +a ara"/o", .ove% to i"terve"e i" t$e ase as Respo"%e"ts:'"terve"ors. #$ey file% t$eir Co..e"t:'":'"terve"tio" %efe"%i"g t$e vali%ity of t$e assaile% agree.e"ts a"% prayi"g for t$e %is.issal of t$e petitio"s. Duri"g t$e pe"%e" y of t$e ase /efore t$is Court, ,resi%e"t Gloria +a apagal Arroyo, o" Nove./er 2!, 2))2, i" $er spee $ at t$e 2))2 Gol%e" S$ell 5Cport A4ar%s at +ala aUa"g ,ala e, state% t$at s$e 4ill "ot H$o"or 1,'A#C23 o"tra ts 4$i $ t$e 5Ce utive &ra" $Bs legal offi es $ave o" lu%e% 1as3 "ull a"% voi%.I@5A Respo"%e"t ,'A#C2 file% its Co..e"ts to t$e prese"t petitio"s o" Nove./er ( a"% 2(, 2))2. #$e 2ffi e of t$e Soli itor Ge"eral a"% t$e 2ffi e of t$e Gover".e"t Corporate Cou"sel file% t$eir respe tive Co..e"ts i" /e$alf of t$e pu/li respo"%e"ts. 2" De e./er 1), 2))2, t$e Court $ear% t$e ase o" oral argu.e"t. After t$e oral argu.e"t, t$e Court t$e" resolve% i" ope" ourt to re;uire t$e parties to file si.ulta"eously t$eir

respe tive +e.ora"%a i" a.plifi atio" of t$e issues $ear% i" t$e oral argu.e"ts 4it$i" 3) %ays a"% to eCplore t$e possi/ility of ar/itratio" or .e%iatio" as provi%e% i" t$e $alle"ge% o"tra ts. '" t$eir o"soli%ate% +e.ora"%u., t$e 2ffi e of t$e Soli itor Ge"eral a"% t$e 2ffi e of t$e Gover".e"t Corporate Cou"sel praye% t$at t$e prese"t petitio"s /e give" %ue ourse a"% t$at Du%g.e"t /e re"%ere% %e lari"g t$e 1!!( Co" essio" Agree.e"t, t$e ARCA a"% t$e Supple.e"ts t$ereto voi% for /ei"g o"trary to t$e Co"stitutio", t$e &2# La4 a"% its '.ple.e"ti"g Rules a"% Regulatio"s. 2" +ar $ 6, 2))3, respo"%e"t ,'A#C2 i"for.e% t$e Court t$at o" +ar $ *, 2))3 ,'A#C2 o..e" e% ar/itratio" pro ee%i"gs /efore t$e '"ter"atio"al C$a./er of Co..er e, '"ter"atio"al Court of Ar/itratio" 1'CC3 /y fili"g a Re;uest for Ar/itratio" 4it$ t$e Se retariat of t$e 'CC agai"st t$e Gover".e"t of t$e Repu/li of t$e ,$ilippi"es a ti"g t$roug$ t$e D2#C a"% +'AA. '" t$e prese"t ases, t$e Court is agai" fa e% 4it$ t$e tas7 of resolvi"g o.pli ate% issues .a%e %iffi ult /y t$eir i"terse ti"g legal a"% e o"o.i i.pli atio"s. #$e Court is a4are of t$e far rea $i"g fall out effe ts of t$e ruli"g 4$i $ it .a7es to%ay. 9or .ore t$a" a e"tury a"% 4$e"ever t$e eCige" ies of t$e ti.es %e.a"% it, t$is Court $as "ever s$ir7e% fro. its sole." %uty to %ispe"se Dusti e a"% resolve Ha tual o"troversies i"volvi"g rig$ts 4$i $ are legally %e.a"%a/le a"% e"for ea/le, a"% to %eter.i"e 4$et$er or "ot t$ere $as /ee" grave a/use of %is retio" a.ou"ti"g to la 7 or eC ess of Duris%i tio".I@6A #o /e sure, t$is Court 4ill "ot /egi" to %o ot$er4ise to%ay. <e s$all first %ispose of t$e pro1e ur"l ;ssues raise% /y respo"%e"t ,'A#C2 4$i $ t$ey allege 4ill /ar t$e resolutio" of t$e i"sta"t o"troversy. *et;t;onersF Le:"l St"n ;n: to 4;le t9e present *et;t;ons a. +.,. Nos. 3DD..3 and 3DDEE3 '" G.R. No. 155))1 i"%ivi%ual petitio"ers are e.ployees of various servi e provi%ers@(A $avi"g separate o" essio" o"tra ts 4it$ +'AA a"% o"ti"ui"g servi e agree.e"ts 4it$ various i"ter"atio"al airli"es to provi%e i":flig$t ateri"g, passe"ger $a"%li"g, ra.p a"% grou"% support, air raft .ai"te"a" e a"% provisio"s, argo $a"%li"g a"% 4are$ousi"g a"% ot$er servi es. Also i" lu%e% as petitio"ers are la/or u"io"s +'ASC2R <or7ers ="io":Natio"al La/or ="io" a"% ,$ilippi"e Airli"es 5.ployees Asso iatio". #$ese petitio"ers file% t$e i"sta"t a tio" for pro$i/itio" as taCpayers a"% as parties 4$ose rig$ts a"% i"terests sta"% to /e violate% /y t$e i.ple.e"tatio" of t$e ,'A#C2 Co"tra ts. ,etitio"ers:'"terve"ors i" t$e sa.e ase are all orporatio"s orga"i-e% a"% eCisti"g u"%er ,$ilippi"e la4s e"gage% i" t$e /usi"ess of provi%i"g i":flig$t ateri"g, passe"ger $a"%li"g, ra.p a"% grou"% support, air raft .ai"te"a" e a"% provisio"s, argo $a"%li"g a"% 4are$ousi"g a"% ot$er servi es to several i"ter"atio"al airli"es at t$e Ni"oy A;ui"o '"ter"atio"al Airport. ,etitio"ers:'"terve"ors allege t$at as taC:payi"g i"ter"atio"al airli"e a"% airport:relate% servi e operators, ea $ o"e of t$e. sta"%s to /e irrepara/ly i"Dure% /y t$e i.ple.e"tatio" of t$e ,'A#C2 Co"tra ts. 5a $ of t$e petitio"ers:i"terve"ors $ave separate a"% su/sisti"g o" essio" agree.e"ts 4it$ +'AA a"% 4it$ various i"ter"atio"al airli"es 4$i $ t$ey allege are /ei"g i"terfere% 4it$ a"% violate% /y respo"%e"t ,'A#C2.

'" G.R. No. 155661, petitio"ers o"stitute e.ployees of +'AA a"% Sa.a$a"g +a"ggaga4a sa ,alipara" "g ,ilipi"as : a legiti.ate la/or u"io" a"% a re%ite% as t$e sole a"% eC lusive /argai"i"g age"t of all t$e e.ployees i" +'AA. ,etitio"ers a" $or t$eir petitio" for pro$i/itio" o" t$e "ullity of t$e o"tra ts e"tere% i"to /y t$e Gover".e"t a"% ,'A#C2 regar%i"g t$e /uil%:operate:a"%:tra"sfer of t$e NA'A ',# '''. #$ey file% t$e petitio" as taCpayers a"% perso"s 4$o $ave a legiti.ate i"terest to prote t i" t$e i.ple.e"tatio" of t$e ,'A#C2 Co"tra ts. ,etitio"ers i" /ot$ ases raise t$e argu.e"t t$at t$e ,'A#C2 Co"tra ts o"tai" stipulatio"s 4$i $ %ire tly o"trave"e "u.erous provisio"s of t$e Co"stitutio", spe ifi provisio"s of t$e &2# La4 a"% its '.ple.e"ti"g Rules a"% Regulatio"s, a"% pu/li poli y. ,etitio"ers o"te"% t$at t$e D2#C a"% t$e +'AA, /y e"teri"g i"to sai% o"tra ts, $ave o..itte% grave a/use of %is retio" a.ou"ti"g to la 7 or eC ess of Duris%i tio" 4$i $ a" /e re.e%ie% o"ly /y a 4rit of pro$i/itio", t$ere /ei"g "o plai", spee%y or a%e;uate re.e%y i" t$e or%i"ary ourse of la4. '" parti ular, petitio"ers assail t$e provisio"s i" t$e 1!!( Co" essio" Agree.e"t a"% t$e ARCA 4$i $ gra"t ,'A#C2 t$e eC lusive rig$t to operate a o..er ial i"ter"atio"al passe"ger ter.i"al 4it$i" t$e 'sla"% of Lu-o", eC ept t$ose i"ter"atio"al airports alrea%y eCisti"g at t$e ti.e of t$e eCe utio" of t$e agree.e"t. #$e o"tra ts furt$er provi%e t$at upo" t$e o..e" e.e"t of operatio"s at t$e NA'A ',# ''', t$e Gover".e"t s$all ause t$e losure of Ni"oy A;ui"o '"ter"atio"al Airport ,asse"ger #er.i"als ' a"% '' as i"ter"atio"al passe"ger ter.i"als. <it$ respe t to eCisti"g o" essio" agree.e"ts /et4ee" +'AA a"% i"ter"atio"al airport servi e provi%ers regar%i"g ertai" servi es or operatio"s, t$e 1!!( Co" essio" Agree.e"t a"% t$e ARCA u"ifor.ly provi%e t$at su $ servi es or operatio"s 4ill "ot /e arrie% over to t$e NA'A ',# ''' a"% ,'A#C2 is u"%er "o o/ligatio" to per.it su $ arry over eC ept t$roug$ a separate agree.e"t %uly e"tere% i"to 4it$ ,'A#C2.@0A <it$ respe t to t$e petitio"i"g servi e provi%ers a"% t$eir e.ployees, upo" t$e o..e" e.e"t of operatio"s of t$e NA'A ',# ''', t$ey allege t$at t$ey 4ill /e effe tively /arre% fro. provi%i"g i"ter"atio"al airli"e airport servi es at t$e NA'A #er.i"als ' a"% '' as all i"ter"atio"al airli"es a"% passe"gers 4ill /e %iverte% to t$e NA'A ',# '''. #$e petitio"i"g servi e provi%ers 4ill t$us /e o.pelle% to o"tra t 4it$ ,'A#C2 alo"e for su $ servi es, 4it$ "o assura" e t$at su/sisti"g o"tra ts 4it$ +'AA a"% ot$er i"ter"atio"al airli"es 4ill /e respe te%. ,etitio"i"g servi e provi%ers stress t$at %espite t$e very o.petitive .ar7et, t$e su/sta"tial apital i"vest.e"ts re;uire% a"% t$e $ig$ rate of fees, t$ey e"tere% i"to t$eir respe tive o"tra ts 4it$ t$e +'AA 4it$ t$e u"%ersta"%i"g t$at t$e sai% o"tra ts 4ill /e i" for e for t$e stipulate% perio%, a"% t$ereafter, re"e4e% so as to allo4 ea $ of t$e petitio"i"g servi e provi%ers to re oup t$eir i"vest.e"ts a"% o/tai" a reaso"a/le retur" t$ereo". ,etitio"i"g e.ployees of various servi e provi%ers at t$e NA'A #er.i"als ' a"% '' a"% of +'AA o" t$e ot$er $a"% allege t$at 4it$ t$e losure of t$e NA'A #er.i"als ' a"% '' as i"ter"atio"al passe"ger ter.i"als u"%er t$e ,'A#C2 Co"tra ts, t$ey sta"% to lose e.ploy.e"t. #$e ;uestio" o" legal sta"%i"g is 4$et$er su $ parties $ave Hallege% su $ a perso"al sta7e i" t$e out o.e of t$e o"troversy as to assure t$at o" rete a%verse"ess 4$i $ s$arpe"s t$e prese"tatio" of issues upo" 4$i $ t$e ourt so largely %epe"%s for illu.i"atio" of %iffi ult o"stitutio"al ;uestio"s.I@!A A or%i"gly, it $as /ee" $el% t$at t$e i"terest of a perso" assaili"g t$e o"stitutio"ality of a statute .ust /e %ire t

a"% perso"al. He .ust /e a/le to s$o4, "ot o"ly t$at t$e la4 or a"y gover".e"t a t is i"vali%, /ut also t$at $e sustai"e% or is i" i..i"e"t %a"ger of sustai"i"g so.e %ire t i"Dury as a result of its e"for e.e"t, a"% "ot .erely t$at $e suffers t$ere/y i" so.e i"%efi"ite 4ay. 't .ust appear t$at t$e perso" o.plai"i"g $as /ee" or is a/out to /e %e"ie% so.e rig$t or privilege to 4$i $ $e is la4fully e"title% or t$at $e is a/out to /e su/De te% to so.e /ur%e"s or pe"alties /y reaso" of t$e statute or a t o.plai"e% of.@1)A <e $ol% t$at petitio"ers $ave t$e re;uisite sta"%i"g. '" t$e a/ove:.e"tio"e% ases, petitio"ers $ave a %ire t a"% su/sta"tial i"terest to prote t /y reaso" of t$e i.ple.e"tatio" of t$e ,'A#C2 Co"tra ts. #$ey sta"% to lose t$eir sour e of liveli$oo%, a property rig$t 4$i $ is -ealously prote te% /y t$e Co"stitutio". +oreover, su/sisti"g o" essio" agree.e"ts /et4ee" +'AA a"% petitio"ers:i"terve"ors a"% servi e o"tra ts /et4ee" i"ter"atio"al airli"es a"% petitio"ers: i"terve"ors sta"% to /e "ullifie% or ter.i"ate% /y t$e operatio" of t$e NA'A ',# ''' u"%er t$e ,'A#C2 Co"tra ts. #$e fi"a" ial preDu%i e /roug$t a/out /y t$e ,'A#C2 Co"tra ts o" petitio"ers a"% petitio"ers:i"terve"ors i" t$ese ases are legiti.ate i"terests suffi ie"t to o"fer o" t$e. t$e re;uisite sta"%i"g to file t$e i"sta"t petitio"s. b. +.,. No. 3DDD@F '" G.R. No. 1555*(, petitio"ers file% t$e petitio" for pro$i/itio" as .e./ers of t$e House of Represe"tatives, iti-e"s a"% taCpayers. #$ey allege t$at as .e./ers of t$e House of Represe"tatives, t$ey are espe ially i"tereste% i" t$e ,'A#C2 Co"tra ts, /e ause t$e o"tra ts o.pel t$e Gover".e"t a"%Jor t$e House of Represe"tatives to appropriate fu"%s "e essary to o.ply 4it$ t$e provisio"s t$erei".@11A #$ey ite provisio"s of t$e ,'A#C2 Co"tra ts 4$i $ re;uire %is/urse.e"t of u"appropriate% a.ou"ts i" o.plia" e 4it$ t$e o"tra tual o/ligatio"s of t$e Gover".e"t. #$ey allege t$at t$e Gover".e"t o/ligatio"s i" t$e ,'A#C2 Co"tra ts 4$i $ o.pel gover".e"t eCpe"%iture 4it$out appropriatio" is a urtail.e"t of t$eir prerogatives as legislators, o"trary to t$e .a"%ate of t$e Co"stitutio" t$at H@"Ao .o"ey s$all /e pai% out of t$e treasury eC ept i" pursua" e of a" appropriatio" .a%e /y la4.I@12A Sta"%i"g is a pe uliar o" ept i" o"stitutio"al la4 /e ause i" so.e ases, suits are "ot /roug$t /y parties 4$o $ave /ee" perso"ally i"Dure% /y t$e operatio" of a la4 or a"y ot$er gover".e"t a t /ut /y o" er"e% iti-e"s, taCpayers or voters 4$o a tually sue i" t$e pu/li i"terest. Alt$oug$ 4e are "ot u".i"%ful of t$e ases of +2us -le1tr;1 Co. v. Mun;1;p"l;ty o8 +2us@13Aa"% %onz"les v. &"Bu;z"@1*A 4$erei" t$is Court $el% t$at appropriatio" .ust /e .a%e o"ly o" a.ou"ts i..e%iately %e.a"%a/le, pu#l;1 ;nterest e2"n s t9"t Ae t"Ee " 2ore l;#er"l v;eA ;n eter2;n;n: A9et9er t9e pet;t;oners su;n: "s le:;sl"tors, t"@p"yers "n 1;t;zens 9"ve lo)&s standi to 8;le t9e ;nst"nt pet;t;on. '" =;los#"y"n, +n1. v. %u;n:on",@15A t$is Court $el% H@iA" li"e 4it$ t$e li/eral poli y of t$is Court o" locus standi, or%i"ary taCpayers, .e./ers of Co"gress, a"% eve" asso iatio" of pla"ters, a"% "o":profit ivi orga"i-atio"s 4ere allo4e% to i"itiate a"% prose ute a tio"s /efore t$is Court to ;uestio" t$e o"stitutio"ality or vali%ity of la4s, a ts, %e isio"s, ruli"gs, or or%ers of various gover".e"t age" ies or i"stru.e"talities.I@16A 9urt$er, Hi"sofar as taCpayersM suits are o" er"e% . . . 1t$is Court3 is not evo; o8 ;s1ret;on as to 4$et$er or "ot it s$oul% /e e"tertai"e%.I @1(A As su $ H. . . eve" if, stri tly spea7i"g, t$ey @t$e petitio"ersA are "ot overe% /y t$e %efi"itio", it is still 4it$i" t$e 4i%e %is retio" of t$e Court to 4aive t$e re;uire.e"t a"% so re.ove t$e i.pe%i.e"t to its a%%ressi"g a"% resolvi"g t$e serious o"stitutio"al ;uestio"s

raise%.I@10A '" vie4 of t$e serious legal ;uestio"s i"volve% a"% t$eir i.pa t o" pu/li i"terest, 4e resolve to gra"t sta"%i"g to t$e petitio"ers. /t9er *ro1e ur"l M"tters Respo"%e"t ,'A#C2 furt$er alleges t$at t$is Court is 4it$out Duris%i tio" to revie4 t$e i"sta"t ases as fa tual issues are i"volve% 4$i $ t$is Court is ill:e;uippe% to resolve. +oreover, ,'A#C2 alleges t$at su/.issio" of t$is o"troversy to t$is Court at t$e first i"sta" e is a violatio" of t$e rule o" $ierar $y of ourts. #$ey o"te"% t$at trial ourts $ave o" urre"t Duris%i tio" 4it$ t$is Court 4it$ respe t to a spe ial ivil a tio" for pro$i/itio" a"% $e" e, follo4i"g t$e rule o" $ierar $y of ourts, resort .ust first /e $a% /efore t$e trial ourts. After a t$oroug$ stu%y a"% areful evaluatio" of t$e issues i"volve%, t$is Court is of t$e vie4 t$at t$e ruC of t$e i"sta"t o"troversy i"volves sig"ifi a"t le:"l Buest;ons. #$e fa ts "e essary to resolve t$ese legal ;uestio"s are 4ell esta/lis$e% a"%, $e" e, "ee% "ot /e %eter.i"e% /y a trial ourt. #$e rule o" $ierar $y of ourts 4ill "ot also preve"t t$is Court fro. assu.i"g Duris%i tio" over t$e ases at /ar. #$e sai% rule .ay /e relaCe% A9en t9e re ress es;re 1"nnot #e o#t";ne ;n t9e "ppropr;"te 1ourts or A9ere e@1ept;on"l "n 1o2pell;n: 1;r1u2st"n1es Dust;8y "v";l2ent o8 " re2e y A;t9;n "n 1"ll;n: 8or t9e e@er1;se o8 t9;s CourtFs pr;2"ry Dur;s ;1t;on.@1!A 't is easy to %is er" t$at e@1ept;on"l 1;r1u2st"n1es eCist i" t$e ases at /ar t$at all for t$e relaCatio" of t$e rule. &ot$ petitio"ers a"% respo"%e"ts agree t$at t$ese ases are oftr"ns1en ent"l ;2port"n1e as t$ey i"volve t$e o"stru tio" a"% operatio" of t$e ou"tryBs pre.ier i"ter"atio"al airport. +oreover, t$e ru ial issues su/.itte% for resolutio" are of first i.pressio" a"% t$ey e"tail t$e proper legal i"terpretatio" of 7ey provisio"s of t$e Co"stitutio", t$e &2# La4 a"% its '.ple.e"ti"g Rules a"% Regulatio"s. #$us, o"si%eri"g t$e "ature of t$e o"troversy /efore t$e Court, pro e%ural /ars .ay /e lo4ere% to give 4ay for t$e spee%y %ispositio" of t$e i"sta"t ases. Le:"l -88e1t o8 t9e Co22en1e2ent o8 Ar#;tr"t;on *ro1ee ;n:s #y *+A5C/ #$ere is o"e .ore pro e%ural o/sta le 4$i $ .ust /e over o.e. #$e Court is a4are t$at ar/itratio" pro ee%i"gs pursua"t to Se tio" 1).)2 of t$e ARCA $ave /ee" file% at t$e i"sta" e of respo"%e"t ,'A#C2. Agai", 4e $ol% t$at t$e ar/itratio" step ta7e" /y ,'A#C2 4ill "ot oust t$is Court of its Duris%i tio" over t$e ases at /ar. '" Del Monte Corpor"t;on$USA v. Court o8 Appe"ls, eve" after fi"%i"g t$at t$e ar/itratio" lause i" t$e Distri/utors$ip Agree.e"t i" ;uestio" is vali% a"% t$e %ispute /et4ee" t$e parties is ar/itra/le, t$is Court affir.e% t$e trial ourtBs %e isio" %e"yi"g petitio"erBs +otio" to Suspe"% ,ro ee%i"gs pursua"t to t$e ar/itratio" lause u"%er t$e o"tra t. '" so ruli"g, t$is Court $el% t$at as o"tra ts pro%u e legal effe t /et4ee" t$e parties, t$eir assig"s a"% $eirs, o"ly t$e parties to t$e Distri/utors$ip Agree.e"t are /ou"% /y its ter.s, i" lu%i"g t$e ar/itratio" lause stipulate% t$erei". #$is Court rule% t$at ar/itratio" pro ee%i"gs oul% /e alle% for /ut only 4it$ respe t to t$e parties to t$e o"tra t i" ;uestio". Co"si%eri"g t$at t$ere are parties to t$e ase 4$o are "eit$er parties to t$e Distri/utors$ip Agree.e"t "or $eirs or assig"s of t$e parties t$ereto, t$is Court, iti"g its previous ruli"g i" S"l"s, 6r. v. L"per"l &e"lty Corpor"t;on,@21A $el% t$at to
@2)A

tolerate t$e spl;tt;n: o8 pro1ee ;n:s /y allo4i"g ar/itratio" as to so.e of t$e parties o" t$e o"e $a"% a"% trial for t$e ot$ers o" t$e ot$er $a"% 4oul%, i" effe t, result i" 2ult;pl;1;ty o8 su;ts, upl;1;tous pro1e ure "n unne1ess"ry el"y . @22A #$us, 4e rule% t$at t$e ;nterest o8 Dust;1e 4oul% /est /e serve% if t$e trial ourt $ears a"% a%Du%i ates t$e ase i" a s;n:le "n 1o2plete pro1ee ;n:. 't is esta/lis$e% t$at pet;t;oners ;n t9e present 1"ses 4$o $ave prese"te% legiti.ate i"terests i" t$e resolutio" of t$e o"troversy are not p"rt;es to t9e *+A5C/ Contr"1ts. A or%i"gly, t$ey a""ot /e /ou"% /y t$e ar/itratio" lause provi%e% for i" t$e ARCA a"% $e" e, a""ot /e o.pelle% to su/.it to ar/itratio" pro ee%i"gs. A spee y "n e1;s;ve resolut;on o8 "ll t9e 1r;t;1"l ;ssues ;n t9e present 1ontroversy, ;n1lu ;n: t9ose r";se #y pet;t;oners, 1"nnot #e 2" e #e8ore "n "r#;tr"l tr;#un"l. #$e o/De t of ar/itratio" is pre isely to allo4 a" eCpe%itious %eter.i"atio" of a %ispute. #$is o/De tive 4oul% "ot /e .et if t$is Court 4ere to allo4 t$e parties to settle t$e ases /y ar/itratio" as t$ere are ertai" issues i"volvi"g "o":parties to t$e ,'A#C2 Co"tra ts 4$i $ t$e ar/itral tri/u"al 4ill "ot /e e;uippe% to resolve. No4, to t$e .erits of t$e i"sta"t o"troversy. + +s *+A5C/ " Bu"l;8;e #; erK

letters issue% /y reputa/le /a"7s. #$e C$alle"ger $as o.plie% 4it$ t$is re;uire.e"t. #o re ap, "et 4ort$ refle te% i" t$e 9i"a" ial State.e"t s$oul% "ot /e ta7e" as t$e a.ou"t of t$e .o"ey to /e use% to a"s4er t$e re;uire% t$irty per e"t 13)N3 e;uity of t$e $alle"ger /ut rat$er to /e use% i" esta/lis$i"g if t$ere is e"oug$ /asis to /elieve t$at t$e $alle"ger a" o.ply 4it$ t$e re;uire% 3)N e;uity. '" fa t, proof of suffi ie"t e;uity is re;uire% as o"e of t$e o"%itio"s for a4ar% of o"tra t 1Se tio" 12.1 'RR of t$e &2# La43 /ut "ot for pre:;ualifi atio" 1Se tio" 5.* of t$e sa.e %o u.e"t3.@23A ="%er t$e &2# La4, i" ase of a /uil%:operate:a"%: tra"sfer arra"ge.e"t, t$e o"tra t s$all /e a4ar%e% to t$e /i%%er H4$o, $avi"g satisfie% t$e 2;n;2u2 8;n"n1;"l, te19n;1"l, or:"n;z"t;on"l "n le:"l st"n "r sI re;uire% /y t$e la4, $as su/.itte% t$e lo4est /i% a"% .ost favora/le ter.s of t$e proDe t.@2*A 9urt$er, t$e 1!!* '.ple.e"ti"g Rules a"% Regulatio"s of t$e &2# La4 provi%eG Se tio" 5.* ,re:;ualifi atio" Re;uire.e"ts. V. . 9i"a" ial Capa/ilityG #$e proDe t propo"e"t .ust $ave a%e;uate apa/ility to sustai" t$e fi"a" i"g re;uire.e"ts for t$e %etaile% e"gi"eeri"g %esig", o"stru tio" a"%Jor operatio" a"% .ai"te"a" e p$ases of t$e proDe t, as t$e ase .ay /e. 9or purposes of pre:;ualifi atio", t$is apa/ility s$all /e .easure% i" ter.s of H;I proo8 o8 t9e "#;l;ty o8 t9e proDe1t proponent "n Lor t9e 1onsort;u2 to prov; e " 2;n;2u2 "2ount o8 eBu;ty to t9e proDe1t, "n H;;I " letter test;2on;"l 8ro2 reput"#le #"nEs "ttest;n: t9"t t9e proDe1t proponent "n Lor 2e2#ers o8 t9e 1onsort;u2 "re #"nE;n: A;t9 t9e2, t9"t t9ey "re ;n :oo 8;n"n1;"l st"n ;n:, "n t9"t t9ey 9"ve " eBu"te resour1es. #$e gover".e"t age" yJLG= o" er"e% s$all %eter.i"e o" a proDe t:to:proDe t /asis a"% /efore pre:;ualifi atio", t$e .i"i.u. a.ou"t of e;uity "ee%e%. 1em hasis su lied3 ,ursua"t to t$is provisio", t$e ,&AC issue% ,&AC &ulleti" No. 3 %ate% August 16, 1!!6 a.e"%i"g t$e fi"a" ial apa/ility re;uire.e"ts for pre:;ualifi atio" of t$e proDe t propo"e"t as follo4sG 6. &asis of ,re:;ualifi atio" #$e /asis for t$e pre:;ualifi atio" s$all /e o" t$e o.plia" e of t$e propo"e"t to t$e .i"i.u. te $"i al a"% fi"a" ial re;uire.e"ts provi%e% i" t$e &i% Do u.e"ts a"% i" t$e 'RR of t$e &2# La4, R.A. No. 6!5(, as a.e"%e% /y R.A. ((10. #$e .i"i.u. a.ou"t of e;uity to 4$i $ t$e propo"e"tBs fi"a" ial apa/ility 4ill /e /ase% s$all /e t9;rty per1ent H3)MI o8 t9e proDe1t 1ost ;nste" o8 t9e tAenty per1ent H2)MI spe1;8;e ;n Se1t;on 3.0.4 o8 t9e !; Do1u2ents. #$is is to orrelate 4it$ t$e re;uire% %e/t:to:e;uity ratio of ()G3) i" Se tio" 2.)1a of t$e %raft o" essio" agree.e"t. #$e %e/t portio" of t$e proDe t fi"a" i"g s$oul% "ot eC ee% ()N of t$e a tual proDe t ost. A or%i"gly, /ase% o" t$e a/ove provisio"s of la4, t$e ,air argo Co"sortiu. or a"y $alle"ger to t$e u"soli ite% proposal of A5DC $as to s$o4 t$at it possesses t$e re;uisite 8;n"n1;"l 1"p"#;l;ty to un ert"Ee t9e proDe1t ;n t9e 2;n;2u2 "2ount o8 3)M o8 t9e proDe1t 1ost t$roug$ 1i3 proof of t$e a/ility to provi%e a .i"i.u. a.ou"t of e;uity to

,u/li respo"%e"ts argue t$at t$e ,air argo Co"sortiu., ,'A#C2Bs pre%e essor, 4as "ot a %uly pre:;ualifie% /i%%er o" t$e u"soli ite% proposal su/.itte% /y A5DC as t$e ,air argo Co"sortiu. faile% to .eet t$e fi"a" ial apa/ility re;uire% u"%er t$e &2# La4 a"% t$e &i% Do u.e"ts. #$ey allege t$at i" o.puti"g t$e a/ility of t$e ,air argo Co"sortiu. to .eet t$e .i"i.u. e;uity re;uire.e"ts for t$e proDe t, t$e ent;re net Aort9 o8 Se1ur;ty !"nE, " 2e2#er o8 t9e 1onsort;u2, s9oul not #e 1ons; ere . ,'A#C2 relies, o" t$e ot$er $a"%, o" t$e stre"gt$ of t$e +e.ora"%u. %ate% 2 to/er 1*, 1!!6 issue% /y t$e D2#C ="%erse retary ,ri.itivo C. Cal stati"g t$at t$e ,air argo Co"sortiu. is fou"% to $ave a o./i"e% "et 4ort$ of ,3,!)),))),))).)), suffi ie"t to .eet t$e e;uity re;uire.e"ts of t$e proDe t. #$e sai% +e.ora"%u. 4as i" respo"se to a letter fro. +r. A"to"io He"so" of A5DC to ,resi%e"t 9i%el E. Ra.os ;uestio"i"g t$e fi"a" ial apa/ility of t$e ,air argo Co"sortiu. o" t$e grou"% t$at it %oes "ot $ave t$e fi"a" ial resour es to put up t$e re;uire% .i"i.u. e;uity of ,2,()),))),))).)). #$is o"te"tio" is /ase% o" t$e restri tio" u"%er R.A. No. 33(, as a.e"%e% or t$e Ge"eral &a"7i"g A t t$at a o..er ial /a"7 a""ot i"vest i" a"y si"gle e"terprise i" a" a.ou"t .ore t$a" 15N of its "et 4ort$. '" t$e sai% +e.ora"%u., ="%erse retary Cal opi"e%G #$e &i% Do u.e"ts, as larifie% t$roug$ &i% &ulleti" Nos. 3 a"% 5, re;uire t$at fi"a" ial apa/ility 4ill /e evaluate% /ase% o" total fi"a" ial apa/ility of all t$e .e./er o.pa"ies of t$e @,air argoA Co"sortiu.. '" t$is o""e tio", t$e C$alle"ger 4as fou"% to $ave a o./i"e% "et 4ort$ of ,3,!26,*21,2*2.)) t$at oul% support a proDe t osti"g approCi.ately ,13 &illio". 't is "ot a re;uire.e"t t$at t$e "et 4ort$ .ust /e Hu"restri te%.I #o i.pose t$at as a re;uire.e"t "o4 4ill /e "ot$i"g less t$a" u"fair. #$e fi"a" ial state.e"t or t$e "et 4ort$ is "ot t$e sole /asis i" esta/lis$i"g fi"a" ial apa/ility. As state% i" &i% &ulleti" No. 3, fi"a" ial apa/ility .ay also /e esta/lis$e% /y testi.o"ial

t$e proDe t, a"% 1ii3 a letter testi.o"ial fro. reputa/le /a"7s attesti"g t$at t$e proDe t propo"e"t or .e./ers of t$e o"sortiu. are /a"7i"g 4it$ t$e., t$at t$ey are i" goo% fi"a" ial sta"%i"g, a"% t$at t$ey $ave a%e;uate resour es. As t$e .i"i.u. proDe t ost 4as esti.ate% to /e =SP35),))),))).)) or roug$ly ,!,103,65),))).)),@25A t$e ,air argo Co"sortiu. $a% to s$o4 to t$e satisfa tio" of t$e ,&AC t$at it $a% t$e a/ility to provi%e t$e .i"i.u. e;uity for t$e proDe t i" t$e a.ou"t of at least *2,755,)(5,))).)). ,air argoBs Au%ite% 9i"a" ial State.e"ts as of 1!!3 a"% 1!!* i"%i ate% t$at it $a% a "et 4ort$ of ,2,(03,5!2.)) a"% ,3,123,515.)) respe tively.@26A ,AGSB Au%ite% 9i"a" ial State.e"ts as of 1!!5 i"%i ate t$at it $as approCi.ately ,26,(35,()).)) to i"vest as its e;uity for t$e proDe t.@2(A Se urity &a"7Bs Au%ite% 9i"a" ial State.e"ts as of 1!!5 s$o4 t$at it $as a "et 4ort$ e;uivale"t to its apital fu"%s i" t$e a.ou"t of ,3,523,5)*,3((.)).@20A <e agree 4it$ pu/li respo"%e"ts t$at 4it$ respe t to Se urity &a"7, t$e ent;re "2ount of its "et 4ort$ oul% "ot /e i"veste% i" a si"gle u"%erta7i"g or e"terprise, 4$et$er allie% or "o":allie% i" a or%a" e 4it$ t$e provisio"s of R.A. No. 33(, as a.e"%e% or t$e Ge"eral &a"7i"g A tG Se . 21:&. #$e provisio"s i" t$is or i" a"y ot$er A t to t$e o"trary "ot4it$sta"%i"g, t$e +o"etary &oar%, 4$e"ever it s$all %ee. appropriate a"% "e essary to furt$er "atio"al %evelop.e"t o/De tives or support "atio"al priority proDe ts, 2"y "ut9or;ze " 1o22er1;"l #"nE, " #"nE "ut9or;ze to prov; e 1o22er1;"l #"nE;n: serv;1es, "s Aell "s " :overn2ent$oAne "n 1ontrolle #"nE, to oper"te un er "n e@p"n e 1o22er1;"l #"nE;n: "ut9or;ty "n #y v;rtue t9ereo8 e@er1;se, ;n " ;t;on to poAers "ut9or;ze 8or 1o22er1;"l #"nEs, t9e poAers o8 "n +nvest2ent House "s prov; e ;n *res; ent;"l De1ree 'o. 12(, ;nvest ;n t9e eBu;ty o8 " non$"ll;e un ert"E;n: , or o4" a .aDority or all of t$e e;uity i" a fi"a" ial i"ter.e%iary ot$er t$a" a o..er ial /a"7 or a /a"7 aut$ori-e% to provi%e o..er ial /a"7i"g servi esG *rov; e , 59"t 1a3 t$e total i"vest.e"t i" e;uities s$all "ot eC ee% fifty per e"t 15)N3 of t$e "et 4ort$ of t$e /a"7F H#I t9e eBu;ty ;nvest2ent ;n "ny one enterpr;se A9et9er "ll;e or non$ "ll;e s9"ll not e@1ee 8;8teen per1ent H15MI o8 t9e net Aort9 o8 t9e #"nEG 1 3 t$e e;uity i"vest.e"t of t$e /a"7, or of its 4$olly or .aDority:o4"e% su/si%iary, i" a si"gle "o":allie% u"%erta7i"g s$all "ot eC ee% t$irty:five per e"t 135N3 of t$e total e;uity i" t$e e"terprise "or s$all it eC ee% t$irty:five per e"t 135N3 of t$e voti"g sto 7 i" t$at e"terpriseF a"% 1%3 t$e e;uity i"vest.e"t i" ot$er /a"7s s$all /e %e%u te% fro. t$e i"vesti"g /a"7Ms "et 4ort$ for purposes of o.puti"g t$e pres ri/e% ratio of "et 4ort$ to ris7 assets. V. 9urt$er, t$e 1!!3 +a"ual of Regulatio"s for &a"7s provi%esG S5C#'2N O303. 2t$er Li.itatio"s a"% Restri tio"s. W #$e follo4i"g li.itatio"s a"% restri tio"s s$all also apply regar%i"g e;uity i"vest.e"ts of /a"7s. a. '" a"y si"gle e"terprise. W #$e e;uity i"vest.e"ts of /a"7s i" a"y si"gle e"terprise s$all "ot eC ee% at a"y ti.e fiftee" per e"t 115N3 of t$e "et 4ort$ of t$e i"vesti"g /a"7 as %efi"e% i" Se . O1)6 a"% Su/se . O121.5. #$us, t$e .aCi.u. a.ou"t t$at Se urity &a"7 oul% vali%ly i"vest i" t$e ,air argo Co"sortiu. is

o"ly ,520,525,656.55, represe"ti"g 15N of its e"tire "et 4ort$. #$e total "et 4ort$ t$erefore of t$e ,air argo Co"sortiu., after o"si%eri"g t$e 2"@;2u2 "2ounts t$at .ay /e vali%ly i"veste% /y ea $ of its .e./ers is *558,384,871.55 or only 0.)8M o8 t9e proDe1t 1ost,@2!A a" a.ou"t su/sta"tially less t$a" t$e pres ri/e% .i"i.u. e;uity i"vest.e"t re;uire% for t$e proDe t i" t$e a.ou"t of ,2,(55,)!5,))).)) or 3)N of t$e proDe t ost. #$e purpose of pre:;ualifi atio" i" a"y pu/li /i%%i"g is to %eter.i"e, at t$e earliest opportu"ity, t$e a/ility of t$e /i%%er to u"%erta7e t$e proDe t. #$us, 4it$ respe t to t$e /i%%erBs fi"a" ial apa ity at t$e pre:;ualifi atio" stage, t$e la4 re;uires t$e gover".e"t age" y to eCa.i"e a"% %eter.i"e t$e a/ility of t$e /i%%er to fu"% t$e e"tire ost of t$e proDe t #y 1ons; er;n: t9e 2"@;2u2 "2ounts t9"t e"19 #; er 2"y ;nvest ;n t9e proDe1t "t t9e t;2e o8 pre$Bu"l;8;1"t;on. #$e ,&AC $as %eter.i"e% t$at a"y prospe tive /i%%er for t$e o"stru tio", operatio" a"% .ai"te"a" e of t$e NA'A ',# ''' proDe t s$oul% prove t$at it $as t$e a/ility to provi%e e;uity i" t$e .i"i.u. a.ou"t of 3)N of t$e proDe t ost, i" a or%a" e 4it$ t$e ()G3) %e/t:to:e;uity ratio pres ri/e% i" t$e &i% Do u.e"ts. #$us, i" t$e ase of ,air argo Co"sortiu., t$e ,&AC s$oul% %eter.i"e t$e 2"@;2u2 "2ounts t$at ea $ .e./er of t$e o"sortiu. .ay o..it for t$e o"stru tio", operatio" a"% .ai"te"a" e of t$e NA'A ',# ''' proDe t "t t9e t;2e o8 pre$Bu"l;8;1"t;on. <it$ respe t to Se urity &a"7, t$e 2"@;2u2 "2ount 4$i $ .ay /e i"veste% /y it 4oul% o"ly /e 15N of its "et 4ort$ i" vie4 of t$e restri tio"s i.pose% /y t$e Ge"eral &a"7i"g A t. Disregar%i"g t$e i"vest.e"t eili"gs provi%e% /y appli a/le la4 4oul% "ot result i" a proper evaluatio" of 4$et$er or "ot a /i%%er is pre:;ualifie% to u"%erta7e t$e proDe t as for all i"te"ts a"% purposes, su $ eili"g or legal restri tio" %eter.i"es t$e true 2"@;2u2 "2ount 4$i $ a /i%%er .ay i"vest i" t$e proDe t. 9urt$er, t$e %eter.i"atio" of 4$et$er or "ot a /i%%er is pre:;ualifie% to u"%erta7e t$e proDe t re;uires a" evaluatio" of t$e fi"a" ial apa ity of t$e sai% /i%%er "t t9e t;2e t9e #; ;s su#2;tte /ase% o" t$e re;uire% %o u.e"ts prese"te% /y t$e /i%%er. #$e ,&AC s$oul% "ot /e allo4e% to spe ulate o" t$e 8uture 8;n"n1;"l "#;l;ty of t$e /i%%er to u"%erta7e t$e proDe t o" t$e /asis of %o u.e"ts su/.itte%. #$is 4oul% ope" %oors to a/use a"% %efeat t$e very purpose of a pu/li /i%%i"g. #$is is espe ially true i" t$e ase at /ar 4$i $ i"volves t$e i"vest.e"t of /illio"s of pesos /y t$e proDe t propo"e"t. #$e releva"t gover".e"t aut$ority is %uty:/ou"% to e"sure t$at t$e a4ar%ee of t$e o"tra t possesses t$e .i"i.u. re;uire% fi"a" ial apa/ility to o.plete t$e proDe t. #o allo4 t$e ,&AC to esti.ate t$e /i%%erBs 8uture 8;n"n1;"l 1"p"#;l;ty 4oul% "ot se ure t$e via/ility a"% i"tegrity of t$e proDe t. A restri tive a"% o"servative appli atio" of t$e rules a"% pro e%ures of pu/li /i%%i"g is "e essary "ot o"ly to prote t t$e i.partiality a"% regularity of t$e pro ee%i"gs /ut also to e"sure t$e fi"a" ial a"% te $"i al relia/ility of t$e proDe t. 't $as /ee" $el% t$atG #$e /asi rule i" pu/li /i%%i"g is t$at /i%s s$oul% /e evaluate% /ase% o" t$e re;uire% %o u.e"ts su/.itte% /efore a"% "ot after t$e ope"i"g of /i%s. 2t$er4ise, t$e fou"%atio" of a fair a"% o.petitive pu/li /i%%i"g 4oul% /e %efeate%. Str;1t o#serv"n1e o8 t9e rules, re:ul"t;ons, "n :u; el;nes o8 t9e #; ;n: pro1ess ;s t9e only s"8e:u"r to " 8";r, 9onest "n 1o2pet;t;ve pu#l;1 #; ;n:.@3)A #$us, if t$e 2"@;2u2 "2ount o8 eBu;ty t$at a /i%%er .ay i"vest i" t$e proDe t "t t9e t;2e t9e #; s "re su#2;tte falls s$ort of t$e .i"i.u. a.ou"ts re;uire% to /e put up /y t$e /i%%er, sai% /i%%er s$oul% /e properly %is;ualifie%. Co"si%eri"g t$at at t$e pre:;ualifi atio" stage, t$e

.aCi.u. a.ou"ts 4$i $ t$e ,air argo Co"sortiu. .ay i"vest i" t$e proDe t fell s$ort of t$e .i"i.u. a.ou"ts pres ri/e% /y t$e ,&AC, 4e $ol% t$at ,air argo Co"sortiu. 4as "ot a ;ualifie% /i%%er. #$us t$e a4ar% of t$e o"tra t /y t$e ,&AC to t$e ,air argo Co"sortiu., a %is;ualifie% /i%%er, is "ull a"% voi%. <$ile it 4oul% /e proper at t$is Du" ture to e"% t$e resolutio" of t$e i"sta"t o"troversy, as t$e legal effe ts of t$e %is;ualifi atio" of respo"%e"t ,'A#C2Bs pre%e essor 4oul% o.e i"to play a"% "e essarily result i" t$e "ullity of all t$e su/se;ue"t o"tra ts e"tere% /y it i" pursua" e of t$e proDe t, t$e Court feels t$at it is "e essary to %is uss i" full t$e pressi"g issues of t$e prese"t o"troversy for a o.plete resolutio" t$ereof. ++ +s t9e 1((7 Con1ess;on A:ree2ent v"l; K ,etitio"ers a"% pu/li respo"%e"ts o"te"% t$at t$e 1!!( Co" essio" Agree.e"t is i"vali% as it o"tai"s provisio"s t$at su/sta"tially %epart fro. t$e %raft Co" essio" Agree.e"t i" lu%e% i" t$e &i% Do u.e"ts. #$ey .ai"tai" t$at a su/sta"tial %eparture fro. t$e %raft Co" essio" Agree.e"t is a violatio" of pu/li poli y a"% re"%ers t$e 1!!( Co" essio" Agree.e"t "ull a"% voi%. ,'A#C2 .ai"tai"s, $o4ever, t$at t$e Co" essio" Agree.e"t atta $e% to t$e &i% Do u.e"ts is i"te"%e% to /e a r"8t, i.e., su/De t to $a"ge, alteratio" or .o%ifi atio", a"% t$at t$is i"te"tio" 4as lear to all parti ipa"ts, i" lu%i"g A5DC, a"% D2#CJ+'AA. 't argue% furt$er t$at sai% i"te"tio" is eCpresse% i" ,art C 163 of &i% &ulleti" No. 3 issue% /y t$e ,&AC 4$i $ statesG 6. A.e"%.e"ts to t$e Draft Co" essio"s Agree.e"t A.e"%.e"ts to t$e Draft Co" essio"s Agree.e"t s$all /e issue% fro. ti.e to ti.e. Sai% a.e"%.e"ts s$all o"ly over ite.s t$at 4oul% "ot .aterially affe t t$e preparatio" of t$e propo"e"tBs proposal. &y its very "ature, pu/li /i%%i"g ai.s to prote t t$e pu/li i"terest /y givi"g t$e pu/li t$e /est possi/le a%va"tages t$roug$ ope" o.petitio". #$usG Co.petitio" .ust /e legiti.ate, fair a"% $o"est. '" t$e fiel% of gover".e"t o"tra t la4, o.petitio" re;uires, "ot o"ly X/i%%i"g upo" a o..o" sta"%ar%, a o..o" /asis, upo" t$e sa.e t$i"g, t$e sa.e su/De t .atter, t$e sa.e u"%erta7i"g,M /ut also t$at it /e legiti.ate, fair a"% $o"estF a"% "ot %esig"e% to i"Dure or %efrau% t$e gover".e"t.@31A A" esse"tial ele.e"t of a pu/li ly /i%%e% o"tra t is t$at all /i%%ers .ust /e o" e;ual footi"g. Not si.ply i" ter.s of appli atio" of t$e pro e%ural rules a"% regulatio"s i.pose% /y t$e releva"t gover".e"t age" y, #ut 2ore ;2port"ntly, on t9e 1ontr"1t #; e upon. -"19 #; er 2ust #e "#le to #; on t9e s"2e t9;n:. #$e ratio"ale is o/vious. 'f t$e 4i""i"g /i%%er is allo4e% to later i" lu%e or .o%ify ertai" provisio"s i" t$e o"tra t a4ar%e% su $ t$at t$e o"tra t is altere% i" a"y .aterial respe t, t$e" t$e esse" e of fair o.petitio" i" t$e pu/li /i%%i"g is %estroye%. A pu/li /i%%i"g 4oul% i"%ee% /e a far e if after t$e o"tra t is a4ar%e%, t$e 4i""i"g /i%%er .ay .o%ify t$e o"tra t a"% i" lu%e provisio"s 4$i $ are favora/le to it t$at 4ere "ot previously .a%e availa/le to t$e ot$er /i%%ers. #$usG

't is i"$ere"t i" pu/li /i%%i"gs t$at t$ere s$all /e a fair o.petitio" a.o"g t$e /i%%ers. #$e spe ifi atio"s i" su $ /i%%i"gs provi%e t$e o..o" grou"% or /asis for t$e /i%%ers. #$e spe ifi atio"s s$oul%, a or%i"gly, operate e;ually or i"%is ri.i"ately upo" all /i%%ers.@32A #$e sa.e rule 4as restate% /y C$ief 8usti e Stuart of t$e Supre.e Court of +i""esotaG #$e la4 is 4ell settle% t$at 4$ere, as i" t$is ase, .u"i ipal aut$orities a" o"ly let a o"tra t for pu/li 4or7 to t$e lo4est respo"si/le /i%%er, t$e proposals a"% spe ifi atio"s t$erefore .ust /e so fra.e% as to per.it free a"% full o.petitio". 'or 1"n t9ey enter ;nto " 1ontr"1t A;t9 t9e #est #; er 1ont";n;n: su#st"nt;"l prov;s;ons #ene8;1;"l to 9;2, not ;n1lu e or 1onte2pl"te ;n t9e ter2s "n spe1;8;1"t;ons upon A9;19 t9e #; s Aere ;nv;te .@33A '" fa t, i" t$e ,&AC &i% &ulleti" No. 3 ite% /y ,'A#C2 to support its argu.e"t t$at t$e %raft o" essio" agree.e"t is su/De t to a.e"%.e"t, t$e perti"e"t portio" of 4$i $ 4as ;uote% a/ove, t$e ,&AC also larifie% t$at H.s3"; "2en 2ents s9"ll only 1over ;te2s t9"t Aoul not 2"ter;"lly "88e1t t9e prep"r"t;on o8 t9e proponentFs propos"l.I <$ile 4e o" e%e t$at a 4i""i"g /i%%er is "ot pre lu%e% fro. .o%ifyi"g or a.e"%i"g ertai" provisio"s of t$e o"tra t /i%%e% upo", su $ $a"ges 2ust not 1onst;tute su#st"nt;"l or 2"ter;"l "2en 2ents t9"t Aoul "lter t9e #"s;1 p"r"2eters o8 t9e 1ontr"1t "n Aoul 1onst;tute " en;"l to t9e ot9er #; ers o8 t9e opportun;ty to #; on t9e s"2e ter2s.He" e, t$e %eter.i"atio" of 4$et$er or "ot a .o%ifi atio" or a.e"%.e"t of a o"tra t /i%%e% out o"stitutes a su/sta"tial a.e"%.e"t rests o" 4$et$er t$e o"tra t, 4$e" ta7e" as a 4$ole, 4oul% o"tai" su/sta"tially %iffere"t ter.s a"% o"%itio"s t$at 4oul% $ave t$e effe t of alteri"g t$e te $"i al a"%Jor fi"a" ial proposals previously su/.itte% /y ot$er /i%%ers. #$e alteratio"s a"% .o%ifi atio"s i" t$e o"tra t eCe ute% /et4ee" t$e gover".e"t a"% t$e 4i""i"g /i%%er .ust /e su $ as to re"%er su $ eCe ute% o"tra t to /e "n ent;rely ;88erent 1ontr"1t 8ro2 t9e one t9"t A"s #; e upon. '" t$e ase of C"lte@ H*9;l;pp;nesI, +n1. v. Del:" o !rot9ers, +n1.,@3*A t$is Court ;uote% 4it$ approval t$e ruli"g of t$e trial ourt t$at a" a.e"%.e"t to a o"tra t a4ar%e% t$roug$ pu/li /i%%i"g, 4$e" su $ su/se;ue"t a.e"%.e"t 4as .a%e 4it$out a "e4 pu/li /i%%i"g, is "ull a"% voi%G #$e Court agrees 4it$ t$e o"te"tio" of ou"sel for t$e plai"tiffs t$at t$e %ue eCe utio" of a o"tra t after pu/li /i%%i"g is a li.itatio" upo" t$e rig$t of t$e o"tra ti"g parties to alter or a.e"% it 4it$out a"ot$er pu/li /i%%i"g, for ot$er4ise A9"t Aoul " pu#l;1 #; ;n: #e :oo 8or ;8 "8ter t9e e@e1ut;on o8 " 1ontr"1t "8ter pu#l;1 #; ;n:, t9e 1ontr"1t;n: p"rt;es 2"y "lter or "2en t9e 1ontr"1t, or even 1"n1el ;t, "t t9e;r A;llK ,u/li /i%%i"gs are $el% for t$e prote tio" of t$e pu/li , a"% to give t$e pu/li t$e /est possi/le a%va"tages /y .ea"s of ope" o.petitio" /et4ee" t$e /i%%ers. He A9o #; s or o88ers t9e #est ter2s ;s "A"r e t9e 1ontr"1t su#De1t o8 t9e #; , "n ;t ;s o#v;ous t9"t su19 prote1t;on "n #est poss;#le " v"nt":es to t9e pu#l;1 A;ll ;s"ppe"r ;8 t9e p"rt;es to " 1ontr"1t e@e1ute "8ter pu#l;1 #; ;n: 2"y "lter or "2en ;t A;t9out "not9er prev;ous pu#l;1 #; ;n:.@35A He" e, t$e ;uestio" t$at o.es to fore is t$isG ;s t9e 1((7 Con1ess;on A:ree2ent t9e s"2e ":ree2ent t9"t A"s o88ere 8or pu#l;1 #; ;n:, i.e., t$e %raft Co" essio"

Agree.e"t atta $e% to t$e &i% Do u.e"tsS A lose o.pariso" of t$e %raft Co" essio" Agree.e"t atta $e% to t$e &i% Do u.e"ts a"% t$e 1!!( Co" essio" Agree.e"t reveals t$at t$e %o u.e"ts %iffer i" at least t4o .aterial respe tsG ". Mo ;8;1"t;on on t9e *u#l;1 Ut;l;ty &evenues "n 'on$*u#l;1 Ut;l;ty &evenues t9"t 2"y #e 1olle1te #y *+A5C/ #$e fees t$at .ay /e i.pose% a"% olle te% /y ,'A#C2 u"%er t$e %raft Co" essio" Agree.e"t a"% t$e 1!!( Co" essio" Agree.e"t .ay /e lassifie% i"to t$ree %isti" t ategoriesG 113 fees 4$i $ are su/De t to perio%i a%Dust.e"t of o" e every t4o years i" a or%a" e 4it$ a pres ri/e% para.etri for.ula a"% a%Dust.e"ts are .a%e effe tive o"ly upo" 4ritte" approval /y +'AAF 123 fees ot$er t$a" t$ose i" lu%e% i" t$e first ategory 4$i $ .ay/e a%Duste% /y ,'A#C2 4$e"ever it %ee.s "e essary 4it$out "ee% for o"se"t of D2#CJ+'AAF a"% 133 "e4 fees a"% $arges t$at .ay /e i.pose% /y ,'A#C2 4$i $ $ave "ot /ee" previously i.pose% or olle te% at t$e Ni"oy A;ui"o '"ter"atio"al Airport ,asse"ger #er.i"al ', pursua"t to A%.i"istrative 2r%er No. 1, Series of 1!!3, as a.e"%e%. #$e glari"g %isti" tio"s /et4ee" t$e %raft Co" essio" Agree.e"t a"% t$e 1!!( Co" essio" Agree.e"t lie i" t$e types of fees i" lu%e% i" ea $ ategory a"% t$e eCte"t of t$e supervisio" a"% regulatio" 4$i $ +'AA is allo4e% to eCer ise i" relatio" t$ereto. 9or fees u"%er t$e 8;rst 1"te:ory, i.e., t$ose 4$i $ are su/De t to perio%i a%Dust.e"t i" a or%a" e 4it$ a pres ri/e% para.etri for.ula a"% effe tive o"ly upo" 4ritte" approval /y +'AA,t9e r"8t Con1ess;on A:ree2ent i" lu%es t$e follo4i"gG@36A 113 air raft par7i"g feesF 123 air raft ta 7i"g feesF 133 grou"%$a"%li"g feesF 1*3 re"tals a"% airli"e offi esF 153 $e 7:i" ou"ter re"talsF a"% 163 porterage fees. ="%er t$e 1((7 Con1ess;on A:ree2ent, fees 4$i $ are su/De t to a%Dust.e"t a"% effe tive upo" +'AA approval are lassifie% as H,u/li =tility Reve"uesI a"% i" lu%eG@3(A 113 air raft par7i"g feesF 123 air raft ta 7i"g feesF 133 $e 7:i" ou"ter feesF a"% 1*3 #er.i"al 9ees. #$e i.pli atio" of t$e re%u e% "u./er of fees t$at are su/De t to +'AA approval is /est appre iate% i" relatio" to fees i" lu%e% i" t$e se1on 1"te:ory i%e"tifie% a/ove. ="%er t$e 1((7 Con1ess;on A:ree2ent, fees 4$i $ ,'A#C2 .ay a%Dust 4$e"ever it %ee.s "e essary 4it$out "ee% for o"se"t of D2#CJ+'AA are HNo":,u/li =tility Reve"uesI a"% is %efi"e% as Hall ot$er i" o.e "ot lassifie% as ,u/li =tility Reve"ues %erive% fro. operatio"s of t$e #er.i"al a"% t$e

#er.i"al Co.pleC.I@30A #$us, u"%er t$e 1!!( Co" essio" Agree.e"t, grou"%$a"%li"g fees, re"tals fro. airli"e offi es a"% porterage fees are "o lo"ger su/De t to +'AA regulatio". 9urt$er, u"%er Se tio" 6.)3 of t$e r"8t Con1ess;on A:ree2ent, +'AA reserves t$e rig$t to regulate 113 lo//y a"% ve$i ular par7i"g fees a"% 123 ot$er "e4 fees a"% $arges t$at .ay /e i.pose% /y ,'A#C2. Su $ regulatio" .ay /e .a%e /y perio%i a%Dust.e"t a"% is effe tive o"ly upo" 4ritte" approval of +'AA. #$e full teCt of sai% provisio" is ;uote% /elo4G Se tio" 6.)3. 4eriodic 'd8ustment in :ees and Charges. A%Dust.e"ts i" t$e air raft par7i"g fees, air raft ta 7i"g fees, grou"%$a"%li"g fees, re"tals a"% airli"e offi es, $e 7:i": ou"ter re"tals a"% porterage fees s$all /e allo4e% o"ly o" e every t4o years a"% i" a or%a" e 4it$ t$e ,ara.etri 9or.ula atta $e% $ereto as A""eC 9. ,rovi%e% t$at a%Dust.e"ts s$all /e .a%e effe tive o"ly after t$e 4ritte" eCpress approval of t$e +'AA. ,rovi%e%, furt$er, t$at su $ approval of t$e +'AA, s$all /e o"ti"ge"t o"ly o" t$e o"for.ity of t$e a%Dust.e"ts 4it$ t$e a/ove sai% para.etri for.ula. #$e first a%Dust.e"t s$all /e .a%e prior to t$e '": Servi e Date of t$e #er.i"al. 59e M+AA reserves t9e r;:9t to re:ul"te un er t9e 8ore:o;n: ter2s "n 1on ;t;ons t9e lo##y "n ve9;1ul"r p"rE;n: 8ees "n ot9er neA 8ees "n 19"r:es "s 1onte2pl"te ;n p"r":r"p9 2 o8 Se1t;on 0.)1 ;8 ;n ;ts Du :2ent t9e users o8 t9e ";rport s9"ll #e epr;ve o8 " 8ree opt;on 8or t9e serv;1es t9ey 1over.@3!A 2" t$e ot$er $a"%, t$e e;uivale"t provisio" u"%er t$e 1((7 Con1ess;on A:ree2ent rea%sG Se tio" 6.)3 ,erio%i A%Dust.e"t i" 9ees a"% C$arges. V. 1 3 Co" essio"aire s$all at all ti.es /e Du%i ious i" fiCi"g fees a"% $arges o"stituti"g No":,u/li =tility Reve"ues i" or%er to e"sure t$at 5"% =sers are "ot u"reaso"a/ly %eprive% of servi es. >9;le t9e ve9;1ul"r p"rE;n: 8ee, porter":e 8ee "n :reeterLAell A;s9er 8ee 1onst;tute 'on$*u#l;1 Ut;l;ty &evenues o8 Con1ess;on";re, %&* 2"y ;ntervene "n reBu;re Con1ess;on";re to e@pl";n "n Dust;8y t9e 8ee ;t 2"y set 8ro2 t;2e to t;2e, if i" t$e reaso"a/le opi"io" of GR, t$e sai% fees $ave /e o.e eCor/ita"t resulti"g i" t$e u"reaso"a/le %eprivatio" of 5"% =sers of su $ servi es.@*)A #$us, u"%er t$e 1((7 Con1ess;on A:ree2ent, 4it$ respe t to 113 ve$i ular par7i"g fee, 123 porterage fee a"% 133 greeterJ4ell 4is$er fee, all t$at +'AA a" %o is to re;uire ,'A#C2 toe@pl";n "n Dust;8y t$e fees set /y ,'A#C2. '" t$e r"8t Con1ess;on A:ree2ent, ve$i ular par7i"g fee is su/De t to +'AA regulatio" a"% approval u"%er t$e se o"% paragrap$ of Se tio" 6.)3 t$ereof 4$ile porterage fee is overe% /y t$e first paragrap$ of t$e sa.e provisio". #$ere is a" o/vious relaCatio" of t$e eCte"t of o"trol a"% regulatio" /y +'AA 4it$ respe t to t$e parti ular fees t$at .ay /e $arge% /y ,'A#C2. +oreover, 4it$ respe t to t$e t9;r 1"te:ory of fees t$at .ay /e i.pose% a"% olle te% /y ,'A#C2, i.e., "e4 fees a"% $arges t$at .ay /e i.pose% /y ,'A#C2 4$i $ $ave "ot /ee" previously i.pose% or olle te% at t$e Ni"oy A;ui"o '"ter"atio"al Airport ,asse"ger #er.i"al ', u"%er Se tio" 6.)3 of t$e r"8t Con1ess;on A:ree2ent +'AA $as reserve% t$e rig$t to regulate t$e sa.e u"%er t$e sa.e o"%itio"s t$at +'AA .ay regulate fees u"%er t$e first ategory, i.e., perio%i a%Dust.e"t of o" e every t4o years i" a or%a" e 4it$ a

pres ri/e% para.etri for.ula a"% effe tive o"ly upo" 4ritte" approval /y +'AA. Ho4ever, u"%er t$e 1((7 Con1ess;on A:ree2ent, a%Dust.e"t of fees u"%er t$e t$ir% ategory is "ot su/De t to +'AA regulatio". <it$ respe t to ter2;n"l 8ees t$at .ay /e $arge% /y ,'A#C2,@*1A as s$o4" earlier, t$is 4as i" lu%e% 4it$i" t$e ategory of H,u/li =tility Reve"uesI u"%er t$e 1((7 Con1ess;on A:ree2ent. #$is lassifi atio" is sig"ifi a"t /e ause u"%er t$e 1!!( Co" essio" Agree.e"t, H,u/li =tility Reve"uesI are su/De t to a" H'"teri. A%Dust.e"tI of fees upo" t$e o urre" e of ertai" eCtraor%i"ary eve"ts spe ifie% i" t$e agree.e"t.@*2A Ho4ever, u"%er t$e r"8t Con1ess;on A:ree2ent, ter.i"al fees are "ot i" lu%e% i" t$e types of fees t$at .ay /e su/De t to H'"teri. A%Dust.e"t.I@*3A 9i"ally, u"%er t$e 1((7 Con1ess;on A:ree2ent, H,u/li =tility Reve"ues,I eC ept ter.i"al fees, are %e"o.i"ate% i" =S Dollars@**A 4$ile pay.e"ts to t$e Gover".e"t are i" ,$ilippi"e ,esos. '" t$e r"8t Con1ess;on A:ree2ent , "o su $ stipulatio" 4as i" lu%e%. &y stipulati"g t$at H,u/li =tility Reve"uesI 4ill /e pai% to ,'A#C2 i" =S Dollars 4$ile pay.e"ts /y ,'A#C2 to t$e Gover".e"t are i" ,$ilippi"e urre" y u"%er t$e 1!!( Co" essio" Agree.e"t, ,'A#C2 is a/le to e"Doy t$e /e"efits of %epre iatio"s of t$e ,$ilippi"e ,eso, 4$ile /ei"g effe tively i"sulate% fro. t$e %etri.e"tal effe ts of eC $a"ge rate flu tuatio"s. <$e" ta7e" as a 4$ole, t$e $a"ges u"%er t$e 1!!( Co" essio" Agree.e"t 4it$ respe t to re%u tio" i" t$e types of fees t$at are su/De t to +'AA regulatio" a"% t$e relaCatio" of su $ regulatio" 4it$ respe t to ot$er fees are sig"ifi a"t a.e"%.e"ts t$at su/sta"tially %isti"guis$ t$e %raft Co" essio" Agree.e"t fro. t$e 1!!( Co" essio" Agree.e"t. 59e 1((7 Con1ess;on A:ree2ent, ;n t9;s respe1t, 1le"rly :;ves *+A5C/ 2ore 8"vor"#le ter2s t9"n A9"t A"s "v";l"#le to ot9er #; ers "t t9e t;2e t9e 1ontr"1t A"s #; e out. 't is "ot very %iffi ult to see t$at t$e $a"ges i" t$e 1!!( Co" essio" Agree.e"t tra"slate to ;re1t "n 1on1rete 8;n"n1;"l " v"nt":es 8or *+A5C/ 4$i $ 4ere "ot availa/le at t$e ti.e t$e o"tra t 4as offere% for /i%%i"g. 't a""ot /e %e"ie% t$at u"%er t$e 1!!( Co" essio" Agree.e"t only N*u#l;1 Ut;l;ty &evenuesO "re su#De1t to M+AA re:ul"t;on. A Dust2ents o8 "ll ot9er 8ees ;2pose "n 1olle1te #y *+A5C/ "re ent;rely A;t9;n ;ts 1ontrol . +oreover, 4it$ respe t to ter.i"al fees, u"%er t$e 1!!( Co" essio" Agree.e"t, t$e sa.e is furt$er su/De t to H'"teri. A%Dust.e"tsI "ot previously stipulate% i" t$e %raft Co" essio" Agree.e"t. 9i"ally, t$e $a"ge i" t$e urre" y stipulate% for H,u/li =tility Reve"uesI u"%er t$e 1!!( Co" essio" Agree.e"t, eC ept ter.i"al fees, gives ,'A#C2 a" a%%e% /e"efit 4$i $ 4as "ot availa/le at t$e ti.e of /i%%i"g. #. Assu2pt;on #y t9e %overn2ent o8 t9e l;"#;l;t;es o8 *+A5C/ ;n t9e event o8 t9e l"tterFs e8"ult t9ereo8 ="%er t$e r"8t Con1ess;on A:ree2ent, %efault /y ,'A#C2 of a"y of its o/ligatio"s to re%itors 4$o $ave provi%e%, loa"e% or a%va" e% fu"%s for t$e NA'A ',# ''' proDe t %oes "ot result i" t$e assu.ptio" /y t$e Gover".e"t of t$ese lia/ilities. '" fa t, "o4$ere i" t$e sai% o"tra t %oes %efault of ,'A#C2Bs loa"s figure i" t$e agree.e"t. Su $ %efault %oes "ot %ire tly result i" a"y o" o.ita"t rig$t or o/ligatio" i" favor of t$e Gover".e"t. Ho4ever, t$e 1((7 Con1ess;on A:ree2ent provi%esG Se tio" *.)* V. Assig".e"t.

1/3 '" t$e eve"t Co" essio"aire s$oul% %efault i" t$e pay.e"t of a" Atte"%a"t Lia/ility, a"% t$e %efault $as resulte% i" t$e a eleratio" of t$e pay.e"t %ue %ate of t$e Atte"%a"t Lia/ility prior to its state% %ate of .aturity, t$e ="pai% Cre%itors a"% Co" essio"aire s$all i..e%iately i"for. GR, i" 4riti"g of su $ %efault. GR, s$all, 4it$i" o"e $u"%re% eig$ty 110)3 Days fro. re eipt of t$e Doi"t 4ritte" "oti e of t$e ="pai% Cre%itors a"% Co" essio"aire, eit$er 1i3 ta7e over t$e Develop.e"t 9a ility a"% assu.e t$e Atte"%a"t Lia/ilities, or 1ii3 allo4 t$e ="pai% Cre%itors, if ;ualifie%, to /e su/stitute% as o" essio"aire a"% operator of t$e Develop.e"t 9a ility i" a or%a" e 4it$ t$e ter.s a"% o"%itio"s $ereof, or %esig"ate a ;ualifie% operator a epta/le to GR, to operate t$e Develop.e"t 9a ility, li7e4ise u"%er t$e ter.s a"% o"%itio"s of t$is Agree.e"tF ,rovi%e% t$at if at t$e e"% of t$e 10):%ay perio% GR, s$all "ot $ave serve% t$e ="pai% Cre%itors a"% Co" essio"aire 4ritte" "oti e of its $oi e, GR, s$all /e %ee.e% to $ave ele te% to ta7e over t$e Develop.e"t 9a ility 4it$ t$e o" o.ita"t assu.ptio" of Atte"%a"t Lia/ilities. 1 3 'f GR, s$oul%, /y 4ritte" "oti e, allo4 t$e ="pai% Cre%itors to /e su/stitute% as o" essio"aire, t$e latter s$all for. a"% orga"i-e a o" essio" o.pa"y ;ualifie% to ta7e over t$e operatio" of t$e Develop.e"t 9a ility. 'f t$e o" essio" o.pa"y s$oul% ele t to %esig"ate a" operator for t$e Develop.e"t 9a ility, t$e o" essio" o.pa"y s$all i" goo% fait$ i%e"tify a"% %esig"ate a ;ualifie% operator a epta/le to GR, 4it$i" o"e $u"%re% eig$ty 110)3 %ays fro. re eipt of GR,Bs 4ritte" "oti e. 'f t$e o" essio" o.pa"y, a ti"g i" goo% fait$ a"% 4it$ %ue %ilige" e, is u"a/le to %esig"ate a ;ualifie% operator 4it$i" t$e aforesai% perio%, t$e" GR, s$all at t$e e"% of t$e 10):%ay perio% ta7e over t$e Develop.e"t 9a ility a"% assu.e Atte"%a"t Lia/ilities. #$e ter. HAtte"%a"t Lia/ilitiesI Con1ess;on A:ree2ent is %efi"e% asG u"%er t$e 1((7

Atte"%a"t Lia/ilities refer to all a.ou"ts re or%e% a"% fro. ti.e to ti.e outsta"%i"g i" t$e /oo7s of t$e Co" essio"aire "s oA;n: to Unp"; Cre ;tors A9o 9"ve prov; e , lo"ne or " v"n1e 8un s "1tu"lly use 8or t9e *roDe1t, i" lu%i"g all i"terests, pe"alties, asso iate% fees, $arges, sur $arges, i"%e."ities, rei./urse.e"ts a"% ot$er relate% eCpe"ses, a"% furt$er i" lu%i"g a.ou"ts o4e% /y Co" essio"aire to its suppliers, o"tra tors a"% su/: o"tra tors. ="%er t$e a/ove ;uote% portio"s of Se tio" *.)* i" relatio" to t$e %efi"itio" of HAtte"%a"t Lia/ilities,I e8"ult #y *+A5C/ o8 ;ts lo"ns use to 8;n"n1e t9e 'A+A +*5 +++ proDe1t tr;::ers t9e o11urren1e o8 1ert";n events t9"t le" s to t9e "ssu2pt;on #y t9e %overn2ent o8 t9e l;"#;l;ty 8or t9e lo"ns. 2"ly i" o"e i"sta" e .ay t$e Gover".e"t es ape t$e assu.ptio" of ,'A#C2Bs lia/ilities, i.e., 4$e" t$e Gover".e"t so ele ts a"% allo4s a ;ualifie% operator to ta7e over as Co" essio"aire. HoAever, t9;s 1;r1u2st"n1e ;s epen ent on t9e e@;sten1e "n "v";l"#;l;ty o8 " Bu"l;8;e oper"tor A9o ;s A;ll;n: to t"Ee over t9e r;:9ts "n o#l;:"t;ons o8 *+A5C/ un er t9e 1ontr"1t, " 1;r1u2st"n1e t9"t ;s not ent;rely A;t9;n t9e 1ontrol o8 t9e %overn2ent. <it$out goi"g i"to t$e vali%ity of t$is provisio" at t$is Du" ture, suffi e it to state t$at Se tio" *.)* of t$e 1!!( Co" essio" Agree.e"t .ay /e o"si%ere% a for. of se urity for t$e loa"s ,'A#C2 $as o/tai"e% to fi"a" e t$e proDe t, a" optio" t$at 4as "ot .a%e availa/le i" t$e %raft Co" essio" Agree.e"t. Se tio" *.)* is a" i.porta"t a.e"%.e"t to t$e 1!!( Co" essio" Agree.e"t /e ause it gra"ts ,'A#C2 a 8;n"n1;"l " v"nt":e or #ene8;t A9;19 A"s not prev;ously 2" e "v";l"#le ur;n: t9e #; ;n: pro1ess. #$is fi"a" ial

a%va"tage is a sig"ifi a"t .o%ifi atio" t$at tra"slates to /etter ter.s a"% o"%itio"s for ,'A#C2. ,'A#C2, $o4ever, argues t$at t$e parties to t$e /i%%i"g pro e%ure a 7"o4le%ge t$at t$e %raft Co" essio" Agree.e"t is su/De t to a.e"%.e"t /e ause t$e &i% Do u.e"ts per.it fi"a" i"g or /orro4i"g. #$ey lai. t$at it 4as t$e le"%ers 4$o propose% t$e a.e"%.e"ts to t$e %raft Co" essio" Agree.e"t 4$i $ resulte% i" t$e 1!!( Co" essio" Agree.e"t. <e agree t$at it is "ot i" o"siste"t 4it$ t$e ratio"ale a"% purpose of t$e &2# La4 to allo4 t$e proDe t propo"e"t or t$e 4i""i"g /i%%er to o/tai" fi"a" i"g for t$e proDe t, espe ially i" t$is ase 4$i $ i"volves t$e o"stru tio", operatio" a"% .ai"te"a" e of t$e NA'A ',# '''. 5Cpe te%ly, o.plia" e /y t$e proDe t propo"e"t of its u"%erta7i"gs t$erei" 4oul% i"volve a su/sta"tial a.ou"t of i"vest.e"t. 't is t$erefore i"evita/le for t$e a4ar%ee of t$e o"tra t to see7 alter"ate sour es of fu"%s to support t$e proDe t. &e t$at as it .ay, t$is Court .ai"tai"s t$at a.e"%.e"ts to t$e o"tra t /i%%e% upo" s$oul% al4ays o"for. to t$e ge"eral poli y o" pu/li /i%%i"g if su $ pro e%ure is to /e fait$ful to its real "ature a"% purpose. &y its very "ature a"% $ara teristi , o.petitive pu/li /i%%i"g ai.s to prote t t$e pu/li i"terest /y givi"g t$e pu/li t$e /est possi/le a%va"tages t$roug$ ope" o.petitio".@*5A 't $as /ee" $el% t$at t$e t$ree pri" iples i" pu/li /i%%i"g are 113 t$e offer to t$e pu/li F 123 opportu"ity for o.petitio"F a"% 133 a /asis for t$e eCa t o.pariso" of /i%s. A regulatio" of t$e .atter 4$i $ eC lu%es a"y of t$ese fa tors %estroys t$e %isti" tive $ara ter of t$e syste. a"% t$4arts t$e purpose of its a%optio". @*6A #$ese are t$e /asi para.eters 4$i $ every a4ar%ee of a o"tra t /i%%e% out .ust o"for. to, re;uire.e"ts of fi"a" i"g a"% /orro4i"g "ot4it$sta"%i"g. #$us, upo" a o" rete s$o4i"g t$at, as i" t$is ase, t$e o"tra t sig"e% /y t$e gover".e"t a"% t$e o"tra t:a4ar%ee is a" e"tirely %iffere"t o"tra t fro. t$e o"tra t /i%%e%, ourts s$oul% "ot $esitate to stri7e %o4" sai% o"tra t i" its e"tirety for violatio" of pu/li poli y o" pu/li /i%%i"g. A stri t a%$ere" e o" t$e pri" iples, rules a"% regulatio"s o" pu/li /i%%i"g .ust /e sustai"e% if o"ly to preserve t$e i"tegrity a"% t$e fait$ of t$e ge"eral pu/li o" t$e pro e%ure. ,u/li /i%%i"g is a sta"%ar% pra ti e for pro uri"g gover".e"t o"tra ts for pu/li servi e a"% for fur"is$i"g supplies a"% ot$er .aterials. 't ai.s to se ure for t$e gover".e"t t$e lo4est possi/le pri e u"%er t$e .ost favora/le ter.s a"% o"%itio"s, to urtail favoritis. i" t$e a4ar% of gover".e"t o"tra ts a"% avoi% suspi io" of a"o.alies a"% it pla es all /i%%ers i" e;ual footi"g.@*(A Any :overn2ent "1t;on A9;19 per2;ts "ny su#st"nt;"l v"r;"n1e #etAeen t9e 1on ;t;ons un er A9;19 t9e #; s "re ;nv;te "n t9e 1ontr"1t e@e1ute "8ter t9e "A"r t9ereo8 ;s " :r"ve "#use o8 ;s1ret;on "2ount;n: to l"1E or e@1ess o8 Dur;s ;1t;on A9;19 A"rr"nts proper Du ;1;"l "1t;on. '" vie4 of t$e a/ove %is ussio", t$e fa t t$at t$e foregoi"g su/sta"tial a.e"%.e"ts 4ere .a%e o" t$e 1((7 Con1ess;on A:ree2ent re"%ers t$e sa.e "ull a"% voi% for /ei"g 1ontr"ry to pu#l;1 pol;1y. #$ese a.e"%.e"ts o"vert t$e 1!!( Co" essio" Agree.e"t to a" ent;rely ;88erent ":ree2ent fro. t$e o"tra t /i%%e% out or t$e %raft Co" essio" Agree.e"t. 't is "ot %iffi ult to see t$at t$e a.e"%.e"ts o" 113 t$e types of fees or $arges t$at are su/De t to +'AA regulatio" or o"trol a"% t$e eCte"t t$ereof a"% 123 t$e assu.ptio" /y t$e Gover".e"t, u"%er ertai" o"%itio"s, of t$e lia/ilities of ,'A#C2 ;re1tly tr"nsl"tes 1on1rete 8;n"n1;"l " v"nt":es to *+A5C/ t9"t Aere prev;ously not "v";l"#le ur;n: t9e #; ;n: pro1ess. #$ese a.e"%.e"ts a""ot /e ta7e" as .erely supple.e"ts to or i.ple.e"ti"g provisio"s of t$ose alrea%y

eCisti"g i" t$e %raft Co" essio" Agree.e"t. #$e a.e"%.e"ts %is usse% a/ove prese"t "e4 ter.s a"% o"%itio"s 4$i $ provi%e fi"a" ial /e"efit to ,'A#C2 4$i $ .ay $ave altere% t$e te $"i al a"% fi"a" ial para.eters of ot$er /i%%ers $a% t$ey 7"o4" t$at su $ ter.s 4ere availa/le. +++ D;re1t %overn2ent %u"r"ntee Arti le 'E, Se tio" *.)*1/3 a"% 1 3, i" relatio" to Arti le 1.)6, of t$e 1!!( Co" essio" Agree.e"t provi%esG Se tio" *.)* Assig".e"t V. 1/3 '" t$e eve"t Co" essio"aire s$oul% e8"ult ;n t9e p"y2ent o8 "n Atten "nt L;"#;l;ty, a"% t$e %efault resulte% i" t$e a eleratio" of t$e pay.e"t %ue %ate of t$e Atte"%a"t Lia/ility prior to its state% %ate of .aturity, t$e ="pai% Cre%itors a"% Co" essio"aire s$all i..e%iately i"for. GR, i" 4riti"g of su $ %efault. GR, s$all 4it$i" o"e $u"%re% eig$ty 110)3 %ays fro. re eipt of t$e Doi"t 4ritte" "oti e of t$e ="pai% Cre%itors a"% Co" essio"aire, eit$er 1i3 ta7e over t$e Develop.e"t 9a ility a"% "ssu2e t9e Atten "nt L;"#;l;t;es , or 1ii3 allo4 t$e ="pai% Cre%itors, if ;ualifie% to /e su/stitute% as o" essio"aire a"% operator of t$e Develop.e"t fa ility i" a or%a" e 4it$ t$e ter.s a"% o"%itio"s $ereof, or %esig"ate a ;ualifie% operator a epta/le to GR, to operate t$e Develop.e"t 9a ility, li7e4ise u"%er t$e ter.s a"% o"%itio"s of t$is Agree.e"tF ,rovi%e%, t$at if at t$e e"% of t$e 10):%ay perio% GR, s$all "ot $ave serve% t$e ="pai% Cre%itors a"% Co" essio"aire 4ritte" "oti e of its $oi e, %&* s9"ll #e ee2e to 9"ve ele1te to t"Ee over t9e Develop2ent 4"1;l;ty A;t9 t9e 1on1o2;t"nt "ssu2pt;on o8 Atten "nt L;"#;l;t;es. 1 3 'f GR,, /y 4ritte" "oti e, allo4 t$e ="pai% Cre%itors to /e su/stitute% as o" essio"aire, t$e latter s$all for. a"% orga"i-e a o" essio" o.pa"y ;ualifie% to ta7eover t$e operatio" of t$e Develop.e"t 9a ility. 'f t$e o" essio" o.pa"y s$oul% ele t to %esig"ate a" operator for t$e Develop.e"t 9a ility, t$e o" essio" o.pa"y s$all i" goo% fait$ i%e"tify a"% %esig"ate a ;ualifie% operator a epta/le to GR, 4it$i" o"e $u"%re% eig$ty 110)3 %ays fro. re eipt of GR,Bs 4ritte" "oti e. 'f t$e o" essio" o.pa"y, a ti"g i" goo% fait$ a"% 4it$ %ue %ilige" e, is u"a/le to %esig"ate a ;ualifie% operator 4it$i" t$e aforesai% perio%, t9en %&* s$all at t$e e"% of t$e 10):%ay perio% t"Ee over t9e Develop2ent 4"1;l;ty "n "ssu2e Atten "nt L;"#;l;t;es. V. Se tio" 1.)6. Atte"%a"t Lia/ilities

Atte"%a"t Lia/ilities refer to "ll "2ounts re1or e "n 8ro2 t;2e to t;2e outst"n ;n: ;n t9e #ooEs o8 t9e Con1ess;on";re "s oA;n: to Unp"; Cre ;tors 4$o $ave provi%e%, loa"e% or a%va" e% fu"%s a tually use% for t$e ,roDe t, ;n1lu ;n: "ll ;nterests, pen"lt;es, "sso1;"te 8ees, 19"r:es, sur19"r:es, ;n e2n;t;es, re;2#urse2ents "n ot9er rel"te e@penses, a"% furt$er i" lu%i"g a.ou"ts o4e% /y Co" essio"aire to its suppliers, o"tra tors a"% su/: o"tra tors.@*0A 't is lear fro. t$e a/ove:;uote% provisio"s t$at %overn2ent, ;n t9e event t9"t *+A5C/ e8"ults ;n ;ts lo"n o#l;:"t;ons, ;s o#l;:"te to p"y Hall a.ou"ts re or%e%

a"% fro. ti.e to ti.e outsta"%i"g fro. t$e /oo7sI of ,'A#C2 4$i $ t$e latter o4es to its re%itors. @*!A #$ese a.ou"ts i" lu%e Hall i"terests, pe"alties, asso iate% fees, $arges, sur $arges, i"%e."ities, rei./urse.e"ts a"% ot$er relate% eCpe"ses.I@5)A #$is o/ligatio" of t$e Gover".e"t to pay ,'A#C2Bs re%itors upo" ,'A#C2Bs %efault 4oul% arise if t$e Gover".e"t opts to ta7e over NA'A ',# '''. 't s$oul% /e "ote%, $o4ever, t$at eve" if t$e Gover".e"t $ooses t$e se o"% optio", 4$i $ is to allo4 ,'A#C2Bs u"pai% re%itors operate NA'A ',# ''', t$e Gover".e"t is still at a ris7 of /ei"g lia/le to ,'A#C2Bs re%itors s$oul% t$e latter /e u"a/le to %esig"ate a ;ualifie% operator 4it$i" t$e pres ri/e% perio%. @51A '" effe t, A9"tever opt;on t9e %overn2ent 19ooses to t"Ee ;n t9e event o8 *+A5C/Fs 8";lure to 8ul8;ll ;ts lo"n o#l;:"t;ons, t9e %overn2ent ;s st;ll "t " r;sE o8 "ssu2;n: *+A5C/Fs outst"n ;n: lo"ns. #$is is %ue to t$e fa t t$at t$e Gover".e"t 4oul% o"ly /e free fro. assu.i"g ,'A#C2Bs %e/ts if t$e u"pai% re%itors 4oul% /e a/le to %esig"ate a ;ualifie% operator 4it$i" t$e perio% provi%e% for i" t$e o"tra t. #$us, t9e %overn2entFs "ssu2pt;on o8 l;"#;l;ty ;s v;rtu"lly out o8 ;ts 1ontrol. #$e Gover".e"t u"%er t$e ir u.sta" es provi%e% for i" t$e 1!!( Co" essio" Agree.e"t is at t$e .er y of t$e eCiste" e, availa/ility a"% 4illi"g"ess of a ;ualifie% operator. #$e a/ove o"tra tual provisio"s o"stitute a %ire t gover".e"t guara"tee 4$i $ is pro$i/ite% /y la4. 2"e of t$e .ai" i.petus for t$e e"a t.e"t of t$e &2# La4 is t$e la 7 of gover".e"t fu"%s to o"stru t t$e i"frastru ture a"% %evelop.e"t proDe ts "e essary for e o"o.i gro4t$ a"% %evelop.e"t. #$is is 4$y private se tor resour es are /ei"g tappe% i" or%er to fi"a" e t$ese proDe ts. #$e &2# la4 allo4s t$e private se tor to parti ipate, a"% is i" fa t e" ourage% to %o so /y 4ay of i" e"tives, su $ as .i"i.i-i"g t$e u"sta/le flo4 of retur"s,@52A provi%e% t$at t$e gover".e"t 4oul% "ot $ave to u""e essarily eCpe"% s ar ely availa/le fu"%s for t$e proDe t itself. As su $, %ire t guara"tee, su/si%y a"% e;uity /y t$e gover".e"t i" t$ese proDe ts are stri tly pro$i/ite%.@53A 59;s ;s #ut lo:;1"l 8or ;8 t9e :overn2ent Aoul ;n t9e en st;ll #e "t " r;sE o8 p"y;n: t9e e#ts ;n1urre #y t9e pr;v"te ent;ty ;n t9e !/5 proDe1ts, t9en t9e purpose o8 t9e l"A ;s su#verte . Se tio" 21"3 of t$e &2# La4 %efi"es %ire t guara"tee as follo4sG 1"3 Dire t gover".e"t guara"tee W A" agree.e"t 4$ere/y t$e gover".e"t or a"y of its age" ies or lo al gover".e"t u"its assu.e respo"si/ility for t$e rep"y2ent o8 e#t ;re1tly ;n1urre #y t9e proDe1t proponent i" i.ple.e"ti"g t$e proDe t ;n 1"se o8 " lo"n e8"ult. Clearly /y provi%i"g t$at t$e Gover".e"t Hassu.esI t$e atte"%a"t lia/ilities, 4$i $ o"sists of ,'A#C2Bs u"pai% %e/ts, t$e 1!!( Co" essio" Agree.e"t provi%e% for a %ire t gover".e"t guara"tee for t$e %e/ts i" urre% /y ,'A#C2 i" t$e i.ple.e"tatio" of t$e NA'A ',# ''' proDe t. 't is of "o .o.e"t t$at t$e releva"t se tio"s are su/su.e% u"%er t$e title of Hassig".e"tI. #$e provisio"s provi%i"g for %ire t gover".e"t guara"tee 4$i $ is pro$i/ite% /y la4 is lear fro. t$e ter.s t$ereof. #$e fa t t$at t$e ARCA superse%e% t$e 1!!( Co" essio" Agree.e"t %i% "ot ure t$is fatal %efe t. Arti le 'E, Se tio" *.)*1 3, i" relatio" to Arti le ', Se tio" 1.)6, of t$e ARCA provi%esG Se tio" *.)* Se urity V.

1 3 %&* ":rees 4it$ Co" essio"aire 1,'A#C23 t$at ;t s9"ll ne:ot;"te ;n :oo 8";t9 "n enter ;nto ;re1t ":ree2ent A;t9 t9e Sen;or Len ers, or 4it$ a" age"t of su $ Se"ior Le"%ers 14$i $ agree.e"t s$all /e su/De t to t$e approval of t$e &a"g7o Se"tral "g ,ilipi"as3, i" su $ for. as .ay /e reaso"a/ly a epta/le to /ot$ GR, a"% Se"ior Le"%ers, 4it$ regar%, i"ter alia, to t$e follo4i"g para.etersG V. 1iv3 +8 t$e Co" essio"aire .*+A5C/3 ;s ;n e8"ult un er " p"y2ent o#l;:"t;on oAe to t9e Sen;or Len ers , a"% as a result t$ereof t$e Se"ior Le"%ers $ave /e o.e e"title% to a elerate t$e Se"ior Loa"s, t$e Se"ior Le"%ers s$all $ave t$e rig$t to "otify GR, of t$e sa.e, a"% 4it$out preDu%i e to a"y ot$er rig$ts of t$e Se"ior Le"%ers or a"y Se"ior Le"%ersB age"t .ay $ave 1i" lu%i"g 4it$out li.itatio" u"%er se urity i"terests gra"te% i" favor of t$e Se"ior Le"%ers3, to eit$er i" goo% fait$ i%e"tify a"% %esig"ate a "o.i"ee 4$i $ is ;ualifie% u"%er su/: lause 1viii31y3 /elo4 to operate t$e Develop.e"t 9a ility @NA'A #er.i"al 3A or tra"sfer t$e Co" essio"aireBs @,'A#C2A rig$ts a"% o/ligatio"s u"%er t$is Agree.e"t to a tra"sferee 4$i $ is ;ualifie% u"%er su/: lause 1viii3 /elo4F V. 1vi3 if t$e Se"ior Le"%ers, a ti"g i" goo% fait$ a"% usi"g reaso"a/le efforts, are u"a/le to %esig"ate a "o.i"ee or effe t a tra"sfer i" ter.s a"% o"%itio"s satisfa tory to t$e Se"ior Le"%ers 4it$i" o"e $u"%re% eig$ty 110)3 %ays after givi"g GR, "oti e as referre% to respe tively i" 1iv3 or 1v3 a/ove, t$e" GR, a"% t$e Se"ior Le"%ers s$all e"%eavor i" goo% fait$ to e"ter i"to a"y ot$er arra"ge.e"t relati"g to t$e Develop.e"t 9a ility @NA'A #er.i"al 3A 1ot$er t$a" a tur"over of t$e Develop.e"t 9a ility @NA'A #er.i"al 3A to GR,3 4it$i" t$e follo4i"g o"e $u"%re% eig$ty 110)3 %ays. +8 no ":ree2ent relati"g to t$e Develop.e"t 9a ility @NA'A #er.i"al 3A is arrive% at /y GR, a"% t$e Se"ior Le"%ers 4it$i" t$e sai% 10):%ay perio%, t$e" at t$e e"% t$ereof t$e Develop2ent 4"1;l;ty .'A+A 5er2;n"l 33 s9"ll #e tr"ns8erre #y t9e Con1ess;on";re .*+A5C/3 to %&* or ;ts es;:nee "n %&* s9"ll 2"Ee " ter2;n"t;on p"y2ent to Con1ess;on";re .*+A5C/3 eBu"l to t9e Appr";se ,"lue H"s 9ere;n"8ter e8;ne I o8 t9e Develop2ent 4"1;l;ty .'A+A 5er2;n"l 33 or t9e su2 o8 t9e Atten "nt L;"#;l;t;es, ;8 :re"ter. Not4it$sta"%i"g Se tio" 0.)11 3 $ereof, t$is Agree.e"t s$all /e %ee.e% ter.i"ate% upo" t$e tra"sfer of t$e Develop.e"t 9a ility @NA'A #er.i"al 3A to GR, pursua"t $eretoF V. Se tio" 1.)6. Atte"%a"t Lia/ilities

Atten "nt L;"#;l;t;es re8er to "ll "2ounts i" ea $ ase supporte% /y verifia/le evi%e" e fro. ti.e to ti.e oAe or A9;19 2"y #e1o2e oA;n: #y Con1ess;on";re .*+A5C/3 to Sen;or Len ers or "ny ot9er persons or ent;t;es A9o $ave provi%e%, loa"e%, or a%va" e% fu"%s or prov; e 8;n"n1;"l 8"1;l;t;es to Con1ess;on";re .*+A5C/3 for t$e ,roDe t @NA'A #er.i"al 3A, ;n1lu ;n:, A;t9out l;2;t"t;on, "ll pr;n1;p"l, ;nterest, "sso1;"te 8ees, 19"r:es, re;2#urse2ents, "n ot9er rel"te e@penses 1i" lu%i"g t$e fees, $arges a"% eCpe"ses of a"y age"ts or trustees of su $ perso"s or e"tities3, 4$et$er paya/le at .aturity, /y a eleratio" or ot$er4ise, a"% furt$er i" lu%i"g a.ou"ts o4e% /y Co" essio"aire @,'A#C2A to its professio"al o"sulta"ts a"% a%visers, suppliers, o"tra tors a"% su/: o"tra tors.@5*A

't is lear fro. t$e foregoi"g o"tra tual provisio"s t$at i" t$e eve"t t$at ,'A#C2 fails to fulfill its loa" o/ligatio"s to its Se"ior Le"%ers, t$e Gover".e"t is o/ligate% to %ire tly "egotiate a"% e"ter i"to a" agree.e"t relati"g to NA'A ',# ''' 4it$ t$e Se"ior Le"%ers, s$oul% t$e latter fail to appoi"t a ;ualifie% "o.i"ee or tra"sferee 4$o 4ill ta7e t$e pla e of ,'A#C2. 'f t$e Se"ior Le"%ers a"% t$e Gover".e"t are u"a/le to e"ter i"to a" agree.e"t after t$e pres ri/e% perio%, t$e Gover".e"t .ust t$e" pay ,'A#C2, upo" tra"sfer of NA'A ',# ''' to t$e Gover".e"t, ter.i"atio" pay.e"t e;ual to t$e appraise% value of t$e proDe t or t9e v"lue o8 t9e "tten "nt l;"#;l;t;es A9;19ever ;s :re"ter. Atte"%a"t lia/ilities as %efi"e% i" t$e ARCA i" lu%es all a.ou"ts o4e% or t$ereafter .ay /e o4e% /y ,'A#C2 "ot o"ly to t$e Se"ior Le"%ers 4it$ 4$o. ,'A#C2 $as %efaulte% i" its loa" o/ligatio"s /ut to all ot$er perso"s 4$o .ay $ave loa"e%, a%va" e% fu"%s or provi%e% a"y ot$er type of fi"a" ial fa ilities to ,'A#C2 for NA'A ',# '''. #$e a.ou"t of ,'A#C2Bs %e/t t$at t$e Gover".e"t 4oul% $ave to pay as a result of ,'A#C2Bs %efault i" its loa" o/ligatio"s :: i" ase "o ;ualifie% "o.i"ee or tra"sferee is appoi"te% /y t$e Se"ior Le"%ers a"% "o ot$er agree.e"t relati"g to NA'A ',# ''' $as /ee" rea $e% /et4ee" t$e Gover".e"t a"% t$e Se"ior Le"%ers :: i" lu%es, /ut is "ot li.ite% to, Hall pri" ipal, i"terest, asso iate% fees, $arges, rei./urse.e"ts, a"% ot$er relate% eCpe"ses . . . 4$et$er paya/le at .aturity, /y a eleratio" or ot$er4ise.I@55A +t ;s 1le"r 8ro2 t9e 8ore:o;n: t9"t t9e A&CA prov; es 8or " ;re1t :u"r"ntee #y t9e :overn2ent to p"y *+A5C/Fs lo"ns not only to ;ts Sen;or Len ers #ut "ll ot9er ent;t;es A9o prov; e *+A5C/ 8un s or serv;1es upon *+A5C/Fs e8"ult ;n ;ts lo"n o#l;:"t;on A;t9 ;ts Sen;or Len ers . #$e fa t t$at t$e Gover".e"tBs o/ligatio" to pay ,'A#C2Bs le"%ers for t$e latterBs o/ligatio" 4oul% o"ly arise after t$e Se"ior Le"%ers fail to appoi"t a ;ualifie% "o.i"ee or tra"sferee %oes "ot %etra t fro. t$e fa t t$at, s$oul% t$e o"%itio"s as state% i" t$e o"tra t o ur, t$e ARCA st;ll o/ligates t$e Gover".e"t to pay a"y a"% all a.ou"ts o4e% /y ,'A#C2 to its le"%ers i" o""e tio" 4it$ NA'A ',# '''. <orse, t$e o"%itio"s t$at 4oul% .a7e t$e Gover".e"t lia/le for ,'A#C2Bs %e/ts is triggere% /y ,'A#C2Bs o4" %efault of its loa" o/ligatio"s to its Se"ior Le"%ers to 4$i $ loa" o"tra ts t$e Gover".e"t 4as "ever a party to. #$e Gover".e"t 4as "ot eve" give" a" optio" as to 4$at ourse of a tio" it s$oul% ta7e i" ase ,'A#C2 %efaulte% i" t$e pay.e"t of its se"ior loa"s. #$e Gover".e"t, upo" ,'A#C2Bs %efault, 4oul% /e .erely "otifie% /y t$e Se"ior Le"%ers of t$e sa.e a"% it is t$e Se"ior Le"%ers 4$o are aut$ori-e% to appoi"t a ;ualifie% "o.i"ee or tra"sferee. S$oul% t$e Se"ior Le"%ers fail to .a7e su $ a" appoi"t.e"t, t$e Gover".e"t is t$e" auto.ati ally o/ligate% to H%ire tly %eal a"% "egotiateI 4it$ t$e Se"ior Le"%ers regar%i"g NA'A ',# '''. #$e o"ly 4ay t$e Gover".e"t 4oul% "ot /e lia/le for ,'A#C2Bs %e/t is for a ;ualifie% "o.i"ee or tra"sferee to /e appoi"te% i" pla e of ,'A#C2 to o"ti"ue t$e o"stru tio", operatio" a"% .ai"te"a" e of NA'A ',# '''. #$is Hpre: o"%itio"I, $o4ever, 4ill "ot ta7e t$e o"tra t out of t$e a./it of a %ire t guara"tee /y t$e gover".e"t as t$e eCiste" e, availa/ility a"% 4illi"g"ess of a ;ualifie% "o.i"ee or tra"sferee is totally out of t$e gover".e"tBs o"trol. As su $ t9e %overn2ent ;s v;rtu"lly "t t9e 2er1y o8 *+A5C/ 1t$at it 4oul% "ot %efault o" its loa" o/ligatio"s to its Se"ior Le"%ers3, t$e Se"ior Le"%ers 1t$at t$ey 4oul% appoi"t a ;ualifie% "o.i"ee or tra"sferee or agree to so.e ot$er arra"ge.e"t 4it$ t$e Gover".e"t3 a"% t$e eCiste" e of a ;ualifie% "o.i"ee or tra"sferee 4$o is a/le a"% 4illi"g to ta7e t$e pla e of ,'A#C2 i" NA'A ',# '''. 59e pros1r;pt;on ":";nst :overn2ent :u"r"ntee ;n "ny 8or2 ;s one o8 t9e pol;1y 1ons; er"t;ons #e9;n t9e !/5 L"A. Clearly, i" t$e prese"t ase, t$e ARCA o/ligates

t$e Gover".e"t to pay for all loa"s, a%va" es a"% o/ligatio"s arisi"g out of fi"a" ial fa ilities eCte"%e% to ,'A#C2 for t$e i.ple.e"tatio" of t$e NA'A ',# ''' proDe t s$oul% ,'A#C2 %efault i" its loa" o/ligatio"s to its Se"ior Le"%ers a"% t$e latter fails to appoi"t a ;ualifie% "o.i"ee or tra"sferee. #$is i" effe t 4oul% .a7e t$e Gover".e"t lia/le for ,'A#C2Bs loa"s s$oul% t$e o"%itio"s as set fort$ i" t$e ARCA arise. #$is is a for. of %ire t gover".e"t guara"tee. #$e &2# La4 a"% its i.ple.e"ti"g rules provi%e t$at i" or%er for a" u"soli ite% proposal for a &2# proDe t .ay /e a epte%, t$e follo4i"g o"%itio"s .ust first /e .etG 113 t$e proDe t i"volves a "e4 o" ept i" te $"ology a"%Jor is "ot part of t$e list of priority proDe ts, H2I no ;re1t :overn2ent :u"r"ntee, su#s; y or eBu;ty ;s reBu;re , a"% 133 t$e gover".e"t age" y or lo al gover".e"t u"it $as i"vite% /y pu/li atio" ot$er i"tereste% parties to a pu/li /i%%i"g a"% o"%u te% t$e sa.e.@56A #$e failure to .eet a"y of t$e a/ove o"%itio"s 4ill result i" t$e %e"ial of t$e proposal. 't is furt$er provi%e% t$at t$e prese" e of %ire t gover".e"t guara"tee, su/si%y or e;uity 4ill H"e essarily %is;ualify a proposal fro. /ei"g treate% a"% a epte% as a" u"soli ite% proposal.I @5(A #$e &2# La4 learly a"% stri tly pro$i/its %ire t gover".e"t guara"tee, su/si%y a"% e;uity i" u"soli ite% proposals t$at t$e .ere i" lusio" of a provisio" to t$at effe t is fatal a"% is suffi ie"t to %e"y t$e proposal. 't sta"%s to reaso" t$erefore t$at if a proposal a" /e %e"ie% /y reaso" of t$e eCiste" e of %ire t gover".e"t guara"tee, t$e" its i" lusio" i" t$e o"tra t eCe ute% after t$e sai% proposal $as /ee" a epte% is li7e4ise suffi ie"t to i"vali%ate t$e o"tra t itself. A pro$i/ite% provisio", t$e i" lusio" of 4$i $ 4oul% result i" t$e %e"ial of a proposal a""ot, a"% s$oul% "ot, /e allo4e% to later o" /e i"serte% i" t$e o"tra t resulti"g fro. t$e sai% proposal. #$e /asi rules of Dusti e a"% fair play alo"e .ilitate agai"st su $ a" o urre" e a"% .ust "ot, t$erefore, /e ou"te"a" e% parti ularly i" t$is i"sta" e 4$ere t$e gover".e"t is eCpose% to t$e ris7 of s$oul%eri"g $u"%re%s of .illio" of %ollars i" %e/t. #$is Court $as lo"g a"% o"siste"tly a%$ere% to t$e legal .aCi. t$at t$ose t$at a""ot /e %o"e %ire tly a""ot /e %o"e i"%ire tly.@50A 5o e1l"re t9e *+A5C/ 1ontr"1ts v"l; esp;te t9e 1le"r st"tutory pro9;#;t;on ":";nst " ;re1t :overn2ent :u"r"ntee Aoul not only 2"Ee " 2o1Eery o8 A9"t t9e !/5 L"A seeEs to prevent $$ A9;19 ;s to e@pose t9e :overn2ent to t9e r;sE o8 ;n1urr;n: " 2onet"ry o#l;:"t;on result;n: 8ro2 " 1ontr"1t o8 lo"n #etAeen t9e proDe1t proponent "n ;ts len ers "n to A9;19 t9e %overn2ent ;s not " p"rty to $$ #ut Aoul "lso ren er t9e !/5 L"A useless 8or A9"t ;t seeEs to "19;eve $ to 2"Ee use o8 t9e resour1es o8 t9e pr;v"te se1tor ;n t9e N8;n"n1;n:, oper"t;on "n 2";nten"n1e o8 ;n8r"stru1ture "n evelop2ent proDe1tsO@5!A A9;19 "re ne1ess"ry 8or n"t;on"l :roAt9 "n evelop2ent #ut A9;19 t9e :overn2ent, un8ortun"tely, 1oul ;ll$"88or to 8;n"n1e "t t9;s po;nt ;n t;2e. +, 5e2por"ry t"Eeover o8 #us;ness "88e1te A;t9 pu#l;1 ;nterest Arti le O'', Se tio" 1( of t$e 1!0( Co"stitutio" provi%esG Se tio" 1(. '" ti.es of "atio"al e.erge" y, 4$e" t$e pu/li i"terest so re;uires, t$e State .ay, %uri"g t$e e.erge" y a"% u"%er reaso"a/le ter.s pres ri/e% /y it, te.porarily ta7e over or %ire t t$e operatio" of a"y privately o4"e% pu/li utility or /usi"ess affe te% 4it$ pu/li i"terest. #$e a/ove provisio" pertai"s to t$e rig$t of t$e State i" ti.es of "atio"al e.erge" y, a"% i" t$e eCer ise of its poli e

po4er, to te.porarily ta7e over t$e operatio" of a"y /usi"ess affe te% 4it$ pu/li i"terest. '" t$e 1!06 Co"stitutio"al Co..issio", t$e ter. H"atio"al e.erge" yI 4as %efi"e% to i" lu%e t$reat fro. eCter"al aggressio", ala.ities or "atio"al %isasters, /ut "ot stri7es Hu"less it is of su $ proportio" t$at 4oul% paraly-e gover".e"t servi e.I@6)A #$e %uratio" of t$e e.erge" y itself is t$e %eter.i"i"g fa tor as to $o4 lo"g t$e te.porary ta7eover /y t$e gover".e"t 4oul% last. @61A #$e te.porary ta7eover /y t$e gover".e"t eCte"%s o"ly to t$e operatio" of t$e /usi"ess a"% "ot to t$e o4"ers$ip t$ereof. As su $ t$e :overn2ent ;s not reBu;re to 1o2pens"te t9e pr;v"te ent;ty$oAner o8 t9e s"; #us;ness "s t9ere ;s no tr"ns8er o8 oAners9;p, 4$et$er per.a"e"t or te.porary. #$e private e"tity:o4"er affe te% /y t$e te.porary ta7eover a""ot, li7e4ise, lai. Dust o.pe"satio" for t$e use of t$e sai% /usi"ess a"% its properties as t$e te.porary ta7eover /y t$e gover".e"t is i" eCer ise of its pol;1e poAer a"% "ot of its po4er of e.i"e"t %o.ai". Arti le E, Se tio" 5.1) 1 3 of t$e 1!!( Co" essio" Agree.e"t provi%esG Se tio" 5.1) #e.porary #a7e:over of operatio"s /y GR,. V. 1 3 '" t$e eve"t t$e %evelop.e"t 9a ility or a"y part t$ereof a"%Jor t$e operatio"s of Co" essio"aire or a"y part t$ereof, /e o.e t$e su/De t .atter of or /e i" lu%e% i" a"y "oti e, "otifi atio", or %e laratio" o" er"i"g or relati"g to a ;uisitio", sei-ure or appropriatio" /y GR, i" ti.es of 4ar or "atio"al e.erge" y, GR, s$all, /y 4ritte" "oti e to Co" essio"aire, i..e%iately ta7e over t$e operatio"s of t$e #er.i"al a"%Jor t$e #er.i"al Co.pleC. Duri"g su $ ta7e over /y GR,, t$e Co" essio" ,erio% s$all /e suspe"%e%F provi%e%, t$at upo" ter.i"atio" of 4ar, $ostilities or "atio"al e.erge" y, t$e operatio"s s$all /e retur"e% to Co" essio"aire, at 4$i $ ti.e, t$e Co" essio" perio% s$all o..e" e to ru" agai". Con1ess;on";re s9"ll #e ent;tle to re"son"#le 1o2pens"t;on 8or t9e ur"t;on o8 t9e te2por"ry t"Ee over #y %&*, A9;19 1o2pens"t;on s9"ll t"Ee ;nto "11ount t9e re"son"#le 1ost 8or t9e use o8 t9e 5er2;n"l "n Lor 5er2;n"l Co2ple@, 1A9;19 ;s ;n t9e "2ount "t le"st eBu"l to t9e e#t serv;1e reBu;re2ents o8 Con1ess;on";re , if t$e te.porary ta7e over s$oul% o ur at t$e ti.e 4$e" Co" essio"aire is still servi i"g %e/ts o4e% to proDe t le"%ers3, a"y loss or %a.age to t$e Develop.e"t 9a ility, a"% ot$er o"se;ue"tial %a.ages. 'f t$e parties a""ot agree o" t$e reaso"a/le o.pe"satio" of Co" essio"aire, or o" t$e lia/ility of GR, as aforesai%, t$e .atter s$all /e resolve% i" a or%a" e 4it$ Se tio" 1).)1 @Ar/itratio"A. A"y a.ou"t %eter.i"e% to /e paya/le /y GR, to Co" essio"aire s$all /e offset fro. t$e a.ou"t "eCt paya/le /y Co" essio"aire to GR,.@62A *+A5C/ 1"nnot, #y 2ere 1ontr"1tu"l st;pul"t;on, 1ontr"vene t9e Const;tut;on"l prov;s;on on te2por"ry :overn2ent t"Eeover "n o#l;:"te t9e :overn2ent to p"y Nre"son"#le 1ost 8or t9e use o8 t9e 5er2;n"l "n Lor 5er2;n"l Co2ple@.O@63A Arti le O'', se tio" 1( of t$e 1!0( Co"stitutio" e"visio"s a situatio" 4$erei" t$e eCige" ies of t$e ti.es "e essitate t$e gover".e"t to Hte.porarily ta7e over or %ire t t$e operatio" of a"y privately o4"e% pu/li utility or /usi"ess affe te% 4it$ pu/li i"terest.I 't is t$e 4elfare a"% i"terest of t$e pu/li 4$i $ is t$e para.ou"t o"si%eratio" i" %eter.i"i"g 4$et$er or "ot to te.porarily ta7e over a parti ular /usi"ess. Clearly, t$e State i" effe ti"g t$e te.porary ta7eover is eCer isi"g its poli e po4er. ,oli e po4er is t$e H.ost esse"tial, i"siste"t, a"% illi.ita/le of po4ers.I@6*A 'ts

eCer ise t$erefore .ust "ot /e u"reaso"a/ly $a.pere% "or its eCer ise /e a sour e of o/ligatio" /y t$e gover".e"t i" t$e a/se" e of %a.age %ue to ar/itrari"ess of its eCer ise. @65A #$us, re;uiri"g t$e gover".e"t to pay reaso"a/le o.pe"satio" for t$e reaso"a/le use of t$e property pursua"t to t$e operatio" of t$e /usi"ess o"trave"es t$e Co"stitutio". , &e:ul"t;on o8 Monopol;es A .o"opoly is Ha privilege or pe uliar a%va"tage veste% i" o"e or .ore perso"s or o.pa"ies, o"sisti"g i" t$e eC lusive rig$t 1or po4er3 to arry o" a parti ular /usi"ess or tra%e, .a"ufa ture a parti ular arti le, or o"trol t$e sale of a parti ular o..o%ity.I@66A #$e 1!0( Const;tut;on str;1tly re:ul"tes 2onopol;es, 4$et$er private or pu/li , a"% eve" provi%es for t$eir pro$i/itio" if pu/li i"terest so re;uires. Arti le O'', Se tio" 1! of t$e 1!0( Co"stitutio" statesG Se . 1!. #$e state s$all regulate or pro$i/it .o"opolies 4$e" t$e pu/li i"terest so re;uires. No o./i"atio"s i" restrai"t of tra%e or u"fair o.petitio" s$all /e allo4e%. Clearly, .o"opolies are "ot per se pro$i/ite% /y t$e Co"stitutio" /ut .ay /e per.itte% to eCist to ai% t$e gover".e"t i" arryi"g o" a" e"terprise or to ai% i" t$e perfor.a" e of various servi es a"% fu" tio"s ;n t9e ;nterest o8 t9e pu#l;1.@6(A No"et$eless, a %eter.i"atio" .ust first /e .a%e as to 4$et$er pu/li i"terest re;uires a .o"opoly. As .o"opolies are su/De t to a/uses t$at a" i"fli t severe preDu%i e to t$e pu/li , t$ey are su/De t to a $ig$er level of State regulatio" t$a" a" or%i"ary /usi"ess u"%erta7i"g. '" t$e ases at /ar, ,'A#C2, u"%er t$e 1!!( Co" essio" Agree.e"t a"% t$e ARCA, is gra"te% t$e H e@1lus;ve r;:9t to operate a o..er ial i"ter"atio"al passe"ger ter.i"al 4it$i" t$e 'sla"% of Lu-o"I at t$e NA'A ',# '''.@60A #$is is 4it$ t$e eC eptio" of alrea%y eCisti"g i"ter"atio"al airports i" Lu-o" su $ as t$ose lo ate% i" t$e Su/i &ay 9reeport Spe ial 5 o"o.i ?o"e 1HS&9S5?I3, Clar7 Spe ial 5 o"o.i ?o"e 1HCS5?I3 a"% i" Laoag City. @6!A As su $, upo" o..e" e.e"t of ,'A#C2Bs operatio" of NA'A ',# ''', #er.i"als 1 a"% 2 of NA'A 4oul% ease to fu" tio" as i"ter"atio"al passe"ger ter.i"als. #$is, $o4ever, %oes "ot preve"t +'AA to use #er.i"als 1 a"% 2 as %o.esti passe"ger ter.i"als or i" a"y ot$er .a""er as it .ay %ee. appropriate eC ept t$ose a tivities t$at 4oul% o.pete 4it$ NA'A ',# ''' i" t$e latterBs operatio" as a" i"ter"atio"al passe"ger ter.i"al.@()A #$e rig$t gra"te% to ,'A#C2 to e@1lus;vely oper"te 'A+A +*5 +++ 4oul% /e for a perio% of t4e"ty:five 1253 years fro. t$e '":Servi e Date@(1A a"% re"e4a/le for a"ot$er t4e"ty:five 1253 years at t$e optio" of t$e gover".e"t.@(2A !ot9 t9e 1((7 Con1ess;on A:ree2ent "n t9e A&CA 8urt9er prov; e t9"t, ;n v;eA o8 t9e e@1lus;ve r;:9t :r"nte to *+A5C/, t9e 1on1ess;on 1ontr"1ts o8 t9e serv;1e prov; ers 1urrently serv;1;n: 5er2;n"ls 1 "n 2 Aoul no lon:er #e reneAe "n t9ose 1on1ess;on 1ontr"1ts A9ose e@p;r"t;on "re su#seBuent to t9e +n$Serv;1e D"te Aoul 1e"se to #e e88e1t;ve on t9e s"; "te.@(3A #$e operatio" of a" i"ter"atio"al passe"ger airport ter.i"al is "o %ou/t a" u"%erta7i"g i./ue% 4it$ pu/li i"terest. '" e"teri"g i"to a &uil%R2perate:a"%:#ra"sfer o"tra t for t$e o"stru tio", operatio" a"% .ai"te"a" e of NA'A ',# ''', t$e gover".e"t $as %eter.i"e% t$at pu/li i"terest 4oul% /e serve% /etter if private se tor resour es 4ere use% i" its o"stru tio" a"% a" eC lusive rig$t to operate /e gra"te% to t$e private e"tity u"%erta7i"g t$e sai% proDe t, i" t$is ase ,'A#C2. No"et$eless, t$e privilege give" to ,'A#C2 is

su/De t to reaso"a/le regulatio" a"% supervisio" /y t$e Gover".e"t t$roug$ t$e +'AA, 4$i $ is t$e gover".e"t age" y aut$ori-e% to operate t$e NA'A o.pleC, as 4ell as D2#C, t$e %epart.e"t to 4$i $ +'AA is atta $e%.@(*A #$is is i" a or% 4it$ t$e Co"stitutio"al .a"%ate t$at a .o"opoly 4$i $ is "ot pro$i/ite% .ust /e regulate%. @(5A <$ile it is t$e %e lare% poli y of t$e &2# La4 to e" ourage private se tor parti ipatio" /y Hprovi%i"g a li.ate of .i"i.u. gover".e"t regulatio"s,I@(6A t$e sa.e %oes "ot .ea" t$at Gover".e"t .ust o.pletely surre"%er its sovereig" po4er to prote t pu/li i"terest i" t$e operatio" of a pu/li utility as a .o"opoly. #$e operatio" of sai% pu/li utility a" "ot /e %o"e i" a" ar/itrary .a""er to t$e %etri.e"t of t$e pu/li 4$i $ it see7s to serve. #$e rig$t gra"te% to t$e pu/li utility .ay /e eC lusive /ut t$e eCer ise of t$e rig$t a""ot ru" riot. #$us, 4$ile ,'A#C2 .ay /e aut$ori-e% to eC lusively operate NA'A ',# ''' as a" i"ter"atio"al passe"ger ter.i"al, t$e Gover".e"t, t$roug$ t$e +'AA, $as t$e rig$t a"% t$e %uty to e"sure t$at it is %o"e i" a or% 4it$ pu/li i"terest. ,'A#C2Bs rig$t to operate NA'A ',# ''' a""ot also violate t$e rig$ts of t$ir% parties. Se tio" 3.)11e3 of t$e 1!!( Co" essio" Agree.e"t a"% t$e ARCA provi%eG 3.)1 Co" essio" ,erio% V. 1e3 %&* 1on8;r2s t9"t 1ert";n 1on1ess;on ":ree2ents relative to ertai" servi es a"% operatio"s urre"tly /ei"g u"%erta7e" at t$e Ni"oy A;ui"o '"ter"atio"al Airport passe"ger #er.i"al ' 9"ve " v"l; ;ty per;o e@ten ;n: #eyon t9e +n$Serv;1e D"te . GR, t$roug$ D2#CJ+'AA, 1on8;r2s t$at t$ese servi es a"% operatio"s s9"ll not #e 1"rr;e over to t$e #er.i"al a"% t$e Co" essio"aire is u"%er no le:"l o#l;:"t;on to per2;t su19 1"rry$over eC ept t$roug$ a separate agree.e"t %uly e"tere% i"to 4it$ Co" essio"aire. '" t$e eve"t Co" essio"aire /e o.es i"volve% i" a"y litigatio" i"itiate% /y a"y su $ o" essio"aire or operator, GR, u"%erta7es a"% $ere/y $ol%s Co" essio"aire free a"% $ar.less o" full i"%e."ity /asis fro. a"% agai"st a"y loss a"%Jor a"y lia/ility resulti"g fro. a"y su $ litigatio", i" lu%i"g t$e ost of litigatio" a"% t$e reaso"a/le fees pai% or paya/le to Co" essio"aireBs ou"sel of $oi e, all su $ a.ou"ts s$all /e fully %e%u ti/le /y 4ay of a" offset fro. a"y a.ou"t 4$i $ t$e Co" essio"aire is /ou"% to pay GR, u"%er t$is Agree.e"t. Duri"g t$e oral argu.e"ts o" De e./er 1), 2))2, t$e ou"sel for t$e petitio"ers:i":i"terve"tio" for G.R. No. 155))1 state% t$at t$ere are t4o servi e provi%ers 4$ose o"tra ts are still eCisti"g a"% 4$ose vali%ity eCte"%s /eyo"% t$e '":Servi e Date. 2"e o"tra t re.ai"s vali% u"til 2))0 a"% t$e ot$er u"til 2)1).@((A <e $ol% t$at 4$ile t$e servi e provi%ers prese"tly operati"g at NA'A #er.i"al 1 %o "ot $ave a" a/solute rig$t for t$e re"e4al or t$e eCte"sio" of t$eir respe tive o"tra ts, t$ose o"tra ts 4$ose %uratio" eCte"%s /eyo"% NA'A ',# '''Bs '":Servi e:Date s$oul% "ot /e u"%uly preDu%i e%. #$ese o"tra ts .ust /e respe te% "ot Dust /y t$e parties t$ereto /ut also /y t$ir% parties. ,'A#C2 a""ot, /y la4 a"% ertai"ly "ot /y o"tra t, re"%er a vali% a"% /i"%i"g o"tra t "ugatory. ,'A#C2, /y t$e .ere eCpe%ie"t of lai.i"g a" eC lusive rig$t to operate, a""ot re;uire t$e Gover".e"t to /rea7 its o"tra tual o/ligatio"s to t$e servi e provi%ers. '" o"trast to t$e arrastre a"% steve%ori"g servi e provi%ers i" t$e ase of An:lo$4;l 5r" ;n: Corpor"t;on v.

L"z"ro@(0A 4$ose o"tra ts o"sist of te.porary $ol%:over per.its, t$e affe te% servi e provi%ers i" t$e ases at /ar, $ave a vali% a"% /i"%i"g o"tra t 4it$ t$e Gover".e"t, t$roug$ +'AA, 4$ose perio% of effe tivity, as 4ell as t$e ot$er ter.s a"% o"%itio"s t$ereof, a""ot /e violate%. '" fi"e, t$e effi ie"t fu" tio"i"g of NA'A ',# ''' is i./ue% 4it$ pu/li i"terest. #$e provisio"s of t$e 1!!( Co" essio" Agree.e"t a"% t$e ARCA %i% "ot strip gover".e"t, t$ru t$e +'AA, of its rig$t to supervise t$e operatio" of t$e 4$ole NA'A o.pleC, i" lu%i"g NA'A ',# '''. As t$e pri.ary gover".e"t age" y tas7e% 4it$ t$e Do/,@(!A it is +'AABs respo"si/ility to e"sure t$at 4$oever /y o"tra t is give" t$e rig$t to operate NA'A ',# ''' 4ill %o so 4it$i" t$e /ou"%s of t$e la4 a"% 4it$ %ue regar% to t$e rig$ts of t$ir% parties a"% a/ove all, t$e i"terest of t$e pu/li . ,+ C/'CLUS+/' '" su., t$is Court rules t$at i" vie4 of t$e a/se" e of t$e re;uisite fi"a" ial apa ity of t$e ,air argo Co"sortiu., pre%e essor of respo"%e"t ,'A#C2, t$e a4ar% /y t$e ,&AC of t$e o"tra t for t$e o"stru tio", operatio" a"% .ai"te"a" e of t$e NA'A ',# ''' is "ull a"% voi%. 9urt$er, o"si%eri"g t$at t$e 1!!( Co" essio" Agree.e"t o"tai"s .aterial a"% su/sta"tial a.e"%.e"ts, 4$i $ a.e"%.e"ts $a% t$e effe t of o"verti"g t$e 1!!( Co" essio" Agree.e"t i"to a" e"tirely %iffere"t agree.e"t fro. t$e o"tra t /i%%e% upo", t$e 1!!( Co" essio" Agree.e"t is si.ilarly "ull a"% voi% for /ei"g o"trary to pu/li poli y. #$e provisio"s u"%er Se tio"s *.)*1/3 a"% 1 3 i" relatio" to Se tio" 1.)6 of t$e 1!!( Co" essio" Agree.e"t a"% Se tio" *.)*1 3 i" relatio" to Se tio" 1.)6 of t$e ARCA, 4$i $ o"stitute a %ire t gover".e"t guara"tee eCpressly pro$i/ite% /y, a.o"g ot$ers, t$e &2# La4 a"% its '.ple.e"ti"g Rules a"% Regulatio"s are also "ull a"% voi%. #$e Supple.e"ts, /ei"g a essory o"tra ts to t$e ARCA, are li7e4ise "ull a"% voi%. >H-&-4/&-, t$e 1!!( Co" essio" Agree.e"t, t$e A.e"%e% a"% Restate% Co" essio" Agree.e"t a"% t$e Supple.e"ts t$ereto are set asi%e for /ei"g "ull a"% voi%. S/ /&D-&-D. *avide, Jr., C.J., Bellosillo, ?nares5Santiago, Sandoval5 +utierrez, 'ustria5Martinez, Corona, a"% Car io5Morales, JJ., o" ur. Vitug, J., see separate 1%isse"ti"g3 opi"io". 4anganiban, J., please see separate opi"io". Quisumbing, J., "o Duris%i tio", please see separate opi"io" of 8. Eitug i" 4$i $ $e o" urs. Car io, J., "o part. Calle8o, Sr., J., also o" ur i" t$e separate opi"io" of 8. ,a"ga"i/a". 'zcuna, J., Doi"s t$e separate opi"io" of 8. Eitug. #H'RD D'E'S'2N

.%.&. 'o. 141833. M"r19 20, 2))33 LM */>-& -'%+'--&+'% C/&*/&A5+/', petitioner, vs. CA*+5/L +'DUS5&+AL C/'S5&UC5+/' %&/U*S, +'C., respondent.

D-C+S+/' *A'%A'+!A', J.7

Alter"ative %ispute resolutio" .et$o%s or ADRs :: li7e ar/itratio", .e%iatio", "egotiatio" a"% o" iliatio" :: are e" ourage% /y t$e Supre.e Court. &y e"a/li"g parties to resolve t$eir %isputes a.i a/ly, t$ey provi%e solutio"s t$at are less ti.e: o"su.i"g, less te%ious, less o"fro"tatio"al, a"% .ore pro%u tive of goo%4ill a"% lasti"g relatio"s$ips.@1A

4or7 ite.s $a% /ee" i"te"%e% to /e a ter.i"atio" of t$e origi"al o"tra t u"%er Letter H>I of t$e Su/ o"tra t. 't rule% li7e4ise o" t4o ot$er issuesG 4$et$er petitio"er 4as lia/le u"%er t$e 4arra"ty lause of t$e Agree.e"t, a"% 4$et$er it s$oul% rei./urse respo"%e"t for t$e 4or7 t$e latter $a% ta7e" over.@15A He" e, t$is ,etitio".@16A

59e C"se &efore us is a ,etitio" for Revie4 o" Certiorari@2A u"%er Rule *5 of t$e Rules of Court, see7i"g to set asi%e t$e 8a"uary 20, 2))) De isio" of t$e Court of Appeals@3A 1CA3 i" CA:GR CE No. 5*232. #$e %ispositive portio" of t$e De isio" rea%s as follo4sG H<H5R592R5, t$e Du%g.e"t appeale% fro. is R5E5RS5D a"% S5# AS'D5. #$e parties are 2RD5R5D to prese"t t$eir %ispute to ar/itratio" i" a or%a" e 4it$ t$eir Su/: o"tra t Agree.e"t. #$e surety /o"% poste% /y @respo"%e"tA is @%Ais $arge%.I@*A 59e +ssues '" its +e.ora"%u., petitio"er raises t$e follo4i"g issues for t$e CourtBs o"si%eratio"G NA <$et$er or "ot t$ere eCist@sA a o"troversyJ%ispute /et4ee" petitio"er a"% respo"%e"t regar%i"g t$e i"terpretatio" a"% i.ple.e"tatio" of t$e Su/:Co"tra t Agree.e"t %ate% 9e/ruary 22, 1!03 t$at re;uires prior re ourse to volu"tary ar/itratio"F N! 59e 4"1ts 2" 9e/ruary 22, 1!03, ,etitio"er L+ ,o4er 5"gi"eeri"g Corporatio" a"% Respo"%e"t Capitol '"%ustrial Co"stru tio" Groups '" . e"tere% i"to a HSu/ o"tra t Agree.e"tI i"volvi"g ele tri al 4or7 at t$e #$ir% ,ort of ?a./oa"ga.@5A 2" April 25, 1!05, respo"%e"t too7 over so.e of t$e 4or7 o"tra te% to petitio"er.@6A Allege%ly, t$e latter $a% faile% to fi"is$ it /e ause of its i"a/ility to pro ure .aterials.@(A =po" o.pleti"g its tas7 u"%er t$e Co"tra t, petitio"er /ille% respo"%e"t i" t$e a.ou"t of ,6,(11,013.!).@0A Co"testi"g t$e a ura y of t$e a.ou"t of a%va" es a"% /illa/le a o.plis$.e"ts liste% /y t$e for.er, t$e latter refuse% to pay. Respo"%e"t also too7 refuge i" t$e ter.i"atio" lause of t$e Agree.e"t.@!A #$at lause allo4e% it to set off t$e ost of t$e 4or7 t$at petitio"er $a% faile% to u"%erta7e :: %ue to ter.i"atio" or ta7e:over :: agai"st t$e a.ou"t it o4e% t$e latter. &e ause of t$e %ispute, petitio"er file% 4it$ t$e Regio"al #rial Court 1R#C3 of +a7ati 1&ra" $ 1*13 a Co.plai"t @1)A for t$e olle tio" of t$e a.ou"t represe"ti"g t$e allege% /ala" e %ue it u"%er t$e Su/ o"tra t. '"stea% of su/.itti"g a" A"s4er, respo"%e"t file% a +otio" to Dis.iss,@11A allegi"g t$at t$e Co.plai"t 4as pre.ature, /e ause t$ere 4as "o prior re ourse to ar/itratio". '" its 2r%er@12A %ate% Septe./er 15, 1!0(, t$e R#C %e"ie% t$e +otio" o" t$e grou"% t$at t$e %ispute %i% "ot i"volve t$e i"terpretatio" or t$e i.ple.e"tatio" of t$e Agree.e"t a"% 4as, t$erefore, "ot overe% /y t$e ar/itral lause.@13A After trial o" t$e .erits, t$e R#C @1*A rule% t$at t$e ta7e: over of so.e 4or7 ite.s /y respo"%e"t 4as "ot e;uivale"t to a ter.i"atio", /ut a .ere .o%ifi atio", of t$e Su/ o"tra t. #$e latter 4as or%ere% to give full pay.e"t for t$e 4or7 o.plete% /y petitio"er. '" t$e affir.ative, 4$et$er or "ot t$e re;uire.e"ts provi%e% i" Arti le ''' @1A of C'AC Ar/itratio" Rules regar%i"g re;uest for ar/itratio" $a@veA /ee" o.plie% 4it$@.AI@1(A

59e CourtFs &ul;n: #$e ,etitio" is u".eritorious.

4;rst +ssue7 W!et!er 1isp&te Is 2rbitrable ,etitio"er lai.s t$at t$ere is "o o"fli t regar%i"g t$e i"terpretatio" or t$e i.ple.e"tatio" of t$e Agree.e"t. #$us, 4it$out $avi"g to resort to prior ar/itratio", it is e"title% to olle t t$e value of t$e servi es it re"%ere% t$roug$ a" or%i"ary a tio" for t$e olle tio" of a su. of .o"ey fro. respo"%e"t. 2" t$e ot$er $a"%, t$e latter o"te"%s t$at t$ere is a "ee% for prior ar/itratio" as provi%e% i" t$e Agree.e"t. #$is is /e ause t$ere are so.e %isparities /et4ee" t$e partiesB positio"s regar%i"g t$e eCte"t of t$e 4or7 %o"e, t$e a.ou"t of a%va" es a"% /illa/le a o.plis$.e"ts, a"% t$e set off of eCpe"ses i" urre% /y respo"%e"t i" its ta7e: over of petitio"erBs 4or7. <e si%e 4it$ respo"%e"t. 5sse"tially, t$e %ispute arose fro. t$e partiesB " o"grue"t positio"s o" 4$et$er ertai" provisio"s of t$eir Agree.e"t oul% /e applie% to t$e fa ts. #$e i"sta"t ase i"volves te $"i al %is repa" ies t$at are /etter left to a" ar/itral /o%y t$at $as eCpertise i" t$ose areas. '" a"y eve"t, t$e i" lusio" of a" ar/itratio" lause i" a o"tra t %oes "ot i so (acto%ivest t$e ourts of Duris%i tio" to pass upo" t$e fi"%i"gs of ar/itral /o%ies, /e ause t$e a4ar%s are still Du%i ially revie4a/le u"%er ertai" o"%itio"s.@10A '" t$e ase /efore us, t$e Su/ o"tra t $as t$e follo4i"g ar/itral lauseG H6. #$e ,arties $ereto agree t$at a"y %ispute or o"fli t as regar%s to i"terpretatio" a"% i.ple.e"tatio" of t$is Agree.e"t 4$i $ a""ot /e settle% /et4ee" @respo"%e"tA a"% @petitio"erA

&ul;n: o8 t9e Court o8 Appe"ls 2" appeal, t$e CA reverse% t$e R#C a"% or%ere% t$e referral of t$e ase to ar/itratio". #$e appellate ourt $el% as ar/itra/le t$e issue of 4$et$er respo"%e"tBs ta7e:over of so.e

a.i a/ly s$all /e settle% /y .ea"s of ar/itratio" C C C.I@1!A Clearly, t$e resolutio" of t$e %ispute /et4ee" t$e parties $erei" re;uires a referral to t$e provisio"s of t$eir Agree.e"t. <it$i" t$e s ope of t$e ar/itratio" lause are %is repa" ies as to t$e a.ou"t of a%va" es a"% /illa/le a o.plis$.e"ts, t$e appli atio" of t$e provisio" o" ter.i"atio", a"% t$e o"se;ue"t set:off of eCpe"ses. A revie4 of t$e fa tual allegatio"s of t$e parties reveals t$at t$ey %iffer o" t$e follo4i"g ;uestio"sG 113 Di% a ta7e: overJter.i"atio" o urS 123 +ay t$e eCpe"ses i" urre% /y respo"%e"t i" t$e ta7e:over /e set off agai"st t$e a.ou"ts it o4e% petitio"erS 133 Ho4 .u $ 4ere t$e a%va" es a"% /illa/le a o.plis$.e"tsS #$e resolutio" of t$e foregoi"g issues lies i" t$e i"terpretatio" of t$e provisio"s of t$e Agree.e"t. A or%i"g to respo"%e"t, t$e ta7e:over 4as ause% /y petitio"erBs %elay i" o.pleti"g t$e 4or7. Su $ %elay 4as i" violatio" of t$e provisio" i" t$e Agree.e"t as to ti.e s $e%uleG HG. #'+5 SCH5D=L5 H@,etitio"erA s$all a%$ere stri tly to t$e s $e%ule relate% to t$e <2R> a"% o.plete t$e <2R> 4it$i" t$e perio% set fort$ i" A""eC C $ereof. N2 ti.e eCte"sio" s$all /e gra"te% /y @respo"%e"tA to @petitio"erA u"less a orrespo"%i"g ti.e eCte"sio" is gra"te% /y @t$e +i"istry of ,u/li <or7s a"% Hig$4aysA to t$e C2NS2R#'=+.I@2)A &e ause of t$e %elay, respo"%e"t alleges t$at it too7 over so.e of t$e 4or7 o"tra te% to petitio"er, pursua"t to t$e follo4i"g provisio" i" t$e Agree.e"tG H>. #5R+'NA#'2N 29 AGR55+5N# H@Respo"%e"tA $as t$e right to terminate andAor ta#e over t$is Agree.e"t for a"y of t$e follo4i"g ausesG C C C C CCC T6. 'f %espite previous 4ar"i"gs /y @respo"%e"tA, @petitio"erA %oes "ot eCe ute t$e <2R> i" a or%a" e 4it$ t$is Agree.e"t, or ersistentl6 or (lagrantl6 neglects to carr6 out GitsH obligations under this 'greement.I@21A Suppose%ly, as a result of t$e Hta7e:over,I respo"%e"t i" urre% eCpe"ses i" eC ess of t$e o"tra te% pri e. 't soug$t to set off t$ose eCpe"ses agai"st t$e a.ou"t lai.e% /y petitio"er for t$e 4or7 t$e latter a o.plis$e%, pursua"t to t$e follo4i"g provisio"G H'f t$e total %ire t a"% i"%ire t ost of o.pleti"g t$e re.ai"i"g part of t$e <2R> eC ee% t$e su. 4$i $ 4oul% $ave /ee" paya/le to @petitio"erA $a% it o.plete% t$e <2R>, t$e a.ou"t of su $ eC ess @.ay /eA lai.e% /y @respo"%e"tA fro. eit$er of t$e follo4i"gG T1. A"y a.ou"t %ue @petitio"erA fro. @respo"%e"tA at t$e ti.e of t$e ter.i"atio" of t$is Agree.e"t.I@22A #$e issue as to t$e orre t a.ou"t of petitio"erBs a%va" es a"% /illa/le a o.plis$.e"ts i"volves a" evaluatio" of t$e .a""er i" 4$i $ t$e parties o.plete% t$e 4or7, t$e C C

eCte"t to 4$i $ t$ey %i% it, a"% t$e eCpe"ses ea $ of t$e. i" urre% i" o""e tio" t$ere4it$. Ar/itrators also "ee% to loo7 i"to t$e o.putatio" of foreig" a"% lo al osts of .aterials, foreig" a"% lo al a%va" es, rete"tio" fees a"% letters of re%it, a"% taCes a"% %uties as set fort$ i" t$e Agree.e"t. #$ese %ata a" /e gat$ere% fro. a revie4 of t$e Agree.e"t, perti"e"t portio"s of 4$i $ are repro%u e% $ereu"%erG HC. C2N#RAC# ,R'C5 AND #5R+S 29 ,A6+5N# C C C C CCC HAll progress pay.e"ts to /e .a%e /y @respo"%e"tA to @petitio"erA s$all /e su/De t to a rete"tio" su. of te" per e"t 11)N3 of t$e value of t$e approve% ;ua"tities. A"y lai.s /y @respo"%e"tA o" @petitio"erA .ay /e %e%u te% /y @respo"%e"tA fro. t$e progress pay.e"ts a"%Jor retai"e% a.ou"t. A"y eC ess fro. t$e retai"e% a.ou"t after %e%u ti"g @respo"%e"tBsA lai.s s$all /e release% /y @respo"%e"tA to @petitio"erA after t$e issua" e of @t$e +i"istry of ,u/li <or7s a"% Hig$4aysA of t$e Certifi ate of Co.pletio" a"% fi"al a epta" e of t$e <2R> /y @t$e +i"istry of ,u/li <or7s a"% Hig$4aysA. C C HD. '+,2R#5D +A#5R'ALS AND 5Q=',+5N# H@Respo"%e"t s$all ope" t$e letters of re%it for t$e i.portatio" of e;uip.e"t a"% .aterials liste% i" A""eC 5 $ereof after t$e %ra4i"gs, /ro $ures, a"% ot$er te $"i al %ata of ea $ ite.s i" t$e list $ave /ee" for.ally approve% /y @t$e +i"istry of ,u/li <or7s a"% Hig$4aysA. Ho4ever, petitio"er 4ill still /e fully respo"si/le for all i.porte% .aterials a"% e;uip.e"t. HAll eCpe"ses i" urre% /y @respo"%e"tA, /ot$ i" foreig" a"% lo al urre" ies i" o""e tio" 4it$ t$e ope"i"g of t$e letters of re%it s$all /e %e%u te% fro. t$e Co"tra t ,ri es. C C HN. 2#H5R C2ND'#'2NS C C C C CCC H2. All usto.s %uties, i.port %uties, o"tra torBs taCes, i" o.e taCes, a"% ot$er taCes t$at .ay /e re;uire% /y a"y gover".e"t age" ies i" o""e tio" 4it$ t$is Agree.e"t s$all /e for t$e sole a ou"t of @petitio"erA.I@23A &ei"g a" i"eCpe"sive, spee%y a"% a.i a/le .et$o% of settli"g %isputes,@2*A ar/itratio" :: alo"g 4it$ .e%iatio", o" iliatio" a"% "egotiatio" :: is e" ourage% /y t$e Supre.e Court. Asi%e fro. u" loggi"g Du%i ial %o 7ets, ar/itratio" also $aste"s t$e resolutio" of %isputes, espe ially of t$e o..er ial 7i"%.@25A 't is t$us regar%e% as t$e H4ave of t$e futureI i" i"ter"atio"al ivil a"% o..er ial %isputes. @26A &rus$i"g asi%e a o"tra tual agree.e"t alli"g for ar/itratio" /et4ee" t$e parties 4oul% /e a step /a 74ar%.@2(A C C C C CCC C C C C CCC C C C C

Co"siste"t 4it$ t$e a/ove:.e"tio"e% poli y of e" ouragi"g alter"ative %ispute resolutio" .et$o%s, ourts s$oul% li/erally o"strue ar/itratio" lauses. ,rovi%e% su $ lause is sus epti/le of a" i"terpretatio" t$at overs t$e asserte% %ispute, a" or%er to ar/itrate s$oul% /e gra"te%. @20A A"y %ou/t s$oul% /e resolve% i" favor of ar/itratio".@2!A

a ;uire Duris%i tio" over t$e sa.e. Rat$er, it is plai" a"% lear t$at as lo"g as t$e parties agree to su/.it to volu"tary ar/itratio", regar%less of 4$at foru. t$ey .ay $oose, t$eir agree.e"t 4ill fall 4it$i" t$e Duris%i tio" of t$e C'AC, su $ t$at, eve" if t$ey spe ifi ally $oose a"ot$er foru., t$e parties 4ill "ot /e pre lu%e% fro. ele ti"g to su/.it t$eir %ispute /efore t$e C'AC /e ause t$is rig$t $as /ee" veste% upo" ea $ party /y la4, i.e., 5.2. No. 1))0.I@3*A Clearly, t$ere is "o .ore "ee% to file a re;uest 4it$ t$e C'AC i" or%er to vest it 4it$ Duris%i tio" to %e i%e a o"stru tio" %ispute. #$e ar/itral lause i" t$e Agree.e"t is a o..it.e"t o" t$e part of t$e parties to su/.it to ar/itratio" t$e %isputes overe% t$erei". &e ause t$at lause is /i"%i"g, t$ey are eCpe te% to a/i%e /y it i" goo% fait$.@35A A"% /e ause it overs t$e %ispute /et4ee" t$e parties i" t$e prese"t ase, eit$er of t$e. .ay o.pel t$e ot$er to ar/itrate.@36A Si" e petitio"er $as alrea%y file% a Co.plai"t 4it$ t$e R#C 4it$out prior re ourse to ar/itratio", t$e proper pro e%ure to e"a/le t$e C'AC to %e i%e o" t$e %ispute is to re;uest t$e stay or suspe"sio" of su $ a tio", as provi%e% u"%er RA 0(6 @t$e Ar/itratio" La4A.@3(A >H-&-4/&-, t$e ,etitio" is *!N$!* a"% t$e assaile% De isio" '::$,M!*. Costs agai"st petitio"er. S/ /&D-&-D. 4uno, (Chairman), Sandoval5+utierrez, Corona a"% Car io5Morales, JJ., o" ur. 4+&S5 D+,+S+/' CHA&L-S !-&'A&D H. &-<-S o;n: #us;ness un er t9e n"2e "n style C!H &-<-S A&CH+5-C5S, ,etitio"er, G.R. No. 16030* ,rese"tG ,a "ga"i/a", C. J. 1C$airperso" 3, 6"ares:Sa"tiago, Austria:+arti"e-, C a l l e D o , S r . , a " % C$i o: Na-ario, JJ.

Se1on +ssue7 Prior 3e4&est "or 2rbitration A or%i"g to petitio"er, assu.i"g arguendo t$at t$e %ispute is ar/itra/le, t$e failure to file a for.al re;uest for ar/itratio" 4it$ t$e Co"stru tio" '"%ustry Ar/itratio" Co..issio" 1C'AC3 pre lu%e% t$e latter fro. a ;uiri"g Duris%i tio" over t$e ;uestio". #o /olster its positio", petitio"er eve" ites our ruli"g i" 1esco Services $ncor orated v. Vera. @3)A <e are "ot persua%e%. Se tio" 1 of Arti le '' of t$e old Rules of ,ro e%ure Gover"i"g Co"stru tio" Ar/itratio" i"%ee% re;uire% t$e su/.issio" of a re;uest for ar/itratio", as follo4sG HS5C#'2N. 1. Su/.issio" to Ar/itratio" :: A"y party to a o"stru tio" o"tra t 4is$i"g to $ave re ourse to ar/itratio" /y t$e Co"stru tio" '"%ustry Ar/itratio" Co..issio" 1C'AC3 s$all su/.it its Re;uest for Ar/itratio" i" suffi ie"t opies to t$e Se retariat of t$e C'ACF ,R2E'D5D, t$at i" t$e ase of gover".e"t o"stru tio" o"tra ts, all a%.i"istrative re.e%ies availa/le to t$e parties .ust $ave /ee" eC$auste% 4it$i" !) %ays fro. t$e ti.e t$e %ispute arose.I 1esco 4as pro.ulgate% /y t$is Court, usi"g t$e foregoi"g provisio" as refere" e. 2" t$e ot$er $a"%, Se tio" 1 of Arti le ''' of t$e ne; Rules of ,ro e%ure Gover"i"g Co"stru tio" Ar/itratio" $as %ispe"se% 4it$ t$is re;uire.e"t a"% re ourse to t$e C'AC .ay "o4 /e availe% of 4$e"ever a o"tra t H o"tai"s a lause for t$e su/.issio" of a future o"troversy to ar/itratio",I i" t$is 4iseG HS5C#'2N 1. Submission to C$'C Jurisdiction W A" ar/itratio" lause i" a o"stru tio" o"tra t or a su/.issio" to ar/itratio" of a o"stru tio" %ispute s$all /e %ee.e% a" agree.e"t to su/.it a" eCisti"g or future o"troversy to C'AC Duris%i tio", "ot4it$sta"%i"g t$e refere" e to a %iffere"t ar/itratio" i"stitutio" or ar/itral /o%y i" su $ o"tra t or su/.issio". <$e" a o"tra t o"tai"s a lause for t$e su/.issio" of a future o"troversy to ar/itratio", it is "ot "e essary for t$e parties to e"ter i"to a su/.issio" agree.e"t /efore t$e lai.a"t .ay i"vo7e t$e Duris%i tio" of C'AC.I #$e foregoi"g a.e"%.e"ts i" t$e Rules 4ere for.ali-e% /y C'AC Resolutio" Nos. 2:!1 a"% 3:!3.@31A #$e %iffere" e i" t$e t4o provisio"s 4as learly eCplai"e% i" China Chang Jiang !nerg6 Cor oration (4hili ines) v. ,osal $n(rastructure Builders et al.@32A 1a" eCte"%e% u"sig"e% Resolutio"3 a"% reiterate% i" National $rrigation 'dministration v. Court o( ' eals,@33A fro. 4$i $ 4e ;uote t$usG H="%er t$e prese"t Rules of ,ro e%ure, for a parti ular o"stru tio" o"tra t to fall 4it$i" t$e Duris%i tio" of C'AC, it is .erely re;uire% t$at t$e parties agree to su/.it t$e sa.e to volu"tary ar/itratio" ="li7e i" t$e origi"al versio" of Se tio" 1, as applie% i" t$e 1esco ase, t$e la4 as it "o4 sta"%s %oes "ot provi%e t$at t$e parties s$oul% agree to su/.it %isputes arisi"g fro. t$eir agree.e"t spe ifi ally to t$e C'AC for t$e latter to

: versus :

A'5/'+/ <UL/ !ALD- ++, *AUL+'/ M. '/5/ "n -&'-S5/ 6. !A55AD, S&., ;n t9e;r 1"p"1;t;es "s Ar#;tr"tors o8 t9e C/'S5&UC5+/' +'DUS5&< A&!+5&A5+/' C/MM+SS+/', ,ro.ulgate%G S*/US-S C-SA& "n CA&M-L+5A -SPU+% "n &/S-MA&+- *A*AS, Respo"%e"ts. August 10, 2))6 @ $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ $$$$$ @ 3E5678.I6N <'A&-S$SA'5+A%/, J.7 &efore t$e Court is a H+otio" to '"$i/it t$e Ho"ora/le C$ief 8usti e a"% +otio" to Refer Case to t$e Court 5" &a" ,I %ate% August *, 2))6, file% /y Atty. 9ra" is o '. C$ave-. +. A or%i"g to t$e .ova"t, t$e +otio" to '"$i/it t$e C$ief 8usti e His "ot a" a usatio" of 4ro"g%oi"g o" t$e part of t$e Ho"ora/le C$ief 8usti e. Rat$er it is i.pelle% /y Atty. C$ave-Bs per eptio" t$at i" t$is ase, t$e Ho"ora/le C$ief 8usti e $as "ot a te% i" a" o/De tive, i.partial a"% "eutral .a""er i" %isposi"g of i" i%e"tal issues a"% .otio"s prese"te% /y t$e parties.I #$e .ova"t a%%s t$at Ht$e %i--yi"g pa e /y 4$i $ private respo"%e"tsB .otio"s $ave /ee" re eive% a"% favora/ly a te% upo" ;n re1or t;2e supports Atty. C$ave-Bs per eptio" t$at private respo"%e"tsB .otio"s R 4it$out as .u $ as re;uiri"g petitio"er to respo"% t$ereto R $ave /ee" gra"te% spe ial atte"tio" a"% favor /y t$e Ho"ora/le C$ief 8usti e.I 1/ol% types i" origi"al3 Atty. C$ave-Bs per eptio" a/out t$e allege% H lose"ess a"% t$e goo% relatio"s$ip /et4ee" Atty. 2r%oUe- a"% t$e C$ief 8usti eI to i.pair t$e latterBs o/De tivity a"% i.partiality $as "o /asis, for t$e follo4i"g reaso"sG 113 #$e a tio"s ta7e" o" t$e various .otio"s a"% i" i%e"ts e"u.erate% /y t$e .ova"t 4ere .a%e /y t$e e"tire .e./ers$ip of t$e 9irst Divisio". Not /ei"g t$e onente, t$e C$ief 8usti e %i% "ot i"itiate or propose a"y of t$e a tio"s a"% ruli"gs .a%e /y t$e Court. Li7e t$e t$ree ot$er Divisio" .e./ers, $e .erely o" urre% 4it$ t$e a tio"sJruli"gs propose% /y t$e onente. <$ile so.e or%ers a"% a tio"s, espe ially te.porary restrai"i"g or%ers, are issue% i" t$e "a.e of t$e Divisio" $air.a" 14$o i" t$is ase is t$e C$ief 8usti e3, t$ey are really olle tive a tio"s of t$e e"tire Divisio", "ot .erely t$ose of t$e C$air. #$is is t$e "or.al pro e%ure i" all Divisio"s, "ot Dust i" t$e 9irst. 123 #$e allege% Hu"pleasa"t i"tera tio" t$ese past 1! years /et4ee" Atty. C$ave- a"% Atty. Se%frey 2r%oUe- 4it$ 4$o. C$ief 8usti e 4or7e% eit$er as asso iate or part"er so.eti.e agoI $as "ot$i"g to %o at all 4it$ t$e o" urre" es .a%e /y t$e C$ief 8usti e o" t$is ase. #$ese o" urre" es 4ere give" o" t$e /asis o"ly of legal .erit, a"% o" "ot$i"g else. 133 #rue, t$e C$ief 8usti e 4as a" asso iate 1"ot a part"er3 i" 1!61 to 1!63 i" t$e Salo"ga, 2r%oUe- a"% Asso iates, 4$i $ i" i%e"tally $a% /ee" %issolve% i"

1!0(. #rue also, $e $as $a% a lose perso"al a"% professio"al relatio"s$ip 4it$ t$e pri" ipal part"er i" t$at la4 fir., Se". 8ovito R. Salo"ga. #$at is t$e reaso" t$e C$ief 8usti e $as i"$i/ite% $i.self fro. ases i" 4$i $ Se". Salo"ga 4asJis a party or a ou"sel.@1A Ho4ever, $e $a% "o si.ilar lose"ess 4it$ Atty. 2r%oUe-. #$at is 4$y $e $as "ot i"$i/ite% $i.self fro. ases i"volvi"g Atty. 2r%oUe-. '" fa t, $e $as "ot $esitate%, o" several o asio"s, to vote agai"st partiesJ auses represe"te% /y t$e for.er Se retary of 8usti e. 1*3 '" fair"ess to all o" er"e%, Atty. 2r%oUe- $as "ever spo7e", %ire tly or i"%ire tly, 4it$ t$e C$ief 8usti e o" a"y .atter pe"%i"g i" t$e Supre.e Court a"% i" a"y ot$er ourt. He $as "ever atte.pte%, %ire tly or i"%ire tly, perso"ally or t$roug$ ot$ers, to i"flue" e t$e C$ief 8usti e i" a"y .a""er 4$atsoever. '" fa t, t$e C$ief 8usti e u"%ersta"%s t$at Atty. 2r%oUe- $as /ee" seriously ill, goi"g i" a"% out of t$e $ospital, over t$e past several .o"t$s. A"% yet t$e C$ief 8usti e $as "ot eve" visite% or spo7e" 4it$ $i. %uri"g su $ perio%. 153 2" t$e ot$er $a"%, t$e C$ief 8usti e, 4$e" so 4arra"te% /y t$e fa ts a"% la4, $as vote% i" favor of auses a"% parties represe"te% /y Atty. C$ave-. 2"e outsta"%i"g eCa.ple is Chavez v. 4C++ 136) ,$il. 133, De e./er !, 1!!0F 366 ,$il. 063, +ay 1!, 1!!!3, 4$i $ 4as 4ritte" /y t$e" Asso iate 8usti e Arte.io E. ,a"ga"i/a". Atty. C$ave- 7"o4s t$at $e $as 4o" t$e vote of t$e C$ief 8usti e 4it$out $is $avi"g to spea7 4it$ or i"flue" e $i. i" a"y .a""er. 163 +ova"tBs per eptio" Ht$at Atty. 2r%oUe-Bs o" er" for a"% i"terest i" up$ol%i"g t$e C'AC Duris%i tio" .ust $ave so.e$o4 /ee" relaye% to t$e Ho"ora/le C$ief 8usti eI is o.pletely /aseless. As alrea%y state%, t$ere $a% /ee" "o o"versatio" or o..u"i atio", %ire tly or i"%ire tly, perso"ally or t$roug$ ot$ers, /et4ee" t$e C$ief 8usti e a"% Atty. 2r%oUe- 1or a"yo"e represe"ti"g $i.3 a/out a"y .atter relate% to a"y ase i" t$is, or a"y ot$er, ourt. Neit$er is t$e C$ief 8usti e a4are of a"y allege% perso"al i"terest of Atty. 2r%oUe- to up$ol% t$e C'AC. 1(3 '" a fe4 .o"t$s, t$e i" u./e"t C$ief 8usti e is s $e%ule% to retire fro. t$e Du%i iary. 't is totally i" o" eiva/le t$at $e 4ill s.ear $is eleve" year re or% of i"tegrity, i"%epe"%e" e a"% et$i al o"%u t i" t$e Supre.e Court 4it$ a"y a tio" t$at is less t$a" Ho/De tive, i.partial a"% "eutral.I 2" t$e ot$er $a"%, $e assures .ova"t 1a"% all o" er"e%3 t$at $e 4ill o"ti"ue 4it$ $is vo4 Hto lea% a Du%i iary $ara teri-e% /y four $nsG i"%epe"%e" e, i"tegrity, i"%ustry a"% i"tellige" e.I ++. 9ollo4i"g $is .isper eptio" of H lose"ess a"% /o"%i"g /et4ee" Atty. 2r%oUe- a"% t$e C$ief 8usti e,I t$e .ova"t assaile% ertai" Hpro ee%i"gs i" t$is Ho"ora/le CourtBs 9irst Divisio".I Ho4ever, t$ese pro ee%i"gs a" easily /e eCplai"e%, t$usG 113 Respo"%e"tsB +otio" to '" lu%e Ho". ,e%ro Sa/u"%ayo, 8r., ,resi%i"g 8u%ge, Regio"al #rial Court of +u"ti"lupa City, &ra" $ 2)3, as pu/li respo"%e"t 4as %e"ie% /e ause Se tio" *, Rule *5 of t$e Rules of Court provi%es t$at i" a petitio" for revie4 o" ertiorari to t$e Supre.e Court, t$ere is "o "ee% to i.plea% t$e lo4er ourts or Du%ges t$ereof eit$er as petitio"ers or respo"%e"ts. #$ere is "o irregularity 4$e" t$e Resolutio" %e"yi"g respo"%e"tsB .otio" 4as issue% 4$e" t$e C$ief 8usti e 4as o" offi ial leave. #$e re.ai"i"g

+e./ers of t$e Divisio" a" pro ee% 4it$ offi ial /usi"ess %espite t$e a/se" e of t$e C$ief 8usti e as lo"g as t$e re;uire% .aDority is prese"t. #$is is i" a or%a" e 4it$ Se tio" *133, Arti le E''' of t$e Co"stitutio" 4$i $ provi%es t$at H ases or .atters $ear% /y a %ivisio" s$all /e %e i%e% or resolve% 4it$ t$e o" urre" e of a .aDority of t$e +e./ers 4$o a tually too7 part i" t$e %eli/eratio"s o" t$e issues i" t$e ase a"% vote% t$ereo", a"% i" "o ase, 4it$out t$e o" urre" e of at least t$ree of su $ +e./ers.I 123 #$e issua" e of a #R2 e"Doi"i"g t$e ,resi%i"g 8u%ge of +u"ti"lupa City, &ra" $ 2)3 fro. o"ti"ui"g 4it$ a"y of t$e pro ee%i"gs i" Civil Case No. )3:11) a"% fro. e"for i"g t$e 2r%er of t$e trial ourt %ate% 8u"e 2!, 2))6 or%eri"g t$e s$eriff to i.ple.e"t t$e 4rit of eCe utio" %ate% +ay 1(, 2))6, is i" or%er. Respo"%e"ts satisfa torily esta/lis$e% t$at t$ey are e"title% to t$e i"Du" tio". 't appears fro. t$e re or%s t$at petitio"er file% a o.plai"t agai"st respo"%e"ts 4it$ t$e Regio"al #rial Court of +u"ti"lupa City 4$i $ 4as %o 7ete% as Civil Case No. )3:11) prayi"g t$at a" a ou"ti"g /e re"%ere% to %eter.i"e t$e ost of t$e .aterials pur $ase% /y respo"%e"t ,apasF t$at respo"%e"ts /e or%ere% to pay t$e ost of t$e a%%itio"al 4or7s %o"e o" t$e propertyF t$at t$e Desig":&uil% Co"stru tio" Agree.e"t /e or%ere% res i"%e% /e ause respo"%e"ts /rea $ t$e sa.eF a"% t$at respo"%e"ts /e or%ere% to pay .oral a"% eCe.plary %a.ages. &ase% o" t$e sa.e Desig":&uil% Co"stru tio" Agree.e"t, respo"%e"ts file% 4it$ t$e Co"stru tio" '"%ustry Ar/itratio" Co..issio" 1C'AC3 a o.plai"t prayi"g t$at petitio"er /e or%ere% to fi"is$ t$e proDe t or, i" t$e alter"ative, to pay t$e ost to fi"is$ t$e sa.eF to rei./urse t$e overpay.e"ts .a%e /y respo"%e"tsF a"% to pay li;ui%ate% %a.ages, attor"eyBs fees a"% osts of t$e suit. 2" 8u"e 0, 2))5,@2A t$e C'AC re"%ere% a %e isio" o" t$e .erits of t$e ase a4ar%i"g i" favor of respo"%e"ts t$e su. of ,*,*1!,)!*.!0. #$e ase is prese"tly o" appeal 4it$ t$e Court of Appeals@3A %o 7ete% as CA:G.R. S, No. !)136.@*A +ea"4$ile, o" 8uly 2!, 2))5, t$e trial ourt re"%ere% Du%g.e"t i" Civil Case No. )3:11) i" favor of petitio"er or%eri"g t$e respo"%e"ts to pay ,0*),3)).)) represe"ti"g t$e ost of t$e a%%itio"al 4or7sF ,2!6,650.!5 represe"ti"g t$e /ala" e of t$e o"tra t pri eF ,5)),))).)) /y 4ay of .oral %a.agesF ,5)),))).)) as eCe.plary %a.agesF ,5)),))).)) as attor"eyBs fees a"% osts of t$e suit. '" a" 2r%er %ate% +ay 1(, 2))6, 8u%ge Sa/u"%ayo, 8r. %ire te% S$eriff +elvi" #. &aga/al%o to i.ple.e"t t$e 4rit of eCe utio" /y ausi"g t$e respo"%e"ts to Hre"%er a" a ou"ti"g of all t$e o"stru tio" .aterials t$ey /oug$t for t$e o"stru tio" of t$e proDe t C C CF to levy t$e goo%s a"% $attels of t$e @respo"%e"tsA C C C a"% to .a7e t$e sale t$ereof C C C.I@5A '" t$eir Second Mani(estation ;ith 4ra6er (or $ssuance o( a 1em orar6 ,estraining 7rderA$n8unction@6A file% 4it$ t$is Court o" 8uly 1), 2))6, respo"%e"ts averre% t$at fro. 8uly (, 2))6 u"til * oB lo 7 i" t$e .or"i"g of 8uly 0, 2))6, S$eriff &aga/al%o 4e"t to t$e resi%e" e of respo"%e"t ,apas a"% levie% several of $er perso"al properties.@(A Respo"%e"ts /e4aile% t$at %espite t$e pro"ou" e.e"t of t$e Court of Appeals t$at t$e C'AC, "ot t$e Regio"al #rial Court, 4$i $ $as Duris%i tio" over t$e ase, a"% %espite t$e pe"%e" y of t$e i"sta"t ase /efore us, t$e Regio"al #rial Court still pro ee%e% 4it$ t$e i.ple.e"tatio" of t$e 4rit. 't is i.porta"t to .e"tio" t$at i" /ot$ ases, t$e parties i"sist t$at t$e ot$er /rea $e% t$eir o/ligatio" u"%er t$e Desig":&uil% Co"stru tio" Agree.e"t. ,etitio"er $o4ever

argues t$at t$e Regio"al #rial Court properly too7 og"i-a" e of t$e ase 4$ile respo"%e"ts lai. t$at C'AC $as t$e eC lusive a"% origi"al Duris%i tio" o" t$e su/De t .atter. 2t$er4ise state%, if 4e rule i" t$e i"sta"t ase t$at C'AC $as Duris%i tio" over t$e o"troversy, t$e" it 4oul% "e essarily follo4 t$at t$e Regio"al #rial Court %oes "ot $ave Duris%i tio". Si" e it %i% "ot a ;uire Duris%i tio" over t$e o"troversy, t$e" t$e 4rit of eCe utio" t$at it issue% 4as voi%. 'f 4e allo4 t$e R#C 8u%ge a"% t$e S$eriff to o"ti"ue 4it$ t$e pro ee%i"gs i" Civil Case No. )3:11), t$e", 4$atever Du%g.e"t t$at 4oul% /e re"%ere% i" t$e i"sta"t ase 4oul% /e re"%ere% "ugatory. '" vie4 of t$e a/ove ir u.sta" es, respo"%e"ts learly esta/lis$e% t$at t$ey are e"title% to t$e issua" e of a #R2. #$us o" 8uly 12, 2))6, t$e Court issue% a Resolutio" t$at rea%sG A ti"g o" t$e prayer for issua" e of a te.porary restrai"i"g or%erJi"Du" tio", t$e Court furt$er resolves to issue a #5+,2RAR6 R5S#RA'N'NG 2RD5R e"Doi"i"g t$e ,resi%i"g 8u%ge, Regio"al #rial Court, &ra" $ 2)3, +u"ti"lupa City, fro. o"ti"ui"g 4it$ a"y of t$e pro ee%i"gs i" Civil Case No. )3:11) e"title% HC$arles &er"ar% H. Reyes, %oi"g /usi"ess u"%er t$e "a.e a"% style of TC&H Reyes Ar $ite tsB vs. Spouses +ely a"% Cesar 5s;uig, et al.I @su/De t .atter of t$e assaile% Court of Appeals %e isio" a"% resolutio" %ate% 9e/ruary 10, 2))5 a"% +ay 2), 2))5, respe tively, i" CA:G.R. S, No. 03016 e"title% HC$arles &er"ar% H. Reyes, %oi"g /usi"ess u"%er t$e "a.e a"% style C&H R565S ARCH'#5C#S vs. A"to"io 6ulo &al%e '', et alIA a"% fro. e"for i"g t$e 2r%er %ate% 8u"e 2!, 2))6 or%eri"g t$e %esig"ate% s$eriff to i.ple.e"t t$e 4rit of eCe utio" %ate% +ay 1(, 2))6 to e"for e t$e %e isio" %ate% 8uly 2!, 2))5 i" Civil Case No. )3: 11), upo" t$e private respo"%e"tsB fili"g of a /o"% i" t$e a.ou"t of #$ree Hu"%re% #$ousa"% ,esos 1,3)),))).))3 4it$i" a perio% of five 153 %ays fro. "oti e $ereof C C C. 133 #$ereafter, respo"%e"ts file% a" Irgent Motion (or Clari(ication of t$e a/ove resolutio". A or%i"gly, o" 8uly 1!, 2))6, 4e issue% a resolutio" 4$i $ is a larifi atio" of t$e #R2 issue% o" 8uly 12, 2))6. &ot$ t$e 8uly 12, 2))6 a"% 8uly 1!, 2))6 Resolutio"s are overe% /y t$e sa.e /o"% i" t$e a.ou"t of ,3)),))).)). 1*3 A petitio" revie4 u"%er Rule *5 of t$e Rules of Court is "ot a .atter of rig$t /ut of sou"% Du%i ial %is retio". @0A 9or purposes of %eter.i"i"g 4$et$er t$e petitio" s$oul% /e %is.isse% or %e"ie%, or 4$ere t$e petitio" is give" %ue ourse, t$e Supre.e Court .ay re;uire or allo4 t$e fili"g of su $ plea%i"gs, /riefs, .e.ora"%a or %o u.e"ts as;t 2"y ee2 ne1ess"ry 4it$i" su $ perio%s a"% u"%er su $ o"%itio"s as it .ay o"si%er appropriate, a"% i.pose t$e orrespo"%i"g sa" tio"s i" ase of "o":fili"g or u"aut$ori-e% fili"g of su $ plea%i"gs a"% %o u.e"ts or "o": o.plia" e 4it$ t$e o"%itio"s t$erefor.@!A #$is Court eCer ise% its %is retio" 4$e" it %i% "ot re;uire petitio"er to file o..e"t o" respo"%e"tsB Mani(estation ;ith Irgent Motion to ,esolve ;ith 4ra6er (or $n8unction, Second Mani(estation ;ith 4ra6er (or

$ssuance o( a 1em orar6 ,estraining 7rderA$n8unction, Irgent Motion (or Clari(ication, a"% Com liance. 153 #$e Court %i% "ot eC ee% its Duris%i tio"F "eit$er %i% it e" roa $ o" t$e Duris%i tio" of t$e Court of Appeals or of t$e lo4er ourt 4$e" it issue% t$e Resolutio" %ate%8uly 12, 2))6. As %is usse%, t$ere is o.pelli"g reaso" to issue a #R2 as t$e respo"%e"ts satisfa torily esta/lis$e% t$ey are e"title% to t$e relief %e.a"%e%. 't .ay furt$er /e sai% t$at t$e issua" e of a #R2 o" 8uly 12, 2))6 is "ot a fi"al %eter.i"atio" of t$e .atter. 't 4as a re.e%y i"te"%e% to avoi% a"y irrepara/le i"Dury t$at .ig$t /e ause% to t$e parties. 't .ay /e re alle% t$at t$e C'AC a"% t$e trial ourt ea $ asserte% its Duris%i tio" over t$e o"troversy to t$e eC lusio" of t$e ot$er. 163 #$ere is "o trut$ or /asis to t$e allegatio" t$at t$e ase $as /ee" give" Hspe ial atte"tio".I All a tio"s o" t$e .otio"s a"% i" i%e"ts $ave /ee" perfor.e% regularly. >H-&-4/&-, t$e +otio" to '"$i/it t$e Ho"ora/le C$ief 8usti e is D-'+-D. #$e +otio" to Refer Case to t$e Court 5" &a" is %&A'5-D. S/ /&D-&-D. S-C/'D D+,+S+/' MA&+A LU+SA *A&= ASS/C+A5+/', +'C., ,etitio"er,

=po" o ular i"spe tio" of t$e $ouse, +L,A' fou"% out t$at respo"%e"ts violate% t$e pro$i/itio" agai"st .ulti: %4elli"g.33 state% i" +L,A'Bs Dee% of Restri tio". Co"se;ue"tly, o" April 20, 2))3, +L,A' se"t a letter to t$e respo"%e"ts, %e.a"%i"g t$at t$ey re tify t$e stru tureF ot$er4ise, it 4ill /e o"strai"e% to forfeit respo"%e"tsB o"stru tio" /o"% a"% i.pose stiffer pe"alties. '" a Letter.43 %ate% April 2!, 2))3, respo"%e"ts, as represe"te% /y t$eir fat$er Ru/e" D. Al.e"%ras %e"ie% $avi"g violate% +L,A'Bs Dee% of Restri tio". 2" +ay 5, 2))3, +L,A', i" its reply, poi"te% out respo"%e"tsB spe ifi violatio"s of t$e su/%ivisio" rules, to 4itG 1a3 i"stallatio" of a se o"% 4ater .eter a"% tappi"g t$e su/%ivisio"Bs .ai" 4ater pipeli"e, a"% 1/3 o"stru tio" of Ht4o separate e"tra" es t$at are .utually eC lusive of ea $ ot$er.I 't li7e4ise reiterate% its 4ar"i"g t$at failure to o.ply 4it$ its %e.a"% 4ill result i" its eCer ise of .ore stri"ge"t .easures.

'" vie4 of t$ese, respo"%e"ts file% 4it$ t$e Regio"al #rial Court of Ce/u City, &ra" $ (, a Co.plai"t.53 o" 8u"e 2, 2))3 for '"Du" tio", De laratory Relief, A""ul.e"t of ,rovisio"s of Arti les a"% &y:La4s 4it$ ,rayer for 'ssua" e of a #e.porary Restrai"i"g 2r%er 1#R23J,reli.i"ary %.&. 'o. 171703 '"Du" tio". ,rese"tG

+L,A' .ove% for t$e %is.issal of t$e o.plai"t o" t$e grou"% of la 7 of Duris%i tio" a"% failure to o.ply 4it$ t$e Q='S=+&'NG ar/itratio" lause.03 provi%e% for i" +L,A'Bs /y:la4s. : versus : 6NAR5S:SAN#'AG2, E5LASC2, 8R., L52NARD2:D5 CAS#R2, '" a" 2r%er.73 %ate% 8uly 31, 2))3, t$e trial ourt &R'2N, %is.isse% t$e o.plai"t for la 7 of Duris%i tio", $ol%i"g t$at it SAMA'5HA MA&+- 5. ALM-'D&AS "n *+A 4as t$e Housi"g a"% La"% =se Regulatory &oar% 1HL=R&3 A'%-LA 5. ALM-'D&AS, ,ro.ulgate%G t$at $as origi"al a"% eC lusive Duris%i tio" over t$e Respo"%e"ts. 8u"e 5, 2))!ase. Respo"%e"ts .ove% for re o"si%eratio" /ut t$eir .otio" 4as %e"ie%. @$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $@ D-C+S+/' PU+SUM!+'%, J.7 #$is petitio" for revie4 o" ertiorari assails t$e De isio".13 %ate% August 31, 2))5 a"% t$e Resolutio".23 %ate% 9e/ruary 13, 2))6 of t$e Court of Appeals i" CA:G.R. S, No. 01)6!. #$e fa ts, ulle% fro. t$e re or%s, are as follo4sG 2" 9e/ruary 6, 2))2, respo"%e"ts Sa.a"t$a +arie #. Al.e"%ras a"% ,ia A"gela #. Al.e"%ras pur $ase% fro. +R2 Develop.e"t Corporatio" a resi%e"tial lot lo ate% i"+aria Luisa 5state ,ar7, &a"ila%, Ce/u City. After so.e ti.e, respo"%e"ts file% 4it$ petitio"er +aria Luisa ,ar7 Asso iatio", '" orporate% 1+L,A'3 a" appli atio" to o"stru t a resi%e"tial $ouse, 4$i $ 4as approve% i" 9e/ruary 1), 2))2. #$us, respo"%e"ts o..e" e% t$e o"stru tio" of t$eir $ouse. Aggrieve%, t$e respo"%e"ts ;uestio"e% t$e %is.issal of t$eir o.plai"t i" a petitio" for ertiorari a"% pro$i/itio" /efore t$e Court of Appeals. #$e Court of Appeals gra"te% t$e petitio" i" its De isio" %ate% August 31, 2))5, t$e %ispositive portio" of 4$i $ rea%sG >H-&-4/&-, i" vie4 of all t$e foregoi"g, t$e petitio" is %&A'5-D a"% t$e assaile% or%ers of t$e respo"%e"t trial ourt are %e lare% 'ULL A'D ,/+D, a"% S-5 AS+D-. Respo"%e"t R#C is $ere/y or%ere% to ta7e Duris%i tio" of Civil Case No. C5&: 2!))2. S2 2RD5R5D..83

+L,A' file% a .otio" for re o"si%eratio" /ut it 4as %e"ie% /y t$e Court of Appeals i" its Resolutio" %ate% 9e/ruary 13, 2))6. He" e, t$is petitio" raisi"g t$e follo4i"g issuesG

'. <H5#H5R #H5 H2N2RA&L5 C2=R# 29 A,,5ALS HAS D'SR5GARD5D LA<S AND <5LL:S5##L5D 8=R'S,R=D5NC5 'N H2LD'NG #HA# 8=R'SD'C#'2N 2E5R @#H5A D'S,=#5 &5#<55N H2+52<N5RS AND H2+52<N5RSB ASS2C'A#'2N L'5S <'#H #H5 R5G=LAR C2=R#S AND N2# <'#H HL=R&. ''. <H5#H5R #H5R5 'S N2 2#H5R R5L'59 AND R5+5D6 AEA'LA&L5 #2 ,5#'#'2N5R #2 AE5R# #H5 C2ND=C# 29 A E2'D @,R2C55D'NGA #HAN #H5 ,R5S5N# R5C2=RS5..(3

1/3 #o regulate a"% supervise t$e a tivities a"% operatio"s of all $ouseo4"ers asso iatio"s registere% i" a or%a" e t$ere4it$F CCCC

+oreover, /y virtue of t$is a.e"%atory la4, t$e H'GC also assu.e% t$e S5CBs origi"al a"% eC lusive Duris%i tio" u"%er Se tio" 5 of ,resi%e"tial De ree No. !)2:A to $ear a"% %e i%e ases i"volvi"gG /3 Co"troversies arisi"g out of i"tra: orporate or part"ers$ip relatio"s, /et4ee" a"% a.o"g sto 7$ol%ers, .e./ers, or asso iatesF #etAeen "ny "n Lor "ll o8 t9e2 "n t9e 1orpor"t;on, p"rtners9;p or "sso1;"t;on o8 A9;19 t9ey "re sto1E9ol ers, 2e2#ers or "sso1;"tes, respe tivelyF a"% /et4ee" su $ orporatio", part"ers$ip or asso iatio" a"% t$e state i"sofar as it o" er"s t$eir i"%ivi%ual fra" $ise or rig$t to eCist as su $ e"tityF .133 15.p$asis supplie%.3 CCCC

Si.ply state%, t$e issue is 4$et$er t$e appellate ourt erre% i" ruli"g t$at it 4as t$e trial ourt a"% "ot t$e HL=R& t$at $as Duris%i tio" over t$e ase.

,etitio"er +L,A' o"te"%s t$at t$e HL=R& .1)3 $as eC lusive Duris%i tio" over t$e prese"t o"troversy, it /ei"g a %ispute /et4ee" a su/%ivisio" lot o4"er a"% a su/%ivisio" asso iatio", 4$ere t$e latter ai.e% to o.pel respo"%e"ts to o.ply 4it$ t$e +L,A'Bs Dee% of Restri tio", spe ifi ally t$e provisio" pro$i/iti"g .ulti:%4elli"g. Respo"%e"ts, o" t$e ot$er $a"%, ou"ter t$at t$e ase t$ey file% agai"st +L,A' is o"e for %e laratory relief a"% a""ul.e"t of t$e provisio"s of t$e /y:la4sF $e" e, it is outsi%e t$e o.pete" e of t$e HL=R& to resolve. #$ey li7e4ise state% t$at +L,A'Bs rules a"% regulatio"s are %is ri.i"atory a"% violative of t$eir /asi rig$ts as .e./ers of t$e asso iatio". #$ey also argue% t$at +L,A'Bs a ts are illegal, i..oral a"% agai"st pu/li poli y a"% t$at t$ey %i% "ot o..it a"y violatio" of t$e +L,A'Bs Dee% of Restri tio". <e agree 4it$ t$e trial ourt t$at t$e i"sta"t o"troversy falls s;uarely 4it$i" t$e eC lusive a"% origi"al Duris%i tio" of t$e Ho.e '"sura" e a"% Guara"ty Corporatio" 1H'GC3,.113 "o4 HL=R&. 2rigi"ally, a%.i"istrative supervisio" over $o.eo4"ersB asso iatio"s 4as veste% /y la4 4it$ t$e Se urities a"% 5C $a"ge Co..issio" 1S5C3. Ho4ever, pursua"t to 5Ce utive 2r%er No. 535,.123 t$e H'GC assu.e% t$e regulatory a"% a%Du%i ative fu" tio"s of t$e S5C over $o.eo4"ersB asso iatio"s. Se tio" 2 of 5.2. No. 535 provi%esG 2. '" a%%itio" to t$e po4ers a"% fu" tio"s veste% u"%er t$e Ho.e 9i"a" i"g A t, t$e Corporatio", s$all $ave a.o"g ot$ers, t$e follo4i"g a%%itio"al po4ersG 1a3 . . . a"% eCer ise all t$e po4ers, aut$orities a"% respo"si/ilities t$at are veste% o" t$e Se urities a"% 5C $a"ge Co..issio" 4it$ respe t to $o.eo4"ers asso iatio"s, t$e provisio" of A t 1*5!, as a.e"%e% /y ,.D. !)2:A, to t$e o"trary "ot4it$sta"%i"gF

Co"se;ue"tly, i" Sta. Clara Comeo;nersB 'ssociation v. +aston.143 a"% Metro 4ro erties, $nc. v. Magallanes Village 'ssociation, $nc.,.153 t$e Court re og"i-e% H'GCBs HRevise% Rules of ,ro e%ure i" t$e Heari"g of Ho.e 24"erBs Disputes,I perti"e"t portio"s of 4$i $ are repro%u e% /elo4G R=L5 '' Disputes #ria/le ,ro ee%i"gs /y H'GCJNature of

Se tio" 1. 16 es o( *is utes R #$e H'GC or a"y perso", offi er, /o%y, /oar% or o..ittee %uly %esig"ate% or reate% /y it s$all $ave Duris%i tio" to $ear a"% %e i%e ases i"volvi"g t$e follo4i"gG CCCC 1/3 Co"troversies arisi"g out of i"tra: orporate relatio"s /et4ee" a"% a.o"g .e./ers of t$e asso iatio", #etAeen "ny or "ll o8 t9e2 "n t9e "sso1;"t;on o8 A9;19 t9ey "re 2e2#ers, a"% /et4ee" su $ asso iatio" a"% t$e stateJge"eral pu/li or ot$er e"tity i" so far as it o" er"s its rig$t to eCist as a orporate e"tity. .103 15.p$asis supplie%.3 CCCC

Later o", t$e a/ove:.e"tio"e% po4ers a"% respo"si/ilities, 4$i $ $a% /ee" veste% i" t$e H'GC 4it$ respe t to $o.eo4"ersB asso iatio"s, 4ere tra"sferre% to t$e HL=R& pursua"t to Repu/li A t No. 0(63,.173 e"title% HHo.e Guara"ty Corporatio" A t of 2))).I

'" t$e prese"t ase, t$ere is "o ;uestio" t$at respo"%e"ts are .e./ers of +L,A' as t$ey $ave eve" a%.itte% it..183 #$erefore, as orre tly rule% /y t$e trial ourt, t$e ase i"volves a o"troversy /et4ee" t$e $o.eo4"ersB asso iatio" a"% so.e of its .e./ers. #$us, t$e eC lusive a"% origi"al Duris%i tio" lies 4it$ t$e HL=R&. '"%ee%, i" Sta. Clara Comeo;nersB 'ssociation v. +aston, 4e $el%G . . . t$e H+%C e@er1;ses l;2;te Dur;s ;1t;on over 9o2eoAnersC ;sputes. 59e l"A 1on8;nes ;ts "ut9or;ty to 1ontrovers;es t9"t "r;se 8ro2 "ny o8 t9e 8olloA;n: ;ntr"$1orpor"te rel"t;onsG 113 /et4ee" a"% a.o"g .e./ers of t$e asso iatio"F 123 #etAeen "ny "n Lor "ll o8 t9e2 "n t9e "sso1;"t;on o8 A9;19 t9ey "re 2e2#ersF a"% 133 /et4ee" t$e asso iatio" a"% t$e statei"sofar as t$e o"troversy o" er"s its rig$t to eCist as a orporate e"tity..1(3 15.p$asis supplie%.3

%efi"ite state% rig$ts, status a"% ot$er relatio"s, o..o"ly eCpresse% i" 4ritte" i"stru.e"t, t$e ase is "ot o"e for %e laratory Du%g.e"t..253

Co"trary to t$e o/servatio" of t$e Court of Appeals, Duris%i tio" a""ot /e .a%e to %epe"% o" t$e eC lusive $ara teri-atio" of t$e ase /y o"e of t$e parties. .203 <$ile respo"%e"ts are ;uestio"i"g t$e vali%ity or legality of t$e +L,A'Bs arti les of i" orporatio" a"% its /y:la4s, t$ey %i% "ot, $o4ever, raise a"y legal grou"% to support its "ullifi atio". #$e legality of t$e /y:la4s i" its e"tirety 4as "ever a" issue i" t$e i"sta"t o"troversy /ut .erely t$e provisio" pro$i/iti"g .ulti: %4elli"g 4$i $ respo"%e"ts assert t$ey %i% "ot violate. .273 So to spea7, t$ere is "o Dusti ia/le o"troversy $ere t$at 4oul% 4arra"t %e laratory relief, or eve" a" a""ul.e"t of o"tra ts. <e reiterate t$at i" Duris%i tio"al issues, 4$at %eter.i"es t$e "ature of a" a tio" for t$e purpose of as ertai"i"g 4$et$er a ourt $as Duris%i tio" over a ase are t$e allegatio"s i" t$e o.plai"t a"% t$e "ature of t$e relief soug$t..283 +oreover, u"%er t$e %o tri"e of pri.ary a%.i"istrative Duris%i tio", ourts a""ot or 4ill "ot %eter.i"e a o"troversy 4$ere t$e issues for resolutio" %e.a"% t$e eCer ise of sou"% a%.i"istrative %is retio" re;uiri"g t$e spe ial 7"o4le%ge, eCperie" e, a"% servi es of t$e a%.i"istrative tri/u"al to %eter.i"e te $"i al a"% i"tri ate .atters of fa t..2(3 '" t$e i"sta"t ase, t$e HL=R& $as t$e eCpertise to resolve t$e /asi te $"i al issue of 4$et$er t$e $ouse /uilt /y t$e respo"%e"ts violate% t$e Dee% of Restri tio", spe ifi ally t$e pro$i/itio" agai"st .ulti:%4elli"g. As o/serve% i" C.1. 1orres !nter rises, $nc. v. CibionadaG.3)3 #$e argu.e"t t$at o"ly ourts of Dusti e a" a%Du%i ate lai.s resolu/le u"%er t$e provisio"s of t$e Civil Co%e is out of step 4it$ t$e fast: $a"gi"g ti.es. #$ere are $u"%re%s of a%.i"istrative /o%ies "o4 perfor.i"g t$is fu" tio" /y virtue of a vali% aut$ori-atio" fro. t$e legislature. #$is ;uasi:Du%i ial fu" tio", as it is alle%, is eCer ise% /y t$e. as a" i" i%e"t of t$e pri" ipal po4er e"truste% to t$e. of regulati"g ertai" a tivities falli"g u"%er t$eir parti ular eCpertise. '" t$e Soli% Ho.es ase for eCa.ple t$e Court affir.e% t$e 1o2peten1e o8 t9e Hous;n: "n L"n Use &e:ul"tory !o"r to "A"r "2":es "lt9ou:9 t9;s ;s "n essent;"lly Du ;1;"l poAer e@er1;s"#le or ;n"r;ly only #y t9e 1ourts o8 Dust;1e. #$is %eparture fro. t$e tra%itio"al allo atio" of gover".e"tal po4ers is Dustifie% /y eCpe%ie" y, or t$e "ee% of t$e gover".e"t to respo"% s4iftly a"% o.pete"tly to t$e pressi"g pro/le.s of t$e .o%er" 4orl%..313

#$e eCte"t to 4$i $ t$e HL=R& $as /ee" veste% 4it$ ;uasi:Du%i ial aut$ority .ust also /e %eter.i"e% /y referri"g to Se tio" 3 of ,.D. No. !5(,.2)3 4$i $ provi%esG S5C. 3. National Cousing 'uthorit6. R #$e Natio"al Housi"g Aut$ority s$all $ave eC lusive Duris%i tio" to re:ul"te t9e re"l est"te tr" e "n #us;ness i" a or%a" e 4it$ t$e provisio"s of t$is De ree. 15.p$asis supplie%.3

#$e provisio"s of ,.D. No. !5( 4ere i"te"%e% to e" o.pass all ;uestio"s regar%i"g su/%ivisio"s a"% o"%o.i"iu.s. #$e i"te"tio" 4as ai.e% at provi%i"g for a" appropriate gover".e"t age" y, t$e HL=R&, to 4$i $ all parties aggrieve% i" t$e i.ple.e"tatio" of provisio"s a"% t$e e"for e.e"t of o"tra tual rig$ts 4it$ respe t to sai% ategory of real estate .ay ta7e re ourse. #$e /usi"ess of %evelopi"g su/%ivisio"s a"% orporatio"s /ei"g i./ue% 4it$ pu/li i"terest a"% 4elfare, a"y ;uestio" arisi"g fro. t$e eCer ise of t$at prerogative s$oul% /e /roug$t to t$e HL=R& 4$i $ $as t$e te $"i al 7"o4:$o4 o" t$e .atter..213 '" t$e eCer ise of its po4ers, t$e HL=R& .ust o..o"ly i"terpret a"% apply o"tra ts a"% %eter.i"e t$e rig$ts of private parties u"%er su $ o"tra ts. #$is a" illary po4er is "o lo"ger a u"i;uely Du%i ial fu" tio", eCer isa/le o"ly /y t$e regular ourts..223 't is appare"t t$at alt$oug$ t$e o.plai"t 4as %e"o.i"ate% as o"e for %e laratory reliefJa""ul.e"t of o"tra ts, t$e allegatio"s t$erei" reveal ot$er4ise. 't s$oul% /e stresse% t$at respo"%e"ts "eit$er as7e% for t$e i"terpretatio" of t$e ;uestio"e% /y:la4s "or %i% t$ey allege t$at t$e sa.e is %ou/tful or a./iguous a"% re;uire Du%i ial o"stru tio". '" fa t, 4$at respo"%e"ts really see7 to a o.plis$ is to $ave a parti ular provisio" of t$e +L,A'Bs /y:la4s "ullifie% a"% t$ereafter a/solve t$e. fro. a"y violatio"s of t$e sa.e. .233 '" >a;asa#i 4ort Service Cor oration v. 'mores ,.243 t$e rule 4as state%G . . . 4$ere a %e laratory Du%g.e"t as to a %ispute% fa t 4oul% /e %eter.i"ative of issues rat$er t$a" a o"stru tio" of

<e also "ote t$at t$e parties faile% to a/i%e /y t$e ar/itratio" agree.e"t i" t$e +L,A' /y:la4s. Arti le O'' of t$e +L,A' /y:la4s e"tere% i"to /y t$e parties provi%eG +o%e of Dispute Resolutio" +o%e of Dispute Resolutio". S$oul% a"y .e./er of t$e Asso iatio" $ave a"y grieva" e, %ispute or lai. agai"st t$e Asso iatio" or a"y of t$e offi ers a"% gover"ors t$ereof i" o""e tio" 4it$ t$eir fu" tio" a"%Jor positio" i" t$e Asso iatio", t$e parties s$all e"%eavor to settle t$e sa.e a.i a/ly. '" t$e eve"t t$at efforts at a.i a/le settle.e"t fail, su $ %ispute, %iffere" e or %isagree.e"t s$all /e /roug$t /y t$e .e./er to a" ar/itratio" pa"el o.pose% of t$ree 133 ar/itrators for fi"al settle.e"t, to t$e eC lusio" of all ot$er fora. Su $ ar/itratio" .ay /e i"itiate% /y givi"g "oti e to t$e ot$er party, su $ "oti e %esig"ati"g o"e 113 i"%epe"%e"t ar/itrator. <it$i" t$irty 13)3 fro. t$e re eipt of sai% "oti e, t$e ot$er party s$all %esig"ate a se o"% i"%epe"%e"t ar/itrator /y 4ritte" "oti e to t$e first party. &ot$ ar/itrators s$all 4it$i" fiftee" 1153 %ays t$ereafter sele t a t$ir% i"%epe"%e"t ar/itrator, 4$o s$all /e t$e $air.a" of t$e Ar/itratio" #ri/u"al. '" t$e eve"t t$at t$e t4o 123 ar/itrators respe tively "o.i"ate% /y t$e parties fail to sele t t$e t$ir% i"%epe"%e"t ar/itrator 4it$i" t$e fiftee": %ay perio%, t$e t$ir% ar/itrator s$all /e Doi"tly sele te% /y t$e parties. '" t$e eve"t t$at t$e ot$er party %oes "ot "o.i"ate a" ar/itrator, t$e Ar/itratio" #ri/u"al s$all /e o.pose% of o"e 113 ar/itrator "o.i"ate% /y t$e party i"itiati"g t$e pro ee%i"gs. #$e Ar/itratio" #ri/u"al s$all re"%er its %e isio" 4it$i" forty: five 1*53 %ays fro. t$e sele tio" of t$e t$ir% ar/itrator, 4$i $ %e isio" s$all /e vali% a"% /i"%i"g /et4ee" t$e parties u"less repu%iate% 4it$i" five 153 %ays fro. re eipt t$ereof o" grou"%s t$at t$e sa.e 4as pro ure% t$roug$ frau% or viole" e, or t$at t$ere are pate"t or gross errors i" fa ts .a%e /asis of t$e %e isio". #$e a4ar% of t$e #ri/u"al s$all /e e"for e% /y a ourt of o.pete"t Duris%i tio". Ee"ue of a tio" overe% /y t$is Arti le s$all /e i" t$e ourts of Dusti e of Ce/u City o"ly.

agree.e"t /i"%s t$e parties t$ereto, as 4ell as t$eir assig"s a"% $eirs..323 Respo"%e"ts, /ei"g .e./ers of +L,A', are /ou"% /y its /y:la4s, a"% are eCpe te% to a/i%e /y it i" goo% fait$..333 '" t$e i"sta"t ase, 4e o/serve% t$at 4$ile /ot$ parties eC $a"ge% orrespo"%e" e pertai"i"g to t$e allege% violatio" of t$e Dee% of Restri tio", t$ey, $o4ever, .a%e "o ear"est effort to resolve t$eir %iffere" es i" a or%a" e 4it$ t$e ar/itratio" lause provi%e% for i" t$eir /y:la4s. +ere eC $a"ge of orrespo"%e" e 4ill "ot suffi e .u $ less satisfy t$e re;uire.e"t of ar/itratio". Ar/itratio" /ei"g t$e .o%e of settle.e"t /et4ee" t$e parties eCpressly provi%e% for i" t$eir /y:la4s, t$e sa.e s$oul% /e respe te%. ="less a" ar/itratio" agree.e"t is su $ as a/solutely to lose t$e %oors of t$e ourts agai"st t$e parties, t$e ourts s$oul% loo7 4it$ favor upo" su $ a.i a/le arra"ge.e"ts..343 Ar/itratio" is o"e of t$e alter"ative .et$o%s of %ispute resolutio" t$at is "o4 rig$tfully vau"te% as Ht$e 4ave of t$e futureI i" i"ter"atio"al relatio"s, a"% is re og"i-e% 4orl%4i%e. #o /rus$ asi%e a o"tra tual agree.e"t alli"g for ar/itratio" i" ase of %isagree.e"t /et4ee" t$e parties 4oul% t$erefore /e a step /a 74ar%..353 >H-&-4/&-, t$e i"sta"t petitio" is %&A'5-D. #$e De isio" %ate% August 31, 2))5 a"% Resolutio" %ate% 9e/ruary 13, 2))6 of t$e Court of Appeals i" CA:G.R. S, No. 01)6! are S-5 AS+D-. #$e 2r%er %ate% 8uly 31, 2))3 of t$e Regio"al #rial Court of Ce/u City, &ra" $ (, is $ere/y &-+'S5A5-D. S/ /&D-&-D.

Repu/li SU*&-M+a"ila #H'RD D'E'S'2N %.&. 'o. 18)705

of

t$e

,$ilippi"es C/U&5

4e#ru"ry 27, 2))( D-,-L/*M-'5

4/&5 !/'+4AC+/ C/&*/&A5+/', ,etitio"er, vs. MA'U-L '. D/M+'%/, Respo"%e"t. D5C'S'2N CH+C/$'A?A&+/, J.9

="%er t$e sai% provisio" of t$e /y:la4s, a"y %ispute or lai. agai"st t$e Asso iatio" or a"y of its offi ers a"% gover"ors s$all first /e settle% a.i a/ly. 'f a.i a/le settle.e"t fails, su $ %ispute s$all /e /roug$t /y t$e .e./er to a" ar/itratio" pa"el for fi"al settle.e"t. #$e ar/itral a4ar% s$all /e vali% a"% /i"%i"g /et4ee" t$e parties u"less repu%iate% o" grou"%s t$at t$e sa.e 4as pro ure% t$roug$ frau% or viole" e, or t$at t$ere are pate"t or gross errors i" t$e tri/u"alBs fi"%i"gs of fa ts upo" 4$i $ t$e %e isio" 4as /ase%. #$e ter.s of Arti le O'' of t$e +L,A' /y:la4s learly eCpress t$e i"te"tio" of t$e parties to /ri"g first to t$e ar/itratio" pro ess all %isputes /et4ee" t$e. /efore a party a" file t$e appropriate a tio". #$e agree.e"t to su/.it all %isputes to ar/itratio" is a o"tra t. As su $, t$e ar/itratio"

&efore t$is Court is a ,etitio" for Revie4 o" Certiorari u"%er Rule *5 of t$e Revise% Rules of Court, file% /y petitio"er 9ort &o"ifa io Develop.e"t Corporatio", see7i"g to reverse a"% set asi%e t$e De isio" %ate% 1! 8uly 2))( 1 a"% t$e Resolutio" %ate% 1) De e./er 2))(2 of t$e Court of Appeals i" CA:G.R. S, No. !((31. #$e appellate ourt, i" its assaile% De isio", affir.e% t$e 2r%er3 of t$e Regio"al #rial Court 1R#C3 of ,asay City, &ra" $ 1)!, i" Civil Case No. )6:2))):C9+, %e"yi"g t$e +otio" to Dis.iss of petitio"erF a"% i" its assaile% Resolutio", refuse% to re o"si%er its %e isio". ,etitio"er, a %o.esti orporatio" %uly orga"i-e% u"%er ,$ilippi"e la4s, is e"gage% i" t$e real estate %evelop.e"t

/usi"ess. Respo"%e"t is t$e assig"ee of L a"% + +aC o Spe ialist 5"gi"eeri"g Co"stru tio" 1L++ Co"stru tio"3 of its re eiva/les fro. petitio"er. 2" 5 8uly 2))), petitio"er e"tere% i"to a #ra%e Co"tra t 4it$ L++ Co"stru tio" for partial stru tural a"% ar $ite tural 4or7s o" o"e of its proDe ts, t$e &o"ifa io Ri%ge Co"%o.i"iu.. A or%i"g to t$e sai% Co"tra t, petitio"er $a% t$e rig$t to 4it$$ol% t$e rete"tio" .o"ey e;uivale"t to 5N of t$e o"tra t pri e for a perio% of o"e year after t$e o.pletio" of t$e proDe t. Rete"tio" .o"ey is a portio" of t$e o"tra t pri e, set asi%e /y t$e proDe t o4"er, fro. all approve% /illi"gs a"% retai"e% for a ertai" perio% to guara"tee t$e perfor.a" e /y t$e o"tra tor of all orre tive 4or7s %uri"g t$e %efe t:lia/ility perio%.* Due to t$e %efe t a"% %elay i" t$e 4or7 of L++ Co"stru tio" o" t$e o"%o.i"iu. proDe t, petitio"er u"ilaterally ter.i"ate% t$e #ra%e Co"tra t5 a"% $ire% a"ot$er o"tra tor to fi"is$ t$e rest of t$e 4or7 left u"%o"e /y L++ Co"stru tio". Despite t$e pre:ter.i"atio" of t$e #ra%e Co"tra t, petitio"er 4as lia/le to pay L++ Co"stru tio" a fra tio" of t$e o"tra t pri e i" proportio" to t$e 4or7s alrea%y perfor.e% /y t$e latter.6 2" 3) 8uly 2))*, petitio"er re eive% t$e first Noti e of Gar"is$.e"t agai"st t$e re eiva/les of L++ Co"stru tio" issue% /y t$e Co"stru tio" '"%ustry Ar/itratio" Co..issio" 1C'AC3 i" o""e tio" 4it$ C'AC Case No. 11:2))2 file% /y Asia:Co" &uil%ers agai"st L++ Co"stru tio", 4$erei" L++ Co"stru tio" 4as a%Du%ge% lia/le to Asia:Co" &uil%ers for t$e a.ou"t of ,5,!!),!2(.((. 2" 3) April 2))5, petitio"er re eive% a letter %ate% 10 April 2))5 fro. respo"%e"t i";uiri"g o" t$e rete"tio" .o"ey suppose%ly %ue to L++ Co"stru tio" a"% i"for.i"g petitio"er t$at a portio" of t$e a.ou"t re eiva/le /y L++ Co"stru tio" t$erefro. 4as alrea%y assig"e% to $i. as evi%e" e% /y t$e Dee% of Assig".e"t eCe ute% /y L++ Co"stru tio" i" respo"%e"tBs favor o" 20 9e/ruary 2))5. L++ Co"stru tio" assig"e% its re eiva/les fro. petitio"er to respo"%e"t to settle t$e allege% u"pai% o/ligatio" of L++ Co"stru tio" to respo"%e"t a.ou"ti"g to,0)*,)60.21. #$roug$ its letter %ate% 11 2 to/er 2))5, a%%resse% to respo"%e"t, petitio"er a 7"o4le%ge% t$at L++ Co"stru tio" %i% $ave re eiva/les still 4it$ petitio"er, o"sisti"g of t$e rete"tio" .o"eyF /ut petitio"er also a%vise% respo"%e"t t$at t$e rete"tio" .o"ey 4as "ot yet %ue a"% %e.a"%a/le a"% .ay /e as ertai"e% o"ly after t$e o.pletio" of t$e orre tive 4or7s u"%erta7e" /y t$e "e4 o"tra tor o" t$e o"%o.i"iu. proDe t. ,etitio"er also "otifie% respo"%e"t t$at part of t$e re eiva/les 4as also /ei"g gar"is$e% /y t$e ot$er re%itors of L++ Co"stru tio". ="satisfie% 4it$ t$e reply of petitio"er, respo"%e"t se"t a"ot$er letter %ate% 1* 2 to/er 2))5 asserti"g $is o4"ers$ip over a portio" of t$e rete"tio" .o"ey assig"e% to $i. a"% .ai"tai"i"g t$at t$e a.ou"t t$ereof pertai"i"g to $i. a" "o lo"ger /e gar"is$e% to satisfy t$e o/ligatio"s of L++ Co"stru tio" to ot$er perso"s si" e it alrea%y ease% to /e t$e property of L++ Co"stru tio" /y virtue of t$e Dee% of Assig".e"t. Atta $e% to respo"%e"tBs letter 4as t$e e"%orse.e"t of L++ Co"stru tio" %ate% 1( 8a"uary 2))5 approvi"g respo"%e"tBs lai. upo" petitio"er i" t$e a.ou"t of ,0)*,)60.21 $argea/le agai"st t$e rete"tio" .o"ey t$at .ay /e re eive% /y L++ Co"stru tio" fro. t$e petitio"er.

&efore respo"%e"tBs lai. oul% /e fully a%%resse%, petitio"er, o" 6 8u"e 2))5, re eive% t$e se o"% Noti e of Gar"is$.e"t agai"st t$e re eiva/les of L++ Co"stru tio", t$is ti.e, issue% /y t$e Natio"al La/or Relatio"s Co..issio" 1NLRC3 to satisfy t$e lia/ility of L++ Co"stru tio" to Ni olas Co"sig"a i" NLRC Case No. )):)(:)5*03:2))3. 2" 13 8uly 2))5, petitio"er re eive% a" 2r%er of Delivery of +o"ey issue% /y t$e 2ffi e of t$e Cler7 of Court a"% 5C:2ffi io S$eriff e"for i"g t$e first Noti e of Gar"is$.e"t a"% %ire ti"g petitio"er to %eliver to Asia:Co" &uil%ers, t$roug$ t$e S$eriff, t$e a.ou"t of ,5,!!),22(.(( /elo"gi"g to L++ Co"stru tio". '" o.plia" e 4it$ t$e sai% 2r%er, petitio"er 4as a/le to %eliver to Asia:Co" &uil%ers o" 22 8uly 2))5 a"% o" 11 August 2))5 partial pay.e"ts a.ou"ti"g to ,1,1(),6)1.01, overe% /y t$e appropriate A 7"o4le%ge.e"t Re eipts. A t$ir% Noti e of Gar"is$.e"t agai"st t$e re eiva/les of L++ Co"stru tio", alrea%y a o.pa"ie% /y a" 2r%er of Delivery of +o"ey, /ot$ issue% /y t$e R#C of +a7ati, &ra" $ 133, 4as serve% upo" petitio"er o" 26 8a"uary 2))6. #$e 2r%er e"Doi"e% petitio"er to %eliver t$e a.ou"t of ,550,**0.2( to t$e S$eriff to a"s4er for t$e favora/le Du%g.e"t o/tai"e% /y Co" rete +asters, '" . 1Co" rete +asters3 agai"st L++ Co"stru tio" i" Civil Case No. )5:16*. ,etitio"er, i" a letter %ate% 31 8a"uary 2))6, ategori ally %e"ie% respo"%e"tBs lai. o" t$e rete"tio" .o"ey, reaso"i"g t$at after t$e o.pletio" of t$e re tifi atio" 4or7s o" t$e o"%o.i"iu. proDe t a"% satisfa tio" of t$e various gar"is$.e"t or%ers, t$ere 4as "o .ore left of t$e rete"tio" .o"ey of L++ Co"stru tio". 't 4oul% appear, $o4ever, t$at petitio"er fully satisfie% t$e first Noti e of Gar"is$.e"t i" t$e a.ou"t of,5,11),033.** o"ly o" 31 8a"uary 2))6,( t$e very t$e sa.e %ate t$at it eCpressly %e"ie% respo"%e"tBs lai.. Also, petitio"er o.plie% 4it$ t$e Noti e of Gar"is$.e"t a"% its a o.pa"yi"g 2r%er of Delivery of +o"ey i" t$e a.ou"t of ,550,**0.2( o" 0 9e/ruary 2))6, a 4ee7 after its %e"ial of respo"%e"tBs lai..0 #$e foregoi"g eve"ts pro.pte% respo"%e"t to file a Co.plai"t for olle tio" of su. of .o"ey, agai"st /ot$ L++ Co"stru tio" a"% petitio"er, %o 7ete% as Civil Case No. )6:)2)):C9+ /efore t$e R#C of ,asay City, &ra" $ 1)!. '"stea% of fili"g a" A"s4er, petitio"er file% a +otio" to Dis.iss Civil Case No. )6:)2)):C9+ o" t$e grou"% of la 7 of Duris%i tio" over t$e su/De t .atter. ,etitio"er argue% t$at si" e respo"%e"t .erely steppe% i"to t$e s$oes of L++ Co"stru tio" as its assig"or, it 4as t$e C'AC a"% "ot t$e regular ourts t$at $a% Duris%i tio" over t$e %ispute as provi%e% i" t$e #ra%e Co"tra t. 2" 6 8u"e 2))6, t$e R#C issue% a" 2r%er %e"yi"g t$e +otio" to Dis.iss of petitio"er, ruli"g t$at a full:/lo4" trial 4as "e essary to %eter.i"e 4$i $ o"e /et4ee" L++ Co"stru tio" a"% petitio"er s$oul% /e .a%e a ou"ta/le for t$e su. %ue to respo"%e"t. ,etitio"er soug$t re.e%y fro. t$e Court of Appeals /y fili"g a ,etitio" for Certiorari, %o 7ete% as CA:G.R. S, No. !((31, $alle"gi"g t$e R#C 2r%er %ate% 6 8u"e 2))6 for $avi"g /ee" re"%ere% /y t$e trial ourt 4it$ grave a/use of %is retio".

'" its De isio" pro.ulgate% o" 1! 8uly 2))(, t$e Court of Appeals %is.isse% t$e ,etitio" for Certiorari a"% affir.e% t$e 6 8u"e 2))6 2r%er of t$e R#C %e"yi"g t$e +otio" to Dis.iss of petitio"er. #$e appellate ourt reDe te% t$e argu.e"t of petitio"er t$at respo"%e"t, as t$e assig"ee of L++ Co"stru tio", 4as /ou"% /y t$e stipulatio" i" t$e #ra%e Co"tra t t$at %isputes arisi"g t$erefro. s$oul% /e /roug$t /efore t$e C'AC. #$e Court of Appeals %e lare% t$at respo"%e"t 4as "ot privy, /ut a t$ir% party, to t$e #ra%e Co"tra tF a"% .o"ey lai.s of t$ir% perso"s agai"st t$e o"tra tor, %eveloper, or o4"er of t$e proDe t are lo%ge% i" t$e regular ourts a"% "ot i" t$e C'AC. Si.ilarly ill:fate% 4as petitio"erBs +otio" for Re o"si%eratio", 4$i $ 4as %e"ie% /y t$e Court of Appeals i" its Resolutio" %ate% 1) De e./er 2))(. ,etitio"er "o4 o.es to t$is Court via t$is i"sta"t ,etitio" for Revie4 o" Certiorari prayi"g for t$e reversal of t$e 1! 8uly 2))( De isio" of t$e Court of Appeals a"% 6 8u"e 2))6 2r%er of t$e R#C a"%, ulti.ately, for t$e %is.issal of Civil Case No. )6:)2)):C9+ pe"%i"g /efore t$e R#C. 9or t$e resolutio" of t$is Court is t$e sole issue ofG <H5#H5R 2R N2# #H5 R#C HAS 8=R'SD'C#'2N 2E5R C'E'L CAS5 N2. )6:)2)):C9+. #$e Duris%i tio" of C'AC is %efi"e% u"%er 5Ce utive 2r%er No. 1))0 as follo4sG S5C#'2N *. 8uris%i tio".W#$e C'AC s$all $ave origi"al a"% eC lusive Duris%i tio" over %isputes arisi"g fro., or o""e te% 4it$, o"tra ts e"tere% i"to /y parties i"volve% i" o"stru tio" i" t$e ,$ilippi"es, 4$et$er t$e %isputes arises /efore or after t$e o.pletio" of t$e o"tra t, or after t$e a/a"%o".e"t or /rea $ t$ereof. #$ese %isputes .ay i"volve gover".e"t or private o"tra ts. 9or t$e &oar% to a ;uire Duris%i tio", t$e parties to a %ispute .ust agree to su/.it t$e sa.e to volu"tary ar/itratio". #$e Duris%i tio" of t$e C'AC .ay i" lu%e /ut is "ot li.ite% to violatio" of spe ifi atio"s for .aterials a"% 4or7.a"s$ipF violatio" of t$e ter.s of agree.e"tF i"terpretatio" a"%Jor appli atio" of o"tra tual provisio"sF a.ou"t of %a.ages a"% pe"altiesF o..e" e.e"t ti.e a"% %elaysF .ai"te"a" e a"% %efe tsF pay.e"t %efault of e.ployer or o"tra tor a"% $a"ges i" o"tra t ost. 5C lu%e% fro. t$e overage of t$is la4 are %isputes arisi"g fro. e.ployer:e.ployee relatio"s$ips 4$i $ s$all o"ti"ue to /e overe% /y t$e La/or Co%e of t$e ,$ilippi"es. '" assaili"g t$e 1! 8uly 2))( De isio" of t$e Court of Appeals, petitio"er i"vo7e% Arti le 1311 of t$e Civil Co%e o" relativity of o"tra ts. A or%i"g to sai% provisio", all o"tra ts s$all o"ly ta7e effe t /et4ee" t$e o"tra ti"g parties, t$eir assig"s a"% $eirs eC ept 4$e" t$e rig$ts a"% o/ligatio"s arisi"g fro. t$e o"tra t are "ot tra"s.issi/le. ,etitio"er argues t$at t$e appellate ourt, i" re og"i-i"g t$e eCiste" e of t$e Dee% of Assig".e"t eCe ute% /y L++ Co"stru tio" :: i" favor of respo"%e"t :: of its re eiva/les u"%er t$e #ra%e Co"tra t, s$oul% $ave o"si%ere% t$e o" o.ita"t result t$ereof, i.e., t$at respo"%e"t /e a.e a party to t$e #ra%e Co"tra t a"%, t$erefore, /ou"% /y t$e ar/itral lause t$erei".

Respo"%e"t ou"ters t$at t$e C'AC is %evoi% of Duris%i tio" over .o"ey lai.s of t$ir% perso"s agai"st t$e o"tra tor, %eveloper or o4"er of t$e proDe t. #$e Duris%i tio" of t$e C'AC is li.ite% to settli"g %isputes arisi"g a.o"g o"tra tors, %evelopers a"%Jor o4"ers of o"stru tio" proDe ts. 't %oes "ot i" lu%e t$e %eter.i"atio" of 4$o a.o"g t$e .a"y re%itors of t$e o"tra tor s$oul% e"Doy prefere" e i" pay.e"t of its re eiva/les fro. t$e %eveloperJo4"er. 't is a" ele.e"tary rule of pro e%ural la4 t$at Duris%i tio" of t$e ourt over t$e su/De t .atter is %eter.i"e% /y t$e allegatio"s of t$e o.plai"t, irrespe tive of 4$et$er or "ot t$e plai"tiff is e"title% to re over upo" all or so.e of t$e lai.s asserte% t$erei". As a "e essary o"se;ue" e, t$e Duris%i tio" of t$e ourt a""ot /e .a%e to %epe"% upo" t$e %efe"ses set up i" t$e a"s4er or upo" t$e .otio" to %is.issF for ot$er4ise, t$e ;uestio" of Duris%i tio" 4oul% al.ost e"tirely %epe"% upo" t$e %efe"%a"t. <$at %eter.i"es t$e Duris%i tio" of t$e ourt is t$e "ature of t$e a tio" plea%e% as appeari"g fro. t$e allegatio"s i" t$e o.plai"t. #$e aver.e"ts t$erei" a"% t$e $ara ter of t$e relief soug$t are t$e o"es to /e o"sulte%.! A or%i"gly, t$e issues i" t$e i"sta"t ase a" o"ly /e properly resolve% /y a" eCa.i"atio" a"% evaluatio" of respo"%e"tBs allegatio"s i" $is Co.plai"t i" Civil Case No. )6:)2)):C9+. #$e allegatio"s i" respo"%e"tBs Co.plai"t are lear a"% si.pleG #$at L++ Co"stru tio" $a% a" outsta"%i"g o/ligatio" to respo"%e"t i" t$e a.ou"t of ,0)*,)60.21F t$at i" pay.e"t of t$e sai% a.ou"t, L++ Co"stru tio" assig"e% to respo"%e"t its re eiva/les fro. petitio"er, 4$i $ assig".e"t 4as properly .a%e 7"o4" to petitio"er as early as 10 April 2))5F t$at %espite %ue "oti e of su $ assig".e"t, petitio"er still refuse% to %eliver t$e a.ou"t assig"e% to respo"%e"t, givi"g prefere" e, i"stea%, to t$e gar"is$i"g re%itors of L++ Co"stru tio"F t$at at t$e ti.e petitio"er 4as "otifie% of t$e assig".e"t, o"ly o"e "oti e of gar"is$.e"t, t$e first Noti e of Gar"is$.e"t, 4as re eive% /y itF t$at $a% petitio"er properly re og"i-e% respo"%e"tBs rig$t as a" assig"ee of a portio" of t$e re eiva/les of L++ Co"stru tio", t$ere oul% $ave /ee" suffi ie"t resi%ual a.ou"ts to satisfy respo"%e"tBs lai.F a"% t$at, u" ertai" over 4$i $ o"e /et4ee" L++ Co"stru tio" a"% petitio"er $e .ay resort to for pay.e"t, respo"%e"t "a.e% t$e. /ot$ as %efe"%a"ts i" Civil Case No. )6:)2)):C9+. A s rupulous eCa.i"atio" of t$e afore.e"tio"e% allegatio"s i" respo"%e"tBs Co.plai"t u"veils t$e fa t t$at $is ause of a tio" spri"gs "ot fro. a violatio" of t$e provisio"s of t$e #ra%e Co"tra t, /ut fro. t$e "o":pay.e"t of t$e .o"etary o/ligatio" of L++ Co"stru tio" to $i.. A ause of a tio" is a partyBs a t or o.issio" t$at violates t$e rig$ts of t$e ot$er.1) #$e rig$t of t$e respo"%e"t t$at 4as violate%, pro.pti"g $i. to i"itiate Civil Case No. )6:)2)):C9+, 4as $is rig$t to re eive pay.e"t for t$e fi"a" ial o/ligatio" i" urre% /y L++ Co"stru tio" a"% to /e preferre% over t$e ot$er re%itors of L++ Co"stru tio", a rig$t 4$i $ pre:eCiste% a"%, t$us, 4as separate a"% %isti" t fro. t$e rig$t to pay.e"t of L++ Co"stru tio" u"%er t$e #ra%e Co"tra t. ,etitio"erBs u" easi"g relia" e o" Arti le 131111 of t$e Civil Co%e o" relativity of o"tra ts is u"availi"g. 't is true t$at respo"%e"t, as t$e assig"ee of t$e re eiva/les of L++ Co"stru tio" fro. petitio"er u"%er t$e #ra%e Co"tra t, .erely steppe% i"to t$e s$oes of L++ Co"stru tio". Ho4ever, it /ears to e.p$asi-e t$at t$e rig$t of L++ Co"stru tio" to su $ re eiva/les fro. petitio"er u"%er t$e #ra%e Co"tra t is "ot eve" i" %ispute i" Civil Case No. )6:)2)):C9+. <$at respo"%e"t puts i" issue /efore t$e R#C is t$e purporte%ly ar/itrary eCer ise of %is retio" /y t$e petitio"er i" givi"g

prefere" e to t$e lai.s of t$e ot$er re%itors of L++ Co"stru tio" over t$e re eiva/les of t$e latter. 't is e" ourage% t$at %isputes arisi"g fro. o"stru tio" o"tra ts /e referre% first to t$e C'AC for t$eir ar/itratio" a"% settle.e"t, si" e su $ ases 4oul% ofte" re;uire eCpertise a"% te $"i al 7"o4le%ge i" o"stru tio". He" e, so.e of t$e .atters over 4$i $ t$e C'AC .ay eCer ise Duris%i tio", upo" agree.e"t of t$e parties to t$e o"stru tio" o"tra t, Li" lu%e /ut @areA "ot li.ite% to violatio" of spe ifi atio"s for .aterials a"% 4or7.a"s$ipF violatio" of t$e ter.s of agree.e"tF i"terpretatio" a"%Jor appli atio" of o"tra tual provisio"sF a.ou"t of %a.ages a"% pe"altiesF o..e" e.e"t ti.e a"% %elaysF .ai"te"a" e a"% %efe tsF pay.e"t %efault of e.ployer or o"tra tor a"% $a"ges i" o"tra t ost.L 12 Alt$oug$ t$e Duris%i tio" of t$e C'AC is "ot li.ite% to t$e afore:state% e"u.eratio", ot$er issues 4$i $ it oul% ta7e og"i-a" e of .ust /e of t$e sa.e or a losely relate% 7i"% or spe ies applyi"g t$e pri" iple of eDus%e. ge"eris i" statutory o"stru tio". Respo"%e"tBs lai. is "ot eve" o"stru tio":relate% at all. Co"stru tio" is %efi"e% as referri"g to all o":site 4or7s o" /uil%i"gs or alteri"g stru tures, fro. la"% leara" e t$roug$ o.pletio" i" lu%i"g eC avatio", ere tio" a"% asse./ly a"% i"stallatio" of o.po"e"ts a"% e;uip.e"t.13 ,etitio"erBs i"siste" e o" t$e appli atio" of t$e ar/itratio" lause of t$e #ra%e Co"tra t to respo"%e"t is learly a" $ore% o" a" erro"eous pre.ise t$at respo"%e"t is see7i"g to e"for e a rig$t u"%er t$e sa.e. Agai", t$e rig$t to t$e re eiva/les of L++ Co"stru tio" fro. petitio"er u"%er t$e #ra%e Co"tra t is "ot /ei"g i.pug"e% $erei". '" fa t, petitio"er rea%ily o" e%e% t$at L++ Co"stru tio" still $a% re eiva/les %ue fro. petitio"er, a"% respo"%e"t %i% "ot eve" $ave to refer to a si"gle provisio" i" t$e #ra%e Co"tra t to assert $is lai.. <$at respo"%e"t is %e.a"%i"g is t$at a portio" of su $ re eiva/les a.ou"ti"g to ,0)*,)60.21 s$oul% $ave /ee" pai% to $i. first /efore t$e ot$er re%itors of L++ Co"stru tio", 4$i $, learly, %oes "ot re;uire t$e C'ACBs eCpertise a"% te $"i al 7"o4le%ge of o"stru tio". #$e a%Du%i atio" of Civil Case No. )6:)2)):C9+ "e essarily i"volves t$e appli atio" of perti"e"t statutes a"% Durispru%e" e to .atters su $ as o/ligatio"s, o"tra ts of assig".e"t, a"%, if appropriate, eve" prefere" e of re%its, a tas7 .ore suite% for a trial ourt to arry out after a full:/lo4" trial, t$a" a" ar/itratio" /o%y spe ifi ally %evote% to o"stru tio" o"tra ts. #$is Court re og"i-es t$e lau%a/le o/De tive of volu"tary ar/itratio" to provi%e a spee%y a"% i"eCpe"sive .et$o% of settli"g %isputes /y allo4i"g t$e parties to avoi% t$e for.alities, %elay, eCpe"se a"% aggravatio" 4$i $ o..o"ly a o.pa"y or%i"ary litigatio", espe ially litigatio" 4$i $ goes t$roug$ t$e e"tire $ierar $y of ourts. 't a""ot, $o4ever, altoget$er surre"%er to ar/itratio" t$ose ases, su $ as t$e o"e at /ar, t$e eCta"t fa ts of 4$i $ plai"ly all for t$e eCer ise of Duris%i tio" /y t$e regular ourts for t$eir resolutio". <H5R592R5, pre.ises o"si%ere%, t$e i"sta"t ,etitio" is D5N'5D. #$e De isio" %ate% 1! 8uly 2))( a"% t$e Resolutio" %ate% 1) De e./er 2))( of t$e Court of Appeals i" CA:G.R. S, No. !((31 are $ere/y A99'R+5D i" toto. Costs agai"st t$e petitio"er. S2 2RD5R5D.

M+'+5A Asso iate A ti"g C$airperso" <5 C2NC=RG S-C/'D D+,+S+/'

,.

CH+C/$'A?A&+/ 8usti e

92R# &2N'9AC'2 D5E5L2,+5N# C2R,2RA#'2N, ,etitio"er,

G.R. No. 1(6()! ,rese"tG CAR,'2

+2RAL5S,Y JJ. : versus :

'cting Chair erson, #'NGA, E5LASC2, 8R., L52NARD2 D5 CAS#R2,YYa" &R'2N, JJ. ,ro.ulgate%G + a y 0 , 2 ) ) !

H2N. 5D<'N D. S2R2NG2N a"% EAL5N#'N 92NG, Respo"%e"ts.

C::::::::::::::::::::::::::::::::::::::::::::: :::C D-C+S+/' #'NGA, J.G

,etitio"er 9ort &o"ifa io Develop.e"t Corporatio" 1petitio"er3, a orporatio" registere% u"%er ,$ilippi"e la4s, is e"gage% i" t$e /usi"ess of real estate %evelop.e"t. Respo"%e"t, Eale"ti" 9o"g 1respo"%e"t3 %oi"g /usi"ess u"%er t$e "a.e E9 '"%ustrial Sales is t$e assig"ee of L K + +aC o Spe ialist Co"stru tio"Bs 1+aC o3 rete"tio" .o"ey fro. t$e &o"ifa io Ri%ge Co"%o.i"iu. ,$ase 1 1&RC, 13. '" t$is ,etitio" for Revie4,@1A petitio"er assails t$e De isio":;< of t$e Court of Appeals %ate% Nove./er 3), 2))6 4$i $ rule% t$at it is t$e regio"al trial ourt a"% "ot t$e Co"stru tio" '"%ustry Ar/itratio" Co..issio" 1C'AC3 t$at $as Duris%i tio" over respo"%e"tBs lai.. #$e fa ts are as follo4sG

2" 8uly 2))), ,etitio"er e"tere% i"to a tra%e o"tra t 4it$ +aC o 4$erei" +aC o 4oul% u"%erta7e t$e stru tural a"% partial ar $ite tural pa 7age of t$e &RC, 1. Later petitio"er a use% +aC o of %elay i" o.pletio" of its 4or7 a"% o" August 2*, 2))* se"t t$e latter a "oti e of ter.i"atio". ,etitio"er also i"stru te% +aC o to perfor. re.e%ial .easures

prior to t$e o"tra t eCpiratio" pursua"t to Clause 23.1 of t$e o"tra t. Su/se;ue"tly, +aC o 4as sue% /y its re%itors i" lu%i"g respo"%e"t for %e/ts u"relate% to &RC, 1. '" or%er to settle t$e olle tio" suit, o" 9e/ruary 20, 2))5, +aC o assig"e% its re eiva/les represe"ti"g its rete"tio" .o"ey fro. t$e &RC, 1 i" t$e a.ou"t of o"e .illio" five $u"%re% seve"ty seve" t$ousa"% o"e $u"%re% fiftee" pesos a"% "i"ety e"tavos 1,1,5((,115.!)3. 2" April 10, 2))5, respo"%e"t 4rote to petitio"er, i"for.i"g t$e latter of +aC oBs assig".e"t i" $is favor a"% as7i"g t$e latter to o"fir. t$e vali%ity of +aC oBs re eiva/les.@3A ,etitio"er replie%, i"for.i"g t$e respo"%e"t t$at +aC o %i% $ave re eiva/les, $o4ever t$ese 4ere "ot %ue a"% %e.a"%a/le u"til 8a"uary of "eCt year, .oreover t$e a.ou"t $a% to /e as ertai"e% a"% li;ui%ate%. A su/se;ue"t eC $a"ge of orrespo"%e" e faile% to settle t$e .atter. Spe ifi ally, o" 8a"uary 31, 2))6,@*A petitio"er t$roug$ ou"sel, 4rote to respo"%e"t i"for.i"g t$e latter t$at t$ere is "o .ore a.ou"t %ue to +aC o fro. petitio"er after t$e re tifi atio" of %efe t as 4ell as t$e satisfa tio" of "oti es of gar"is$.e"t %ate% 8uly 3), 2))*@5A a"%8a"uary 26, 2))6. @6A 2" 9e/ruary 13, 2))6, respo"%e"t file% a o.plai"t for a su. of .o"ey agai"st petitio"er a"% +aC o i" t$e Regio"al #rial Court of +a"%aluyo"g City.@(ARespo"%e"t lai.e% t$at t$ere 4ere suffi ie"t resi%ual a.ou"ts to pay t$e re eiva/les of +aC o at t$e ti.e $e serve% "oti e of t$e assig".e"t. #$e su/se;ue"t "oti es of gar"is$.e"t s$oul% "ot a%versely affe t t$e re eiva/les assig"e% to $i.. #$e rete"tio" .o"ey 4as over %ue i" 8a"uary 2))6 a"% %espite %e.a"%, petitio"er %i% "ot pay t$e a.ou"t su/De t of t$e %ee% of assig".e"t. ,etitio"er $o4ever, pai% out t$e rete"tio" .o"ey to ot$er gar"is$i"g re%itors of +aC o to t$e %etri.e"t of respo"%e"t.

i"%ustry as it is for e"for e.e"t of +aC oBs %ee% of assig".e"t over its rete"tio" .o"ey. ,etitio"er .ove% for re o"si%eratio" o" De e./er 22, 2))6 /ut t$is 4as %e"ie% /y t$e appellate ourt i" a resolutio" %ate% 9e/ruary 2!, 2))6. He" e, t$e prese"t petitio" for revie4 o" ertiorari. ,etitio"ers sets fort$ four 1*3 errors o..itte% /y t$e appellate ourt "a.elyG 113 t$e origi"al a"% eC lusive Duris%i tio" over respo"%e"tBs o.plai"t is veste% 4it$ t$e C'ACF 123 Respo"%e"tBs o.plai"t faile% to state a ause of a tio"F 133 t$e lai. of respo"%e"t $as alrea%y /ee" eCti"guis$e%F a"% 1*3 t$e o"%itio"s pre e%e"t for t$e o.plai"t $ave "ot /ee" o.plie% 4it$. #$e petitio" la 7s .erit. '" refere" e to t$e first error, Se tio" * of 5Ce utive 2r%er No. 1))0, Series of 1!05 15.2. No. 1))03 sets fort$ t$e Duris%i tio" of C'AC. #o 4itG S5C#'2N *. Jurisdiction.W#$e C'AC s$all $ave origi"al a"% eC lusive Duris%i tio" over %isputes arisi"g fro., or o""e te% 4it$, o"tra ts e"tere% i"to /y parties i"volve% i" o"stru tio" i" t$e ,$ilippi"es, 4$et$er t$e %ispute arises /efore or after t$e o.pletio" of t$e o"tra t, or after t$e a/a"%o".e"t or /rea $ t$ereof. #$ese %isputes .ay i"volve gover".e"t or private o"tra ts. 9or t$e &oar% to a ;uire Duris%i tio", t$e parties to a %ispute .ust agree to su/.it t$e sa.e to volu"tary ar/itratio". #$e Duris%i tio" of t$e C'AC .ay i" lu%e /ut is "ot li.ite% to violatio" of spe ifi atio"s for .aterials a"% 4or7.a"s$ipF violatio" of t$e ter.s of agree.e"tF i"terpretatio" a"%Jor appli atio" of o"tra tual provisio"sF .ai"te"a" e a"% %efe tsF pay.e"t %efault of e.ployer or o"tra tor a"% $a"ges i" o"tra t ost. 5C lu%e% fro. t$e overage of t$is la4 are %isputes arisi"g fro. e.ployer: e.ployee relatio"s$ips 4$i $ s$all o"ti"ue to /e overe% /y t$e La/or Co%e of t$e ,$ilippi"es.

2" +ar $ 16, 2))6, i"stea% of fili"g a" A"s4er, petitio"er file% a +otio" to Dis.iss o" t$e grou"% of la 7 of Duris%i tio" over t$e su/De t .atter.@0A ,etitio"er argue% t$at si" e respo"%e"t .erely steppe% i"to t$e s$oes of +aC o as its assig"ee, it 4as t$e C'AC a"% "ot t$e regular ourts t$at $a% Duris%i tio" over t$e %ispute as provi%e% i" t$e #ra%e Co"tra t. 8u%ge 5%4i" Soro"go" issue% a" 2r%er %ate% 8u"e 2(, 2))6 %e"yi"g t$e .otio" to %is.iss.@!A ,etitio"er .ove% for re o"si%eratio" /ut t$is 4as %e"ie% i" a" 2r%er %ate% August 15, 2))6. 2" 2 to/er 16, 2))6, petitio"er file% a petitio" for ertiorari a"% pro$i/itio" 4it$ t$e Court of Appeals. 2" Nove./er 3), 2))6, t$e Court of Appeals %e"ie% t$e petitio" for la 7 of .erit. #$e %ispositive portio" rea%sG <H5R592R5, pre.ises o"si%ere%, t$e prese"t petitio" is $ere/y D5N'5D D=5 C2=RS5 a"% a or%i"gly D'S+'SS5D for la 7 of .erit. #$e assaile% 2r%ers %ate% 8u"e 2(, 2))6 a"% August 15, 2))6 of respo"%e"t 8u%ge i" Civil Case No. +C:)6:2!20 are $ere/y A99'R+5D. <it$ osts agai"st t$e petitio"er. S2 2RD5R5D.@1)A

8uris%i tio" is %efi"e% as t$e aut$ority to try, $ear a"% %e i%e a ase.@11A +oreover, t$at Duris%i tio" of t$e ourt over t$e su/De t .atter is %eter.i"e% /y t$e allegatio"s of t$e o.plai"t 4it$out regar% to 4$et$er or "ot t$e plai"tiff is e"title% to re over upo" all or so.e of t$e lai.s asserte% t$erei" is a 4ell e"tre" $e% pri" iple. @12A '" t$is regar%, t$e Duris%i tio" of t$e ourt %oes "ot %epe"% upo" t$e %efe"ses plea%e% i" t$e a"s4er or i" t$e .otio" to %is.iss, lest t$e ;uestio" of Duris%i tio" 4oul% al.ost e"tirely %epe"% upo" t$e %efe"%a"t.@13A A" eCa.i"atio" of t$e allegatio"s i" 9o"gBs o.plai"t reveals t$at $is ause of a tio" spri"gs "ot fro. a violatio" of t$e provisio"s of t$e #ra%e Co"tra t, /ut fro. t$e assig".e"t of +aC oBs rete"tio" .o"ey to $i. a"% failure of petitio"er to tur" over t$e rete"tio" .o"ey. #$e allegatio"s i" 9o"gBs Co.plai"t are lear a"% si.pleG 113 #$at +aC o $a% a"

#$e appellate ourt $el% t$at it 4as t$e trial ourt a"% "ot t$e Co"stru tio" '"%ustry Ar/itratio" Co..issio" 1C'AC3 t$at $a% Duris%i tio" over t$e lai.s of Eale"ti" 9o"g. #$e lai. oul% "ot /e o"strue% as relate% to t$e o"stru tio"

outsta"%i"g o/ligatio" to respo"%e"tF 123 +aC o assig"e% to 9o"g its rete"tio" fro. petitio"er i" pay.e"t of t$e sai% o/ligatio",F 133 ,etitio"er as early as April 10, 2))5 4as "otifie% of t$e assig".e"tF 1*3 Despite %ue "oti e of su $ assig".e"t, petitio"er still refuse% to %eliver t$e a.ou"t assig"e% to respo"%e"t, givi"g prefere" e, i"stea%, to t$e 2 ot$er re%itors of +aC oF 153 At t$e ti.e petitio"er 4as "otifie% of t$e assig".e"t, t$ere 4ere o"ly o"e ot$er "oti e of gar"is$.e"t a"% t$ere 4ere suffi ie"t resi%ual a.ou"ts to satisfy 9o"gBs lai.F a"% 163 u" ertai" over 4$i $ o"e /et4ee" +aC o a"% petitio"er $e .ay resort to for pay.e"t, respo"%e"t "a.e% t$e. /ot$ as %efe"%a"ts i" Civil Case No. )6:)2)):C9+. <$ile it is true t$at respo"%e"t, as t$e assig"ee of t$e re eiva/les of +aC o fro. petitio"er u"%er t$e #ra%e Co"tra t, .erely steppe% i"to t$e s$oes of +aC o. Ho4ever, t$e rig$t of +aC o to t$e rete"tio" .o"ey fro. petitio"er u"%er t$e tra%e o"tra t is "ot eve" i" %ispute i" Civil Case No. )6:)2)):C9+. Respo"%e"t raises as a" issue /efore t$e R#C is t$e petitio"erBs allege% u"Dustifie% prefere" e to t$e lai.s of t$e ot$er re%itors of +aC o over t$e rete"tio" .o"ey. Alt$oug$ t$e Duris%i tio" of t$e C'AC is "ot li.ite% to t$e i"sta" es e"u.erate% i" Se tio" * of 5. 2. No. 1))0, 9o"gBs lai. is "ot eve" o"stru tio":relate% at all. #$is ourt $as $el% t$atG HConstruction is %efi"e% as referri"g to all o":site 4or7s o" /uil%i"gs or alteri"g stru tures, fro. la"% leara" e t$roug$ o.pletio" i" lu%i"g eC avatio", ere tio" a"% asse./ly a"% i"stallatio" of o.po"e"ts a"% e;uip.e"t.I@1*A #$us, petitio"erBs i"siste" e o" t$e appli atio" of t$e ar/itratio" lause of t$e #ra%e Co"tra t to 9o"g is learly a" $ore% o" a" erro"eous pre.ise t$at t$e latter is see7i"g to e"for e a rig$t u"%er t$e tra%e o"tra t. #$is pre.ise a""ot sta"% si" e t$e rig$t to t$e rete"tio" .o"ey of +aC o u"%er t$e #ra%e Co"tra t is "ot /ei"g i.pug"e% $erei". 't /ears .e"tio"i"g t$at petitio"er rea%ily o" e%e% t$e eCiste" e of t$e rete"tio" .o"ey. 9o"gBs %e.a"% t$at t$e portio" of rete"tio" .o"ey s$oul% $ave /ee" pai% to $i. /efore t$e ot$er re%itors of +aC o learly, %oes "ot re;uire t$e C'ACBs eCpertise a"% te $"i al 7"o4le%ge of o"stru tio". #$e a%Du%i atio" of Civil Case "e essarily i"volves t$e appli atio" of perti"e"t statutes a"% Durispru%e" e to .atters of assig".e"t a"% prefere" e of re%its. As t$is Court $el% i" :ort Boni(acio *evelo ment Cor oration v. *omingo, @15A t$is tas# .ore suite% for a trial ourt to arry out after a full: /lo4" trial, t$a" a" ar/itratio" /o%y spe ifi ally %evote% to o"stru tio" o"tra ts. #$e se o"% error raise% also $as "ot .erit. 9ailure to state a ause of a tio" refers to t$e i"suffi ie" y of allegatio" i" t$e plea%i"g. '" resolvi"g a .otio" to %is.iss /ase% o" t$e failure to state a ause of a tio" o"ly t$e fa ts allege% i" t$e o.plai"t .ust /e o"si%ere%. #$e test is 4$et$er t$e ourt a" re"%er a vali% Du%g.e"t o" t$e o.plai"t /ase% o" t$e fa ts allege% a"% t$e prayer as7e% for. '" t$is ase t$e o.plai"t alleges t$atG C C C at t$e ti.e $e serve% "oti e of assig".e"t to %efe"%a"t 9&DC t$ere 4as o"ly o"e "oti e of gar"is$.e"t t$at t$e latter $a% re eive% a"% t$ere 4ere still suffi ie"t resi%ual a.ou"ts to pay t$at assig"e% /y %efe"%a"t +aC o to t$e plai"tiff. Su/se;ue"t "oti es of gar"is$.e"t re eive% /y %efe"%a"t 9&DC oul% "ot a%versely affe t t$e a.ou"ts alrea%y assig"e% to t$e plai"tiff

as t$ey are alrea%y $is property, "o lo"ger t$at of %efe"%a"t +aC o.@16A 9ro. t$is state.e"t alo"e, it is lear t$at a ause of a tio" is prese"t i" t$e o.plai"t file% a =uo. Respo"%e"t $as spe ifi ally allege% t$at t$e u"%ue prefere" e give" to ot$er re%itors of +aC o over t$e rete"tio" .o"ey /y petitio"er 4as to t$e preDu%i e of $is rig$ts.

,etitio"er "eCt asserts t$at t$e appellate ourt erre% i" "ot ruli"g t$at t$e lai. of respo"%e"t 4as eCti"guis$e% /y pay.e"t to t$e ot$er gar"is$i"g re%itors of +aC o. #$e assig".e"t of t$is as a" error is .islea%i"g as t$is is pre isely o"e of t$e issues t$at "ee% to /e resolve% i" a full /lo4" trial a"% o"e of t$e reaso"s t$at respo"%e"t i.plea%e% +aC o a"% petitio"er i" t$e alter"ative. #$e fi"al error raise% /y petitio"er t$at t$e ot$er Du%g.e"t re%itors@1(A as 4ell as t$e trial ourt t$at issue% t$e 4rit of gar"is$.e"t a"% C'AC s$oul% $ave /ee" i.plea%e% as %efe"%a"ts i" t$e ase as t$ey 4ere i"%ispe"sa/le parties is li7e4ise 4ea7. Se tio" (, Rule 3 of t$e Revise% Rules of Court provi%es for t$e o.pulsory Doi"%er of i"%ispe"sa/le parties 4it$out 4$o. "o fi"al %eter.i"atio" a" /e $a% of a" a tio". A" i"%ispe"sa/le party is %efi"e% as o"e 4$o $as su $ a" i"terest i" t$e o"troversy or su/De t .atter t$at a fi"al a%Du%i atio" a""ot /e .a%e, i" $is a/se" e, 4it$out i"Duri"g or affe ti"g t$at i"terest.@10A #$e ot$er Du%g.e"t re%itors are e"title% to t$e fruits of t$e fi"al Du%g.e"ts re"%ere% i" t$eir favor. #$eir rig$ts are %isti" t fro. t$e rig$ts a ;uire% /y t$e respo"%e"t over t$e portio" of t$e rete"tio" .o"ey assig"e% to t$e latter /y +aC o. #$eir i"terests are i" "o 4ay affe te% /y a"y Du%g.e"t to /e re"%ere% i" t$is ase.

>H-&-4/&-, pre.ises o"si%ere%, t$e i"sta"t ,etitio" is D-'+-D. #$e De isio" %ate% Nove./er 3), 2))6 a"% t$e Resolutio" %ate% 9e/ruary 1!, 2))( of t$e Court of Appeals i" CA:G.R. S, No. !6532 are $ere/y A44+&M-D. S/ /&D-&-D. 5H+&D D+,+S+/' HU5AMA$&S-A 6/+'5 /*-&A5+/'S, +'C., ,etitio"er,

#$e S7y4ay ,roDe t 4as ope"e% o" 15 De e./er 1!!! for pu/li use, a"% toll fees 4ere a or%i"gly olle te%. After i"for.i"g respo"%e"t t$at t$e o"stru tio" of t$e S7y4ay ,roDe t 4as alrea%y o.plete, petitio"er reiterate% its %e.a"% t$at respo"%e"t pay t$e outsta"%i"g /ala" e o" t$e i"teri. /illi"gs, as 4ell as t$e H5arly Co.pletio" &o"usI agree% upo" i" t$e 5,CC. Respo"%e"t refuse% to o.ply 4it$ petitio"erBs %e.a"%s.@6A 2" 2* +ay 2))*, petitio"er, t$roug$ ou"sel, se"t a letter to respo"%e"t %e.a"%i"g pay.e"t of t$e follo4i"gG 113 t$e outsta"%i"g /ala" e o" t$e i"teri. /illi"gsF 123 t$e a.ou"t of petitio"erBs fi"al /illi"gF 133 early o.pletio" /o"usF a"% 1*3 i"terest $arges o" t$e %elaye% pay.e"t. #$ereafter, petitio"er a"% respo"%e"t, t$roug$ t$eir respe tive offi ers a"% represe"tatives, $el% several .eeti"gs to %is uss t$e possi/ility of a.i a/ly settli"g t$e %ispute. Despite several .eeti"gs a"% o"ti"uous "egotiatio"s, lasti"g for a perio% of al.ost o"e year, petitio"er a"% respo"%e"t faile% to rea $ a" a.i a/le settle.e"t.@(A ,etitio"er fi"ally file% 4it$ t$e Co"stru tio" '"%ustry Ar/itratio" Co..issio" 1C'AC3 a Re;uest for Ar/itratio", see7i"g to e"for e its .o"ey lai.s agai"st respo"%e"t. @0A ,etitio"erBs Re;uest 4as %o 7ete% as C'AC Case No. 1(: 2))5. '" its A"s4er ad cautelam 4it$ +otio" to Dis.iss, respo"%e"t averre% t$at t$e C'AC $a% "o Duris%i tio" over C'AC Case No. 1(:2))5. Respo"%e"t argue% t$at t$e fili"g /y petitio"er of sai% ase 4as pre.ature /e ause a o"%itio" pre e%e"t, i.e., prior referral /y t$e parties of t$eir %ispute to t$e Dispute A%Du%i atio" &oar% 1DA&3, re;uire% /y Clause 2).* of t$e 5,CC, $a% "ot /ee" satisfie% or o.plie% 4it$. Respo"%e"t as7e% t$e C'AC to %is.iss petitio"erBs Re;uest for Ar/itratio" i" C'AC Case No. 1(:2))5 a"% to %ire t t$e parties to o.ply first 4it$ Clause 2).* of t$e 5,CC.@!A After su/.issio" /y t$e parties of t$e "e essary plea%i"gs o" t$e .atter of Duris%i tio", t$e C'AC issue% o" 3) August 2))5, a" 2r%er i" C'AC Case No. 1(:2))5, favori"g petitio"er. #$e C'AC rule% t$at it $a% Duris%i tio" over C'AC Case No. 1(:2))5, a"% t$at t$e %eter.i"atio" of 4$et$er petitio"er $a% o.plie% 4it$ Clause 2).* of t$e 5,CC 4as a fa tual issue t$at .ay /e resolve% %uri"g t$e trial. 't t$e" or%ere% respo"%e"t to file a" A"s4er to petitio"erBs Re;uest for Ar/itratio".@1)A After respo"%e"t a"% petitio"er file% a" A"s4er a"% a Reply, respe tively, i" C'AC Case No. 1(:2))5, t$e C'AC o"%u te% a preli.i"ary o"fere" e, 4$erei" petitio"er a"% respo"%e"t sig"e% t$e H#er.s of Refere" eI outli"i"g t$e issues to /e resolve%, vizG 113 's prior resort to t$e DA& a pre o"%itio" to su/.issio" of t$e %ispute to ar/itratio" o"si%eri"g t$at t$e DA& 4as "ot o"stitute%SF 123 's @$erei" petitio"erA e"title% to t$e /ala" e of t$e pri" ipal a.ou"t of t$e o"tra tS 'f so, $o4 .u $SF 133 's @petitio"erA e"title% to t$e early o.pe"satio" /o"us "et of EA# %ue t$ereo"S 'f so, $o4 .u $SF 1*3 <as t$ere %elay i" t$e o.pletio" of t$e proDe tS 'f so, is @$erei"

,rese"tG 6NAR5S:SAN#'AG2, J., C$airperso", A=S#R'A:+AR#'N5?, CH'C2:NA?AR'2, NACH=RA, a"% ,5RAL#A, JJ. ,ro.ulgate%G

5 versus 5

C+5&A M-5&/ MA'+LA 5/LL>A<S C/&*/&A5+/', Respo"%e"t.

April 2*, 2))! C::::::::::::::::::::::::::::::::::::::::::::: : : : : :C 1E0I5I6N CH'C2:NA?AR'2, J.G &efore =s is a ,etitio"@1A for Revie4 o" Certiorari u"%er Rule *5 of t$e Rules of Court see7i"g to set asi%e t$e De isio"@2A %ate% 23 +ay 2))( a"% @3A Resolutio" %ate% 16 Nove./er 2))( of t$e Court of Appeals i" CA:G.R. S, No. !25)*. #$e fa ts, ulle% fro. t$e re or%s, are as follo4sG ,etitio"er H=#A+A:RS5A 8oi"t 2peratio"s '" orporatio" a"% respo"%e"t Citra +etro +a"ila #oll4ays Corporatio" are orporatio"s orga"i-e% a"% eCisti"g u"%er ,$ilippi"e la4s. ,etitio"er is a su/: o"tra tor e"gage% i" e"gi"eeri"g a"% o"stru tio" 4or7s. Respo"%e"t, o" t$e ot$er $a"%, is t$e ge"eral o"tra tor a"% operator of t$e Sout$ +etro +a"ila S7y4ay ,roDe t 1S7y4ay ,roDe t3. 2" 25 Septe./er 1!!6, petitio"er a"% respo"%e"t e"tere% i"to a" 5"gi"eeri"g ,ro ure.e"t Co"stru tio" Co"tra t 15,CC3 4$ere/y petitio"er 4oul% u"%erta7e t$e o"stru tio" of Stage 1 of t$e S7y4ay ,roDe t, 4$i $ stret $e% fro. t$e Du" tio" of &ue"%ia Ave"ue, +a7ati City, up to &i uta" '"ter $a"ge, #aguig City. As o"si%eratio" for petitio"erBs u"%erta7i"g, respo"%e"t o/lige% itself u"%er t$e 5,CC to pay t$e for.er a total a.ou"t of =SP36!,51),3)*.)).
@*A

Duri"g t$e o"stru tio" of t$e S7y4ay ,roDe t, petitio"er 4rote respo"%e"t o" several o asio"s re;uesti"g pay.e"t of t$e for.erBs i"teri. /illi"gs, pursua"t to t$e provisio"s of t$e 5,CC. Respo"%e"t o"ly partially pai% t$e sai% i"teri. /illi"gs, t$us, pro.pti"g petitio"er to %e.a"% t$at respo"%e"t pay t$e outsta"%i"g /ala" e t$ereo", /ut respo"%e"t still faile% to %o so.@5A

respo"%e"tA e"title% to its li;ui%ate% %a.agesSF

ou"ter lai. for

,etitio"er file% a +otio" for Re o"si%eratio" of t$e afore:.e"tio"e% De isio" /ut t$is 4as %e"ie% /y t$e Court of Appeals i" a Resolutio" %ate% 16 Nove./er 2))(. He" e, petitio"er file% t$e i"sta"t ,etitio" for Revie4 /efore us raisi"g t$e sole issue of 4$et$er C'AC $as Duris%i tio" over C'AC Case No. 1(:2))5. Se tio" * of 5Ce utive 2r%er No. 1))0 @10A %efi"es t$e Duris%i tio" of C'AC, t$usG S5C#'2N *. Jurisdiction. : #$e C'AC s$all $ave origi"al a"% eC lusive Duris%i tio" over %isputes arisi"g fro., or o""e te% 4it$, o"tra ts e"tere% i"to /y parties i"volve% i" o"stru tio" i" t$e ,$ilippi"es, 4$et$er t$e %isputes arises /efore or after t$e o.pletio" of t$e o"tra t, or after t$e a/a"%o".e"t or /rea $ t$ereof. #$ese %isputes .ay i"volve gover".e"t or private o"tra ts. 4or t9e !o"r to "1Bu;re Dur;s ;1t;on, t9e p"rt;es to " ;spute 2ust ":ree to su#2;t t9e s"2e to volunt"ry "r#;tr"t;on. #$e Duris%i tio" of t$e C'AC .ay i" lu%e /ut is "ot li.ite% to violatio" of spe ifi atio"s for .aterials a"% 4or7.a"s$ipF violatio" of t$e ter.s of agree.e"tF i"terpretatio" a"%Jor appli atio" of o"tra tual provisio"sF a.ou"t of %a.ages a"% pe"altiesF o..e" e.e"t ti.e a"% %elaysF .ai"te"a" e a"% %efe tsF pay.e"t %efault of e.ployer or o"tra tor a"% $a"ges i" o"tra t ost. 5C lu%e% fro. t$e overage of t$is la4 are %isputes arisi"g fro. e.ployer: e.ployee relatio"s$ips 4$i $ s$all o"ti"ue to /e overe% /y t$e La/or Co%e of t$e ,$ilippi"es. 15.p$asis ours.3 9urt$er, Se tio" 1, Arti le ''' of t$e C'AC Rules of ,ro e%ure Gover"i"g Co"stru tio" Ar/itratio"@1!A 1C'AC Rules3, provi%esG S5C#'2N 1. Submission to C$'C Jurisdiction. R An "r#;tr"t;on 1l"use ;n " 1onstru1t;on 1ontr"1t or " su#2;ss;on to "r#;tr"t;on o8 " 1onstru1t;on ;spute s9"ll #e ee2e "n ":ree2ent to su#2;t "n e@;st;n: or 8uture 1ontroversy to C+AC Dur;s ;1t;on, notA;t9st"n ;n: t9e re8eren1e to " ;88erent "r#;tr"t;on ;nst;tut;on or "r#;tr"l #o y ;n su19 1ontr"1t or su#2;ss;on. <$e" a o"tra t o"tai"s a lause for t$e su/.issio" of a future o"troversy to ar/itratio", it is "ot "e essary for t$e parties to e"ter i"to a su/.issio" agree.e"t /efore t$e lai.a"t .ay i"vo7e t$e Duris%i tio" of C'AC. A" ar/itratio" agree.e"t or a su/.issio" to ar/itratio" s$all /e i" 4riti"g, /ut it "ee% "ot /e sig"e% /y t$e parties, as lo"g as t$e i"te"t is lear t$at t$e parties agree to su/.it a prese"t or future

153 's @petitio"erA e"title% to pay.e"t of i"terest o" t$e a.ou"ts of its lai.s for u"pai% /illi"gs a"% early o.pletio" /o"usS 'f so, at 4$at rate a"% for 4$at perio%SF 163 <$i $ of t$e parties is e"title% to rei./urse.e"t of t$e ar/itratio" osts i" urre%S @11A Respo"%e"t, $o4ever, su/se;ue"tly file% a" =rge"t +otio" re;uesti"g t$at C'AC refrai" fro. pro ee%i"g 4it$ t$e trial proper of C'AC Case No. 1(:2))5 u"til it $a% resolve% t$e issue of 4$et$er prior resort /y t$e parties to DA& 4as a o"%itio" pre e%e"t to t$e su/.issio" of t$e %ispute to C'AC. @12A Respo"%e"tBs =rge"t +otio" 4as %e"ie% /y t$e C'AC i" its 2r%er %ate% 6 De e./er 2))5.@13A Respo"%e"t file% a +otio" for Re o"si%eratio" of t$e C'AC 2r%er %ate% 6 De e./er 2))5.@1*A #$e C'AC issue%, o" 12 De e./er 2))5, a" 2r%er %e"yi"g respo"%e"tBs +otio" for Re o"si%eratio".@15A 't $el% t$at prior resort /y t$e parties to DA& 4as "ot a o"%itio" pre e%e"t for it to assu.e Duris%i tio" over C'AC Case No. 1(:2))5. Aggrieve%, respo"%e"t assaile% t$e C'AC 2r%er %ate% 12 De e./er 2))5 /y fili"g a spe ial ivil a tio" for certiorari a"% pro$i/itio" 4it$ t$e Court of Appeals,@16A %o 7ete% as CA:G.R. S, No. !25)*. 2" 23 +ay 2))(, t$e Court of Appeals re"%ere% its De isio" i" CA:G.R. S, No. !25)*, a""ulli"g t$e 12 De e./er 2))5 2r%er of t$e C'AC, a"% e"Doi"i"g t$e sai% Co..issio" fro. pro ee%i"g 4it$ C'AC Case No. 1(:2))5 u"til t$e %ispute /et4ee" petitio"er a"% respo"%e"t $a% /ee" referre% to a"% %e i%e% /y t$e DA&, to /e o"stitute% /y t$e parties pursua"t to Clause 2).* of t$e 5,CC. #$e appellate ourt, t$us, fou"% t$at t$e C'AC eC ee%e% its Duris%i tio" i" ta7i"g og"i-a" e of petitio"erBs Re;uest for Ar/itratio" i" C'AC Case No. 1(:2))5 %espite t$e latterBs failure to i"itially refer its %ispute 4it$ respo"%e"t to t$e DA&, as %ire te% /y Clause 2).* of t$e 5,CC. #$e %ispositive portio" of t$e 23 +ay 2))( De isio" of t$e Court of Appeals rea%sG >H-&-4/&-, t$e i"sta"t petitio" is %&A'5-D a"% t$e or%er of t$e Ar/itratio" #ri/u"al of t$e Co"stru tio" '"%ustry Ar/itratio" Co..issio" %ate% De e./er 12, 2))5 is $ere/y A''UL-Da"% S-5 AS+D- a"%, i"stea%, @C'AC, .e./ers of t$e Ar/itral #ri/u"al,@1(A a"% $erei" petitio"erA, t$eir age"ts or a"y/o%y a ti"g i" t$eir /e$alf, are e"Doi"e% fro. furt$er pro ee%i"g 4it$ C'AC Case No. 1(:2))5, pro.ulgati"g a %e isio" t$erei", eCe uti"g t$e sa.e if o"e $as alrea%y /ee" pro.ulgate% or ot$er4ise e"for i"g sai% or%er of De e./er 12, 2))5 u"til t$e %ispute $as /ee" referre% to a"% %e i%e% /y t$e Dispute A%Du%i atio" &oar% to /e o"stitute% /y t$e parties i" a or%a" e 4it$ Su/:Clause 2).* of t$e 5"gi"eeri"g ,ro ure.e"t Co"stru tio" Co"tra t %ate% Septe./er 25, 1!!6.

o"troversy arisi"g fro. a o"tra t to ar/itratio".

o"stru tio" 1%3

a or%a" e Co"tra t, a"%

4it$

t$e

't .ay /e i" t$e for. of eC $a"ge of letters se"t /y post or /y telefaC, teleCes, telegra.s or a"y ot$er .o%es of o..u"i atio". 15.p$asis ours.3 &ase% o" t$e foregoi"g provisio"s, t$e C'AC s$all $ave Duris%i tio" over a %ispute i"volvi"g a o"stru tio" o"tra t if sai% o"tra t o"tai"s a" ar/itratio" lause 1"ot$4it$sta"%i"g a"y refere" e /y t$e sa.e o"tra t to a"ot$er ar/itratio" i"stitutio" or ar/itral /o%y3F or, eve" i" t$e a/se" e of su $ a lause i" t$e o"stru tio" o"tra t, t$e parties still agree to su/.it t$eir %ispute to ar/itratio". 't is u"%ispute% t$at i" t$e ase at /ar, t$e 5,CC o"tai"s a" ar/itratio" lause i" 4$i $ t$e petitio"er a"% respo"%e"t eCpli itly agree to su/.it to ar/itratio" a"y %ispute /et4ee" t$e. arisi"g fro. or o""e te% 4it$ t$e 5,CC, u"%er t$e follo4i"g ter.s a"% o"%itio"s@2)AG CLA'+S, D'S,=#5S a"% A&!+5&A5+/' CCCC 2).3 ="less t$e .e./er or .e./ers of t$e Dispute A%Du%i atio" &oar% $ave /ee" previously .utually agree% upo" /y t$e parties a"% "a.e% i" t$e Co"tra t, t$e parties s$all, 4it$i" 20 %ays of t$e 5ffe tive Date, Doi"tly e"sure t$e appoi"t.e"t of a Dispute A%Du%i atio" &oar%. Su $ Dispute A%Du%i atio" &oar% s$all o.prise suita/ly ;ualifie% perso"s as .e./ers, t$e "u./er of .e./ers /ei"g eit$er o"e or t$ree, as state% i" t$e Appe"%iC to #e"%er. 'f t$e Dispute A%Du%i atio" &oar% is to o.prise t$ree .e./ers, ea $ party s$all "o.i"ate o"e .e./er for t$e approval of t$e ot$er party, a"% t$e parties s$all .utually agree upo" a"% appoi"t t$e t$ir% .e./er 14$o s$all a t as $air.a"3. #$e ter.s of appoi"t.e"t of t$e Dispute A%Du%i atio" &oar% s$allG 1a3 i" orporate t$e .o%el ter.s pu/lis$e% /y t$e 9Z%Zratio" '"ter"atio"ale %es '"gZ"ieurs:Co"seils 19'D'C3, re;uire ea $ .e./er of t$e Dispute A%Du%i atio" &oar% to /e, a"% to re.ai" t$roug$out t$e appoi"t.e"t, i"%epe"%e"t of t$e parties, re;uire t$e Dispute A%Du%i atio" &oar% to a t i.partially a"% i"

i" lu%e u"%erta7i"gs /y t$e parties 1to ea $ ot$er a"% to t$e Dispute A%Du%i atio" &oar%3 t$at t$e .e./ers of t$e Dispute A%Du%i atio" &oar% s$all i" "o ir u.sta" es /e lia/le for /rea $ of %uty or of o"tra t arisi"g out of t$eir appoi"t.e"tF t$e parties s$all i"%e."ify t$e .e./ers agai"st su $ lai.s.

#$e ter.s of t$e re.u"eratio" of t$e Dispute A%Du%i atio" &oar%, i" lu%i"g t$e re.u"eratio" of ea $ .e./er a"% of a"y spe ialist fro. 4$o. t$e Dispute A%Du%i atio" &oar% .ay re;uire to see7 a%vi e, s$all /e .utually agree% upo" /y t$e 5.ployer, t$e Co"tra tor a"% ea $ .e./er of t$e Dispute A%Du%i atio" &oar% 4$e" agreei"g su $ ter.s of appoi"t.e"t. '" t$e eve"t of %isagree.e"t, t$e re.u"eratio" of ea $ .e./er s$all i" lu%e rei./urse.e"t for reaso"a/le eCpe"ses, a %aily fee i" a or%a" e 4it$ t$e %aily fee esta/lis$e% fro. ti.e to ti.e for ar/itrators u"%er t$e a%.i"istrative a"% fi"a" ial regulatio"s of t$e '"ter"atio"al Ce"tre for Settle.e"t of '"vest.e"t Disputes, a"% a retai"er fee per ale"%ar .o"t$ e;uivale"t to t$ree ti.es su $ %aily fee. #$e 5.ployer a"% t$e Co"tra tor s$all ea $ pay o"e:$alf of t$e Dispute A%Du%i atio" &oar%Bs re.u"eratio" i" a or%a" e 4it$ its ter.s of re.u"eratio". 'f, at a"y ti.e, eit$er party s$all fail to pay its %ue proportio" of su $ re.u"eratio", t$e ot$er party s$all /e e"title% to .a7e pay.e"t o" $is /e$alf a"% re over if fro. t$e party i" %efault. #$e Dispute A%Du%i atio" &oar%Bs appoi"t.e"t .ay /e ter.i"ate% o"ly /y .utual agree.e"t of t$e 5.ployer a"% t$e Co"tra tor. #$e Dispute A%Du%i atio" &oar%Bs appoi"t.e"t s$all eCpire 4$e" t$e %is $arge referre% to i" Su/:Clause 13.12 s$all $ave /e o.e effe tive, or at su $ ot$er ti.e as t$e parties .ay .utually agree. 't, at a"y ti.e, t$e parties so agree, t$ey .ay appoi"t a suita/ly ;ualifie% perso" to repla e 1or to /e availa/le to repla e3 a"y or all

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1 3

.e./ers of t$e Dispute A%Du%i atio" &oar%. #$e appoi"t.e"t 4ill o.e i"to effe t if a .e./er of t$e Dispute A%Du%i atio" &oar% %e li"es to a t or is u"a/le to a t as a result of %eat$, %isa/ility, resig"atio" or ter.i"atio" of appoi"t.e"t. 'f a .e./er so %e li"es or is u"a/le to a t, a"% "o su $ repla e.e"t is availa/le to a t, t$e .e./er s$all /e repla e% i" t$e sa.e .a""er as su $ .e./er 4as to $ave /ee" "o.i"ate%. 'f a"y of t$e follo4i"g apply, "a.elyG 1a3 o"%itio"s

t$e parties fail to agree upo" t$e appoi"t.e"t of t$e sole .e./er of a o"e: perso" Dispute A%Du%i atio" &oar% 4it$i" 20 %ays of t$e 5ffe tive Date, eit$er party fails to "o.i"ate a" a epta/le .e./er, for t$e Dispute A%Du%i atio" &oar% of t$ree .e./ers, 4it$i" 20 %ays of t$e 5ffe tive Date, t$e parties fail to agree upo" t$e appoi"t.e"t of t$e t$ir% .e./er 1to a t as $air.a"3 4it$i" 20 %ays of t$e 5ffe tive Date, or t$e parties fail to agree upo" t$e appoi"t.e"t of a repla e.e"t .e./er of t$e Dispute A%Du%i atio" &oar% 4it$i" 20 %ays of t$e %ate o" 4$i $ a .e./er of t$e Dispute A%Du%i atio" &oar% %e li"es to a t or is u"a/le to a t as a result of %eat$, %isa/ility, resig"atio" or ter.i"atio" of appoi"t.e"t,

Represe"tative, t$e %ispute s$all i"itially /e referre% i" 4riti"g to t$e Dispute A%Du%i atio" &oar% for its %e isio", 4it$ a opy to t$e ot$er party. Su $ refere" e s$all state t$at it is .a%e u"%er t$is Su/: Clause. #$e parties s$all pro.ptly .a7e availa/le to t$e Dispute A%Du%i atio" &oar% all su $ i"for.atio", a ess to t$e Site, a"% appropriate fa ilities, as t$e Dispute A%Du%i atio" &oar% .ay re;uire for t$e purposes of re"%eri"g its %e isio". No later t$a" t$e fifty: siCt$ %ay after t$e %ay o" 4$i $ it re eive% su $ refere" e, t$e Dispute A%Du%i atio" &oar%, a ti"g as a pa"el of eCpert1s3 a"% "ot as ar/itrator1s3, s$all give "oti e of its %e isio" to t$e parties. Su $ "oti e s$all i" lu%e reaso"s a"% s$all state t$at it is give" u"%er t$is Su/: Clause. ="less t$e Co"tra t $as alrea%y /ee" repu%iate% or ter.i"ate%, t$e Co"tra tor s$all, i" every ase, o"ti"ue to pro ee% 4it$ t$e <or7s 4it$ all %ue %ilige" e, a"% t$e Co"tra tor a"% t$e 5.ployer s$all give effe t fort$4it$ to every %e isio" of t$e Dispute A%Du%i atio" &oar%, u"less a"% u"til t$e sa.e s$all /e revise%, as $erei"after provi%e%, i" a" a.i a/le settle.e"t or a" ar/itral a4ar%. 'f eit$er party is %issatisfie% 4it$ t$e Dispute A%Du%i atio" &oar%Bs %e isio", t$e" eit$er party, o" or /efore t$e t4e"ty:eig$t$ %ay after t$e %ay o" 4$i $ it re eive% "oti e of su $ %e isio", .ay "otify t$e ot$er party of its %issatisfa tio". 'f t$e Dispute A%Du%i atio" &oar% fails to give "oti e of its %e isio" o" or /efore t$e fifty:siCt$ %ay after t$e %ay o" 4$i $ it re eive% t$e refere" e, t$e" eit$er party, o" or /efore t$e t4e"ty:eig$t$ %ay after t$e %ay o" 4$i $ t$e sai% perio% of fifty:siC %ays $as eCpire%, .ay "otify t$e ot$er party of its %issatisfa tio". '" eit$er eve"t, su $ "oti e of %issatisfa tio" s$all state t$at it is give" u"%er t$is Su/: Clause, su $ "oti e s$all set out t$e .atters i" %ispute a"% t$e reaso"1s3 for %issatisfa tio" a"%, su/De t to Su/:Clauses 2).( a"% 2).0, "o ar/itratio" i" respe t of su $ %ispute .ay /e o..e" e% u"less su $ "oti e is give". 'f t$e Dispute A%Du%i atio" &oar% $as give" "oti e of its %e isio" as to a .atter i" %ispute to t$e 5.ployer a"% t$e Co"tra tor a"% "o "oti e of %issatisfa tio" $as /ee" give" /y

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1%3

t$e" t$e perso" or a%.i"istratio" "a.e% i" t$e Appe"%iC to t$e #e"%er s$all, after %ue o"sultatio" 4it$ t$e parties, "o.i"ate su $ .e./er of t$e Dispute A%Du%i atio" &oar%, a"% su $ "o.i"atio" s$all /e fi"al a"% o" lusive. 2).* 'f a %ispute arises /et4ee" t$e 5.ployer a"% t$e Co"tra tor i" o""e tio" 4it$, or arisi"g out of, t$e Co"tra t or t$e eCe utio" of t$e <or7s, i" lu%i"g a"y %ispute as to a"y opi"io", i"stru tio", %eter.i"atio", ertifi atio" or valuatio" of t$e 5.ployerBs

eit$er party o" or /efore t$e t4e"ty: eig$t$ %ay after t$e %ay o" 4$i $ t$e parties re eive% t$e Dispute A%Du%i atio" &oar%Bs %e isio", t$e" t$e Dispute A%Du%i atio" &oar%Bs %e isio" s$all /e o.e fi"al a"% /i"%i"g upo" t$e 5.ployer a"% t$e Co"tra tor. 2).5 >9ere not;1e o8 ;ss"t;s8"1t;on 9"s #een :;ven un er Su#$ Cl"use 2).4, t9e p"rt;es s9"ll "tte2pt to settle su19 ;spute "2;1"#ly #e8ore t9e 1o22en1e2ent o8 "r#;tr"t;on. *rov; e t9"t unless t9e p"rt;es ":ree ot9erA;se, "r#;tr"t;on 2"y #e 1o22en1e on or "8ter t9e 8;8ty$s;@t9 "y "8ter t9e "y on A9;19 not;1e o8 ;ss"t;s8"1t;on A"s :;ven, even ;8 no "tte2pt "t "2;1"#le settle2ent 9"s #een 2" e. Any ;spute ;n respe1t o8 A9;197 H"I t9e e1;s;on, ;8 "ny, o8 t9e D;spute A Du ;1"t;on !o"r 9"s not #e1o2e 8;n"l "n #;n ;n: pursu"nt to Su#$Cl"use 2).4, "n "2;1"#le settle2ent 9"s not #een re"19e ,

2).7

>9ere ne;t9er p"rty 9"s :;ven not;1e o8 ;ss"t;s8"1t;on A;t9;n t9e per;o st"te ;n Su#$Cl"use 2).4 "n t9e D;spute A Du ;1"t;on !o"r Fs rel"te e1;s;on, ;8 "ny, 9"s #e1o2e 8;n"l "n #;n ;n:, e;t9er p"rty 2"y, ;8 t9e ot9er p"rty 8";ls to 1o2ply A;t9 su19 e1;s;on, "n A;t9out preDu ;1e to "ny ot9er r;:9ts ;t 2"y 9"ve, re8er t9e 8";lure ;tsel8 to "r#;tr"t;on un er Su#$Cl"use 2).0. 59e prov;s;ons o8 Su#$ Cl"uses 2).4 "n 2).5 s9"ll not "pply to "ny su19 re8eren1e. >9en t9e "ppo;nt2ent o8 t9e D;spute A Du ;1"t;on !o"r "n o8 "ny repl"1e2ent 9"s e@p;re , "ny su19 ;spute re8erre to ;n Su#$Cl"use 2).4 s9"ll #e 8;n"lly settle #y "r#;tr"t;on pursu"nt to Su#$Cl"use 2).0. 59e prov;s;ons o8 Su#$Cl"uses 2).4 "n 2).5 s9"ll not "pply to "ny su19 re8eren1e. 15.p$asis ours.3

2).8

2).0

H#I

s9"ll #e 8;n"lly e1; e #y ;ntern"t;on"l "r#;tr"t;on. 59e "r#;tr"t;on rules un er A9;19 t9e "r#;tr"t;on ;s 1on u1te , t9e ;nst;tut;on to no2;n"te t9e "r#;tr"torHsI or to " 2;n;ster t9e "r#;tr"t;on rules Hunless n"2e t9ere;nI, t9e nu2#er o8 "r#;tr"tors, "n t9e l"n:u":e "n pl"1e o8 su19 "r#;tr"t;on s9"ll #e "s set out ;n t9e Appen ;@ to 5en er. 59e "r#;tr"torHsI s9"ll 9"ve 8ull poAer to open up, rev;eA "n rev;se "ny e1;s;on o8 t9e D;spute A Du ;1"t;on !o"r . 'e;t9er p"rty s9"ll #e l;2;te , ;n t9e pro1ee ;n:s #e8ore su19 "r#;tr"torHsI, to t9e ev; en1e or "r:u2ents prev;ously put #e8ore t9e D;spute A Du ;1"t;on !o"r to o#t";n ;ts e1;s;on. Ar#;tr"t;on 2"y #e 1o22en1e pr;or to or "8ter 1o2plet;on o8 t9e >orEs. 59e o#l;:"t;ons o8 t9e p"rt;es "n t9e D;spute A Du ;1"t;on !o"r s9"ll not #e "ltere #y re"son o8 t9e "r#;tr"t;on #e;n: 1on u1te ur;n: t9e pro:ress o8 t9e >orEs.

Despite t$e prese" e of t$e afore:;uote% ar/itratio" lause i" t$e 5,CC, it is respo"%e"tBs positio", up$el% /y t$e Court of Appeals, t$at t$e C'AC still a""ot assu.e Duris%i tio" over C'AC Case No. 1(:2))5 1petitio"erBs Re;uest for Ar/itratio"3 /e ause petitio"er $as "ot yet referre% its %ispute 4it$ respo"%e"t to t$e DA&, as %ire te% /y Clause 2).* of t$e 5,CC. ,rior resort of t$e %ispute to DA& is a o"%itio" pre e%e"t a"% a" i"%ispe"sa/le re;uire.e"t for t$e C'AC to a ;uire Duris%i tio" over C'AC Case No. 1(:2))5.@21A 't is true t$at Clause 2).* of t$e 5,CC states t$at a %ispute /et4ee" petitio"er a"% respo"%e"t as regar%s t$e 5,CC s$all /e i"itially referre% to t$e DA& for %e isio", a"% o"ly 4$e" t$e parties are %issatisfie% 4it$ t$e %e isio" of t$e DA& s$oul% ar/itratio" o..e" e. #$is %oes "ot .ea", $o4ever, t$at t$e C'AC is /arre% fro. assu.i"g Duris%i tio" over t$e %ispute if su $ lause 4as "ot o.plie% 4it$. ="%er Se tio" 1, Arti le ''' of t$e C'AC Rules, a" ar/itratio" lause i" a o"stru tio" o"tra t s$all /e %ee.e% as a" agree.e"t to su/.it a" eCisti"g or future o"troversy to C'AC Duris%i tio", HnotA;t9st"n ;n: t$e refere" e to a %iffere"t ar/itratio" i"stitutio" or ar/itral /o%y i" su $ o"tra t C C C.I 5le.e"tary is t$e rule t$at 4$e" la4s or rules are lear, it is i" u./e"t o" t$e ourt to apply t$e.. <$e" t$e la4 1or rule3 is u"a./iguous a"% u"e;uivo al, appli atio", "ot i"terpretatio" t$ereof, is i.perative.@22A He" e, t$e /are fa t t$at t$e parties $erei" i" orporate% a" ar/itratio" lause i" t$e 5,CC is suffi ie"t to vest t$e C'AC 4it$ Duris%i tio" over a"y o"stru tio" o"troversy or lai. /et4ee" t$e parties.@23A #$e ar/itratio" lause i" t$e o"stru tio" o"tra t i so (acto veste% t$e C'AC 4it$ Duris%i tio".@2*A #$is rule applies, regar%less of 4$et$er t$e parties spe ifi ally $oose a"ot$er foru. or .a7e refere" e to a"ot$er ar/itral /o%y.@25A Si" e t$e Duris%i tio" of C'AC is o"ferre% /y la4, it a""ot /e su/De te% to a"y o"%itio"F "or a" it /e 4aive% or %i.i"is$e% /y t$e stipulatio", a t or o.issio" of t$e parties, as lo"g as t$e parties agree% to su/.it t$eir o"stru tio" o"tra t %ispute to ar/itratio", or if t$ere is a" ar/itratio" lause i" t$e o"stru tio" o"tra t.@26A #$e parties

4ill "ot /e pre lu%e% fro. ele ti"g to su/.it t$eir %ispute to C'AC, /e ause t$is rig$t $as /ee" veste% i" ea $ party /y la4.
@2(A

(4hili t$usG

'" China Chang Jiang !nerg6 Cor oration ines) v. ,osal $n(rastructure Builders ,@20A 4e elu i%ate% >9"t t9e l"A 2erely reBu;res 8or " p"rt;1ul"r 1onstru1t;on 1ontr"1t to 8"ll A;t9;n t9e Dur;s ;1t;on o8 C+AC ;s 8or t9e p"rt;es to ":ree to su#2;t t9e s"2e to volunt"ry "r#;tr"t;on. ="li7e i" t$e origi"al versio" of Se tio" 1, as applie% i" t$e 1esco ase, t$e la4 %oes "ot .e"tio" t$at t$e parties s$oul% agree to su/.it %isputes arisi"g fro. t$eir agree.e"t spe ifi ally to t$e C'AC for t$e latter to a ;uire Duris%i tio" over su $ %isputes. &"t9er, ;t ;s pl";n "n 1le"r t9"t "s lon: "s t9e p"rt;es ":ree to su#2;t to volunt"ry "r#;tr"t;on, re:"r less o8 A9"t 8oru2 t9ey 2"y 19oose, t9e;r ":ree2ent A;ll 8"ll A;t9;n t9e Dur;s ;1t;on o8 t9e C+AC, su19 t9"t, even ;8 t9ey spe1;"lly 19oose "not9er 8oru2, t9e p"rt;es A;ll not #e pre1lu e 8ro2 ele1t;n: to su#2;t t9e;r ;spute #e8ore t9e C+AC #e1"use t9;s r;:9t 9"s #een veste upon e"19 p"rty #y l"A, i.e., -./. 'o. 1))8. CCCC No4 t$at Se tio" 1, Arti le ''' @C'AC Rules of ,ro e%ure Gover"i"g Co"stru tio" Ar/itratio"A, as a.e"%e%, is su/.itte% to test i" t$e prese"t petitio", 4e rule to up$ol% its vali%ity 4it$ full ertai"ty. Ho4ever, t$is s$oul% "ot /e u"%erstoo% to .ea" t$at t$e parties .ay "o lo"ger stipulate to su/.it t$eir %isputes to a %iffere"t foru. or ar/itral /o%y. *"rt;es 2"y 1ont;nue to st;pul"te "s re:"r s t9e;r pre8erre 8oru2 ;n 1"se o8 volunt"ry "r#;tr"t;on, #ut ;n so o;n:, t9ey 2"y not ;vest t9e C+AC o8 Dur;s ;1t;on "s prov; e #y l"A. Un er t9e ele2ent"ry pr;n1;ple on t9e l"A on 1ontr"1ts t9"t l"As o#t";n;n: ;n " Dur;s ;1t;on 8or2 p"rt o8 "ll ":ree2ents, A9en t9e l"A prov; es t9"t t9e !o"r "1Bu;res Dur;s ;1t;on A9en t9e p"rt;es to t9e 1ontr"1t ":ree to su#2;t t9e s"2e to volunt"ry "r#;tr"t;on, t9e l"A ;n e88e1t, "uto2"t;1"lly :;ves t9e p"rt;es "n "ltern"t;ve 8oru2 #e8ore A9o2 t9ey 2"y su#2;t t9e;r ;sputes. 59"t "ltern"t;ve 8oru2 ;s t9e C+AC. 59;s, to t9e 2;n o8 t9e Court, ;s t9e re"l sp;r;t o8 -./. 'o. 1))8, "s ;2ple2ente #y Se1t;on 1, Art;1le +++ o8 t9e C+AC &ules. 15.p$ases ours.3 Li7e4ise, i" National $rrigation 'dministration v. Court eals,@2!A 4e pro"ou" e% t$atG ="%er t$e prese"t Rules of ,ro e%ure @C'AC Rules of ,ro e%ure Gover"i"g Co"stru tio" Ar/itratio"A, for a

parti ular o"stru tio" o"tra t to fall 4it$i" t$e Duris%i tio" of C'AC, it is .erely re;uire% t$at t$e parties agree to su/.it t$e sa.e to volu"tary ar/itratio". ="li7e i" t$e origi"al versio" of Se tio" 1, as applie% i" t$e 1esco ase, t$e la4 as it "o4 sta"%s %oes "ot provi%e t$at t$e parties s$oul% agree to su/.it %isputes arisi"g fro. t$eir agree.e"t spe ifi ally to t$e C'AC for t$e latter to a ;uire Duris%i tio" over t$e sa.e. Rat$er, it is plai" a"% lear t$at as lo"g as t$e parties agree to su/.it to volu"tary ar/itratio", regar%less of 4$at foru. t$ey .ay $oose, t$eir agree.e"t 4ill fall 4it$i" t$e Duris%i tio" of t$e C'AC, su $ t$at, eve" if t$ey spe ifi ally $oose a"ot$er foru., t$e parties 4ill "ot /e pre lu%e% fro. ele ti"g to su/.it t$eir %ispute /efore t$e C'AC /e ause t$is rig$t $as /ee" veste% upo" ea $ party /y la4, i.e., 5.2. No. 1))0. <e "ote t$at t$is is "ot a ase 4$erei" t$e ar/itratio" lause i" t$e o"stru tio" o"tra t "a.e% a"ot$er foru., "ot t$e C'AC, 4$i $ s$all $ave Duris%i tio" over t$e %ispute /et4ee" t$e partiesF rat$er, t$e sai% lause re;uires prior referral of t$e %ispute to t$e DA&. No"et$eless, 4e still $ol% t$at t$is o"%itio" pre e%e"t, or .ore appropriately, "o": o.plia" e t$ere4it$, s$oul% "ot %eprive C'AC of its Duris%i tio" over t$e %ispute /et4ee" t$e parties. 't /ears to e.p$asi-e t$at t$e .ere eCiste" e of a" ar/itratio" lause i" t$e o"stru tio" o"tra t is o"si%ere% /y la4 as a" agree.e"t /y t$e parties to su/.it eCisti"g or future o"troversies /et4ee" t$e. to C'AC Duris%i tio", 4it$out a"y ;ualifi atio" or o"%itio" pre e%e"t. #o affir. a o"%itio" pre e%e"t i" t$e o"stru tio" o"tra t, 4$i $ 4oul% e88e1t;vely suspen t$e Duris%i tio" of t$e C'AC u"til o.plia" e t$ere4it$, 4oul% /e ;n 1on8l;1t 4it$ t$e re og"i-e% i"te"tio" of t$e la4 a"% rules to "uto2"t;1"lly vestC'AC 4it$ Duris%i tio" over a %ispute s$oul% t$e o"stru tio" o"tra t o"tai" a" ar/itratio" lause. +oreover, t$e C'AC 4as reate% i" re og"itio" of t$e o"tri/utio" of t$e o"stru tio" i"%ustry to "atio"al %evelop.e"t goals. Reali-i"g t$at %elays i" t$e resolutio" of o"stru tio" i"%ustry %isputes 4oul% also $ol% up t$e %evelop.e"t of t$e ou"try, 5Ce utive 2r%er No. 1))0 eCpressly .a"%ates t$e C'AC to e@pe ;t;ously settle o"stru tio" i"%ustry %isputes a"%, for t$is purpose, vests i" t$e C'AC origi"al a"% eC lusive Duris%i tio" over %isputes arisi"g fro., or o""e te% 4it$, o"tra ts e"tere% i"to /y t$e parties i"volve% i" o"stru tio" i" t$e ,$ilippi"es.@3)A #$e %ispute /et4ee" petitio"er a"% respo"%e"t $as /ee" li"geri"g for al.ost five years "o4. Despite "u.erous .eeti"gs a"% "egotiatio"s /et4ee" t$e parties, 4$i $ too7 pla e prior to petitio"erBs fili"g 4it$ t$e C'AC of its Re;uest for Ar/itratio", "o a.i a/le settle.e"t 4as rea $e%. A ruli"g re;uiri"g t$e parties to still appoi"t a DA&, to 4$i $ t$ey s$oul% first refer t$eir %ispute /efore t$e sa.e oul% /e su/.itte% to t$e C'AC, 4oul% .erely /e ir uitous a"% %ilatory at t$is poi"t. 't 4oul% e"tail u""e essary %elays a"% eCpe"ses o" /ot$ parties, 4$i $ 5Ce utive 2r%er No. 1))0 pre isely see7s to preve"t. 't 4oul%, i"%ee%, %efeat t$e purpose for 4$i $ t$e C'AC 4as reate%. >H-&-4/&-, t$e ,etitio" is $ere/y %&A'5-D. #$e De isio", %ate% 23 +ay 2))(, a"%

o( '

Resolutio", %ate% 16 Nove./er 2))(, of t$e Court of Appeals i" CA:G.R. S, No. !25)* are $ere/y &-,-&S-D a"% S-5 AS+D-. #$e i"sta"t ase is $ere/y &-MA'D-D for furt$er pro ee%i"gs to t$e C'AC 4$i $ is D+&-C5-D to resolve t$e sa.e 4it$ %ispat $. S/ /&D-&-D. Repu/li of t$e ,$ilippi"es S=,R5+5 C2=R# +a"ila S5C2ND D'E'S'2N -PU+5A!L- *C+ !A'=+'% C/&*/&A5+/',@1A %-/&%- L. %/, *A5&+C= D. %/, %-'-,+-,- >.6. %/, 4-&D+'A'D MA&5+' %. C$airperso", &/MUALD-?, /SCA& *. L/*-?$D--, &-'- 6. !U-'A,-'5U&A, %L/&+A L. 5A'$CL+MAC/, &/%-L+/ S. CHUA, 4-D-&+C/ C. *ASCUAL, L-/*/LD/ S. ,-&/<, >+L4&+D/ ,. ,-&%A&A, -D+L!-&5/ ,. 6A,+-&, A'5H/'< 4. C/'>A<, &/MULAD U. D< 5A'%, >AL5-& C. >-SSM-&, "n A'5/'+/ '. C/5/C/, ,etitio"ers, : versus : ,ro.ulgate%G &C!C CA*+5AL C/&*/&A5+/', Respo"%e"t. De e./er 10, 2))0 C:::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: :::::::C D-C+S+/' ,-LASC/, 6&., J.7 59e C"se #$is ,etitio" for Revie4 o" Certiorari u"%er Rule *5 see7s t$e reversal of t$e 8a"uary 0, 2))0 @2A a"% +ar $ 1(, 2))0@3A 2r%ers of t$e Regio"al #rial Court 1R#C3, &ra" $ 1*0 i" +a7ati City i" S, ,ro . Case No. 6)*6, e"title% $n the Matter o( $CC 'rbitration ,e(. No. 302/.AMSAJBAJ!M Bet;een ,CBC Ca ital Cor oration, (Claimant), and !=uitable 4C$ Ban#ing Cor oration, $nc. et al., (,es ondents). #$e assaile% 8a"uary 0, 2))0 2r%er o"fir.e% t$e ,artial A4ar% %ate% Septe./er 2(, 2))(@*A re"%ere% /y t$e '"ter"atio"al C$a./er of Co..er e:'"ter"atio"al Court of Ar/itratio" 1'CC:'CA3 i" Case No. 132!)J+SJ8&J85+, e"title% ,CBC Ca ital Cor oration (4hili ines) v. !=uitable 4C$ Ban#, $nc. J 7thers (4hili ines). #$e +ar $ 1(, 2))0 2r%er %e"ie% petitio"ersB .otio" for re o"si%eratio" of t$e 8a"uary 0, 2))0 2r%er. 59e 4"1ts 2" +ay 2*, 2))), petitio"ers 5;uita/le ,C' &a"7, '" . 15,C'&3 a"% t$e i"%ivi%ual s$are$ol%ers of &a"7ar%, '" ., as %.&. 'o. 182248 ,rese"tG Q='S=+&'NG, J., CAR,'2 +2RAL5S, #'NGA, E5LASC2, 8R., a"% &R'2N, JJ.

sellers, a"% respo"%e"t RC&C Capital Corporatio" 1RC&C3, as /uyer, eCe ute% a Share 4urchase 'greement@5A 1S,A3 for t$e pur $ase of petitio"ersB i"terests i" &a"7ar%, represe"ti"g 226,*6),))) s$ares, for t$e pri e of ,$, 1,(06,(6!,*)). #o eCpe%ite t$e pur $ase, RC&C agree% to %ispe"se 4it$ t$e o"%u t of a %ue %ilige" e au%it o" t$e fi"a" ial status of &a"7ar%. ="%er t$e S,A, RC&C u"%erta7es, o" t$e %ate of o"tra t eCe utio", to %eposit, as %o4"pay.e"t, 2)N of t$e pur $ase pri e, or ,$, 35(,353,00), i" a" es ro4 a ou"t. #$e es ro4e% a.ou"t, t$e S,A state%, s$oul% /e release% to petitio"ers o" a" agree%:upo" release %ate a"% t$e /ala" e of t$e pur $ase pri e s$all /e %elivere% to t$e s$are /uyers upo" t$e fulfill.e"t of ertai" o"%itio"s agree% upo", i" t$e for. of a .a"agerBs $e 7. #$e ot$er releva"t provisio"s of t$e S,A areG Se tio" 5. SellersB <arra"ties Represe"tatio"s a"%

#$e S5LL5RS Doi"tly a"% severally represe"t a"% 4arra"t to t$e &=65R t$atG CCCC

#$e 9i"a" ial Co"%itio" of &a"7ar% g. #$e au%ite% fi"a" ial state.e"ts of &a"7ar% for t$e t$ree 133 fis al years e"%e% De e./er 31, 1!!(, 1!!0 a"% 1!!!, a"% t$e u"au%ite% fi"a" ial state.e"ts for t$e first ;uarter e"%e% 31 +ar $ 2))), are fair a"% a urate, a"% o.plete i" all .aterial respe ts, a"% $ave /ee" prepare% i" a or%a" e 4it$ ge"erally a epte% a ou"ti"g pri" iples o"siste"tly follo4e% t$roug$out t$e perio% i"%i ate% a"%G i3 t$e /ala" e s$eet of &a"7ar% as of 31 De e./er 1!!!, as prepare% a"% ertifie% /y SGE K Co. 1HSGEI3, a"% t$e u"au%ite% /ala" e s$eet for t$e first ;uarter e"%e% 31 +ar $ 2))), prese"t a fair a"% a urate state.e"t as of t$ose %ates, of &a"7ar%Bs fi"a" ial o"%itio" a"% of all its assets a"% lia/ilities, a"% is o.plete i" all .aterial respe tsF a"% ii3 t$e state.e"ts of &a"7ar%Bs profit a"% loss a ou"ts for t$e fis al years 1!!6 to 1!!!, as prepare% a"% ertifie% /y SGE, a"% t$e u"au%ite% profit a"% loss a ou"ts for t$e first ;uarter e"%e% 31 +ar $ 2))), fairly a"% a urately prese"t t$e results of t$e operatio"s of &a"7ar% for t$e perio%s i"%i ate%, a"% are o.plete i" all .aterial respe ts. $. 5C ept as %is lose% i" t$e Dis losures, a"% eC ept to t$e eCte"t set fort$ or reserve% i" t$e au%ite% fi"a" ial

state.e"ts of &a"7ar% as of 31 De e./er 1!!! a"% its u"au%ite% fi"a" ial state.e"ts as of 31 +ar $ 2))), &a"7ar%, as of su $ %ates a"% up to 31 +ay 2))), $a% a"% s$all $ave "o lia/ilities, o.issio"s or .ista7es i" its re or%s 4$i $ 4ill $ave .aterial a%verse effe t o" t$e "et 4ort$ or fi"a" ial o"%itio" of &a"7ar% to t$e eCte"t of .ore t$a" 2"e Hu"%re% +illio" ,esos 1,1)),))),))).))3 i" t$e aggregate. '" t$e eve"t su $ .aterial a%verse effe t o" t$e "et 4ort$ or fi"a" ial o"%itio" of &a"7ar% eC ee%s 2"e Hu"%re% +illio" ,esos 1,1)),))),))).))3, t$e ,ur $ase ,ri e s$all /e re%u e% i" a or%a" e 4it$ t$e follo4i"g for.ulaG Re%u tio" i" ,ur $ase ,ri e [ O .ultiplie% /y 226,*6),))) 4$ere A.ou"t 4$i $ "egative a%Dust.e"t eC ee%s ,1)) +illio" /y

#$ereafter, t$e parties eCe ute% a" 'mendment to Share 4urchase 'greement 1AS,A3 %ate% Septe./er 1!, 2))).@(A 'ts paragrap$ 21e3 provi%e% t$atG 2. Not4it$sta"%i"g a"y provisio"s to t$e o"trary i" t$e S$are ,ur $ase Agree.e"t a"%Jor a"y agree.e"t, i"stru.e"t or %o u.e"t e"tere% i"to or eCe ute% /y t$e ,arties i" relatio" t$ereto 1t$e HRelate% Agree.e"tsI3, t$e ,arties $ere/y agree t$atG CCCC e3 Not4it$sta"%i"g t$e provisio"s of Se . ( of t$e S$are ,ur $ase Agree.e"t to t$e o"trary, t9e re2e y 8or " #re"19 o8 t9e S-LL-&SF represent"t;on "n A"rr"nty ;n Se1t;on 5H9I of t$e S$are ,ur $ase Agree.e"t s9"ll #e "v";l"#le ;8 t9e e2"n t9ere8or ;s presente to t$e S5LL5RS i" 4riti"g toget$er 4it$ s $e%ules a"% %ata to su/sta"tiate su $ %e.a"%, o" or /efore 31 De1e2#er 2))). 15.p$asis a%%e%.3 So.eti.e i" Septe./er 2))), RC&C $a% &a"7ar%Bs a ou"ts au%ite%, reati"g for t$e purpose a" au%it tea. le% /y a ertai" Ru/io, t$e Ei e:,resi%e"t for 9i"a" e of RC&C at t$e ti.e. Ru/ioBs o" lusio" 4as t$at t$e 4arra"ty, as o"tai"e% i" Se tio" 51$3 of t$e S,A 1si.ply Se . 5@$A $erei"after3, 4as orre t. 2" De e./er 20, 2))), RC&C pai% t$e /ala" e of t$e o"tra t pri e. #$e orrespo"%i"g %ee%s of sale for t$e s$ares i" ;uestio" 4ere eCe ute% i" 8a"uary 2))1. #$ereafter, i" a letter of +ay 5, 2))3, RC&C i"for.e% petitio"ers of its $avi"g overpai% t$e pur $ase pri e of t$e su/De t s$ares, lai.i"g t$at t$ere 4as a" overstate.e"t of valuatio" of a ou"ts a.ou"ti"g to ,$, *(0 .illio", resulti"g i" t$e overpay.e"t of over ,$, 616 .illio". #$us, RC&C lai.e% t$at petitio"ers violate% t$eir 4arra"ty, as sellers, e./o%ie% i" Se . 51g3 of t$e S,A 1Se . 5@gA $erei"after3. 9ollo4i"g u"su essful atte.pts at settle.e"t, RC&C, i" a or%a" e 4it$ Se . 1) of t$e S,A, file% a ,e=uest (or 'rbitration %ate% +ay 12, 2))*@0A 4it$ t$e 'CC:'CA. '" t$e re;uest, RC&C $arge% &a"7ar% 4it$ %eviati"g fro., o"trave"i"g a"% "ot follo4i"g ge"erally a epte% a ou"ti"g pri" iples a"% pra ti es i" .ai"tai"i"g t$eir /oo7s. Due to t$ese i.proper a ou"ti"g pra ti es, RC&C allege% t$at /ot$ t$e au%ite% a"% u"au%ite% fi"a" ial state.e"ts of &a"7ar% prior to t$e sto 7 pur $ase 4ere far fro. fair a"% a urate a"%, $e" e, violate% t$e represe"tatio"s a"% 4arra"ties of petitio"ers i" t$e S,A. ,er RC&C, its overpay.e"t a.ou"te% to ,$, 556 .illio". 't t$us praye% for t$e res issio" of t$e S,A, restitutio" of t$e pur $ase pri e, pay.e"t of a tual %a.ages i" t$e a.ou"t of ,$, 5(3,132,11), legal i"terest o" t$e pur $ase pri e u"til a tual restitutio", .oral %a.ages, a"% litigatio" a"% attor"eyBs fees. As alter"ative to res issio" a"% restitutio", RC&C praye% for %a.ages i" t$e a.ou"t of at least ,$, 0)!,(!6,)!2 plus legal i"terest. #o t$e ,e=uest (or 'rbitration, petitio"ers file% a" A"s4er %ate% 8uly 20, 2))*,@!A %e"yi"g RC&CBs i" ulpatory aver.e"ts a"% setti"g up t$e follo4i"g affir.ative allegatio"sG t$e perio% for fili"g of t$e asserte% lai. $a% alrea%y lapse% /y for e of Se . ( of t$e S,AF RC&C is "ot e"title% to res issio"

O [ :::::::::::::::::::::::::::::: ::::::::::::: 11.!253 330,))), ))) CCCC Se tio" (. Re.e%ies <arra"ties for &rea $ of

a. 'f a"y of t$e represe"tatio"s a"% 4arra"ties of a"y or all of t$e S5LL5RS or t$e &=65R 1t$e HDefaulti"g ,artyI3 o"tai"e% i" Se tio"s 5 a"% 6 s$all /e fou"% to /e u"true 4$e" .a%e a"%Jor as of t$e Closi"g Date, t$e ot$er party, i.e., t$e &=65R if t$e Defaulti"g ,arty is a"y or all of t$e S5LL5RS a"% t$e S5LL5RS if t$e Defaulti"g ,arty is t$e &=65R 1$erei"after referre% to as t$e HNo":Defaulti"g ,artyI3 s$all $ave t$e rig$t to re;uire t$e Defaulti"g ,arty, at t$e latterBs eCpe"se, to ure su $ /rea $, a"%Jor see7 %a.ages, /y provi%i"g "oti e or prese"ti"g a lai. to t$e Defaulti"g ,arty, reaso"a/ly spe ifyi"g t$erei" t$e parti ulars of t$e /rea $. #$e foregoi"g re.e%ies s$all /e availa/le to t$e No": Defaulti"g ,arty o"ly if t$e %e.a"% t$erefor is prese"te% i" 4riti"g to t$e Defaulti"g ,arty 4it$i" t$ree 133 years fro. t$e Closi"g Date eC ept t$at t$e re.e%y for a /rea $ of t$e S5LL5RSB represe"tatio" a"% 4arra"t i" Se tio" 5 1$3 s$all /e availa/le o"ly if t$e %e.a"% t$erefor is prese"te% to t$e Defaulti"g ,arty i" 4riti"g toget$er 4it$ s $e%ules a"% to su/sta"tiate su $ %e.a"%, 4it$i" siC 163 .o"t$s fro. t$e Closi"g Date.@6A 2" 8u"e 2, 2))), RC&C %eposite% t$e stipulate% %o4"pay.e"t a.ou"t i" a" es ro4 a ou"t after 4$i $ it 4as give" full .a"age.e"t a"% operatio"al o"trol of &a"7ar%.6une 2, 2))) is also o"si%ere% /y t$e parties as t$e Clos;n: D"te referre% to i" t$e S,A.

$avi"g $a% a.ple opportu"ity a"% reaso"a/le ti.e to file a lai. agai"st petitio"ersF RC&C is "ot e"title% to its alter"ative prayer of %a.ages, /ei"g guilty of la $es a"% faili"g to set out t$e %etails of t$e /rea $ as re;uire% u"%er Se . (. Ar/itratio" i" t$e 'CC:'CA pro ee%e% after t$e for.atio" of t$e ar/itratio" tri/u"al o"sisti"g of retire% 8usti e Sa"tiago +. >apu"a", "o.i"ate% /y petitio"ersF Neil >apla", RC&CBs "o.i"eeF a"% Sir 'a" &ar7er, appoi"te% /y t$e 'CC: 'CA. After %ra4" out pro ee%i"gs 4it$ ea $ party allegi"g %eviatio" a"% "o": o.plia" e /y t$e ot$er 4it$ ar/itratio" rules, t$e tri/u"al, 4it$ 8usti e >apu"a" %isse"ti"g, re"%ere% a ,artial A4ar% %ate% Septe./er 2(, 2))(,@1)A t$e %ispositive portio" of 4$i $ statesG 15 A<ARD AND D'R5C#'2NS 15.1 #$e #ri/u"al .a7es t$e follo4i"g %e laratio"s /y 4ay of ,artial A4ar%G 1a3 #$e Clai.a"tBs lai. is "ot ti.e: /arre% u"%er t$e provisio"s of t$is S,A. 1/3 #$e Clai.a"t is "ot estoppe% /y its o"%u t or t$e e;uita/le %o tri"e of la $es fro. pursui"g its lai.. 1 3 As %etaile% i" t$e ,artial A4ar%, t$e Clai.a"t $as esta/lis$e% t$e follo4i"g /rea $es /y t$e Respo"%e"ts of lause 51g3 of t$e S,AG i3 t$e assets, reve"ue a"% "et 4ort$ of &a"7ar% 4ere overstate% /y reaso" of its poli y o" a"% re og"itio" of Late ,ay.e"t 9eesF ii3 reporte% re eiva/les 4ere $ig$er t$a" t$eir reali-a/le values /y reaso" of t$e T/u 7eti"gB .et$o%, t$us overstati"g &a"7ar%Bs assetsF a"% iii3 t$e releva"t &a"7ar% state.e"ts 4ere i"a%e;uate a"% .islea%i"g i" t$at t$eir %is losures ause% rea%ers to /e .isi"for.e% a/out &a"7ar%Bs a ou"ti"g poli ies o" reve"ue a"% re eiva/les. 1%3 Su/De t to proof of loss t$e Clai.a"t is e"title% to %a.ages for t$e foregoi"g /rea $es. 1e3 #$e Clai.a"t is "ot e"title% to res issio" of t$e S,A. 1f3 All ot$er issues, i" lu%i"g a"y issue relati"g to osts, 4ill /e %ealt 4it$ i" a furt$er or fi"al a4ar%. 15.2 A furt$er ,ro e%ural 2r%er 4ill /e "e essary su/se;ue"t to t$e %elivery of t$is ,artial A4ar% to %eal 4it$ t$e %eter.i"atio" of ;ua"tu. a"% i" parti ular, 4$et$er t$ere s$oul% /e a" 5Cpert appoi"te% /y t$e #ri/u"al u"%er Arti le 2)1*3 of t$e 'CC Rules to assist t$e #ri/u"al i" t$is regar%. 15.3 #$is A4ar% is %elivere% /y a .aDority of t$e #ri/u"al 1Sir 'a" &ar7er a"% +r. >apla"3. 8usti e >apu"a" is u"a/le to agree 4it$ t$e .aDorityBs o" lusio" o" t$e

lai. of estoppel /roug$t /y t$e respo"%e"ts. 2" t$e .atter of pres riptio", t$e tri/u"al $el% t$at RC&CBs lai. is "ot ti.e:/arre%, t$e lai. properly falli"g u"%er t$e o"te.platio" of Se . 51g3 a"% "ot Se . 51$3. As su $, t$e tri/u"al o" lu%e%, RC&CBs lai. 4as file% 4it$i" t$e t$ree 133:year perio% u"%er Se . 51g3 a"% t$at t$e siC 163:.o"t$ perio% u"%er Se . 51$3 %i% "ot apply. #$e tri/u"al also eCo"erate% RC&C fro. la $es, t$e latter $avi"g soug$t relief 4it$i" t$e t$ree 133:year perio% pres ri/e% i" t$e S,A. 2" t$e .atter of estoppel suggeste% i" petitio"ersB a"s4er, t$e tri/u"al state% i" par. 1).2( of t$e ,artial A4ar% t$e follo4i"gG 1).2( Clearly, t$ere $as to /e /ot$ a" a%.issio" or represe"tatio" /y 1i" t$is ase3 t$e Clai.a"t @RC&CA, plus relia" e upo" it /y 1i" t$is ase3 t$e Respo"%e"ts @$erei" petitio"ersA. #$e #ri/u"al a""ot fi"% as prove% a"y a%.issio"Jreprese"tatio" t$at t$e Clai.a"t 4as a/a"%o"i"g a 51g3 lai., a"y relia" e /y t$e Respo"%e"ts o" a" a%.issio", a"% a"y %etri.e"t to t$e Respo"%e"ts su $ as 4oul% e"title t$e. to $ave t$e Clai.a"t %eprive% of t$e /e"efit of lause 51g3. #$ese aspe ts of t$e lai. for estoppels are reDe te%.@11A Nota/ly, t$e tri/u"al o"si%ere% t$e res issio" of t$e S,A a"% AS,A as i.pra ti a/le a"% Htotally out of t$e ;uestio".I@12A '" $is Disse"ti"g 2pi"io"@13A 4$i $ $e su/.itte% to a"% 4$i $ 4as re eive% o" Septe./er 2*, 2))( /y t$e 'CC:'CA, 8usti e >apu"a" state% t$e o/servatio" t$at RC&CBs lai. is ti.e:/arre%, falli"g as su $ lai. %i% u"%er Se . 51$3, 4$i $ pres ri/es a o.paratively s$orter pres riptive perio%, "ot 51g3 as $el% /y t$e .aDority of t$e tri/u"al, to 4itG Clai.a"t a%.its t$at t$e Clai. is for re overy of ,*31 .illio" o" a ou"t of allege% Hovervaluatio" of t$e "et 4ort$ of &a"7ar%,I allege%ly for Hi.proper a ou"ti"g pra ti esI resulti"g i" Hits /oo7 value per s$are as of 31 De e./er 1!!! @/ei"gA overstate%.I Clai.a"tBs 4it"ess, Dea" 5 $a"is asserts t$at Ht$e i"a%e;uate provisio"i"g for &a"7ar%Bs %ou/tful a ou"ts result@e%A i" a" overstate.e"t of its De e./er 31, 1!!! total assets a"% "et 4ort$ of /y @si A least ,*10.2 .illio".I '" a%%itio", Clai.a"tBs %e.a"% letter a%%resse% to t$e Respo"%e"ts allege% t$at H4e overpai% for t$e S$ares to t$e eCte"t of t$e i.pa t of t$e sai% overstate.e"t o" t$e &oo7 Ealue per s$areI. #$ese ir u.sta" es esta/lis$ /eyo"% %ispute t$at t$e Clai. is /ase% o" t$e allege% overstate.e"t of t$e 1!!! "et 4ort$ of &a"7ar%, 4$i $ t$e parties relie% o" i" setti"g t$e pur $ase pri e of t$e s$ares. +oreover, it is lear t$at t$ere 4as a" overstate.e"t /e ause of Hi.proper a ou"ti"g pra ti esI 4$i $ le% Clai.a"t to overpay for t$e s$ares.

=lti.ately, t$e Clai. is o"e for re overy of overpay.e"t i" t$e pur $ase pri e of t$e s$ares. C C C As to t$e issue of estoppel, 8usti e >apu"a" state%G +oreover, +r. Ru/ioBs fi"%i"gs .erely orro/orate% t$e %is losures .a%e i" t$e '"for.atio" +e.ora"%u. t$at Clai.a"t re eive% fro. t$e Respo"%e"ts prior to t$e eCe utio" of t$e S,A. '" t$is o""e tio", ' "ote t$at &a"7ar%Bs poli y o" provisio"i"g a"% setti"g of allo4a" es usi"g t$e &u 7ete% +et$o% a"% i" o.e re og"itio" fro. ARJ,ri" ipal, ARJ'"terest a"% ARJL,9s 4ere %is lose% i" t$e '"for.atio" +e.ora"%u.. #$us, t$ese allege% i.proper a ou"ti"g pra ti es 4ere 7"o4" to t$e Clai.a"t eve" prior to t$e eCe utio" of t$e S,A. #$us, 4$e" Clai.a"t pai% t$e /ala" e of t$e pur $ase pri e, it %i% so 4it$ full 7"o4le%ge of t$ese a ou"ti"g pra ti es of &a"7ar% t$at it "o4 assails. &y payi"g t$e /ala" e of t$e pur $ase pri e 4it$out ta7i"g eC eptio" or o/De ti"g to t$e a ou"ti"g pra ti es %is lose% t$roug$ +r. Ru/ioB s revie4 a"% t$e '"for.atio" +e.ora"%u., Clai.a"t is %ee.e% to $ave a epte% su $ pra ti es as orre tly reporti"g t$e 1!!! "et 4ort$. C C C CCCC As last poi"t, ' "ote t$at .y olleagues i"vo7e a pri" iple t$at for estoppels to apply t$ere .ust /e positive i"%i atio" t$at t$e rig$t to sue 4as 4aive%. ' a. of t$e vie4 t$at t$ere is "o su $ pri" iple u"%er ,$ilippi"e la4. <$at is appli a/le is t$e $ol%i"g i" =ne19t "n ;n Co1"$ Col" t$at prior 7"o4le%ge of a" u"favora/le fa t is /i"%i"g o" t$e party 4$o $as su $ 7"o4le%geF H4$e" t$e pur $aser pro ee%s to .a7e i"vestigatio"s /y $i.self, a"% t$e ve"%or %oes "ot$i"g to preve"t su $ i"vestigatio" fro. /ei"g as o.plete as t$e for.er .ig$t 4is$, t$e pur $aser a""ot later allege t$at t$e ve"%or .a%e false represe"tatio"s to $i.I 1Cf. So"g o v. Sell"er, 3( ,$il 25* itatio"s o.itte%3. Applie% to t$is ase, t$e Clai.a"t a""ot see7 relief o" t$e /asis t$at 4$e" it pai% t$e pur $ase pri e i" De e./er 2))), it 4as u"a4are t$at t$e a ou"ti"g pra ti es t$at 4e"t i"to t$e reporti"g of t$e 1!!! "et 4ort$ as a.ou"ti"g to ,1,30(,2(5,0*( 4ere "ot i" o"for.ity 4it$ GAA, @ge"erally a epte% a ou"ti"g pri" iplesA. 15.p$asis a%%e%.3 2" 2 to/er 26, 2))(, RC&C file% 4it$ t$e R#C a +otio" to Co"fir. ,artial A4ar%. 2" t$e sa.e %ay, petitio"ers ou"tere% 4it$ a +otio" to Ea ate t$e ,artial A4ar%. 2"Nove./er !, 2))(, petitio"ers agai" file% a +otio" to Suspe"% a"% '"$i/it &ar7er a"% >apla".

2" 8a"uary 0, 2))0, t$e R#C issue% t$e first assaile% or%er o"fir.i"g t$e ,artial A4ar% a"% %e"yi"g t$e a%verte% separate .otio"s to va ate a"% to suspe"% a"% i"$i/it. 9ro. t$is or%er, petitio"ers soug$t re o"si%eratio", /ut t$eir .otio" 4as %e"ie% /y t$e R#C i" t$e e;ually assaile% se o"% or%er of +ar $ 1(, 2))0. 9ro. t$e assaile% or%ers, petitio"ers a.e %ire tly to t$is Court t$roug$ t$is petitio" for revie4. 59e +ssues #$is petitio" see7s t$e revie4, reversal a"% setti"g asi%e of t$e or%ers A""eCes A a"% & a"%, i" lieu of t$e., it see7s Du%g.e"t va ati"g t$e ar/itratorsB lia/ility a4ar%, A""eC C, o" t$ese grou"%sG 1a3 #$e trial ourt a te% o"trary to la4 a"% Du%i ial aut$ority i" refusi"g to va ate t$e ar/itral a4ar%, "ot4it$sta"%i"g it 4as re"%ere% i" plai" %isregar% of t$e partiesB o"tra t a"% appli a/le ,$ilippi"e la4, u"%er 4$i $ t$e lai. i" ar/itratio" 4as i"%u/ita/ly ti.e:/arre%. 1/3 #$e trial ourt a te% o"trary to la4 a"% Du%i ial aut$ority i" refusi"g to va ate a"% i" o"fir.i"g t$e ar/itral a4ar%, "ot4it$sta"%i"g t$at t$e ar/itrators $a% plai"ly a"% a%.itte%ly faile% to a or% petitio"ersB %ue pro ess /y %e"yi"g t$e. a $eari"g o" t$e /asi fa tual .atter upo" 4$i $ t$eir lia/ility is pre%i ate%. 1 3 #$e trial ourt o..itte% grave error i" o"fir.i"g t$e ar/itratorsB a4ar%, 4$i $ $el% petitio"ers:sellers lia/le for a" allege% i.proper re or%i"g of a ou"ts, allege%ly affe ti"g t$e value of t$e s$ares t$ey sol%, "ot4it$sta"%i"g t$at t$e respo"%e"t:/uyer 7"e4 /efore o"tra ti"g t$at t$e a ou"ts 4ere 7ept i" t$e .a""er o.plai"e% of, a"% i" fa t ratifie% a"% a%opte% t$e ;uestio"e% a ou"ti"g pra ti e a"% poli ies.@1*A

59e CourtFs &ul;n: #$e petitio" .ust /e %e"ie%. /n *ro1e ur"l M;sstep o8 D;re1t Appe"l to 59;s Court As earlier re ite%, t$e 'CC:'CABs ,artial A4ar% %ate% Septe./er 2(, 2))( 4as o"fir.e% /y t$e R#C i" its first assaile% or%er of 8a"uary 0, 2))0. #$ereafter, t$e R#C, /y or%er of +ar $ 1(, 2))0, %e"ie% petitio"ersB .otio" for re o"si%eratio". #$erefro., petitio"ers a.e %ire tly to t$is

Court o" a petitio" for revie4 u"%er Rule *5 of t$e Rules of Court. #$is is a pro e%ural .is ue for petitio"ers 4$o erro"eously /ypasse% t$e Court of Appeals 1CA3 i" pursuit of its appeal. <$ile t$is pro e%ural gaffe $as "ot /ee" raise% /y RC&C, still 4e 4oul% /e re.iss i" "ot poi"ti"g out t$e proper .o%e of appeal fro. a %e isio" of t$e R#C o"fir.i"g, va ati"g, setti"g asi%e, .o%ifyi"g, or orre ti"g a" ar/itral a4ar%. Rule *5 is "ot t$e re.e%y availa/le to petitio"ers as t$e proper .o%e of appeal assaili"g t$e %e isio" of t$e R#C o"fir.i"g as ar/itral a4ar% is a" appeal /efore t$e CA pursua"t to Se . *6 of Repu/li A t No. 1RA3 !205, ot$er4ise 7"o4" as t$e 'lternative *is ute ,esolution 'ct o( 2..@, or o.pletely, 'n 'ct to $nstitutionalize the Ise o( an 'lternative *is ute ,esolution S6stem in the 4hili ines and to !stablish the 7((ice (or 'lternative *is ute ,esolution, and (or other 4ur oses, pro.ulgate% o" April 2, 2))* a"% /e a.e effe tive o" April 20, 2))* after its pu/li atio" o" April 13, 2))*. '" >orea 1echnologies Co., )td v. )erma, 4e eCplai"e%, inter alia, t$at t$e R#C %e isio" of a" assaile% ar/itral a4ar% is appeala/le to t$e CA a"% .ay furt$er /e appeale% to t$is Court, t$usG Se . *6 of RA !205 provi%es for a" appeal /efore t$e CA as t$e re.e%y of a" aggrieve% party i" ases 4$ere t$e R#C sets asi%e, reDe ts, va ates, .o%ifies, or orre ts a" ar/itral a4ar%, t$usG S5C. *6. ' eal (rom Court *ecision or 'rbitral ';ards.KA %e isio" of t$e Regio"al #rial Court o"fir.i"g, va ati"g, setti"g asi%e, .o%ifyi"g or orre ti"g a" ar/itral a4ar% .ay /e"ppe"le to t9e Court o8 Appe"ls i" a or%a" e 4it$ t$e rules a"% pro e%ure to /e pro.ulgate% /y t$e Supre.e Court. #$e losi"g party 4$o appeals fro. t$e Du%g.e"t of t$e ourt o"fir.i"g a" ar/itral a4ar% s$all /e re;uire% /y t$e appellate ourt to post a ou"ter/o"% eCe ute% i" favor of t$e prevaili"g party e;ual to t$e a.ou"t of t$e a4ar% i" a or%a" e 4it$ t$e rules to /e pro.ulgate% /y t$e Supre.e Court. #$ereafter, t$e CA %e isio" .ay furt$er /e appeale% or revie4e% /efore t$is Court t$roug$ a petitio" for revie4 u"%er Rule *5 of t$e Rules of Court.@15A 't is lear fro. t$e fa tual a"te e%e"ts t$at RA !205 applies to t$e i"sta"t ase. #$is la4 4as alrea%y effe tive at t$e ti.e t$e ar/itral pro ee%i"gs 4ere o..e" e% /y RC&C t$roug$ a re;uest for ar/itratio" file% /efore t$e 'CC:'CA o" +ay 12, 2))*. &esi%es, t$e assaile% o"fir.atio" or%er of t$e R#C 4as issue% o" +ar $ 1(, 2))0. #$us, petitio"ers learly too7 t$e 4ro"g .o%e of appeal a"% t$e i"sta"t petitio" a" /e outrig$t reDe te% a"% %is.isse%. 5ve" if 4e e"tertai" t$e petitio", t$e out o.e 4ill /e t$e sa.e.

59e Court >;ll 'ot /verturn "n Ar#;tr"l AA"r Unless +t >"s M" e ;n M"n;8est D;sre:"r o8 t9e L"A '" 'sset 4rivatization 1rust v. Court o( ' eals ,@16A t$e Court passe% o" si.ilar issues as t$e o"es te"%ere% i" t$e i"sta"t petitio". '" t$at ase, t$e ar/itratio" o..ittee issue% a" ar/itral a4ar% 4$i $ t$e trial ourt, upo" %ue pro ee%i"gs, o"fir.e% %espite t$e oppositio" of t$e losi"g party. +otio"s for re o"si%eratio" /y t$e losi"g party 4ere %e"ie%. A" appeal i"terpose% /y t$e losi"g party to t$e CA 4as %e"ie% %ue ourse. 2" appeal to t$is Court, 4e esta/lis$e% t$e para.eters /y 4$i $ a" ar/itral a4ar% .ay /e set asi%e, to 4itG As " rule, t9e "A"r o8 "n "r#;tr"tor 1"nnot #e set "s; e 8or 2ere errors o8 Du :2ent e;t9er "s to t9e l"A or "s to t9e 8"1ts. Courts "re A;t9out poAer to "2en or overrule 2erely #e1"use o8 ;s":ree2ent A;t9 2"tters o8 l"A or 8"1ts eter2;ne #y t9e "r#;tr"tors. 59ey A;ll not rev;eA t9e 8;n ;n:s o8 l"A "n 8"1t 1ont";ne ;n "n "A"r , "n A;ll not un ert"Ee to su#st;tute t9e;r Du :2ent 8or t9"t o8 t9e "r#;tr"tors, s;n1e "ny ot9er rule Aoul 2"Ee "n "A"r t9e 1o22en1e2ent, not t9e en , o8 l;t;:"t;on. -rrors o8 l"A "n 8"1t, or "n erroneous e1;s;on o8 2"tters su#2;tte to t9e Du :2ent o8 t9e "r#;tr"tors, "re ;nsu88;1;ent to ;nv"l; "te "n "A"r 8";rly "n 9onestly 2" e. 6u ;1;"l rev;eA o8 "n "r#;tr"t;on ;s, t9us, 2ore l;2;te t9"n Du ;1;"l rev;eA o8 " tr;"l. No"et$eless, t$e ar/itratorsB a4ar%s is "ot a/solute a"% 4it$out eC eptio"s. #$e ar/itrators a""ot resolve issues /eyo"% t$e s ope of t$e su/.issio" agree.e"t. #$e parties to su $ a" agree.e"t are /ou"% /y t$e ar/itratorsB a4ar% o"ly to t$e eCte"t a"% i" t$e .a""er pres ri/e% /y t$e o"tra t a"% o"ly if t$e a4ar% is re"%ere% i" o"for.ity t$ereto. #$us, Se tio"s 2* a"% 25 of t$e Ar/itratio" La4 provi%e grou"%s for va ati"g, res i"%i"g or .o%ifyi"g a" ar/itratio" a4ar%. <$ere t$e o"%itio"s %es ri/e% i" Arti les 2)30, 2)3! a"% 2)*) of t$e Civil Co%e appli a/le to o.pro.ises a"% ar/itratio" are atte"%a"t, t$e ar/itratio" a4ar% .ay also /e a""ulle%. CCCC 9i"ally, it s$oul% /e stresse% t$at 4$ile a ourt is pre lu%e% fro. overtur"i"g a" a4ar% for errors i" %eter.i"atio" of fa tual issues, "evert$eless, if a" eCa.i"atio" of t$e re or% reveals "o support 4$atever for t$e ar/itratorsB %eter.i"atio"s, t$eir a4ar% .ust /e va ate%. '" t$e sa.e .a""er, "n "A"r 2ust #e v"1"te ;8 ;t A"s 2" e ;n N2"n;8est ;sre:"r o8 t9e l"A.I@1(A 15.p$asis supplie%.3 9ollo4i"g 'sset 4rivatization 1rust, errors i" la4 a"% fa t 4oul% "ot ge"erally Dustify t$e reversal of a" ar/itral a4ar%. A party as7i"g for t$e va atio" of a" ar/itral a4ar% .ust s$o4 t$at a"y of t$e grou"%s for va ati"g, res i"%i"g, or .o%ifyi"g

a" a4ar% are prese"t or t$at t$e ar/itral a4ar% 4as .a%e i" .a"ifest %isregar% of t$e la4. 2t$er4ise, t$e Court is %uty: /ou"% to up$ol% a" ar/itral a4ar%. #$e i"sta"t petitio" %4ells o" t$e allege% .a"ifest %isregar% of t$e la4 /y t$e 'CC:'CA. #$e =S ase of Merrill )6nch, 4ierce, :enner J Smith, $nc. v. Jaros@10A eCpou"%e% o" t$e p$rase H.a"ifest %isregar% of t$e la4I i" t$e follo4i"g 4iseG #$is ourt $as e.p$asi-e% t$at .a"ifest %isregar% of t$e la4 is a very "arro4 sta"%ar% of revie4. 'naconda Co. v. *istrict )odge No. 2F, E/0 :.2d 0D (Eth Cir.3/-2). A .ere error i" i"terpretatio" or appli atio" of t$e la4 is i"suffi ie"t. 'naconda, 6!3 9.2% at 3(:30. Rat$er, t$e %e isio" .ust fly i" t$e fa e of learly esta/lis$e% legal pre e%e"t. <$e" fa e% 4it$ ;uestio"s of la4, a" ar/itratio" pa"el %oes "ot a t i" .a"ifest %isregar% of t$e la4 u"less 113 t$e appli a/le legal pri" iple is learly %efi"e% a"% "ot su/De t to reaso"a/le %e/ateF a"% 123 t$e ar/itrators refuse% to $ee% t$at legal pri" iple. #$us, to Dustify t$e va atio" of a" ar/itral a4ar% o" a ou"t of H.a"ifest %isregar% of t$e la4,I t$e ar/iterBs fi"%i"gs .ust learly a"% u"e;uivo ally violate a" esta/lis$e% legal pre e%e"t. A"yt$i"g less 4oul% "ot suffi e. '" t$e prese"t ase, petitio"ers, i" a /i% to esta/lis$ t$at t$e ar/itral a4ar% 4as issue% i" .a"ifest %isregar% of t$e la4, allege t$at t$e ,artial A4ar% violate% t$e pri" iples of pres riptio", %ue pro ess, a"% estoppel. A revie4 of petitio"ersB argu.e"ts 4oul%, $o4ever, s$o4 t$at t$eir argu.e"ts are /ereft of .erit. #$us, t$e ,artial A4ar% %ate%Septe./er 2(, 2))( a""ot /e va ate%. &C!CFs Cl";2 +s 'ot 5;2e$!"rre ,etitio"ers argue t$at RC&CBs lai. u"%er Se . 51g3 is /ase% o" overvaluatio" of &a"7ar%Bs reve"ues, assets, a"% "et 4ort$, $e" e, for pri e re%u tio" falli"g u"%er Se . 51$3, i" 4$i $ ase it 4as /elate%ly file%, for RC&C prese"te% t$e lai. to petitio"ers o" +ay 5, 2))3, 4$e" t$e perio% for prese"ti"g it u"%er Se . 51$3 eCpire% o" De e./er 31, 2))). As a ou"terpoi"t, RC&C asserts t$at its lai. learly o.es u"%er Se . 51g3 i" relatio" to Se . ( 4$i $ t$us gave it t$ree 133 years fro. t$e losi"g %ate of 8u"e 2, 2))), or u"til 8u"e 1, 2))3, 4it$i" 4$i $ to .a7e its lai.. RC&C o"te"%s $avi"g a te% 4it$i" t$e re;uire% perio%, $avi"g prese"te% its lai.:%e.a"% o" +ay 5, 2))3. #o .a7e lear t$e issue at $a"%, 4e $ig$lig$t t$e perti"e"t portio"s of Se s. 51g3, 51$3, a"% ( /eari"g o" 4$at petitio"ers 4arra"te% relative to t$e fi"a" ial o"%itio" of &a"7ar% a"% t$e re.e%ies availa/le to RC&C i" ase of /rea $ of 4arra"tyG g. #$e "u ;te 8;n"n1;"l st"te2ents o8 !"nE"r 8or t9e t9ree H3I 8;s1"l ye"rs en e De1e2#er 31, 1((7, 1((8 "n 1(((, "n t9e un"u ;te 8;n"n1;"l st"te2ents 8or t9e 8;rst Bu"rter en e 31 M"r19 2))), "re 8";r "n "11ur"te, "n 1o2plete ;n "ll 2"ter;"l respe1ts , a"% $ave /ee" prep"re ;n $.

"11or "n1e A;t9 :ener"lly "11epte "11ount;n: pr;n1;ples o"siste"tly follo4e% t$roug$out t$e perio% i"%i ate% a"%G i3 t$e #"l"n1e s9eet o8 !"nE"r "s o8 31 De1e2#er 1(((, as prepare% a"% ertifie% /y SGE K Co. 1HSGEI3, a"% t$e u"au%ite% /ala" e s$eet for t$e first ;uarter e"%e% 31 +ar $ 2))),present " 8";r "n "11ur"te st"te2ent "s o8 t9ose "tes, o8 !"nE"r Fs 8;n"n1;"l 1on ;t;on "n o8 "ll ;ts "ssets "n l;"#;l;t;es, "n ;s 1o2plete ;n "ll 2"ter;"l respe1tsF a"% t$e st"te2ents o8 !"nE"r Fs pro8;t "n loss "11ounts 8or t9e 8;s1"l ye"rs 1((0 to 1(((, as prepare% a"% ertifie% /y SGE, "n t9e un"u ;te pro8;t "n loss "11ounts 8or t9e 8;rst Bu"rter en e 31 M"r19 2))), 8";rly "n "11ur"tely present t9e results o8 t9e oper"t;ons o8 !"nE"r for t$e perio%s i"%i ate%, a"% "re 1o2plete ;n "ll 2"ter;"l respe1ts.

ii3

5C ept as %is lose% i" t$e Dis losures, a"% eC ept to t$e eCte"t set fort$ or reserve% i" t$e au%ite% fi"a" ial state.e"ts of &a"7ar% as of 31 De e./er 1!!! a"% its u"au%ite% fi"a" ial state.e"ts for t$e first ;uarter e"%e% 31 +ar $ 2))), !"nE"r , "s o8 su19 "tes "n up to 31 M"y 2))), 9" "n s9"ll 9"ve no l;"#;l;t;es, o2;ss;ons or 2;st"Ees ;n ;ts re1or s A9;19 A;ll 9"ve " 2"ter;"l " verse e88e1t on t9e net Aort9 or 8;n"n1;"l 1on ;t;on o8 !"nE"r to t9e e@tent o8 2ore t9"n /ne Hun re M;ll;on *esos H* 1)),))),))).))I ;n t9e "::re:"te. '" t$e eve"t su $ .aterial a%verse effe t o" t$e "et 4ort$ or fi"a" ial o"%itio" of &a"7ar% eC ee%s 2"e Hu"%re% +illio" ,esos 1, 1)),))),))).))3, t$e ,ur $ase ,ri e s$all /e re%u e% i" a or%a" e 4it$ t$e follo4i"g for.ulaG CCCC

Se tio" (. >"rr"nt;es

&e2e ;es 8or !re"19 o8

'f a"y of t$e represe"tatio"s a"% 4arra"ties of a"y or all of t$e S5LL5RS or t$e &=65R 1t$e HDefaulti"g ,artyI3 o"tai"e% i" Se tio"s 5 a"% 6 s$all /e fou"% to /e u"true 4$e" .a%e a"%Jor as of t$e Closi"g Date, t$e ot$er party, i.e., t$e &=65R if t$e Defaulti"g is a"y of t$e S5LL5RS a"% t$e S5LL5RS if t$e

Defaulti"g ,arty is t$e &=65R 1$erei"after referre% to as t$e HNo":Defaulti"g ,artyI3s9"ll 9"ve t9e r;:9t to reBu;re t9e De8"ult;n: *"rty, "t t9e l"tterFs e@pense, to 1ure su19 #re"19, "n Lor seeE "2":es, #y prov; ;n: not;1e or present;n: " 1l";2 to t9e De8"ult;n: *"rty, reaso"a/ly spe ifyi"g t$erei" t$e parti ulars of t$e /rea $. #$e foregoi"g re.e%ies s$all /e availa/le to t$e No": Defaulti"g ,arty o"ly ;8 t9e e2"n t9ere8or ;s presente ;n Ar;t;n: to t9e De8"ult;n: *"rty A;t9;n t9ree H3I ye"rs 8ro2 t9e Clos;n: D"te, e@1ept t9"t t9e re2e y 8or " #re"19 o8 t9e S-LL-&SF represent"t;on "n A"rr"nty ;n Se1t;on 5 H9I s9"ll #e "v";l"#le only ;8 t9e e2"n t9ere8or ;s presente to t$e Defaulti"g ,arty i" 4riti"g toget$er 4it$ s $e%ules a"% %ata to su/sta"tiate su $ %e.a"%, A;t9;n s;@ H0I 2ont9s 8ro2 t9e Clos;n: D"te. 15.p$asis supplie%.3 &efore 4e a%%ress t$e issue put for4ar% /y petitio"ers, t$ere is a "e essity to %eter.i"e t$e "ature a"% appli atio" of t$e reliefs provi%e% u"%er Se . 51g3 a"% Se . 51$3 i" o"Du" tio" 4it$ Se . (, t$usG 113 #$e relief u"%er Se . 51$3 is spe ifi ally for pri e re%u tio" as sai% se tio" eCpli itly states t$at t$e H,ur $ase ,ri e s$all /e re%u e% i" a or%a" e 4it$ t$e follo4i"g for.ula C C C.I '" a%%itio", Se . ( gives t$e aggrieve% party t$e rig$t to as7 %a.ages /ase% o" t$e stipulatio" t$at t$e "o":%efaulti"g party Hs$all $ave t$e rig$t to re;uire t$e Defaulti"g ,arty, at t$e latterBs eCpe"se, to ure su $ /rea $ a"%Jor seeE "2":es.I 2" t$e ot$er $a"%, t$e re.e%y u"%er Se . 51g3 i" o"Du" tio" 4it$ Se . ( a" i" lu%e spe ifi perfor.a" e, %a.ages, a"% ot$er reliefs e@1lu ;n: pr;1e re u1t;on. 123 Se . 51g3 4arra"ty overs t$e au%ite% fi"a" ial state.e"ts 1A9S3 for t$e t$ree 133 years e"%i"g De e./er 31, 1!!( to 1!!! a"% t$e u"au%ite% fi"a" ial state.e"ts 1=9S3 for t$e first ;uarter e"%i"g +ar $ 31, 2))). 2" t$e ot$er $a"%, t$e Se . 51$3 4arra"ty refers o"ly to t$e A9S for t$e year e"%i"g De e./er 31, 1!!! a"% t$e =9S up to+ay 31, 2))). 't is u"%e"ie% t$at Se . 51$3 refers to pri e re%u tio" as it overs Ho"ly t$e .ost up:to:%ate au%ite% a"% u"au%ite% fi"a" ial state.e"ts upo" 4$i $ t$e pri e .ust $ave /ee" /ase%.I@1!A 133 ="%er Se . 51$3, t$e respo"si/ility of petitio"ers for its 4arra"ty s$all e@1lu e t$e %is losures a"% reservatio"s .a%e i" A9S of &a"7ar% as of De e./er 31, 1!!!a"% its =9S up to +ay 31, 2))). No su $ eC lusio"s 4ere .a%e u"%er Se . 51g3 4it$ respe t to t$e 4arra"ty of petitio"ers i" t$e A9S a"% =9S of &a"7ar%. 1*3 Se . 51$3 gives relief o"ly if t$ere is .aterial a%verse effe t i" t$e "et 4ort$ i" eC ess of ,$, 1)) .illio" a"% it provi%es a for.ula for pri e re%u tio".@2)A 2" t$e ot$er $a"%, Se . 51g3 a" /e t$e /asis for re.e%ies li7e spe ifi perfor.a" e, %a.ages, a"% ot$er reliefs, eC ept pri e re%u tio", eve" if t$e overvaluatio" is less or a/ove ,$, 1)) .illio" a"% t$ere is "o for.ula for o.putatio" of %a.ages. 153 ="%er Se . (, t$e aggrieve% party s$all prese"t its 4ritte" %e.a"% to t$e %efaulti"g party 4it$i" t$ree 133 years fro. losi"g %ate. ="%er Se . 51$3, t$e 4ritte" %e.a"% s$all

/e prese"te% 4it$i" siC 163 .o"t$s fro. losi"g %ate. '" a or%a" e 4it$ par. 21 3 of t$e AS,A, t$e %ea%li"e to file t$e %e.a"% u"%er Se . 51$3 4as eCte"%e% to De e./er 31, 2))). 9ro. t$e a/ove %eter.i"atio", it /e o.es lear t$at t$e aggrieve% party is e"title% to t4o 123 separate alter"ative re.e%ies u"%er Se s. 5 a"% ( of t$e S,A, t$usG 1. A lai. for pri e re%u tio" u"%er Se . 51$3 a"%Jor %a.ages /ase% o" t$e /rea $ of 4arra"ty /y &a"7ar% o" t$e a/se" e of lia/ilities, o.issio"s a"% .ista7es o" t$e fi"a" ial state.e"ts as of 31 De e./er 1!!! a"% t$e =9S as of 31 +ay 2))), provi%e% t$at t$e .aterial a%verse effe t o" t$e "et 4ort$ eC ee%s ,$, 1))+ a"% t$e 4ritte" %e.a"% is prese"te% 4it$i" siC 163 .o"t$s fro. losi"g %ate 1eCte"%e% to 31 De e./er 2)))3F a"% 2. A" a tio" to ure t$e /rea $ li7e spe ifi perfor.a" e a"%Jor %a.ages u"%er Se . 51g3 /ase% o" &a"7ar%Bs /rea $ of 4arra"ty i"volvi"g its A9S for t$e t$ree 133 fis al years e"%i"g 31 De e./er 1!!(, 1!!0, a"% 1!!! a"% t$e =9S for t$e first ;uarter e"%i"g 31 +ar $ 2))) provi%e% t$at t$e 4ritte" %e.a"% s$all /e prese"te% 4it$i" t$ree 133 years fro. losi"g %ate. Has RC&C t$e optio" to $oose /et4ee" Se . 51g3 or Se . 51$3S #$e a"s4er is yes. Se . 5 a"% Se . ( are lear t$at it is %is retio"ary o" t$e aggrieve% parties to avail t$e.selves of a"y re.e%y .e"tio"e% a/ove. #$ey .ay $oose o"e a"% %ispe"se 4it$ t$e ot$er. 2f ourse, t$e relief for pri e re%u tio" u"%er Se . 51$3 4ill $ave to o"for. to t$e prere;uisites a"% ti.e fra.e of siC 163 .o"t$sF ot$er4ise, it is 4aive%. ,reli.i"arily, petitio"ersB /asi posture t$at RC&CBs lai. is for t$e re overy of overpay.e"t is spe ious. #$e re or%s s$o4 t$at i" its ,e=uest (or 'rbitration %ate% +ay 12, 2))*, RC&C praye% for t$e res issio" of t$e S,A, restitutio" of t$e 4$ole pur $ase pri e, a"% %a.ages "ot for re%u tio" of pri e or for t$e retur" of a"y overpay.e"t. 5ve" i" its +ay 5, 2))) letter,@21A RC&C %i% "ot as7 for t$e re overy of a"y overpay.e"t or re%u tio" of pri e, .erely stati"g i" it t$at t$e a ou"ts of &a"7ar%, as refle te% i" its A9S for 1!!!, 4ere overstate% 4$i $, "e essarily, resulte% i" a" overpay.e"t situatio". RC&C 4as e.p$ati a"% u"e;uivo al t$at petitio"ers violate% t$eir 4arra"ty overe% /y Se . 51g3 of t$e S,A. 't is t$us evi%e"t t$at RC&C %i% "ot avail itself of t$e optio" u"%er Se . 51$3, i.e., for pri e re%u tio" or t$e retur" of a"y overpay.e"t arisi"g fro. t$e overvaluatio" of &a"7ar%Bs fi"a" ial o"%itio". Clearly, RC&C i"vo7e% Se . 51g3 to lai. %a.ages fro. petitio"ers 4$i $ is o"e of t$e alter"ative reliefs gra"te% u"%er Se . ( i" a%%itio" to res issio" a"% restitutio" of pur $ase pri e. ,etitio"ers %o "ot %e"y t$at RC&C for.ally file% its lai. u"%er Se . 51g3 4$i $ is a" $ore% o" t$e .aterial overstate.e"t or overvaluatio" of &a"7ar%Bs reve"ues, assets, a"% "et 4ort$ a"%, $e" e, t$e overstate.e"t of t$e pur $ase pri e. #$ey, $o4ever, assert t$at su $ lai. for overpay.e"t

is a tually a lai. u"%er Se . 51$3 of t$e S,A for pri e re%u tio" 4$i $ it forfeite% after De e./er 31, 2))). <e a""ot sustai" petitio"ersB positio". 't a""ot /e %ispute% t$at a" overstate.e"t or overvaluatio" of &a"7ar%Bs fi"a" ial o"%itio" as of losi"g %ate tra"slates i"to a .isreprese"tatio" "ot o"ly of t$e a ura y a"% trut$ful"ess of t$e fi"a" ial state.e"ts u"%er Se . 51g3, /ut also as to &a"7ar%Bs a tual "et 4ort$ .e"tio"e% i" Se . 51$3. 2vervaluatio" presupposes .ista7es i" t$e e"tries i" t$e fi"a" ial state.e"ts a"% a.ou"ts to a /rea $ of petitio"ersB represe"tatio"s a"% 4arra"ties u"%er Se . 5. Co"se;ue"tly, su $ error i" t$e fi"a" ial state.e"ts 4oul% i.pa t o" t$e figure represe"ti"g t$e "et 4ort$ of &a"7ar% as of losi"g %ate. A" overvaluatio" .ea"s t$at t$e fi"a" ial o"%itio" of &a"7ar% as of losi"g %ate, i.e., 8u"e 2, 2))), is overstate%, a situatio" t$at 4ill %efi"itely result i" a /rea $ of 5,C'&Bs represe"tatio"s a"% 4arra"ties. A s ruti"y of Se . 51g3 a"% Se . 51$3 i" relatio" to Se . ( of t$e S,A 4oul% i"%i ate t$e follo4i"g re.e%ies availa/le to RC&C s$oul% it /e %is overe%, as of losi"g %ate, t$at t$ere is overvaluatio" 4$i $ 4ill o"stitute /rea $ of t$e 4arra"ty lause u"%er eit$er Se . 51g3 or 1$3, to 4itG 113 A" overvaluatio" of &a"7ar%Bs a tual fi"a" ial o"%itio" as of losi"g %ate tai"ts t$e vera ity a"% a ura y of t$e A9S for 1!!(, 1!!0, a"% 1!!! a"% t$e =9S for t$e first ;uarter of 2))) a"% is a" a tio"a/le /rea $ of petitio"ersB 4arra"ties u"%er Se . 51g3. 123 A" overvaluatio" of &a"7ar%Bs fi"a" ial o"%itio" as of +ay 31, 2))), e" o.passi"g t$e 4arra"te% fi"a" ial o"%itio" as of De e./er 31, 1!!! t$roug$ t$e A9S for 1!!! a"% as of +ar $ 31, 2))) t$roug$ t$e =9S for t$e first ;uarter of 2))), is a /rea $ of petitio"ersB represe"tatio"s a"% 4arra"ties u"%er Se . 51$3. #$us, RC&C $as t4o %isti" t alter"ative re.e%ies i" ase of a" overvaluatio" of &a"7ar%Bs fi"a" ial o"%itio". 't .ay i"vo7e Se . 51$3 4$e" t$e o"%itio"s of t$e t$res$ol% aggregate overvaluatio" a"% t$e lai. .a%e 4it$i" t$e siC: .o"t$ ti.e:/ar are prese"t. '" t$e alter"ative, it .ay i"vo7e Se . 51g3 4$e" it fi"%s t$at a lai. for H uri"g t$e /rea $I a"%Jor %a.ages 4ill /e .ore a%va"tageous to its i"terests provi%e% it is file% 4it$i" t$ree 133 years fro. losi"g %ate. Si" e it $as t4o re.e%ies, RC&C .ay opt to eCer ise eit$er o"e. 2f ourse, t$e eCer ise of eit$er o"e 4ill pre lu%e t$e ot$er. +oreover, t$e la"guage e.ploye% i" Se . 51g3 a"% Se . 51$3 is lear a"% /ereft of a"y a./iguity. #$e S,ABs stipulatio"s reveal t$at t$e "o":use or 4aiver of Se . 51$3 %oes "ot pre lu%e RC&C fro. availi"g itself of t$e se o"% relief u"%er Se . 51g3. Arti le 13() of t$e Civil Co%e is eCpli it t$at Hif ter.s of a o"tra t are lear a"% leave "o %ou/t upo" t$e i"te"tio" of t$e o"tra ti"g parties t$e literal .ea"i"g of its stipulatio"s s$all o"trol.I Si" e t$e ter.s of a o"tra t $ave t$e for e of la4 /et4ee" t$e parties,@22A t$e" t$e parties .ust respe t a"% stri tly o"for. to it. Lastly, it is a lo"g $el% ar%i"al rule t$at 4$e" t$e ter.s of a" agree.e"t are re%u e% to 4riti"g, it is %ee.e% to o"tai" all t$e ter.s agree% upo" a"% "o evi%e" e of su $ ter.s a" /e a%.itte% ot$er t$a" t$e o"te"ts of t$e agree.e"t itself.@23A Si" e t$e S,A is u"a./iguous, a"% petitio"ers faile% to a%%u e evi%e" e to t$e o"trary, t$e" t$ey are legally /ou"% to o.ply 4it$ it.

,etitio"ers stipulatio" t$atG

agree%

ulti.ately

to

t$e

5a $ of t$e represe"tatio"s a"% 4arra"ties of t$e S5LL5RS is %ee.e% to /e a sep"r"te represent"t;on "n A"rr"nty, a"% t$e &=65R $as pla e% o.plete relia" e t$ereo" i" agreei"g to t$e ,ur $ase ,ri e a"% i" e"teri"g i"to t$is Agree.e"t. #$e represe"tatio"s a"% 4arra"ties of t$e S5LL5RS s$all /e orre t as of t$e %ate of t$is Agree.e"t a"% as of t$e Closi"g Date 4it$ t$e sa.e for e a"% effe t as t$oug$ su $ represe"tatio"s a"% 4arra"ties $a% /ee" .a%e as of t$e Closi"g Date.@2*A 15.p$asis supplie%.3 #$e Court sustai"s t$e fi"%i"g i" t$e ,artial A4ar% t$at Se . 51g3 of t$e S,A is a free sta"%i"g 4arra"ty a"% "ot o"stri te% /y Se . 51$3 of t$e sai% agree.e"t. =po" t$e foregoi"g pre.ises a"% i" t$e lig$t of t$e u"%ispute% fa ts o" re or%, RC&CBs lai. for res issio" of t$e S,A a"% %a.ages %ue to overvaluatio" of &a"7ar%Bs a ou"ts 4as properly for a /rea $ of t$e 4arra"ty u"%er Se . 51g3 a"% 4as "ot ti.e:/arre%. #o repeat, RC&C prese"te% its 4ritte" lai. o" +ay 5, 2))3, or a little less t$a" a .o"t$ /efore losi"g %ate, 4ell 4it$i" t$e t$ree 133:year pres riptive perio% provi%e% u"%er Se . ( for t$e eCer ise of t$e rig$t provi%e% u"%er Se . 51g3. ,etitio"ers /e.oa" t$e fa t t$at Ht$e ar/itratorsB lia/ility a4ar% 1a3 %isregar%e% t$e 6:.o"t$ o"tra tual li.itatio" for RC&CBs Qoverpr;1eF 1l";2, a"% @/A su/stitute% i" its pla e t$e 3:year li.itatio" u"%er t$e o"tra t for ot9er 1l";2s,I@25A a%opti"g i" t$at regar% t$e i"terpretatio" of t$e S,A .a%e /y ar/itral tri/u"al .e./er, retire% 8usti e >apu"a", i" $is Disse"ti"g 2pi"io", i" 4$i $ $e asserte%G =lti.ately, t$e Clai. is o"e for re overy of overpay.e"t i" t$e pur $ase pri e of t$e s$ares. A"% it is i" t$is o"teCt, t$at ' respe tfully su/.it t$at Se tio" 51$3 a"% "ot Se tio" 51g3, applies to t$e prese"t o"troversy.@26A CCCC #rue, 4it$out Se tio" 51$3, t$e Clai. for pri e re overy 4oul% fall u"%er Se tio" 51g3. #$e re overy of t$e pe u"iary loss of t$e Clai.a"t i" t$e for. of t$e eC ess pri e pai% 4oul% /e i" t$e "ature of a lai. for a tual %a.ages /y 4ay of o.pe"satio". '" t$at situatio", all t$e a ou"ts i" t$e 1!!! fi"a" ial state.e"ts 4oul% /e t$e su/De t of t$e 4arra"ty i" Se tio" 51g3. Ho4ever, si" e t$e parties eCpli itly i" lu%e% Se tio" 51$3 i" t$eir S,A, 4$i $ assures t$e Clai.a"t t$at t$ere 4ere "o Ho.issio"s or .ista7es i" t$e re or%sI t$at 4oul% .isstate t$e 1!!! "et 4ort$ a ou"t, + "2 le8t A;t9 no ot9er 1on1lus;on #ut t9"t t9e "11ur"1y o8 t9e net Aort9 A"s t9e su#De1t o8 t9e A"rr"nty ;n Se1t;on 5H9I, A9;le t9e "11ur"1y or 1orre1tness o8 t9e ot!er a))o&ntst9"t ; not #e"r on, or

"88e1t !"nE"r Fs net Aort9, :u"r"ntee #y Se1t;on 5H:I. CCCC

Aere

#$is .a""er of re o" ili"g t$e t4o provisio"s is o"siste"t 4it$ t$e pri" iple i" Rule 13), Se tio" 12 of t$e Rules of Court t$at H4$e" a ge"eral a"% a parti ular provisio" are i" o"siste"t, t$e latter is para.ou"t to t$e for.erV @soA a parti ular i"te"t 4ill o"trol a ge"eral o"e t$at is i" o"siste"t 4it$ it.I #$is is also o"siste"t 4it$ eCisti"g %o tri"es o" statutory o"stru tio", t$e appli atio" of 4$i $ is illustrate% i" t$e ase of Co..issio"er of Custo.s vs. Court of #aC Appeals, GR No. L:*1061, %ate% +ar $ 23, 1!0( C C C. CCCC

use ;n t9e S*A to :;ve pr;or;ty to one A"rr"nty over t9e ot9er. 59ere ;s not9;n: ;n t9e Aor ;n: use to ;n ;1"te t9"t t9e p"rt;es ;nten e to l;2;t t9e s1ope o8 t9e A"rr"nty ;n 5H:I. 'f it /e o"te"%e% t$at, o" a true o"stru tio" of t$e t4o 4arra"ties, 51$3 so.e$o4 uts %o4" t$e s ope of 51g3, t9e 5r;#un"l 1"n 8;n no Dust;8;1"t;on 8or su19 1on1lus;on on t9e Aor ;n: use . 9urt$er.ore, t$e #ri/u"al is of t$e vie4 t$at very lear 4or%s 4oul% /e "ee%e% to ut %o4" t$e s ope of t$e 51g3 4arra"ty.@20A #$e Court up$ol%s t$e o" lusio" of t$e tri/u"al a"% rules t$at t$e lai. of RC&C u"%er Se . 51g3 is "ot ti.e: /arre%.

*et;t;oners >ere 'ot Den;e Due *ro1ess 59e Cl";2 ;s 8or re1overy o8 t9e e@1ess pr;1e #y A"y o8 "1tu"l "2":es. @2(A C C C 15.p$asis supplie%.3 8usti e >apu"a" "ote% t$at 4it$out Se . 51$3, RC&CBs lai. 4oul% fall u"%er Se . 51g3, i.plie%ly a%.itti"g t$at /ot$ provisio"s oul% very 4ell over RC&CBs lai., eC ept t$at Se . 51$3 eC lu%es t$e situatio" o"te.plate% i" it fro. t$e ge"eral ter.s of Se . 51g3. Su $ vie4 is i" orre t. <$ile it is true t$at Se . 51$3, as ou $e%, is a 4arra"ty o" t$e a ura y of t$e &a"7ar%Bs "et 4ort$ 4$ile Se . 51g3, as also ou $e%, is a 4arra"ty o" t$e vera ity, a ura y, a"% o.plete"ess of t$e A9S i" all .aterial respe ts as prepare% i" a or%a" e 4it$ ge"erally a epte% a ou"ti"g pri" iples o"siste"tly follo4e% t$roug$out t$e perio% au%ite%, yet /ot$ 4arra"ties /oil %o4" to t$e sa.e t$i"g a"% ste. fro. t$e sa.e a ou"ts as su..ari-e% i" t$e A9S. Si" e t$e net Aort9 ;s t9e #"l"n1e o8 !"nE"r Fs "ssets less ;ts l;"#;l;t;es, ;t ne1ess"r;ly ;n1lu es "ll t9e "11ounts un er t9e A4S . '" s$ort, t9ere "re no "11ounts ;n t9e A4S t9"t o not #e"r on t9e net Aort9 o8 !"nE"r . +oreover, as earlier elu i%ate%, a"y overvaluatio" of &a"7ar%Bs "et 4ort$ is "e essarily a .isreprese"tatio" of t$e vera ity, a ura y, a"% o.plete"ess of t$e A9S a"% also a /rea $ of t$e 4arra"ty u"%er Se . 51g3. #$us, t$e su/De t of t$e 4arra"ty i" Se . 51$3 is also overe% /y t$e 4arra"ty i" Se . 51g3, a"% Se . 51$3 a""ot eC lu%e su $ /rea $ fro. t$e a./it of Se . 51g3. #$ere is "o "ee% to rely o" Se . 12, Rule 13) of t$e Rules of Court for /ot$ Se . 51g3 a"% Se . 51$3 as alter"ative re.e%ies are of e;ual footi"g a"% o"e "ee% "ot ategori-e o"e se tio" as a ge"eral provisio" a"% t$e ot$er a parti ular provisio". +ore i.porta"tly, a s ruti"y of t$e four or"ers of t$e S,A %oes "ot eCpli itly reveal a"y stipulatio" "or eve" i.plie%ly t$at t$e parties i"te"%e% to li.it t$e s ope of t$e 4arra"ty i" Se . 51g3 or gave priority to Se . 51$3 over Se . 51g3. #$e ar/itral tri/u"al %i% "ot fi"% a"y legal /asis i" t$e S,A t$at Se . 51$3 Hso.e$o4 uts %o4"I t$e s ope of Se . 51g3, t$usG !.1) '" t$e opi"io" of t$e #ri/u"al, t9ere ;s not9;n: ;n t9e Aor ;n: ,etitio"ers i.pute o" RC&C t$e a t of reati"g su..aries of t$e a ou"ts of &a"7ar% 4$i $ Hi" tur" 4ere use% /y its eCperts to o" lu%e t$at &a"7ar% i.properly re or%e% its re eiva/les a"% o..itte% .aterial %eviatio"s fro. GAA, re;uire.e"ts.I@2!A Later, petitio"ers 4oul% assert t$at Ht$e ar/itratorsB partial a4ar% a%.itte% a"% use% t$e Su..aries as evi%e" e, a"% $el% o" t$e /asis of t$e Ti"for.atio"B o"tai"e% i" t$e. t$at petitio"ers 4ere i" /rea $ of t$eir 4arra"ty i" GAA, o.plia" e.I #o petitio"ers, t$e 'CC:'CABs use of su $ su..aries /ut 4it$out prese"ti"g t$e sour e %o u.e"ts violates t$eir rig$t to %ue pro ess. ,ressi"g t$e poi"t, petitio"ers $a% .ove%, /ut to "o avail, for t$e eC lusio" of t$e sai% su..aries. ,etitio"ers allege t$at t$ey $a% reserve% t$e rig$t to ross: eCa.i"e t$e 4it"esses of RC&C 4$o testifie% o" t$e su..aries, pe"%i"g t$e resolutio" of t$eir .otio" to eC lu%e. &ut, a or%i"g to t$e., t$ey 4ere effe tively %e"ie% t$e rig$t to ross:eCa.i"e RC&CBs 4it"esses 4$e" t$e 'CC:'CA a%.itte% t$e su..aries of RC&C as evi%e" e. ,etitio"ersB positio" is /ereft of .erit. A"e"t t$e use /ut "o":prese"tatio" of t$e sour e %o u.e"ts as t$e Du.pi"g /oar% for a lai. of %e"ial of %ue pro ess, petitio"ers ite Com ania Maritima v. 'llied :ree "or#erBs Inion.@3)A 't .ay /e state%, $o4ever, t$at su $ ase is "ot o" all fours 4it$ t$e i"sta"t ase a"%, t$erefore, a""ot /e applie% $ere o"si%eri"g t$at it %oes "ot i"volve a" a%.i"istrative /o%y eCer isi"g ;uasi:Du%i ial fu" tio" /ut rat$er t$e regular ourt. '" a ate"a of ases, 4e $ave rule% t$at H@tA$e esse" e of %ue pro ess is t$e opportu"ity to /e $ear%. <$at t$e la4 pro$i/its is "ot t$e a/se" e of previous "oti e /ut t$e a/solute a/se" e t$ereof a"% t$e la 7 of opportu"ity to /e $ear%.I@31A <e also eCplai"e% i" )astimoso v. 'sa6o t$at H@%Aue pro ess i" a" a%.i"istrative o"teCt %oes "ot re;uire trial type pro ee%i"gs si.ilar to t$ose i" ourts of Dusti e. <$ere a" opportu"ity to /e $ear% eit$er t$roug$ oral argu.e"ts or t$roug$ plea%i"gs is a or%e%, t$ere is "o %e"ial of pro e%ural %ue pro ess.I@32A

<ere petitio"ers affor%e% t$e opportu"ity to refute t$e su..aries a"% pie es of evi%e" e su/.itte% /y RC&C 4$i $ /e a.e t$e /ases of t$e eCpertsB opi"io"S #$e a"s4er is i" t$e affir.ative. <e re all t$e eve"ts t$at ul.i"ate% i" t$e issua" e of t$e $alle"ge% ,artial A4ar%, t$usG 2" +ay 1(, 2))*, t$e 'CC:'CA re eive% t$e ,e=uest (or 'rbitration %ate% +ay 12, 2))* fro. RC&C see7i"g res issio" of t$e S,A a"% restitutio" of all t$e a.ou"ts pai% /y RC&C to petitio"ers, 4it$ a tual a"% .oral %a.ages, i"terest, a"% osts of suit. 2" August 0, 2))*, petitio"ers file% a" A"s4er to t$e Re;uest for Ar/itratio" %ate% 8uly 20, 2))*, setti"g up a ou"ter lai. for =SD 3)),))) for a tual a"% eCe.plary %a.ages. RC&C file% its Reply@33A %ate% August 31, 2))* to petitio"ersB A"s4er to t$e Re;uest for Ar/itratio". 2" 2 to/er *, 2))*, t$e parties e"tere% i"to t$e #er.s of Refere" e.@3*A At t$e sa.e ti.e, t$e $airperso" of t$e ar/itral tri/u"al issue% a provisio"al ti.eta/le @35A for t$e ar/itratio". 2" 2 to/er 25, 2))*, as previously agree% upo" i" t$e .eeti"g o" 2 to/er *, 2))*, petitio"ers file% a +otio" to Dis.iss@36A 4$ile RC&C file% a HClai.a"tBs ,ositio" ,aper 1ReG @,etitio"ersBA Assertio" t$at RC&C CA,'#AL C2R,2RA#'2NBs ,rese"t Clai. 's #i.e &arre%3.I@3(A #$e", t$e tri/u"al issue% ,ro e%ural 2r%er No. 1 %ate% 8a"uary 12, 2))5,@30A %e"yi"g t$e .otio" to %is.iss a"% setti"g t$e i"itial $eari"g of t$e ase o" April 11, 2))5. '" a letter %ate% 9e/ruary !, 2))5,@3!A petitio"ers re;ueste% t$at t$e tri/u"al %ire t RC&C to pro%u e ertai" %o u.e"ts. At t$e sa.e ti.e, petitio"ers soug$t t$e postpo"e.e"t of t$e $eari"g o" April 11, 2))5 to +ar $ 21, 2))5, i" lig$t of t$eir o4" re;uest. 2" 9e/ruary 11, 2))5, petitio"ers re eive% RC&CBs /rief of evi%e" e a"% supporti"g %o u.e"tatio" i" a or%a" e 4it$ t$e provisio"al ti.eta/le.@*)A '" t$e /rief of evi%e" e, RC&C provi%e% su..aries of t$e a ou"ts of &a"7ar%, 4$i $ petitio"ers "o4 ;uestio". Later, i" a letter %ate% 9e/ruary 1*, 2))5, petitio"ers o.plai"e% to t$e tri/u"al 4it$ regar% to t$eir la 7 of a ess to RC&CBs eCter"al au%itor. ,etitio"ers soug$t a" au%it /y a" a ou"ti"g fir. of t$e re or%s of &a"7ar% 4it$ respe t to t$e lai.s of RC&C. &y virtue of su $ re;uests, petitio"ers also soug$t a res $e%uli"g of t$e provisio"al ti.eta/le, %espite t$eir earlier assura" e to t$e tri/u"al t$at if t$ey re eive% t$e %o u.e"ts t$at t$ey re;ueste% o" 9e/ruary !, 2))5 o" or /efore 9e/ruary 21, 2))5, t$ey 4oul% a/i%e /y t$e provisio"al ti.eta/le.
@*1A

evi%e" e a"% %o u.e"ts to +ar $ 21, 2))5. #$e %ate of t$e i"itial $eari"g, $o4ever, re.ai"e% o" April 11, 2))5. 2" 9e/ruary 10, 2))5, petitio"ers 4ere fur"is$e% t$e %o u.e"ts t$at t$ey re;ueste% RC&C.@*3A #$e parties also agree% to .eet agai" o" 9e/ruary 23, 2))5 to provi%e petitio"ers 4it$ a H4al7:t$roug$I of &a"7ar%Bs Statisti al A"alysis Syste. a"% to provi%e petitio"ers 4it$ a soft opy of all of &a"7ar%Bs ar%$ol%ers.@**A Duri"g t$e 9e/ruary 23, 2))5 .eeti"g, 5,C'&Bs ou"selsJreprese"tatives 4ere a o.pa"ie% to t$e &a"7ar%Bs Cre%it:+'S Group. #$ere, &a"7ar%Bs represe"tative, A.or La-aro, %es ri/e% a"% eCplai"e% to petitio"ersB represe"tatives t$e steps i"volve% i" pro uri"g a"% tra"slati"g ra4 %ata o" usto.er tra"sa tio"s. La-aro eCplai"e% t$at &a"7ar% aptures ar%$ol%er i"for.atio" a"% tra"sa tio"s t$roug$ e" o%i"g or ele tro"i %ata apture. #$ereafter, su $ %ata are tra"s.itte% to its .ai" re%it ar% a%.i"istratio" syste.. Su $ ra4 %ata are t$e" se"t to &a"7ar%Bs '"for.atio" #e $"ology Group. =si"g a proprietary soft4are alle% SAS, t$e ra4 %ata is t$e" o"verte% i"to SAS files 4$i $ .ay /e vie4e%, $a"%le%, a"% o"verte% i"to 5C el files for reporti"g purposes. Duri"g t$e 4al7:t$roug$, petitio"ersB represe"tatives as7e% ;uestio"s 4$i $ 4ere a"s4ere% i" %etail /y La-aro. At t$e sa.e ti.e, a"ot$er &a"7ar% represe"tative, 9eliC L. Si" oUegue, a o.pa"ie% t4o au%itorsJreprese"tatives of petitio"ers to eCa.i"e t$e Dour"al vou $ers a"% supporti"g %o u.e"ts of &a"7ar% o"sisti"g of several /oCes. #$e au%itors ra"%o.ly sifte% t$roug$ t$e /oCes 4$i $ t$ey $a% earlier re;ueste% to /e i"spe te%. '" a%%itio", petitio"ers 4ere fur"is$e% 4it$ a" ele tro"i opy of t$e %etails of all ar%$ol%ers, i" lu%i"g releva"t %ata for agi"g of re eiva/les for t$e years 2))) to 2))3, as 4ell as %ata o"tai"i"g %etails of 4ritte":off a ou"ts fro. 1!!! to +ar $ 2))) o"tai"e% i" o.pa t %is s.@*5A 2" +ar $ *, 2))5, petitio"ers se"t a letter@*6A to t$e tri/u"al re;uesti"g for a postpo"e.e"t of t$e April 11, 2))5 $eari"g of t$e ase. ,etitio"ers lai. t$at t$ey oul% "ot o"fir. t$e su..aries prepare% /y RC&C, o"si%eri"g t$at RC&C allege%ly %i% "ot ooperate i" provi%i"g %ata t$at 4oul% fa ilitate t$eir verifi atio". ,etitio"ers spe ifi ally .e"tio"e% t$e follo4i"g %ataG 113 list of "a.es of ar%$ol%ers 4$ose a ou"ts are sour es of %ata gat$ere% or al ulate% i" t$e su..ariesF 123 refere" es to t$e /asi ar%$ol%er %o u.e"ts fro. 4$i $ su $ %ata 4ere olle te%F a"% 133 a ess to t$e u"%erlyi"g ar%$ol%er %o u.e"ts at a ti.e a"% u"%er o"%itio"s .utually o"ve"ie"t to t$e parties. As regar%s t$e o.pa t %is s of i"for.atio" provi%e% to petitio"ers, it is lai.e% t$at su $ i"for.atio" oul% "ot /e a esse% as t$e soft4are "e essary for t$e $a"%li"g of t$e %ata oul% "ot /e .a%e i..e%iately availa/le to t$e.. '" ,ro e%ural 2r%er No. 3 %ate% +ar $ 11 2))5, @*(A t$e i"itial $eari"g 4as .ove% to 8u"e 13 to 16, 2))5, o"si%eri"g t$at petitio"ers faile% to pay t$e a%va" e o" osts of t$e tri/u"al. 2" +ar $ 23, 2))5, RC&C pai% t$e /ala" e of t$e a%va" e o" osts.@*0A 2" April 22, 2))5, petitio"ers se"t t$e tri/u"al a letter, re;uesti"g for t$e postpo"e.e"t of t$e $eari"g s $e%ule% o" 8u"e 13 to 16, 2))5 o" t$e grou"% t$at t$ey oul% "ot su/.it t$eir 4it"essB state.e"ts %ue to t$e volu.e of %ata t$at t$ey a ;uire% fro. RC&C.
@*!A

#$ereafter, t$e tri/u"al issue% ,ro e%ural 2r%er No. 2 %ate% 9e/ruary 10, 2))5,@*2A i" 4$i $ it allo4e% t$e %is overy a"% i"spe tio" of t$e %o u.e"ts re;ueste% /y petitio"ers t$at 4ere also s $e%ule% o" 9e/ruary 10, 2))5. #$e re;uest for a" au%it of &a"7ar%Bs a ou"ts 4as %e"ie% 4it$out preDu%i e to t$e o"%u t of su $ au%it %uri"g t$e ourse of t$e $eari"gs. Co"se;ue"tly, t$e tri/u"al a.e"%e% t$e provisio"al ti.eta/le, eCte"%i"g t$e %ea%li"e for petitio"ers to file t$eir /rief of

'" a letter %ate% April 25, 2))5,@5)A petitio"ers %e.a"%e% fro. RC&C t$at t$ey /e allo4e% to eCa.i"e t$e Dour"al vou $ers earlier .a%e availa/le to t$e. %uri"g t$e9e/ruary 23, 2))5 .eeti"g. #$is %e.a"% 4as a"s4ere% /y RC&C i" a letter %ate% April 26, 2))5,@51A stati"g t$at su $ %e.a"% 4as /ei"g %e"ie% /y virtue of ,ro e%ural 2r%er No. 2, i" 4$i $ it 4as rule% t$at furt$er re;uests for %is overy 4oul% "ot /e .a%e eC ept 4it$ leave of t$e $airperso" of t$e tri/u"al. '" ,ro e%ural 2r%er No. *,@52A t$e tri/u"al gra"te% petitio"ersB re;uest for t$e postpo"e.e"t of t$e $eari"g o" 8u"e 13, 2))5 a"% res $e%ule% it to Nove./er 21, 2))5 i" lig$t of t$e pe"%i"g .otio"s file% /y 5,C'& 4it$ t$e R#C i" +a7ati City. 2" 8uly 2!, 2))5, t$e parties $el% a .eeti"g 4$erei" it 4as agree% t$at petitio"ers 4oul% /e provi%e% 4it$ $ar% a"% soft opies of t$e i"ve"tory of t$e Dour"al vou $ers earlier prese"te% to its represe"tatives, 4$ile .a7i"g t$e Dour"al vou $ers availa/le to petitio"ers for t4o 4ee7s for eCa.i"atio" a"% p$oto opyi"g.@53A 2" Septe./er 2, 2))5, petitio"ers applie% for t$e postpo"e.e"t of t$e Nove./er 21, 2))5 $eari"g %ue to t$e follo4i"gG 113 petitio"ers $a% earlier file% a .otio" %ate% August 11, 2))5 4it$ t$e R#C, i" 4$i $ t$e issue of 4$et$er t$e "o": 9ilipi"o .e./ers of t$e tri/u"al 4ere illegally pra ti i"g la4 i" t$e ,$ilippi"es /y $eari"g t$eir ase, 4$i $ 4as still pe"%i"gF a"% 123 t$e gat$eri"g a"% pro essi"g of t$e %ata a"% %o u.e"ts .a%e availa/le /y RC&C 4oul% re;uire 26 4ee7s. @5*A Su $ appli atio" 4as %e"ie% /y t$e tri/u"al i" ,ro e%ural 2r%er No. 5 %ate% Septe./er 16, 2))5.@55A 2" 2 to/er 21, 2))5, t$e tri/u"al issue% ,ro e%ural 2r%er No. 6,@56A postpo"i"g t$e Nove./er 21, 2))5 $eari"g /y virtue of a" or%er issue% /y t$e R#C i" +a7ati City%ire ti"g t$e tri/u"al to reset t$e $eari"g for April 21 a"% 2*, 2))6. #$ereafter, i" a letter %ate% 8a"uary 10, 2))6, petitio"ers 4rote t$e tri/u"al re;uesti"g t$at RC&C /e %ire te% toG 113 provi%e petitio"ers 4it$ i"for.atio" i%e"tifyi"g t$e Dour"al vou $ers a"% ot$er supporti"g %o u.e"ts t$at RC&C use% to arrive at t$e figures set out i" t$e su..aries a"% ot$er releva"t i"for.atio" "e essary to e"a/le t$e. to re o"stru t a"%Jor ot$er4ise u"%ersta"% t$e figures or a.ou"ts i" ea $ su..aryF a"% 123 su/.it to petitio"ers t$e re;ueste% pie es of i"for.atio" as soo" as t$ese are or $ave /e o.e availa/le, or i" a"y ase "ot later t$a" five %ays.
@5(A

'" a letter %ate% +ar $ 1), 2))6, @6)A petitio"ers re;ueste% t$at t$ey /e give" a" a%%itio"al perio% of at least *( %ays 4it$i" 4$i $ to su/.it t$eir evi%e" e:i": $ief 4it$ t$e orrespo"%i"g re;uest for t$e a" ellatio" of t$e $eari"g o" April 2*, 2))6. ,etitio"ers su/.it t$at s$oul% su $ re;uest /e %e"ie%, RC&CBs su..aries s$oul% /e eC lu%e% fro. t$e re or%s. 2" April 6, 2))6, petitio"ers file% t$eir ar/itratio" /riefs a"% 4it"ess state.e"ts. &y 4ay of reply, o" April 1(, 2))6, RC&C su/.itte% Eolu.es 'E a"% E of its eC$i/its a"% Eolu.e '' of its evi%e" e:i": $ief.@61A 2" April 10, 2))6, petitio"ers re;ueste% t$e tri/u"al t$at t$ey /e allo4e% to file reDoi"%er /riefs, or ot$er4ise eC lu%e RC&CBs reply /rief a"% 4it"ess state.e"ts.@62A '" t$is re;uest, petitio"ers also re;ueste% t$at t$e $eari"g set for April 2*, 2))6 /e .ove%. #$ese re;uests 4ere %e"ie%. Co"se;ue"tly, o" April 2* to 2(, 2))6, t$e ar/itral tri/u"al o"%u te% $eari"gs o" t$e ase.@63A 2" De e./er *, 2))6, petitio"ers su/.itte% reDoi"%er affi%avits, raisi"g "e4 issues for t$e first ti.e, to 4$i $ RC&C su/.itte% Eolu.e ''' of its evi%e" e:i": $ief /y 4ay of a reply. 2" 8a"uary 16, 2))(, /ot$ parties si.ulta"eously su/.itte% t$eir .e.ora"%a. 2" 8a"uary 26, 2))(, /ot$ parties si.ulta"eously file% t$eir reply to t$e ot$erBs .e.ora"%u..@6*A #$us, o" Septe./er 2(, 2))(, t$e ,artial A4ar% 4as re"%ere% /y t$e #ri/u"al. Later, petitio"ers .ove% to va ate t$e sai% a4ar% /efore t$e R#C. Su $ .otio" 4as %e"ie% /y t$e trial ourt i" t$e first assaile% or%er %ate% 8a"uary 0, 2))0. ,etitio"ers t$e" .ove% for a re o"si%eratio" of su $ or%er, /ut t$eir .otio" 4as also %e"ie% i" t$e se o"% assaile% or%er %ate% +ar $ 1(, 2))0. #$e foregoi"g eve"ts u"e;uivo ally %e.o"strate a.ple opportu"ity for petitio"ers to verify a"% eCa.i"e RC&CBs su..aries, a ou"ti"g re or%s, a"% reports. #$e plea%i"gs reveal t$at RC&C gra"te% petitio"ersB re;uests for pro%u tio" of %o u.e"ts a"% a ou"ti"g re or%s. +ore so, t$ey $a% .ore t$a" t$ree 133 years to prepare for t$eir %efe"se after RC&CBs su/.issio" of its /rief of evi%e" e. 9i"ally, it .ust /e e.p$asi-e% t$at petitio"ers $a% t$e opportu"ity to appeal t$e ,artial A4ar% to t$e R#C, 4$i $ t$ey i" fa t %i%. Later, petitio"ers eve" .ove% for t$e re o"si%eratio" of t$e %e"ial of t$eir appeal. Havi"g /ee" a/le to appeal a"% .ove for a re o"si%eratio" of t$e assaile% ruli"gs, petitio"ers a""ot lai. a %e"ial of %ue pro ess.@65A ,etitio"ersB rig$t to %ue pro ess 4as "ot /rea $e%. As regar%s petitio"ersB lai. t$at its rig$t to %ue pro ess 4as violate% 4$e" t$ey 4ere allege%ly %e"ie% t$e rig$t to ross:eCa.i"e RC&CBs 4it"esses, t$eir lai. is also /ereft of .erit. Se . 15 of RA 0(6 or t$e 'rbitration )a; provi%es t$atG Se tio" 15. Cearing b6 arbitrators. W Ar/itrators .ay, at t$e o..e" e.e"t of t$e $eari"g, as7 /ot$ parties for /rief state.e"ts of t$e issues i" o"troversy a"%Jor a" agree% state.e"t of fa ts. #$ereafter t$e parties .ay offer su $ evi%e" e as t$ey %esire, a"% s$all pro%u e

'" respo"se to su $ letter, RC&C a%%resse% a letter %ate% 8a"uary 31, 2))6@50A to t$e tri/u"al lai.i"g t$at t$e pie es of i"for.atio" t$at petitio"ers re;ueste% are alrea%y 7"o4" to petitio"ers o"si%eri"g t$at RC&C .erely .ai"tai"e% t$e syste.s t$at t$ey i"$erite% 4$e" it /oug$t &a"7ar% fro. petitio"ers. RC&C a%%e% t$at t$e %o u.e"ts t$at 5,C'& origi"ally tra"s.itte% to it 4$e" RC&C /oug$t &a"7ar% 4ere all /ei"g .a%e availa/le to petitio"ersF t$us, a"y .issi"g supporti"g %o u.e"ts fro. t$ese files 4ere "ever tra"s.itte% to t$e. i" t$e first pla e. Later, petitio"ers se"t to t$e tri/u"al a letter %ate% 9e/ruary 1), 2))6,@5!A as7i"g t$at it %ire t RC&C to provi%e petitio"ers 4it$ t$e supporti"g %o u.e"ts t$at RC&C .e"tio"e% i" its letter %ate% 8a"uary 31, 2))6. ,etitio"ers 4rote t$at s$oul% RC&C fail to prese"t su $ %o u.e"ts, RC&CBs su..aries s$oul% /e eC lu%e% fro. t$e re or%s.

su $ a%%itio"al evi%e" e as t$e ar/itrators s$all re;uire or %ee. "e essary to a" u"%ersta"%i"g a"% %eter.i"atio" of t$e %ispute. 59e "r#;tr"tors s9"ll #e t9e sole Du :e o8 t9e relev"n1y "n 2"ter;"l;ty o8 t9e ev; en1e o88ere or pro u1e , "n s9"ll not #e #oun to 1on8or2 to t9e &ules o8 Court pert";n;n: to ev; en1e. Ar#;tr"tors s9"ll re1e;ve "s e@9;#;ts ;n ev; en1e "ny o1u2ent A9;19 t9e p"rt;es 2"y A;s9 to su#2;t "n t9e e@9;#;ts s9"ll #e properly ; ent;8;e "t t9e t;2e o8 su#2;ss;on. All eC$i/its s$all re.ai" i" t$e usto%y of t$e Cler7 of Court %uri"g t$e ourse of t$e ar/itratio" a"% s$all /e retur"e% to t$e parties at t$e ti.e t$e a4ar% is .a%e. #$e ar/itrators .ay .a7e a" o ular i"spe tio" of a"y .atter or pre.ises 4$i $ are i" %ispute, /ut su $ i"spe tio" s$all /e .a%e o"ly i" t$e prese" e of all parties to t$e ar/itratio", u"less a"y party 4$o s$all $ave re eive% "oti e t$ereof fails to appear, i" 4$i $ eve"t su $ i"spe tio" s$all /e .a%e i" t$e a/se" e of su $ party. 15.p$asis supplie%.3 #$e 4ell:settle% rule is t$at a%.i"istrative age" ies eCer isi"g ;uasi:Du%i ial po4ers s$all "ot /e fettere% /y t$e rigi% te $"i alities of pro e%ure, al/eit t$ey are, at all ti.es re;uire%, to a%$ere to t$e /asi o" epts of fair play. #$e Court 4rote i" CM4 :ederal Securit6 'genc6, $nc. v. N),CG <$ile a%.i"istrative tri/u"als eCer isi"g ;uasi:Du%i ial po4ers, li7e t$e NLRC a"% La/or Ar/iters, are free fro. t$e rigi%ity of ertai" pro e%ural re;uire.e"ts, t$ey are "o"et$eless /ou"% /y la4 a"% pra ti e to o/serve t$e fu"%a.e"tal a"% esse"tial re;uire.e"ts of %ue pro ess. #$e sta"%ar% of %ue pro ess t$at .ust /e .et i" a%.i"istrative tri/u"als allo4s a ertai" %egree of latitu%e as lo"g as fair"ess is "ot ig"ore%. He" e, it is not legally o/De tio"a/le, for /ei"g violative of %ue pro ess, for t$e La/or Ar/iter to resolve a ase /ase% solely o" t$e positio" papers, affi%avits or %o u.e"tary evi%e" e su/.itte% /y t$e parties. #$e affi%avits of 4it"esses i" su $ ase .ay ta7e t$e pla e of t$eir %ire t testi.o"y.@66A 2f t$e sa.e te"or is our $ol%i"g i" Quiambao v. Court o( ' ealsG '" resolvi"g a%.i"istrative ases, o"%u t of full:/lo4" trial is "ot i"%ispe"sa/le to %ispe"se Dusti e to t$e parties. #$e re;uire.e"t of "oti e a"% $eari"g %oes "ot o""ote full a%versarial pro ee%i"gs. Su/.issio" of positio" papers .ay /e suffi ie"t for as lo"g as t$e parties t$ereto are give" t$e opportu"ity to /e $ear%. +n " 2;n;str"t;ve pro1ee ;n:s, t9e essen1e o8 ue pro1ess ;s s;2ply "n opportun;ty to #e 9e"r , or "n opportun;ty to e@pl";n oneFs s; e or opportun;ty to seeE " re1ons; er"t;on o8 t9e "1t;on or rul;n: 1o2pl";ne o8. 59;s 1onst;tut;on"l

2"n "te ;s ee2e s"t;s8;e ;8 " person ;s :r"nte "n opportun;ty to seeE re1ons; er"t;on o8 "n "1t;on or " rul;n:. 't %oes "ot re;uire trial:type pro ee%i"gs si.ilar to t$ose i" t$e ourts of Dusti e. <$ere opportu"ity to /e $ear% eit$er t$roug$ oral argu.e"ts or t$roug$ plea%i"gs is a or%e%, t$ere is "o %e"ial of pro e%ural %ue pro ess.@6(A 15.p$asis supplie%.3 Citi"g Vertudes v. Buena(lor, petitio"ers also ry %e"ial of %ue pro ess 4$e" t$ey 4ere allege%ly %e"ie% t$e rig$t to ross:eCa.i"e t$e 4it"esses prese"te% /y RC&C. 't is true t$at i" Vertudes, 4e state%G H#$e rig$t of a party to o"fro"t a"% ross:eCa.i"e opposi"g 4it"esses i" a Du%i ial litigatio", /e it ri.i"al or ivil i" "ature, or i" pro ee%i"gs /efore a%.i"istrative tri/u"als 4it$ ;uasi:Du%i ial po4ers, is a fu"%a.e"tal rig$t 4$i $ is part of %ue pro ess.I@60A 't is, $o4ever, e;ually true t$atG @#A$e rig$t is a perso"al o"e 4$i $ .ay /e 4aive% eCpressly or i.plie%ly /y o"%u t a.ou"ti"g to a re"u" iatio" of t$e rig$t of ross:eCa.i"atio". 59us, A9ere " p"rty 9"s 9" t9e opportun;ty to 1ross$ e@"2;ne " A;tness #ut 8";le to "v";l 9;2sel8 o8 ;t, 9e ne1ess"r;ly 8or8e;ts t9e r;:9t to 1ross$e@"2;ne "n t9e test;2ony :;ven on ;re1t e@"2;n"t;on o8 t9e A;tness A;ll #e re1e;ve or "lloAe to re2";n ;n t9e re1or .@6!A 15.p$asis supplie%.3 <e also $el% i" o"e aseG HoAever, t9e r;:9t 9"s "lA"ys #een un erstoo "s reBu;r;n: not ne1ess"r;ly "n "1tu"l 1ross$e@"2;n"t;on #ut 2erely "n opportun;ty to e@er1;se t9e r;:9t to 1ross$e@"2;ne ;8 es;re . >9"t ;s pros1r;#e #y st"tutory nor2 "n Dur;spru ent;"l pre1ept ;s t9e "#sen1e o8 t9e opportun;ty to 1ross$e@"2;ne. #$e rig$t is a perso"al o"e a"% .ay /e 4aive% eCpressly or i.plie%ly. #$ere is a" i.plie% 4aiver 4$e" t$e party 4as give" t$e opportu"ity to o"fro"t a"% ross:eCa.i"e a" opposi"g 4it"ess /ut faile% to ta7e a%va"tage of it for reaso"s attri/uta/le to $i.self alo"e. 'f /y $is a tuatio"s, t$e a use% lost $is opportu"ity to ross: eCa.i"e 4$olly or i" part t$e 4it"esses agai"st $i., $is rig$t to ross:eCa.i"e is i.plie%ly 4aive%.@()A 15.p$asis supplie%.3 A"% later i" Velez v. *e Vera, t$e Court !n Banc eCpou"%e% o" t$e a/ove ruli"gs, a%%i"g t$at i" a%.i"istrative pro ee%i"gs, ross:eCa.i"atio" is "ot i"%ispe"sa/le, t$usG Due pro ess of la4 i" a%.i"istrative ases is "ot i%e"ti al 4it$ HDu%i ial pro essI for a trial i" ourt is "ot al4ays esse"tial to %ue pro ess. <$ile a %ay i" ourt is a .atter of rig$t i" Du%i ial pro ee%i"gs, it is ot$er4ise i" a%.i"istrative

pro ee%i"gs si" e t$ey rest upo" %iffere"t pri" iples. #$e %ue pro ess lause guara"tees "o parti ular for. of pro e%ure a"% its re;uire.e"ts are "ot te $"i al. #$us, i" ertai" pro ee%i"gs of a%.i"istrative $ara ter, t$e rig$t to a "oti e or $eari"g @isA "ot esse"tial to %ue pro ess of la4. #$e o"stitutio"al re;uire.e"t of %ue pro ess is .et /y a fair $eari"g /efore a regularly esta/lis$e% a%.i"istrative age" y or tri/u"al. 't is "ot esse"tial t$at $eari"gs /e $a% /efore t$e .a7i"g of a %eter.i"atio" if t$ereafter, t$ere is availa/le trial a"% tri/u"al /efore 4$i $ all o/De tio"s a"% %efe"ses to t$e .a7i"g of su $ %eter.i"atio" .ay /e raise% a"% o"si%ere%. 2"e a%e;uate $eari"g is all t$at %ue pro ess re;uires. <$at is re;uire% for H$eari"gI .ay %iffer as t$e fu" tio"s of t$e a%.i"istrative /o%ies %iffer. 59e r;:9t to 1ross$e@"2;ne ;s not "n ;n ;spens"#le "spe1t o8 ue pro1ess. @(1A C C C 15.p$asis supplie%.3 Clearly, t$e rig$t to ross:eCa.i"e a 4it"ess, alt$oug$ a fu"%a.e"tal rig$t of a party, .ay /e 4aive%. ,etitio"ers t$e.selves a%.it $avi"g $a% t$e opportu"ity to ross:eCa.i"e RC&CBs 4it"esses %uri"g t$e $eari"gs /efore t$e tri/u"al, /ut %e li"e% to %o so /y reservi"g su $ rig$t at a later ti.e. Havi"g $a% t$e opportu"ity to ross:eCa.i"e RC&CBs 4it"esses, petitio"ers 4ere "ot %e"ie% t$eir rig$t to %ue pro ess. &C!C +s 'ot -stoppe 8ro2 Puest;on;n: t9e 4;n"n1;"l Con ;t;on o8 !"nE"r 2" estoppel, petitio"ers o"te"% t$at RC&C alrea%y 7"e4 t$e re or%i"g of t$e &a"7ar% a ou"ts /efore it pai% t$e /ala" e of t$e pur $ase pri e a"% oul% "o lo"ger $alle"ge t$e fi"a" ial state.e"ts of &a"7ar%. RC&C, t$ey lai., $a% full o"trol of t$e operatio"s of &a"7ar% si" e 8u"e 2, 2))) a"% RC&CBs au%it tea. revie4e% t$e a ou"ts i" Septe./er 2))). #$us, RC&C is "o4 pre lu%e% fro. %e"yi"g t$e fair"ess a"% a ura y of sai% a ou"ts si" e it %i% "ot see7 pri e re%u tio" u"%er Se . 51$3. Lastly, t$ey asseverate t$at RC&C o"ti"ue% 4it$ &a"7ar%Bs a ou"ti"g poli ies a"% pra ti es a"% fou"% t$e. to o"for. to t$e ge"erally a epte% a ou"ti"g pri" iples, o"trary to RC&CBs allegatio"s. 't also /ears stati"g t$at i" $is %isse"t, retire% 8usti e >apu"a", a" ar/itral tri/u"al .e./er, argue% t$at &a"7ar%Bs a ou"ti"g pra ti es 4ere %is lose% i" t$e i"for.atio" .e.ora"%u. provi%e% to RC&CF $e" e, RC&C 4as suppose% to 7"o4 su $ a ou"ti"g pra ti es a"% to $ave a epte% t$eir propriety eve" /efore t$e eCe utio" of t$e S,A. He t$e" argue% t$at 4$e" it pai% t$e pur $ase pri e o" De e./er 2!, 2))), RC&C oul% "o lo"ger lai. t$at t$e a ou"ti"g pra ti es t$at 4e"t i"to t$e reporti"g of t$e 1!!! A9S of &a"7ar% 4ere "ot i" a or% 4it$ ge"erally a epte% a ou"ti"g pri" iples. He poi"te% out t$at RC&C 4as /ou"% /y t$e au%it o"%u te% /y a ertai" Ru/io prior to t$e full pay.e"t of t$e pur $ase pri e of &a"7ar%. A" $ore% o" t$ese state.e"ts /y 8usti e >apu"a", petitio"ers o" lu%e t$at RC&C is estoppe% fro. lai.i"g t$at t$e for.er violate% t$eir 4arra"ties u"%er t$e S,A. ,etitio"ersB o"te"tio" is "ot .eritorious.

Art. 1*31 of t$e Civil Co%e, o" t$e su/De t of estoppel, provi%esG H#$roug$ estoppel a" a%.issio" or represe"tatio" is re"%ere% o" lusive upo" t$e perso" .a7i"g it, a"% a""ot /e %e"ie% or %isprove% as agai"st t$e perso" relyi"g t$ereo".I #$e %o tri"e of estoppel is /ase% upo" t$e grou"%s of pu/li poli y, fair %eali"g, goo% fait$, a"% Dusti eF a"% its purpose is to for/i% o"e to spea7 agai"st o"eBs o4" a ts, represe"tatio"s, or o..it.e"ts to t$e i"Dury of o"e to 4$o. t$ey 4ere %ire te% a"% 4$o reaso"a/ly relie% o" t$e..@(2A <e eCplai"e% t$e pri" iple of estoppel i" 4hili Savings Ban# v. Cho;#ing :ood Cor orationG C C C #$e e;uita/le %o tri"e of estoppel 4as eCplai"e% /y t$is Court i" Calte& (4hili ines), $nc. v. Court o( ' ealsG ="%er t$e %o tri"e of estoppel, a" a%.issio" or represe"tatio" is re"%ere% o" lusive upo" t$e perso" .a7i"g it, a"% a""ot /e %e"ie% or %isprove% as agai"st t$e perso" relyi"g t$ereo". A party .ay "ot go /a 7 o" $is o4" a ts a"% represe"tatio"s to t$e preDu%i e of t$e ot$er party 4$o relie% upo" t$e.. '" t$e la4 of evi%e" e, 4$e"ever a party $as, /y $is o4" %e laratio", a t, or o.issio", i"te"tio"ally a"% %eli/erately le% a"ot$er to /elieve a parti ular t$i"g true, to a t upo" su $ /elief, $e a""ot, i" a"y litigatio" arisi"g out of su $ %e laratio", a t, or o.issio", /e per.itte% to falsify it. #$e pri" iple re eive% ela/oratio" i" Maneclang v. BaunG furt$er ine

'" estoppel /y ais, as relate% to t$e party soug$t to /e estoppe%, it is "e essary t$at t$ere /e a o" urre" e of t$e follo4i"g re;uisitesG 1a3 o"%u t a.ou"ti"g to false represe"tatio" or o" eal.e"t of .aterial fa ts or at least al ulate% to o"vey t$e i.pressio" t$at t$e fa ts are ot$er4ise t$a", a"% i" o"siste"t 4it$, t$ose 4$i $ t$e party su/se;ue"tly atte.pts to assertF 1/3 i"te"t, or at least eCpe tatio" t$at t$is o"%u t s$all /e a te% upo", or at least i"flue" e% /y t$e ot$er partyF a"% 1 3 7"o4le%ge, a tual or o"stru tive of t$e a tual fa ts. 5stoppel .ay vary so.e4$at i" %efi"itio", /ut all aut$orities agree t$at " p"rty ;nvoE;n: t9e o1tr;ne 2ust 9"ve #een 2;sle to oneFs preDu ;1e. #$at is t$e fi"al a"%, i" reality, .ost i.porta"t of t$e ele.e"ts of e;uita/le estoppel. 't is t$is ele.e"t t$at is la 7i"g $ere.@(3A 15.p$asis supplie%.3

#$e ele.e"ts of estoppel pertai"i"g to t$e party estoppe% areG 113 o"%u t 4$i $ a.ou"ts to a false represe"tatio" or o" eal.e"t of .aterial fa ts, or, at least, 4$i $ al ulate% to o"vey t$e i.pressio" t$at t$e fa ts are ot$er4ise t$a", a"% i" o"siste"t 4it$, t$ose 4$i $ t$e party su/se;ue"tly atte.pts to assertF 123 i"te"tio", or at least eCpe tatio", t$at su $ o"%u t s$all /e a te% upo" /y t$e ot$er partyF a"% 133 7"o4le%ge, a tual or o"stru tive, of t$e a tual fa ts.@(*A '" t$e ase at /ar, t$e first ele.e"t of estoppel i" relatio" to t$e party soug$t to /e estoppe% is "ot prese"t. ,etitio"ers lai. t$at RC&C .isreprese"te% itself 4$e" RC&C .a%e it appear t$at t$ey o"si%ere% petitio"ers to $ave suffi ie"tly o.plie% 4it$ its 4arra"ties u"%er Se . 51g3 a"% 51$3, i" relatio" to Se . ( of t$e S,A. ,etitio"ersB positio" is t$at HRC&C 4as a4are of t$e .a""er i" 4$i $ t$e &a"7ar% a ou"ts 4ere re or%e%, 4ell /efore it o"su..ate% t$e S,A /y ta7i"g %elivery of t$e s$ares a"% payi"g t$e outsta"%i"g 0)N /ala" e of t$e o"tra t pri e.I@(5A ,etitio"ers, t$erefore, t$eori-e t$at i" t$is ase, t$e first ele.e"t of estoppel i" relatio" to t$e party soug$t to /e estoppe% is t$at RC&C .a%e a false represe"tatio" t$at it o"si%ere% &a"7ar%Bs a ou"ts to /e i" or%er a"%, t$us, RC&C a/a"%o"e% a"y lai. u"%er Se . 51g3 a"% 51$3 /y its i"a tio". Su $ o"te"tio" is i" orre t. 't .ust /e e.p$asi-e% t$at it 4as o"ly after a se o"% au%it t$at RC&C prese"te% its lai. to petitio"ers for violatio" of Se . 51g3, 4it$i" t$e t$ree 133:year perio% pres ri/e%. '" ot$er 4or%s, RC&C, prior to su $ se o"% au%it, %i% "ot $ave full a"% t$oroug$ 7"o4le%ge of t$e orre t"ess of &a"7ar%Bs a ou"ts, i" relatio" to Se . 51g3. RC&C, t$erefore, oul% "ot $ave .isreprese"te% itself o"si%eri"g t$at it 4as still i" t$e pro ess of verifyi"g t$e 4arra"ties overe% u"%er Se . 51g3. Co"si%eri"g t$at t$ere .ust /e a o" urre" e of t$e ele.e"ts of estoppel for it to arise, o" t$is grou"% alo"e su $ lai. is alrea%y "egate%. As 4ill /e s$o4", $o4ever, all t$e ot$er ele.e"ts of estoppel are li7e4ise a/se"t i" t$e ase at /ar. As to t$e se o"% ele.e"t, i" or%er to esta/lis$ estoppel, RC&C .ust $ave i"te"%e% t$at petitio"ers 4oul% a t upo" its a tio"s. #$is ele.e"t is also .issi"g. RC&C /y its a tio"s %i% "ot .islea% petitio"ers i"to /elievi"g t$at it 4aive% a"y lai. for violatio" of a 4arra"ty. #$e perio%s u"%er Se . 51g3 a"% 51$3 4ere still availa/le to RC&C. #$e ele.e"t t$at petitio"ers relie% o" t$e a ts a"% o"%u t of RC&C is a/se"t. #$e Court fi"%s t$at t$ere 4as "o relia" e o" t$e part of petitio"ers o" t$e a ts of RC&C t$at 4oul% lea% t$e. to /elieve t$at t$e RC&C 4ill forego t$e fili"g of a lai. u"%er Se . 51g3. #$e allegatio" t$at RC&C 7"e4 t$at t$e &a"7ar% a ou"ts %i% "ot o.ply 4it$ ge"erally a epte% a ou"ti"g pri" iples /efore pay.e"t a"%, $e" e, it a""ot ;uestio" t$e fi"a" ial state.e"ts of &a"7ar% is .eritless. ,re isely, t$e S,A eCpli itly provi%es t$at lai.s for violatio" of t$e 4arra"ties u"%er Se . 51g3 a" still /e file% 4it$i" t$ree 133 years fro. t$e losi"g %ate. ,etitio"ersB o"te"tio" t$at RC&C $a% full o"trol of &a"7ar% operatio"s after pay.e"t of t$e pri e a"% t$at a" au%it u"%erta7e" /y t$e Ru/io tea. %i% "ot fi"% a"yt$i"g 4ro"g 4it$ t$e a ou"ts oul% "ot $ave plausi/ly .isle% petitio"ers i"to /elievi"g t$at RC&C 4ill 4aive its rig$t to file a lai. u"%er Se . 51g3. After all, t$e perio% to file a lai. u"%er Se . 51g3 is t$ree 133 years u"%er Se . (, .u $

lo"ger t$a" t$e siC 163:.o"t$ perio% u"%er Se . 51$3. ,etitio"ers are fully a4are t$at t$e 4arra"ties u"%er Se . 51g3 11!!( up to +ar $ 2)))3 are of a 4i%er s ope t$a" t$at of Se . 51$3 1A9S of 1!!! a"% =9S up to +ay 31, 2)))3, "e essitati"g a lo"ger au%it perio% t$a" t$e siC 163:.o"t$ perio% u"%er Se . 51$3. #$e t$ir% ele.e"t of estoppel i" relatio" to t$e party soug$t to /e estoppe% is also a/se"t o"si%eri"g t$at, as state%, RC&C 4as still i" t$e pro ess of verifyi"g t$e orre t"ess of &a"7ar%Bs a ou"ts prior to prese"ti"g its lai. of overvaluatio" to petitio"ers. RC&C, t$erefore, $a% "o suffi ie"t 7"o4le%ge of t$e orre t"ess of &a"7ar%Bs a ou"ts. 2" a"ot$er issue, RC&C oul% "ot $ave i..e%iately $a"ge% t$e &a"7ar% a ou"ti"g pra ti es u"til it $a% o"%u te% a .ore eCte"sive a"% t$oroug$ au%it of &a"7ar%Bs volu.i"ous re or%s a"% tra"sa tio"s to u" over a"y irregularities. #$at 4oul% /e t$e o"ly logi al eCpla"atio" 4$y &a"7ar%Bs allege% irregular pra ti es 4ere .ai"tai"e% for .ore t$a" t4o 123 years fro. losi"g %ate. #$e fa t t$at RC&C o"ti"ue% 4it$ t$e au%it of &a"7ar%Bs A9S a"% re or%s after t$e ter.i"atio" of t$e Ru/io au%it a" o"ly se"% t$e lear .essage to petitio"ers t$at RC&C is still e"tertai"i"g t$e possi/ility of fili"g a lai. u"%er Se . 51g3. 't a""ot t$e" /e sai% t$at petitio"ersB relia" e o" RC&CBs a ts after full pay.e"t of t$e pri e oul% $ave .isle% t$e. i"to /elievi"g t$at "o .ore lai. 4ill /e prese"te% /y RC&C. #$e Ar/itral #ri/u"al eCplai"e% i" %etail 4$y estoppel is "ot prese"t i" t$e ase at /ar, t$usG 1).10 #$e au%it eCer ise o"%u te% /y +r. Legaspi a"% +r. Ru/io 4as learly "ot o"e o.pre$e"sive e"oug$ to $ave %is overe% t$e pro/le.s later u"eart$e% /y Dr. Laya a"% Dea" Le%es.a. C C C 1).1! Alt$oug$ t$e po4ers of t$e #C @#ra"sitio" Co..itteeA .ay $ave /ee" 4i%ely eCpresse% i" t$e vie4 of +r. Rogelio C$ua, t$e" i" $arge of &a"7ar% C C C t$e #C o"%u te% .eeti"gs o"ly to get up%ate% o" t$e status a"% progress of &a"7ar%Bs operatio"s. Co..er ially, o"e 4oul% eCpe t t$at a" u"pai% ve"%or eCpe ti"g to re eive 0)N of a large pur $ase pri e 4oul% "ot /e re eptive to a pur $aser .a7i"g vast poli y $a"ges i" t$e operatio" of t$e /usi"ess u"til t$e pur $aser $as pai% up its .o"ey. 't is .ore li7ely t$at, u"til t$e settle.e"t %ate, t$ere 4as a pra ti e of .ai"tai"i"g t$estatus =uo at &a"7ar%. 1).2) &ut "eit$er t$e Clai.a"t "or t$e #C %i% a"yt$i"g, i" t$e #ri/u"alBs vie4, 4$i $ 4oul% $ave give" t$e Respo"%e"ts t$e i.pressio" t$at t$ey 4ere /ei"g relieve% over t$e "eCt t$ree years of sus epti/ility to a lai. u"%er lause 51g3. +ay/e t$e #C oul% $ave /ee" .ore proa tive i" o..issio"i"g furt$er or .ore i":%ept$ au%its /ut it 4as "ot. 't %i% "ot $ave to /e. 't is

o..er ially u"li7ely t$at it $ave /ee" %o"e so, 4it$ t$e "e essary %egree of atte"tio" to %etail, 4it$i" t$e relatively s$ort ti.e /et4ee" t$e appoi"t.e"t of t$e #C a"% t$e ulti.ate settle.e"t %ate of t$e pur $ase R a perio% of so.e t$ree .o"t$s. A" i"teri. arra"ge.e"t 4as o/viously se"si/le to e"a/le t$e Clai.a"t a"% its staff to /e o.e fa.iliar 4it$ t$e pra ti es a"% pro e%ures of &a"7ar%. 1).21 #$e ore o"si%eratio" 4eig$i"g 4it$ t$e #ri/u"al i" assessi"g t$ese lai.s for estoppel is t$at t$e S,A allo4e% t4o types of lai.F o"e 4it$i" siC .o"t$s u"%er 51$3 a"% o"e 4it$i" t$ree years u"%er 51g3. #$e #ri/u"al $as alrea%y $el% t$e prese"t lai. is "ot /arre% /y lause 51$3. 't .ust t$erefore $ave /ee" 4it$i" t$e reaso"a/le o"te.platio" of t$e parties t$at a 51g3 lai. oul% surfa e 4it$i" t$e t$ree:year perio% a"% t$at it oul% /e so.e4$at %iffere"tly assesse% t$a" t$e lai. u"%er 51$3. #$e #ri/u"al a""ot fi"% estoppel /y o"%u t eit$er fro. t$e for.atio" of t$e #C or fro. t$e li.ite% au%iti"g eCer ise %o"e /y +r. Ru/io a"% +r. Legaspi. #$e o"us provi"g estoppel is o" t$e Respo"%e"ts a"% it $as "ot /ee" %is $arge%. 1).22 'f t$e parties $a% 4is$e% t$e ave"ues of relief for .isreprese"tatio" affor%e% to t$e Clai.a"t to $ave /ee" restri te% to a lai. u"%er Clause 51$3, t$e" t$ey oul% $ave sai% so. #$e Tspe ial au%itB .ay $ave provi%e% a" a"s4er to a"y lai. /ase% o" lause 51$3 /ut it a""ot %o so i" respe t of a lai. /ase% o" Clause 51g3. Clause 51g3 i.pose% a positive o/ligatio" o" t$e Respo"%e"ts fro. 4$i $ t$ey a""ot /e eC use%, si.ply /y reaso" of eit$er t$e for.atio" a"% o"%u t of t$e #C or of t$e li.ite% au%it. 1).23 #$e t$ree:year li.itatio" perio% o/viously o"te.plate% t$at it oul% ta7e so.e ti.e to as ertai" 4$et$er t$ere $a% /ee" a /rea $ of t$e GAA, sta"%ar%s, et . Su $ 4as t$e ase. A siC:.o"t$ li.itatio" perio% u"%er Clause 51$3, i" o"trast, presage% a so.e4$at less stri"ge"t e";uiry of t$e 7i"% arrie% out /y +r. Ru/io a"% +r. Legaspi. 1).2* Clause 2133 of t$e A.e"%.e"t to t$e S,A stre"gt$e"s t$e o" lusio" t$at t$e parties 4ere o" er"e% o"ly 4it$ a 51$3 lai. %uri"g t$e

#CBs reig". #$e fo us of t$e Tau%itB R $o4ever i"te"se it 4as R o"%u te% /y +r. Ru/io a"% +r. Legaspi, 4as o" esta/lis$i"g possi/le lia/ility u"%er t$at se tio" a"% t$us as a possi/le re%u tio" i" t$e pri e to /e pai% o" settle.e"t. 1).25 #$e fa t t$at t$e pur $ase pri e 4as pai% over i" full 4it$out a"y %e%u tio" i" ter.s of lause 51$3 is "ot a /ar to t$e Clai.a"t /ri"gi"g a lai. u"%er 51g3 4it$i" t$e t$ree: year perio%. #$e fa t t$at pay.e"t 4as .a%e a" /e, as t$e #ri/u"al $as $el%, a /arrier to a lai. for res issio" a"% restitution ad inegrum. A lai. for estoppel "ee%s a fi"%i"g of represe"tatio" /y 4or%s of o"%u t or a s$are% presu.ptio" t$at a rig$t 4oul% "ot /e relie% upo". #$e party relyi"g o" estoppel $as to s$o4 relia" e to its %etri.e"t or t$at, ot$er4ise, it 4oul% /e u" o"s io"a/le to resile fro. t$e provisio". 1).26 Arti le 1*31 of t$e Civil Co%e statesG H#$roug$ estoppel a" a%.issio" or represe"tatio" is re"%ere% o" lusive upo" t$e perso" .a7i"g it, a"% a""ot /e %e"ie% or %isprove% as agai"st t$e perso" relyi"g t$ereo".I 1).2( Clearly, t$ere $as to /ot$ a" a%.issio" or represe"tatio" /y 1i" t$is ase3 t$e Clai.a"t, plus relia" e upo" it /y 1i" t$is ase3 t$e Respo"%e"ts. #$e #ri/u"al a""ot fi"% as prove% a"y a%.issio"Jreprese"tatio" t$at t$e Clai.a"t 4as a/a"%o"i"g a 51g3 lai., a"y relia" e /y Respo"%e"ts o" a" a%.issio", a"% a"y %etri.e"t to t$e Respo"%e"ts su $ as 4oul% e"title t$e. to $ave t$e Clai.a"t %eprive% of t$e /e"efit of lause 51g3. #$ese aspe ts of t$e lai. of estoppel are reDe te%. CCCC 1).*2 #$e #ri/u"al is "ot t$e appropriate foru. for %e i%i"g 4$et$er t$ere $ave /ee" a"y regulatory or et$i al i"fra tio"s /y &a"7ar% a"%Jor t$e Clai.a"t i" setti"g t$e T/uy:/a 7B pri e. 't $as "o /eari"g o" 4$et$er t$e Clai.a"t .ust /e o"si%ere% as $avi"g 4aive% its rig$t to lai. agai"st t$e Respo"%e"ts. 1).*3 '" t$e #ri/u"alBs vie4, "eit$er a"y i"fra tio" /y &a"7ar% i" faili"g to a%vise t$e Ce"tral &a"7 of t$e eCpertsB fi"%i"gs, "or a failure to put a tag o" t$e a ou"ts "or to $ave sai% so.et$i"g to t$e s$are$ol%ers

i" t$e /uy:/a 7 eCer ise operates as a Hte $"i al 7"o 7:outI of Clai.a"tBs lai.. 1).** #$e #ri/u"al "otes t$at t$e o" iliatio" pro ess .a"%ate% /y t$e S,A too7 .ost of 2))3 a"% t$is .ay eCplai" a part of t$e %elay i" o..e" i"g ar/itral pro ee%i"gs. 1).*5 <$atever t$e status of +r. Ru/ioBs a"% +r. LegaspiBs e";uiries i" late 2))), t$e Clai.a"t 4as ;uite e"title% to o..issio" su/se;ue"t reports fro. Dr. Laya a"% Dr. 5 $a"is a"%, o" t$e /asis of t$ose reports, .a7e a ti.eous lai. u"%er lause 51g3 of t$e S,A. 1).*6 '" t$e #ri/u"alBs vie4, t$erefore, t$ere is "o .erit i" Respo"%e"tsB various su/.issio"s t$at t$e Clai.a"t is %e/arre% fro. prose uti"g its lai.s o" t$e grou"%s of estoppel. #$ere is Dust "o proof of t$e "e essary represe"tatio" to t$e Respo"%e"t, "or a"y %etri.e"t to t$e Respo"%e"t prove%. #$e grou"%s of %elay a"% la $es are "ot su/sta"tiate%. '" su..ary, t$e tri/u"al properly rule% t$at petitio"ers faile% to prove t$at t$e for.atio" of t$e #ra"sitio" Co..ittee a"% t$e o"%u t of t$e au%it /y Ru/io a"% Legaspi 4ere a%.issio"s or represe"tatio"s /y RC&C t$at it 4oul% "ot pursue a lai. u"%er Se . 51g3 a"% t$at petitio"ers relie% o" su $ represe"tatio" to t$eir %etri.e"t. <e agree 4it$ t$e fi"%i"gs of t$e tri/u"al t$at estoppel is "ot prese"t i" t$e situatio" at /ar. A%%itio"ally, petitio"ers lai. t$at i" >necht v. Court o( ' eals@(6A a"% Coca5Cola Bottlers 4hili ines, $nc. v. Court o( ' eals 1Coca5Cola3,@((A t$is Court rule% t$at t$e a/se" e of t$e ele.e"t of relia" e /y a party o" t$e represe"tatio" of a"ot$er %oes "ot "egate t$e pri" iple of estoppel. #$ose ases are, $o4ever, "ot o" all fours 4it$ a"% a""ot /e applie% to t$is ase. '" >necht, t$e /uyer $a% t$e opportu"ity of 7"o4i"g t$e o"%itio"s of t$e la"% $e 4as /uyi"g early o" i" t$e tra"sa tio", /ut pro ee%e% 4it$ t$e sale a"y4ay. A or%i"g to t$e Court, t$e /uyer 4as estoppe% fro. lai.i"g t$at t$e ve"%or .a%e a false represe"tatio" as to t$e o"%itio" of t$e la"%. #$is is "ot true i" t$e i"sta"t ase. RC&C %i% "ot o"%u t a %ue %ilige" e au%it i" relatio" to Se .51g3 prior to t$e sale %ue to petitio"ersB eCpress represe"tatio"s a"% 4arra"ties. #$e eCa.i"atio" o"%u te% /y RC&C, t$roug$ Ru/io, after t$e eCe utio" of t$e S,A o" 8u"e 2, 2))), 4as o"fi"e% to fi"%i"g a"y /rea $ u"%er Se . 51$3 for a possi/le re%u tio" of t$e pur $ase pri e prior to t$e pay.e"t of its /ala" e o" De e./er 31, 2))). 9urt$er, t$e parties learly agree% u"%er Se . ( of t$e S,A to a t$ree 133:year perio% fro. losi"g %ate 4it$i" 4$i $ to prese"t a lai. for %a.ages for violatio" of t$e 4arra"ties u"%er t$e S,A. He" e, >necht is "ot a pre e%e"t to t$e ase at /ar.

So is Coca5Cola. As lessee, Co a:Cola &ottlers 4as 4ell a4are of t$e "ature a"% situatio" of t$e la"% relative to its i"te"%e% use prior to t$e sig"i"g of t$e o"tra t. 'ts su/se;ue"t assertio" t$at t$e la"% 4as "ot suite% for t$e purpose it 4as lease% 4as, t$erefore, ast asi%e for /ei"g u".eritorious. Su $ ir u.sta" e %oes "ot o/tai" i" t$e i"sta"t ase. #$ere 4as "o prior %ue %ilige" e au%it o"%u te% /y RC&C, it $avi"g relie%, as earlier state%, o" t$e 4arra"ties of petitio"ers 4it$ regar% to t$e fi"a" ial o"%itio" of &a"7ar% u"%er Se . 51g3. As su $, Se . 51g3 guara"tee% RC&C t$at it oul% file a lai. for %a.ages for a"y .ista7es i" t$e A9S a"% =9S of &a"7ar%. Clearly, Coca5Cola also a""ot /e applie% to t$e i"sta"t ase. 't /e o.es evi%e"t fro. all of t$e foregoi"g fi"%i"gs t$at t$e 'CC:'CA is "ot guilty of a"y .a"ifest %isregar% of t$e la4 o" estoppel. As s$o4" a/ove, t$e fi"%i"gs of t$e 'CC:'CA i" t$e ,artial A4ar% are 4ell:supporte% i" la4 a"% grou"%e% o" fa ts. #$e ,artial A4ar% .ust /e up$el%.

<e lose t$is %ispositio" 4it$ t$e o/servatio" t$at a .e./er of t$e t$ree:perso" ar/itratio" pa"el 4as sele te% /y petitio"ers, 4$ile a"ot$er 4as respo"%e"tBs $oi e. #$e respe tive i"terests of t$e parties, t$erefore, are very .u $ safeguar%e% i" t$e ar/itratio" pro ee%i"gs. A"y suggestio", t$erefore, o" t$e partiality of t$e ar/itratio" tri/u"al $as to /e %is.isse%. >H-&-4/&-, t$e i"sta"t petitio" is $ere/y D-'+-D. #$e assaile% 8a"uary 0, 2))0 a"% +ar $ 1(, 2))0 2r%ers of t$e R#C, &ra" $ 1*0 i" +a7ati City are $ere/yA44+&M-D. Costs agai"st petitio"ers. S/ /&D-&-D. *&-S!+5-&/ ,-LASC/, 6&. Asso iate 8usti e 5H+&D D+,+S+/' -M*+&- -AS5 LA'D H/LD+'%S, +'C., ,etitio"er, 6.

%.&. '

,rese" : versus :

6NAR5 Chair A=S#R CH'C2 E5LAS NACH=

CA*+5/L +'DUS5&+AL C/'S5&UC5+/' %&/U*S, +'C., Respo"%e"t.

,ro.ul

Septe C::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::C D-C+S+/' 'ACHU&A, J.7

&efore us is a ,etitio" for Revie4 o" Certiorari u"%er Rule *5 of t$e Rules of Court, of t$e Court of Appeals 1CA3 De isio"@1A %ate% Nove./er 3, 2))* a"% its Resolutio"@2A %ate% +ay 1), 2))5, i" CA:G.R. S, No. 50!0). #$e assaile% %e isio" .o%ifie% t$e De isio"@3A of t$e Co"stru tio" '"%ustry Ar/itratio" Co..issio" 1C'AC3 %ate% +ay 16, 2))) i" C'AC No. 3!:!!. #$e fa ts of t$e ase, as fou"% /y t$e C'AC a"% affir.e% /y t$e CA, follo4G 2" 9e/ruary 12, 1!!(, petitio"er 5.pire 5ast La"% Hol%i"gs, '" . a"% respo"%e"t Capitol '"%ustrial Corporatio" Groups, '" . e"tere% i"to a Co"stru tio" Agree.e"t@*A4$ere/y t$e latter /ou"% itself to u"%erta7e t$e o.plete supply a"% i"stallatio" of Ht$e /uil%i"g s$ell 4et o"stru tio"I of t$e for.erBs /uil%i"g 7"o4" as Gil.ore Heig$ts ,$ase ', lo ate% at Gil.ore or. Castilla St., Sa" 8ua", +etro +a"ila.@5A #$e perti"e"t portio" of t$e aforesai% agree.e"t is ;uote% $ereu"%er for easy refere" eG AR#'CL5 '' : SC2,5 29 <2R> 2.1. #$e C2N#RAC#2R s$all o.plete t$e ivilJstru tural a"% .aso"ry 4or7s of t$e /uil%i"g /ase% o" t$e 4or7s 1si 3 ite.s overe% /y t$e C2N#RAC#2RBs ,roposal of Co.plete Supply a"% '"stallatio" of &uil%i"g S$ell <et Co"stru tio" <or7s as i"%i ate% i" t$e pla"s a"% spe ifi atio"s at t$e Co"tra t ,ri e a"% 4it$i" t$e Co"tra t ti.e $erei" stipulate% a"% i" a or%a" e 4it$ t$e pla"s a"% spe ifi atio"s. #$e C2N#RAC#2R s$all fur"is$ a"% supply all "e essary la/or, e;uip.e"t a"% tools, supervisio" a"% ot$er fa ilities "ee%e% a"% s$all perfor. everyt$i"g "e essary for t$e o.plete a"% su essful .aso"ry 4or7s of t$e /uil%i"g %es ri/e% $ereof, provi%e% t$at it pertai"s to or is part of t$e a/ove .e"tio"e% 4or7 or ite.s overe% /y t$e Co"tra t %o u.e"ts. 2.2. #$e s ope of 4or7s as state% $ereu"%er /ut "ot li.ite% to t$e follo4i"gG a3 C2NCR5#5 <2R>S R fou"%atio" a"% footi"gs, tie /ea.s, 4alls, olu."s, /ea.s, gir%ers, sla/s, stairs, stair sla/s, e.e"t floor toppi"g, ra.ps, ru//e% o" rete. /3 +AS2NR6 <2R>S R i"terior a"% eCterior 4alls i" lu%i"g stiffe"ers, CH& layi"g, i"terior a"% eCterior plasteri"g, "o":s7i% tile i"stallatio" a"% s rat $ oati"g for tile i"stallatio". 3 92R+<2R>S

f3 : : : :

+'SC5LLAN52=S <2R>S i"stallatio" of Doors a"% 8a./s 1.etal a"% 4oo%3 Li"tel &ea.sJStiffe"er Colu."s '"stallatio" of Har%4ares a"% a essories <i"%o4 a"% Door 2pe"i"gs

g3 +'SC5LLAN52=S '#5+S R olu." guar%, 4$eel guar%, 4aterstop, vapor /arrier, i" i%e"tal e./e%s, floor $ar%e"er, %ustproofer, seala"t, soil treat.e"t, elevator /lo 7:outs for all /utto", /lo 7:outs for ele tro:.e $a"i al 4or7s a"% o" rete la"%i"g sills. $3 R229'NG <2R>S RSteel #russesJ,urli"s, Ri/ #ype pre:pai"te% roofi"g s$eets, '"sulatio" i3 Gar/age C$utes

2.3. #$e 4or7 of t$e C2N#RAC#2R s$all i" lu%e /ut "ot /e li.ite% to, prepari"g t$e /ill of .aterials, a"vassi"g of pri es, re;uisitio" of .aterials for pur $ase /y 2<N5R, follo4i"g up of or%ers, $e 7i"g t$e ;uality a"% ;ua"tity of t$e .aterials 4it$i" t$e pre.ises of t$e o"stru tio" site a"% retur"i"g %efe tive .aterials.@6A Respo"%e"t furt$er agree% t$at t$e o"stru tio" 4or7 4oul% /e o.plete% 4it$i" 33) ale"%ar %ays fro. HDay 1,I upo" t$e Co"stru tio" +a"agerBs o"fir.atio".@(A ,etitio"er i"itially o"si%ere% 9e/ruary 2), 1!!( as HDay 1I of t$e proDe t. Ho4ever, 4$e" respo"%e"t e"tere% t$e proDe t site, it oul% "ot start 4or7 %ue to t$e o":goi"g /ul7 eC avatio" /y a"ot$er o"tra tor. Respo"%e"t t$us as7e% petitio"er to .ove HDay 1I to a later %ate, 4$e" t$e /ul7 eC avatio" o"tra tor 4oul% $ave o.pletely tur"e% over t$e site.@0A After a series of orrespo"%e" e /et4ee" petitio"er a"% respo"%e"t, 9e/ruary 25, 1!!( 4as propose% as HDay 1.I A or%i"gly, respo"%e"tBs o.pletio" %ate of t$e proDe t 4as fiCe% o" 8a"uary 21, 1!!0.@!A ,rior to a"% %uri"g t$e o"stru tio" perio%, $a"ges i" ir u.sta" es arose, pro.pti"g t$e parties to .a7e a%Dust.e"ts i" t$e i"itial ter.s of t$eir o"tra t. #$e follo4i"g perti"e"t $a"ges 4ere .utually agree% upo" /y t$e partiesG :irst, as t$e /ul7 eC avatio" o"tra tor refuse% to retur" to t$e proDe t site, petitio"er %ire te% respo"%e"t to o"ti"ue t$e eC avatio" 4or7F@1)A Second, i" a%%itio" to respo"%e"tBs s ope of 4or7, it 4as .a%e to perfor. si%e tri..i"gs. 1hird, petitio"er %ire te% respo"%e"t to re%u e t$e .o"t$ly target a o.plis$.e"t to ,1 .illio" 4ort$ of 4or7 a"% up to o"e 113 floor o"ly.@11A

%3 2#H5R C2NCR5#5 <2R>S R tre" $es, platfor. for tra"sfor.ers, ger sets a"% air o"s e3 +5#AL <2R>S R tre" $ grati"g, ':/ea. separator, .a"$ole over, la%%er ru"gs of ta"7s, stair raili"gs a"% stair "osi"g

:ourth, t$e follo4i"g 4ere %elete% fro. respo"%e"tBs s ope of 4or7G a3 +aso"ry 4or7s a"% all relate% ite.s fro. 6t$ floor to roof %e 7F /3 All eCterior .aso"ry 4or7s fro. *t$ floor to roof %e 7F a"% 3 Gar/age $ute.@12A :i(th, as a o"se;ue" e of t$e %eletio" of t$e a/ove 4or7s, t$e o"tra t pri e 4as re%u e% to ,62,020,026.53.@13A

t$at t$is Ho"ora/le Co..issio" re"%er Du%g.e"t agai"st Respo"%e"t:24"er 5+,'R5 5AS# LAND H2LD'NGS, 'NC., or%eri"g sai% Respo"%e"ts to pay t$e Clai.a"t t$e a.ou"t of ,$,22,((),!(6.66 plus osts of suit, /ro7e" %o4" as follo4sG a. ,$,*,**2,*3).! ) as u"pai% a.ou"t fro. t$e o"tra t pri eF ,$,3,153,(33.6 ) as t$e a.ou"t re.ai"i"g u"pai% for a%%itio"al 4or7sF ,$,13,!(6,*2(. )) as over$ea% eCpe"sesF a"% ,$,1,1!0,305.1 6 as a%%itio"al osts %ue to 4age es alatio"F

/. Si&th, t$e parties agree%G t$at t$e ite.s of 4or7 or a"y part t$ereof "ot o.plete% /y t$e respo"%e"t as of 9e/ruary 20, 1!!! s$oul% /e %elete% fro. its o"tra t, eC ept %e.o/ili-atio"F t$e pu" $ list ite.s u"%er respo"%e"tBs s ope of respo"si/ility "ot yet .a%e goo%J orre te% as of t$e sa.e perio% s$all /e %o"e /y ot$ers at a fiCe% ost to /e agree% upo" /y all o" er"e%F a"% respo"%e"t s$oul% /e o.pe"sate% for t$e ost of utilities it i"stalle% /ut 4ere still "ee%e% /y ot$er o"tra tors to o.plete t$eir 4or7.@1*A )astl6, t$ey agree% t$at a Doi"t ;ua"tifi atio" s$oul% /e %o"e to esta/lis$ t$e /otto. li"e figures as to 4$at 4ere to /e %elete% fro. t$e respo"%e"tBs o"tra t a"% t$e ost of o.pleti"g t$e pu" $ list ite.s 4$i $ 4ere %e%u ti/le fro. respo"%e"tBs re eiva/les.@15A '" vie4 of t$e li.itatio" o" t$e target a o.plis$.e"t to ,1 .illio" 4ort$ of 4or7 per .o"t$, respo"%e"t as7e% t$at t$e toppi"g:off /e .ove% to 9e/ruary 1!!!. Respo"%e"t li7e4ise re;ueste% a pri e a%Dust.e"t 4it$ respe t to over$ea% a"% e;uip.e"t eCpe"ses a"% legislate% a%%itio"al la/or ost. #$ese re;uests 4ere "ot, $o4ever, a te% upo" /y petitio"er.@16A After t$e o.pletio" of t$e si%e tri..i"gs a"% eC avatio" of t$e /uil%i"gBs fou"%atio", respo"%e"t %e.a"%e% t$e pay.e"t of ,2,2*0,5)(.() a"% ,1,0)5,225.!), respe tively. '"stea% of payi"g t$e a.ou"t, petitio"er agree% 4it$ t$e respo"%e"t o" a "egotiate% a.ou"t of ,!)),))).)) for si%e tri..i"gs.@1(A Ho4ever, respo"%e"tBs lai. for fou"%atio" eC avatio" 4as "ot a te% upo".@10A Duri"g t$e o"stru tio" perio%, petitio"er gra"te%, o" separate o asio"s, respo"%e"tBs re;uests for payroll a"% .aterial a o..o%atio"s.@1!A 2" +ar $ 13, 1!!!, respo"%e"t su/.itte% its fi"al /illi"g, a.ou"ti"g to ,*,**2,*3).!) represe"ti"g its 4or7 a o.plis$.e"t a"% rete"tio", less all %e%u tio"s. 2" +ar $ 23, 1!!!, a pu" $ list 4as %ra4" as a result of t$e Doi"t i"spe tio" u"%erta7e" /y t$e parties. ,etitio"er, o" t$e ot$er $a"%, refuse% to issue a ertifi ate of o.pletio". 't, i"stea%, se"t a letter to respo"%e"t i"for.i"g t$e latter t$at it 4as alrea%y i" %efault.@2)A 2" Septe./er 1*, 1!!!, respo"%e"t 4as o"strai"e% to file a Re;uest for A%Du%i atio"@21A 4it$ t$e C'AC. Respo"%e"t spe ifi ally praye%, t$usG <H5R592R5, pre.ises o"si%ere%, t$e Clai.a"t:Co"tra tor prays

. %.

2t$er reliefs e;uita/le u"%er t$e pre.ises are also praye% for.@22A 2" +ay 16, 2))), t$e C'AC re"%ere% a %e isio" @23A i" favor of t$e respo"%e"t, %isposi"g, as follo4sG <H5R592R5, Du%g.e"t is $ere/y re"%ere% a"% A<ARD of .o"etary lai.s is $ere/y .a%e as follo4sG 92R #H5 CLA'+AN#G 1 Rete"tio" +o"ey ,*,5)2,006.6* . ="pai% &illi"gs 1,1,6)(,62(.653 Rete"tio" 16,11),51*.2!3 +o"ey 2. A%%itio"al <or7G 5C avatio" for 9ou"%atio"s 3. 2ver$ea% 5Cpe"ses *. La/or 5s alatio" Costs 1,3!(,6*2.() 3)0,226.5(

#otal %ue t$e Clai.a"t 92R #H5 R5S,2ND5N#G 1. ,u" $ List 'te.s ,2*0,35).))

#otal %ue t$e Respo"%e"t ,2*0,35).)) All ot$er are %is.isse%. lai.s a"% ou"ter lai.s

299S5##'NG t$e lesser a.ou"t %ue fro. Clai.a"t 4it$ t$e /igger a.ou"t fro. t$e Respo"%e"t, 5+,'R5 5AS# LAND H2LD'NGS, 'NC. is $ere/y or%ere% to pay CA,'#2L 'ND=S#R'AL C2NS#R=C#'2N GR2=,S, 'NC. t$e "et a.ou"t of S5E5N +'LL'2N S5E5N H=NDR5D S'O#6:9'E5

#H2=SAND S'O H=NDR5D #H'R#6:2N5 AND 01J1)) 1,(,(65,631.013 4it$ 6N legal i"terest fro. t$e ti.e t$e re;uest for a%Du%i atio" 4as file% 4it$ t$e C'AC o" Septe./er 1*, 1!!! up to t$e ti.e t$is De isio" /e o.es fi"al a"% eCe utory. #$ereafter, i"terest at t$e rate of 12N per a""u. s$all a rue o" t$e fi"al Du%g.e"t u"til it is fully pai%. #$e ar/itratio" fees a"% eCpe"ses s$all /e pai% o" a pro rata /asis as i"itially s$are% /y t$e parties. S2 2RD5R5D.@2*A As to petitio"erBs ou"ter lai., t$e C'AC %e"ie% t$ose 4$i $ referre% to .aso"ry a"% ot$er 4or7s t$at it too7 over, o"si%eri"g t$at t$ey 4ere for.ally %elete% fro. respo"%e"tBs s ope of 4or7, 4$i $ i" tur" ause% t$e re%u tio" of t$eir total o"tra t pri e.@25A ,etitio"erBs lai. for li;ui%ate% %a.ages 4as li7e4ise fou"% u".eritorious /e ause it allo4e% respo"%e"t to o.plete t$e 4or7s %espite 7"o4le%ge t$at t$e latter 4as alrea%y i" %efault.@26A 2" t$e ot$er $a"%, as t$e pu" $ list 4as %ra4" after t$e Doi"t i"spe tio" /y t$e parties, C'AC fou"% for t$e petitio"er a"% t$us a4ar%e% a total a.ou"t of ,2*0,35).))@2(A Aggrieve%, petitio"er elevate% t$e .atter to t$e CA via a petitio" for revie4 u"%er Rule *3 of t$e Rules of Court. 2" Nove./er 3, 2))*, t$e CA affir.e% t$e C'ACBs fi"%i"gs of fa t a"% o" lusio"s of la4 4it$ a slig$t .o%ifi atio", a"% rule%G <H5R592R5, t$e De isio", %ate% 16 +ay 2))), of t$e Co"stru tio" '"%ustry Ar/itratio" Co..issio" Ar/itral #ri/u"al is $ere/y A99'R+5D <'#H +2D'9'CA#'2N i" t$at C'ACBs a4ar% o" La/or Cost 5s alatio" is $ere/y D5L5#5D for la 7 of fa tual /asis a"%, o"se;ue"tly, for la 7 of ause of a tio" a"% C'ACBs a4ar% o" A%%itio"al <or7 for 9ou"%atio" 5C avatio" is $ere/y e;uita/ly R5D=C5D to ,!0),3(6.3*. All ot$er a4ar%s, as 4ell as t$e rates of i"terest, are $ere/y A99'R+5D. A or%i"gly, t$e total a.ou"t %ue to C'CG is ,6,00),!)5.60. <$ile 55LH is e"title% ,2*0,35).)). 2ffsetti"g t$e a4ar% of 55LH fro. t$e a.ou"t %ue to C'CG, 55LH is $ere/y 2RD5R5D to pay C'CG t$e total a.ou"t of S'O +'LL'2N S'O H=NDR5D #H'R#6:#<2 #H2=SAND 9'E5 H=NDR5D 9'9#6:9'E5 ,5S2S 1,6,632,555.))3. No osts at t$is i"sta" e. S2 2RD5R5D.@20A '" %eleti"g respo"%e"tBs lai. for la/or ost es alatio" a"% re%u i"g its lai. for t$e ost of t$e eC avatio" of fou"%atio", t$e appellate ourt sai% t$at respo"%e"t faile% to s$o4 t$at it i" fa t pai% sai% 4age i" rease pursua"t to t$e Ne4 <age 2r%er,@2!A 4$ile t$e re%u tio" of t$e ost of fou"%atio" eC avatio" 4as t$e result of t$e re%u tio" of its ost per u/i .eter.@3)A

He" e, t$e prese"t petitio", raisi"g t$e follo4i"g issuesG '. <H5#H5R 2R N2# #H5 C2=R# 29 A,,5ALS C2++'##5D R5E5RS'&L5 5RR2R <H5N '# 2RD5R5D #H5 R5L5AS5 29 R5#5N#'2N +2N56 'N 9AE2R 29 C'CG. ''. <H5#H5R 2R N2# #H5 C2=R# 29 A,,5ALS C2++'##5D R5E5RS'&L5 5RR2R <H5N '# A<ARD5D #H5 CLA'+ 29 C'CG 92R #H5 5OCAEA#'2N 29 92=NDA#'2N. '''. <H5#H5R 2R N2# #H5 C2=R# 29 A,,5ALS C2++'##5D R5E5RS'&L5 5RR2R <H5N '# A99'R+5D C'ACBS A<ARD 92R #H5 ,A6+5N# 29 ALL5G5D 2E5RH5AD 5O,5NS5S. 'E. <H5#H5R 2R N2# #H5 C2=R# 29 A,,5ALS C2++'##5D R5E5RS'&L5 5RR2R <H5N '# D5N'5D 5+,'R5 5AS#BS CLA'+ 92R +AS2NR6 AND 2#H5R <2R>S, L'Q='DA#5D DA+AG5S, AND C2S# 29 +2N56 92R ,A6R2LL ASS'S#ANC5 AND +A#5R'ALS ACC2++2DA#'2N.@31A #$e petitio" is partly .eritorious. 6n t!e 3elease o" 3etention =one' ,etitio"er o"te"%s t$at /ot$ t$e C'AC a"% t$e CA erre% i" or%eri"g t$e release of t$e rete"tio" .o"ey %espite respo"%e"tBs failure to o.ply 4it$ t$e o"%itio"s for its release as set fort$ i" t$e o"tra t. <e fi"% for t$e petitio"er. '" t$e o"stru tio" i"%ustry, t$e te" per e"t 11)N3 rete"tio" .o"ey is a portio" of t$e o"tra t pri e auto.ati ally %e%u te% fro. t$e o"tra torBs /illi"gs, as se urity for t$e eCe utio" of orre tive 4or7 R if a"y /e o.es "e essary.@32A #$e o"stru tio" o"tra t gave petitio"er t$e rig$t to retai" 1)N of ea $ progress pay.e"t u"til o.pletio" a"% a epta" e of all 4or7s.@33A ="%ou/te%ly, as 4ill /e %is usse% $ereu"%er, respo"%e"t o.plie% fully 4it$ its o/ligatio"s, save o"ly t$ose ite.s of 4or7 4$i $ 4ere .utually %elete% /y t$e parties fro. its s ope of 4or7. Ho4ever, apart fro. t$e o.pletio" a"% a epta" e of all 4or7s, t$e follo4i"g re;uisites 4ere set as pre: o"%itio"s for t$e release of t$e rete"tio" .o"eyG a3 Co"tra torBs S4or" State.e"t s$o4i"g t$at all taCes %ue fro. t$e C2N#RAC#2R, a"% all o/ligatio"s o" .aterials use% a"% la/or

e.ploye% i" o""e tio" 4it$ t$is o"tra t $ave /ee" %uly pai%F /3 Guara"tee &o"% to a"s4er for faulty a"%Jor %efe tive .aterials or 4or7.a"s$ip as state% i" Arti le 'O Se tio" !.3 of t$is Co"tra tF 2rigi"al a"% sig"e% a"% seale% #$ree 133 sets of pri"ts of HAs &uiltI %ra4i"gs.@3*A

<e /eg to %iffer. 't is u"%ispute% t$at t$e o"ly pie e of evi%e" e prese"te% /y respo"%e"t i" support of its lai. for a%%itio"al over$ea% ost 4as its o4" o.putatio" of t$e sai% eCpe"ses. 't faile% to a%%u e a tual re eipts, i"voi es, o"tra ts a"% si.ilar %o u.e"ts. #o /e sure, respo"%e"tBs lai. for over$ea% ost .ay /e lassifie% as a lai. for a tual %a.ages. A tual %a.ages are t$ose %a.ages 4$i $ t$e i"Dure% party is e"title% to re over for t$e 4ro"g %o"e a"% i"Duries re eive% 4$e" "o"e 4ere i"te"%e%. #$ey i"%i ate su $ losses as are a tually sustai"e% a"% are sus epti/le of .easure.e"t. As su $, t$ey .ust /e prove" 4it$ a reaso"a/le %egree of ertai"ty.@35A #$is is "ot t$e first ti.e t$at a o"tra torBs lai. for a%%itio"al over$ea% osts 4as %e"ie% /e ause of i"suffi ie" y or a/se" e of evi%e" e to support t$e sa.e. '":ili inas (4re :ab Bldg.) S6stems, $nc. v. M,1 *evelo ment Cor oration, @36A 4e %e"ie% 9S'Bs lai. /e ause o"ly Hsu..aries,I a"% "ot a tual re eipts, 4ere prese"te% %uri"g t$e $eari"g. Si.ilarly, i" t$e i"sta"t ase, respo"%e"t, /y prese"ti"g o"ly its o4" o.putatio" to su/sta"tiate its lai., is "ot e"title% eve" to t$e re%u e% a.ou"t of,1,3!(,6*2.() 4$i $ is 1)N of its origi"al lai.. '"stea%, 4e altoget$er %e"y its prayer for a%%itio"al over$ea% osts. 6n 3espondent>s 3ig!t to t!e 0ost o" ?o&ndation E/)avation As to respo"%e"tBs e"title.e"t to t$e ost of eC avatio" of fou"%atio", 4e fi"% "o oge"t reaso" to %istur/ t$e C'ACBs o" lusio", as .o%ifie% /y t$e CA. Si%e tri..i"gs a"% t$e eC avatio" of fou"%atio" 4ere "ot i" lu%e% i" respo"%e"tBs origi"al s ope of 4or7. #$ey 4ere, $o4ever, u"%erta7e" /y t$e respo"%e"t upo" t$e %ire tive of petitio"er, %ue to t$e previous o"tra torBs refusal to resu.e its eC avatio" 4or7. #$ese 4or7s, t$erefore, o"stitute a" a%%itio"al lai. of respo"%e"t over a"% a/ove t$e origi"al o"tra t pri e. A o"fir.atio" of t$ese 4or7s $a%, i" fa t, /ee" give" /y petitio"er t$roug$ C$a"ge 2r%er Nos. 3@3(A a"% *@30A 4$ere it agree% to pay,25),))).)) a"% ,65),))).)), respe tively. #$is ,!)),))).)) "egotiate% a.ou"t referre% spe ifi ally to si%e tri..i"gs a"% $auli"g out of a%o/e soil. 't is u"fortu"ate, t$oug$, t$at t$e parties faile% to arrive at a settle.e"t as to respo"%e"tBs lai. for t$e ost of eC avatio" of fou"%atio". #$e a%%itio"al 4or7s $avi"g /ee" u"%erta7e" /y respo"%e"t, a"% t$e fa t of "o":pay.e"t t$ereof $avi"g /ee" esta/lis$e%, 4e fi"% "o reaso" to %istur/ t$e C'ACBs o" lusio" t$at respo"%e"t is e"title% to its lai. for t$e ost of eC avatio" of fou"%atio". As to t$e propriety of t$e a4ar%, /ot$ t$e C'AC a"% t$e CA 4ere i" a /etter positio" to o.pute t$e sa.e o"si%eri"g t$at sai% issue is fa tual i" "ature. Sig"ifi a"tly, Durispru%e" e tea $es t$at .at$e.ati al o.putatio"s, as 4ell as t$e propriety of ar/itral a4ar%s, are fa tual %eter.i"atio"s@3!A 4$i $ are /etter eCa.i"e% /y t$e lo4er ourts as trier of fa ts. #$us, 4e affir. t$e a4ar% of ,!0),3(6.3* for fou"%atio" eC avatio". 6n Petitioner>s 0o&nter)lai% "or t!e 0ost o" 8n"inis!ed Wor@s Duri"g t$e o"stru tio" perio%, t$e parties .utually agree% t$at so.e ite.s of 4or7 /e %elete% fro. respo"%e"tBs s ope of 4or7. Spe ifi ally, as lai.e% /y respo"%e"t, t$e follo4i"g 4ere %elete%G a3 .aso"ry 4or7s a"% all relate%

#$e CA affir.e% t$e C'ACBs %e isio" to or%er t$e release of t$e rete"tio" .o"ey %espite respo"%e"tBs failure to esta/lis$ t$e fulfill.e"t of t$e afore.e"tio"e% o"%itio"s, as /ot$ tri/u"als .erely fo use% o" t$e "o":issua" e of t$e ertifi ate of o.pletio", 4$i $, a or%i"g to respo"%e"t, 4as a pre:re;uisite to t$e issua" e of a guara"tee /o"%. #$e CA o" lu%e% t$at t$e o"%itio"s 4ere %ee.e% fulfille% /e ause t$e re%itor volu"tarily preve"te% t$eir fulfill.e"t. #o t$is, 4e a""ot agree. #$e re or% of t$e ase is /ereft of a"y evi%e" e to s$o4 t$at o"%itio"s 1a3 a"% 1 3 4ere o.plie% 4it$. ,etitio"er ategori ally state% i" all its plea%i"gs t$at t$ey 4ere "ot. Surprisi"gly, respo"%e"t %i% "ot s;uarely argue t$is poi"t. 't relie% solely o" petitio"erBs failure to issue t$e ertifi ate of o.pletio", 4$i $ preve"te% t$e a ;uisitio" of a guara"tee /o"% a"% t$us resulte% i" t$e "o":release of t$e rete"tio" .o"ey. <$ile it is true t$at respo"%e"t 4as e"title% to a ertifi ate of o.pletio" as t$e issua" e t$ereof 4as Dust a .i"isterial %uty of petitio"er o"si%eri"g t$at t$e proDe t $a% alrea%y /ee" o.plete%, t$e ertifi ate 4as "ot t$e o"ly o"%itio" for sai% release. 't 4as si.ply a pre:re;uisite for t$e issua" e of t$e guara"tee /o"%. A"% t$ere 4as "o s$o4i"g t$at t$e a/se" e of t$e ertifi ate of o.pletio" 4as t$e o"ly reaso" 4$y "o guara"tee /o"% 4as issue%. 'f 4e 4ere to apply t$e ivil la4 rule of o"stru tive fulfill.e"t R t$e o"%itio" s$all /e %ee.e% fulfille% if t$e re%itor volu"tarily preve"te% its fulfill.e"t R t$e" t$e su/.issio" of a guara"tee /o"% .ay /e %ee.e% to $ave /ee" o.plie% 4it$. &ut 4e a""ot apply t$e rule to o"%itio"s 1a3 a"% 1 3, 4$i $ re.ai" as u"fulfille% o"%itio"s: pre e%e"t. Si" e "o proof 4as a%%u e% t$at t$ese t4o o"%itio"s 4ere o.plie% 4it$, petitio"erBs o/ligatio" to release t$e rete"tio" .o"ey $a% "ot, as yet, arise". <e 4oul% li7e to e.p$asi-e, t$oug$, t$at t$is is 4it$out preDu%i e to respo"%e"tBs o.plia" e 4it$ t$e u"fulfille% o"%itio"s, after 4$i $, release of t$e rete"tio" .o"ey .ust, perfor e, follo4. 6n 3espondent>s 3ig!t to 2dditional 6ver!ead 0osts Respo"%e"t lai.e% ,13,!(6,*2(.)) as a%%itio"al over$ea% eCpe"ses /roug$t a/out /y t$e %elay i" t$e o.pletio" of t$e proDe t %ue to petitio"erBs o4" a ts. #$e C'AC, $o4ever, a4ar%e% o"ly a "o.i"al a.ou"t 4$i $ is 1)N of respo"%e"tBs lai. /e ause of its failure to prese"t supporti"g %o u.e"ts to prove su $ a%%itio"al eCpe"ses. #$e ar/itral tri/u"al o/serve% t$at respo"%e"t o"ly prese"te% its o4" o.putatio" 4it$out a"y ot$er %o u.e"t to su/sta"tiate its lai.. #$e CA, i" tur", affir.e% t$e C'AC fi"%i"gs, ratio i"ati"g t$at petitio"erBs failure to prese"t ou"tervaili"g evi%e" e 4as a" i.plie% a%.issio" o" its part t$at t$e o.putatio" .a%e /y respo"%e"t 4as orre t.

ite.s fro. t$e 6t$ floor to t$e roof %e 7F /3 all eCterior .aso"ry 4or7s fro. t$e *t$ floor to t$e roof %e 7F a"% 3 t$e gar/age $ute. #$is %eletio" 4as, $o4ever, %e"ie% /y petitio"er. 't, i"stea%, lai.e% t$at t$e o"ly .o%ifi atio" it approve% 4as t$e re%u tio" /y t$ree floors of t$e total "u./er of floors to /e o"stru te% /y respo"%e"t.@*)A After a t$oroug$ revie4 of t$e %o u.e"ts prese"te% /y /ot$ parties, /ot$ t$e C'AC a"% t$e CA o" lu%e% t$at t$e u"fi"is$e% 4or7s, i.e., .aso"ry 4or7s, 4ere a tually re og"i-e% a"% a epte% /y petitio"er. 't t$us agree% to ta7e over, t$roug$ its "e4 o"tra tor, t$e /ala" e of 4or7. #$e o"ly o"se;ue" e of su $ a epta" e 4as t$e %e%u tio" of t$e value of t$e u"fi"is$e% 4or7s fro. t$e total o"tra t pri e. @*1A #$is 4as t$e reaso" 4$y t$e o"tra t pri e 4as re%u e% fro. ,0* .illio" to ,62,020,026.53. #$e %eletio" 4as, li7e4ise, o"fir.e% /y respo"%e"t i" a letter %ate% August 21, 1!!0.@*2A Applyi"g Arti le 1235@*3A of t$e Civil Co%e, petitio"erBs a t eCe.pte% respo"%e"t fro. lia/ility for t$e u"fi"is$e% 4or7s. A perso" e"teri"g i"to a o"tra t $as a rig$t to i"sist o" its perfor.a" e i" all parti ulars, a or%i"g to its .ea"i"g a"% spirit. &ut if $e $ooses to 4aive a"y of t$e ter.s i"tro%u e% for $is o4" /e"efit, $e .ay %o so. @**A<$e" t$e o/ligee a epts t$e perfor.a" e, 7"o4i"g its i" o.plete"ess or irregularity, a"% 4it$out eCpressi"g a"y protest or o/De tio", t$e o/ligatio" is %ee.e% fully o.plie% 4it$. '" t$e i"sta"t ase, petitio"er 4as a4are of t$e u"fi"is$e% 4or7 of respo"%e"tF yet, it %i% "ot raise a"y o/De tio" or protest. 't, i"stea%, volu"tarily $ire% a"ot$er o"tra tor to perfor. t$e u"fi"is$e% 4or7, a"% opte% to re%u e t$e o"tra t pri e. &y re.ovi"g fro. t$e o"tra t pri e t$e value of t$e 4or7s %elete%, it is as if sai% ite.s 4ere "ot i" lu%e% i" t$e origi"al ter.s, i" t$e first pla e. #$us, as orre tly o" lu%e% /y t$e C'AC, a"% as affir.e% /y t$e CA, petitio"er is "ot e"title% to rei./urse.e"t fro. respo"%e"t for t$e eCpe"ses it i" urre% to o.plete t$e u"fi"is$e% 4or7s. 6n Petitioner>s 0o&nter)lai% "or 7i4&idated 1a%ages '" a%%itio" to its lai. for t$e ost of .aso"ry a"% ot$er 4or7s, petitio"er %e.a"%e% t$e pay.e"t of li;ui%ate% %a.ages o" t$e grou"% t$at respo"%e"t 4as i" %efault i" t$e perfor.a" e of its o/ligatio". Li;ui%ate% %a.ages are t$ose t$at t$e parties agree to /e pai% i" ase of a /rea $. As 4or%e%, t$e a.ou"t agree% upo" a"s4ers for %a.ages suffere% /y t$e o4"er %ue to %elays i" t$e o.pletio" of t$e proDe t. ="%er ,$ilippi"e la4s, t$ey are i" t$e "ature of pe"alties. #$ey are atta $e% to t$e o/ligatio" i" or%er to e"sure perfor.a" e. @*5A As a pre: o"%itio" to su $ a4ar%, $o4ever, t$ere .ust /e proof of t$e fa t of %elay i" t$e perfor.a" e of t$e o/ligatio". #$us, t$e resolutio" of t$e issue of petitio"erBs e"title.e"t to li;ui%ate% %a.ages $i"ges o" 4$et$er respo"%e"t 4as i" %efault i" t$e perfor.a" e of its o/ligatio". #$e o.pletio" %ate of t$e o"stru tio" proDe t 4as i"itially fiCe% o" 8a"uary 21, 1!!0. Ho4ever, %ue to auses /eyo"% t$e o"trol of respo"%e"t, t$e latter faile% to perfor. its o/ligatio" as s $e%ule%. #$e C'AC@*6A a"% t$e CA e"u.erate% t$e auses of t$e %elay, viz., t$e %elaye% issua" e of /uil%i"g per.itF@*(A a%%itio"al 4or7 u"%erta7e" /y respo"%e"t, i.e., /ul7 eC avatio" a"% si%e tri..i"gsF @*0A %elaye% pay.e"t of progress /illi"gsF @*!A %elaye% %elivery of o4"er:supplie% o"stru tio" .aterialsF@5)A a"% li.itatio" of

.o"t$ly a o.plis$.e"t.@51A All t$ese auses of respo"%e"tBs failure to o.plete t$e proDe t o" ti.e 4ere attri/uta/le to petitio"erBs fault. Still, petitio"er o"te"%s t$at eve" at t$e start a"% for t$e e"tire %uratio" of t$e o"stru tio", respo"%e"t 4as guilty of %elay %ue to i"suffi ie"t .a"po4er a"% la 7 of te $"i al 7"o4:$o4.@52A 6et, petitio"er allo4e% respo"%e"t to pro ee% 4it$ t$e proDe tF t$us, petitio"er a""ot "o4 /e per.itte% to raise a"e4 respo"%e"tBs allege% %elay. +ore i.porta"tly, respo"%e"t is "ot guilty of /rea $ of t$e o/ligatio"F $e" e, it a""ot /e $el% lia/le for li;ui%ate% %a.ages.

6n Petitioner>s 0o&nter)lai% "or t!e 0ost o" Pa'roll 2ssistan)e and =aterials 2))o%%odation 9i"ally, as to petitio"erBs ou"ter lai. for payroll assista" e a"% .aterials a o..o%atio", 4e ;uote 4it$ approval t$e CABs o/servatio" i" t$is 4iseG @<Ait$ respe t to 55LHBs @petitio"erBsA lai. for payroll a"% .aterial assista" e, a perusal of C'ACBs ;uestio"e% De isio" reveals t$at t$ese 4ere alrea%y ta7e" i"to o"si%eratio" a"%, 4ere i" fa t, %e%u te% fro. C'CGBs @respo"%e"tBsA rete"tio" .o"ey ite.i-e% as u"pai% /illi"gs a.ou"ti"g to ,1,6)(,62(.65. 2" page ! of C'ACBs De isio", t$e ar/itral tri/u"al fou"% t$at t$e total a.ou"t of payroll a o..o%atio" a%va" e% /y 55LH @petitio"erA for 1si 3 C'CG @respo"%e"tA is ,1),)**,!66.16, 4$ile t$e .aterial assista" e a%va" e% /y 55LH @petitio"erA is ,2,03(,6*5.26. #$ese a.ou"ts 4ere a%%e% toget$er 4it$ ot$er ite.s a"% 4ere %e%u te% fro. t$e re%u e% o"tra t pri e. He" e, as a" /e glea"e% fro. page 13 of t$e C'ACBs De isio", 55LHBs @petitio"erBsA overpay.e"t a.ou"ti"g to ,1,6)(,62(.65 alrea%y i" lu%e% 55LHBs @petitio"erBsA payroll a o..o%atio" a"% .aterial a o..o%atio"s.@53A As a" /e glea"e% fro. t$e appeale% CA %e isio", t$e appellate ourt $a% revie4e% t$e ase /ase% o" t$e petitio" a"% a""eCes, a"% 4eig$e% t$e. agai"st t$e Co..e"t of respo"%e"t a"% t$e %e isio" of t$e ar/itral tri/u"al to arrive at t$e o" lusio" t$at t$e latter %e isio" 4as /ase% o" su/sta"tial evi%e" e. '" a%.i"istrative or ;uasi:Du%i ial /o%ies li7e t$e C'AC, a fa t .ay /e esta/lis$e% if supporte% /y su/sta"tial evi%e" e, or t$at a.ou"t of releva"t evi%e" e 4$i $ a reaso"a/le .i"% .ig$t a ept as a%e;uate to Dustify a o" lusio".@5*A 't is 4ell esta/lis$e% t$at u"%er Rule *5 of t$e Rules of Court, o"ly ;uestio"s of la4, "ot of fa t, .ay /e raise% /efore t$e Supre.e Court. 't .ust /e stresse% t$at t$is Court is "ot a trier of fa ts a"% it is "ot its fu" tio" to re:eCa.i"e a"% 4eig$ a"e4 t$e respe tive evi%e" e of t$e parties. @55A #o /e sure, fi"%i"gs of fa t of lo4er ourts are %ee.e% o" lusive a"% /i"%i"g upo" t$e Supre.e Court, save o"ly i" lear eC eptio"al ases.@56A '" vie4 of t$e foregoi"g, after %e%u ti"g fro. t$e fi"al o"tra t pri e t$e rete"tio" .o"ey 1t$at is yet to /e release%3, t$e pay.e"ts as 4ell as t$e payroll a"% .aterial a o..o%atio"s .a%e /y t$e petitio"er, t$ere 4as a" overpay.e"t to respo"%e"t i" t$e total a.ou"t of ,1,6)(,62(.65. 9ro. sai% a.ou"t s$all /e %e%u te% ,!0),3(6.3* %ue t$e respo"%e"t for t$e ost of fou"%atio" eC avatio". 2" t$e ot$er $a"%, as $el% /y t$e C'AC a"% affir.e% /y t$e CA, petitio"er is e"title% to its lai. for pu" $ list ite.s a.ou"ti"g to ,2*0,35).)). Co"si%eri"g t$at t$e o"%itio"s set fort$ i" t$e o"tra t $ave "ot yet /ee" o.plie% 4it$, t$e release of t$e rete"tio" .o"ey s$all /e $el% i" a/eya" e. #$us, respo"%e"t is lia/le to petitio"er for t$e pay.e"t of ,0(5,6)1.31, 4$i $ is

t$e %iffere" e /et4ee" t$e overpay.e"t a"% t$e ost of fou"%atio" eC avatio", plus t$e ost of pu" $ list ite.s. >H-&-4/&-, pre.ises o"si%ere%, t$e petitio" is *A&5+ALL< %&A'5-D . #$e De isio" of t$e Court of Appeals %ate% Nove./er 3, 2))* a"% its Resolutio" %ate% +ay 1), 2))5 i" CA:G.R. S, No. 50!0), are M/D+4+-D /y %eleti"g t$e a4ar% of a%%itio"al over$ea% ost a.ou"ti"g to ,1,3!(,6*2.(). #$e petitio"er is %ire te% to issue to respo"%e"t t$e re;uire% ertifi ate of o.pletio" i" or%er to e"a/le t$e latter to o/tai" t$e orrespo"%i"g guara"tee /o"%. '" vie4 of t$e "o":fulfill.e"t of t$e o"%itio"s:pre e%e"t, t$e release of t$e rete"tio" .o"ey is $ere/y $el% i" a/eya" e. #$us, respo"%e"t is or%ere% to pay t$e petitio"er ,0(5,6)1.31 su/De t to t$e retur" of t$e a.ou"t 4$e" respo"%e"t s$all $ave o.plie% 4it$ t$e o"%itio"s aforesai%. S/ /&D-&-D. 4+&S5 D+,+S+/' A!S$C!' !&/ADCAS5+'% C/&*/&A5+/', *et;t;oner, Chair erson, SAND2EAL: G=#'5RR5?, $versus$ a"% L52NA RD2:D5 CAS#R2, JJ. >/&LD +'5-&AC5+,'-5>/&= S<S5-MS H>+'SI 6A*A' C/., L5D., &espon ent. C2R2NA, A?C=NA G.R. No. 16!332 ,rese"tG ,=N2, C.J.,

,ro.ulgate%G 4e#ru"ry 11, 2))8

@$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ $$$$$$@ D-C+S+/' C/&/'A, J.7 #$is petitio" for revie4 o" ertiorari u"%er Rule *5 of t$e Rules of Court see7s to set asi%e t$e 9e/ruary 16, 2))5 %e isio"@1A a"% August 16, 2))5 resolutio"@2A of t$e Court of Appeals 1CA3 i" CA:G.R. S, No. 01!*). 2" Septe./er 2(, 1!!!, petitio"er A&S:C&N &roa% asti"g Corporatio" e"tere% i"to a li e"si"g agree.e"t 4it$ respo"%e"t <orl% '"tera tive Net4or7 Syste.s 1<'NS3 8apa" Co., Lt%., a foreig" orporatio" li e"se% u"%er t$e la4s of 8apa". ="%er t$e agree.e"t, respo"%e"t 4as gra"te% t$e eC lusive li e"se to %istri/ute a"% su/li e"se t$e %istri/utio" of t$e televisio" servi e 7"o4" as H#$e 9ilipi"o C$a""elI 1#9C3 i" 8apa". &y virtue t$ereof, petitio"er u"%ertoo7 to tra"s.it t$e #9C progra..i"g sig"als to respo"%e"t 4$i $ t$e latter re eive% t$roug$ its %e o%ers a"% %istri/ute% to its su/s ri/ers.

A %ispute arose /et4ee" t$e parties 4$e" petitio"er a use% respo"%e"t of i"serti"g "i"e episo%es of <'NS <55>L6, a 4ee7ly 35:.i"ute o..u"ity "e4s progra. for 9ilipi"os i" 8apa", i"to t$e #9C progra..i"g fro. +ar $ to +ay 2))2.@3A ,etitio"er lai.e% t$at t$ese 4ere Hu"aut$ori-e% i"sertio"sI o"stituti"g a .aterial /rea $ of t$eir agree.e"t. Co"se;ue"tly, o" +ay !, 2))2,@*A petitio"er "otifie% respo"%e"t of its i"te"tio" to ter.i"ate t$e agree.e"t effe tive 8u"e 1), 2))2. #$ereafter, respo"%e"t file% a" ar/itratio" suit pursua"t to t$e ar/itratio" lause of its agree.e"t 4it$ petitio"er. 't o"te"%e% t$at t$e airi"g of <'NS <55>L6 4as .a%e 4it$ petitio"erMs prior approval. 't also allege% t$at petitio"er o"ly t$reate"e% to ter.i"ate t$eir agree.e"t /e ause it 4a"te% to re"egotiate t$e ter.s t$ereof to allo4 it to %e.a"% $ig$er fees. Respo"%e"t also praye% for %a.ages for petitio"erMs allege% gra"t of a" eC lusive %istri/utio" li e"se to a"ot$er e"tity, NH> 18apa" &roa% asti"g Corporatio"3.@5A #$e parties appoi"te% ,rofessor Alfre%o 9. #a%iar to a t as sole ar/itrator. #$ey stipulate% o" t$e follo4i"g issues i" t$eir ter.s of refere" e 1#2R3@6AG 1. <as t$e /roa% ast of <'NS <55>L6 /y t$e lai.a"t %uly aut$ori-e% /y t$e respo"%e"t @$erei" petitio"erAS Di% su $ /roa% ast o"stitute a .aterial /rea $ of t$e agree.e"t t$at is a grou"% for ter.i"atio" of t$e agree.e"t i" a or%a" e 4it$ Se tio" 13 1a3 t$ereofS 'f so, 4as t$e /rea $ seaso"a/ly ure% u"%er t$e sa.e o"tra tual provisio" of Se tio" 13 1a3S <$i $ party is e"title% to t$e pay.e"t of %a.ages t$ey lai. a"% to t$e ot$er reliefs praye% forS CCC CCC

a.ou"ti"g to la 7 or eC ess of Duris%i tio" o" t$e part of t$e ar/itrator. Respo"%e"t, o" t$e ot$er $a"%, file% a petitio" for o"fir.atio" of ar/itral a4ar% /efore t$e Regio"al #rial Court 1R#C3 of Que-o" City, &ra" $ !3, %o 7ete% as Civil Case No. Q:)*:51022. Co"se;ue"tly, petitio"er file% a supple.e"tal petitio" i" t$e CA see7i"g to e"Doi" t$e R#C of Que-o" City fro. furt$er pro ee%i"g 4it$ t$e $eari"g of respo"%e"tMs petitio" for o"fir.atio" of ar/itral a4ar%. After t$e petitio" 4as a%.itte% /y t$e appellate ourt, t$e R#C of Que-o" City issue% a" or%er $ol%i"g i" a/eya" e a"y furt$er a tio" o" respo"%e"tMs petitio" as t$e assaile% %e isio" of t$e ar/itrator $a% alrea%y /e o.e t$e su/De t of a" appeal i" t$e CA. Respo"%e"t file% a .otio" for re o"si%eratio" /ut "o resolutio" $as /ee" issue% /y t$e lo4er ourt to %ate.@0A 2" 9e/ruary 16, 2))5, t$e CA re"%ere% t$e assaile% %e isio" %is.issi"g A&S:C&NBs petitio" for la 7 of Duris%i tio". 't state% t$at as t$e #2R itself provi%e% t$at t$e ar/itratorMs %e isio" s$all /e fi"al a"% u"appeala/le a"% t$at "o .otio" for re o"si%eratio" s$all /e file%, t$e" t$e petitio" for revie4 .ust fail. 't rule% t$at it is t$e R#C 4$i $ $as Duris%i tio" over ;uestio"s relati"g to ar/itratio". 't $el% t$at t$e o"ly i"sta" e it a" eCer ise Duris%i tio" over a" ar/itral a4ar% is a" appeal fro. t$e trial ourtMs %e isio" o"fir.i"g, va ati"g or .o%ifyi"g t$e ar/itral a4ar%. 't furt$er state% t$at a petitio" for ertiorari u"%er Rule 65 of t$e Rules of Court is proper i" ar/itratio" ases o"ly if t$e ourts refuse or "egle t to i";uire i"to t$e fa ts of a" ar/itratorMs a4ar%. #$e %ispositive portio" of t$e CA %e isio" rea%G <H5R592R5, t$e i"sta"t petitio" is $ere/y D+SM+SS-D for la 7 of Duris%i tio". #$e appli atio" for a 4rit of i"Du" tio" a"% te.porary restrai"i"g or%er is li7e4ise D-'+-D. #$e Regio"al #rial Court of Que-o" City &ra" $ !3 is %ire te% to pro ee% 4it$ t$e trial for t$e ,etitio" for Co"fir.atio" of Ar/itral A4ar%. S2 2RD5R5D.

2.

3.

*.

CCC

#$e ar/itrator fou"% i" favor of respo"%e"t.@(A He $el% t$at petitio"er gave its approval to respo"%e"t for t$e airi"g of <'NS <55>L6 as s$o4" /y a series of 4ritte" eC $a"ges /et4ee" t$e parties. He also rule% t$at, $a% t$ere really /ee" a .aterial /rea $ of t$e agree.e"t, petitio"er s$oul% $ave ter.i"ate% t$e sa.e i"stea% of se"%i"g a .ere "oti e to ter.i"ate sai% agree.e"t. #$e ar/itrator fou"% t$at petitio"er t$reate"e% to ter.i"ate t$e agree.e"t %ue to its %esire to o.pel respo"%e"t to re:"egotiate t$e ter.s t$ereof for $ig$er fees. He furt$er state% t$at eve" if respo"%e"t o..itte% a /rea $ of t$e agree.e"t, t$e sa.e 4as seaso"a/ly ure%. He t$e" allo4e% respo"%e"t to re over te.perate %a.ages, attor"eyMs fees a"% o"e:$alf of t$e a.ou"t it pai% as ar/itratorMs fee. ,etitio"er file% i" t$e CA a petitio" for revie4 u"%er Rule *3 of t$e Rules of Court or, i" t$e alter"ative, a petitio" for ertiorari u"%er Rule 65 of t$e sa.e Rules, 4it$ appli atio" for te.porary restrai"i"g or%er a"% 4rit of preli.i"ary i"Du" tio". 't 4as %o 7ete% as CA:G.R. S, No. 01!*). 't allege% serious errors of fa t a"% la4 a"%Jor grave a/use of %is retio"

,etitio"er .ove% for re o"si%eratio". #$e sa.e 4as %e"ie%. He" e, t$is petitio". ,etitio"er o"te"%s t$at t$e CA, i" effe t, rule% t$atG 1a3 it s$oul% $ave first file% a petitio" to va ate t$e a4ar% i" t$e R#C a"% o"ly i" ase of %e"ial oul% it elevate t$e .atter to t$e CA via a petitio" for revie4 u"%er Rule *3 a"% 1/3 t$e assaile% %e isio" i.plie% t$at a" aggrieve% party to a" ar/itral a4ar% %oes "ot $ave t$e optio" of %ire tly fili"g a petitio" for revie4 u"%er Rule *3 or a petitio" for ertiorari u"%er Rule 65 4it$ t$e CA eve" if t$e issues raise% pertai" to errors of fa t a"% la4 or grave a/use of %is retio", as t$e ase .ay /e, a"% "ot %epe"%e"t upo" su $ grou"%s as e"u.erate% u"%er Se tio" 2* 1petitio" to va ate a" ar/itral a4ar%3 of RA 0(6 1t$e Ar/itratio" La43. ,etitio"er allege% serious error o" t$e part of t$e CA. #$e issue /efore us is 4$et$er or "ot a" aggrieve% party i" a volu"tary ar/itratio" %ispute .ay avail of, %ire tly i" t$e CA, a petitio" for revie4 u"%er Rule *3 or a petitio" for ertiorari u"%er Rule 65 of t$e Rules of Court, i"stea% of fili"g a petitio" to va ate t$e a4ar% i" t$e R#C 4$e" t$e grou"%s

i"vo7e% to overtur" t$e ar/itratorBs %e isio" are ot$er t$a" t$ose for a petitio" to va ate a" ar/itral a4ar% e"u.erate% u"%er RA 0(6. RA 0(6 itself .a"%ates t$at it is t$e Court of 9irst '"sta" e, "o4 t$e R#C, 4$i $ $as Duris%i tio" over ;uestio"s relati"g to ar/itratio",@!A su $ as a petitio" to va ate a" ar/itral a4ar%. Se tio" 2* of RA 0(6 provi%es for t$e spe ifi grou"%s for a petitio" to va ate a" a4ar% .a%e /y a" ar/itratorG Se . 2*. +rounds (or vacating a;ard. : +n "ny one o8 t9e 8olloA;n: 1"ses , t9e 1ourt 2ust 2"Ee "n or er v"1"t;n: t9e "A"r upo" t$e petitio" of a"y party to t$e o"troversy 4$e" su $ party proves affir.atively t$at i" t$e ar/itratio" pro ee%i"gsG 1a3 #$e a4ar% 4as pro ure% /y orruptio", frau%, or ot$er u"%ue .ea"sF or 1/3 #$at t$ere 4as evi%e"t partiality or orruptio" i" t$e ar/itrators or a"y of t$e.F or 1 3 #$at t$e ar/itrators 4ere guilty of .is o"%u t i" refusi"g to postpo"e t$e $eari"g upo" suffi ie"t ause s$o4", or i" refusi"g to $ear evi%e" e perti"e"t a"% .aterial to t$e o"troversyF t$at o"e or .ore of t$e ar/itrators 4as %is;ualifie% to a t as su $ u"%er se tio" "i"e $ereof, a"% 4illfully refrai"e% fro. %is losi"g su $ %is;ualifi atio"s or of a"y ot$er .is/e$avior /y 4$i $ t$e rig$ts of a"y party $ave /ee" .aterially preDu%i e%F or 1%3 #$at t$e ar/itrators eC ee%e% t$eir po4ers, or so i.perfe tly eCe ute% t$e., t$at a .utual, fi"al a"% %efi"ite a4ar% upo" t$e su/De t .atter su/.itte% to t$e. 4as "ot .a%e.

appeal, t$e CA reverse% t$e %e isio" of t$e trial ourt a"% affir.e% t$e ar/itral a4ar%. '" affir.i"g t$e CA, 4e $el%G #$e Court of Appeals, i" reversi"g t$e trial ourtMs %e isio" $el% t$at t$e "ullifi atio" of t$e %e isio" of t$e Ar/itratio" Co..ittee 4as "ot /ase% o" t$e grou"%s provi%e% /y t$e Ar/itratio" La4 a"% t$at CCC private respo"%e"ts 1petitio"ers $erei"3 $ave faile% to su/sta"tiate 4it$ a"y evi%e" e t$eir lai. of partiality. Sig"ifi a"tly, eve" as respo"%e"t Du%ge rule% agai"st t$e ar/itratorMs a4ar%, $e oul% "ot fi"% fault 4it$ t$eir i.partiality a"% i"tegrity. -v; ently, t9e null;8;1"t;on o8 t9e "A"r ren ere "t t9e 1"se "t #"r A"s not 2" e on t9e #"s;s o8 "ny o8 t9e :roun s prov; e #y l"A. CCC CCC CCC

+t ;s 1le"r, t9ere8ore, t9"t t9e "A"r A"s v"1"te not #e1"use o8 ev; ent p"rt;"l;ty o8 t9e "r#;tr"tors /ut /e ause t$e latter i"terprete% t$e o"tra t i" a 4ay 4$i $ 4as "ot favora/le to $erei" petitio"ers a"% /e ause it o"si%ere% t$at $erei" private respo"%e"ts, /y su/.itti"g t$e o"troversy to ar/itratio", 4as see7i"g to re"ege o" its o/ligatio"s u"%er t$e o"tra t. CCC CCC CCC

't is lear t$e" t$at t9e Court o8 Appe"ls reverse t9e tr;"l 1ourt "ot /e ause t$e latter revie4e% t$e ar/itratio" a4ar% i"volve% $erei", /ut #e1"use t9e respon ent "ppell"te 1ourt 8oun t9"t t9e tr;"l 1ourt 9" no le:"l #"s;s 8or v"1"t;n: t9e "A"r . 15.p$asis supplie%3. '" ases "ot falli"g u"%er a"y of t$e afore.e"tio"e% grou"%s to va ate a" a4ar%, t$e Court $as alrea%y .a%e several pro"ou" e.e"ts t$at a petitio" for revie4 u"%er Rule *3 or a petitio" for ertiorari u"%er Rule 65 .ay /e availe% of i" t$e CA. <$i $ o"e 4oul% %epe"% o" t$e grou"%s relie% upo" /y petitio"er. '" )uzon *evelo ment Ban# v. 'ssociation o( )uzon *evelo ment Ban# !m lo6ees,@11A t$e Court $el% t$at a volu"tary ar/itrator is properly lassifie% as a H;uasi:Du%i ial i"stru.e"talityI a"% is, t$us, 4it$i" t$e a./it of Se tio" ! 133 of t$e 8u%i iary Reorga"i-atio" A t, as a.e"%e%. ="%er t$is se tio", t$e Court of Appeals s$all eCer iseG CCC CCC CCC

&ase% o" t$e foregoi"g provisio"s, t$e la4 itself learly provi%es t$at t$e R#C .ust issue a" or%er va ati"g a" ar/itral a4ar% o"ly Hi" a"y o"e of t$e . . . asesI e"u.erate% t$erei". ="%er t$e legal .aCi. i" statutory o"stru tio" e& ressio unius est e&clusio alterius, t$e eCpli it .e"tio" of o"e t$i"g i" a statute .ea"s t$e eli.i"atio" of ot$ers "ot spe ifi ally .e"tio"e%. As RA 0(6 %i% "ot eCpressly provi%e for errors of fa t a"%Jor la4 a"% grave a/use of %is retio" 1proper grou"%s for a petitio" for revie4 u"%er Rule *3 a"% a petitio" for ertiorari u"%er Rule 65, respe tively3 as grou"%s for .ai"tai"i"g a petitio" to va ate a" ar/itral a4ar% i" t$e R#C, it "e essarily follo4s t$at a party .ay "ot avail of t$e latter re.e%y o" t$e grou"%s of errors of fa t a"%Jor la4 or grave a/use of %is retio" to overtur" a" ar/itral a4ar%. 'damson v. Court o( ' eals@1)A gave a.ple 4ar"i"g t$at a petitio" to va ate file% i" t$e R#C 4$i $ is "ot /ase% o" t$e grou"%s e"u.erate% i" Se tio" 2* of RA 0(6 s$oul% /e %is.isse%. '" t$at ase, t$e trial ourt va ate% t$e ar/itral a4ar% see.i"gly /ase% o" grou"%s i" lu%e% i" Se tio" 2* of RA 0(6 /ut a loser rea%i"g t$ereof reveale% ot$er4ise. 2"

133 5C lusive appellate Duris%i tio" over all fi"al Du%g.e"ts, %e isio"s, resolutio"s, or%ers or a4ar%s of Regio"al #rial Courts a"% ;uasi:Du%i ial age" ies, ;nstru2ent"l;t;es, /oar%s or o..issio"s, i" lu%i"g t$e Se urities a"% 5C $a"ge Co..issio", t$e 5.ployeesB Co.pe"satio" Co..issio" a"% t$e Civil Servi e Co..issio", eC ept t$ose falli"g 4it$i" t$e appellate Duris%i tio" of t$e Supre.e Court i" a or%a" e 4it$ t$e Co"stitutio", t$e La/or Co%e of t$e

,$ilippi"es u"%er ,resi%e"tial De ree No. **2, as a.e"%e%, t$e provisio"s of t$is A t a"% of su/paragrap$ 113 of t$e t$ir% paragrap$ a"% su/paragrap$ 1*3 of t$e fourt$ paragrap$ of Se tio" 1( of t$e 8u%i iary A t of 1!*0. 15.p$asis supplie%3 As su $, %e isio"s $a"%e% %o4" /y volu"tary ar/itrators fall 4it$i" t$e eC lusive appellate Duris%i tio" of t$e CA. #$is %e isio" 4as ta7e" i"to o"si%eratio" i" approvi"g Se tio" 1 of Rule *3 of t$e Rules of Court.@12A #$usG S5C#'2N 1. Sco e. : #$is Rule s$all apply to appeals fro. Du%g.e"ts or fi"al or%ers of t$e Court of #aC Appeals a"% fro. a4ar%s, Du%g.e"ts, fi"al or%ers or resolutio"s of or aut$ori-e% /y a"y ;uasi: Du%i ial age" y i" t$e eCer ise of its ;uasi: Du%i ial fu" tio"s. A.o"g t$ese age" ies are t$e Civil Servi e Co..issio", Ce"tral &oar% of Assess.e"t Appeals, Se urities a"% 5C $a"ge Co..issio", 2ffi e of t$e ,resi%e"t, La"% Registratio" Aut$ority, So ial Se urity Co..issio", Civil Aero"auti s &oar%, &ureau of ,ate"ts, #ra%e.ar7s a"% #e $"ology #ra"sfer, Natio"al 5le trifi atio" A%.i"istratio", 5"ergy Regulatory &oar%, Natio"al #ele o..u"i atio"s Co..issio", Depart.e"t of Agraria" Refor. u"%er Repu/li A t Nu./er 665(, Gover".e"t Servi e '"sura" e Syste., 5.ployees Co.pe"satio" Co..issio", Agri ultural '"ve"tio"s &oar%, '"sura" e Co..issio", ,$ilippi"e Ato.i 5"ergy Co..issio", &oar% of '"vest.e"ts, Co"stru tio" '"%ustry Ar/itratio" Co..issio", a"%volunt"ry "r#;tr"tors "ut9or;ze #y l"A. 15.p$asis supplie%3

" :r"ve "#use o8 ;s1ret;on "2ount;n: to l"1E or e@1ess o8 Dur;s ;1t;on on t9e p"rt o8 "ny #r"n19 or ;nstru2ent"l;ty o8 t9e %overn2ent. 15.p$asis supplie%3 As .ay /e glea"e% fro. t$e a/ove state% provisio", it is 4ell 4it$i" t$e po4er a"% Duris%i tio" of t$e Court to i";uire 4$et$er a"y i"stru.e"tality of t$e Gover".e"t, su $ as a volu"tary ar/itrator, $as gravely a/use% its %is retio" i" t$e eCer ise of its fu" tio"s a"% prerogatives. A"y agree.e"t stipulati"g t$at Ht$e %e isio" of t$e ar/itrator s$all /e fi"al a"% u"appeala/leI a"% Ht$at "o furt$er Du%i ial re ourse if eit$er party %isagrees 4it$ t$e 4$ole or a"y part of t$e ar/itratorMs a4ar% .ay /e availe% ofI a""ot /e $el% to pre lu%e i" proper ases t$e po4er of Du%i ial revie4 4$i $ is i"$ere"t i" ourts. @16A <e 4ill "ot $esitate to revie4 a volu"tary ar/itratorMs a4ar% 4$ere t$ere is a s$o4i"g of grave a/use of aut$ority or %is retio" a"% su $ is properly raise% i" a petitio" for ertiorari@1(A a"% t$ere is "o appeal, "or a"y plai", spee%y re.e%y i" t$e ourse of la4.@10A Sig"ifi a"tly, $nsular Savings Ban# v. :ar !ast Ban# and 1rust Com an6@1!A %efi"itively outli"e% several Du%i ial re.e%ies a" aggrieve% party to a" ar/itral a4ar% .ay u"%erta7eG 113 a petitio" i" t$e proper R#C to issue a" or%er to va ate t$e a4ar% o" t$e grou"%s provi%e% for i" Se tio" 2* of RA 0(6F a petitio" for revie4 i" t$e CA u"%er Rule *3 of t$e Rules of Court o" ;uestio"s of fa t, of la4, or .iCe% ;uestio"s of fa t a"% la4F a"% a petitio" for ertiorari u"%er Rule 65 of t$e Rules of Court s$oul% t$e ar/itrator $ave a te% 4it$out or i" eC ess of $is Duris%i tio" or 4it$ grave a/use of %is retio" a.ou"ti"g to la 7 or eC ess of Duris%i tio".

123

133

#$is rule 4as ite% i" Sevilla 1rading Com an6 v. Semana,@13A Manila Midto;n Cotel v. Borromeo,@1*A a"% Ni on 4aint !m lo6ees Inion57lalia v. Court o( ' eals.@15A #$ese ases $el% t$at t$e proper re.e%y fro. t$e a%verse %e isio" of a volu"tary ar/itrator, if errors of fa t a"%Jor la4 are raise%, is a petitio" for revie4 u"%er Rule *3 of t$e Rules of Court. #$us, petitio"erMs o"te"tio" t$at it .ay avail of a petitio" for revie4 u"%er Rule *3 u"%er t$e ir u.sta" es of t$is ase is orre t. As to petitio"erMs argu.e"ts t$at a petitio" for ertiorari u"%er Rule 65 .ay also /e resorte% to, 4e $ol% t$e sa.e to /e i" a or%a" e 4it$ t$e Co"stitutio" a"% Durispru%e" e. Se tio" 1 of Arti le E''' of t$e 1!0( Co"stitutio" provi%es t$atG S5C#'2N 1. #$e Du%i ial po4er s$all /e veste% i" o"e Supre.e Court a"% i" su $ lo4er ourts as .ay /e esta/lis$e% /y la4. 6u ;1;"l poAer ;n1lu es t9e uty o8 t9e 1ourts o8 Dust;1e to settle a tual o"troversies i"volvi"g rig$ts 4$i $ are legally %e.a"%a/le a"% e"for ea/le, a"% to eter2;ne A9et9er or not t9ere 9"s #een

Nevert$eless, alt$oug$ petitio"erBs positio" o" t$e Du%i ial re.e%ies availa/le to it 4as orre t, 4e sustai" t$e %is.issal of its petitio" /y t$e CA. #$e re.e%y petitio"er availe% of, e"title% Halternative etition (or revie; under ,ule @0 or etition (or certiorari under ,ule ED,I 4as 4ro"g. #i.e a"% agai", 4e $ave rule% t$at t$e re.e%ies of appeal a"% ertiorari are .utually eC lusive a"% "ot alter"ative or su essive.@2)A ,roper issues t$at .ay /e raise% i" a petitio" for revie4 u"%er Rule *3 pertai" to errors of fa t, la4 or .iCe% ;uestio"s of fa t a"% la4. @21A <$ile a petitio" for ertiorari u"%er Rule 65 s$oul% o"ly li.it itself to errors of Duris%i tio", t$at is, grave a/use of %is retio" a.ou"ti"g to a la 7 or eC ess of Duris%i tio".@22A +oreover, it a""ot /e availe% of 4$ere appeal is t$e proper re.e%y or as a su/stitute for a lapse% appeal.@23A '" t$e ase at /ar, t$e ;uestio"s raise% /y petitio"er i" its alternative etition /efore t$e CA 4ere t$e follo4i"gG A. #H5 S2L5 AR&'#RA#2R C2++'##5D S5R'2=S 5RR2R ANDJ2R GRAE5L6 A&=S5D H'S D'SCR5#'2N 'N R=L'NG #HA# #H5 &R2ADCAS# 29

H<'NS <55>L6I <AS D=L6 A=#H2R'?5D &6 A&S:C&N. &. #H5 S2L5 AR&'#RA#2R C2++'##5D S5R'2=S 5RR2R ANDJ2R GRAE5L6 A&=S5D H'S D'SCR5#'2N 'N R=L'NG #HA# #H5 =NA=#H2R'?5D &R2ADCAS# D'D N2# C2NS#'#=#5 +A#5R'AL &R5ACH 29 #H5 AGR55+5N#. C. #H5 S2L5 AR&'#RA#2R C2++'##5D S5R'2=S 5RR2R ANDJ2R GRAE5L6 A&=S5D H'S D'SCR5#'2N 'N R=L'NG #HA# <'NS S5AS2NA&L6 C=R5D #H5 &R5ACH. D. #H5 S2L5 AR&'#RA#2R C2++'##5D S5R'2=S 5RR2R ANDJ2R GRAE5L6 A&=S5D H'S D'SCR5#'2N 'N R=L'NG #HA# #5+,5RA#5 DA+AG5S 'N #H5 A+2=N# 29 ,1,166,!55.)) +A6 &5 A<ARD5D #2 <'NS. 5. #H5 S2L5 AR&'#RA#2R C2++'##5D S5R'2=S 5RR2R ANDJ2R GRAE5L6 A&=S5D H'S D'SCR5#'2N 'N A<ARD'NG A##2RN56MS 955S 'N #H5 =NR5AS2NA&L5 A+2=N# AND =NC2NSC'2NA&L5 A+2=N# 29 ,05),))).)). 9. #H5 5RR2R C2++'##5D &6 #H5 S2L5 AR&'#RA#2R 'S N2# A S'+,L5 5RR2R 29 8=DG+5N# 2R A&=S5 29 D'SCR5#'2N. '# 'S GRAE5 A&=S5 29 D'SCR5#'2N #AN#A+2=N# #2 LAC> 2R 5OC5SS 29 8=R'SD'C#'2N. A areful rea%i"g of t$e assig"e% errors reveals t$at t$e real issues alli"g for t$e CAMs resolutio" 4ere less t$e allege% grave a/use of %is retio" eCer ise% /y t$e ar/itrator a"% .ore a/out t$e ar/itratorBs appre iatio" of t$e issues a"% evi%e" e prese"te% /y t$e parties. #$erefore, t$e issues learly fall u"%er t$e lassifi atio" of errors of fa t a"% la4 W ;uestio"s 4$i $ .ay /e passe% upo" /y t$e CA via a petitio" for revie4 u"%er Rule *3. ,etitio"er leverly rafte% its assig".e"t of errors i" su $ a 4ay as to stra%%le /ot$ Du%i ial re.e%ies, t$at is, /y allegi"g serious errors of fa t a"% la4 1i" 4$i $ ase a petitio" for revie4 u"%er Rule *3 4oul% /e proper3 a"% grave a/use of %is retio" 1/e ause of 4$i $ a petitio" for ertiorari u"%er Rule 65 4oul% /e per.issi/le3. 't .ust /e e.p$asi-e% t$at every la4yer s$oul% /e fa.iliar 4it$ t$e %isti" tio"s /et4ee" t$e t4o re.e%ies for it is "ot t$e %uty of t$e ourts to %eter.i"e u"%er 4$i $ rule t$e petitio" s$oul% fall.@2*A ,etitio"erMs ploy 4as fatal to its ause. A" appeal ta7e" eit$er to t$is Court or t$e CA /y t$e 4ro"g or i"appropriate .o%e s$all /e %is.isse%.@25A #$us, t$e "ltern"t;ve petitio" file% i" t$e CA, /ei"g a" i"appropriate .o%e of appeal, s$oul% $ave /ee" %is.isse% outrig$t /y t$e CA. >H-&-4/&-, t$e petitio" is $ere/y D-'+-D. #$e 9e/ruary 16, 2))5 %e isio" a"% August 16, 2))5 resolutio" of t$e Court of Appeals i" CA:G.R. S, No. 01!*) %ire ti"g t$e Regio"al #rial Court of Que-o" City, &ra" $ !3 to pro ee%

4it$ t$e trial of t$e petitio" for o"fir.atio" of ar/itral a4ar% is A44+&M-D. Costs agai"st petitio"er. S/ /&D-&-D. Repu/li of t$e ,$ilippi"es S=,R5+5 C2=R# +a"ila S5C2ND D'E'S'2N D+-S-L C/'S5&UC5+/' C/., +'C., ,etitio"er, : versus : %.&. 'o. 154885

U*S+ *&/*-&5< H/LD+'%S, +'C., Respo"%e"t. C::::::::::::::::::::::::::::::::::::::::::::::::C U*S+ *&/*-&5< H/LD+'%S, +'C., %.&. 'o. 154(37 ,etitio"er, ,rese"tG Q='S=+&'NG, J., C$airperso", : versus : CAR,'2 +2RAL5S, #'NGA, E5LASC2, 8R., a"% CH'C2:NA?AR'2,Y JJ

. D+-S-L C/'S5&UC5+/' C/., +'C. ,ro.ulgate%G "n 4%U +'SU&A'C- C/&*., Respo"%e"ts. +ar $ 2*, 2))0 C:::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: :::::::C D-C+S+/' ,-LASC/, 6&., J.7 59e C"se &efore t$e Court are t$ese petitio"s for revie4 u"%er Rule *5 separately i"terpose% /y Diesel Co"stru tio" Co., '" . 1Diesel3 a"% =,S' ,roperty Hol%i"gs, '" . 1=,S'3 to set asi%e t$e De isio"@1A %ate% April 16, 2))2 as partly .o%ifie% i" a Resolutio"@2A of August 21, 2))2, /ot$ re"%ere% /y t$e Court of Appeals 1CA3 i" CA:G.R. S, No. 603*), e"title% I4S$ 4ro ert6 Coldings, $nc. v. *iesel Construction Co., $nc., and :+I $nsurance Cor oration. #$e CA De isio" .o%ifie% t$e De isio" %ate% De e./er 1*, 2))1 of t$e Ar/itral #ri/u"al of t$e Co"stru tio" '"%ustry Ar/itratio" Co..issio" 1C'AC3 i" C'AC Case No. 10:2))1, 4$ile t$e CA Resolutio" gra"te% i" part t$e .otio" of Diesel for re o"si%eratio" a"% %e"ie% a si.ilar .otio" of =,S'. 59e 4"1ts

#$e fa ts, as fou"% i" t$e CA De isio" u"%er revie4, are as follo4sG 2" August 26, 1!!5, Diesel, as Co"tra tor, a"% =,S', as 24"er, e"tere% i"to a Co"stru tio" Agree.e"t@3A 1Agree.e"t3 for t$e i"terior ar $ite tural o"stru tio" 4or7s for t$e 1*t$ to 16t$ floors of t$e =,S' &uil%i"g 3 +e%itelJCo"%otel ,roDe t 1,roDe t3 lo ate% o" Ge". Lu"a St., 5r.ita, +a"ila. ="%er t$e Agree.e"t, as a.e"%e%, Diesel, for ,$, 12,(3!,)!!, agree% to u"%erta7e t$e ,roDe t, paya/le /y progress /illi"g.@*A As stipulate%, Diesel poste%, t$roug$ 9G= '"sura" e Corp. 19G=3, a perfor.a" e /o"% i" favor of =,S'.@5A $nter alia, t$e Agree.e"t o"tai"e% provisio"s o" o"tra t 4or7s a"% ,roDe t o.pletio", eCte"sio"s of o"tra t perio%, $a"geJeCtra 4or7s or%ers, %elays, a"% %a.ages for "egative slippage. #as7e% to oversee DieselBs 4or7 progress 4ereG Gra e S. Reyes Desig"s, '" . for i"terior %esig" a"% ar $ite ture, D.L. Earias a"% Asso iates as Co"stru tio" +a"ager, a"% Ry%er Hu"t Loa or, '" . as Qua"tity Surveyor.@6A ="%er t$e Agree.e"t, t$e ,roDe t prose utio" proper 4as to start o" August 2, 1!!!, to ru" for a perio% of !) %ays or u"til Nove./er 0, 1!!!. #$e parties later agree% to .ove t$e o..e" e.e"t %ate to August 21, 1!!!, a %evelop.e"t "e essitati"g t$e orrespo"%i"g .ove.e"t of t$e o.pletio" %ate to Nove./er 2), 1!!!. 2f parti ular releva" e to t$is ase is t$e se tio" o/ligi"g t$e o"tra tor, i" ase of u"Dustifia/le %elay, to pay t$e o4"er li;ui%ate% %a.ages i" t$e a.ou"t e;uivale"t to o"e:fift$ 11J53 of o"e 113 per e"t of t$e total ,roDe t ost for ea $ ale"%ar %ay of %elay.@(A '" t$e ourse of t$e ,roDe t i.ple.e"tatio", $a"ge or%ers 4ere effe te% a"% eCte"sio"s soug$t. At o"e ti.e or a"ot$er, Diesel re;ueste% for eCte"sio" o4i"g to t$e follo4i"g auses or %elayi"g fa torsG 113 .a"ual $auli"g of .aterials fro. t$e 1*t$ to 16t$ floorsF 123 %elaye% supply of .ar/leF 133 various $a"ge or%ersF a"% 1*3 %elay i" t$e i"stallatio" of s$o4er asse./ly.@0A =,S', it 4oul% appear, %isapprove% t$e %esire% eCte"sio"s o" t$e /asis of t$e foregoi"g auses, t$us putti"g Diesel i" a state of %efault for a give" o"tra t 4or7. A"% for every %efault situatio", =,S' assesse% Diesel for li;ui%ate% %a.ages i" t$e for. of %e%u tio"s fro. DieselBs progress pay.e"ts, as stipulate% i" t$e Agree.e"t.@!A Appare"tly ir7e% /y a"% eC epti"g fro. t$e a tio"s ta7e" /y =,S', Diesel, t$ru its ,roDe t .a"ager, se"t, o" +ar $ 16, 2))), a letter "oti e to =,S' stati"g t$at t$e ,roDe t $as /ee" o.plete% as of t$at %ate. =,S', $o4ever, %isregar%e% t$e "oti e, a"% refuse% to a ept %elivery of t$e o"tra te% pre.ises, lai.i"g t$at Diesel $a% a/a"%o"e% t$e ,roDe t u"fi"is$e%. Apart t$erefro., =,S' 4it$$el% DieselBs 1)N Hrete"tio" .o"eyI a"% refuse% to pay t$e u"pai% /ala" e of t$e o"tra t pri e.@1)A 't is upo" t$e foregoi"g fa tual /a 7%rop t$at Diesel file% a o.plai"t /efore t$e C'AC, prayi"g t$at =,S' /e o.pelle% to pay t$e u"pai% /ala" e of t$e o"tra t pri e, plus %a.ages a"% attor"eyBs fees. '" a" a"s4er 4it$ ou"ter lai., =,S' %e"ie% lia/ility, a use% Diesel of a/a"%o"i"g a proDe t yet to /e fi"is$e%, a"% praye% for repay.e"t of eCpe"ses it allege%ly i" urre% for o.pleti"g t$e ,roDe t a"% for a

%e laratio" t$at t$e %e%u tio"s it .a%e for li;ui%ate% %a.ages 4ere proper. =,S' also soug$t pay.e"t of attor"eyBs fees.@11A After %ue $eari"g follo4i"g a protra te% legal sparri"g, t$e Ar/itral #ri/u"al of t$e C'AC, o" De e./er 1*, 2))1, i" C'AC Case No. 10:2))1, re"%ere% Du%g.e"t for Diesel, al/eit for a" a.ou"t lesser t$a" its origi"al %e.a"%. #o /e pre ise, t$e C'AC or%ere% =,S' to pay Diesel t$e total a.ou"t of ,$, *,)2(,061.6), /ro7e" %o4" as follo4sG ,$, 3,661,6!2.6), represe"ti"g t$e u"pai% /ala" e of t$e o"tra t pri eF a"% ,$, 366,16! as attor"eyBs fees. '" t$e sa.e %e isio", t$e C'AC %is.isse% =,S'Bs ou"ter lai. @12Aa"% assesse% it for ar/itratio" osts i" t$e a.ou"t of ,$, 2!0,*)6.)3.@13A '" ti.e, =,S' 4e"t to t$e CA o" a petitio" for revie4, %o 7ete% as CA:G.R. S, No. 603*). 5ve"tually, t$e appellate ourt re"%ere% its assaile% De isio" %ate% April 16, 2))2, .o%ifyi"g t$at of t$e C'AC, t$usG <H5R592R5, pre.ises o"si%ere%, t$e petitio" is GRAN#5D a"% t$e ;uestio"e% De isio" is +2D'9'5D i" t$is 4iseG a. #$e lai. of @=,S'A for li;ui%ate% %a.ages is GRAN#5D to t$e eCte"t of ,5S2SG 2N5 +'LL'2N #HR55 H=NDR5D N'N5 #H2=SAND AND 9'E5 H=NDR5D 1,1,3)!,5)).))3 represe"ti"g forty:five 1*53 %ays of %elay at ,2!,1)) er diemF /. <e $ol% t$at @DieselA su/sta"tially o.plie% 4it$ t$e Co"stru tio" Co"tra t a"% is t$erefore e"title% to o"e $u"%re% per e"t 11))N3 pay.e"t of t$e o"tra t pri e. #$erefore, t$e lai. of @DieselA for a" u"pai% /ala" e of ,5S2SG #<2 +'LL'2N 92=R H=NDR5D 92R#6: 2N5 #H2=SAND 92=R H=NDR5D 5'GH#6 #<2 a"% S'O#6 92=R e"tavos 1,2,**1,*02.6*3, 4$i $ a.ou"t alrea%y i" lu%es t$e rete"tio" o" t$e a%%itio"al 4or7s or C$a"ge 2r%ers, is GRAN#5D, .i"us li;ui%ate% %a.ages. '" su., @=,S'A is $el% lia/le to @DieselA i" t$e a.ou"t of ,5S2SG 2N5 +'LL'2N 2N5 H=NDR5D #H'R#6 2N5 #H2=SAND N'N5 H=NDR5D 5'GH#6 #<2 a"% siCty four e"tavos 1,1,131,!02.6*3, 4it$ legal i"terest u"til t$e sa.e is fully pai%F . #$e parties are lia/le e;ually for t$e pay.e"t of ar/itratio" ostsF %. All lai.s for attor"eyBs fees are D'S+'SS5DF a"% e. Si" e t$ere is still %ue a"% o4i"g fro. =,S' a" a.ou"t of .o"ey i" favor of Diesel, respo"%e"t 9G= is D'SCHARG5D as surety for Diesel. Costs de o((icio. S2 2RD5R5D.@1*A #$erefro., Diesel a"% =,S' ea $ soug$t re o"si%eratio". 2" August 21, 2))2, t$e CA issue% its e;ually assaile% Resolutio" %e"yi"g re o"si%eratio" to =,S', /ut partially gra"ti"g DieselBs .otio", %isposi"g as follo4sG <H5R592R5, t$e +otio" for Re o"si%eratio" of @DieselA is partially

GRAN#5D. #$e li;ui%ate% %a.ages are $ere/y re%u e% to ,1,1*6,51!.)) 1*5 %ays .ultiplie% /y ,25,*(0.2) er diem3. Ho4ever, i" a or%a" e 4it$ t$e .ai" opi"io", <e $ol% t$at @=,S'A is lia/le to @DieselA for t$e total a.ou"t of ,3,661,6!2.6*, represe"ti"g t$e u"pai% /ala" e of t$e o"tra t pri e plus t$e te": per e"t rete"tio", fro. 4$i $ t$e li;ui%ate% %a.ages, .ust, of ourse, /e %e%u te%. #$us, i" su., as a.e"%e%, <e $ol% t$at petitio"er is still lia/le to respo"%e"t Diesel i" t$e a.ou"t of ,2,515,1(3.6*, 4it$ legal i"terest u"til t$e sa.e is fully pai%. #$e .ai" opi"io", respe ts, S#ANDS. S2 2RD5R5D.@15A He" e, t$ese separate petitio"s are /efore us. ,er its Resolutio" of +ar $ 1(, 2))3, t$e Court or%ere% t$e o"soli%atio" of t$e petitio"s. 59e +ssues '" its petitio" i" G.R. No. 15*005, Diesel raises t$e follo4i"g issuesG 1. <$et$er or "ot t$e @CAA $as t$e %is retio", i"%ee% t$e Duris%i tio", to pass upo" t$e ;ualifi atio"s of t$e i"%ivi%ual .e./ers of t$e C'AC Ar/itral #ri/u"al a"% %e lare t$e. to /e "o":te $"o rats a"% "ot eC eptio"ally 4ell:verse% i" t$e o"stru tio" i"%ustry 4arra"ti"g reversal a"% "ullifi atio" of t$e tri/u"alBs fi"%i"gs. <$et$er or "ot t$e @CAA .ay i"terve"e to a""ul t$e fi"%i"gs of a $ig$ly spe iali-e% age" y, li7e t$e C'AC, o" t$e grou"% t$at esse"tially t$e ;uestio" to /e resolve% goes to t$e very $eart of t$e su/sta"tiality of evi%e" e, 4$e" i" so %oi"g, @CAA .erely su/stitute% its o4" o"De tural opi"io" to t$at of t$e C'AC Ar/itral #ri/u"alBs 4ell: supporte% fi"%i"gs a"% a4ar%. <$et$er or "ot t$e @CAA erre% i" its fi"%i"gs, 4$i $ are o"trary to t$e fi"%i"gs of t$e C'AC Ar/itral #ri/u"al.@16A i" all ot$er

'' <$et$er or "ot portio" of t$e De isio" C C C of t$e @CAA fi"%i"g %elay of o"ly forty five 1*53 %ays is "ull a"% voi% for /ei"g "ot i" a or% 4it$ o"tra tual stipulatio"s upo" 4$i $ t$e o"troversy arise. ''' <$et$er or "ot t$e resolutio" of t$e Ho"ora/le Court of Appeals %e"yi"g t$e $erei" petitio"erBs .otio" for re o"si%eratio" a"% partially gra"ti"g t$e respo"%e"tBs .otio" for re o"si%eratio" is li7e4ise "ull a"% voi% as it %oes "ot serve its purpose for /ei"g .ore o" eCpou"%i"g t$a" re tifyi"g errors.@1(A #$e issues s$all /e %is usse% in seriatim. 59e CourtFs &ul;n: <e resolve to .o%ify t$e assaile% CA De isio". 4;rst +ssue Diesel .ai"tai"s t$at t$e CA erre% i" its %e laratio" t$at it .ay revie4 t$e C'ACBs %e isio" o"si%eri"g t$e %o tri"e o" t$e /i"%i"g effe t of o" lusio"s of fa t of $ig$ly spe iali-e% age" ies, su $ as t$e C'AC, 4$e" supporte% /y su/sta"tial evi%e" e. #$e a/ove .islea%i"g. o"te"tio" is erro"eous a"%, as ou $e%,

2.

As is "ote%, t$e CA, i" its assaile% resolutio", %is.isse% as u"te"a/le DieselBs positio" t$at t$e fa tual fi"%i"gs of t$e C'AC are /i"%i"g o" a"% o" lu%es t$e appellate ourt. #$e CA 4e"t to larify, $o4ever, t$at t$e ge"eral rule is t$at fa tual o" lusio"s of $ig$ly spe iali-e% /o%ies are give" great 4eig$t a"% eve" fi"ality 4$e" supporte% /y su/sta"tial evi%e" e. Give" t$is perspe tive, t$e CA 4as orre t i" $ol%i"g t$at it .ay vali%ly revie4 a"% eve" overtur" su $ o" lusio" of fa ts 4$e" t$e .atter of its /ei"g a%e;uately supporte% /y su/sta"tial evi%e" e %uly a%%u e% o" re or% o.es to t$e fore a"% is raise% as a" issue. <ell:esta/lis$e% Durispru%e" e $as it t$at H@tA$e o"se;ue"t poli y a"% pra ti e u"%erlyi"g our A%.i"istrative La4 is t$at ourts of Dusti e s$oul% respe t t$e fi"%i"gs of fa t of sai% a%.i"istrative age" ies, u"less t$ere is a/solutely "o evi%e" e i" support t$ereof or su $ evi%e" e is learly, .a"ifestly a"% pate"tly i"su/sta"tial.I@10A #$ere a" /e "o serious %ispute a/out t$e orre t"ess of t$e CABs a/ove posture. Ho4ever, 4$at t$e appellate ourt state% later to /ela/or its poi"t stri7es t$e Court as spe ious a"% u" alle% for. <rote t$e CAG #$is %i tu. fi"%s greater appli atio" i" t$e ase of t$e C'AC /e ause C C C as poi"te% out /y petitio"er i" its Co..e"t, t$e %o tri"e of pri.ary Duris%i tio" relie% upo" /y @DieselA is %ilute% /y t$e i"%u/ita/le fa t t$at t$e C'AC pa"el C C C is "ot at all o.pose% of te $"o rats, or perso"s eC eptio"ally 4ell: verse% i" t$e o"stru tio" i"%ustry. 9or i"sta" e, its $air C C C is a statisti ia"F a"ot$er .e./er, C C C a for.er .agistrate, is a .e./er of t$e &ar. Dou/tless, t$ese t4o

3.

2" t$e ot$er $a"%, i" G.R. No. 15*!3(, =,S' prese"ts t$e follo4i"g issuesG ' <$et$er or "ot portio" of t$e De isio" %ate% April 16, 2))2 of t$e Ho"ora/le @CAA %e"yi"g a%%itio"al eCpe"ses to o.plete t$e u"fi"is$e% a"% a/a"%o"e% 4or7 of @DieselA, is "ull a"% voi% for /ei"g o"trary to lea" a"% o"vi" i"g evi%e" e o" re or%.

are pree.i"e"t i" t$eir fiel%s, a"% t$eir o.pete" e a"% profi ie" y i" t$eir $ose" professio"s are u"i.pea $a/le. Ho4ever, 4$e" it o.es to %eter.i"i"g fi"%i"gs of fa t 4it$ respe t to t$e .atter /efore =s, t$e sai% pa"el 4$i $ t$ey partly o.prise a""ot lai. to $ave a"y spe ial a%va"tage over t$e .e./ers of t$is Court.@1!A #$e ;uestio" of 4$et$er or "ot t$e fi"%i"gs of fa t of t$e C'AC are supporte% /y su/sta"tial evi%e" e $as "o ausal o""e tio" to t$e perso"al ;ualifi atio"s of t$e .e./ers of t$e ar/itratio" pa"el. Surely, a perso"Bs u"%ergra%uate or postgra%uate %egrees, as t$e ase .ay /e, a" $ar%ly /e i"vo7e% as t$e sole, fool proof /asis to %eter.i"e t$at perso"Bs ;ualifi atio" to $ol% a ertai" positio". 2"eBs 4or7 eCperie" es a"% atte"%a" e i" releva"t se.i"ars a"% trai"i"gs 4oul% per$aps /e t$e .ore i.porta"t fa tors i" gaugi"g a perso"Bs fit"ess to a ertai" u"%erta7i"g. Correlatively, Diesel, o/viously $avi"g i" .i"% t$e %isputa/le presu.ptio" of regularity, orre tly argues t$at $ig$ly spe iali-e% age" ies are presu.e% to $ave t$e "e essary te $"i al eCpertise i" t$eir li"e of aut$ority. '" ot$er 4or%s, t$e .e./ers of t$e Ar/itral #ri/u"al of t$e C'AC $ave i" t$eir favor t$e presu.ptio" of possessi"g t$e "e essary ;ualifi atio"s a"% o.pete" e eCa te% /y la4. A party i" 4$ose favor t$e legal presu.ptio" eCists .ay rely o" a"% i"vo7e su $ legal presu.ptio" to esta/lis$ a fa t i" issue. 2"e "ee% "ot i"tro%u e evi%e" e to prove t$at t$e fa t for a presu.ptio" is rima (acie proof of t$e fa t presu.e%.@2)A #o set t$e re or%s straig$t, $o4ever, t$e CA %i% "ot ast aspersio" o" t$e o.pete" e let alo"e t$e bona (ides of t$e .e./ers of t$e Ar/itral #ri/u"al to ar/itrate. '" o"teCt, 4$at t$e appellate ourt sai%RRi" rea tio" to DieselBs "egative o..e"tary a/out t$e CABs eCpertise o" o"stru tio" .attersRRis t$at t$e sai% .e./ers %o "ot really e"Doy a spe ial a%va"tage over t$e .e./ers of t$e CA i" ter.s of fles$i"g out t$e fa ts fro. t$e evi%e" e o" re or%. '" a"y eve"t, t$e fa t re.ai"s t$at t$e CA sta"%s Dustifie% i" revie4i"g t$e C'AC %e isio". Se1on "n 59;r +ssues #$e "eCt t4o issues, /ei"g i"terrelate%, s$all /e %is usse% Doi"tly. Diesel su/.its t$at t$e CA, i" rea $i"g its %e isio", su/stitute% its o4" o"De tural opi"io" to t$at of t$e C'ACBs 4ell:grou"%e% fi"%i"gs a"% a4ar%. 5ve" as DieselBs su/.issio" $as little to o..e"% itself, 4e %ee. it pru%e"t to a%%ress its o" er" /y revie4i"g t$e i" o"grue"t %eter.i"atio"s of t$e C'AC a"% CA a"% t$e fa tual pre.ises $ol%i"g su $ %eter.i"atio"s toget$er. As it 4ere, t$e CA re%u e% t$e a4ar% for u"pai% /ala" e of t$e o"tra t ost fro. ,$, 3,661,6!2.6), as earlier fiCe% /y t$e C'AC, to ,$, 2,**1,*02.6*, alt$oug$ it 4oul% o"si%er t$e re%u tio" a"% revert to t$e origi"al C'AC figure. ="li7e t$e C'AC 4$i $ fou"% t$e a4ar% of li;ui%ate% %a.ages to /e 4it$out /asis, t$e CA 4as of a %iffere"t %ispositio" a"% a4ar%e% =,S' ,$, 1,3)!,5)), o"ly to re%u e t$e sa.e to ,$, 1,1*6,51! i" its assaile% resolutio". Also, t$e CA stru 7 out t$e C'AC a4ar% of ,$, 366,16! to Diesel for attor"eyBs fees. A%%itio"ally, t$e C'ACBs ruli"g .a7i"g =,S' alo"e lia/le for t$e

osts of ar/itratio" 4as .o%ifie% /y t$e CA, 4$i $ %ire te% =,S' a"% Diesel to e;ually s$are t$e /ur%e". #$e C'AC fou"% Diesel "ot to $ave i" urre% %elay, t$us "egati"g =,S'Bs e"title.e"t to li;ui%ate% %a.ages. #$e CA, o" t$e ot$er $a"%, fou"% Diesel to $ave /ee" i" %elay for *5 %ays. '" %eter.i"i"g 4$et$er or "ot Diesel 4as i" %elay, t$e C'AC a"% CA first tur"e% o" t$e ;uestio" of DieselBs lai.e% e"title.e"t to $ave t$e ,roDe t perio% eCte"%e%, a" eC usa/le %elay /ei"g $argea/le agai"st t$e t$res$ol% !):%ay o.pletio" perio%. &ot$ 4ere o"e i" sayi"g t$at o urre" e of ertai" eve"ts gave Diesel t$e rig$t to a" eCte"sio", /ut %iffere% o" t$e .atter of le"gt$ of t$e eCte"sio", a"% o" t$e "ature of t$e %elay, t$at is, 4$et$er t$e %elay is eC usa/le or "ot. #$e CA %ee.e% t$e %elay, a"% t$e resulti"g eCte"sio" of 1* %ays, arisi"g fro. t$e .a"ual $auli"g of .aterials, as u"%eserve%. &ut t$e C'AC sa4 it ot$er4ise for t$e reaso" t$at 9re%eri 7 <. Crespillo, t$e 4it"ess =,S' prese"te% to refute t$e allegatio" of DieselBs e"title.e"t to ti.e eCte"sio" for t$e .a"ual $auli"g of .aterials, 4as i" o.pete"t to testify o" t$e issue. As C'AC o/serve%, Crespillo la 7e% perso"al 7"o4le%ge of t$e real situatio" at t$e 4or7site. #$e C'ACBs reaso"i"g, $o4ever, is fla4e%, assu.i"g t$at t$e o"us reste% o" =,S', i"stea% of o" Diesel, to prove t$at t$e %elay i" t$e eCe utio" of t$e ,roDe t 4as eC usa/le. Diesel eCplai"e% t$at t$ere 4as "o pla e for its o4" $oisti"g .a $i"e at t$e ,roDe t site as t$e assig"e% lo atio" 4as /ei"g use% /y t$e Ge"eral Co"tra tor, 4$ile t$e alter"ative lo atio" 4as "ot feasi/le %ue to po4er o"strai"t. +oreover, Diesel oul% "ot use t$e site elevator of t$e Ge"eral Co"tra tor as its perso""el 4ere o"ly per.itte% to use t$e sa.e for o"e $our every %ay at ,$, 6)) per $our.

#$e provisio"s i" t$e Agree.e"t o" eC usa/le %elays rea%G 2.3 5C usa/le %elaysG #$e Co"tra tor s$all i"for. t$e o4"er i" a ti.ely .a""er, of a"y %elay ause% /y t$e follo4i"gG 2.3.a A ts of Go%, su $ as stor., floo%s or eart$;ua7es. 2.3./ Civil %istur/a" e, su $ as riots, revolutio"s, i"surre tio". 2.3. A"y gover".e"t a ts, %e rees, ge"eral or%ers or regulatio"s li.iti"g t$e perfor.a" e of t$e 4or7. 2.3.% <ars 1%e lare% or "ot3. 2.3.e A"y %elays i"itiate% /y t$e 24"er or $is perso""el 4$i $ are learly outsi%e t$e o"trol of t$e Co"tra tor. 2.3.1 Delays ause% /y t$e foregoi"g s$all /e eC usa/le. A "e4 s $e%ule or a%Dust.e"ts i" o"tra t ti.e s$all /e "egotiate% 4it$ t$e 24"er. As ti.e is of t$e esse" e of t$is agree.e"t, all ot$er %elays s$all "ot /e eC usa/le.@21A As .ay /e "ote%, a o..o" t$rea% ru"s a.o"g t$e eve"ts liste% a/ove, t$at is, t$e %elayi"g eve"t is u"foreseea/le a"%Jor its o urre" e is /eyo"% t$e o"trol of Diesel as o"tra tor. Here, t$e la 7 of a lo atio" to esta/lis$

DieselBs o4" $oisti"g .a $i"e a" $ar%ly /e tagge% as a foreseea/le eve"t. As t$e CA aptly o/serve%G @=A"%er t$e ter.s of t$e o"tra t, it is Diesel t$at 4oul% for.ulate t$e s $e%ule to /e follo4e% i" t$e o.pletio" of t$e 4or7sF t$erefore, it 4as e" u./e"t upo" Diesel to ta7e i"to a ou"t all fa tors t$at 4oul% o.e i"to play i" t$e ourse of t$e proDe t. 9ro. t$e re or%s it appears t$at t$e Ge"eral Co"tra tor C C C $a% /ee" i" t$e pre.ises a$ea% of DieselF $e" e it 4oul% $ave /ee" a si.ple .atter for Diesel to $ave o"ferre% 4it$ t$e for.erBs offi er if t$e use of its e;uip.e"t 4oul% /e via/le. Li7e4ise, it 4oul% "ot $ave /ee" too .u $ trou/le for Diesel to $ave .a%e a prior re;uest fro. =,S' for t$e use of its freig$t elevator R i" t$e fa e of t$e %e"ial t$ereof, it oul% $ave .a%e t$e "e essary re.e%ial .easures C C C. '" ot$er 4or%s, t$ose %elays 4ere foreseea/le o" t$e part of Diesel, 4it$ t$e appli atio" of eve" or%i"ary %ilige" e. &ut Diesel %i% all of t$ose 4$e" o"stru tio" 4as a/out to o..e" e. #$erefore, <e $ol% t$at t$e %elays o asio"e% /y DieselBs i"a/ility to i"stall its $oisti"g .a $i"e C C C @4ereA attri/uta/le solely to Diesel, a"% t$us t$e resulta"t %elay a""ot /e $arge% agai"st t$e "i"ety:%ay perio% for t$e ter.i"atio" of t$e o"stru tio".@22A #$ere a" /e "o ;ui//li"g t$at t$e %elay ause% /y t$e .a"ual $auli"g of .aterials is "ot eC usa/le a"%, $e" e, a""ot vali%ly /e set up as grou"% for a" eCte"sio". #$us, t$e CA eC lu%e% t$e %elay ause% t$ere/y a"% o"ly allo4e% Diesel a total eCte"sio" perio% of 05 %ays. Su $ eCte"sio", a or%i"g to t$at ourt, effe tively tra"slate% to a %elay of *5 %ays i" t$e o.pletio" of t$e proDe t. #$e CA, i" its assaile% %e isio", eCplai"e% 4$yG (. All tol%, <e fi"%, a"% so $ol%, t$at @DieselA $as i" urre% i" %elay. C C C Ho4ever, u"%er t$e ir u.sta" es 4$erei" =,S' 4as respo"si/le for so.e of t$e %elay, it 4oul% /e .ost u"fair to $arge Diesel 4it$ t4o $u"%re% a"% forty 12*)3 %ays of %elay, so .u $ so t$at it 4oul% still o4e =,S', eve" after li;ui%ate% %a.ages $ave eate" up t$e rete"tio" a"% u"pai% /ala" e, t$e a.ou"t of @,*,3*),))).))A. #$us, /ase% o" 2ur o4" al ulatio"s, <e %ee. it .ore i" a or% 4it$ t$e spirit of t$e o"tra t, as a.e"%e%, C C C to assess Diesel 4it$ a" u"Dustifia/le %elay of forty:five 1*53 %ays o"lyF $e" e, at t$e rate of 1J5 of o"e per e"t as state% i" t$e o"tra t, @or at ,1,3)!,5)).))A, 4$i $ s$oul% /e %e%u te% fro. t$e total u"pai% /ala" e of @,2,**1,*02.6*A, 4$i $ a.ou"t alrea%y i" lu%es t$e rete"tio" o" t$e a%%itio"al 4or7s or C$a"ge 2r%ers.@23A #$e CA, i" its ;uestio"e% resolutio", eCpou"%e% o" $o4 it arrive% at t$e figure of *5:%ay %elay i" t$is 4iseG (. C C C <e li7e4ise a""ot give 2ur asse"t to t$e asseveratio" of @DieselA t$at 2ur al ulatio"s as to t$e "u./er of %ays of %elay $ave "o /asis. 9or i"%ee%, t$e

sa.e 4as arrive% at after ta7i"g a $olisti vie4 of t$e e"tire ir u.sta" es atte"%a"t to t$e i"sta"t ase. C C C &ut pres i"%i"g fro. t$e a/ove, t$e /asis for 2ur ruli"g s$oul% "ot /e $ar% to %is er". #o %isa/use t$e .i"% of @DieselA t$at t$e forty:five %ay %elay 4as plu 7e% fro. out of t$e /lue, allo4 =s to let t$e re or%s spea7. #$e re or%s 4ill s$o4 t$at 4$ile t$e origi"al target %ate for t$e o.pletio" C C C 4as 1! Nove./er 1!!! C C C, t$ere is a total of eig$ty:five 1053 %ays of eCte"sio" 4$i $ are Dustifia/le a"% sa" tio"e% /y @=,S'A, to 4itG t$irty 13)3 %ays as aut$ori-e% o" 2( 8a"uary 2))) /y =,S'Bs Co"stru tio" +a"ager C C CF t$irty 13)3 %ays as agai" o"se"te% to /y t$e sa.e Co"stru tio" +a"ager o" 2* 9e/ruary 2))) C C CF a"% t4e"ty:five 1253 %ays o" 16 +ar $ 2))) /y Ri%er Hu"t a"% Lia o. C C C. #$e rest of t$e %ays lai.e% /y Diesel 4ere, of ourse, fou"% /y =s to /e u"Dustifie% i" t$e .ai" opi"io". He" e, t$e proDe t s$oul% $ave /ee" fi"is$e% /y 9e/ruary 12, 2))). Ho4ever, /y 22 +ar $ 2))), as ertifie% to /y Gra e S. Reyes Desig"s, '" . t$e proDe t 4as o"ly !(.56N fi"is$e%, .ea"i"g 4$ile it 4as su/sta"tially fi"is$e%, it 4as "ot 4$olly fi"is$e%. &y 25 +ar $ 2))), t$e sa.e o"sulta"t o"%itio"ally a epte% so.e floors /ut 4ere still pu" $ liste%, so t$at fro. 12 9e/ruary 2))) to 25 +ar $ 2))) 4as a perio% of forty:o"e 1*13 %ays. Allo4i"g four 1*3 .ore %ays for t$e pu" $ liste% ite.s to /e a o.plis$e%, a"% for t$e Hge"eral lea"i"gI .e"tio"e% /y Gra e S. Reyes Desig"s, '" ., to /e %o"e, 4$i $ to =s is a reaso"a/le le"gt$ of ti.e, e;uals forty: five 1*53 %ays. #$is is 4$y <e fi"% t$e @ o" lusio"A .a%e /y t$e C'AC, C C C t$at t$ere 4as "o %elay 4$atsoever i" t$e 4or7 %o"e /y @DieselA, too pate"tly a/sur% for =s to offer 2ur u" o"%itio"al asse"t.@2*A Asi%e fro. t$e fa t t$at t$e CA see.i"gly assu.e% o"tra%i tory positio"s i" t$e spa" of t4o paragrap$s, its $ol%i"g i..e%iately a%verte% to a/ove is pate"tly erro"eous. #$e CA o.pletely faile% to fa tor i" t$e $a"ge or%ers of =,S' to DieselRRt$e %ire tives effe tively eCte"%i"g t$e ,roDe t o.pletio" ti.e at t$e /e$est of =,S'. Se tio" E of t$e Agree.e"t o" t$e su/De t Change 7rders rea%sG E. CHANG5S 'N <2R> AND 5O#RA <2R> SC2,5 29

A"y $a"ges or eCtra 4or7 i" t$e SC2,5 29 <2R> re o..e"%e% /y t$e 'N#5R'2R D5S'GN5RJARCH'#5C# or %ire te% a"% approve% /y t$e 2<N5R s$all /e prese"te% to t$e C2N#RAC#2R. <it$i" t$e s$ortest ti.e possi/le, t$e C2N#RAC#2R C C C s$all also i"for. t$e

2<N5R if su $ $a"ges s$all re;uire a "e4 s $e%ule a"%Jor revise% o.pletio" %ate. #$e ,arties s$all t$e" "egotiate .utually agreea/le ter.s C C C. #$e C2N#RAC#2R s$all "ot perfor. a"y $a"ge or%er or eCtra 4or7 u"til t$e overi"g ter.s are agree% upo" @i" 4riti"g a"% sig"e% /y t$e partiesA.@25A ,ursua"t t$ereto, =,S' issue% C$a"ge 2r%er 1C23 Nos. 1 to * o" 9e/ruary 3, 2, 0, a"% !, 2))) respe tively. #$ereafter, Diesel su/.itte% a S $e%ule of Co.pletio" of A%%itio"al <or7s@26A u"%er 4$i $ Diesel o..itte% to u"%erta7e C2 No. 1 for 3) %ays fro. 9e/ruary 1), 2)))F C2 No. 2 for 21 %ays fro. 8a"uary 6, 2)))F C2 No. 3 for 15 %ays, su/De t to =,S'Bs a epta" e of DieselBs proposalF a"% C2 No. * for 1) %ays after t$e re eipt of t$e ite.s fro. =,S'.

#$e Court resolves to rei"state t$e C'ACBs a4ar% of attor"eyBs fees, t$ere /ei"g suffi ie"t Dustifi atio" for t$is 7i"% of %ispositio". As earlier %is usse%, Diesel 4as "ot stri tly i" %elay i" t$e o.pletio" of t$e ,roDe t. No vali% reaso", t$erefore, o/tai"s for =,S' to 4it$$ol% t$e rete"tio" .o"ey or to refuse to pay t$e u"pai% /ala" e of t$e o"tra t pri e. '"%ee%, t$e rete"tio" a"% "o"pay.e"t 4ere, to us, as 4as to t$e C'AC, resorte% to /y =,S' out of 4$i., t$us for i"g t$e $a"% of Diesel to sue to re over 4$at is rig$tfully %ue. #$us, t$e gra"t of attor"eyBs fees 4oul% /e Dustifia/le u"%er Art. 22)0 of t$e Civil Co%e, t$usG Arti le 22)0. '" t$e a/se" e of stipulatio", attor"eyBs fees a"% eCpe"ses of litigatio" C C C a""ot /e re overe%, eC eptG CCCC 153 <$ere t$e %efe"%a"t a te% i" gross a"% evi%e"t /a% fait$ i" refusi"g to satisfy t$e plai"tiffBs plai"ly vali%, Dust a"% %e.a"%a/le lai.. A"% for t$e sa.e reaso" Dustifyi"g t$e a4ar% of attor"eyBs fees, ar/itratio" osts oug$t to /e $arge% agai"st =,S', too.

#$e C'AC fou"% t$at i.ple.e"te% o" t$e follo4i"g %atesG

t$e C2s 4ere

a tually

C2 No. 1 R 9e/ruary ! to +ar $ 3, 2))) C2 No. 3 R 9e/ruary 2* to +ar $ 1), 2))) C2 No. * R +ar $ 16 to April (, 2)))@2(A He" e, as orre tly $el% /y t$e C'AC, =,S', "o less, effe tively .ove% t$e o.pletio" %ate, t$roug$ t$e various C2s, to April (, 2))). +oreover, as evi%e" e% /y =,S'Bs ,rogress Report No. 1! for t$e perio% e"%i"g +ar $ 22, 2))), DieselBs s ope of 4or7, as of t$at %ate, 4as alrea%y !(.56N o.plete.@20A Su $ level of 4or7 a o.plis$.e"t 4oul%, /y a"y ratio"al "or., /e o"si%ere% as su/sta"tial to 4arra"t full pay.e"t of t$e o"tra t a.ou"t, less a tual %a.ages suffere% /y =,S'. Arti le 123* of t$e Civil Co%e says as .u $, H'f t$e o/ligatio" $a% /ee" su/sta"tially perfor.e% i" goo% fait$, t$e o/ligor .ay re over as t$oug$ t$ere $a% /ee" a stri t a"% o.plete fulfill.e"t, less %a.ages suffere% /y t$e o/ligee.I #$e fa t t$at t$e la/orers of Diesel 4ere still at t$e 4or7 site as of +ar $ 22, 2))) is a refle tio" of its $o"est i"te"tio" to 7eep its part of t$e /argai" a"% o.plete t$e ,roDe t. #$us, 4$e" Diesel atte.pte% to tur" over t$e pre.ises to =,S', lai.i"g it $a% o.plete% t$e ,roDe t o" +ar $ 15, 2))), Diesel oul% "o lo"ger /e o"si%ere% to /e i" %elay. Li7e4ise, t$e C'AC ite% t$e ="ifor. Ge"eral Co"%itio"s of Co"tra t for ,rivate Co"stru tio" 1C'A, Do u.e"t 1)23, 4$erei" it is state% t$at "o li;ui%ate% %a.ages for %elay /eyo"% t$e o.pletio" ti.e s$all a rue after t$e %ate of su/sta"tial o.pletio" of t$e 4or7.@2!A '" all, Diesel a""ot /e o"si%ere% as i" %elay a"%, $e" e, is "ot a.e"a/le u"%er t$e Agree.e"t for li;ui%ate% %a.ages. As to t$e issue of attor"eyBs fees, Diesel i"sists t$at /a% fait$ tai"te% =,S'Bs a t of i.posi"g li;ui%ate% %a.ages o" a ou"t of its 1DieselBs3 allege% %elay. A"%, t$is pro.pte% Diesel to file its petitio" for ar/itratio". #$us, t$e C'AC gra"te% Diesel a" a4ar% of ,$, 366,16! as attor"eyBs fees. Ho4ever, t$e CA reverse% t$e C'AC o" t$e a4ar%, it /ei"g its fi"%i"g t$at Diesel 4as i" %elay.

4ourt9 +ssue =,S' urges a revie4 of t$e fa tual /asis for t$e parallel %e"ial /y t$e C'AC a"% CA of its lai. for a%%itio"al eCpe"ses to o.plete t$e ,roDe t. =,S' states t$at t$e reality of Diesel $avi"g a/a"%o"e% t$e ,roDe t /efore its agree% o.pletio" is supporte% /y lear a"% o"vi" i"g evi%e" e. #$e Court a""ot a or% t$e %esire% revie4. 't is settle% rule t$at t$e Court, "ot /ei"g a trier of fa ts, is u"%er "o o/ligatio" to eCa.i"e, 4i""o4, a"% 4eig$ a"e4 evi%e" e a%%u e% /elo4. #$is ge"eral rule is, of ourse, "ot a/solute. '" Su erlines 1rans ortation Com an6, $nc. v. 4hili ine National Construction Com an6, t$e Court e"u.erate% t$e re og"i-e% eC eptio"s to /eG C C C 113 4$e" t$e fi"%i"gs are grou"%e% e"tirely o" spe ulatio", sur.ises or o"De turesF 123 4$e" t$e i"fere" e .a%e is .a"ifestly .ista7e", a/sur% or i.possi/leF 133 4$e" t$ere is grave a/use of %is retio"F 1*3 ;hen the 8udgment is based on a misa rehension o( (actsL 153 4$e" t$e fi"%i"gs of fa ts are o"fli ti"gF 163 4$e" i" .a7i"g its fi"%i"gs t$e @CAA 4e"t /eyo"% t$e issues of t$e ase, or its fi"%i"gs are o"trary to t$e a%.issio"s of /ot$ t$e appella"t a"% t$e appelleeF 1(3 4$e" t$e fi"%i"gs are o"trary to t$e trial ourtF 103 4$e" t$e fi"%i"gs are o" lusio"s 4it$out itatio" of spe ifi evi%e" e o" 4$i $ t$ey are /ase%F 1!3 4$e" t$e fa ts set fort$ i" t$e petitio" as 4ell as i" t$e petitio"erBs .ai" a"% reply /riefs are "ot %ispute% /y t$e respo"%e"tF (3.) ;hen the (indings o( (act are remised on the su osed absence o( evidence and contradicted b6 the evidence on recordL and (33) !en t!e 0o&rt o"

2ppeals %ani"estl' overloo@ed )ertain relevant "a)ts not disp&ted b' t!e parties, !i)!, i" properl' )onsidered, o&ld A&sti"' a di""erent )on)l&sion.@3)A 15.p$asis supplie%.3 '" t$e i"sta"t ase, t$e fa tual fi"%i"gs of t$e C'AC a"% CA, 4it$ regar% to t$e o.pletio" of t$e ,roDe t a"% =,S'Bs e"title.e"t to re over eCpe"ses allege%ly i" urre% to fi"is$ t$e ,roDe t, %o "ot fall u"%er a"y o"e of t$ese eC eptio"s. As t$i"gs sta"%, t$e fa tual fi"%i"gs of t$e C'AC a"% CA are supporte% /y evi%e" e prese"te% %uri"g t$e $eari"g /efore t$e Ar/itral #ri/u"al. Co"si%er 4$at t$e C'AC 4roteG #$is #ri/u"al fi"%s over4$el.i"g evi%e" e to prove t$at a o.plis$.e"t as of t$e allege% Hperio% of ta7eoverI 4as !5.0(N as of +ar $ 3, 2))) a"% i" rease% to !(.56N o" +ar $ 15, 2)))/ase% o" ,rogress Report \ 10. C C C #$is is supporte% /y t$e state.e"t of @=,S'BsA 4it"ess, +r. Crespillo C C C 4$ere $e o" e%e% t$at su $ a%.issio"s a"% state.e"ts /ou"% @=,S', t$e 24"erA. &y t$at ti.e, @DieselA $a% su/sta"tially o.plete% t$e proDe t a"% o"ly "ee%e% to orre t t$e ite.s i" lu%e% i" t$e pu" $list.@31A #$e CA se o"%e% 4$at t$e C'AC sai%, t$usG 6. Neit$er are <e prepare% to sustai" =,S'Bs argu.e"t t$at Diesel left t$e 4or7 u"fi"is$e% a"% pulle%:out all of its 4or7.e" fro. t$e proDe t. #$is lai. is /elie% /y t$e assess.e"t of its o4" Co"stru tio" +a"ager i" ,rogress Report No. 1! for t$e perio% He"%i"g 22 +ar $ 2))),I 4$erei" it 4as plai"tly state% t$at as of t$at perio%, 4it$ respe t to Diesel, t$ere 4ere still t4e"ty:t$ree la/orers o" site 4it$ t$e proDe t H!(.56NI o.plete C C C. #$is i"%i ates t$at t$e o"tra te% 4or7s of Diesel 4ere su/sta"tially o.plete% 4it$ o"ly .i"or orre tio"s C C C, t$us o"tra%i ti"g t$e avo4al of =,S' t$at t$e 4or7 4as a/a"%o"e% i" su $ a state t$at "e essitate% t$e e"gage.e"t of a"ot$er o"tra tor for t$e proDe t to /e fi"is$e%. 't 4as t$erefore "ot rig$t for =,S' to $ave %e li"e% t$e tur":over a"% refuse% t$e full pay.e"t of t$e o"tra t pri e, C C C.@32A Give" t$e !(.56N 4or7 a o.plis$.e"t te"%ere% /y Diesel, =,S'Bs t$eory of a/a"%o".e"t a"% of its $avi"g spe"t a su. to o.plete t$e 4or7 .ust fall o" its fa e. <e a" o" e%e $ypot$eti ally t$at =,S' u"%ertoo7 4$at it $ara teri-e% as Ha%%itio"al or re tifi atio"I 4or7s o" t$e ,roDe t. &ut as /ot$ t$e C'AC a"% CA $el%, =,S' faile% to s$o4 t$at su $ Ha%%itio"al or re tifi atio"I 4or7s, if t$ere /e a"y, 4ere t$e "e essary result of t$e faulty 4or7.a"s$ip of Diesel. #$e Court per eives of "o reaso" to %ou/t, .u $ less %istur/, t$e oi" i%i"g fi"%i"gs of t$e C'AC a"% CA o" t$e .atter. #$e foregoi"g "ot4it$sta"%i"g a"% o"si%eri"g t$at Diesel .ay o"ly /e re%ite% for !(.56N 4or7 a o.plis$.e"t, =,S' oug$t to /e o.pe"sate%, /y 4ay of %a.ages, i" t$e

a.ou"t orrespo"%i"g to t$e value of t$e 2.**N u"fi"is$e% portio" 11))N R !(.56N [ 2.**N3. '" a/solute ter.s, 2.**N of t$e total ,roDe t ost tra"slates to ,$, 31),03*.)1. #$is %ispositio" is "o .ore t$a" a%$eri"g to t$e o..a"% of Art. 123* of t$e Civil Co%e. #$e fift$ a"% siCt$ issues $ave alrea%y /ee" %is usse% earlier a"% "ee% "ot %etai" us a"y lo"ger. >H-&-4/&-, DieselBs petitio" is *A&5+ALL< %&A'5-D a"% =,S'Bs ,etitio" is D-'+-D 4it$ ;ualifi atio". #$e assaile% De isio" %ate% April 16, 2))2 a"% Resolutio" %ate% August 21, 2))2 of t$e CA are M/D+4+-D, as follo4sG 113 #$e a4ar% for li;ui%ate% %a.ages is D-L-5-DF 123 #$e a4ar% to Diesel for t$e u"pai% /ala" e of t$e o"tra t pri e of ,$, 3,661,6!2.6* is A44+&M-DF 133 =,S' s$all pay t$e osts of ar/itratio" /efore t$e C'AC i" t$e a.ou"t of ,$, 2!0,*)6.)3F 1*3 Diesel is a4ar%e% attor"eyBs fees i" t$e a.ou"t of ,$, 366,16!F a"% 153 =,S' is a4ar%e% %a.ages i" t$e a.ou"t of ,$, 31),03*.)1, t$e sa.e to /e %e%u te% fro. t$e rete"tio" .o"ey, if t$ere still /e a"y, a"%, if "e essary, fro. t$e a.ou"t referre% to i" ite. 123 i..e%iately a/ove. '" su..ary, t$e aggregate a4ar% to Diesel s$all /e ,$, 3,(1(,)2(.6*. 9ro. t$is a.ou"t s$all /e %e%u te% t$e a4ar% of a tual %a.ages of ,$, 31),03*.)1 to =,S' 4$i $ s$all pay t$e osts of ar/itratio" i" t$e a.ou"t of ,$, 2!0,*)6.)3.

9G= is release% fro. lia/ility for t$e perfor.a" e /o"% t$at it issue% i" favor of Diesel. No osts. S/ /&D-&-D. Repu/li of t$e ,$ilippi"es S=,R5+5 C2=R# +a"ila S5C2ND D'E'S'2N =/&-A 5-CH'/L/%+-S C/., L5D., ,etitio"er, : versus : C$airperso", CAR,'2, CAR,'2 +2RAL5S, H/'. AL!-&5/ A. L-&MA, ;n #'NGA, a"% 9;s 1"p"1;ty "s *res; ;n: 6u :e o8 E5LASC2, 8R., JJ. !r"n19 250 o8 &e:;on"l 5r;"l Court o8 Munt;nlup" C;ty, "n *AC+4+C %-'-&AL S5--L ,ro.ulgate%G MA'U4AC5U&+'% C/&*/&A5+/', Respo"%e"ts. 8a"uary (, 2))0 %.&. 'o. 143581 ,rese"tG Q='S=+&'NG, J.,

C:::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: :::::::C D-C+S+/' ,-LASC/, 6&., J.7 '" our Duris%i tio", t$e poli y is to favor alter"ative .et$o%s of resolvi"g %isputes, parti ularly i" ivil a"% o..er ial %isputes. Ar/itratio" alo"g 4it$ .e%iatio", o" iliatio", a"% "egotiatio", /ei"g i"eCpe"sive, spee%y a"% less $ostile .et$o%s $ave lo"g /ee" favore% /y t$is Court. #$e petitio" /efore us puts at issue a" ar/itratio" lause i" a o"tra t .utually agree% upo" /y t$e parties stipulati"g t$at t$ey 4oul% su/.it t$e.selves to ar/itratio" i" a foreig" ou"try. Regretta/ly, i"stea% of $aste"i"g t$e resolutio" of t$eir %ispute, t$e parties 4itti"gly or u"4itti"gly prolo"ge% t$e o"troversy. ,etitio"er >orea #e $"ologies Co., Lt%. 1>2G'5S3 is a >orea" orporatio" 4$i $ is e"gage% i" t$e supply a"% i"stallatio" of Li;uefie% ,etroleu. Gas 1L,G3 Cyli"%er .a"ufa turi"g pla"ts, 4$ile private respo"%e"t ,a ifi Ge"eral Steel +a"ufa turi"g Corp. 1,GS+C3 is a %o.esti orporatio". 2" +ar $ 5, 1!!(, ,GS+C a"% >2G'5S eCe ute% a Co"tra t@1A 4$ere/y >2G'5S 4oul% set up a" L,G Cyli"%er +a"ufa turi"g ,la"t i" Car.o"a, Cavite. #$e o"tra t 4as eCe ute% i" t$e ,$ilippi"es. 2" April (, 1!!(, t$e parties eCe ute%, i" >orea, a" A.e"%.e"t for Co"tra t No. >L,: !()3)1 %ate% +ar $ 5, 1!!(@2A a.e"%i"g t$e ter.s of pay.e"t. #$e o"tra t a"% its a.e"%.e"t stipulate% t$at >2G'5S 4ill s$ip t$e .a $i"ery a"% fa ilities "e essary for .a"ufa turi"g L,G yli"%ers for 4$i $ ,GS+C 4oul% pay =SD 1,22*,))). >2G'5S 4oul% i"stall a"% i"itiate t$e operatio" of t$e pla"t for 4$i $ ,GS+C /ou"% itself to pay =SD 3)6,))) upo" t$e pla"tBs pro%u tio" of t$e 11:7g. L,G yli"%er sa.ples. #$us, t$e total o"tra t pri e a.ou"te% to =SD 1,53),))). 2" 2 to/er 1*, 1!!(, ,GS+C e"tere% i"to a Co"tra t of Lease@3A 4it$ <ort$ ,roperties, '" . 1<ort$3 for use of <ort$Bs 5,)(!:s;uare .eter property 4it$ a *,)32:s;uare .eter 4are$ouse /uil%i"g to $ouse t$e L,G .a"ufa turi"g pla"t. #$e .o"t$ly re"tal 4as ,$, 322,56) o..e" i"g o" 8a"uary 1, 1!!0 4it$ a 1)N a""ual i" re.e"t lause. Su/se;ue"tly, t$e .a $i"eries, e;uip.e"t, a"% fa ilities for t$e .a"ufa ture of L,G yli"%ers 4ere s$ippe%, %elivere%, a"% i"stalle% i" t$e Car.o"a pla"t. ,GS+C pai% >2G'5S =SD 1,22*,))). Ho4ever, glea"e% fro. t$e Certifi ate@*A eCe ute% /y t$e parties o" 8a"uary 22, 1!!0, after t$e i"stallatio" of t$e pla"t, t$e i"itial operatio" oul% "ot /e o"%u te% as ,GS+C e" ou"tere% fi"a" ial %iffi ulties affe ti"g t$e supply of .aterials, t$us for i"g t$e parties to agree t$at >2G'5S 4oul% /e %ee.e% to $ave o.pletely o.plie% 4it$ t$e ter.s a"% o"%itio"s of t$e +ar $ 5, 1!!( o"tra t. 9or t$e re.ai"i"g /ala" e of =SD3)6,))) for t$e i"stallatio" a"% i"itial operatio" of t$e pla"t, ,GS+C issue% t4o post%ate% $e 7sG 113 &,' C$e 7 No. )316*12 %ate% 8a"uary 3), 1!!0 for ,$, *,5)),)))F a"% 123 &,' C$e 7 No. )316*13 %ate% +ar $ 3), 1!!0 for ,$, *,5)),))).@5A <$e" >2G'5S %eposite% t$e $e 7s, t$ese 4ere %is$o"ore% for t$e reaso" H,A6+5N# S#2,,5D.I #$us, o" +ay 0, 1!!0, >2G'5S se"t a %e.a"% letter@6A to ,GS+C

t$reate"i"g ri.i"al a tio" for violatio" of Batas 4ambansa Blg. 22 i" ase of "o"pay.e"t. 2" t$e sa.e %ate, t$e 4ife of ,GS+CBs ,resi%e"t faCe% a letter %ate% +ay (, 1!!0to >2G'5SB ,resi%e"t 4$o 4as t$e" stayi"g at a +a7ati City $otel. S$e o.plai"e% t$at "ot o"ly %i% >2G'5S %eliver a %iffere"t /ra"% of $y%rauli press fro. t$at agree% upo" /ut it $a% "ot %elivere% several e;uip.e"t parts alrea%y pai% for. 2" +ay 1*, 1!!0, ,GS+C replie% t$at t$e t4o $e 7s it issue% >2G'5S 4ere fully fu"%e% /ut t$e pay.e"ts 4ere stoppe% for reaso"s previously .a%e 7"o4" to >2G'5S.
@(A

2" 8u"e 1, 1!!0, ,GS+C i"for.e% >2G'5S t$at ,GS+C 4as a" eli"g t$eir Co"tra t %ate% +ar $ 5, 1!!( o" t$e grou"% t$at >2G'5S $a% altere% t$e ;ua"tity a"% lo4ere% t$e ;uality of t$e .a $i"eries a"% e;uip.e"t it %elivere% to ,GS+C, a"% t$at ,GS+C 4oul% %is.a"tle a"% tra"sfer t$e .a $i"eries, e;uip.e"t, a"% fa ilities i"stalle% i" t$e Car.o"a pla"t. 9ive %ays later, ,GS+C file% /efore t$e 2ffi e of t$e ,u/li ,rose utor a" Affi%avit:Co.plai"t for !sta(a %o 7ete% as '.S. No. !0:)3013 agai"st +r. Dae Hyu" >a"g, ,resi%e"t of >2G'5S. 2" 8u"e 15, 1!!0, >2G'5S 4rote ,GS+C i"for.i"g t$e latter t$at ,GS+C oul% "ot u"ilaterally res i"% t$eir o"tra t "or %is.a"tle a"% tra"sfer t$e .a $i"eries a"% e;uip.e"t o" .ere i.agi"e% violatio"s /y >2G'5S. 't also i"siste% t$at t$eir %isputes s$oul% /e settle% /y ar/itratio" as agree% upo" i" Arti le 15, t$e ar/itratio" lause of t$eir o"tra t. 2" 8u"e 23, 1!!0, ,GS+C agai" 4rote >2G'5S reiterati"g t$e o"te"ts of its 8u"e 1, 1!!0 letter t$reate"i"g t$at t$e .a $i"eries, e;uip.e"t, a"% fa ilities i"stalle% i" t$e pla"t 4oul% /e %is.a"tle% a"% tra"sferre% o" 8uly *, 1!!0. #$us, o" 8uly 1, 1!!0, >2G'5S i"stitute% a" Appli atio" for Ar/itratio" /efore t$e >orea" Co..er ial Ar/itratio" &oar% 1>CA&3 i" Seoul, >orea pursua"t to Art. 15 of t$e Co"tra t as a.e"%e%. 2" 8uly 3, 1!!0, >2G'5S file% a Co.plai"t for Spe ifi ,erfor.a" e, %o 7ete% as Civil Case No. !0:11(@0A agai"st ,GS+C /efore t$e +u"ti"lupa City Regio"al #rial Court 1R#C3. #$e R#C gra"te% a te.porary restrai"i"g or%er 1#R23 o" 8uly *, 1!!0, 4$i $ 4as su/se;ue"tly eCte"%e% u"til 8uly 22, 1!!0. '" its o.plai"t, >2G'5S allege% t$at ,GS+C $a% i"itially a%.itte% t$at t$e $e 7s t$at 4ere stoppe% 4ere "ot fu"%e% /ut later o" lai.e% t$at it stoppe% pay.e"t of t$e $e 7s for t$e reaso" t$at Ht$eir value 4as "ot re eive%I as t$e for.er allege%ly /rea $e% t$eir o"tra t /y Halteri"g t$e ;ua"tity a"% lo4eri"g t$e ;uality of t$e .a $i"ery a"% e;uip.e"tI i"stalle% i" t$e pla"t a"% faile% to .a7e t$e pla"t operatio"al alt$oug$ it earlier ertifie% to t$e o"trary as s$o4" i" a 8a"uary 22, 1!!0 Certifi ate. Li7e4ise, >2G'5S averre% t$at ,GS+C violate% Art. 15 of t$eir Co"tra t, as a.e"%e%, /y u"ilaterally res i"%i"g t$e o"tra t 4it$out resorti"g to ar/itratio". >2G'5S also as7e% t$at ,GS+C /e restrai"e% fro. %is.a"tli"g a"% tra"sferri"g t$e .a $i"ery a"% e;uip.e"t i"stalle% i" t$e pla"t 4$i $ t$e latter t$reate"e% to %o o" 8uly *, 1!!0. 2" 8uly !, 1!!0, ,GS+C file% a" oppositio" to t$e #R2 argui"g t$at >2G'5S 4as "ot e"title% to t$e #R2 si" e Art. 15, t$e ar/itratio" lause, 4as "ull a"% voi% for /ei"g agai"st pu/li poli y as it ousts t$e lo al ourts of Duris%i tio" over t$e i"sta"t o"troversy.

2" 8uly 1(, 1!!0, ,GS+C file% its A"s4er 4it$ Co.pulsory Cou"ter lai.@!A asserti"g t$at it $a% t$e full rig$t to %is.a"tle a"% tra"sfer t$e .a $i"eries a"% e;uip.e"t /e ause it $a% pai% for t$e. i" full as stipulate% i" t$e o"tra tF t$at >2G'5S 4as "ot e"title% to t$e ,$, !,))),))) overe% /y t$e $e 7s for faili"g to o.pletely i"stall a"% .a7e t$e pla"t operatio"alF a"% t$at >2G'5S 4as lia/le for %a.ages a.ou"ti"g to ,$, *,5)),))) for alteri"g t$e ;ua"tity a"% lo4eri"g t$e ;uality of t$e .a $i"eries a"% e;uip.e"t. +oreover, ,GS+C averre% t$at it $as alrea%y pai% ,$, 2,25(,!2) i" re"t 1 overi"g 8a"uary to 8uly 1!!03 to <ort$ a"% it 4as "ot 4illi"g to furt$er s$oul%er t$e ost of re"ti"g t$e pre.ises of t$e pla"t o"si%eri"g t$at t$e L,G yli"%er .a"ufa turi"g pla"t "ever /e a.e operatio"al. After t$e parties su/.itte% t$eir +e.ora"%a, o" 8uly 23, 1!!0, t$e R#C issue% a" 2r%er %e"yi"g t$e appli atio" for a 4rit of preli.i"ary i"Du" tio", reaso"i"g t$at ,GS+C $a% pai% >2G'5S =SD 1,22*,))), t$e value of t$e .a $i"eries a"% e;uip.e"t as s$o4" i" t$e o"tra t su $ t$at >2G'5S "o lo"ger $a% proprietary rig$ts over t$e.. A"% fi"ally, t$e R#C $el% t$at Art. 15 of t$e Co"tra t as a.e"%e% 4as i"vali% as it te"%e% to oust t$e trial ourt or a"y ot$er ourt Duris%i tio" over a"y %ispute t$at .ay arise /et4ee" t$e parties. >2G'5SB prayer for a" i"Du" tive 4rit 4as %e"ie%. @1)A #$e %ispositive portio" of t$e 2r%er state%G <H5R592R5, i" vie4 of t$e foregoi"g o"si%eratio", t$is Court /elieves a"% so $ol%s t$at "o oge"t reaso" eCists for t$is Court to gra"t t$e 4rit of preli.i"ary i"Du" tio" to restrai" a"% refrai" %efe"%a"t fro. %is.a"tli"g t$e .a $i"eries a"% fa ilities at t$e lot a"% /uil%i"g of <ort$ ,roperties, '" orporate% at Car.o"a, Cavite a"% tra"sfer t$e sa.e to a"ot$er siteG a"% t$erefore %e"ies plai"tiffBs appli atio" for a 4rit of preli.i"ary i"Du" tio".

4as a vali% ar/itratio" stipulatio" u"%er Art. 2)** of t$e Civil Co%e a"% as $el% /y t$is Court i" Chung :u $ndustries (4hils.), $nc.@15A '" t$e .ea"ti.e, ,GS+C file% a +otio" for '"spe tio" of #$i"gs@16A to %eter.i"e 4$et$er t$ere 4as i"%ee% alteratio" of t$e ;ua"tity a"% lo4eri"g of ;uality of t$e .a $i"eries a"% e;uip.e"t, a"% 4$et$er t$ese 4ere properly i"stalle%. >2G'5S oppose% t$e .otio" positi"g t$at t$e ;ueries a"% issues raise% i" t$e .otio" for i"spe tio" fell u"%er t$e overage of t$e ar/itratio" lause i" t$eir o"tra t. 2" Septe./er 21, 1!!0, t$e trial ourt issue% a" 2r%er 113 gra"ti"g ,GS+CBs .otio" for i"spe tio"F 123 %e"yi"g >2G'5SB .otio" for re o"si%eratio" of t$e 8uly 23, 1!!0 R#C 2r%erF a"% 133 %e"yi"g >2G'5SB .otio" to %is.iss ,GS+CBs o.pulsory ou"ter lai.s as t$ese ou"ter lai.s fell 4it$i" t$e re;uisites of o.pulsory ou"ter lai.s. 2" 2 to/er 2, 1!!0, >2G'5S file% a" =rge"t +otio" for Re o"si%eratio"@1(A of t$e Septe./er 21, 1!!0 R#C 2r%er gra"ti"g i"spe tio" of t$e pla"t a"% %e"yi"g %is.issal of ,GS+CBs o.pulsory ou"ter lai.s. #e" %ays after, o" 2 to/er 12, 1!!0, 4it$out 4aiti"g for t$e resolutio" of its 2 to/er 2, 1!!0 urge"t .otio" for re o"si%eratio", >2G'5S file% /efore t$e Court of Appeals 1CA3 a petitio" for ertiorari @10A %o 7ete% as CA:G.R. S, No. *!2*!, see7i"g a""ul.e"t of t$e 8uly 23, 1!!0 a"% Septe./er 21, 1!!0 R#C 2r%ers a"% prayi"g for t$e issua" e of 4rits of pro$i/itio", .a"%a.us, a"% preli.i"ary i"Du" tio" to e"Doi" t$e R#C a"% ,GS+C fro. i"spe ti"g, %is.a"tli"g, a"% tra"sferri"g t$e .a $i"eries a"% e;uip.e"t i" t$e Car.o"a pla"t, a"% to %ire t t$e R#C to e"for e t$e spe ifi agree.e"t o" ar/itratio" to resolve t$e %ispute. '" t$e .ea"ti.e, o" 2 to/er 1!, 1!!0, t$e R#C %e"ie% >2G'5SB urge"t .otio" for re o"si%eratio" a"% %ire te% t$e &ra" $ S$eriff to pro ee% 4it$ t$e i"spe tio" of t$e .a $i"eries a"% e;uip.e"t i" t$e pla"t o" 2 to/er 20, 1!!0.@1!A #$ereafter, >2G'5S file% a Supple.e"t to t$e ,etitio"@2)A i" CA:G.R. S, No. *!2*! i"for.i"g t$e CA a/out t$e 2 to/er 1!, 1!!0 R#C 2r%er. 't also reiterate% its prayer for t$e issua" e of t$e 4rits of pro$i/itio", .a"%a.us a"% preli.i"ary i"Du" tio" 4$i $ 4as "ot a te% upo" /y t$e CA. >2G'5S asserte% t$at t$e &ra" $ S$eriff %i% "ot $ave t$e te $"i al eCpertise to as ertai" 4$et$er or "ot t$e .a $i"eries a"% e;uip.e"t o"for.e% to t$e spe ifi atio"s i" t$e o"tra t a"% 4ere properly i"stalle%. 2" Nove./er 11, 1!!0, t$e &ra" $ S$eriff file% $is S$eriffBs Report@21A fi"%i"g t$at t$e e"u.erate% .a $i"eries a"% e;uip.e"t 4ere "ot fully a"% properly i"stalle%. 59e Court o8 Appe"ls "88;r2e t9e tr;"l 1ourt "n t9e "r#;tr"t;on 1l"use ":";nst pu#l;1 pol;1y e1l"re

2" 8uly 2!, 1!!0, >2G'5S file% its Reply to A"s4er a"% A"s4er to Cou"ter lai..@11A >2G'5S %e"ie% it $a% altere% t$e ;ua"tity a"% lo4ere% t$e ;uality of t$e .a $i"ery, e;uip.e"t, a"% fa ilities it %elivere% to t$e pla"t. 't lai.e% t$at it $a% perfor.e% all t$e u"%erta7i"gs u"%er t$e o"tra t a"% $a% alrea%y pro%u e% ertifie% sa.ples of L,G yli"%ers. 't averre% t$at 4$atever 4as u"fi"is$e% 4as ,GS+CBs fault si" e it faile% to pro ure ra4 .aterials %ue to la 7 of fu"%s. >2G'5S, relyi"g o" Chung :u $ndustries (4hils.), $nc. v. Court o( ' eals ,@12A i"siste% t$at t$e ar/itratio" lause 4as 4it$out ;uestio" vali%. After >2G'5S file% a Supple.e"tal +e.ora"%u. 4it$ +otio" to Dis.iss@13A a"s4eri"g ,GS+CBs .e.ora"%u. of 8uly 22, 1!!0 a"% see7i"g %is.issal of ,GS+CBs ou"ter lai.s, >2G'5S, o" August *, 1!!0, file% its +otio" for Re o"si%eratio"@1*A of t$e 8uly 23, 1!!0 2r%er %e"yi"g its appli atio" for a" i"Du" tive 4rit lai.i"g t$at t$e o"tra t 4as "ot .erely for .a $i"ery a"% fa ilities 4ort$ =SD 1,22*,))) /ut 4as for t$e sale of a" HL,G .a"ufa turi"g pla"tI o"sisti"g of Hsupply of all t$e .a $i"ery a"% fa ilitiesI a"% Htra"sfer of te $"ologyI for a total o"tra t pri e of =SD 1,53),))) su $ t$at t$e %is.a"tli"g a"% tra"sfer of t$e .a $i"ery a"% fa ilities 4oul% result i" t$e %is.a"tli"g a"% tra"sfer of t$e very pla"t itself to t$e great preDu%i e of >2G'5S as t$e still u"pai% o4"erJseller of t$e pla"t. +oreover, >2G'5S poi"ts out t$at t$e ar/itratio" lause u"%er Art. 15 of t$e Co"tra t as a.e"%e%

2" +ay 3), 2))), t$e CA re"%ere% t$e assaile% De isio"@22A affir.i"g t$e R#C 2r%ers a"% %is.issi"g t$e petitio" for ertiorari file% /y >2G'5S. #$e CA fou"% t$at t$e R#C %i% "ot gravely a/use its %is retio" i" issui"g t$e assaile% 8uly 23, 1!!0 a"% Septe./er 21, 1!!0 2r%ers. +oreover, t$e CA reaso"e% t$at >2G'5SB o"te"tio" t$at t$e total o"tra t pri e for =SD 1,53),))) 4as for t$e 4$ole pla"t a"% $a% "ot /ee" fully pai% 4as o"trary to t$e fi"%i"g of t$e R#C t$at ,GS+C fully pai% t$e pri e of =SD

1,22*,))), 4$i $ 4as for all t$e .a $i"eries a"% e;uip.e"t. A or%i"g to t$e CA, t$is %eter.i"atio" /y t$e R#C 4as a fa tual fi"%i"g /eyo"% t$e a./it of a petitio" for ertiorari. 2" t$e issue of t$e vali%ity of t$e ar/itratio" lause, t$e CA agree% 4it$ t$e lo4er ourt t$at a" ar/itratio" lause 4$i $ provi%e% for a fi"al %eter.i"atio" of t$e legal rig$ts of t$e parties to t$e o"tra t /y ar/itratio" 4as agai"st pu/li poli y. 2" t$e issue of "o"pay.e"t of %o 7et fees a"% "o": atta $.e"t of a ertifi ate of "o":foru. s$oppi"g /y ,GS+C, t$e CA $el% t$at t$e ou"ter lai.s of ,GS+C 4ere o.pulsory o"es a"% pay.e"t of %o 7et fees 4as "ot re;uire% si" e t$e A"s4er 4it$ ou"ter lai. 4as "ot a" i"itiatory plea%i"g. 9or t$e sa.e reaso", t$e CA sai% a ertifi ate of "o":foru. s$oppi"g 4as also "ot re;uire%. 9urt$er.ore, t$e CA $el% t$at t$e petitio" for ertiorari $a% /ee" file% pre.aturely si" e >2G'5S %i% "ot 4ait for t$e resolutio" of its urge"t .otio" for re o"si%eratio" of t$e Septe./er 21, 1!!0 R#C 2r%er 4$i $ 4as t$e plai", spee%y, a"% a%e;uate re.e%y availa/le. A or%i"g to t$e CA, t$e R#C .ust /e give" t$e opportu"ity to orre t a"y allege% error it $as o..itte%, a"% t$at si" e t$e assaile% or%ers 4ere i"terlo utory, t$ese a""ot /e t$e su/De t of a petitio" for ertiorari. He" e, 4e $ave t$is ,etitio" for Revie4 o" Certiorari u"%er Rule *5. 59e +ssues

1!!0 2R <'#H2=# G'E'NG #H5 #R'AL C2=R# AN 2,,2R#=N'#6 #2 C2RR5C# '#S5L9F e. ,R2CLA'+'NG #H5 #<2 2RD5RS DA#5D 8=L6 23 AND S5,#5+&5R 21, 1!!0 N2# #2 &5 ,R2,5R S=&85C#S 29 C5R#'2RAR' AND ,R2H'&'#'2N 92R &5'NG H'N#5RL2C=#2R6 'N NA#=R5FI f. N2# GRAN#'NG #H5 R5L'59S AND R5+5D'5S ,RA65D 92R 'N H5 1S'C3 ,5#'#'2N AND, 'NS#5AD, D'S+'SS'NG #H5 SA+5 92R ALL5G5DL6 H<'#H2=# +5R'#.I@23A 59e CourtFs &ul;n: #$e petitio" is partly .eritorious. &efore 4e %elve i"to t$e su/sta"tive issues, 4e s$all first ta 7le t$e pro e%ural issues. 59e rules on t9e p"y2ent o8 o1Eet 8ees 8or 1ounter1l";2s "n 1ross 1l";2s Aere "2en e e88e1t;ve Au:ust 10, 2))4 >2G'5S stro"gly argues t$at 4$e" ,GS+C file% t$e ou"ter lai.s, it s$oul% $ave pai% %o 7et fees a"% file% a ertifi ate of "o":foru. s$oppi"g, a"% t$at its failure to %o so 4as a fatal %efe t. <e %isagree 4it$ >2G'5S.

,etitio"er posits t$at t$e appellate ourt o..itte% t$e follo4i"g errorsG a. ,R2N2=NC'NG #H5 Q=5S#'2N 29 2<N5RSH', 2E5R #H5 +ACH'N5R6 AND 9AC'L'#'5S AS HA Q=5S#'2N 29 9AC#I H&562ND #H5 A+&'# 29 A ,5#'#'2N 92R C5R#'2RAR'I 'N#5ND5D 2NL6 92R C2RR5C#'2N 29 5RR2RS 29 8=R'SD'C#'2N 2R GRAE5 A&=S5 29 D'SCR5#'2N A+2=N#'NG #2 LAC> 29 1S'C3 5OC5SS 29 8=R'SD'C#'2N, AND C2NCL=D'NG #HA# #H5 #R'AL C2=R#BS 9'ND'NG 2N #H5 SA+5 Q=5S#'2N <AS '+,R2,5RL6 RA'S5D 'N #H5 ,5#'#'2N &5L2<F /. D5CLAR'NG AS N=LL AND E2'D #H5 AR&'#RA#'2N CLA=S5 'N AR#'CL5 15 29 #H5 C2N#RAC# &5#<55N #H5 ,AR#'5S 92R &5'NG HC2N#RAR6 #2 ,=&L'C ,2L'C6I AND 92R 2=S#'NG #H5 C2=R#S 29 8=R'SD'C#'2NF . D5CR55'NG ,R'EA#5 R5S,2ND5N#BS C2=N#5RCLA'+S #2 &5 ALL C2+,=LS2R6 N2# N5C5SS'#A#'NG ,A6+5N# 29 D2C>5# 955S AND C5R#'9'CA#'2N 29 N2N: 92R=+ SH2,,'NGF %. R=L'NG #HA# #H5 ,5#'#'2N <AS 9'L5D ,R5+A#=R5L6 <'#H2=# <A'#'NG 92R #H5 R5S2L=#'2N 29 #H5 +2#'2N 92R R5C2NS'D5RA#'2N 29 #H5 2RD5R DA#5D S5,#5+&5R 21,

As aptly rule% /y t$e CA, t$e ou"ter lai.s of ,GS+C 4ere i" orporate% i" its A"s4er 4it$ Co.pulsory Cou"ter lai. %ate% 8uly 1(, 1!!0 i" a or%a" e 4it$ Se tio" 0 of Rule 11, 1!!( Revise% Rules of Civil ,ro e%ure, t$e rule t$at 4as effe tive at t$e ti.e t$e A"s4er 4it$ Cou"ter lai. 4as file%. Se . 0 o" eCisti"g ou"ter lai. or ross: lai.states, HA o.pulsory ou"ter lai. or a ross: lai. t$at a %efe"%i"g party $as at t$e ti.e $e files $is a"s4er s$all /e o"tai"e% t$erei".I 2" 8uly 1(, 1!!0, at t$e ti.e ,GS+C file% its A"s4er i" orporati"g its ou"ter lai.s agai"st >2G'5S, it 4as "ot lia/le to pay fili"g fees for sai% ou"ter lai.s /ei"g o.pulsory i" "ature. <e stress, $o4ever, t$at effe tive August 16, 2))* u"%er Se . (, Rule 1*1, as a.e"%e% /y A.+. No. )*:2: )*:SC, %o 7et fees are "o4 re;uire% to /e pai% i" o.pulsory ou"ter lai. or ross: lai.s. As to t$e failure to su/.it a ertifi ate of foru. s$oppi"g, ,GS+CBs A"s4er is "ot a" i"itiatory plea%i"g 4$i $ re;uires a ertifi atio" agai"st foru. s$oppi"g u"%er Se . 5@2*A of Rule (, 1!!( Revise% Rules of Civil ,ro e%ure. 't is a respo"sive plea%i"g, $e" e, t$e ourts a =uo %i% "ot o..it reversi/le error i" %e"yi"g >2G'5SB .otio" to %is.iss ,GS+CBs o.pulsory ou"ter lai.s. +nterlo1utory or ers proper su#De1t o8 1ert;or"r; Citi"g +amboa v. Cruz,@25A t$e CA also pro"ou" e% t$at H ertiorari a"% ,ro$i/itio" are "eit$er t$e re.e%ies to ;uestio" t$e propriety of a" i"terlo utory or%er of t$e trial ourt.I@26A #$e CA erre% o" its relia" e o" +amboa. +amboa i"volve% t$e %e"ial of a .otio" to a ;uit

i" a ri.i"al ase 4$i $ 4as "ot assaila/le i" a" a tio" for ertiorari si" e t$e %e"ial of a .otio" to ;uas$ re;uire% t$e a use% to plea% a"% to o"ti"ue 4it$ t$e trial, a"% 4$atever o/De tio"s t$e a use% $a% i" $is .otio" to ;uas$ a" t$e" /e use% as part of $is %efe"se a"% su/se;ue"tly a" /e raise% as errors o" $is appeal if t$e Du%g.e"t of t$e trial ourt is a%verse to $i.. #$e ge"eral rule is t$at i"terlo utory or%ers a""ot /e $alle"ge% /y a" appeal.@2(A #$us, i" ?amao#a v. 4escarich Manu(acturing Cor oration, 4e $el%G #$e proper re.e%y i" su $ ases is a" or%i"ary appeal fro. a" a%verse Du%g.e"t on t$e merits, i" orporati"g i" sai% appeal t$e grou"%s for assaili"g t$e i"terlo utory or%ers. Allo4i"g appeals fro. i"terlo utory or%ers 4oul% result i" t$e Tsorry spe ta leB of a ase /ei"g su/De t of a ou"terpro%u tive ing5 ong to a"% fro. t$e appellate ourt as ofte" as a trial ourt is per eive% to $ave .a%e a" error i" a"y of its i"terlo utory ruli"gs. Ho4ever, 4$ere t$e assaile% i"terlo utory or%er 4as issue% 4it$ grave a/use of %is retio" or pate"tly erro"eous a"% t$e re.e%y of appeal 4oul% "ot affor% a%e;uate a"% eCpe%itious relief, t$e Court allo4s ertiorari as a .o%e of re%ress.@20A Also, appeals fro. i"terlo utory or%ers 4oul% ope" t$e floo%gates to e"%less o asio"s for %ilatory .otio"s. #$us, 4$ere t$e i"terlo utory or%er 4as issue% 4it$out or i" eC ess of Duris%i tio" or 4it$ grave a/use of %is retio", t$e re.e%y is ertiorari.@2!A #$e allege% grave a/use of %is retio" of t$e respo"%e"t ourt e;uivale"t to la 7 of Duris%i tio" i" t$e issua" e of t$e t4o assaile% or%ers ouple% 4it$ t$e fa t t$at t$ere is "o plai", spee%y, a"% a%e;uate re.e%y i" t$e or%i"ary ourse of la4 a.ply provi%es t$e /asis for allo4i"g t$e resort to a petitio" for ertiorari u"%er Rule 65. *re2"tur;ty o8 t9e pet;t;on #e8ore t9e CA Neit$er %o 4e t$i"7 t$at >2G'5S 4as guilty of foru. s$oppi"g i" fili"g t$e petitio" for ertiorari. Note t$at >2G'5SB .otio" for re o"si%eratio" of t$e 8uly 23, 1!!0 R#C 2r%er 4$i $ %e"ie% t$e issua" e of t$e i"Du" tive 4rit $a% alrea%y /ee" %e"ie%. #$us, >2G'5SB o"ly re.e%y 4as to assail t$e R#CBs i"terlo utory or%er via a petitio" for ertiorari u"%er Rule 65. <$ile t$e 2 to/er 2, 1!!0 .otio" for re o"si%eratio" of >2G'5S of t$e Septe./er 21, 1!!0 R#C 2r%er relati"g to t$e i"spe tio" of t$i"gs, a"% t$e allo4a" e of t$e o.pulsory ou"ter lai.s $as "ot yet /ee" resolve%, t$e ir u.sta" es i" t$is ase 4oul% allo4 a" eC eptio" to t$e rule t$at /efore ertiorari .ay /e availe% of, t$e petitio"er .ust $ave file% a .otio" for re o"si%eratio" a"% sai% .otio" s$oul% $ave /ee" first resolve% /y t$e ourt a ;uo. #$e reaso" /e$i"% t$e rule is Hto e"a/le t$e lo4er ourt, i" t$e first i"sta" e, to pass upo" a"% orre t its .ista7es 4it$out t$e i"terve"tio" of t$e $ig$er ourt.I@3)A #$e Septe./er 21, 1!!0 R#C 2r%er %ire ti"g t$e /ra" $ s$eriff to i"spe t t$e pla"t, e;uip.e"t, a"% fa ilities 4$e" $e is "ot o.pete"t a"% 7"o4le%gea/le o" sai% .atters is evi%e"tly fla4e% a"% %evoi% of a"y legal support. +oreover, t$ere is a" urge"t "e essity to resolve t$e issue o" t$e

%is.a"tli"g of t$e fa ilities a"% a"y furt$er %elay 4oul% preDu%i e t$e i"terests of >2G'5S. '"%ee%, t$ere is real a"% i..i"e"t t$reat of irrepara/le %estru tio" or su/sta"tial %a.age to >2G'5SB e;uip.e"t a"% .a $i"eries. <e fi"% t$e resort to ertiorari /ase% o" t$e gravely a/usive or%ers of t$e trial ourt sa"s t$e ruli"g o" t$e 2 to/er 2, 1!!0 .otio" for re o"si%eratio" to /e proper. 59e Core +ssue7 Art;1le 15 o8 t9e Contr"1t <e "o4 go to t$e ore issue of t$e vali%ity of Art. 15 of t$e Co"tra t, t$e ar/itratio" lause. 't provi%esG Arti le 15. 'rbitration.WAll %isputes, o"troversies, or %iffere" es 4$i $ .ay arise /et4ee" t$e parties, out of or i" relatio" to or i" o""e tio" 4it$ t$is Co"tra t or for t$e /rea $ t$ereof, s$all fi"ally /e settle% /y ar/itratio" i" Seoul, >orea i" a or%a" e 4it$ t$e Co..er ial Ar/itratio" Rules of t$e >orea" Co..er ial Ar/itratio" &oar%. 59e "A"r ren ere #y t9e "r#;tr"t;onHsI s9"ll #e8;n"l "n #;n ;n: upon #ot9 p"rt;es 1on1erne . 15.p$asis supplie%.3 ,etitio"er lai.s t$e R#C a"% t$e CA erre% i" ruli"g t$at t$e ar/itratio" lause is "ull a"% voi%. ,etitio"er is orre t. 5sta/lis$e% i" t$is Duris%i tio" is t$e rule t$at t$e la4 of t$e pla e 4$ere t$e o"tra t is .a%e gover"s. )e& loci contractus. #$e o"tra t i" t$is ase 4as perfe te% $ere i" t$e ,$ilippi"es. #$erefore, our la4s oug$t to gover". No"et$eless, Art. 2)** of t$e Civil Co%e sa" tio"s t$e vali%ity of .utually agree% ar/itral lause or t$e fi"ality a"% /i"%i"g effe t of a" ar/itral a4ar%. Art. 2)** provi%es, HAny st;pul"t;on t9"t t9e "r#;tr"torsF "A"r or e1;s;on s9"ll #e 8;n"l, ;s v"l; , 4it$out preDu%i e to Arti les 2)30, 2)3! a"% 2)*).I 15.p$asis supplie%.3 Arts. 2)30,@31A 2)3!,@32A a"% 2)*)@33A a/ove ite% refer to i"sta" es 4$ere a o.pro.ise or a" ar/itral a4ar%, as applie% to Art. 2)** pursua"t to Art. 2)*3,@3*A .ay /e voi%e%, res i"%e%, or a""ulle%, /ut t$ese 4oul% "ot %e"igrate t$e fi"ality of t$e ar/itral a4ar%. #$e ar/itratio" lause 4as .utually a"% volu"tarily agree% upo" /y t$e parties. 't $as "ot /ee" s$o4" to /e o"trary to a"y la4, or agai"st .orals, goo% usto.s, pu/li or%er, or pu/li poli y. #$ere $as /ee" "o s$o4i"g t$at t$e parties $ave "ot %ealt 4it$ ea $ ot$er o" e;ual footi"g. <e fi"% "o reaso" 4$y t$e ar/itratio" lause s$oul% "ot /e respe te% a"% o.plie% 4it$ /y /ot$ parties. '" +onzales v. Clima& Mining )td.,@35A 4e $el% t$at su/.issio" to ar/itratio" is a o"tra t a"% t$at a lause i" a o"tra t provi%i"g t$at all .atters i" %ispute /et4ee" t$e parties s$all /e referre% to ar/itratio" is a o"tra t.@36A Agai" i" *el Monte Cor oration5 IS' v. Court o( ' eals, 4e li7e4ise rule% t$at H@tA$e provisio" to su/.it to ar/itratio" a"y %ispute arisi"g t$erefro. a"% t$e relatio"s$ip of t$e parties is part of t$at o"tra t a"% is itself a o"tra t.I@3(A Ar#;tr"t;on 1l"use not 1ontr"ry to pu#l;1 pol;1y #$e ar/itratio" lause 4$i $ stipulates t$at t$e ar/itratio" .ust /e %o"e i" Seoul, >orea i" a or%a" e 4it$

t$e Co..er ial Ar/itratio" Rules of t$e >CA&, a"% t$at t$e ar/itral a4ar% is fi"al a"% /i"%i"g, is "ot o"trary to pu/li poli y. #$is Court $as sa" tio"e% t$e vali%ity of ar/itratio" lauses i" a catena of ases. '" t$e 1!5( ase of!astboard Navigation )td. v. Juan ?smael and Co., $nc.,@30A t$is Court $a% o asio" to rule t$at a" ar/itratio" lause to resolve %iffere" es a"% /rea $es of .utually agree% o"tra tual ter.s is vali%. '" B: Cor oration v. Court o( ' eals, 4e $el% t$at H@iA" t$is Duris%i tio", ar/itratio" $as /ee" $el% vali% a"% o"stitutio"al. 5ve" /efore t$e approval o" 8u"e 1!, 1!53 of Repu/li A t No. 0(6, t$is Court $as ou"te"a" e% t$e settle.e"t of %isputes t$roug$ ar/itratio". Repu/li A t No. 0(6 4as a%opte% to supple.e"t t$e Ne4 Civil Co%eBs provisio"s o" ar/itratio".I@3!A A"% i" )M 4o;er !ngineering Cor oration v. Ca itol $ndustrial Construction +rou s, $nc ., 4e %e lare% t$atG &ei"g a" i"eCpe"sive, spee%y a"% a.i a/le .et$o% of settli"g %isputes, ar/itratio"RRalo"g 4it$ .e%iatio", o" iliatio" a"% "egotiatio"RRis e" ourage% /y t$e Supre.e Court. Asi%e fro. u" loggi"g Du%i ial %o 7ets, ar/itratio" also $aste"s t$e resolutio" of %isputes, espe ially of t$e o..er ial 7i"%. 't is t$us regar%e% as t$e H4ave of t$e futureI i" i"ter"atio"al ivil a"% o..er ial %isputes. &rus$i"g asi%e a o"tra tual agree.e"t alli"g for ar/itratio" /et4ee" t$e parties 4oul% /e a step /a 74ar%. Co"siste"t 4it$ t$e a/ove: .e"tio"e% poli y of e" ouragi"g alter"ative %ispute resolutio" .et$o%s, ourts s$oul% li/erally o"strue ar/itratio" lauses. ,rovi%e% su $ lause is sus epti/le of a" i"terpretatio" t$at overs t$e asserte% %ispute, a" or%er to ar/itrate s$oul% /e gra"te%. A"y %ou/t s$oul% /e resolve% i" favor of ar/itratio".@*)A Havi"g sai% t$at t$e i"sta"t ar/itratio" lause is "ot agai"st pu/li poli y, 4e o.e to t$e ;uestio" o" 4$at gover"s a" ar/itratio" lause spe ifyi"g t$at i" ase of a"y %ispute arisi"g fro. t$e o"tra t, a" ar/itral pa"el 4ill /e o"stitute% i" a foreig" ou"try a"% t$e ar/itratio" rules of t$e foreig" ou"try 4oul% gover" a"% its a4ar% s$all /e fi"al a"% /i"%i"g. &A (285 ;n1orpor"te t9e U'C+5&AL Mo el l"A to A9;19 Ae "re " s;:n"tory 9or %o.esti ar/itratio" pro ee%i"gs, 4e $ave parti ular age" ies to ar/itrate %isputes arisi"g fro. o"tra tual relatio"s. '" ase a foreig" ar/itral /o%y is $ose" /y t$e parties, t$e ar/itratio" rules of our %o.esti ar/itratio" /o%ies 4oul% "ot /e applie%. As sig"atory to t$e Ar/itratio" Rules of t$e =NC'#RAL +o%el La4 o" '"ter"atio"al Co..er ial Ar/itratio"@*1A of t$e ="ite% Natio"s Co..issio" o" '"ter"atio"al #ra%e La4 1=NC'#RAL3 i" t$e Ne4 6or7 Co"ve"tio" o" 8u"e 21, 1!05, t$e ,$ilippi"es o..itte% itself to /e /ou"% /y t$e +o%el La4. <e $ave eve" i" orporate% t$e +o%el La4 i" Repu/li A t No. 1RA3 !205, ot$er4ise 7"o4" as t$e Alter"ative Dispute Resolutio" A t of 2))* e"title% 'n 'ct to $nstitutionalize the Ise o( an 'lternative *is ute ,esolution S6stem in the 4hili ines and to !stablish the 7((ice (or 'lternative *is ute ,esolution, and (or 7ther 4ur oses, pro.ulgate% o" April 2, 2))*. Se s. 1!

a"% 2) of C$apter * of t$e +o%el La4 are t$e perti"e"t provisio"sG CHA,#5R * : 'N#5RNA#'2NAL C2++5RC'AL AR&'#RA#'2N S5C. 1!. 'do tion o( the Model )a; on $nternational Commercial 'rbitration.RR'"ter"atio"al o..er ial ar/itratio" s$all /e gover"e% /y t$e +o%el La4 o" '"ter"atio"al Co..er ial Ar/itratio" 1t$e H+o%el La4I3 a%opte% /y t$e ="ite% Natio"s Co..issio" o" '"ter"atio"al #ra%e La4 o" 8u"e 21, 1!05 1="ite% Natio"s Do u.e"t AJ*)J1(3 a"% re o..e"%e% for e"a t.e"t /y t$e Ge"eral Asse./ly i" Resolutio" No. *)J(2 approve% o" De e./er 11, 1!05, opy of 4$i $ is $ereto atta $e% as Appe"%iC HAI. S5C. 2). $nter retation o( Model )a;.KK'" i"terpreti"g t$e +o%el La4, regar% s$all /e $a% to its i"ter"atio"al origi" a"% to t$e "ee% for u"ifor.ity i" its i"terpretatio" a"% resort .ay /e .a%e to t$e travau& re aratories a"% t$e report of t$e Se retary Ge"eral of t$e ="ite% Natio"s Co..issio" o" '"ter"atio"al #ra%e La4 %ate% +ar $ 25, 1!05 e"title%, H'"ter"atio"al Co..er ial Ar/itratio"G A"alyti al Co..e"tary o" Draft #ra%e i%e"tifie% /y refere" e "u./er AJCN. !J26*.I

<$ile RA !205 4as passe% o"ly i" 2))*, it "o"et$eless applies i" t$e i"sta"t ase si" e it is a pro e%ural la4 4$i $ $as a retroa tive effe t. Li7e4ise, >2G'5S file% its appli atio" for ar/itratio" /efore t$e >CA& o" 8uly 1, 1!!0 a"% it is still pe"%i"g /e ause "o ar/itral a4ar% $as yet /ee" re"%ere%. #$us, RA !205 is appli a/le to t$e i"sta"t ase. <ell:settle% is t$e rule t$at pro e%ural la4s are o"strue% to /e appli a/le to a tio"s pe"%i"g a"% u"%eter.i"e% at t$e ti.e of t$eir passage, a"% are %ee.e% retroa tive i" t$at se"se a"% to t$at eCte"t. As a ge"eral rule, t$e retroa tive appli atio" of pro e%ural la4s %oes "ot violate a"y perso"al rig$ts /e ause "o veste% rig$t $as yet atta $e% "or arise" fro. t$e..@*2A A.o"g t$e perti"e"t features of RA !205 applyi"g a"% i" orporati"g t$e =NC'#RAL +o%el La4 are t$e follo4i"gG H1I 59e &5C 2ust re8er to "r#;tr"t;on ;n proper 1"ses

="%er Se . 2*, t$e R#C %oes "ot $ave Duris%i tio" over %isputes t$at are properly t$e su/De t of ar/itratio" pursua"t to a" ar/itratio" lause, a"% .a"%ates t$e referral to ar/itratio" i" su $ ases, t$usG S5C. 2*. ,e(erral to 'rbitration.RR A ourt /efore 4$i $ a" a tio" is /roug$t i" a .atter 4$i $ is t$e su/De t .atter of a" ar/itratio" agree.e"t s$all, if at least o"e party so re;uests "ot later t$a" t$e pre:trial o"fere" e, or upo" t$e re;uest of /ot$ parties t$ereafter, refer t$e parties to ar/itratio" u"less it fi"%s t$at t$e ar/itratio" agree.e"t is "ull a"% voi%, i"operative or i" apa/le of /ei"g perfor.e%.

eCe utory %e isio"s of t$e ,$ilippi"es CCCC H2I 4ore;:n "r#;tr"l "A"r s 2ust #e 1on8;r2e &5C #y t9e

ourts of la4 of

9oreig" ar/itral a4ar%s 4$ile .utually stipulate% /y t$e parties i" t$e ar/itratio" lause to /e fi"al a"% /i"%i"g are "ot i..e%iately e"for ea/le or a""ot /e i.ple.e"te% i..e%iately. Se . 35@*3A of t$e =NC'#RAL +o%el La4 stipulates t$e re;uire.e"t for t$e ar/itral a4ar% to /e re og"i-e% /y a o.pete"t ourt for e"for e.e"t, 4$i $ ourt u"%er Se . 36 of t$e =NC'#RAL +o%el La4 .ay refuse re og"itio" or e"for e.e"t o" t$e grou"%s provi%e% for. RA !205 i" orporate% t$ese provisos to Se s. *2, *3, a"% ** relative to Se s. *( a"% *0, t$usG S5C. *2. ' lication o( the Ne; ?or# Convention.RR#$e Ne4 6or7 Co"ve"tio" s$all gover" t$e re og"itio" a"% e"for e.e"t of ar/itral a4ar%s overe% /y sai% Co"ve"tio". #$e re og"itio" a"% e"for e.e"t of su $ ar/itral a4ar%s s$all /e file% 4it$ t$e &e:;on"l 5r;"l Court i" a or%a" e 4it$ t$e rules of pro e%ure to /e pro.ulgate% /y t$e Supre.e Court. Sai% pro e%ural rules s$all provi%e t$at t$e party relyi"g o" t$e a4ar% or applyi"g for its e"for e.e"t s$all file 4it$ t$e ourt t$e origi"al or aut$e"ti ate% opy of t$e a4ar% a"% t$e ar/itratio" agree.e"t. 'f t$e a4ar% or agree.e"t is "ot .a%e i" a"y of t$e offi ial la"guages, t$e party s$all supply a %uly ertifie% tra"slatio" t$ereof i"to a"y of su $ la"guages. #$e appli a"t s$all esta/lis$ t$at t$e ou"try i" 4$i $ foreig" ar/itratio" a4ar% 4as .a%e i" party to t$e Ne4 6or7 Co"ve"tio". CCCC S5C. *3. ,ecognition and !n(orcement o( :oreign 'rbitral ';ards Not Covered b6 the Ne; ?or# Convention.RR#$e re og"itio" a"% e"for e.e"t of foreig" ar/itral a4ar%s "ot overe% /y t$e Ne4 6or7 Co"ve"tio" s$all /e %o"e i" a or%a" e 4it$ pro e%ural rules to /e pro.ulgate% /y t$e Supre.e Court. #$e Court .ay, o" grou"%s of o.ity a"% re ipro ity, re og"i-e a"% e"for e a "o": o"ve"tio" a4ar% as a o"ve"tio" a4ar%. S5C. **. :oreign 'rbitral ';ard Not :oreign Judgment.RRA foreig" ar/itral a4ar% 4$e" o"fir.e% /y a ourt of a foreig" ou"try, s$all /e re og"i-e% a"% e"for e% as a foreig" ar/itral a4ar% a"% "ot as a Du%g.e"t of a foreig" ourt. A foreig" ar/itral a4ar%, 4$e" o"fir.e% /y t$e Regio"al #rial Court, s$all /e e"for e% i" t$e sa.e .a""er as fi"al a"%

S5C. *(. Venue and Jurisdiction.RR,ro ee%i"gs for re og"itio" a"% e"for e.e"t of a" ar/itratio" agree.e"t or for va atio"s, setti"g asi%e, orre tio" or .o%ifi atio" of a" ar/itral a4ar%, a"% a"y appli atio" 4it$ a ourt for ar/itratio" assista" e a"% supervisio" s$all /e %ee.e% as spe ial pro ee%i"gs a"% s$all /e file% 4it$ t$e Regio"al #rial Court 1i3 4$ere ar/itratio" pro ee%i"gs are o"%u te%F 1ii3 4$ere t$e asset to /e atta $e% or levie% upo", or t$e a t to /e e"Doi"e% is lo ate%F 1iii3 4$ere a"y of t$e parties to t$e %ispute resi%es or $as $is pla e of /usi"essF or 1iv3 i" t$e Natio"al 8u%i ial Capital Regio", at t$e optio" of t$e appli a"t. S5C. *0. Notice o( 4roceeding to 4arties.RR'" a spe ial pro ee%i"g for re og"itio" a"% e"for e.e"t of a" ar/itral a4ar%, t$e Court s$all se"% "oti e to t$e parties at t$eir a%%ress of re or% i" t$e ar/itratio", or if a"y part a""ot /e serve% "oti e at su $ a%%ress, at su $ partyBs last 7"o4" a%%ress. #$e "oti e s$all /e se"t al least fiftee" 1153 %ays /efore t$e %ate set for t$e i"itial $eari"g of t$e appli atio". 't is "o4 lear t$at foreig" ar/itral a4ar%s 4$e" o"fir.e% /y t$e R#C are %ee.e% "ot as a Du%g.e"t of a foreig" ourt /ut as a foreig" ar/itral a4ar%, a"% 4$e" o"fir.e%, are e"for e% as fi"al a"% eCe utory %e isio"s of our ourts of la4. #$us, it a" /e glea"e% t$at t$e o" ept of a fi"al a"% /i"%i"g ar/itral a4ar% is si.ilar to Du%g.e"ts or a4ar%s give" /y so.e of our ;uasi:Du%i ial /o%ies, li7e t$e Natio"al La/or Relatio"s Co..issio" a"% +i"es A%Du%i atio" &oar%, 4$ose fi"al Du%g.e"ts are stipulate% to /e fi"al a"% /i"%i"g, /ut "ot i..e%iately eCe utory i" t$e se"se t$at t$ey .ay still /e Du%i ially revie4e%, upo" t$e i"sta" e of a"y party. #$erefore, t$e fi"al foreig" ar/itral a4ar%s are si.ilarly situate% i" t$at t$ey "ee% first to /e o"fir.e% /y t$e R#C. H3I 59e &5C 9"s Dur;s ;1t;on to rev;eA 8ore;:n "r#;tr"l "A"r s Se . *2 i" relatio" to Se . *5 of RA !205 %esig"ate% a"% veste% t$e R#C 4it$ spe ifi aut$ority a"% Duris%i tio" to set asi%e, reDe t, or va ate a foreig" ar/itral a4ar% o" grou"%s provi%e% u"%er Art. 3*123 of t$e =NC'#RAL +o%el La4. Se s. *2 a"% *5 provi%eG S5C. *2. ' lication o( the Ne; ?or# Convention.RR#$e Ne4 6or7 Co"ve"tio" s$all gover" t$e re og"itio" a"% e"for e.e"t of ar/itral a4ar%s overe% /y sai% Co"ve"tio". #$e re og"itio" a"% e"for e.e"t of su $ ar/itral a4ar%s s$all /e file% 4it$ t$e &e:;on"l 5r;"l Court i" a or%a" e 4it$ t$e rules of pro e%ure to /e pro.ulgate% /y

t$e Supre.e Court. Sai% pro e%ural rules s$all provi%e t$at t$e party relyi"g o" t$e a4ar% or applyi"g for its e"for e.e"t s$all file 4it$ t$e ourt t$e origi"al or aut$e"ti ate% opy of t$e a4ar% a"% t$e ar/itratio" agree.e"t. 'f t$e a4ar% or agree.e"t is "ot .a%e i" a"y of t$e offi ial la"guages, t$e party s$all supply a %uly ertifie% tra"slatio" t$ereof i"to a"y of su $ la"guages. #$e appli a"t s$all esta/lis$ t$at t$e ou"try i" 4$i $ foreig" ar/itratio" a4ar% 4as .a%e is party to t$e Ne4 6or7 Co"ve"tio". 'f t$e appli atio" for reDe tio" or suspe"sio" of e"for e.e"t of a" a4ar% $as /ee" .a%e, t$e Regio"al #rial Court .ay, if it o"si%ers it proper, va ate its %e isio" a"% .ay also, o" t$e appli atio" of t$e party lai.i"g re og"itio" or e"for e.e"t of t$e a4ar%, or%er t$e party to provi%e appropriate se urity. CCCC S5C. *5. ,e8ection o( a :oreign 'rbitral ';ard.RRA party to a foreig" ar/itratio" pro ee%i"g .ay oppose a" appli atio" for re og"itio" a"% e"for e.e"t of t$e ar/itral a4ar% i" a or%a" e 4it$ t$e pro e%ures a"% rules to /e pro.ulgate% /y t$e Supre.e Court o"ly o" t$ose grou"%s e"u.erate% u"%er Arti le E of t$e Ne4 6or7 Co"ve"tio". A"y ot$er grou"% raise% s$all /e %isregar%e% /y t$e Regio"al #rial Court.

R#C,@*5A t$ey .ay o"ly /e assaile% /efore t$e R#C a"% va ate% o" t$e grou"%s provi%e% u"%er Se . 25 of RA 0(6.@*6A H5I &5C e1;s;on o8 "ss";le "ppe"l"#le 8ore;:n "r#;tr"l "A"r

Se . *6 of RA !205 provi%es for a" appeal /efore t$e CA as t$e re.e%y of a" aggrieve% party i" ases 4$ere t$e R#C sets asi%e, reDe ts, va ates, .o%ifies, or orre ts a" ar/itral a4ar%, t$usG S5C. *6. ' eal (rom Court *ecision or 'rbitral ';ards.WA %e isio" of t$e Regio"al #rial Court o"fir.i"g, va ati"g, setti"g asi%e, .o%ifyi"g or orre ti"g a" ar/itral a4ar% .ay /e appeale% to t$e Court of Appeals i" a or%a" e 4it$ t$e rules a"% pro e%ure to /e pro.ulgate% /y t$e Supre.e Court. #$e losi"g party 4$o appeals fro. t$e Du%g.e"t of t$e ourt o"fir.i"g a" ar/itral a4ar% s$all /e re;uire% /y t$e appellate ourt to post a ou"ter/o"% eCe ute% i" favor of t$e prevaili"g party e;ual to t$e a.ou"t of t$e a4ar% i" a or%a" e 4it$ t$e rules to /e pro.ulgate% /y t$e Supre.e Court. #$ereafter, t$e CA %e isio" .ay furt$er /e appeale% or revie4e% /efore t$is Court t$roug$ a petitio" for revie4 u"%er Rule *5 of t$e Rules of Court. *%SMC 9"s re2e ;es to prote1t ;ts ;nterests #$us, /ase% o" t$e foregoi"g features of RA !205, ,GS+C .ust su/.it to t$e foreig" ar/itratio" as it /ou"% itself t$roug$ t$e su/De t o"tra t. <$ile it .ay $ave .isgivi"gs o" t$e foreig" ar/itratio" %o"e i" >orea /y t$e >CA&, it $as availa/le re.e%ies u"%er RA !205. 'ts i"terests are %uly prote te% /y t$e la4 4$i $ re;uires t$at t$e ar/itral a4ar% t$at .ay /e re"%ere% /y >CA& .ust /e o"fir.e% $ere /y t$e R#C /efore it a" /e e"for e%. <it$ our %is;uisitio" a/ove, petitio"er is orre t i" its o"te"tio" t$at a" ar/itratio" lause, stipulati"g t$at t$e ar/itral a4ar% is fi"al a"% /i"%i"g, %oes "ot oust our ourts of Duris%i tio" as t$e i"ter"atio"al ar/itral a4ar%, t$e a4ar% of 4$i $ is "ot a/solute a"% 4it$out eC eptio"s, is still Du%i ially revie4a/le u"%er ertai" o"%itio"s provi%e% for /y t$e=NC'#RAL +o%el La4 o" 'CA as applie% a"% i" orporate% i" RA !205. 9i"ally, it .ust /e "ote% t$at t$ere is "ot$i"g i" t$e su/De t Co"tra t 4$i $ provi%es t$at t$e parties .ay %ispe"se 4it$ t$e ar/itratio" lause. Un;l"ter"l res1;ss;on ;2proper "n ;lle:"l Havi"g rule% t$at t$e ar/itratio" lause of t$e su/De t o"tra t is vali% a"% /i"%i"g o" t$e parties, a"% "ot o"trary to pu/li poli yF o"se;ue"tly, /ei"g /ou"% to t$e o"tra t of ar/itratio", a party .ay "ot u"ilaterally res i"% or ter.i"ate t$e o"tra t for 4$atever ause 4it$out first resorti"g to ar/itratio". <$at t$is Court $el% i" Iniversit6 o( the 4hili ines v. *e )os 'ngeles@*(A a"% reiterate% i" su ee%i"g ases,@*0A t$at t$e a t of treati"g a o"tra t as res i"%e% o" a ou"t of i"fra tio"s /y t$e ot$er o"tra ti"g party is vali% al/eit provisio"al as it a" /e Du%i ially assaile%, is "ot appli a/le to

#$us, 4$ile t$e R#C %oes "ot $ave Duris%i tio" over %isputes gover"e% /y ar/itratio" .utually agree% upo" /y t$e parties, still t$e foreig" ar/itral a4ar% is su/De t to Du%i ial revie4 /y t$e R#C 4$i $ a" set asi%e, reDe t, or va ate it. '" t$is se"se, 4$at t$is Court $el% i" Chung :u $ndustries (4hils.), $nc. relie% upo" /y >2G'5S is appli a/le i"sofar as t$e foreig" ar/itral a4ar%s, 4$ile fi"al a"% /i"%i"g, %o "ot oust ourts of Duris%i tio" si" e t$ese ar/itral a4ar%s are "ot a/solute a"% 4it$out eC eptio"s as t$ey are still Du%i ially revie4a/le. C$apter ( of RA !205 $as .a%e it lear t$at all ar/itral a4ar%s, 4$et$er %o.esti or foreig", are su/De t to Du%i ial revie4 o" spe ifi grou"%s provi%e% for. H4I %roun s 8or Du ;1;"l rev;eA ;88erent ;n o2est;1 "n 8ore;:n "r#;tr"l "A"r s #$e %iffere" es /et4ee" a fi"al ar/itral a4ar% fro. a" i"ter"atio"al or foreig" ar/itral tri/u"al a"% a" a4ar% give" /y a lo al ar/itral tri/u"al are t$e spe ifi grou"%s or o"%itio"s t$at vest Duris%i tio" over our ourts to revie4 t$e a4ar%s. 9or foreig" or i"ter"atio"al ar/itral a4ar%s 4$i $ .ust first /e o"fir.e% /y t$e R#C, t$e grou"%s for setti"g asi%e, reDe ti"g or va ati"g t$e a4ar% /y t$e R#C are provi%e% u"%er Art. 3*123 of t$e =NC'#RAL +o%el La4. 9or fi"al %o.esti ar/itral a4ar%s, 4$i $ also "ee% o"fir.atio" /y t$e R#C pursua"t to Se . 23 of RA 0(6 @**A a"% s$all /e re og"i-e% as fi"al a"% eCe utory %e isio"s of t$e

t$e i"sta"t ase o" a ou"t of a vali% stipulatio" o" ar/itratio". <$ere a" ar/itratio" lause i" a o"tra t is availi"g, "eit$er of t$e parties a" u"ilaterally treat t$e o"tra t as res i"%e% si" e 4$atever i"fra tio"s or /rea $es /y a party or %iffere" es arisi"g fro. t$e o"tra t .ust /e /roug$t first a"% resolve% /y ar/itratio", a"% "ot t$roug$ a" eCtraDu%i ial res issio" or Du%i ial a tio". #$e issues arisi"g fro. t$e o"tra t /et4ee" ,GS+C a"% >2G'5S o" 4$et$er t$e e;uip.e"t a"% .a $i"eries %elivere% a"% i"stalle% 4ere properly i"stalle% a"% operatio"al i" t$e pla"t i" Car.o"a, CaviteF t$e o4"ers$ip of e;uip.e"t a"% pay.e"t of t$e o"tra t pri eF a"% 4$et$er t$ere 4as su/sta"tial o.plia" e /y >2G'5S i" t$e pro%u tio" of t$e sa.ples, give" t$e allege% fa t t$at ,GS+C oul% "ot supply t$e ra4 .aterials re;uire% to pro%u e t$e sa.ple L,G yli"%ers, are .atters proper for ar/itratio". '"%ee%, 4e "ote t$at o" 8uly 1, 1!!0, >2G'5S i"stitute% a" Appli atio" for Ar/itratio" /efore t$e >CA& i" Seoul, >orea pursua"t to Art. 15 of t$e Co"tra t as a.e"%e%. #$us, it is i" u./e"t upo" ,GS+C to a/i%e /y its o..it.e"t to ar/itrate. Corollarily, t$e trial ourt gravely a/use% its %is retio" i" gra"ti"g ,GS+CBs +otio" for '"spe tio" of #$i"gs o" Septe./er 21, 1!!0, as t$e su/De t .atter of t$e .otio" is u"%er t$e pri.ary Duris%i tio" of t$e .utually agree% ar/itral /o%y, t$e >CA& i" >orea. '" a%%itio", 4$atever fi"%i"gs a"% o" lusio"s .a%e /y t$e R#C &ra" $ S$eriff fro. t$e i"spe tio" .a%e o" 2 to/er 20, 1!!0, as or%ere% /y t$e trial ourt o" 2 to/er 1!, 1!!0, is of "o 4ort$ as sai% S$eriff is "ot te $"i ally o.pete"t to as ertai" t$e a tual status of t$e e;uip.e"t a"% .a $i"eries as i"stalle% i" t$e pla"t. 9or t$ese reaso"s, t$e Septe./er 21, 1!!0 a"% 2 to/er 1!, 1!!0 R#C 2r%ers pertai"i"g to t$e gra"t of t$e i"spe tio" of t$e e;uip.e"t a"% .a $i"eries $ave to /e re alle% a"% "ullifie%. +ssue on oAners9;p o8 pl"nt proper 8or "r#;tr"t;on ,etitio"er assails t$e CA ruli"g t$at t$e issue petitio"er raise% o" 4$et$er t$e total o"tra t pri e of =SD 1,53),))) 4as for t$e 4$ole pla"t a"% its i"stallatio" is /eyo"% t$e a./it of a ,etitio" for Certiorari. ,etitio"erBs positio" is u"te"a/le. 't is settle% t$at ;uestio"s of fa t a""ot /e raise% i" a" origi"al a tio" for ertiorari.@*!A <$et$er or "ot t$ere 4as full pay.e"t for t$e .a $i"eries a"% e;uip.e"t a"% i"stallatio" is i"%ee% a fa tual issue pro$i/ite% /y Rule 65. Ho4ever, 4$at appears to o"stitute a grave a/use of %is retio" is t$e or%er of t$e R#C i" resolvi"g t$e issue o" t$e o4"ers$ip of t$e pla"t 4$e" it is t$e ar/itral /o%y 1>CA&3 a"% "ot t$e R#C 4$i $ $as Duris%i tio" a"% aut$ority over t$e sai% issue. #$e R#CBs %eter.i"atio" of su $ fa tual issue o"stitutes grave a/use of %is retio" a"% .ust /e reverse% a"% set asi%e.

a"% tra"sfer t$e e;uip.e"t a"% .a $i"eries, 4e fi"% it to /e i" or%er o"si%eri"g t$e fa tual .ilieu of t$e i"sta"t ase. 9irstly, 4$ile t$e issue of t$e proper i"stallatio" of t$e e;uip.e"t a"% .a $i"eries .ig$t 4ell /e u"%er t$e pri.ary Duris%i tio" of t$e ar/itral /o%y to %e i%e, yet t$e R#C u"%er Se . 20 of RA !205 $as Duris%i tio" to $ear a"% gra"t i"teri. .easures to prote t veste% rig$ts of t$e parties. Se . 20 perti"e"tly provi%esG S5C. 20. +rant o( interim Measure o( 4rotection.W1a3 +t ;s not ;n1o2p"t;#le A;t9 "n "r#;tr"t;on ":ree2ent 8or " p"rty to reBuest, #e8ore 1onst;tut;on o8 t9e tr;#un"l, 8ro2 " Court to :r"nt su19 2e"sure. After o"stitutio" of t$e ar/itral tri/u"al a"% %uri"g ar/itral pro ee%i"gs, a re;uest for a" i"teri. .easure of prote tio", or .o%ifi atio" t$ereof, .ay /e .a%e 4it$ t$e ar/itral or to t9e e@tent t9"t t9e "r#;tr"l tr;#un"l 9"s no poAer to "1t or ;s un"#le to "1t e88e1t;v;ty, t9e reBuest 2"y #e 2" e A;t9 t9e Court. #$e ar/itral tri/u"al is %ee.e% o"stitute% 4$e" t$e sole ar/itrator or t$e t$ir% ar/itrator, 4$o $as /ee" "o.i"ate%, $as a epte% t$e "o.i"atio" a"% 4ritte" o..u"i atio" of sai% "o.i"atio" a"% a epta" e $as /ee" re eive% /y t$e party .a7i"g t$e re;uest. 1/3 #$e follo4i"g rules o" i"teri. or provisio"al relief s$all /e o/serve%G A"y party .ay re;uest t$at provisio"al relief /e gra"te% agai"st t$e a%verse party. Su $ relief .ay /e gra"te%G 1i3 to prevent ;rrep"r"#le loss or ;nDuryF 1ii3 to provi%e se urity for t$e perfor.a" e of a"y o/ligatio"F 1iii3 to pro%u e or preserve a"y evi%e" eF or 1iv3 to o.pel a"y ot$er appropriate a t or o.issio". 1 3 #$e or%er gra"ti"g provisio"al relief .ay /e o"%itio"e% upo" t$e provisio" of se urity or a"y a t or o.issio" spe ifie% i" t$e or%er. 1%3 '"teri. or provisio"al relief is re;ueste% /y 4ritte" appli atio" tra"s.itte% /y reaso"a/le .ea"s to t$e Court or ar/itral tri/u"al as t$e ase .ay /e a"% t$e party agai"st 4$o. t$e relief is soug$t, %es ri/i"g i" appropriate %etail t$e pre ise relief, t$e party agai"st 4$o. t$e relief is re;ueste%, t$e grou"%s for t$e relief, a"% t$e evi%e" e supporti"g t$e re;uest. 1e3 59e or er s9"ll #e #;n ;n: upon t9e p"rt;es. 1f3 5it$er party .ay apply 4it$ t$e Court for assista" e i" i.ple.e"ti"g or

&5C 9"s ;nter;2 Dur;s ;1t;on to prote1t t9e r;:9ts o8 t9e p"rt;es A"e"t t$e 8uly 23, 1!!0 2r%er %e"yi"g t$e issua" e of t$e i"Du" tive 4rit pavi"g t$e 4ay for ,GS+C to %is.a"tle

e"for i"g a" i"teri. .easure or%ere% /y a" ar/itral tri/u"al. 1g3 A party 4$o %oes "ot o.ply 4it$ t$e or%er s$all /e lia/le for all %a.ages resulti"g fro. "o" o.plia" e, i" lu%i"g all eCpe"ses, a"% reaso"a/le attor"eyMs fees, pai% i" o/tai"i"g t$e or%erBs Du%i ial e"for e.e"t. 15.p$asis ours.3 Art. 1(123 of t$e =NC'#RAL +o%el o" 'CA %efi"es a" Hi"teri. .easureI of prote tio" asG 'rticle 3F. 4o;er o( arbitral tribunal to order interim measures CCC CCC CCC La4

for i"teri. or o"servatory .easures. Li7e4ise, Se tio" 1* of Repu/li A t 1R.A.3 No. 0(6 1#$e Ar/itratio" La43 re og"i-es t$e rig$ts of a"y party to petitio" t$e ourt to ta7e .easures to safeguar% a"%Jor o"serve a"y .atter 4$i $ is t$e su/De t of t$e %ispute i" ar/itratio". '" a%%itio", R.A. !205, ot$er4ise 7"o4" as t$e HAlter"ative Dispute Resolutio" A t of 2))*,I allo4s t$e fili"g of provisio"al or i"teri. .easures 4it$ t$e regular ourts 4$e"ever t$e ar/itral tri/u"al $as "o po4er to a t or to a t effe tively.@5)A 't is t$us /eyo"% avil t$at t$e R#C $as aut$ority a"% Duris%i tio" to gra"t i"teri. .easures of prote tio". Se o"%ly, o"si%eri"g t$at t$e e;uip.e"t a"% .a $i"eries are i" t$e possessio" of ,GS+C, it $as t$e rig$t to prote t a"% preserve t$e e;uip.e"t a"% .a $i"eries i" t$e /est 4ay it a". Co"si%eri"g t$at t$e L,G pla"t 4as "o": operatio"al, ,GS+C $as t$e rig$t to %is.a"tle a"% tra"sfer t$e e;uip.e"t a"% .a $i"eries eit$er for t$eir prote tio" a"% preservatio" or for t$e /etter 4ay to .a7e goo% use of t$e. 4$i $ is i"elu ta/ly 4it$i" t$e .a"age.e"t %is retio" of ,GS+C. #$ir%ly, a"% of greater i.port is t$e reaso" t$at .ai"tai"i"g t$e e;uip.e"t a"% .a $i"eries i" <ort$Bs property is "ot to t$e /est i"terest of ,GS+C %ue to t$e pro$i/itive re"t 4$ile t$e L,G pla"t as set:up is "ot operatio"al. ,GS+C 4as losi"g ,$,322,56) as .o"t$ly re"tals or ,$,3.0(+ for 1!!0 alo"e 4it$out o"si%eri"g t$e 1)N a""ual re"t i" re.e"t i" .ai"tai"i"g t$e pla"t. 9ourt$ly, a"% orollarily, 4$ile t$e >CA& a" rule o" .otio"s or petitio"s relati"g to t$e preservatio" or tra"sfer of t$e e;uip.e"t a"% .a $i"eries as a" i"teri. .easure, yet o" $i"%sig$t, t$e 8uly 23, 1!!0 2r%er of t$e R#C allo4i"g t$e tra"sfer of t$e e;uip.e"t a"% .a $i"eries give" t$e "o": re og"itio" /y t$e lo4er ourts of t$e ar/itral lause, $as a or%e% a" i"teri. .easure of prote tio" to ,GS+C 4$i $ 4oul% ot$er4ise /ee" irrepara/ly %a.age%. 9ift$, >2G'5S is "ot u"Dustly preDu%i e% as it $as alrea%y /ee" pai% " su/sta"tial a.ou"t /ase% o" t$e o"tra t. +oreover, >2G'5S is a.ply prote te% /y t$e ar/itral a tio" it $as i"stitute% /efore t$e >CA&, t$e a4ar% of 4$i $ a" /e e"for e% i" our Duris%i tio" t$roug$ t$e R#C. &esi%es, /y our %e isio", ,GS+C is o.pelle% to su/.it to ar/itratio" pursua"t to t$e vali% ar/itratio" lause of its o"tra t 4it$ >2G'5S. *%SMC to 2"19;ner;es preserve t9e su#De1t eBu;p2ent "n

123 A" ;nter;2 2e"sure is a"y te.porary .easure, 4$et$er i" t$e for. of a" a4ar% or i" a"ot$er for., /y 4$i $, at a"y ti.e prior to t$e issua" e of t$e a4ar% /y 4$i $ t$e %ispute is fi"ally %e i%e%, t$e ar/itral tri/u"al or%ers a party toG (a) +ai"tai" or restore t$e status ;uo pe"%i"g %eter.i"atio" of t$e %isputeF (b) #a7e a tio" t$at 4oul% preve"t, or refrai" fro. ta7i"g a tio" t$at is li7ely to ause, urre"t or i..i"e"t $ar. or preDu%i e to t$e ar/itral pro ess itselfF (c) ,rovi%e a .ea"s of preservi"g assets out of 4$i $ a su/se;ue"t a4ar% .ay /e satisfie%F or (d) ,reserve evi%e" e t$at .ay /e releva"t a"% .aterial to t$e resolutio" of t$e %ispute. Art. 1( 8 of =NC'#RAL +o%el La4 o" 'CA also gra"ts ourts po4er a"% Duris%i tio" to issue i"teri. .easuresG 'rticle 3F J. Court5ordered interim measures A ourt s$all $ave t$e sa.e po4er of issui"g a" i"teri. .easure i" relatio" to ar/itratio" pro ee%i"gs, irrespe tive of 4$et$er t$eir pla e is i" t$e territory of t$is State, as it $as i" relatio" to pro ee%i"gs i" ourts. #$e ourt s$all eCer ise su $ po4er i" a or%a" e 4it$ its o4" pro e%ures i" o"si%eratio" of t$e spe ifi features of i"ter"atio"al ar/itratio". '" t$e re e"t 2))6 ase of 1rans(ield 4hili ines, $nc. v. )uzon C6dro Cor oration, 4e 4ere eCpli it t$at eve" Ht$e pe"%e" y of a" ar/itral pro ee%i"g %oes "ot fore lose resort to t$e ourts for provisio"al reliefs.I <e eCpli ate% t$is 4ayG As a fu"%a.e"tal poi"t, t$e pe"%e" y of ar/itral pro ee%i"gs %oes "ot fore lose resort to t$e ourts for provisio"al reliefs. #$e Rules of t$e 'CC, 4$i $ gover"s t$e partiesB ar/itral %ispute, allo4s t$e appli atio" of a party to a Du%i ial aut$ority

9i"ally, 4$ile ,GS+C .ay $ave /ee" gra"te% t$e rig$t to %is.a"tle a"% tra"sfer t$e su/De t e;uip.e"t a"% .a $i"eries, it %oes "ot $ave t$e rig$t to o"vey or %ispose of t$e sa.e o"si%eri"g t$e pe"%i"g ar/itral pro ee%i"gs to settle t$e %iffere" es of t$e parties. ,GS+C t$erefore .ust preserve a"% .ai"tai" t$e su/De t e;uip.e"t a"% .a $i"eries 4it$ t$e %ilige" e of a goo% fat$er of a fa.ily@51A u"til fi"al resolutio" of t$e ar/itral pro ee%i"gs a"% e"for e.e"t of t$e a4ar%, if a"y.

>H-&-4/&-, t$is petitio" is *A&5L< %&A'5-D , i" t$atG 113 #$e +ay 3), 2))) CA De isio" i" CA:G.R. S, No. *!2*! is &-,-&S-D a"% S-5 AS+D-F 123 #$e Septe./er 21, 1!!0 a"% 2 to/er 1!, 1!!0 R#C 2r%ers i" Civil Case No. !0:11( are &-,-&S-D a"% S-5 AS+D-F 133 #$e parties are $ere/y /&D-&-D to su/.it t$e.selves to t$e ar/itratio" of t$eir %ispute a"% %iffere" es arisi"g fro. t$e su/De t Co"tra t /efore t$e >CA&F a"% 1*3 ,GS+C is $ere/y ALL/>-D to %is.a"tle a"% tra"sfer t$e e;uip.e"t a"% .a $i"eries, if it $a% "ot %o"e so, a"% /&D-&-D to preserve a"% .ai"tai" t$e. u"til t$e fi"ality of 4$atever ar/itral a4ar% is give" i" t$e ar/itratio" pro ee%i"gs. No pro"ou" e.e"t as to osts. S/ /&D-&-D.

't appears t$at t$e &ill of La%i"g issue% /y t$e CARR'5R o"tai"e% a ge"eral state.e"t of i" orporatio" of t$e ter.s of a C$arter ,arty /et4ee" t$e SH',,5R a"% ,ar el #a"7ers, '" ., e"tere% i"to i" Gree"4i $, Co""e ti ut, =.S.A. =po" re eipt of t$e argo /y t$e C2NS'GN55 i" t$e Net$erla"%s, it 4as fou"% to /e %is olore% a"% totally o"ta.i"ate%. #$e lai. file% /y t$e SH',,5R:ASS=R5D 4it$ t$e CARR'5R $avi"g /ee" %e"ie%, t$e 'NS=R5R i"%e."ifie% t$e SH',,5R pursua"t to t$e stipulatio" i" t$e .ari"e argo poli y overi"g sai% s$ip.e"t. 2" 21 April 1!06, as su/rogee of t$e SH',,5R:ASS=R5D, t$e 'NS=R5R file% suit agai"st t$e CARR'5R, /efore t$e Regio"al #rial Court of +a7ati, &ra" $ 50 1R#C3, for re overy of t$e su. of ,1,61!,*6!.21, 4it$ i"terest, represe"ti"g t$e a.ou"t t$e 'NS=R5R $a% pai% t$e SH',,5R:ASS=R5D. #$e CARR'5R .ove% to %is.issJsuspe"% t$e pro ee%i"gs o" t$e grou"% t$at t$e R#C $a% "o Duris%i tio" over t$e lai. t$e sa.e /ei"g a" ar/itra/le o"eF t$at as su/rogee of t$e SH',,5R:ASS=R5D, t$e 'NS=R5R is su/De t to t$e provisio"s of t$e &ill of La%i"g, 4$i $ i" lu%es a provisio" t$at t$e s$ip.e"t is arrie% u"%er a"% pursua"t to t$e ter.s of t$e C$arter ,arty, %ate% 21 De e./er 1!0*, /et4ee" t$e SH',,5R:ASS=R5D a"% ,ar el #a"7ers, '" . provi%i"g for ar/itratio". #$e 'NS=R5R oppose% t$e %is.issalJsuspe"sio" of t$e pro ee%i"gs o" t$e grou"% t$at it 4as "ot legally /ou"% to su/.it t$e lai. for ar/itratio" i"as.u $ as t$e ar/itratio" lause provi%e% i" t$e C$arter ,arty 4as "ot i" orporate% i"to t$e &ill of La%i"g, a"% t$at t$e ar/itratio" lause is voi% for /ei"g u"reaso"a/le a"% u"Dust. 2" 20 8uly 1!0(, t$e R#C 1 %e"ie% t$e +otio", /ut su/se;ue"tly re o"si%ere% its a tio" o" 1! Nove./er 1!0(, a"% %eferre% resolutio" o" t$e +otio" to Dis.issJSuspe"% ,ro ee%i"gs u"til trial o" t$e .erits Lsi" e t$e grou"% allege% i" sai% .otio" %oes "ot appear to /e i"%u/ita/le.L #$e CARR'5R t$e" resorte% to a ,etitio" for C ertiorari a"% ,ro$i/itio" 4it$ prayer for ,reli.i"ary '"Du" tio" a"%Jor #e.porary Restrai"i"g 2r%er /efore t$e respo"%e"t Appellate Court see7i"g t$e a""ul.e"t of t$e 1! Nove./er 1!0( R#C 2r%er. 2" 12 April 1!0!, t$e respo"%e"t Court 2 pro.ulgate% t$e De isio" "o4 u"%er revie4, 4it$ t$e follo4i"g %ispositive te"orG <H5R592R5M, t$e or%er of respo"%e"t 8u%ge %ate% Nove./er 1!, 1!0( %eferri"g resolutio" o" petitio"er Stolt:Nielse"Ms +otio" to Dis.issJSuspe"% ,ro ee%i"gs is $ere/y S5# AS'D5F private respo"%e"t N=9'C 1t$e 'NS=R5R3 is or%ere% to refer its lai.s for ar/itratio"F a"% respo"%e"t 8u%ge is %ire te% to suspe"% t$e pro ee%i"gs i" Civil ase No. 13*!0 pe"%i"g t$e retur" of t$e orrespo"%i"g ar/itral a4ar%. 2" 21 August 1!0!, 4e resolve% to give %ue ourse a"% re;uire% t$e parties to su/.it t$eir respe tive +e.ora"%a, 4$i $ t$ey $ave %o"e, t$e last file% $avi"g /ee" Note% o" 23 2 to/er 1!0!. 9irst, $erei" petitio"er:'NS=R5R alleges t$at t$e R#C 2r%er %eferri"g resolutio" of t$e CARR'5RMs +otio" to Dis.iss o"stitutes a" i"terlo utory or%er, 4$i $ a" "ot /e t$e su/De t of a spe ial ivil a tio" o" certiorari a"% pro$i/itio".

Repu/li SU*&-M+a"ila S5C2ND D'E'S'2N

of

t$e

,$ilippi"es C/U&5

%.&. 'o. 87(58 Apr;l 20, 1(() 'A5+/'AL U'+/' 4+&- +'SU&A'C- C/M*A'< /4 *+55S!U&%, *ALAM-&+CA' +'5-&'A5+/'AL U'D-&>&+5-& H*H+L.I +'C., petitio"ers, vs. S5/L5$'+-LS-' *H+L+**+'-S, +'C. "n C/U&5 /4 A**-ALS, respo"%e"ts. :a8ardo )a; 7((ices (or etitioners. S6ci , Salazar, Cernandez J +atmaitan (or Stolt5Nielsen 4hil., $nc.

M-L-'C+/$H-&&-&A, J.9 <e up$ol% t$e ruli"g of respo"%e"t Court of Appeals t$at t$e lai. or %ispute $erei" is ar/itra/le. 2" ! 8a"uary 1!05, ="ite% Co o"ut C$e.i als, '" . 1$erei"after referre% to as SH',,5R3 s$ippe% *)*.((* .etri to"s of %istille% C6:C10 fatty a i% o" /oar% +# LStolt S eptre,L a ta"7er o4"e% /y Stolt:Nielse" ,$ilippi"es '" . 1$erei"after referre% to as CARR'5R3, fro. &aua", &ata"gas, ,$ilippi"es, o"sig"e% to LNieu4e +ateCL at Rotter%a., Net$erla"%s, overe% /y #a"7er &ill of La%i"g &L No. &A#:1. #$e s$ip.e"t 4as i"sure% u"%er a .ari"e argo poli y 4it$ ,etitio"er Natio"al ="io" 9ire '"sura" e Co.pa"y of ,itts/urg 1$erei"after referre% to as 'NS=R5R3, a "o":life A.eri a" i"sura" e orporatio", t$roug$ its settli"g age"t i" t$e ,$ilippi"es, t$e A.eri a" '"ter"atio"al ="%er4riters 1,$ilippi"es3, '" ., t$e ot$er petitio"er $erei".

Ge"erally, t$is 4oul% /e true. Ho4ever, t$e ase /efore us falls u"%er t$e eC eptio". <$ile a Court 2r%er %eferri"g a tio" o" a .otio" to %is.iss u"til t$e trial is i"terlo utory a"% a""ot /e $alle"ge% u"til fi"al Du%g.e"t, still, 4$ere it learly appears t$at t$e trial 8u%ge or Court is pro ee%i"g i" eC ess or outsi%e of its Duris%i tio", t$e re.e%y of pro$i/itio" 4oul% lie si" e it 4oul% /e useless a"% a 4aste of ti.e to go a$ea% 4it$ t$e pro ee%i"gs 1="iversity of Sto. #o.as vs. Eilla"ueva, 1)6 ,$il. *3!, @1!5!A citing ,$ilippi"e '"ter"atio"al 9air, '" ., et al., vs. '/a"e-, et al., !* ,$il. *2* @1!5*AF 5"ri;ue vs. +a a%aeg, et al., 0* ,$il. 6(* @1!*!AF Sa" &e%a College vs. C'R, !( ,$il. (0( @1!55A3. 5ve" a ursory rea%i"g of t$e su/De t &ill of La%i"g, i" relatio" to t$e C$arter ,arty, reveals t$e CourtMs pate"t la 7 of Duris%i tio" to $ear a"% %e i%e t$e lai.. <e pro ee% to t$e se o"% /ut .ore ru ial issueG Are t$e ter.s of t$e C$arter ,arty, parti ularly t$e provisio" o" ar/itratio", /i"%i"g o" t$e 'NS=R5RS #$e 'NS=R5R postulates t$at it a""ot /e /ou"% /y t$e C$arter ,arty /e ause, as i"surer, it is su/rogee o"ly 4it$ respe t to t$e &ill of La%i"gF t$at o"ly t$e &ill of La%i"g s$oul% regulate t$e relatio" a.o"g t$e 'NS=R5R, t$e $ol%er of t$e &ill of La%i"g, a"% t$e CARR'5RF a"% t$at i" or%er to /i"% it, t$e ar/itral lause i" t$e C$arter ,arty s$oul% $ave /ee" i" orporate% i"to t$e &ill of La%i"g. <e rule agai"st t$at su/.issio". #$e perti"e"t portio" of t$e &ill of La%i"g i" issue provi%es i" partG #$is s$ip.e"t is arrie% u"%er a"% pursua"t to t$e ter.s of t$e C$arter %ate% De e./er 21st 1!0* at Gree"4i $, Co""e ti ut, =.S.A. /et4ee" ,ar el #a"7ers. '" . a"% ="ite% Co o"ut C$e.i als, '"%. as C$arterer a"% all the terms ;hatsoever o( the said Charter eC ept t$e rate a"% pay.e"t of freig$t spe ifie% t$erei" apply to a"% gover" t$e rig$ts of t$e parties o" er"e% i" t$is s$ip.e"t. Copy of t$e C$arter .ay /e o/tai"e% fro. t$e S$ipper or C$arterer. 15.p$asis supplie%3 <$ile t$e provisio" o" ar/itratio" i" t$e C$arter ,arty rea%sG H. Spe ial ,rovisio"s. CCC CCC CCC *. Ar/itratio". A"y %ispute arisi"g fro. t$e .a7i"g, perfor.a" e or ter.i"atio" of t$is C$arter ,arty s$all /e settle% i" Ne4 6or7, 24"er a"% C$arterer ea $ appoi"ti"g a" ar/itrator, 4$o s$all /e a .er $a"t, /ro7er or i"%ivi%ual eCperie" e% i" t$e s$ippi"g /usi"essF t$e t4o t$us $ose", if t$ey a""ot agree, s$all "o.i"ate a t$ir% ar/itrator 4$o s$all /e a" a%.iralty la4yer. Su $ ar/itratio" s$all /e o"%u te% i" o"for.ity 4it$ t$e provisio"s a"% pro e%ure of t$e ="ite% States ar/itratio" a t, a"% a Du%g.e"t of t$e ourt s$all /e e"tere% upo" a"y a4ar% .a%e /y sai% ar/itrator. Not$i"g i" t$is lause s$all /e %ee.e% to 4aive 24"erMs rig$t to lie" o"

t$e argo for freig$t, %ee% of freig$t, or %e.urrage. Clearly, t$e &ill of La%i"g i" orporates /y refere" e t$e ter.s of t$e C$arter ,arty. 't is settle% la4 t$at t$e $arter .ay /e .a%e part of t$e o"tra t u"%er 4$i $ t$e goo%s are arrie% /y a" appropriate refere" e i" t$e &ill of La%i"g 1<$arto" ,oor, C$arter ,arties a"% 2 ea" &ills of La%i"g 15t$ e%., p. (13. #$is s$oul% i" lu%e t$e provisio" o" ar/itratio" eve" 4it$out a spe ifi stipulatio" to t$at effe t. #$e e"tire o"tra t .ust /e rea% toget$er a"% its lauses i"terprete% i" relatio" to o"e a"ot$er a"% "ot /y parts. +oreover, i" ases 4$ere a &ill of La%i"g $as /ee" issue% /y a arrier overi"g goo%s s$ippe% a/oar% a vessel u"%er a $arter party, a"% t$e $arterer is also t$e $ol%er of t$e /ill of la%i"g, Lt$e /ill of la%i"g operates as t$e re eipt for t$e goo%s, a"% as %o u.e"t of title passi"g t$e property of t$e goo%s, /ut "ot as varyi"g t$e o"tra t /et4ee" t$e $arterer a"% t$e s$ipo4"erL 1'" re +ari"e Sulp$ur Quee", *6) 9 2% 0!, 1)3 @2% Cir. 1!(2AF +i"istry of Co..er e vs. +ari"e #a"7ers Corp. 1!* 9. Supp 161, 163 @S.D.N.6. 1!6)AF Gree"sto"e S$ippi"g Co., S.A. vs. #ra"s4orl% 2il, Lt%., 500 9 Supp @D.5l. 1!0*A3. #$e &ill of La%i"g /e o.es, t$erefore, o"ly a re eipt a"% "ot t$e o"tra t of arriage i" a $arter of t$e e"tire vessel, for t$e o"tra t is t$e C$arter ,arty 1S$ell 2il Co. vs. +J# Gil%a, (!) 9 2% 12)!, 1212 @5t$ Cir. 1!06AF Ho.e '"sura" e Co. vs. A.eri a" Stea.s$ip Age" ies, '" ., G.R. No. L:255!!, * April 1!60, 23 SCRA 2*3, a"% is t$e la4 /et4ee" t$e parties 4$o are /ou"% /y its ter.s a"% o"%itio" provi%e% t$at t$ese are "ot o"trary to la4, .orals, goo% usto.s, pu/li or%er a"% pu/li poli y 1Arti le 13)6, Civil Co%e3. As t$e respo"%e"t Appellate Court fou"%, t$e 'NS=R5R L a""ot feig" ig"ora" e of t$e ar/itratio" lause si" e it 4as alrea%y $arge% 4it$ "oti e of t$e eCiste" e of t$e $arter party %ue to a" appropriate refere" e t$ereof i" t$e /ill of la%i"g a"%, /y t$e eCer ise of or%i"ary %ilige" e, it oul% $ave easily o/tai"e% a opy t$ereof eit$er fro. t$e s$ipper or t$e $arterer. <e $ol%, t$erefore, t$at t$e 'NS=R5R a""ot avoi% t$e /i"%i"g effe t of t$e ar/itratio" lause. &y su/rogatio", it /e a.e privy to t$e C$arter ,arty as fully as t$e SH',,5R /efore t$e latter 4as i"%e."ifie%, /e ause as su/rogee it steppe% i"to t$e s$oes of t$e SH',,5R:ASS=R5D a"% is su/rogate% .erely to t$e latterMs rig$ts. 't a" re over o"ly t$e a.ou"t t$at is re overa/le /y t$e assure%. A"% si" e t$e rig$t of a tio" of t$e SH',,5R:ASS=R5D is gover"e% /y t$e provisio"s of t$e &ill of La%i"g, 4$i $ i" lu%es /y refere" e t$e ter.s of t$e C$arter ,arty, "e essarily, a suit /y t$e 'NS=R5R is su/De t to t$e sa.e agree.e"ts 1see St. ,aul 9ire a"% +ari"e '"sura" e Co. vs. +a o"%ray, G.R. No. L:2((!6, 25 +ar $ 1!(6, () SCRA 1223. State% ot$er4ise, as t$e su/rogee of t$e SH',,5R, t$e 'NS=R5R is o"tra tually /ou"% /y t$e ter.s of t$e C$arter party. A"y lai. of i" o"ve"ie" e or a%%itio"al eCpe"se o" its part s$oul% "ot re"%er t$e ar/itratio" lause u"e"for ea/le. Ar/itratio", as a" alter"ative .o%e of settli"g %isputes, $as lo"g /ee" re og"i-e% a"% a epte% i" our Duris%i tio" 1C$apter 2, #itle O'E, &oo7 'E, Civil Co%e3. Repu/li A t No. 0(6 1#$e Ar/itratio" La43 also eCpressly aut$ori-es ar/itratio" of %o.esti %isputes. 9oreig" ar/itratio" as a syste. of settli"g o..er ial %isputes of a" i"ter"atio"al $ara ter 4as li7e4ise re og"i-e% 4$e" t$e ,$ilippi"es a%$ere% to t$e ="ite% Natio"s LCo"ve"tio" o" t$e Re og"itio" a"% t$e 5"for e.e"t of

9oreig" Ar/itral A4ar%s of 1!50,L u"%er t$e 1) +ay 1!65 Resolutio" No. (1 of t$e ,$ilippi"e Se"ate, givi"g re ipro al re og"itio" a"% allo4i"g e"for e.e"t of i"ter"atio"al ar/itratio" agree.e"ts /et4ee" parties of %iffere"t "atio"alities 4it$i" a o"tra ti"g state. #$us, it perti"e"tly provi%esG 1. 5a $ Co"tra ti"g State s$all re og"i-e a" agree.e"t i" 4riti"g u"%er 4$i $ t$e parties u"%erta7e to su/.it to ar/itratio" all or a"y %iffere" es 4$i $ $ave arise" or 4$i $ .ay arise /et4ee" t$e. i" respe t of a %efi"e% legal relatio"s$ip, 4$et$er o"tra tual or "ot, o" er"i"g a su/De t .atter apa/le of settle.e"t /y ar/itratio". 2. #$e ter. Lagree.e"t i" 4riti"gL s$all i" lu%e a" ar/itral lause i" a o"tra t or a" ar/itratio" agree.e"t, sig"e% /y t$e parties or o"tai"e% i" a" eC $a"ge of letters or telegra.s. 3. #$e ourt of a Co"tra ti"g State, 4$e" sei-e% of a" a tio" i" a .atter i" respe t of 4$i $ t$e parties $ave .a%e a" agree.e"t 4it$i" t$e .ea"i"g of t$is arti le, s$all, at t$e re;uest of o"e of t$e parties, refer t$e parties to ar/itratio", u"less it fi"%s t$at t$e sai% agree.e"t is "ull a"% voi%, i"operative or i" apa/le of /ei"g perfor.e%. 't $as "ot /ee" s$o4" t$at t$e ar/itral lause i" ;uestio" is "ull a"% voi%, i"operative, or i" apa/le of /ei"g perfor.e%. Nor $as a"y o"fli t /ee" poi"te% out /et4ee" t$e C$arter ,arty a"% t$e &ill of La%i"g. '" fi"e, referral to ar/itratio" i" Ne4 6or7 pursua"t to t$e ar/itratio" lause, a"% suspe"sio" of t$e pro ee%i"gs i" Civil Case No. 13*!0 /elo4, pe"%i"g t$e retur" of t$e ar/itral a4ar%, is, i"%ee% alle% for. <H5R592R5, fi"%i"g "o reversi/le error i" respo"%e"t Appellate CourtMs 12 April 1!0! De isio", t$e i"sta"t ,etitio" for Revie4 o" certiorari is D5N'5D a"% t$e sai% Du%g.e"t is $ere/y A99'R+5D. Costs agai"st petitio"ers. S2 2RD5R5D. 4adilla, Sarmiento and ,egalado JJ., concur. 4aras, J., too# no art. Repu/li SU*&-M+a"ila S5C2ND D'E'S'2N of t$e ,$ilippi"es C/U&5

S6LLA&=S 1. C'E'L LA<F 2&L'GA#'2NS 29 E5ND2RF DA+AG5S AR'S'NG 9R2+ CARR'AG5 AND D5L'E5R6. W <e agree 4it$ t$e ourt a ;uo t$at t$e sales o"tra t is o.pre$e"sive e"oug$ to i" lu%e lai.s for %a.ages arisi"g fro. arriage a"% %elivery of t$e goo%s. As a ge"eral rule, t$e seller $as t$e o/ligatio" to tra"s.it t$e goo%s to t$e /uyer, a"% o" o.ita"t t$ereto, t$e o"tra ti"g of a arrier to %eliver t$e sa.e. 2. C2++5RC'AL LA<F +AR'#'+5 #RANS,2R#A#'2NF +AR'#'+5 C2++5RC5F CHAR#5R ,AR#'5S, C2NS#R=5D. W A.eri a" Durispru%e" e %efi"es $arter party as a o"tra t /y 4$i $ a" e"tire s$ip or so.e pri" ipal part t$ereof is let /y t$e o4"er to a"ot$er perso" for a spe ifie% ti.e or use. C$arter or $arter parties are of t4o 7i"%s. C$arter of %e.ise or /are/oat a"% o"tra ts of affreig$t.e"t. 3. 'D.F 'D.F 'D.F 'D.F >'NDSF CHAR#5R 29 D5+'S5, C2NS#R=5D. W ="%er t$e %e.ise or /are/oat $arter of t$e vessel, t$e $arterer 4ill ge"erally /e o"si%ere% as o4"er for t$e voyage or servi e stipulate%. #$e $arterer .a"s t$e vessel 4it$ $is o4" people a"% /e o.es, i" effe t, t$e o4"er pro $a vi e, su/De t to lia/ility to ot$ers for %a.ages ause% /y "eglige" e. #o reate a %e.ise t$e o4"er of a vessel .ust o.pletely a"% eC lusively reli";uis$ possessio", a"yt$i"g s$ort of su $ a o.plete tra"sfer is a o"tra t of affreig$t.e"t 1ti.e or voyage $arter party3 or "ot a $arter party at all. *. 'D.F 'D.F 'D.F 'D.F 'D.F C2N#RAC# 29 A99R5'GN+5N#, C2NS#R=5D. W A o"tra t of affreig$t.e"t is i" 4$i $ t$e o4"er of t$e vessel leases part or all of its spa e to $aul goo%s for ot$ers. 't is a o"tra t for a spe ial servi e to /e re"%ere% /y t$e o4"er of t$e vessel a"% u"%er su $ o"tra t t$e ge"eral o4"er retai"s t$e possessio", o..a"% a"% "avigatio" of t$e s$ip, t$e $arterer or freig$ter .erely $avi"g use of t$e spa e i" t$e vessel i" retur" for $is pay.e"t of t$e $arter $ire. 'f t$e $arter is a o"tra t of affreig$t.e"t, 4$i $ leaves t$e ge"eral o4"er i" possessio" of t$e s$ip as o4"er for t$e voyage, t$e rig$ts, respo"si/ilities of o4"ers$ip rest o" t$e o4"er a"% t$e $arterer is usually free fro. lia/ility to t$ir% perso"s i" respe t of t$e s$ip. 5. 'D.F 'D.F 'D.F 'D.F L'A&'L'#6 #2 #H'RD ,5RS2NS 92R G22DS SH',,5D 2N &2ARD A E5SS5L. W Respo"si/ility to t$ir% perso"s for goo%s s$ippe% o" /oar% a vessel follo4s t$e vesselMs possessio" a"% e.ploy.e"tF a"% if possessio" is tra"sferre% to t$e $arterer /y virtue of a %e.ise, t$e $arterer, a"% "ot t$e o4"er, is lia/le as arrier o" t$e o"tra t of affreig$t.e"t .a%e /y $i.self or /y t$e .aster 4it$ t$ir% perso"s, a"% is a"s4era/le for loss, %a.age or "o":%elivery of goo%s re eive% for tra"sportatio". A" o4"er 4$o retai"s possessio" of t$e s$ip, t$oug$ t$e $ol% is t$e property of t$e $arterer, re.ai"s lia/le as arrier a"% .ust a"s4er for a"y /rea $ of %uty as to t$e are, loa%i"g or u"loa%i"g of t$e argo. 6. 'D.F 'D.F 'D.F 'D.F &'LLS 29 LAD'NGF AR&'#RA#'2N ,R2E'S'2N #H5R529, C2NS'D5R5D AND R5S,5C#5D. W <$et$er t$e lia/ility of respo"%e"t s$oul% /e /ase% o" t$e sa.e o"tra t or t$at of t$e /ill of la%i"g, t$e parties are "evert$eless o/ligate% to respe t t$e ar/itratio" provisio"s o" t$e sales o"tra t a"%Jor t$e /ill of la%i"g. ,etitio"er /ei"g a sig"atory a"% party to t$e sales o"tra t a""ot es ape fro. $is o/ligatio" u"%er t$e ar/itratio" lause as state% t$erei". Ar/itratio" $as /ee" $el% vali% a"% o"stitutio"al. 5ve" /efore

%.&. 'o. (1228. M"r19 22, 1((3. ,=R2+'N5S, 'NC., petitio"er, vs. C2=R# 29 A,,5AL a"% ,H'L',, &R2#H5RS 2C5AN'C, 'NC., respo"%e"ts.

t$e e"a t.e"t of Repu/li A t No. 0(6, t$is Court $as ou"te"a" e% t$e settle.e"t of %isputes t$roug$ ar/itratio". #$e rule "o4 is t$at u"less t$e agree.e"t is su $ as a/solutely to lose t$e %oors of t$e ourts agai"st t$e parties, 4$i $ agree.e"t 4oul% /e voi%, t$e ourts 4ill loo7 4it$ favor upo" su $ a.i a/le arra"ge.e"ts a"% 4ill o"ly i"terfere 4it$ great relu ta" e to a"ti ipate or "ullify t$e a tio" of t$e ar/itrator. As poi"te% out i" t$e ase of +i"%a"ao ,ortla"% Ce.e"t Corp. v. + Doug$ Co"stru tio" Co.pa"y of 9lori%a 10 4$erei" t$e plai"tiff sue% %efe"%a"t for %a.ages arisi"g fro. a o"tra t, t$e Court sai%G LSi" e t$ere o/tai"s $erei" a 4ritte" provisio" for ar/itratio" as 4ell as failure o" respo"%e"tMs part to o.ply t$ere4it$, t$e ourt a ;uo rig$tly or%ere% t$e parties to pro ee% to t$eir ar/itratio" i" a or%a" e 4it$ t$e ter.s of t$eir agree.e"t 1Se . 6 Repu/li A t 0(63. Respo"%e"tMs argu.e"ts tou $i"g upo" t$e .erits of t$e %ispute are i.properly raise% $erei". #$ey s$oul% /e a%%resse% to t$e ar/itrators. #$is pro ee%i"g is .erely a su..ary re.e%y to e"for e t$e agree.e"t to ar/itrate. #$e %uty of t$e ourt i" t$is ase is "ot to resolve t$e .erits of t$e partiesM lai.s /ut o"ly to %eter.i"e if t$ey s$oul% pro ee% to ar/itratio" or "ot. A"% alt$oug$ it $as /ee" rule% t$at a privolous or pate"tly /aseless lai. s$oul% "ot /e or%ere% to ar/itratio" it is also re og"i-e% t$at t$e .ere fa t t$at a %efe"se eCist agai"st a lai. %oes "ot .a7e it frivolous or /aseless.L (. R5+5D'AL LA<F C'E'L ,R2C5D=R5F ,L5AD'NGSF C2+,LA'N#F ANN5O5S A##ACH5D #H5R529, ,AR# 29 #H5 R5C2RD. W ,etitio"er o"te"% t$at t$e ar/itratio" provisio" i" t$e /ills of la%i"g s$oul% "ot $ave /ee" %is usse% as a" issue i" t$e %e isio" of t$e Court of Appeals si" e it 4as "ot raise% as a spe ial or affir.ative %efe"se. #$e t$ree /ills of la%i"g 4ere atta $e% to t$e o.plai"t as A""eCes LA,L L&,L a"% LC,L a"% are t$erefore parts t$ereof a"% .ay /e o"si%ere% as evi%e" e alt$oug$ "ot i"tro%u e% as su $. He" e, it 4as t$e" proper for t$e ourt a ;uo to %is uss t$e o"te"ts of t$e /ills of la%i"g, $avi"g /ee" .a%e part of t$e re or%. D5C'S'2N N2C2N, 8 pG #$is is a spe ial ivil a tio" for ertiorari a"% pro$i/itio" to a""ul a"% set asi%e t$e De isio" of t$e respo"%e"t Court of Appeals %ate% Nove./er 16, 1!0! 1 reversi"g t$e or%er of t$e trial ourt a"% %is.issi"g petitio"erMs o.plia"t i" Civil Case No. 0!:*(*)3, e"title% ,uro.i"es, '" . v. +ariti.e 9a tors, '" . a"% ,$ilipp &rot$ers 2 ea"i , '" . Culle% fro. t$e re or%s of t$is ase, t$e fa ts s$o4 t$at petitio"er, ,uro.i"es, '" . 1,uro.i"es for /revity3 a"% +a7ati Agro #ra%i"g, '" . 1"ot a party i" t$is ase3 e"tere% i"to a o"tra t 4it$ private respo"%e"ts ,$ilipp &rot$ers 2 ea"i , '" . for t$e sale of prille% =rea i" /ul7. #$e Sales Co"tra t No. S151.0.)1)10 provi%e%, a.o"g ot$ers a" ar/itratio" lause 4$i $ states, t$usG L!. Ar/itratio" LA"y %isputes arisi"g u"%er t$is o"tra t s$all /e settle% /y ar/itratio" i" Lo"%o" i" a or%a" e 4it$ t$e Ar/itratio" A t 1!5) a"% a"y statutory a.e"%.e"t or .o%ifi atio" t$ereof. 5a $ party is to appoi"t a" Ar/itrator, a"% s$oul% t$ey /e u"a/le to agree, t$e %e isio" of a" =.pire appoi"te% /y t$e. to /e fi"al. #$e Ar/itrators a"% =.pire are all to /e o..er ial

.e" a"% resi%e"t i" Lo"%o". #$is su/.issio" .ay /e .a%e a rule of t$e Hig$ Court of 8usti e i" 5"gla"% /y eit$er party.L 2 2" or a/out +ay 22, 1!00, t$e vessel +JE LLilia"a Di.itrovaL loa%e% o" /oar% at 6u-$"y, =SSR a s$ip.e"t of 15,5)) .etri to"s prille% =rea i" /ul7 o.plete a"% i" goo% or%er a"% o"%itio" for tra"sport to 'loilo a"% +a"ila, to /e %elivere% to petitio"er. #$ree /ills of la%i"g 4ere issue% /y t$e s$ip:age"t i" t$e ,$ilippi"es, +ariti.e 9a tors '" ., "a.elyG &ill of La%i"g No. %ate% +ay 12, 1!00 overi"g 1),))) .etri to"s for %is $arge +a"ilaF &ill of La%i"g No. 2 of eve" %ate overi"g *,))) .etri to"s for u"loa%i"g i" 'loilo CityF a"% &ill of La%i"g No. 3, also %ate% +ay 12, 1!00, overi"g 1,5)) .etri to"s li7e4ise for %is $arge% i" +a"ila #$e s$ip.e"t overe% /y &ill of La%i"g No. 2 4as %is $arge% i" 'loilo City o.plete a"% i" goo% or%er a"% o"%itio". Ho4ever, t$e s$ip.e"ts overe% /y &ill of La%i"g Nos. 1 a"% 3 4ere %is $arge% i" +a"ila i" /a% or%er a"% o"%itio", a7e%, $ar%e"e% a"% lu.py, %is olore% a"% o"ta.i"ate% 4it$ rust a"% %irt. Da.ages 4ere value% at ,603, )56. 2! i" lu%i"g a%%itio"al %is $argi"g eCpe"ses. Co"se;ue"tly, petitio"er file% a o.plai"t 3 4it$ t$e trial ourt * for /rea $ of o"tra t of arriage agai"st +ariti.e 9a tors '" . 14$i $ 4as "ot i" lu%e% as respo"%e"t i" t$is petitio"3 as s$ip:age"t i" t$e ,$ilippi"es for t$e o4"ers of t$e vessel +E LLilia"a Di.itrova,L 4$ile private respo"%e"t, ,$ilipp &rot$ers 2 ea"i '" ., 4as i.plea%e% as $arterer of t$e sai% vessel a"% proper party to a or% petitio"er o.plete relief. +ariti.e 9a tors, '" . file% its A"s4er 5 to t$e o.plai"t, 4$ile private respo"%e"t file% a .otio" to %is.iss, %ate% 9e/ruary !, 1!0!, o" t$e grou"%s t$at t$e o.plai"t states "o ause of a tio"F t$at it 4as pre.aturely file%F a"% t$at petitio"er s$oul% o.ply 4it$ t$e ar/itratio" lause i" t$e sales o"tra t. 6 #$e .otio" to %is.iss 4as oppose% /y petitio"er o"te"%i"g t$e i"appli a/ility of t$e ar/itratio" lause i"as.u $ as t$e ause of a tio" %i% "ot arise fro. a violatio" of t$e ter.s of t$e sales o"tra t /ut rat$er for lai.s of argo %a.ages 4$ere t$ere is "o ar/itratio" agree.e"t. 2" April 26, 1!0!, t$e trial ourt %e"ie% respo"%e"tMs .otio" to %is.iss i" t$is 4iseG L#$e sales o"tra t i" ;uestio" states i" partG MA"y %isputes arisi"g u"%er t$is o"tra t s$all /e settle% /y ar/itratio" . . .1e.p$asis supplie%3 LA perusal of t$e fa ts allege% i" t$e o.plai"t upo" 4$i $ t$e ;uestio" of suffi ie" y of t$e ause of a tio" of t$e o.plai"t arose fro. a /rea $ of o"tra t of arriage /y t$e vessel $artere% /y t$e %efe"%a"t ,$ilipp &rot$ers 2 ea"i , '" . #$us, t$e afore.e"tio"e% ar/itratio" lause a""ot apply to t$e %ispute i" t$e prese"t a tio" 4$i $ o" er"s plai"tiffMs lai. for argo lossJ%a.age arisi"g fro. /rea $ of o"tra t of arriage. L#$at t$e %efe"%a"t is "ot t$e s$ip o4"er or o..o" arrier a"% t$erefore plai"tiff %oes "ot $ave legal rig$t agai"st it si" e every a tio" .ust /e /roug$t agai"st t$e real party i" i"terest $as "o .erit eit$er for /y t$e allegatio"s i" t$e o.plai"t t$e %efe"%a"t $erei" $as /ee" i.plea%e% as $arterer of t$e vessel, $e" e, a proper party.L ( 5levati"g t$e .atter to t$e Court of Appeals, petitio"erMs o.plai"t 4as %is.isse%. #$e appellate ourt fou"% t$at t$e

ar/itratio" provisio" i" t$e sales o"tra t a"%Jor t$e /ills of la%i"g is appli a/le i" t$e prese"t ase. Sai% t$e ourtG LA" eCa.i"atio" of t$e sales o"tra t No. S151.0.)1)10 s$o4s t$at it is /roa% e"oug$ to i" lu%e t$e lai. for %a.ages arisi"g fro. t$e arriage a"% %elivery of t$e goo%s su/De t:.atter t$ereof. L't is also "ote% t$at t$e /ills of la%i"g atta $e% as A""eCes MAM, M&M a"% MCM to t$e o.plai"t state, i" part, Ma"y %ispute arisi"g u"%er t$is &ill of La%i"g s$all /e referre% to ar/itratio" of t$e +ariti.e Ar/itratio" Co..issio" at t$e =SSR C$a./er of Co..er e a"% '"%ustry, 6 >ui/ys$evs7aia Str., +os o4, =SSR, i" a or%a" e 4it$ t$e rules of pro e%ure of sai% o..issio".M Co"si%eri"g t$at t$e private respo"%e"t 4as o"e of t$e sig"atories to t$e sales o"tra t . . . all parties are o/lige% o respe t t$e ter.s a"% o"%itio"s of t$e sai% sales o"tra t, i" lu%i"g t$e provisio" t$ereof o" Mar/itratio".M L He" e, t$is petitio" #$e issue raise% isG <$et$er t$e p$rase La"y %ispute arisi"g u"%er t$is o"tra tL i" t$e ar/itratio" lause of t$e sales o"tra t overs a argo lai. agai"st t$e vessel 1o4"er a"%Jor $arterers3 for /rea $ of o"tra t of arriage. ,etitio"er states i" its o.plai"a"ts t$at ,$ilipp &rot$ers L4as t$e $arterer of t$e vessel +E MLilia"a Di.itrovaM 4$i $ tra"sporte% t$e s$ip.e"t fro. 6u-$"y =SSR to +a"ila.L ,etitio"er furt$er allege% t$at t$e a7i"g a"% $ar%e"i"g, 4etti"g a"% .elti"g, a"% o"ta.i"atio" /y rust a"% %irt of t$e %a.age% portio"s of t$e s$ip.e"t 4ere %ue to t$e i.proper ve"tilatio" a"% i"a%e;uate storage fa ilities of t$e vesselF t$at t$e 4etti"g of t$e argo 4as attri/uta/le to t$e failure of t$e re4 to lose t$e $at $es /efore a"% 4$e" it rai"e% 4$ile t$e s$ip.e"t 4as /ei"g u"loa%e% i" t$e ,ort of +a"ilaF a"% t$at as a %ire t a"% "atural o"se;ue" e of t$e u"sea4ort$i"ess a"% "eglige" e of t$e vessel 1si 3, petitio"er suffere% %a.ages i" t$e total a.ou"t of ,603, )56.2! ,$ilippi"e urre" y.L 0 15.p$asis supplie%3 +oreover, i" its 2ppositio" to t$e +otio" to Dis.iss, petitio"er sai% t$at L@tA$e ause of a tio" of t$e o.plai"t arose fro. /rea $ of o"tra t of arriage /y t$e vessel t$at 4as $artere% /y %efe"%a"t ,$ilipp &rot$ers.L ! '" t$e prese"t petitio", petitio"er argues t$at t$e sales o"tra t %oes "ot i" lu%e t$e o"tra t of arriage 4$i $ is a %iffere"t o"tra t e"tere% i"to /y t$e arrier 4it$ t$e argo o4"ers. #$at it 4as a" error for t$e respo"%e"t ourt to tou $ upo" t$e ar/itratio" provisio" of t$e /ills la%i"g i" its %e isio" i"as.u $ as t$e sa.e 4as "ot raise% as a" issue /y private respo"%e"t 4$o 4as "ot a party i" t$e /ills of la%i"g 1e.p$asis 2urs3. ,etitio"er o"tra%i ts itself. <e agree 4it$ t$e ourt a ;uo t$at t$e sales o"tra t is o.pre$e"sive e"oug$ to i" lu%e lai.s for %a.ages arisi"g fro. arriage a"% %elivery of t$e goo%s. As a ge"eral rule, t$e seller $as t$e o/ligatio" to tra"s.it t$e goo%s to t$e /uyer, a"% o" o.ita"t t$ereto, t$e o"tra ti"g of a arrier to %eliver t$e sa.e. Art. 1523 of t$e Civil Co%e provi%esG LArt. 1523. <$ere i" pursua" e of a o"tra t of sale, t$e seller i" aut$ori-e% or re;uire% to se"% t$e goo%s to t$e /uyer, %elivery of t$e goo%s to a arrier, 4$et$er "a.e% /y t$e /uyer

or "ot, for t$e purpose of tra"s.issio" to t$e /uyer is %ee.e% to /e a %elivery of t$e goo%s to t$e /uyer, eC ept i" t$e ases provi%e% for i" arti le 15)3, first, se o"% a"% t$ir% paragrap$s, or u"less a o"trary i"te"t appear. L="less ot$er4ise aut$ori-e% /y t$e /uyer, t$e seller .ust ta7e su $ o"tra t 4it$ t$e arrier o" /e$alf of t$e /uyer as .ay /e reaso"a/le, $avi"g regar% to t$e "ature of t$e goo%s a"% t$e ot$er ir u.sta" es of t$e ase. 'f t$e seller o.it so to %o, a"% t$e goo%s are lost or %a.age% i" ourse of tra"sit, t$e /uyer .ay %e li"e to treat t$e %elivery to t$e arrier as a %elivery to $i.self,, or .ay $ol% t$e seller respo"si/le i" %a.ages.L CCC CCC CCC #$e %ispute% sales o"ta t provi%es for o"%itio"s relative to t$e %elivery of goo%s, su $ as %ate of s$ip.e"t, %e.urrage, 4eig$t as %eter.i"e% /y t$e /ill of la%i"g at loa% port a"% .ore parti ularly t$e follo4i"g provisio"sG L3. '"te"tio" is to s$ip i" o"e /otto., approCi.ately 5,))) .etri s to"s to ,uro.i"es a"% approCi.ately 15,))) .etri to"s to +a7ati Agro. Ho4ever, Sellers to $ave rig$t to s$ip .aterial as partial s$ip.e"t or o:s$ip.e"t i" a%%itio" to a/ove. '" t$e eve"t of o:s$ip.e"t to a t$ir% party 4it$i" ,$ilippi"es sa.e to /e %is usse% 4it$ a"% a epta/le to /ot$ ,uro.i"es a"% +a7ati Agro. L*. Sellers to appoi"t "eutral survey for SellerMs a ou"t to o"%u t i"itial %raft survey at first %is $arge port a"% fi"al survey at last %is $arge port. Surveyors results to /e /i"%i"g a"% fi"al. '" t$e eve"t %raft survey results s$o4 a ;ua"tity less t$a" t$e o./i"e% &ills of La%i"g ;ua"tity for /ot$ ,uro.i"es a"% +a7ati Agro, Sellers to refu"% t$e %iffere" e. '" t$e eve"t t$at %raft survey results s$o4 a ;ua"tity i" eC ess of o./i"e% &ills of La%i"g of ;ua"tity of /ot$ ,uro.i"es a"% +a7ati Agro t$e" &uyers to refu"% t$e %iffere" e. L5. 't is eCpressly a"% .utually agree% t$at "eit$er Sellers "or vesselMs 24"ers $ave a"y lia/ility to separate argo or to %eliver argo separately or to %eliver .i"i.u.J.aCi.u. ;ua"tities state% o" i"%ivi%ual &ills of La%i"g. At ea $ port vessel is to %is $arge i" a or%a" e 4it$ &uyers lo al re;uire.e"ts a"% it is &uyerMs respo"si/ility to separate i"%ivi%ual ;ua"tities re;uire% /y ea $ of t$e. at ea $ port %uri"g or after %is $arge%.L As argue% /y respo"%e"t o" its .otio" to %is.iss, Lt$e 1petitio"er3 %erives $is rig$t to t$e argo fro. t$e /ill of la%i"g 4$i $ is t$e o"tra t of affreig$t.e"t toget$er 4it$ t$e sales o"tra t. Co"se;ue"tly, t$e 1petitio"er3 is /ou"% /y t$e provisio"s a"% ter.s of sai% /ill of la%i"g a"% of t$e ar/itratio" lause i" orporate% i" t$e sales o"tra t.L Assu.i"g argue"%o t$at t$e lia/ility of respo"%e"t is "ot /ase% o" t$e sales o"tra t, /ut rat$er o" t$e o"tra t of arriage, /ei"g t$e $arterer of t$e vessel +E LLilia"a Di.itrova,L it 4oul%, t$erefore, /e .aterial to s$o4 4$at 7i"% of $arter party t$e respo"%e"t $a% 4it$ t$e s$ipo4"er to %eter.i"e respo"%e"tMs lia/ility. A.eri a" Durispru%e" e %efi"es $arter party as a o"tra t /y 4$i $ a" e"tire s$ip or so.e pri" ipal part t$ereof is let /y t$e o4"er to a"ot$er perso" for a spe ifie% ti.e or use. 1) C$arter or $arter parties are of t4o 7i"%s. C$arter of %e.ise or /are/oat a"% o"tra ts of affreig$t.e"t.

="%er t$e %e.ise or /are/oat $arter of t$e vessel, t$e $arterer 4ill ge"erally /e o"si%ere% as o4"er for t$e voyage or servi e stipulate%. #$e $arterer .a"s t$e vessel 4it$ $is o4" people a"% /e o.es, i" effe t, t$e o4"er pro $a vi e, su/De t to lia/ility to ot$ers for %a.ages ause% /y "eglige" e. 11 #o reate a %e.ise t$e o4"er of a vessel .ust o.pletely a"% eC lusively reli";uis$ possessio", a"yt$i"g s$ort of su $ a o.plete tra"sfer is a o"tra t of affreig$t.e"t 1ti.e or voyage $arter party3 or "ot a $arter party at all. 2" t$e ot$er $a"%, a o"tra t of affreig$t.e"t is i" 4$i $ t$e o4"er of t$e vessel leases part or all of its spa e to $aul goo%s for ot$ers. 't is a o"tra t for a spe ial servi e to /e re"%ere% /y t$e o4"er of t$e vessel 12 a"% u"%er su $ o"tra t t$e ge"eral o4"er retai"s t$e possessio", o..a"% a"% "avigatio" of t$e s$ip, t$e $arterer or freig$ter .erely $avi"g use of t$e spa e i" t$e vessel i" retur" for $is pay.e"t of t$e $arter $ire. 13 'f t$e $arter is a o"tra t of affreig$t.e"t, 4$i $ leaves t$e ge"eral o4"er i" possessio" of t$e s$ip as o4"er for t$e voyage, t$e rig$ts, respo"si/ilities of o4"ers$ip rest o" t$e o4"er a"% t$e $arterer is usually free fro. lia/ility to t$ir% perso"s i" respe t of t$e s$ip. 1* Respo"si/ility to t$ir% perso"s for goo%s s$ippe% o" /oar% a vessel follo4s t$e vesselMs possessio" a"% e.ploy.e"tF a"% if possessio" is tra"sferre% to t$e $arterer /y virtue of a %e.ise, t$e $arterer, a"% "ot t$e o4"er, is lia/le as arrier o" t$e o"tra t of affreig$t.e"t .a%e /y $i.self or /y t$e .aster 4it$ t$ir% perso"s, a"% is a"s4era/le for loss, %a.age or "o": %elivery of goo%s re eive% for tra"sportatio". A" o4"er 4$o retai"s possessio" of t$e s$ip, t$oug$ t$e $ol% is t$e property of t$e $arterer, re.ai"s lia/le as arrier a"% .ust a"s4er for a"y /rea $ of %uty as to t$e are, loa%i"g or u"loa%i"g of t$e argo. 15 Assu.i"g t$at i" t$e prese"t ase, t$e $arter party is a %e.ise or /are/oat $arter, t$e" ,$ilipp &rot$ers is lia/le to ,uro.i"es, '" ., su/De t to t$e ter.s a"% o"%itio"s of t$e sales o"tra t. 2" t$e ot$er $a"%, if t$e o"tra t /et4ee" respo"%e"t a"% t$e o4"er of t$e vessel +E LLilia"a Di.itrovaL 4as .erely t$at of affreig$t.e"t, t$e" it a""ot /e $el% lia/le for t$e %a.ages ause% /y t$e /rea $ of o"tra t of arriage, t$e evi%e" e of 4$i $ is t$e /ills of la%i"g '" a"y ase, 4$et$er t$e lia/ility of respo"%e"t s$oul% /e /ase% o" t$e sa.e o"tra t or t$at of t$e /ill of la%i"g, t$e parties are "evert$eless o/ligate% to respe t t$e ar/itratio" provisio"s o" t$e sales o"tra t a"%Jor t$e /ill of la%i"g. ,etitio"er /ei"g a sig"atory a"% party to t$e sales o"tra t a""ot es ape fro. $is o/ligatio" u"%er t$e ar/itratio" lause as state% t$erei". Neit$er a" petitio"er o"te"% t$at t$e ar/itratio" provisio" i" t$e /ills of la%i"g s$oul% "ot $ave /ee" %is usse% as a" issue i" t$e %e isio" of t$e Court of Appeals si" e it 4as "ot raise% as a spe ial or affir.ative %efe"se. #$e t$ree /ills of la%i"g 4ere atta $e% to t$e o.plai"t as A""eCes LA,L L&,L a"% LC,L a"% are t$erefore parts t$ereof a"% .ay /e o"si%ere% as evi%e" e alt$oug$ "ot i"tro%u e% as su $. 16 He" e, it 4as t$e" proper for t$e ourt a ;uo to %is uss t$e o"te"ts of t$e /ills of la%i"g, $avi"g /ee" .a%e part of t$e re or%. Goi"g /a 7 to t$e .ai" su/De t of t$is ase, ar/itratio" $as /ee" $el% vali% a"% o"stitutio"al. 5ve" /efore t$e e"a t.e"t of Repu/li A t No. 0(6, t$is Court $as ou"te"a" e% t$e settle.e"t of %isputes t$roug$ ar/itratio". #$e rule "o4 is t$at u"less t$e agree.e"t is su $ as a/solutely to lose t$e %oors

of t$e ourts agai"st t$e parties, 4$i $ agree.e"t 4oul% /e voi%, t$e ourts 4ill loo7 4it$ favor upo" su $ a.i a/le arra"ge.e"ts a"% 4ill o"ly i"terfere 4it$ great relu ta" e to a"ti ipate or "ullify t$e a tio" of t$e ar/itrator. 1( As poi"te% out i" t$e ase of +i"%a"ao ,ortla"% Ce.e"t Corp. v. + Do"oug$ Co"stru tio" Co.pa"y of 9lori%a 10 4$erei" t$e plai"tiff sue% %efe"%a"t for %a.ages arisi"g fro. a o"tra t, t$e Court sai%G LSi" e t$ere o/tai"s $erei" a 4ritte" provisio" for ar/itratio" as 4ell as failure o" respo"%e"tMs part to o.ply t$ere4it$, t$e ourt a ;uo rig$tly or%ere% t$e parties to pro ee% to t$eir ar/itratio" i" a or%a" e 4it$ t$e ter.s of t$eir agree.e"t 1Se . 6 Repu/li A t 0(63. Respo"%e"tMs argu.e"ts tou $i"g upo" t$e .erits of t$e %ispute are i.properly raise% $erei". #$ey s$oul% /e a%%resse% to t$e ar/itrators. #$is pro ee%i"g is .erely a su..ary re.e%y to e"for e t$e agree.e"t to ar/itrate. #$e %uty of t$e ourt i" t$is ase is "ot to resolve t$e .erits of t$e partiesM lai.s /ut o"ly to %eter.i"e if t$ey s$oul% pro ee% to ar/itratio" or "ot. A"% alt$oug$ it $as /ee" rule% t$at a frivolous or pate"tly /aseless lai. s$oul% "ot /e or%ere% to ar/itratio" it is also re og"i-e% t$at t$e .ere fa t t$at a %efe"se eCist agai"st a lai. %oes "ot .a7e it frivolous or /aseless.L 1! '" t$e ase of &e"gso" v. C$a", 2) <e up$el% t$e provisio" of a o"tra t 4$i $ re;uire% t$e parties to su/.it t$eir %isputes to ar/itratio" a"% <e $el% as follo4sG L#$e trial ourt se"si/ly sai% t$at Mall t$e auses of a tio" allege% i" t$e plai"tiffs a.e"%e% o.plai"t are /ase% upo" t$e suppose% violatio"s o..itte% /y t$e %efe"%a"ts of t$e MCo"tra t of Co"stru tio" of a &uil%i"gM a"% t$at Mt$e provisio"s of paragrap$ 15 $ereof leave a very little roo. for %ou/t t$at t$e sai% auses of a tio" are e./ra e% 4it$i" t$e p$rase Ma"y a"% all ;uestio"s, %isputes or %iffere" es /et4ee" t$e parties $ereto relative to t$e o"stru tio" of t$e /uil%i"g,M 4$i $ .ust /e %eter.i"e% /y ar/itratio" of t4o perso"s a"% su $ %eter.i"atio" /y t$e ar/itrators s$all /e Mfi"al, o" lusive a"% /i"%i"g upo" /ot$ parties u"less t$ey to ourt, i" 4$i $ t$e ase t$e %eter.i"atio" /y ar/itratio" is a o"%itio" pre e%e"t Mfor ta7i"g a"y ourt a tio".L CCC CCC CCC L<e $ol% t$at t$e ter.s of paragrap$ 15 learly eCpress t$e i"te"tio" of t$e parties t$at all %isputes /et4ee" t$e. s$oul% first /e ar/itrate% /efore ourt a tio" a" /e ta7e" /y t$e aggrieve% party.L 21 ,re.ises o"si%ere%, <e up$ol% t$e vali%ity a"% appli a/ility of t$e ar/itratio" lause as state% i" Sales Co"tra t No. S151.0.)1)10 to t$e prese"t %ispute. <H5R592R5, petitio" is $ere/y D'S+'SS5D a"% %e isio" of t$e ourt a ;uo is A99'R+5D. S2 2RD5R5D. Narvasa, C . 8 ., ,a%illa, Regala%o a"% Ca.pos, 8r., 88., o" ur.

Repu/li SU*&-M+a"ila 5N &ANC %.&. 'o. L$37878

of

t$e

,$ilippi"es C/U&5

to it, is "o4 .a%e to effe t t$e rig$ts of perso"s "ot sig"atories to t$e ove"a"t. #$e la4 alls for ar/itratio" 4$i $ represe"ts a .et$o% of t$e partiesM o4" $oi e. A su/.issio" to ar/itratio" is a o"tra t. #$e parties to a" ar/itratio" agree.e"t .ay "ot oust t$e ourts of Duris%i tio" of t$e .atters su/.itte% to ar/itratio". #$ese are fa.iliar rules 4$i $ fi"% support i" arti les 102) a"% 1021 of t$e Civil Co%e. Citatio" of aut$ority is $ar%ly "e essary, eC ept t$at it s$oul% /e re alle% t$at i" t$e ,$ilippi"es, a"% i" t$e ="ite% States for t$at .atter, it $as /ee" $el% t$at a lause i" a o"tra t, provi%i"g t$at all .atters i" %ispute /et4ee" t$e parties s$all /e referre% to ar/itrators a"% to t$e. alo"e, is o"trary to pu/li poli y a"% a""ot oust t$e ourts of Duris%i tio" 1<a$l a"% <a$l vs. Do"al%so", Si.s K Co. @1!)3A, 2 ,$il., 3)1F ,ue"te/ella vs. Negros Coal Co. @1!2(A, 5) ,$il., 6!F Eega vs. Sa" Carlos +illi"g Co. @1!2*A, 51 ,$il., !)0F Distri t of Colu./ia vs. &ailey @10!(A, 1(1 =. S., 161.3 <e 4oul% "ot /e u"%erstoo% as eCte"%i"g t$e pri" iples gover"i"g ar/itratio" a"% a4ar% too far. ="less t$e ar/itratio" agree.e"t is su $ as a/solutely to lose t$e %oors of t$e ourts agai"st t$e parties, t$e ourts s$oul% loo7 4it$ favor upo" su $ a.i a/le arra"ge.e"ts. <e a" also per eive a %isti" tio" /et4ee" a private o"tra t for su/.issio" to ar/itratio" a"% agree.e"ts to ar/itrate falli"g 4it$i" t$e ter.s of a statute e"a te% for su $ purpose a"% affe ti"g ot$ers t$a" t$e parties to a parti ular fra" $ise. Here, $o4ever, 4$atever else .ay /e sai% i" eCte"uatio", it re.ai"s true t$at t$e %e isio" of t$e /oar% of ar/itrators is .a%e fi"al, 4$i $ if literally e"for e% 4oul% leave a pu/li utility, "ot a party to t$e o"tra t aut$ori-e% /y A t No. 1**6, 4it$out re ourse to t$e ourts for a Du%i ial %eter.i"atio" of t$e ;uestio" i" %ispute. Cou"sel for t$e petitio"er rely pri" ipally o" t$e ase of 1allassee :alls M(g. Co. vs. CommissionerNs Court @1!)0A, 150 Ala., 263. 't 4as t$ere $el% t$at a" A t of a state legislature aut$ori-i"g t$e o..issio"ersM ourt of a ertai" ou"ty to regulate a"% fiC t$e rate of toll to /e $arge% /y t$e o4"ers of a /ri%ge is "ot u" o"stitutio"al as %elegati"g legislative po4er to t$e ourts. &ut t$at is "ot t$e ;uestio" /efore us. Here t$e ;uestio" is "ot o"e of 4$et$er or "ot t$ere $as /ee" a %elegatio" of legislative aut$ority to a ourt. +ore pre isely, t$e issue o" er"s t$e legal rig$t of t$e .e./ers of t$e Supre.e Court, sitti"g as a /oar% of ar/itrators t$e %e isio" of a .aDority of 4$o. s$all /e fi"al, to a t i" t$at apa ity. <e ru" ou"ter to t$is %ile..a. 5it$er t$e .e./ers of t$e Supre.e Court, sitti"g as a /oar% of ar/itrators, eCer ise Du%i ial fu" tio"s, or t$e .e./ers of t$e Supre.e Court, sitti"g as /oar% of ar/itrators, eCer ise a%.i"istrative or =uasi Du%i ial fu" tio"s. #$e first ase 4oul% appear "ot to fall 4it$i" t$e Duris%i tio" gra"te% t$e Supre.e Court. 5ve" o" e%i"g t$at it %oes, it 4oul% presuppose t$e rig$t to /ri"g t$e .atter i" %ispute /efore t$e ourts, for a"y ot$er o"stru tio" 4oul% te"% to oust t$e ourts of Duris%i tio" a"% re"%er t$e a4ar% a "ullity. &ut if t$is /e t$e proper o"stru tio", 4e 4oul% t$e" $ave t$e a"o.aly of a %e isio" /y t$e .e./ers of t$e Supre.e Court, sitti"g as a /oar% of ar/itrators, ta7e" t$erefro. to t$e ourts a"% eve"tually o.i"g /efore t$e Supre.e Court, 4$ere t$e Supre.e Court 4oul% revie4 t$e %e isio" of its .e./ers a ti"g as ar/itrators. 2r i" t$e se o"% ase, if t$e fu" tio"s perfor.e% /y t$e .e./ers of t$e Supre.e Court, sitti"g as a /oar% of ar/itrators, /e o"si%ere% as a%.i"istrative or =uasi Du%i ial i" "ature, t$at 4oul% result i" t$e perfor.a" e of %uties 4$i $ t$e .e./ers of t$e Supre.e Court oul% "ot la4fully ta7e it upo" t$e.selves to perfor.. #$e prese"t

'ove2#er 25, 1(32 C/M*A'<, petitio"er, C/M*A'<, +'C., -5

MA'+LA -L-C5&+C vs. *ASA< 5&A'S*/&5A5+/' AL., respo"%e"ts.

,oss, )a;rence J Sel h (or etitioner. ,ivera J :rancisco (or res ondent 4asa6 1rans ortation Co. 4. '. ,emigio (or res ondent !. B. +utierrez. '. M. Marate (or res ondent ,a6mundo 1rans ortation Co. Vicente 'm il (or res ondent J. 'm il.

MALC/LM, J.9 #$e preli.i"ary a"% /asi ;uestio" prese"te% /y t$e petitio" of t$e +a"ila 5le tri Co.pa"y, re;uesti"g t$e .e./ers of t$e Supre.e Court, sitti"g as a /oar% of ar/itrators, to fiC t$e ter.s upo" 4$i $ ertai" tra"sportatio" o.pa"ies s$all /e per.itte% to use t$e ,asig /ri%ge of t$e +a"ila 5le tri Co.pa"y a"% t$e o.pe"satio" to /e pai% to t$e +a"ila 5le tri Co.pa"y /y su $ tra"sportatio" o.pa"ies, relates to t$e vali%ity of se tio" 11 of A t No. 1**6 a"% to t$e legal rig$t of t$e .e./ers of t$e Supre.e Court, sitti"g as a /oar% of ar/itrators, to a t o" t$e petitio". A t No. 1**6 a/ove referre% to is e"title%. LA" A t gra"ti"g a fra" $ise to C$arles +. S4ift to o"stru t, .ai"tai", a"% operate a" ele tri rail4ay, a"% to o"stru t, .ai"tai", a"% operate a" ele tri lig$t, $eat, a"% po4er syste. fro. a poi"t i" t$e City of +a"ila i" a" easterly %ire tio" to t$e to4" of ,asig, i" t$e ,rovi" e of Ri-al.L Se tio" 11 of t$e A t provi%esG L<$e"ever a"y fra" $ise or rig$t of 4ay is gra"te% to a"y ot$er perso" or orporatio", "o4 or $ereafter i" eCiste" e, over portio"s of t$e li"es a"% tra 7s of t$e gra"tee $erei", t$e ter.s o" 4$i $ sai% ot$er perso" or orporatio" s$all use su $ rig$t of 4ay, a"% t$e o.pe"satio" to /e pai% to t$e gra"tee $erei" /y su $ ot$er perso" or orporatio" for sai% use, s$all /e fiCe% /y t$e .e./ers of t$e Supre.e Court, sitti"g as a /oar% of ar/itrators, t$e %e isio" of a .aDority of 4$o. s$all /e fi"al.L <$e" t$e petitio" of t$e +a"ila 5le tri Co.pa"y 4as file% i" t$is ourt, it 4as or%ere% t$at t$e petitio"er /e re;uire% to serve opies o" t$e Attor"ey:Ge"eral a"% t$e tra"sportatio" o.pa"ies affe te% /y t$e petitio". #$ereafter, t$e Attor"ey: Ge"eral %is lai.e% a"y i"terest i" t$e pro ee%i"gs, a"% oppositio" 4as e"tere% to t$e petitio" /y a "u./er of pu/li utility operators. 2" t$e su/.issio" of .e.ora"%a after a" oral $eari"g, t$e petitio" 4as .a%e rea%y for resolutio". 5Ca.i"i"g t$e statutory provisio" 4$i $ is $ere i"vo7e%, it is first "ote% t$at po4er is atte.pte% to /e gra"te% to t$e .e./ers of t$e Supre.e Court sitti"g as a /oar% of ar/itrators a"% to t$e Supre.e Court as a" e"tity. 't is "eCt see" t$at t$e %e isio" of a .aDority of t$e .e./ers of t$e Supre.e Court is .a%e fi"al. A"% it is fi"ally o/serve% t$at t$e fra" $ise gra"te% t$e +a"ila 5le tri Co.pa"y /y t$e Gover".e"t of t$e ,$ilippi"e 'sla"%s, alt$oug$ o"ly a o"tra t /et4ee" t$e parties

petitio" also fur"is$es a" apt illustratio" of a"ot$er a"o.aly, for 4e fi"% t$e Supre.e Court as a ourt as7e% to %eter.i"e if t$e .e./ers of t$e ourt .ay /e o"stitute% a /oar% of ar/itrators, 4$i $ is "ot a ourt at all.la; hil.net #$e Supre.e Court of t$e ,$ilippi"e 'sla"%s represe"ts o"e of t$e t$ree %ivisio"s of po4er i" our gover".e"t. 't is Du%i ial po4er a"% Du%i ial po4er o"ly 4$i $ is eCer ise% /y t$e Supre.e Court. 8ust as t$e Supre.e Court, as t$e guar%ia" of o"stitutio"al rig$ts, s$oul% "ot sa" tio" usurpatio"s /y a"y ot$er %epart.e"t of t$e gover".e"t, so s$oul% it as stri tly o"fi"e its o4" sp$ere of i"flue" e to t$e po4ers eCpressly or /y i.pli atio" o"ferre% o" it /y t$e 2rga"i A t. #$e Supre.e Court a"% its .e./ers s$oul% "ot a"% a""ot /e re;uire% to eCer ise a"y po4er or to perfor. a"y trust or to assu.e a"y %uty "ot pertai"i"g to or o""e te% 4it$ t$e a%.i"isteri"g of Du%i ial fu" tio"s. #$e 2rga"i A t provi%es t$at t$e Supre.e Court of t$e ,$ilippi"e 'sla"%s s$all possess a"% eCer ise Duris%i tio" as $eretofore provi%e% a"% su $ a%%itio"al Duris%i tio" as s$all $ereafter /e pres ri/e% /y la4 1se . 263. <$e" t$e 2rga"i A t spea7s of t$e eCer ise of LDuris%i tio"L /y t$e Supre.e Court, it oul% "ot o"ly .ea" t$e eCer ise of LDuris%i tio"L /y t$e Supre.e Court a ti"g as a ourt, a"% oul% $ar%ly .ea" t$e eCer ise of LDuris%i tio"L /y t$e .e./ers of t$e Supre.e Court, sitti"g as a /oar% of ar/itrators. #$ere is a" i.porta"t %isti" tio" /et4ee" t$e Supre.e Court as a" e"tity a"% t$e .e./ers of t$e Supre.e Court. A /oar% of ar/itrators is "ot a L ourtL i" a"y proper se"se of t$e ter., a"% possesses "o"e of t$e Duris%i tio" 4$i $ t$e 2rga"i A t o"te.plates s$all /e eCer ise% /y t$e Supre.e Court.la; hOl.net '" t$e last Du%i ial paper fro. t$e pe" of C$ief 8usti e #a"ey, it 4as sai%G #$e po4er o"ferre% o" t$is ourt is eC lusively Du%i ial, a"% it a""ot /e re;uire% or aut$ori-e% to eCer ise a"y ot$er. . . . 'ts Duris%i tio" a"% po4ers a"% %uties /ei"g %efi"e% i" t$e orga"i la4 of t$e gover".e"t, a"% /ei"g all stri tly Du%i ial, Co"gress a""ot re;uire or aut$ori-e t$e ourt to eCer ise a"y ot$er Duris%i tio" or po4er, or perfor. a"y ot$er %uty. . . . #$e a4ar% of eCe utio" is a part, a"% a" esse"tial part of every Du%g.e"t passe% /y a ourt eCer isi"g Du%i ial po4er. 't is "o Du%g.e"t, i" t$e legal se"se of t$e ter., 4it$out it. <it$out su $ a" a4ar% t$e Du%g.e"t 4oul% /e i"operative a"% "ugatory, leavi"g t$e aggrieve% party 4it$out a re.e%y. 't 4oul% /e .erely a" opi"io", 4$i $ 4oul% re.ai" a %ea% letter, a"% 4it$out a"y operatio" upo" t$e rig$ts of t$e parties, u"less Co"gress s$oul% at so.e future ti.e sa" tio" it, a"% pass a la4 aut$ori-i"g t$e ourt to arry its opi"io" i"to effe t. Su $ is "ot t$e Du%i ial po4er o"fi%e% to t$is ourt, i" t$e eCer ise of its appellate Duris%i tio"F yet it is t$e 4$ole po4er t$at t$e ourt is allo4e% to eCer ise u"%er t$is a t of Co"gress. . . . A"% 4$ile it eCe utes fir.ly all t$e Du%i ial po4ers e"truste% to it, t$e ourt 4ill arefully a/stai" fro. eCer isi"g a"y po4er t$at is "ot stri tly Du%i ial i" its $ara ter, a"% 4$i $ is "ot learly o"fi%e% to it /y t$e Co"stitutio". . . . 1Gor%o" vs. ="ite% States @106*A, 2 <all., 561F 11( =. S., 6!( Appe"%iC.3 Co"fir.i"g t$e %e isio" to t$e /asi ;uestio" at issue, t$e Supre.e Court $ol%s t$at se tio" 11 of A t No. 1**6

o"trave"es t$e .aCi.s 4$i $ gui%e t$e operatio" of a %e.o rati gover".e"t o"stitutio"ally esta/lis$e%, a"% t$at it 4oul% /e i.proper a"% illegal for t$e .e./ers of t$e Supre.e Court, sitti"g as a /oar% of ar/itrators, t$e %e isio" of a .aDority of 4$o. s$all /e fi"al, to a t o" t$e petitio" of t$e +a"ila 5le tri Co.pa"y. As a result, t$e .e./ers of t$e Supre.e Court %e li"e to pro ee% furt$er i" t$e .atter. 'vancePa, C.J., Street, Villamor, 7strand, Villa5,eal, 'bad Santos, Cull, Vic#ers, $m erial and Butte, JJ., concur. Repu/li SU*&-M+a"ila 9'RS# D'E'S'2N %.&. 'o. L$51((0 'ove2#er 23, 1(88 >-S5-&' M+'/LC/ vs. C/U&5 /4 A**-ALS C/M*A'<, respo"%e"ts. C/&*/&A5+/', petitio"er, "n %&-%/&+A' M+'+'% of t$e ,$ilippi"es C/U&5

'ngara, 'bello, Conce cion, ,egala J Cruz (or etitioner. Bernardino :. Catbagan, Jr. (or res ondent +regorian Mining Com an6.

'A&,ASA, J.9 A series of o"tra ts 4as e"tere% i"to /et4ee" <ester" +i"ol o Corporatio" a"% Gregoria" +i"i"g Co.pa"y, /asi ally for t$e operatio" /y t$e for.er of t$e latterMs .i"i"g lai.s. 1 2"e of t$e stipulatio"s i" t$e o"tra ts 1a3 %e lare% ertai" parti ular %isputes to /e su/De t to ar/itratio" a"% 1/3 spe ifie% t$e .a""er of e"for e.e"t /y ourt a tio" of t$e resulti"g ar/itratio" a4ar%s. 2 #$e stipulatio" rea%s as follo4sG Arti le O'' 12.)1. S$oul% a"y %ispute, %iffere" e or %isagree.e"t arise /et4ee" t$e CLA'+: 2<N5R a"% t$e C2+,AN6 regar%i"g t$e .ea"i"g, appli atio" or effe t of t$is Agree.e"t or of a"y lause t$ereof, or i" regar% to t$e a.ou"t a"% o.putatio" of t$e royalties, %e%u tio"s, or ot$er ite. of eCpe"se $erei"a/ove provi%e%, su $ %ispute, %iffere" e or %isagree.e"t s$all /e referre% to a /oar% of ar/itratio" to /e o.pose% of o"e ar/itrator to /e appoi"te% /y t$e C2+,AN6, a"ot$er to /e appoi"te% /y t$e CLA'+:2<N5R, a"% a t$ir% to /e sele te% /y t$e t4o afore.e"tio"e% ar/itrators, t$e %e isio" of a .aDority of t$e sai% ar/itrators to /e /i"%i"g upo" t$e parties, i"sofar as t$e sa.e is per.itte% /y la4. No a tio" s$all /e i"stitute% i" a"y Court /y eit$er party $ereto, u"less t$e %ispute, %iffere" e or %isagree.e"t, s$all $ave /ee" first su/.itte% to a"% re eive% /y sai% /oar%

of ar/itrators, a"% a"y su $ a tio" s$all /e /ase% upo" t$e a4ar% as o/tai"e%. 12.)2W#$e parties stipulate t$at t$e ve"ue of t$e a tio"s referre% to i" Se tio" 12.)1 s$all /e i" t$e City of +a"ila. #$ere are, it 4ill /e "ote%, o"ly t4o 123 lasses of %isputes or %isagree.e"ts gover"e% /y t$ese provisio"sG 13 t$ose Lregar%i"g t$e .ea"i"g, appli atio" or effe t of t$e agree.e"t1s3 or a"y lause t$ereof,L a"% 23 t$ose Li" regar% to t$e a.ou"t a"% o.putatio" of t$e royalties, %e%u tio"s, or ot$er ite. of eCpe"seL provi%e% i" t$e agree.e"t. 't is .a%e ;uite lear t$at t$ese t4o 123 lasses of %isputes are to /e Lreferre% to a /oar% of ar/itratio".L 't is .a%e e;ually lear t$at "o a tio" o" er"i"g t$e. .ay /e i"stitute% i" a"y ourt /y eit$er party 113 unless the controvers6 be L(irst submitted to and received b6 said board o( arbitrators ,L a"% 123 onl6 i( the action Lbe based u on the a;ard as obtained . L '" t$e eve"t of su $ a" a tio", t$e ve"ue t$ereof Ls$all /e i" t$e City of +a"ila.L No4, it appears t$at <ester" +i"ol o Corporatio" su/se;ue"tly eCe ute% a"ot$er agree.e"t 4it$ a"ot$er fir., t$e Drea.ers +i"i"g Asso iatio", for t$e vali%atio" of 36 .i"eral lo%e lai.s i" t$e latterMs favor. As it $appe"e%, t$ose 36 lai.s 4ere /elieve% /y Gregoria" +i"i"g Co.pa"y to /e i" o"fli t 4it$, a"% $a% /ee" superi.pose% o" its o4" lai.s, 4$i $ it $a% earlier lo ate% a"% 4$i $ 4ere i" fa t su/De t of t$e series of agree.e"ts sig"e% /y it a"% <ester" +i"ol o Corporatio". Gregoria" +i"i"g Co.pa"y o"se;ue"tly /roug$t suit agai"st <ester" +i"ol o Corporatio" i" t$e Court of 9irst '"sta" e of &aguio a"% &e"guet, for t$e res issio" of t$eir agree.e"ts a"% %a.ages. 3 <ester" +i"ol o .ove% to %is.iss t$e o.plai"t, t$eori-i"g t$at 1a3 ve"ue $a% /ee" i.properly lai%, a"% 1/3 t$e o.plai"t state% "o ause of a tio". 4 Gregoria" oppose% t$e .otio", argui"g t$at 1a3 t$e stipulatio" regar%i"g ve"ue i" t$e partiesM agree.e"ts 4as .erely per.issive a"% %i% "ot pre lu%e t$e fili"g of a" a tio" o"for.a/ly 4it$ t$e ge"eral rules of ve"ue i" Se tio" 2, Rule * of t$e Rules of Court, a"% 1/3 t$ere 4as a ause of a tio" set fort$ i" t$e o.plai"t 4it$i" t$e #rial CourtMs Duris%i tio" /e ause t$e a tio" i"volve% a %ispute 4$i $ 4as "ot ar/itra/le i" a or%a" e 4it$ t$eir o"tra ts. 5 <ester" +i"ol o file% a reply. 0 #$e #rial Court 7 %e"ie% <ester" +i"ol oMs .otio" to %is.iss a"% re;uire% it to file its respo"sive plea%i"g 4it$i" t$e pres ri/e% perio%. 8 #$e Court also %e"ie% <ester" +i"ol oMs .otio" for re o"si%eratio".( '" t$e .ea"ti.e, a"% 4$ile it 4as see7i"g re o"si%eratio" of t$e &aguio CourtMs a%verse or%er, <ester" +i"ol o file% a petitio" 4it$ t$e Court of 9irst '"sta" e of +a"ila to o.pel ar/itratio", i" li"e 4it$ its agree.e"t 4it$ Gregoria", a"% for re overy of %a.ages agai"st t$e latter. 1) After a" eC $a"ge of plea%i"gs, t$e petitio" 4as gra"te%. 11Gregoria" soug$t to ta7e a" appeal to t$e Court of AppealsF 12 /ut t$e +a"ila Court rule% t$at t$e appeal s$oul% .ore properly /e ta7e" to t$is Court. 13

Gregoria" %e i%e% to forego t$e appeal, a"% to a4ait i"stea% t$e %e isio" of t$e Court of Appeals o" t$e petitio" for ertiorari a"% pro$i/itio" 4$i $ <ester" +i"ol o $a% i" t$e .ea"ti.e file% to assail t$e 2r%ers of t$e C9' of &aguio a"% &e"guet 1refusi"g to %is.iss t$e a tio" @Case No. 22(2 122)3A /roug$t agai"st it /y Gregoria"3. 14 #$e Court of Appeals 4as "ot persua%e% /y <ester" +i"ol oMs argu.e"ts, a"% %is.isse% its petitio", /y %e isio" %ate% August 2!, 1!(!. 15 't later %e"ie% <ester" +i"ol oMs .otio" for re o"si%eratio". 10 #$is %e isio" of August 2!, 1!(!, a"% t$e or%er %e"yi"g re o"si%eratio", are $alle"ge% i" t$e i"sta"t appeal. #$e ver%i t .ust go agai"st t$e petitio"er, <ester" +i"ol o Corporatio". 't is <ester" +i"ol oMs t$esis t$at it 4as reversi/le error for t$e Court of Appeals to fi"% a"% %e lare t$atW a3 t$e ve"ue of t$e a tio" i"stitute% agai"st it /y Gregoria" +i"i"g Co. 4as i.properly lai%F /3 t$e a tio" oul% "ot /e i"stitute% u"til a"% u"less t$e %ispute su/De t t$ereof $a% first /ee" resolve% /y ar/itratio", as ove"a"te% /y t$e partiesF 3 pu/li poli y e" ourages ar/itratio" a"% ar/itratio" agree.e"ts are to /e li/erally o"strue%F %3 t$e #rial Court $a% "o /usi"ess i"terpreti"g t$e provisio"s of t$e agree.e"t t$e ter.s of 4$i $ 4ere ot$er4ise lear, u"a./iguous a"% u"e;uivo al. #$e ter.s of t$e appli a/le provisio" of t$e partiesM agree.e"ts are i"%ee% L lear, u"a./iguous, a"% u"e;uivo al.L As poi"te% out i" t$e ope"i"g paragrap$s of t$is opi"io", o"ly t4o 123 7i"%s of L%isputes, %iffere" es or %isagree.e"tsL $ave /ee" .a%e su/De t of ar/itratio"G 13 t$ose Lregar%i"g t$e .ea"i"g, appli atio" or effe t of t$e agree.e"t1s3 or a"y lause t$ereofFL a"% 23 t$ose Li" regar% to t$e a.ou"t a"% o.putatio" of t$e royalties, %e%u tio", or ot$er ite. of eCpe"seL provi%e% i" t$e agree.e"t. #$e o"troversy i"volve% i" t$e a tio" /roug$t /y Gregoria" agai"st <ester" +i"ol o 4as t$e allege% violatio" /y t$e latter of its agree.e"ts 4it$ t$e for.er, o"sisti"g of its e"teri"g i"to a o"tra t 4it$ a t$ir% party for t$e vali%atio" of .i"i"g lai.s 4$i $ it 7"e4 $a% alrea%y /ee" lo ate% /y Gregoria". <$at 4as i"volve%, i" ot$er 4or%s, 4as t$e /rea $ of fait$, or t$e %ou/le %eali"g of <ester" +i"ol o i" u"%erta7i"g to vali%ate i" favor of a t$ir% party t$e selfWsa.e lai.s 4$i $ it $a% earlier u"%erta7e" to operate for Gregoria". Clearly, su $ a o"troversy %oes "ot fall 4it$i" eit$er of t$e t4o ategories of %isputes 4$i $ .ust first /e su/.itte% for ar/itratio". #$e stipulatio" i" ;uestio" 1for ar/itratio" to /e first $a%3 %i% "ot t$erefore o"stitute a" i.pe%i.e"t or a /ar to t$e i"stitutio" of t$e a tio" o..e" e% /y Gregoria" agai"st <ester" +i"ol o, for res issio" a"% %a.ages. 5ve" if, for t$e sa7e of argu.e"t, so.e .easure of te"a/ility /e o" e%e% to t$e opposite vie4G t$at t$e o"troversy su/De t of Civil Case No. 22(2 122)3 .ig$t /e o"si%ere% as %eali"g

4it$ t$e L.ea"i"g, appli atio" or effe tL of t$e agree.e"tW spe ifi ally, 4$et$er t$e lai.s t$erei" %es ri/e% are t$e very sa.e .i"i"g lai.s su/De t of <ester" +i"ol oMs su/se;ue"t agree.e"t 4it$ a t$ir% partyWa"% t$erefore s$oul% first /e su/.itte% to a"% resolve% /y a /oar% of ar/itrators, t$e 4orst t$at oul% t$e" /e sai% of t$e or%ers of t$e #rial Court, affir.e% /y t$e Court of Appeals, is t$at t$ey are atte"%e% /y a" error i" t$e a"alysis a"% i"terpretatio" of t$e la"guage a"% i.port of t$e stipulatio" i" ;uestio", /ut ertai"ly "ot /y t$at 4$i.si al, apri ious, or totally grou"%less or ta"ge"tial eCer ise of a%Du%g.e"t or %is retio" as 4oul% Dustify t$e issua" e of t$e eCtraor%i"ary 4rit of ertiorari or pro$i/itio". 17 '" "o se"se .ay it /e sai% t$at po4er $as /ee" eCer ise% /y eit$er t$e Appellate Court or t$e #rial Court i" so ar/itrary or %espoti a .a""er, as /y reaso" of passio", preDu%i e or perso"al $ostility, or i" so pate"tly a"% grossly .ista7e" a .a""er as to a.ou"t to a" evasio" of positive %uty or a virtual refusal to perfor. a %uty e"Doi"e% or to a t at all i" o"te.platio" of la4, so as to .a7e "ee%ful t$e eCte"sio" of t$is CourtMs orre ti"g $a"% /y t$e pere.ptory 4rit of ertiorari or pro$i/itio". 18 Si" e t$e stipulatio" as to ve"ue /e o.es releva"t o"ly 4$e" a" a tio" $as to /e i"stitute% L/ase% upo" t$e a4ar% as o/tai"e%L 1fro. t$e /oar% of ar/itrators3 1i.e., as t$e .o%e of e"for e.e"t of t$e a4ar%3F a"% si" e t$ere is $ere "o su $ a4ar% /e ause "o o"troversy su/De t to ar/itratio" eCiste% a"% 4as ever su/.itte% to ar/itratio", "o error a" possi/ly /e i.pute% to t$e #rial Court i" "ot applyi"g t$e stipulatio" to t$e a tio" a =uo. '" a"y eve"t, it is "ot e"tirely a.iss to restate t$e %o tri"e t$at stipulatio"s i" a o"tra t, 4$i $ spe ify a %efi"ite pla e for t$e i"stitutio" of a" a tio" arisi"g i" o""e tio" t$ere4it$, %o "ot, as a rule, superse%e t$e ge"eral rules o" t$e .atter set out i" Rule * of t$e Rules of Court, /ut s$oul% /e o"strue% .erely as a" agree.e"t o" a" a%%itio"al foru., "ot as li.iti"g ve"ue to t$e spe ifie% pla e. 1( <H5R592R5, t$e petitio" is D5N'5D, a"% t$e %e isio" of t$e Court of Appeals su/De t of t$e appeal is A99'R+5D. Costs agai"st petitio"er. S2 2RD5R5D. Cruz, +anca6co, +riPo5'=uino and Medialdea, JJ., concur. Repu/li SU*&-M+a"ila #H'RD D'E'S'2N %.&. 'o. 5515( De1e2#er 22, 1(8( *H+L+**+'A+&L+'-S, vs. 'A5+/'AL LA!/& &-LA5+/'S A&MA'D/ D/L+'A, respo"%e"ts. +'C., petitio"er C/MM+SS+/' "n of t$e ,$ilippi"es C/U&5

,etitio"er i.pug"s i" t$is petitio" for certiorari t$at part of t$e pu/li respo"%e"t Natio"al La/or Relatio"s Co..issio"Ms 1NLRC3 %e isio" i" NLRC Case No. R&:'E:!31!:(( 4$i $ or%ere% petitio"er to restore private respo"%e"t Doli"a to its payroll, a"% to pay $is salaries fro. 1 April 1!(! Lu"til t$is ase is fi"ally resolve%L @Rollo, p. 33A. ,etitio"er o"te"%s t$at pu/li respo"%e"t NLRC gravely a/use% its %is retio" o"si%eri"g t$at i" t$e sa.e %e isio" pu/li respo"%e"t affir.e% t$e %e isio" of t$e La/or Ar/iter i" toto gra"ti"g respo"%e"tMs appli atio" for leara" e to %is.iss t$e private respo"%e"t. #$e perti"e"t fa ts are as follo4sG ,rivate respo"%e"t Doli"a 4as a%.itte% to t$e ,$ilippi"e Airli"es 1,AL3 Aviatio" S $ool for trai"i"g as a pilot /egi""i"g 16 8a"uary 1!(3. #$e trai"i"g agree.e"t /ou"% ,AL to provi%e regular a"% per.a"e"t e.ploy.e"t to Doli"a upo" o.pletio" of t$e trai"i"g ourse. 2" 25 8a"uary 1!(*, Doli"a o.plete% t$e ourse, a"% u"%ertoo7 a" e;uip.e"t ;ualifi atio" ourse up to * 2 to/er 1!(*. 2" ! 2 to/er 1!(*, t$e Civil Aero"auti s A%.i"istratio" issue% $i. a li e"se as Co..er ial ,ilot a"% ,AL t$e" eCte"%e% $i. a te.porary appoi"t.e"t for siC 163 .o"t$s as Li.ite% 9irst 2ffi er. <$e" $is appoi"t.e"t 4as %ue to eCpire o" 3) April 1!(5, Doli"a $a% o"ly logge% eig$ty four 10*3 $ours a"% fifty five 1553 .i"utes flyi"g ti.e, s$ort of t$e .i"i.u. 5)) flyi"g $ours re;uire% for regulari-atio" as 9irst 2ffi er. #o e"a/le $i. to o.plete t$e re;uire.e"t, $is e.ploy.e"t 4as eCte"%e% for a"ot$er siC .o"t$s 4$i $ appoi"t.e"t 4as %es ri/e% as Lper.a"e"t.L 2" 31 2 to/er 1!(5, 4$e" $is appoi"t.e"t 4as agai" %ue to eCpire, $e 4as still s$ort of t$e .i"i.u. flyi"g ti.e re;uire.e"t su $ t$at $is appoi"t.e"t 4as agai" eCte"%e% up to 3) April 1!(6. Duri"g t$is t$ir% eCte"sio" of $is appoi"t.e"t, Doli"a o.plete% t$e 5)) flyi"g $ours re;uire.e"t, a"% t$us o" 31 +ar $ 1!(6 $e applie% for regulari-atio" as 9irst 2ffi er. ,e"%i"g $is p$ysi al eCa.i"atio" /y t$e $ief 9lig$t Surgeo", $is appoi"t.e"t 4as agai" eCte"%e% to 31 2 to/er 1!(6. 2" 1( August 1!(6, Doli"a too7 a psy $ologi al eCa.i"atio" 4$erei" $is LA%apta/ility Rati"gL 4as fou"% to /e Lu"a epta/leL @A""eC LLL to t$e ,etitio". p. 0F Rollo, p. 116A. 2" 23 Septe./er 1!(6, o.plai"a"t 4as agai" su/De te% to a" eCa.i"atio" a"% i"tervie4 /y t$e ,ilot A epta" e Qualifi atio"s &oar% as part of t$e regulari-atio" pro ess, 4$i $ eCa.i"atio" reveale% t$e follo4i"gG CCC CCC CCC /. Ar.a"%o Doli"a : After t$oroug$ evaluatio" of t$e a"%i%ateMs past re or%s, $is perfor.a" e a"% t$e result of $is .e%i al eCa.i"atio" as su/.itte% /y t$e +e%i al Su/:Depart.e"t, t$e &oar% fi"%s +r. A. Doli"a "ot ;ualifie% for regular e.ploy.e"t i" t$e Co.pa"y. CCC CCC CCC @NLRC De isio", pp. 3:*F Rollo, pp. 25:26A. Co"for.a/ly, t$e &oar% re o..e"%e% t$e ter.i"atio" of t$e o.plai"a"t pursua"t to 4$i $ ,AL file% a leara" e appli atio" @Rollo, p. 3*A for Doli"aMs ter.i"atio". '" t$e .ea"ti.e Doli"a 4as pla e% u"%er preve"tive suspe"sio" effe tive 1 2 to/er 1!(6. Doli"a ou"tere% 4it$ a o.plai"t for illegal %is.issal o" 6 2 to/er 1!(6 @Rollo, 35A. 2" 26 8a"uary

!rmitano Manzano J 'ssociates (or etitioner. Solon +arcia collaborating counsel (or etitioner.

C/&5-S, J.9

1!(( t$e 2ffi er:i":C$arge of t$e Depart.e"t of La/or Regio"al 2ffi e No. 'E lifte% t$e preve"tive suspe"sio", a"% or%ere% petitio"er to rei"state Doli"a to $is for.er positio" 4it$ full /a 74ages fro. 1 2 to/er 1!(6 up to a tual rei"state.e"t. #$e issue of ter.i"atio" a"% %a.ages 4as referre% to t$e 5Ce utive La/or Ar/iter for o.pulsory ar/itratio" @Rollo, p. (1A. ,etitio"er appeale% t$e or%er lifti"g Doli"aMs suspe"sio" to t$e Se retary of La/or. Ho4ever, o" 2 +ar $ 1!((, pe"%i"g t$e resolutio" of petitio"erMs appeal, t$e parties sig"e% a" agree.e"t /efore t$e ="%erse retary of La/or, t$e ter.s of 4$i $ are as follo4sG AGR55+5N# #$e u"%ersig"e% parties $ere/y agree to t$e follo4i"gG 1 <$ile pe"%i"g fi"al resolutio" of t$e o.plai"t of +r. Ar.a"%o Doli"a agai"st t$e ,$ilippi"e Airli"es, $e s$all /e o"si%ere% i" t$e payroll effe tive 1 2 to/er 1!(6. 2 #$e or%er of Regio"al Dire tor Ei e"te Leogar%o for t$e rei"state.e"t 4it$ /a 74ages of +r. Doli"a is $ere/y re"%ere% .oot a"% a a%e.i . 3 #$e parties s$all o"si%er t$is arra"ge.e"t pe"%i"g fi"al resolutio" of t$e ase /y ar/itratio". CCC CCC CCC Su/se;ue"tly, o" 3) +ay 1!((, t$e A ti"g Se retary of La/or issue% a" or%er fi"%i"g t$at t$e propriety of t$e suspe"sio" $a% /ee" re"%ere% .oot a"% a a%e.i /y t$e a/ove agree.e"t a"% referre% t$e ase for o.pulsory ar/itratio" to t$e 5Ce utive La/or Ar/iter @A""eC L8L to t$e ,etitio"F Rollo, p. 05A. 2" 23 +ar $ 1!(!, t$e La/or Ar/iter re"%ere% its %e isio", t$e %ispositive portio" of 4$i $ rea%s as follo4sG 'N E'5< 29 ALL #H5 92R5G2'NG, it is our o"si%ere% opi"io" t$at t$ere is .erit o" t$e appli atio" for leara" e, a"% t$erefore, t$e sa.e s$oul% /e as it is $ere/y GRAN#5D. Co"se;ue"tly, t$e oppositorMs #5R+'NA#'2N 'S 'N 2RD5R. Si" e t$e ter.i"atio" is up$el%, perfor e t$e lai. for .oral %a.ages is %e"ie%. &esi%es pursua"t to ,.D. No. 136( %ate% +ay 1, 1!(0, t$is offi e is %evoi% of Duris%i tio" to e"tertai" sai% lai.. S2 2RD5R5D. @De isio" of La/or Ar/iter, p. 12F Rollo, p. !(A. &y virtue of t$e a/ove %e isio", ,AL re.ove% Doli"a fro. its payroll effe tive 1 April 1!(!. Doli"a t$e" appeale% t$e La/or Ar/iterMs %e isio" to t$e pu/li respo"%e"t NLRC o" 2! April 1!(! a"% t$ere file% a .otio" prayi"g t$at ,AL /e or%ere% to retur" $i. to ,ALMs payroll, o"te"%i"g t$at t$e La/or Ar/iterMs %e isio" 4as "ot yet fi"al /e ause of $is ti.ely appeal. ,AL

oppose% t$e .otio" lai.i"g t$at it 4as "o lo"ger o/lige% to retur" Doli"a to its payroll si" e t$e %e isio" of t$e La/or Ar/iter %ate% 23 +ar $ 1!(! i" its favor 4as a fi"al resolutio" of t$e ase /y ar/itratio" @A""eC LNL to t$e ,etitio", p. 1F Rollo, p. 13(A. 2" 0 9e/ruary 1!0), pu/li respo"%e"t NLRC re"%ere% its %e isio" o"tai"i"g t$e assaile% portio" to 4itG CCC CCC CCC '" fi"e it is our o"si%ere% vie4 t$at t$e respo"%e"tMs appli atio" for leara" e to %is.iss t$e o.plai"a"t $as suffi ie"tly sur.ou"te% t$e test of vali%ity. &e t$at as it .ay, 4e are "ot i" a or% 4it$ t$e %is o"ti"uatio" of t$e pay.e"t of o.plai"a"tMs salaries. #$e agree.e"t of t$e parties stipulate% i" "o u" ertai" ter.s t$at t$e o.plai"a"t @Doli"aA is to /e arrie% i" respo"%e"tMs payroll u"til t$is ase is fi"ally resolve%. As t$i"gs sta"%, t$e .ai" issue is still /ei"g litigate%. #$e o.plai"a"t, t$erefore, .ust /e restore% to t$e payroll a"% pai% for $is salaries fro. 1 April 1!(!, t$e %ate $e 4as %roppe% fro. t$e respo"%e"tMs payroll. <H5R592R5, t$e De isio" appeale% fro. s$oul% /e as it is $ere/y affir.e% i" toto. Ho4ever t$e respo"%e"t is or%ere% to restore t$e o.plai"a"t to its payroll a"% to pay $is salaries fro. 1 April 1!(! u"til t$is ase is fi"ally resolve%. S2 2RD5R5D. @NLRC De isio", pp. 1):11F Rollo, pp. 32:33F 'tali s supplie%A He" e, t$is petitio", 4it$ a prayer for a te.porary restrai"i"g or%er. #$e Court issue% a te.porary restrai"i"g or%er o" 1) 2 to/er 1!0). ,rivate respo"%e"t Doli"a faile% to file $is o..e"t a"% t$e Soli itor Ge"eral su/.itte% $is o4" Co..e"t supporti"g t$e sta"% of petitio"er. Due to t$e a%verse sta"% of t$e Soli itor Ge"eral, pu/li respo"%e"t NLRC su/.itte% its o4" Co..e"t. #$e issue /efore t$e Court is 4$et$er or "ot t$e NLRC o..itte% grave a/use of %is retio" i" $ol%i"g t$at private respo"%e"t Doli"a 4as e"title% to $is salaries fro. 1 April 1!(! Lu"til t$is ase is fi"ally resolve%.L ,AL o"te"%s t$at i"as.u $ as t$e respo"%e"t Co..issio" a ti"g e" /a" $a% affir.e% i" toto t$e %e isio" of t$e La/or Ar/iter gra"ti"g petitio"er t$e leara" e for t$e %is.issal of private respo"%e"t Doli"a, it is a" a t of grave a/use of %is retio" a.ou"ti"g to la 7 of Duris%i tio" o" its part to or%er petitio"er to pay private respo"%e"tMs salaries fro. 1 April 1!(! u"til t$e ase is fi"ally ter.i"ate%. ,AL o"te"%s t$at sai% stipulatio" refers o"ly to t$e resolutio" of t$e ase /y ar/itratio" a"% sai% ar/itratio" of t$e ase 4as ter.i"ate% 4$e" t$e La/or Ar/iter re"%ere% its %e isio" %ate% 23 +ar $ 1!(!. ,AL argues t$at t$e ar/itratio" of t$e ase is li.ite% to a"% o.prises .erely t$e pro ee%i"gs /efore t$e La/or Ar/iter su $ t$at 4$e" t$e latter re"%ers a %e isio", ar/itratio" of t$e %ispute is ter.i"ate% .

,u/li respo"%e"t NLRC o" t$e ot$er $a"% o"te"%s t$at ar/itratio" is a o"ti"ui"g pro ess fro. t$e ti.e t$e ase is referre% /y t$e Se retary of La/or to t$e Ar/itratio" &ra" $ u"til t$e fi"al Du%g.e"t is $a% o" appeal. Si" e t$e La/or Ar/iterMs %e isio" i" favor of petitio"er %i% "ot fi"ally resolve t$e ase i" vie4 of t$e ti.ely appeal /y private respo"%e"t fro. sai% %e isio", t$e ase 4as "ot yet fi"ally ter.i"ate% /y ar/itratio" a"% Doli"a is e"title% to /e pla e% i" petitio"erMs payroll u"til t$e o.plai"t is fi"ally resolve%. #$e a/ove o"te"tio"s all for t$e proper i"terpretatio" of t$e agree.e"t /et4ee" t$e parties, spe ifi ally t$e t$ir% stipulatio" o"tai"i"g t$e lause Lpe"%i"g fi"al resolutio" of t$e ase /y ar/itratio".L 't is a /asi rule i" i"terpretatio" of o"tra ts t$at t$e ir u.sta" es u"%er 4$i $ a" i"stru.e"t 4as .a%e, i" lu%i"g t$e situatio" of t$e su/De t t$ereof a"% t$e parties to it, .ay /e o"si%ere% so t$at t$e i"te"tio" of t$e o"tra ti"g parties .ay /e Du%ge% orre tly @Art. 13(1, Civil Co%e of t$e ,$ilippi"esF Se tio" 11, Rule 13), Rules of CourtF Li. v. Court of Appeals, G.R. No. L:*)250, Septe./er 11, 1!0), !! SCRA 660.A '" t$e i"sta"t ase, t$e stipulatio" i" t$e 2 +ar $ 1!(( agree.e"t t$at Doli"a s$ag /e i" lu%e% i" t$e payroll of ,AL u"til fi"al resolutio" of t$e ase /y ar/itratio" 4as i"te"%e% to superse%e t$e or%er of t$e Regio"al Dire tor 4$i $, /y stipulatio" of t$e parties, 4as re"%ere% .oot a"% a a%e.i . '" lieu of rei"state.e"t a"% t$e pay.e"t of $is /a 74ages, private respo"%e"t 4as i" lu%e% i" petitio"erMs payroll, effe tive fro. t$e ti.e $e 4as preve"tively suspe"%e% u"til fi"al resolutio" of t$e ase /y ar/itratio", 4it$out $avi"g to perfor. a"y 4or7 for t$e petitio"er. '" e"teri"g i"to t$e agree.e"t, t$e parties oul% "ot $ave i"te"%e% to i" lu%e i" t$e lause Lfi"al resolutio" of t$e ase /y ar/itratio"L t$e 4$ole a%Du%i atory pro ess, i" lu%i"g appeal. 9or if it 4ere so, eve" pro ee%i"gs o" ertiorari /efore t$is Court 4oul% /e e./ra e% /y t$e ter. Lar/itratio"L a"% private respo"%e"t 4ill o"ti"ue to re eive .o"t$ly salary 4it$out re"%eri"g a"y servi e to t$e petitio"er regar%less of t$e out o.e of t$e pro ee%i"gs /efore t$e La/or Ar/iter, for as lo"g as o"e of t$e parties appeal to t$e NLRC a"% u"til t$e ase is fi"ally resolve% /y t$is Court. #$is is learly a" a/sur%ity 4$i $ oul% "ot $ave /ee" o"te.plate% /y t$e parties. Neit$er a" pro ee%i"gs o" appeal /efore t$e NLRC e" /a" /e o"si%ere% as part of t$e ar/itratio" pro ee%i"g. '" its /roa% se"se, ar/itratio" is t$e refere" e of a %ispute to a" i.partial t$ir% perso", $ose" /y t$e parties or appoi"te% /y statutory aut$ority to $ear a"% %e i%e t$e ase i" o"troversy @C$a" Li"te v. La4 ="io" a"% Ro 7, '"s. Co., *2 ,$il. 5*0 11!213A. <$e" t$e o"se"t of o"e of t$e parties is e"for e% /y statutory provisio"s, t$e pro ee%i"g is referre% to as o.pulsory ar/itratio". '" la/or ases, o.pulsory ar/itratio" is t$e pro ess of settle.e"t of la/or %isputes /y a gover".e"t age" y 4$i $ $as t$e aut$ority to i"vestigate a"% to .a7e a" a4ar% 4$i $ is /i"%i"g o" all t$e parties @See <oo% v. Seattle, 23 <as$. 1, 62 , 135, 52 LRA 36! 11!2)3F A.alga.ate% Asso iatio" v. <is o"si" 5.ployeesM Relatio"s &oar%, 3*) =.S. 303:*1),!5 L. 5%. 301 11!513A. ="%er t$e La/or Co%e, it is t$e La/or Ar/iter 4$o is lot$e% 4it$ t$e aut$ority to o"%u t o.pulsory ar/itratio" o" ases i"volvi"g ter.i"atio" %isputes @Arti le 21(, ,res. De ree No. **2, as a.e"%e%A. <$e" t$e La/or Ar/iter re"%ers $is %e isio", o.pulsory ar/itratio" is %ee.e% ter.i"ate% /e ause /y t$e" t$e $eari"g a"% %eter.i"atio" of t$e o"troversy $as e"%e%. A"y appeal raise% /y a" aggrieve% party fro. t$e La/or Ar/iterMs %e isio" is alrea%y /eyo"% t$e s ope of ar/itratio" si" e i" t$e appeal stage, t$e NLRC e" /a" .erely revie4s t$e La/or Ar/iterMs

%e isio" for errors of fa t or la4 a"% "o lo"ger %upli ates t$e pro ee%i"gs /efore t$e La/or Ar/iter. #$us, t$e lause Lpe"%i"g fi"al resolutio" of t$e ase /y ar/itratio"L s$oul% /e u"%erstoo% to /e li.ite% o"ly to t$e pro ee%i"gs /efore t$e La/or Ar/iter, su $ t$at 4$e" t$e latter re"%ere% $is %e isio", t$e ase 4as fi"ally resolve% /y ar/itratio". +ore i.porta"t, $o4ever, is t$e fa t t$at t$e NLRCMs or%er for t$e o"ti"ue% pay.e"t of Doli"aMs salaries is i" o"siste"t 4it$ its affir.a" e of t$e La/or Ar/iterMs %e isio" up$ol%i"g t$e vali%ity of Doli"aMs %is.issal. '" affir.i"g t$e La/or Ar/iterMs %e isio" gra"ti"g t$e ter.i"atio" leara" e, t$e NLRC $el% t$atG <it$ respe t to t$e issue of 4$et$er or "ot t$e o.plai"a"tMs @Doli"aA %is.issal 4as suffi ie"tly grou"%e%, 4e are "ot persua%e% t$at t$e respo"%e"t @$erei" petitio"er ,ALA is u"%er o/ligatio" to e.ploy $i. as regular e.ployee si.ply /e ause $e 4as ertifie% p$ysi ally fit a"% te $"i ally to profi ie"t /y t$e CAA. #$is is u"%ersta"%a/le for it o" er"s t$e safety of its properties, a"% a/ove all, t$e safety of t$e lives a"% properties of its passe"gers, 4$i $ /y la4 it is o..itte% to tra"sport safely. '" t$e a/se" e, t$erefore, of a"y s$o4i"g t$at its sta"%ar%s are u"reaso"a/le a"% %is ri.i"atory, 4$i $ 4e %o "ot fi"% $ere, <e a""ot %istur/ t$e.. <e a" o"ly say t$at for eCer isi"g eCtraor%i"ary %ilige" e i" t$e sele tio" of its pilots, <e Doi" t$e pu/li i" o..e"%i"g it. CCC CCC CCC '" fi"e, it is 2ur o"si%ere% vie4 t$at t$e respo"%e"tMs appli atio" for leara" e to %is.iss t$e o.plai"a"t $as suffi ie"tly sur.ou"te% t$e test of vali%ity. '" vie4 of t$e a/ove fi"%i"g of vali% %is.issal, t$e NLRC $a% "o aut$ority to or%er t$e o"ti"ue% pay.e"t of Doli"aMs salaries fro. 1 April 1!(! u"til t$e ase is fi"ally resolve%. #$e NLRCMs or%er 4oul% result i" o.pe"sati"g Doli"a for servi es "o lo"ger re"%ere% a"% 4$e" $e is "o lo"ger i" ,ALMs e.ploy. #$is is o"trary to t$e age:ol% rule of La fair %ayMs 4age for a fair %ayMs la/orL 4$i $ o"ti"ues to gover" t$e relatio" /et4ee" la/or a"% apital a"% re.ai"s a /asi fa tor i" %eter.i"i"g e.ployeesM 4ages @Dura/ilt Re appi"g ,la"t K Co. v. Natio"al La/or Relatio"s Co..issio", G.R. No. (6(*6, 8uly 2(, 1!0(, 152 SCRA 320A. So t$at, if t$ere is "o 4or7 perfor.e% /y t$e e.ployee t$ere a" /e "o 4age or pay u"less t$e la/orer 4as a/le, 4illi"g a"% rea%y to 4or7 /ut 4as preve"te% /y .a"age.e"t or 4as illegally lo 7e% out, suspe"%e% or %is.isse%. <$ere t$e e.ployeeMs %is.issal 4as for a Dust ause, it 4oul% "eit$er /e fair "or Dust to allo4 t$e e.ployee to re over so.et$i"g $e $as "ot ear"e% a"% oul% "ot $ave ear"e% @Sa"tos v. Natio"al La/or Relatio"s Co..issio", G.R. No. (6(21, Septe./er 21, 1!0(, 15* SCRA 166A. +oreover, i" or%eri"g t$e o"ti"ue% pay.e"t of Doli"aMs salaries fro. 1 April 1!(! u"til t$e ase is fi"ally resolve%, t$e NLRC i" effe t or%ere% t$e pay.e"t of /a 74ages to Doli"a "ot4it$sta"%i"g its fi"%i"g of a vali% %is.issal.

#$is is learly u"te"a/le. '" t$e first pla e, /a 74ages i" ge"eral are gra"te% o" grou"%s of e;uity for ear"i"gs 4$i $ a 4or7er or e.ployee $as lost %ue to $is illegal %is.issal @Ne4 +a"ila Ca"%y <or7ers ="io" 1NAC2N<A:,A9L=3 v. Court of '"%ustrial Relatio"s, G.R. No. L:2!(20, 2 to/er 3), 1!(0, 06 SCRA 3(F Dura/ilt Re appi"g ,la"t K Co. v. Natio"al La/or Relatio"s Co..issio", supraF C$o"g Gua" #ra%i"g v. Natio"al La/or Relatio"s Co..issio", G. R. No. 01*(1, April 26, 1!0!F Sa"tos v. Natio"al La/or Relatio"s Co..issio", supraA. <$ere, as i" t$is ase, t$e %is.issal 4as for a Dust ause, t$ere is "o fa tual or legal /asis for or%eri"g t$e pay.e"t of /a 74ages. #$e or%er of t$e NLRC for t$e o"ti"ue% pay.e"t of Doli"aMs salaries 4oul% allo4 t$e latter to u"Dustly e"ri $ $i.self at t$e eCpe"se of t$e petitio"er. #$is Court $as reiterate% ti.e a"% agai" t$at t$e la4, i" prote ti"g t$e rig$ts of t$e la/orer, aut$ori-es "eit$er oppressio" "or self:%estru tio" of t$e e.ployer @Colgate ,al.olive ,$ilippi"es, '" . v. 2ple, G.R. No. (3601, 8u"e 3),1!00,163 SCRA 323A. '" t$is ase, t$e NLRC $ose "ot to a%$ere 4it$ fi%elity to t$is %o tri"e. Se o"%ly, NLRCMs or%er for o"ti"ue% pay.e"t of Doli"aMs salary fro. 1 April 1!(! up to t$e fi"al resolutio" of t$e ase 4oul% pla e Doli"a i" a /etter positio" t$a" t$ose 4or7ers 4$o 4ere fou"% to $ave /ee" illegally %is.isse% /y t$eir e.ployer. 9or i" t$e latter ase, t$e /a 74ages t$at a" /e re overe% /y t$e 4or7er is li.ite% to t$ree years @+er ury Drug Co., '" . v. Court of '"%ustrial Relatio"s, G.R. No. L:2335(, April 3), 1!(*, 56 SCRA 6!*F ,$ilippi"e Airli"es, '" . v. Natio"al La/or Relatio"s Co..issio", G.R. No. 6*0)!, Nove./er 2!, 1!03, 126 SCRA 223F +a%rigal K Co., '" . v. ?a.ora, G.R. No. L: *023(, +a%rigal K Co., '" . v. +i"ister of La/or, G.R. No. L: *!)23, 8u"e 3),1!0(A 4$ile Doli"a, 4$ose %is.issal 4as fou"% to /e vali%, a" re over approCi.ately te" years /a 74ages, 4$i $ orrespo"%s to t$e perio% fro. 1 April 1!(! u"til Lfi"al resolutio"L of t$e i"sta"t ase. Co"si%eri"g t$e foregoi"g, t$e Court $ol%s t$at respo"%e"t NLRCMs or%er for t$e o"ti"ue% pay.e"t of Doli"aMs salaries fro. Ll April 1!(! u"til t$e ase is fi"ally resolve%L is o"trary to la4 a"% esta/lis$e% Durispru%e" e a"% t$e NLRC a te% i" eC ess of its Duris%i tio" i" issui"g t$e assaile% or%er. '" t$e re e"t ase of Llora +otors, '" . v. Drilo", G.R. No. 020!5, Nove./er (, 1!0! t$e Court $el% as a" a t 4it$out or i" eC ess of Duris%i tio" t$e portio" of t$e La/or Ar/iterMs a4ar%, 4$i $ re;uire% t$e e.ployer to pay to its e.ployee a" a.ou"t e;uivale"t to a $alf .o"t$Ms pay for every year of servi e as retire.e"t /e"efits, for /ei"g 4it$out /asis eit$er i" la4 or o"tra t. Si.ilarly, t$ere is i" t$is ase a" eC ess of Duris%i tio" o" t$e part of t$e NLRC i" or%eri"g t$e o"ti"ue% pay.e"t of Doli"aMs salaries Lfro. 1 April 1!(! u"til t$e ase is fi"ally resolve%.L <H5R592R5, t$at part of t$e %ispositive portio" of t$e %e isio" of t$e Natio"al La/or Relatio"s Co..issio" i" NLRC CAS5 N2. R&:'E:!31!:(( re;uiri"g petitio"er to restore private respo"%e"t to its payroll a"% or%eri"g t$e pay.e"t of $is salaries fro. 1 April 1!(! u"til t$e ase is fi"ally resolve% is $ere/y %e lare% N=LL a"% E2'D a"% S5# AS'D5. #$e te.porary Restrai"i"g 2r%er issue% /y t$e Court o" 1) 2 to/er 1!0) is .a%e ,5R+AN5N#. S2 2RD5R5D.

Repu/li SU*&-M+a"ila #H'RD D'E'S'2N

of

t$e

,$ilippi"es C/U&5

%.&. 'o. 1)2881 De1e2#er 7, 1((2 5/</5A M/5/& *H+L+**+'-S C/&*/&A5+/', petitio"er, vs. 5H- C/U&5 /4 A**-ALS, H/'. 4-&'A'D/ ,. %/&/S*-, 6&. "n SU' ,ALL-< MA'U4AC5U&+'% R D-,-L/*M-'5 C/&*/&A5+/', respo"%e"ts.

%U5+-&&-?, 6&., J.9 #$is ase i"volves a /ou"%ary %ispute /et4ee" #oyota +otor ,$il. Corporatio" 1#oyota3 a"% Su" Ealley +a"ufa turi"g a"% Develop.e"t Corporatio" 1Su" Ealley3. &ot$ #oyota a"% Su" Ealley are t$e registere% o4"ers of t4o 123 a%Doi"i"g par els of la"% situate% i" La Huerta, ,araUa;ue, +etro +a"ila 4$i $ t$ey pur $ase% fro. t$e Asset ,rivati-atio" #rust 1A,#3. #$e properties i" ;uestio" for.erly /elo"ge% to Delta +otors Corporatio" 1D+C3. #$ey 4ere fore lose% /y t$e ,$ilippi"e Natio"al &a"7 1,N&3 a"% later tra"sferre% to t$e "atio"al gover".e"t t$roug$ t$e A,# for %ispositio". A,# t$e" pro ee%e% to lassify t$e D+C properties a or%i"g to t$e eCisti"g i.prove.e"ts, i.e., /uil%i"gs, %rive4ays, par7i"g areas, peri.eter fe" e, 4alls a"% gates a"% t$e la"% o" 4$i $ t$e i.prove.e"ts stoo%. #$e e"tire D+C property is alle% GC ''':Delta +otors Corporatio", %ivi%e% i"to Delta ', Delta '', a"% Delta '''. 9urt$er su/%ivisio"s for t$e separate atalogues 4ere .a%e for ea $ %ivisio" e.g. Delta ' i"to Lots 1, 2 a"% 3. After t$is lassifi atio", A,# par elle% out a"% atalogue% t$e properties for /i%%i"g a"% sale. ,art of t$e %uly par elle% Delta ' property 1Lot 23 4as sol% to #oyota t$roug$ pu/li /i%%i"g o" +ay 12, 1!00 for t$e a.ou"t of ,!5,305,))).)). After its pur $ase, #oyota o"stru te% a o" rete $ollo4 /lo 7 1CH&3 peri.eter fe" e arou"% its allege% property. 2" 2 to/er 5, 1!!), a"ot$er part of t$e par elle% Delta ' 1Lot 13 overi"g a" area of 55,236 s;uare .eters 4as pur $ase% /y Su" Ealley fro. A,# for t$e /i% pri e of ,12*,3*!,(6(.)). Relyi"g upo" t$e title %es riptio" of its property a"% t$e surveys it $a% o..issio"e%, Su" Ealley lai.e% t$at #oyotaMs peri.eter fe" e overlaps Su" EalleyMs property alo"g or"ers 11 to 15 /y 322 s;uare .eters a"% or"ers 1! to 1 /y *)1 s;uare .eters for a total of (23 s;uare .eters. 1,ollo, p. 0*13 Negotiatio"s /et4ee" t$e t4o 123 orporatio"s for a possi/le settle.e"t of t$e %ispute /ogge% %o4". Court /attles e"sue%, grou"%e% o" purely pro e%ural issues. '" pursui"g t$e resolutio" of t$e %ispute, /ot$ #oyota a"% Su" Ealley opte% to file separate a tio"s. +u $ of t$e o.pli atio"s t$at arose a"% are "o4 /efore us a" /e tra e% to t$e t4o separate ases pursue% /y /ot$ parties. #$ere are ot$er ases arisi"g fro. t$e sa.e %ispute /ut 4$i $ are "ot /efore us.

Culle% fro. t$e re or%s, t$ese are t$e a"te e%e"ts of t$e t4o ases 4$i $ tra"spire% /elo4.

re.oval of #oyotaMs 4alls a"% %ire te% Su" Ealley to restore t$e pre.ises to t$e status =uo ante. 2" De e./er 11, 1!!1, 8u%ge #e"sua" %e"ie% Su" EalleyMs .otio" for re o"si%eratio" of its .otio" to %is.iss. Su" Ealley elevate% t$is %e"ial to t$e Court of Appeals. #$e ase 4as %o 7ete% as CA:G.R. Sp. No. 26!*2 a"% raffle% to t$e 5leve"t$ 111t$3 Divisio". 8u%ge #e"sua"Ms Duris%i tio" to a t o"si%eri"g t$e %efe"se of pre.aturity of a tio" for failure to ar/itrate t$e vali%ity of t$e #R2 issue% o" De e./er *, 1!!1 a"% t$e or%er gra"ti"g i"Du" tive reliefs 4ere $alle"ge% i" a petitio" for certiorari file% 4it$ t$e Court of Appeals a"% %o 7ete% as CA:G.R. No. 26013, assig"e% to t$e Se o"% 12"%3 Divisio".

5/</5A CAS- HC;v;l C"se 'o. (1$25)4I 2" Septe./er 11, 1!!1, #oyota file% a ase agai"st A,# a"% Su" Ealley %o 7ete% as Civil Case No. !1:25)* 4it$ t$e Regio"al #rial Court of +a7ati, &ra" $ 1*6 presi%e% /y 8u%ge Salva%or #e"sua". #$e o.plai"t 4as for t$e refor.atio" of t$e Dee% of Sale eCe ute% /et4ee" #oyota a"% A,#. #oyota alleges t$at t$e i"stru.e"t faile% to refle t t$e true i"te"tio" of t$e parties, as evi%e" e% /y t$e failure of t$e title to i" lu%e t$e (23 s;uare .eters strip of la"%. #oyota alleges t$at t$e %is repa" y a.e a/out /e ause of t$e serious fla4 i" t$e lassifi atio"J atalogui"g of properties /i%%e% out for sale /y A,#. #oyota 4as .a%e to u"%ersta"% t$at i" lu%e% i" its peri.eter fe" e is t$e %ispute% strip of la"%. #$us, #oyota soug$t t$e resurvey of t$e property to orre t t$is error i" t$e title. Su" Ealley 4as i.plea%e% o"si%eri"g t$at it pur $ase% t$e a%Doi"i"g la"% 4$ose title allege%ly i" lu%e% t$e (23 s;uare .eters property. 2" Septe./er 11, 1!!1, upo" #oyotaMs appli atio", 8u%ge #e"sua" issue% a te.porary restrai"i"g or%er 1#R23 e"Doi"i"g Su" Ealley a"% A,# fro. a"y a t of %estru tio" a"% re.oval of #oyotaMs 4alls a"% stru tures. Su" Ealley a"% A,# 4ere respe tively serve% su..o"s o" t$e follo4i"g %ay. 2" Septe./er 16, 1!!1, Su" Ealley file% a .otio" to %is.iss, o" t$e grou"% t$at t$e #oyota o.plai"t faile% to state a ause of a tio" agai"st it 113 si" e it 4as "ot a party to t$e o"tra t of t$e %ee% of sale /et4ee" #oyota a"% A,#, a"% 123 t$e o.plai"t 4as i" effe t a ollateral atta 7 o" its title. 2" Septe./er 2(, 1!!1, 8u%ge #e"sua" i"itially %e"ie% #oyotaMs appli atio" for preli.i"ary i"Du" tio" o" t$e fi"%i"g t$at t$ere 4as "o evi%e" e of a"y t$reate"e% %estru tio", re.oval or %ispossessio" of #oyotaMs property. 2" 2 to/er 1), 1!!1, 8u%ge #e"sua" %e"ie% Su" EalleyMs .otio" to %is.iss. &ot$ #oyota a"% Su" Ealley file% t$eir respe tive .otio"s for re o"si%eratio". #oyota .ove% to re o"si%er t$e %e"ial of its i"Du" tive appli atio" 4$ile Su" Ealley .ove% to re o"si%er t$e %e"ial of its .otio" to %is.iss. 2" 2 to/er 3), 1!!1, A,# file% its a"s4er 4it$ affir.ative %efe"ses allegi"g t$at t$e o.plai"t .ust /e %is.isse% o" t$e grou"% t$at #oyota a"% A,# s$oul% first $ave resorte% to ar/itratio" as provi%e% i" #oyotaMs %ee% of sale 4it$ A,#. 2" De e./er *, 1!!1, #oyota file% a .otio" allegi"g t$at Su" EalleyMs lo"g t$reate"e% %estru tio" a"% re.oval of #oyotaMs 4alls a"% stru tures 4ere a tually /ei"g i.ple.e"te% to 4$i $ 8u%ge #e"sua" issue% a"ot$er #R2 e"Doi"i"g a ts of %estru tio" a"% re.oval of t$e peri.eter 4alls a"% stru tures o" t$e o"teste% area. Co"se;ue"tly, o" De e./er 1(, 1!!1, 8u%ge #e"sua" re o"si%ere% $is earlier %e"ial of #oyotaMs appli atio" for i"Du" tio" a"% gra"te% a 4rit of preli.i"ary i"Du" tio" e"Doi"i"g Su" Ealley fro. pro ee%i"g 4it$ its t$reate"e% %estru tio" a"%

SU' ,ALL-< CAS- HC;v;l C"se 'o. (1$255)I 2" Septe./er 16, 1!!1, Su" Ealley, o" t$e ot$er $a"%, file% a ase for re overy of possessio" of t$e %ispute% (23 s;uare .eters /ou"%ary 4it$ t$e Regio"al #rial Court 1R#C3 +a7ati, &ra" $ 61 presi%e% /y 8u%ge 9er"a"%o Gorospe, 8r. 2" t$e sa.e %ay, 8u%ge Gorospe issue% a #R2 e"Doi"i"g #oyota fro. o..itti"g furt$er a ts of %ispossessio" agai"st Su" Ealley. 2" Septe./er 1!, 1!!1, #oyota .ove% to lift t$e #R2 a"% oppose% Su" EalleyMs appli atio" for i"Du" tio". 2" Septe./er 23, 1!!1, #oyota file% a .otio" to %is.iss o" t$e grou"% t$at t$e R#C $as "o Duris%i tio" over t$e ase si" e t$e o.plai"t 4as a si.ple eDe t.e"t ase og"i-a/le /y t$e +etropolita" #rial Court 1+#C3. #$e .otio" to %is.iss 4as set for $eari"g o" Septe./er 2(, 1!!1. 2" Septe./er 2(, 1!!1, Su" Ealley file% a" a.e"%e% o.plai"t to i" orporate a" allegatio" t$at #oyotaMs possessio" of t$e allege% %ispute% area /ega" i" Septe./er, 1!00 4$e" #oyota pur $ase% t$e property. Ruli"g t$at t$e a.e"%.e"t 4as a .atter of rig$t, 8u%ge Gorospe a%.itte% t$e a.e"%e% o.plai"t. #oyota a%opte% its .otio" to %is.iss t$e origi"al o.plai"t as its .otio" to %is.iss t$e a.e"%e% o.plai"t. After t$e argu.e"ts to #oyotaMs .otio" to %is.iss, t$e sa.e 4as su/.itte% for resolutio". Su" EalleyMs appli atio" for pro$i/itory a"% .a"%atory i"Du" tio" o"tai"e% i" its o.plai"t 4as set for $eari"g o" 2 to/er 1, 1!!1. ,rotesti"g t$e a%.issio" of t$e a.e"%e% o.plai"t, #oyota 4e"t to t$e Court of Appeals, o" certiorari o" 2 to/er 1, 1!!1. #$is petitio" 4as %o 7ete% as CA:G.R. No. 26152 raffle% to t$e #e"t$ 11)t$3 Divisio". #oyota 4as later pro.pte% to file t4o supple.e"tal petitio"s, /efore t$e Court of Appeals as a result of 8u%ge GorospeMs allege% $asty issua" e of four 1*3 2r%ers, all %ate% 2 to/er 1, 1!!2. #$ese areG

113 9irst supple.e"tal petitio" %ate% 2 to/er *, 1!!1 4$i $ soug$t to "ullify t$e 2r%er %e"yi"g #oyotaMs .otio" to %is.iss t$e a.e"%e% o.plai"t. 123 Se o"% supple.e"tal petitio" %ate% 2 to/er 23, 1!!1 4$i $ soug$t t$e "ullifi atio" of t$e or%ers gra"ti"g Su" EalleyMs appli atio" for preli.i"ary pro$i/itory a"% .a"%atory i"Du" tio" a"% %e"yi"g #oyotaMs .otio" to ross:eCa.i"e Su" EalleyMs 4it"esses o" t$e latterMs i"Du" tio" appli atio". 2" Nove./er 2(, 1!!1, respo"%e"t Court of AppealsM #e"t$ Divisio" pro.ulgate% its ;uestio"e% %e isio" 4$i $ is pri.arily t$e su/De t .atter of t$e prese"t petitio" /efore us. #$e respo"%e"t ourt %e"ie% %ue ourse to t$e #oyota petitio" o" t$e fi"%i"g t$at t$e a.e"%.e"t of Su" EalleyMs o.plai"t 4as a vali% o"e as Su" EalleyMs a tio" 4as "ot for u"la4ful %etai"er /ut a" accion ubliciana. 9urt$er.ore, t$e supple.e"tal petitio"s file% /y #oyota assaili"g t$e pro$i/itory a"% .a"%atory i"Du" tive 4rit 4ere "ot rule% upo" as t$ey 4ere eCpu"ge% fro. t$e re or%s /e ause of #oyotaMs failure to atta $ a .otio" to a%.it t$ese supple.e"tal petitio"s. Co"se;ue"tly, #oyota file% t$e prese"t petitio" for certiorari o" De e./er !, 1!!1. 5arlier, upo" a" e&5 arte .otio" to larify file% /y Su" Ealley o" 2 to/er 25, 1!!1, 8u%ge Gorospe issue% a"ot$er or%er %ate% De e./er 2, 1!!1 4$i $ follo4e% Su" Ealley to /rea7 ope" a"% %e.olis$ a portio" of t$e #oyota peri.eter 4alls, a"% eve"tually to se ure possessio" of t$e %ispute% area. #oyota 4as o"strai"e% to o.e to t$is Court for relief. 2" De e./er 11, 1!!1, 4e issue% a #R2 e"Doi"i"g t$e i.ple.e"tatio" of 8u%ge GorospeMs i"Du" tio" a"% /rea7:ope" or%ers %ate% 2 to/er 1, 1!!1 a"% De e./er 2, 1!!1 respe tively as 4ell as furt$er pro ee%i"gs i" Civil Case No. !1:255). +ea"4$ile, t$e Court of AppealsM Se o"% Divisio" issue% a #R2 or%eri"g respo"%e"t 8u%ge #e"sua" a"% all ot$er perso"s a ti"g i" $is /e$alf to ease a"% %esist fro. furt$er pro ee%i"g 4it$ Civil Case No. !1:25)* a"% fro. e"for i"g t$e 2r%er %ate% De e./er 1(, 1!!1 a"% t$e 4rit of preli.i"ary .a"%atory i"Du" tio" %ate% De e./er 1!, 1!!1. #$is pro.pte% #oyota to file a .otio" to ;uas$ t$e #R2 a"% file a supple.e"tal petitio" 4it$ t$is Court i.plea%i"g t$e Court of AppealsM Se o"% Divisio". 2" 8a"uary 13, 1!!2, 4e a%.itte% t$e supple.e"tal petitio". 2" 8a"uary 1), 1!!2, t$e Court of AppealsM Se o"% Divisio" issue% t$e Resolutio" gra"ti"g Su" EalleyMs appli atio" for preli.i"ary i"Du" tio" 4$i $ e"Doi"e% 8u%ge #e"sua" i" t$e #oyota ase fro. i.ple.e"ti"g $is i"Du" tio" 2r%er a"% fro. pro ee%i"g 4it$ t$e ase /efore $i. 1Civil Case No. !1:25)*3. #$us, #oyota file% its Se o"% Supple.e"tal ,etitio" 4it$ t$is Court $alle"gi"g t$e vali%ity of t$e i"Du" tio" 4rit issue% /y t$e Court of AppealsM Se o"% Divisio". #$is Se o"% Supple.e"tal ,etitio" 4as a%.itte% o" 9e/ruary 1), 1!!2.

2" 9e/ruary 1), 1!!2, 4e gave %ue petitio".

ourse to #oyotaMs

Su/se;ue"tly, t$roug$ a .a"ifestatio" %ate% April 2!, 1!!2, #oyota i"for.e% t$e Court t$at o" April 15, 1!!2, t$e Court of AppealsM 11t$ Divisio" 1Su" Ealley ase3 re"%ere% a %e isio" %is.issi"g t$e ase /efore it for la 7 of .erit. #$e Court of Appeals rule% t$at t$e #oyota o.plai"t 4as "ot a ollateral atta 7 o" Su" EalleyMs title a"% t$at .isDoi"%er of parties is "ot a grou"% for %is.issal. A su/se;ue"t .otio" for re o"si%eratio" 4as %e"ie% i" a resolutio" %ate% August 1), 1!!2. '" t$e i"sta"t petitio" #oyota raises t$e follo4i"g issues, to 4itG 1. #$e Court of AppealsM 1)t$ Divisio" gravely a/use% its %is retio" 4$e" it ig"ore% or prete"%e% to ig"ore #oyotaMs protests agai"st 8u%ge GorospeMs i"Du" tio" or%ers. 2. Su" Ealley is guilty of foru.:s$oppi"g a"% 8u%ge Gorospe of ase:gra//i"g. Su" Ealley, o" t$e ot$er $a"% raises t$e follo4i"gG 1. <$et$er or "ot t$e petitio"er availe% of t$e proper .o%e of elevati"g t$e ase to t$is Court. 2. <$et$er or "ot t$e Court of Appeals o..itte% grave a/use of %is retio" i" refusi"g to a t upo" petitio"erMs supple.e"tal petitio"s for certiorari. 3. <$et$er or "ot t$e o.plai"t file% i" t$e ourt /elo4 is a" accion ubliciana 4$i $ is 4it$i" t$e Duris%i tio" of t$e R#C. *. <$et$er or "ot 8u%ge Salva%or S. #e"sua" $a% Duris%i tio" to ta7e og"i-a" e of Civil Case No. 25)* for refor.atio" of i"stru.e"t. 5. <$et$er or "ot respo"%e"t 8u%ge Gorospe, 8r. o..itte% grave a/use of %is retio" i" gra"ti"g private respo"%e"tMs appli atio" for a 4rit of preli.i"ary pro$i/itoryJ.a"%atory i"Du" tio". 6. <$et$er or "ot 8u%ge #e"sua" o..itte% grave a/use of %is retio" i" issui"g t$e 4rit of .a"%atory i"Du" tio" %ate% De e./er 1!, 1!!1. #$is ase is far fro. settle.e"t o" t$e .erits. #$roug$ legal .a"euveri"gs, t$e parties $ave su ee%e% i" .u%%li"g up t$e vital issues of t$e ase a"% getti"g t$e lo4er ourts e./roile% i" "u.erous appeals over te $"i alities. As it is "o4, t$ere are t$ree appellate %e isio"sJresolutio"s /efore us for revie4 a"% o"fli ti"g or%ers issue% /y lo4er ourts as a result of t$e separate ases file% /y t$e parties. As i" t$e ase of Consolidated Ban# and 1rust Cor . v. Court o( ' eal,s 1!3 SCRA 150 @1!!1A, t$e Court is eCpli it i" stati"g t$atG CCC CCC CCC <$ere t$ere are o"fli ti"g /ut i"eCtri a/ly i"ter o""e te% issues i" o"e a"% t$e sa.e o.pli ate% ase, it is /est t$at t$ese /e resolve% i" o"e i"tegrate% pro ee%i"g 4$ere

a" overall pi ture of t$e e"tirety of t$e ase a" /e prese"te% a"% eCa.i"e%. ,ie e.eal %eter.i"atio"s /y several trial ourts o" seg.e"ts of t$e /asi issue a"% %is o""e te% appeals to %iffere"t Divisio"s of t$e Court of Appeals resulti"g i" separate %e isio"s ea $ %eali"g 4it$ o"ly part of t$e pro/le. are %is ourage%. Nee%less .ultipli ity of suits is so.et$i"g 4$i $ is fro4"e% upo". CCC CCC CCC A.i% t$e lutter of eCtra"eous .aterials 4$i $ $ave ertai"ly /loate% t$e re or%s of t$is ase, 4e fi"% o"ly t4o 123 issues vital to t$e %ispositio" of t$e petitio"G first, is t$e .atter of Duris%i tio", 4$o as /et4ee" 8u%ge #e"sua" or 8u%ge Gorospe $as Duris%i tio" over t$e %isputeF a"% se o"%, 4$o as /et4ee" t$e parties $as t$e rig$tful possessio" of t$e la"%. A"e"t t$e issue o" Duris%i tio", 4e eCa.i"e t$e t4o a tio"s file% /y t$e parties. #oyota file% a" a tio" for refor.atio" o" Septe./er 11, 1!!1, /efore 8u%ge #e"sua" allegi"g t$at t$e true i"te"tio"s of t$e parties 4ere "ot eCpresse% i" t$e i"stru.e"t 1Art. 135! Civil Co%e3. #$e i"stru.e"t soug$t to /e refor.e% is t$e %ee% of sale eCe ute% /y A,# i" favor of #oyota. #oyota alleges t$at t$ere 4as a .ista7e i" t$e %esig"atio" of t$e real properties su/De t .atter of t$e o"tra t. Su" Ealley 4as i.plea%e% i" or%er to o/tai" o.plete relief si" e it 4as t$e o4"er of t$e a%Da e"t lot. Su" Ealley, $o4ever, argues t$at t$e o.plai"t for refor.atio" states "o ause of a tio" agai"st it si" e a" a tio" for refor.atio" is /asi ally o"e stri tly /et4ee" t$e parties to t$e o"tra t itself. #$ir% perso"s 4$o are "ot parties to t$e o"tra t a""ot a"% s$oul% "ot /e i"volve%. #$us, Su" Ealley o"te"%s t$at it s$oul% "ot $ave /ee" i.plea%e% as a %efe"%a"t. #$e Court of AppealsM 11t$ Divisio", i" its %e isio" pro.ulgate% o" April 15, 1!!2 4$ere t$e %e"ial of Su" EalleyMs .otio" to %is.iss 4as sustai"e%, orre tly rule% t$at .isDoi"%er of parties is "ot a grou"% for %is.issal. A.eri a" Durispru%e" e fro. 4$ere provisio"s o" refor.atio" of i"stru.e"ts 4ere ta7e" %is loses t$at suits to refor. 4ritte" i"stru.e"ts are su/De t to t$e ge"eral rule i" e;uity t$at all perso"s i"tereste% i" t$e su/De t .atter of t$e litigatio", 4$et$er it is a legal or a" e;uita/le i"terest s$oul% /e .a%e parties, so t$at t$e ourt .ay settle all t$eir rig$ts at o" e a"% t$us preve"t t$e "e essity of a .ultipli ity of suits 1&evis Co"stru tio" Co. v. Gra e @9la AppA 115 So 2% 0*F Gree" v. Sto"e, 5* N.8.5. 30(, 3* A 1)!!3. As a ge"eral rule, t$erefore, all perso"s to /e affe te% /y t$e propose% refor.atio" .ust /e .a%e parties 1A.eri a" 9i%elity K Casualty Co. v. 5l%er, 10! Ga 22!, 5 S5 2% 660F >e.p v. 9u"%er/ur7, 22* NC 353, 3) S5 2% 1553. '" a" a tio" to refor. a %ee%, all parties lai.i"g a" i"terest i" t$e la"% or a"y part t$ereof purporte%ly o"veye% /y t$e i"stru.e"t soug$t to /e refor.e%, a"% 4$ose i"terests 4ill /e affe te% /y t$e refor.atio" of t$e i"stru.e"t are "e essary parties to t$e a tio" 1>e.p v. 9u"%er/ur7, 22* NC 353, 3) S5 2% 1553. 9ro. t$e foregoi"g Durispru%e" e, it 4oul% appear t$at #oyota 4as orre t i" i.plea%i"g Su" Ealley as party %efe"%a"t.

Ho4ever, t$ese pri" iples are "ot appli a/le u"%er t$e parti ular ir u.sta" es of t$is ase. ="%er t$e fa ts of t$e prese"t ase, #oyotaMs a tio" for refor.atio" is %is.issi/le as agai"st Su" Ealley. Atte"tio" .ust first /e /roug$t to t$e fa t t$at t$e o"tra t of sale eCe ute% /et4ee" A,# a"% #oyota provi%es a" ar/itratio" lause 4$i $ states t$atG CCC CCC CCC 5. '" ase of %isagree.e"t or o"fli t arisi"g out of t$is Co"tra t, t$e parties $ere/y u"%erta7e to su/.it t$e .atter for %eter.i"atio" /y a o..ittee of eCperts, a ti"g as ar/itrators, t$e o.positio" of 4$i $ s$all /e as follo4sG a3 2"e .e./er to /e appoi"te% /y t$e E5ND2RF /3 2"e .e./er to /e appoi"te% /y t$e E5ND55F 3 2"e .e./er, 4$o s$all /e a la4yer, to /e appoi"te% /y /ot$ of t$e aforesai% partiesF #$e .e./ers of t$e Ar/itratio" Co..ittee s$all /e appoi"te% "ot later t$a" t$ree 133 4or7i"g %ays fro. re eipt of a 4ritte" "oti e fro. eit$er or /ot$ parties. #$e Ar/itratio" Co..ittee s$all o"ve"e "ot later t$a" t$ree 133 4ee7s after all its .e./ers $ave /ee" appoi"te% a"% pro ee% 4it$ t$e ar/itratio" of t$e %ispute 4it$i" t$ree 133 ale"%ar .o"t$s ou"te% t$erefro.. &y 4ritte" .utual agree.e"t /y t$e parties $ereto, su $ ti.e li.it for t$e ar/itratio" .ay /e eCte"%e% for a"ot$er ale"%ar .o"t$. #$e %e isio" of t$e Ar/itratio" Co..ittee /y .aDority vote of at least t4o 123 .e./ers s$all /e fi"al a"% /i"%i"g upo" /ot$ t$e E5ND2R a"% t$e E5ND55F 1,ollo, pp. 016:01(3 CCC CCC CCC #$e o"te"tio" t$at t$e ar/itratio" lause $as /e o.e %isfu" tio"al /e ause of t$e prese" e of t$ir% parties is u"te"a/le. Co"tra ts are respe te% as t$e la4 /et4ee" t$e o"tra ti"g parties 1+er a"tile '"s. Co. '" . v. 9elipe 6s.ael, 8r. K Co., '" ., 16! SCRA 66 @1!0!A3. As su $, t$e parties are t$ere/y eCpe te% to a/i%e 4it$ goo% fait$ i" t$eir o"tra tual o..it.e"ts 1Quilla" v. CA, 16! SCRA 2(! @1!0!A3. #oyota is t$erefore /ou"% to respe t t$e provisio"s of t$e o"tra t it e"tere% i"to 4it$ A,#. #oyota file% a" a tio" for refor.atio" of its o"tra t 4it$ A,#, t$e purpose of 4$i $ is to loo7 i"to t$e real i"te"tio"sJagree.e"t of t$e parties to t$e o"tra t a"% to

%eter.i"e if t$ere 4as really a .ista7e i" t$e %esig"atio" of t$e /ou"%aries of t$e property as allege% /y #oyota. Su $ ;uestio"s a" o"ly /e a"s4ere% /y t$e parties to t$e o"tra t t$e.selves. #$is is a o"troversy 4$i $ learly arose fro. t$e o"tra t e"tere% i"to /y A,# a"% #oyota. '"as.u $ as t$is o" er"s .ore i.porta"tly t$e parties A,# a"% #oyota t$e.selves, t$e ar/itratio" o..ittee is t$erefore t$e proper a"% o"ve"ie"t foru. to settle t$e .atter as learly provi%e% i" t$e %ee% of sale. Havi"g /ee" apprise% of t$e prese" e of t$e ar/itratio" lause i" t$e .otio" to %is.iss file% /y A,#, 8u%ge #e"sua" s$oul% $ave at least suspe"%e% t$e pro ee%i"gs a"% %ire te% t$e parties to settle t$eir %ispute /y ar/itratio" 1&e"gso" v. C$a", (0 SCRA 113 @1!((A, Se . (, RA 0(63. 8u%ge #e"sua" s$oul% $ave "ot ta7e" og"i-a" e of t$e ase. &ut t$e .ore appare"t reaso" 4$i $ 4arra"ts t$e %is.issal of t$e a tio" as agai"st Su" Ealley is t$e fa t t$at t$e o.plai"t for refor.atio" a.ou"ts to a ollateral atta 7 o" Su" EalleyMs title, o"trary to t$e fi"%i"g of t$e Court of AppealsM 11t$ Divisio". 't is %ispute% t$at Su" Ealley $as a #orre"s title registere% i" its "a.e /y virtue of its pur $ase of t$e la"% fro. A,#. #oyota o"te"%s t$at t$e (23 s;uare .eters strip of la"% 4$i $ it u"%erstoo% to /e i" lu%e% i" its pur $ase fro. A,# 4as erro"eously i" lu%e% i" Su" EalleyMs title. #$is is t$e reaso" 4$y refor.atio" 4as soug$t to orre t t$e .ista7e. <ell:settle% is t$e rule t$at a ertifi ate of title a" "ot /e altere%, .o%ifie%, or a" elle% eC ept i" a %ire t pro ee%i"g i" a or%a" e 4it$ la4 1Se tio" *0, ,.D. No. 152!3. '" t$e ase of *omingo v. Santos 7ngsia#o, )im 6 Sia 155 ,$il. 361 @1!3)A3, t$e Court $el% t$atG . . . #$e fa t s$oul% "ot /e overloo7e% t$at 4e are $ere o"fro"te% 4it$ 4$at is really a ollateral atta 7 upo" a #orre"s title. #$e ir u.sta" e t$at t$e a tio" 4as %ire tly /roug$t to re over a par el of la"% %oes "ot alter t$e trut$ t$at t$e pro ee%i"g i"volves a ollateral atta 7 upo" a #orre"s title, /e ause as 4e $ave fou"%, t$e la"% i" o"troversy lies 4it$i" t$e /ou"%aries %eter.i"e% /y t$at title. #$e La"% Registratio" La4 %efi"es t$e .et$o%s u"%er 4$i $ a 4ro"gful a%Du%i atio" of title to la"% u"%er t$e #orre"s syste. .ay /e orre te% . .. <$ile refor.atio" .ay ofte" /e $a% to orre t .ista7es i" %efi"i"g t$e /ou"%ary of la"%s o"veye% so as to i%e"tify t$e la"%s, it .ay "ot /e use% to pass ot$er la"%s fro. t$ose i"te"%e% to /e /oug$t a"% sol%, "ot4it$sta"%i"g a .ista7e i" poi"ti"g out t$e li"es, si" e refor.atio" u"%er t$ese ir u.sta" es 4oul% /e i"e;uita/le a"% u"Dust. 1+ Cay v. 8e"7i"s, 2** Ala 65), 15 So 2% *)!, 1*! ALR (*63 Assu.i"g t$at #oyota is affor%e% t$e relief praye% for i" t$e #e"sua" ourt, t$e latter a" "ot vali%ly or%er t$e o"teste% portio" to /e ta7e" out fro. t$e Su" EalleyMs #C# a"% a4ar% it i" favor of #oyota.

A" a tio" for refor.atio" is in ersonam, "ot in rem 1Co$e" v. Hell.a" Co..er ial #rust K Savi"gs &a"7, 133 Cal App (50, 2* ,2% !6)F 5%4ar%s v. Ne4 6or7 Life '"s. Co. 1(3 #e"" 1)2, 11* S< 2% 0)03 eve" 4$e" real estate is i"volve% 1Agurs v. Holt, 232 La 1)26, !5 So 2% 6**F Eallee v. Eallee 1La App3 10) So 2% 5()3. 't is .erely a" e;uita/le relief gra"te% to t$e parties 4$ere t$roug$ .ista7e or frau%, t$e i"stru.e"t faile% to eCpress t$e real agree.e"t or i"te"tio" of t$e parties. <$ile it is a re og"i-e% re.e%y affor%e% /y ourts of e;uity it .ay "ot /e applie% if it is o"trary to 4ell:settle% pri" iples or rules. 't is a lo"g sta"%i"g pri" iple t$at e;uity follo4s t$e la4. 't is applie% i" t$e a/s e" e of a"% "ever agai"st statutory la4 1?a/at v. Court of Appeals, 1*2 SCRA 50( @1!06A3. Courts are /ou"% /y rules of la4 a"% $ave "o ar/itrary %is retio" to %isregar% t$e.. 1See Arse"al v. '"ter.e%iate Appellate Court, 1*3 SCRA *) @1!06A.3 Courts of e;uity .ust pro ee% 4it$ ut.ost autio" espe ially 4$e" rig$ts of t$ir% parties .ay i"terve"e. #$us i" t$e i"sta"t ase, vis5a5vis 4ell:settle% pri" iples or rules i" la"% registratio", t$e e;uita/le relief of refor.atio" .ay "ot o.e i"to play i" or%er to tra"sfer or appropriate a pie e of la"% t$at o"e lai.s to o4" /ut 4$i $ is title% i" t$e "a.e of a t$ir% party. 2" t$e ot$er $a"%, Su" Ealley file% a" a tio" for re o"veya" e agai"st #oyota to re over possessio" of t$e strip of la"% e" roa $e% upo" a"% o upie% /y t$e latter. <$at Su" Ealley see7s i" its o.plai"t is t$e re overy of possessio" de 8ure a"% "ot .erely possessio" de (acto. #oyota .ove% to %is.iss o" t$e assu.ptio" t$at t$e o.plai"t 4as o"e for u"la4ful %etai"er og"i-a/le /y t$e +#C. <e %o "ot fi"% a"y reversi/le error i" t$e %e isio" of t$e Court of AppealsM 1)t$ Divisio" 4$ere it up$el% 8u%ge GorospeMs or%er %e"yi"g #oyotaMs .otio" to %is.iss. A" a.e"%.e"t to a o.plai"t /efore a respo"sive plea%i"g is file%, is a .atter of rig$t 1Rule 1), Se . 23. <$et$er or "ot t$e o.plai"t 4as a.e"%e%, Su" EalleyMs o.plai"t 4as o"e for accion ubliciana og"i-a/le /y t$e R#C. 'ts rig$t over t$e la"% is pre.ise% o" t$e ertifi ate of title registere% i" its "a.e after it $a% pur $ase% sai% la"% fro. A,#. As t$e registere% o4"er it $a% t$e rig$t of possessio" of sai% la"% illegally o upie% /y a"ot$er 16/aUe- v. 'AC, 1!* SCRA (*3 @1!!1A3. #$e ase ofBana6os v. Susana ,ealt6, $nc. 1(1 SCRA 55( @1!(6A3 is ;uite i"stru tiveG CCC CCC CCC <e %ee. it a%visa/le, at t$is poi"t, to reiterate t$e esse"tial %iffere" es /et4ee" t$ree 7i"%s of a tio"s for t$e re overy of possessio" of real property, "a.elyG 113 t$e su..ary a tio" for for i/le e"try a"% u"la4ful %etai"erF 123 t$e accion ublicianaF a"% 133 t$e accion de reivindicacion. #$e a tio" for for i/le e"try .ay /e /roug$t 4$ere %ispossessio" of real property $a% ta7e" pla e /y a"y of t$e .ea"s provi%e% for i" Se tio" 1 of Rule () of t$e Revise% Rules of Court, a"% i" t$e ase of u"la4ful %etai"er, 4$ere t$e possessio" is 4it$$el% after t$e eCpiratio" or ter.i"atio" of t$e rig$t to $ol% possessio", /y virtue of a"y o"tra t eCpress or i.plie%. #$ese t4o a tio"s .ust /e file% 4it$i" o"e 113 year after su $ u"la4ful %eprivatio" or 4it$$ol%i"g of possessio" 4it$ t$e .u"i ipal or ity ourt.

#$ese a tio"s i" t$eir esse" e are .ere ;uieti"g pro esses /y virtue of 4$i $ a party i" possessio" of la"% .ay "ot /e, /y for e, %ispossesse% of t$at la"%, t$e la4 restori"g to $i. su $ possessio" i" a su..ary .a""er, u"til t$e rig$t of o4"ers$ip a" /e trie% i" %ue ourse of la4. #$ey are, t$erefore, i"te"%e% to provi%e a" eCpe%itious .ea"s of prote ti"g a tual possessio" or rig$t to possessio" of property. #$e aforesai% Rule () %oes "ot, $o4ever, over all of t$e ases of %ispossessio" of la"%s. #$us, L4$e"ever t$e o4"er is %ispossesse% /y a"y ot$er .ea"s t$a" t$ose .e"tio"e% $e .ay .ai"tai" $is a tio" i" t$e Court of 9irst '"sta" e, a"% it is "ot "e essary for $i. to 4ait u"til t$e eCpiratio" of t4elve .o"t$s /efore o..e" i"g a" a tio" to /e repossesse% or %e lare% to /e o4"er of la"%.L 1Gu.ira" v. Gu.ira", 21 ,$il. 1(*, 1(!. C(. +e%i"a, et al. v. Eal%ello", 63 SCRA 2(03 Courts of 9irst '"sta" e $ave Duris%i tio" over a tio"s to re over possessio" of real property illegally %etai"e%, toget$er 4it$ re"ts %ue a"% %a.ages, eve" t$oug$ o"e 113 year $as "ot eCpire% fro. t$e /egi""i"g of su $ illegal %ete"tio", provi%e% t$e ;uestio" of o4"ers$ip of su $ property is also i"volve%. '" ot$er 4or%s, if t$e party illegal %ispossesse% %esires to raise t$e ;uestio" of illegal %ispossessio" as 4ell as t$at of t$e o4"ers$ip over t$e property, $e .ay o..e" e su $ a tio" i" t$e Court of 9irst '"sta" e i..e%iately or at a"y ti.e after su $ illegal %ispossessio". 'f $e %e i%es to raise t$e ;uestio" of illegal %ispossessio" o"ly, a"% t$e a tio" is file% .ore t$a" o"e 113 year after su $ %eprivatio" or 4it$$ol%i"g of possessio", t$e" t$e Court of 9irst '"sta" e 4ill $ave origi"al Duris%i tio" over t$e ase. 1&is$op of Ce/u v. +a"goro", 6 ,$il. 206F Cat$oli C$ur $ v. #arla a"% Ei toria, ! ,$il. *5)F Le%es.a v. +ar os, ! ,$il. 610F +e%i"a, et al. v. Eal%ello", su ra3 #$e for.er is a" accion de reivindicacion 4$i $ see7s t$e re overy of o4"ers$ip as 4ell as possessio", 4$ile t$e latter refers to a" accion ubliciana, 4$i $ is t$e re overy of t$e rig$t to possess a"% is a ple"ary a tio" i" a" or%i"ary pro ee%i"g i" t$e Court of 9irst '"sta" e. 1Se . 00, Rep. A t No. 2!6F Rule (), Rules of CourtF +a"ila Railroa% Co. v. Attor"ey Ge"eral, 2) ,$il. 523F Li. Cay v. Del, 55 ,$il. 6!2F Ce"tral A-u arera %e #arla v. De Leo", 56 ,$il. 16!F Navarro v. Aguila, 66 ,$il. 6)*F Lu"a v. Cara"%a"g, 26 SCRA 3)6F +e%i"a, et al. v. Eal%ello", su raF ,asa;ui, et al. v. Eilla/la" a, et al.,su ra3. <it$ t$e fi"%i"g t$at #oyotaMs a tio" for refor.atio" is %is.issa/le as it is i" effe t a ollateral atta 7 o" Su" EalleyMs title, Su" EalleyMs a tio" for re overy of possessio" file% /efore 8u%ge Gorospe "o4 sta"%s to /e t$e proper foru. 4$ere t$e follo4i"g %ispute .ay /e trie% or $ear%.

<e "o4 o.e to t$e issue as to 4$i $ of t$e parties $as a legal rig$t over t$e property to 4arra"t t$e issua" e of t$e preli.i"ary .a"%atoryJpro$i/itory i"Du" tio". '" a tio"s i"volvi"g realty, preli.i"ary i"Du" tio" 4ill lie o"ly after t$e plai"tiff $as fully esta/lis$e% $is title or rig$t t$ereto /y a proper a tio" for t$e purpose. #o aut$ori-e a te.porary i"Du" tio", t$e o.plai"a"t .ust .a7e out at least a rima (acie s$o4i"g of a rig$t to t$e fi"al relief. ,reli.i"ary i"Du" tio" 4ill "ot issue to prote t a rig$t "ot in esse 1&uaya" Cattle Co. '" . v. Qui"tilla", 120 SCRA 206:20( @1!0*AF 2rtigas K Co.pa"y, Li.ite% ,art"ers$ip v. Rui-, 1*0 SCRA 326 @1!0(A3. #4o re;uisites are "e essary if a preli.i"ary i"Du" tio" is to issue, "a.ely, t$e eCiste" e of t$e rig$t to /e prote te%, a"% t$e fa ts agai"st 4$i $ t$e i"Du" tio" is to /e %ire te%, are violative of sai% rig$t. '" parti ular, for a 4rit of preli.i"ary i"Du" tio" to issue, t$e eCiste" e of t$e rig$t a"% t$e violatio" .ust appear i" t$e allegatio"s of t$e o.plai"t a"% a" i"Du" tio" is proper also 4$e" t$e plai"tiff appears to /e e"title% to t$e relief %e.a"%e% i" $is o.plai"t. 9urt$er.ore, t$e o.plai"t for i"Du" tive relief .ust /e o"strue% stri tly agai"st t$e plea%er 12rtigas K Co.pa"y, Li.ite% ,art"ers$ip v. Rui-, su ra3. '" t$e i"sta"t ase t$e eCiste" e of a L lear positive rig$tL espe ially alli"g for Du%i ial prote tio" $as /ee" s$o4" /y Su" Ealley. #oyotaMs lai. over t$e %ispute% property is a" $ore% o" t$e fa t of its pur $ase of t$e property fro. A,#, t$at fro. t$e ir u.sta" es of t$e pur $ase a"% t$e i"te"tio" of t$e parties, t$e property i" lu%i"g t$e %ispute% area 4as sol% to it. Su" Ealley, o" t$e ot$er $a"% $as #C# No. *!)1! of t$e Registry of Dee%s of ,araUa;ue e./ra i"g t$e aforesai% property i" its "a.e, $avi"g /ee" vali%ly a ;uire% also fro. A,# /y virtue of a Dee% of Sale eCe ute% i" its favor o" De e./er 5, 1!!) 1,ollo, pp. 023:025F 026:02(3. #$ere are ot$er ir u.sta" es i" t$e ase 4$i $ .ilitate agai"st #oyotaMs lai. for legal possessio" over t$e %ispute% area. #$e fa t t$at #oyota $as file% a suit for refor.atio" see7i"g t$e i" lusio" of t$e (23 s;uare .eters strip of la"% is suffi ie"t to %e%u e t$at it is "ot e"title% to ta7e over t$e pie e of property it "o4 atte.pts to appropriate for itself. As early as Septe./er, 1!00 prior to t$e o"stru tio" of t$e peri.eter fe" e, #oyota 4as alrea%y a4are of t$e %is repa" ies i" t$e propertyMs %es riptio" i" t$e title a"% t$e a tual survey. #$e letter of its surveyor revealsG o.pa"y, Su..a >u.agai t$us

)! Septe./er, 1!00 #262#A +2#2R ,H'L',,'N5S C2R,2RA#'2N 1)t$ 9loor, +etro/a"7 ,la-a Se". Gil 8. ,uyat Ave. +a7ati, +etro +a"ila

A##5N#'2NG +R. 9L2R5NC'2 8=RAD2 9i"a" e 2ffi er S=&85C#G ,HAS5 ' R5N2EA#'2N <2R> ,5R'+5#5R 95NC5 G5N#L5+5NG #$is is i" o""e tio" 4it$ t$e o"stru tio" of t$e ,eri.eter 9e" e for t$e #oyota +otor ,la"t 9a ilities 4$i $ to t$is %ate 4e $ave "ot starte% yet %ue to t$e follo4i"g reaso"sG 1. La 7 of fe" i"g per.it 4$i $ a" o"ly /e applie% to a"% issue% /y t$e ,araUa;ue &uil%i"g 2ffi ial upo" re eipt of t$e tra"sfer ertifi ate to title a"% taC %e laratio". 2. Alt$oug$ t$e &uil%i"g 2ffi ial $as ver/ally i"stru te% us to pro ee% 4it$ t$e re"ovatio" 4or7 a"% o"stru tio" of fe" e, ;e could not e&ecute the (encing ;or# due to discre ancies on the consolidation lan and the e&isting ro ert6 monuments. #$ese %is repa" ies 4as 1sic3 o"fir.e% 4it$ t$e represe"tatives of t$e Geo%eti 5"gi"eer. >i"%ly eCpe%ite t$e i..e%iate o"fir.atio" 4it$ t$e Geo%eti 5"gi"eer o" t$e fi"al %es riptio"s of t$e property li"es. <e 4oul% appre iate your usual pro.pt atte"tio" regar%i"g t$is .atter. Eery truly yours, C5SAR D. 5L5 ,roDe t +a"ager 15.p$asis supplie%, ,ollo, p. 0113 Despite su $ "otifi atio", #oyota o"ti"ue% to /uil% t$e peri.eter fe" e. 't is $ig$ly %ou/tful 4$et$er #oyota .ay /e o"si%ere% a /uil%er i" goo% fait$ to /e e"title% to prote tio" u"%er Arti le **0 of t$e Civil Co%e. #$e re or%s also reveal t$at #oyotaMs o4" surveyor, t$e Certe-a Surveyi"g K A rop$oto Syste.s, '" . o"fir.e% i" its reports %ate% April 1 a"% April 5, 1!!1 t$at #oyotaMs peri.eter fe" e overlaps t$e /ou"%aries of Su" EalleyMs lot 1 ,ollo, pp. 033:3033. 5ve" o..u"i atio" eC $a"ges /et4ee" a"% a.o"g A,#, #oyota K Su" Ealley s$o4 t$at t$e parties are ertai"ly a4are t$at t$e o4"ers$ip of t$e %ispute% property .ore properly pertai"s to Su" Ealley. A.o"g t$ese are t$e follo4i"gG +ay 20, 1!!1 +R. 82S5 ,resi%e"t Su" Ealley Develop.e"t CH. ALEAR5?

Cor. Aurora &lv%. a"% ,asay City, +etro +a"ila Dear +r. Alvare-G

A"%re4s

Ave.

#$a"7 you for $o"ori"g our i"vitatio" to a lu" $eo" .eeti"g $el% at "oo" ti.e to%ay at Sugi Restaura"t. As per our u"%ersta"%i"g, 4e 4oul% li7e to propose as a pa 7age t$e settle.e"t of %iffere" es /et4ee" your property a"% ours as follo4sG 1. &ou"%ary 'ssue /et4ee" #+, +ai" 2ffi e K 9a tory a"% t$e re e"tly a ;uire% property of SE+DC. #$e /ou"%ary li"es to our property li"es /i%%e% early 1!00 4ere %eter.i"e% after .a7i"g full pay.e"t i" August 1!00 Doi"tly /y represe"tatives of #+,J+etro/a"7 W +essrs. +ita7e, ,e%rosa, Alo"-o a"% 8ura%o, A,# W +r. &i" e toget$er 4it$ represe"tatives of Geo: Resour es 4$o i"stalle% t$e .o"u.e"ts a"% prepare% t$e te $"i al %es riptio" of t$e property. #$e o"stru tio" of t$e fe" e utili-e% eCisti"g fe" e .ar7e% yello4 o" 5C$i/it 1 a"% .a%e sure t$at t$e "e4 fe" e to set /ou"%aries 4ere o" top of t$e .o"u.e"ts set /y Geo:Resour es. #$e repla e.e"t of eCisti"g 4ire fe" e 4ere affe te% /y setti"g o" rete 4alls o" eCa tly t$e sa.e positio". #$is is t$e reaso" 4$y 4e are surprise% top /e i"for.e% t$at our fe" e goes /eyo"% t$e /ou"%ary li"es set fort$ i" t$e #e $"i al Des riptio" o" t$e #ra"sfer Certifi ate of #itle 1#C#3 to our property. #$is o urs eve" o" fe" e alrea%y eCisti"g a"% s$oul% $ave /ee" .ai"tai"e% i" t$e #C#. Since ;e have mani(ested our intention ;hen ;e set boundaries to our ro ert6, ;e ro ose the (ollo;ing in relation to the

+a"ufa turi"g K Corp. 1SE+DC3

e&cess area occu ied b6 1M4. 1. <e offer to give 4ay to a" a ess roa% 5 .. 4i%e .ore or less fro. poi"t 15 to 16 of Lot 2 11*.65 .. i" le"gt$3 at t$e /a 7 of our ,ai"t Storage &uil%i"g 15C$i/it 23. 2. "e ro ose to a6 (or the balance o( e&cess land inside 1M4 (ence (contested areas) at a rice mutuall6 agreed u on. ''. Questio" of o4"ers$ip of ertai" per.a"e"t i.prove.e"ts 1u"%ergrou"% 4ater reservoir a"% peri.eter 4allsJfe" es3 lo ate% at Lot 6 4$i $ 4e 4o" /y /i%%i"g fro. A,# o" 2 to/er 5, 1!!). <e $ave .a%e our positio" to A,# t$at t$ese per.a"e"t i.prove.e"ts are part of Lot 6 o" Las is 4$ere isL /i% /asis 1See eCpla"atory .ap W 5C$i/it 33. Ho4ever, si" e you $ave relaye% to us t$at t$e u"%ergrou"% 4ater reservoir is of "o use to you, as part of t$e total pa 7age 4e are proposi"g to pay for t$e u"%ergrou"% 4ater reservoir, t$e appli a/le peri.eter 4allsJfe" es a"% t$e 4ater pu.pJpipi"gs at a pri e .utually agree% upo". <e $ope t$at t$roug$ t$is proposal 4e 4oul% settle our %iffere" es a"% loo7 for4ar% to a .ore ooperative relatio"s$ip /et4ee" goo% "eig$/ors. <e 4ill appre iate your favora/le o"si%eratio" a"% i..e%iate atte"tio" o" t$e .atter. Eery truly yours,

#262#A +2#2R C2R,2RA#'2N R.. 15, Sout$ ,araUa;ue, +etro +a"ila A##5N#'2NG ,resi%e"t Ge"tle.e"G +R.

,H'L',,'N5S Super$ig$4ay

+ASA2

+'#A>5

#$is refers to our several .eeti"gs regar%i"g t$e property pro/le.s at LLot 6L a"% your e" roa $.e"t of SE+D L2# '. <e 4is$ to t$a"7 you for fi"ally a 7"o4le%gi"g t$e legiti.a y of our %e.a"%s o" /ot$ properties. '" or%er to start a goo% /usi"ess relatio"s$ip, 4e propose t$at t$e property pro/le. at LL2# 6L 4$i $ o"sists of t$e peri.eter fe" e, 4ater reservoir, 4ater pu.p a"% syste.s /e settle% first, i" t$e a.ou"t of ,3,5)),))).)) paya/le to C+ANC. <e also 4oul% li7e to re;uest you to allo4 us to o"ti"ue usage of t$e +5RALC2 posts a"% li"es o""e ti"g to SE+D po4er statio" 4$i $ passes t$ru your property a"% allo4 e"try of +5RALC2 li"e.e" fro. ti.e to ti.e. I on acce tance o( these re=uests, $ ;ill con(er ;hich our Ja anese artners to consider the selling o( the F20 s=. m. o( land ad8acent to 6our 'ssembl6 4lant ;hich 6ou continue to use even a(ter said ro ert6 has been legall6 trans(erred to us (rom last =uarter o( 3//.. '" vie4 of your prese"t goo% /e$avior, 4e are $opi"g t$at t$is first pro/le. /e settle% "ot later t$a" 8uly 15, 1!!1, ot$er4ise, 4e 4ill o"si%er t$e 4$ole .atter as u"a epta/le to you a"% 4e, t$erefore, pro ee% as earlier %e.a"%e% to i..e%iately %e.olis$ t$e CH& fe" e t$at preve"ts us fro. usi"g our property. <e $ope for your i..e%iate a tio" to start t$e resolutio" of t$ese u"4a"te% pro/le.s.

Eery truly

82S5 ,resi%e"t 5.p$asis

+ASA2 +oreover, Su" Ealley puts +'#A>5 fort$ evi%e" e t$at #oyota $as ,resi%e"taltere% t$e /ou"%aries of its o4" property /y .ovi"g t$e .o"u.e"ts ere te% t$ereo" /y A,#Ms surveyor Geo: Resour es a"% Co"sulta" y, '" . 4$e" Lot 2 4as i"itially surveye% i" August 1!00G 8uly *, 1!!1 #$e 1)t$ Asset 9loor, ,rivitali-atio" &A:Lepa"to #rust &uil%i"g

!0*( ,aseo +etro +a"ila

%e

RoCas

&uil%i"g

Atte"tio"G +r. 9elipe &. Asso iate 5Ce utive #rustee Dear SirsG

&i" e,

8r.

AS+A' C/'S5&UC5+/' A'D D-,-L/*M-'5 C/&*/&A5+/', petitio"er, vs. C/'S5&UC5+/' +'DUS5&< A&!+5&A5+/' C/MM+SS+/' "n &/MA&C +'DUS5&+AL &-S/U&C-S,respo"%e"ts. Castillo, )aman, 1an J 4antaleon (or etitioner. Balita, Valero J 'ssociates (or rivate res ondents.

#$is $as refere" e to our letter to your offi e %ate% April 0, 1!!1, a opy of 4$i $ is atta $e%, regar%i"g t$e $e 7 survey of Delta '. After as7i"g so.e of t$e fiel% .e" 4$o parti ipate% i" t$e various surveys of Delta ' fro. t$e o"soli%atio" to su/%ivisio" surveys, ;e (ound out that some more o( the resent corner oints are not the same oints sho;n to them during the surve6s. <e s$all s$o4 t$is %uri"g a .eeti"g 4it$ t$e represe"tatives of t$e o4"ers of Lots 1 a"% 2. <e $ope t$is 4ill larify t$e %is repa" ies.

*AD+LLA, J.9 ,etitio" for revie4 o" certiorari, 4it$ a prayer for t$e issua" e of a 4rit of preli.i"ary i"Du" tio" a"%Jor te.porary restrai"i"g or%er, of a" A4ar% re"%ere% /y t$e Co"stru tio" '"%ustry Ar/itratio" Co..issio" i" C'AC Case No. 1):!), e"title%G LRo.ar '"%ustrial Resour es, lai.a"t, versus Asia" Co"stru tio" Develop.e"t Corporatio", respo"%e"t,L 4$i $ or%ere% t$e respo"%e"t t$erei" to pay t$e lai.a"t t$e a.ou"t of ,2!1,6*0.)0.

Eery truly#$e yours, a"te e%e"t fa ts of t$e ase are as follo4sG N2R&5R#2 E'LA $erei" petitio"er, Asia" So.eti.e i" S. 8uly 1!!), t$e 5Ce . Ei Co"stru e ,res. Ktio" Ge". +a"ager a"% Develop.e"t Corporatio" 1AS'A>2NS#R=>#, for s$ort3, a %o.esti orporatio" 15.p$asis supplie%F ,ollo, p. 03!3 e"gage% i" t$e /usi"ess of ge"eral o"tra ti"g, a"% t$e private respo"%e"t, Ro.ar '"%ustrial Resour es 1R2+ARC, for s$ort3, a si"gle proprietors$ip o4"e% a"% operate% /y 2s ar D. #$ere is t$erefore suffi ie"t a"% o"vi" i"g proof t$at Su" +ora, e"tere% i"to a LSu/ o"tra t Agree.e"tL 4$ere/y t$e Ealley $as a lear legal rig$t to possessio" i" its favor to for.er su/ o"tra te% to t$e latter t$e pai"ti"g a"% var"is$i"g 4arra"t t$e issua" e of a 4rit of preli.i"aryJ.a"%atory 4or7 at t$e Clario" 5le tro"i s 9a tory t$e" /ei"g o"stru te% i"Du" tio". Su" EalleyMs #C# gives it t$at rig$t to possessio". at t$e Cavite ,ro essi"g ?o"e i" Rosario, Cavite, for t$e 2" t$e ot$er $a"%, #oyota $as "ot esta/lis$e% its rig$t over t$e a.ou"t of ,(3),((6.)). 1 #$e parties t$erei" agree%, a.o"g sai% property eC ept for t$e assertio" t$at t$ere 4as a .ista7e ot$ers, t$at t$e su/ o"tra tor R2+ARC s$all o.plete t$e i" a" i"stru.e"t 4$i $ purporte%ly s$oul% $ave i" lu%e% t$e 4or7 o" 15 Septe./er 1!!) Li" stri t a%$ere" e to t$e ;uestio"e% strip of la"%. MCo"stru tio" +a"po4er S $e%uleML, appe"%e% to t$e Agree.e"t as A""eC LCL 2 a"% i" ase t$e 4or7 is %elaye%, As /et4ee" t$e t4o 123 parties, Su" Ealley $as a /etter rig$t. AS'A>2NS#R=># 4oul% assist R2+ARC or ta7e over t$e ="%er t$e ir u.sta" es, t$erefore, a"% o"si%eri"g t$at t$e re.ai"i"g 4or7 4it$ all osts $argea/le to t$e su/ o"tra tor, lear legal rig$t of #oyota to possessio" of t$e %ispute% area plus 2)N t$ereof as supervisio" fee. 3 #$e parties furt$er $as "ot /ee" esta/lis$e% suffi ie"t to gra"t t$e praye% for agree% t$at a"y %ispute i" o""e tio" 4it$ sai% o"tra t 4ill /e relief, a 4rit of preli.i"ary .a"%atory i"Du" tio" .ay /e settle% a.i a/ly /y t$e., ot$er4ise, t$e %ispute 4ill /e issue% endente lite. 1See +ara, '" . v. 5strella, 65 SCRA *(1 su/.itte% to ar/itratio" pursua"t to 5Ce utive 2r%er No. 1))0, @1!(5AF De Gra ia v. Sa"tos, (! ,$il. 365 @1!*(AF Ro%ulfa v. ot$er4ise 7"o4" as t$e LCo"stru tio" '"%ustry Ar/itratio" Alfo"so, (6 ,$il. 225 @1!*6A a"% #orre v. Queru/i", 1)1 ,$il. La4.L 4 53 @1!5(A3 '" vie4 of all t$e foregoi"g, t$e petitio" is $ere/y D'S+'SS5D for failure to s$o4 reversi/le error, .u $ less grave a/use of %is retio", o" t$e part of t$e respo"%e"t ourt. Bidin, *avide, Jr., ,omero and Melo, JJ., concur. Repu/li SU*&-M+a"ila 9'RS# D'E'S'2N of t$e ,$ilippi"es C/U&5 2" 31 2 to/er 1!!), R2+ARC file% a re;uest for ar/itratio" 4it$ t$e Co"stra tio" Ar/itratio" Co..issio" allegi"g t$at it o.plete% t$e o"tra te% 4or7 4it$i" t$e stipulate% perio% a"% $a% fully o.plie% 4it$ its %uties u"%er t$e Su/ o"tra t Agree.e"t /ut t$at AS'A>2NS#R=># faile% to o.ply 4it$ its o/ligatio" to pay t$e /ala" e of o"tra t pri e %espite %e.a"%s t$erefor, a"% prayi"g t$at AS'A>2NS#R=># /e or%ere% to pay R2+ARC t$e a.ou"t of ,3)!,23*.** 4it$ legal i"terest t$ereo" fro. 15 Septe./er 1!!), as 4ell as a tual, .oral a"% eCe.plary %a.ages. 5 AS'A>2NS#R=># file% its A"s4er to t$e o.plai"t, allegi"g, /y 4ay of %efe"se, t$at R2+ARC i" urre% i" %elay i" eCe uti"g t$e su/ o"tra te% 4or7 pro.pti"g AS'A>2NS#R=># to i"terve"e a"% assist R2+ARC i" t$e o.pletio" of t$e pai"ti"g a"% var"is$i"g 4or7 i" urri"g, as a

%.&. 'o. 1))14( 4e#ru"ry 8, 1((3

result t$ereofl, "u.erous eCpe"ses 4$i $ are $argea/le to R2+ARC. 0 #$e o"troversy 4as referre% to a" Ar/itral #ri/u"al o.pose% of 5"gi"eers ,a/lo D. Arevalo, 8r., Lauro +. Cru-, a"% Hora io Di.atata . 7 After $eari"g t$e parties, t$e Ar/itral #ri/u"al re"%ere% a" A<ARD o" 13 +ay 1!!1 fi"%i"g t$at R2+ARC o.plete% t$e 4or7 o" 15 Septe./er 1!!) i" a or%a" e 4it$ t$e Su/ o"tra t Agree.e"t a"%, a or%i"gly, gra"te% its lai. for t$e u"pai% /ala" e of t$e o"tra t pri e i" t$e a.ou"t of ,2!1,6*0.)0. 8 He" e, t$e prese"t re ourse /y t$e petitio"er. No restrai"i"g or%er 4as issue% so t$at o" 1( 8u"e 1!!1, t$e respo"%e"t C2++'SS'2N pro ee%e% to e"for e t$e A<ARD. ( Co..e"ti"g o" t$e petitio", ou"sel for t$e private respo"%e"t, R2+ARC, o"te"%s t$at t$e petitio" raises purely ;uestio"s of fa t 4$i $ $ave /e o.e .oot upo" t$e eCe utio" of t$e A<ARD soug$t to /e revie4e%, a"% praye% t$at t$e petitio" /e %is.isse%. 1) <e fi"% "o Dustifi atio" for t$e .o%ifi atio" or reversal of t$e %ispute% %e isio" of t$e respo"%e"t Ar/itratio" Co..issio". Nor %o 4e fi"% a"y reaso" to give %ue ourse to t$e petitio". #$e issues raise% i" t$e petitio" are .ai"ly fa tual a"% t$ere is "o s$o4i"g t$at t$e sai% issues $ave /ee" resolve% ar/itrarily or 4it$out /asisF o" t$e o"trary, t$e fi"%i"gs of t$e sai% Ar/itratio" Co..issio" are supporte% /y evi%e" e o" re or%. Settle% is t$e rule t$at i" petitio"s for certiorari, as a .o%e of appeal, o"ly ;uestio"s of la4 %isti" tly set fort$ .ay /e raise%. Su $ ;uestio"s $ave /ee" %efi"e% as t$ose t$at %o "ot all for a"y eCa.i"atio" of t$e pro/ative value of t$e evi%e" e prese"te% /y t$e parties. 11 A petitio" for certiorari L4ill lie o"ly 4$ere a grave a/use of %is retio" or a" a t 4it$out or i" eC ess of Duris%i tio" o" t$e part of t$e Eolu"tary Ar/itrator is learly s$o4". 't .ust /e /or"e i" .i"% t$at t$e 4rit ofcertiorari is a" eCtraor%i"ary re.e%y a"% t$at certiorari Duris%i tio" is "ot to /e e;uate% 4it$ appellate Duris%i tio". '" a spe ial ivil a tio" of certiorari, t$e Court 4ill "ot e"gage i" a revie4 of t$e fa ts fou"% "or eve" of t$e la4 as i"terprete% or applie% /y t$e Ar/itrator u"less t$e suppose% errors of fa t or of la4 are so pate"t a"% gross a"% preDu%i ial as to a.ou"t to a grave a/use of %is retio" or a" e&cess de ouvoir o" t$e part of t$e Ar/itrator.L 12 Si" e t$e issues raise% /y t$e petitio"er i" its assig".e"t of errors are .ai"ly fa tual as it 4oul% "e essitate a" eCa.i"atio" or re:evaluatio" of t$e evi%e" e o" 4$i $ t$e ar/itrators /ase% t$eir %e isio", t$e petitio" .ay "ot /e give" %ue ourse. ACC2RD'NGL6, t$e i"sta"t petitio" for certiorari s$oul% /e, as it is $ere/y, D'S+'SS5D 4it$ osts agai"st petitio"er. S2 2RD5R5D. Cruz, +riPo5'=uino and Bellosillo, JJ., concur.

5A!ACAL-&A SH+**+'% +'C., respondents. D-C+S+/' <'A&-S$SA'5+A%/, J.7

A%-'C<

H4+L+*+'ASI,

#$is petitio" for revie4 o" certiorari see7s to a""ul a"% set asi%e t$e %e isio" of t$e Court of Appeals %ate% Septe./er 2!, 1!!5 i" CA:G.R. S, No. 35(((, @1A %is.issi"g t$e petitio" forcertiorari file% /y petitio"er to a""ul t$e t4o 123 or%ers issue% /y t$e Regio"al #rial Court of Que-o" City, &ra" $ 216, i" Civil Case No. Q:!2:125!3. #$e fa ts are as follo4sG 2" April 2!, 1!!1, petitio"er Sea:La"% Servi es, '" . a"% private respo"%e"t A.,. +ollerJ+aers7 Li"e 1$erei"after referre% to as LA++LL3, /ot$ arriers of argo i" o"tai"ers$ips as 4ell as o..o" arriers, e"tere% i"to a o"tra t e"title%, LCo:operatio" i" t$e ,a ifi L@2A 1$erei"after referre% to as t$e LAgree.e"tL3, a vessel s$ari"g agree.e"t 4$ere/y t$ey .utually agree% to pur $ase, s$are a"% eC $a"ge "ee%e% spa e for argo i" t$eir respe tive o"tai"ers$ips. ="%er t$e Agree.e"t, t$ey oul% /e, %epe"%i"g o" t$e o asio", eit$er a pri" ipal arrier 14it$ a "egotia/le /ill of la%i"g or ot$er o"tra t of arriage 4it$ respe t to argo3 or a o"tai"ers$ip operator 1o4"er, operator or $arterer of o"tai"ers$ip o" 4$i $ t$e argo is arrie%3. Duri"g t$e lifeti.e of t$e sai% Agree.e"t, or o" 10 +ay 1!!1, 9loreC '"ter"atio"al, '" . 1$erei"after referre% to as L9loreCL3 %elivere% to private respo"%e"t A++L argo of various foo%stuffs, 4it$ 2a7la"%, Califor"ia as port of %is $arge a"% Sa" 9ra" is o as pla e of %elivery. #$e orrespo"%i"g &ill of La%i"g No. +A5= +NL11)263 4as issue% to 9loreC /y respo"%e"t A++L. ,ursua"t to t$e Agree.e"t, respo"%e"t A++L loa%e% t$e su/De t argo o" +S Seala"% ,a er, a vessel o4"e% /y petitio"er. ="%er t$is arra"ge.e"t, t$erefore, respo"%e"t A++L 4as t$e pri" ipal arrier 4$ile petitio"er 4as t$e o"tai"ers$ip operator. #$e o"sig"ee refuse% to pay for t$e argo, allegi"g t$at %elivery t$ereof 4as %elaye%. #$us, o" 8u"e 26, 1!!2, 9loreC file% a o.plai"t agai"st respo"%e"t +aers7:#a/a alera S$ippi"g Age" y 19ilipi"as3, '" . for rei./urse.e"t of t$e value of t$e argo a"% ot$er $arges.@3A A or%i"g to 9loreC, t$e argo 4as re eive% /y t$e o"sig"ee o"ly o" 8u"e 20, 1!!1, si" e it 4as %is $arge% i" Lo"g &ea $, Califor"ia, i"stea% of i" 2a7la"%, Califor"ia o" 8u"e 5, 1!!1 as stipulate%. Respo"%e"t A++L file% its A"s4er @*A allegi"g t$at eve" o" t$e assu.ptio" t$at 9loreC 4as e"title% to rei./urse.e"t, it 4as petitio"er 4$o s$oul% /e lia/le. A or%i"gly, respo"%e"t A++L file% a #$ir% ,arty Co.plai"t@5A agai"st petitio"er o" Nove./er 1), 1!!2, averri"g t$at 4$atever %a.ages sustai"e% /y 9loreC 4ere ause% /y petitio"er, 4$i $ a tually re eive% a"% tra"sporte% 9loreCBs argo o" its vessels a"% u"loa%e% t$e.. 2" 8a"uary 1, 1!!3, petitio"er file% a +otio" to Dis.iss t$e #$ir% ,arty Co.plai"t@6A o" t$e grou"% of failure to state a ause of a tio" a"% la 7 of Duris%i tio", t$e a.ou"t of %a.ages "ot $avi"g /ee" spe ifie% t$erei". ,etitio"er also praye% eit$er for %is.issal or suspe"sio" of t$e #$ir% ,arty Co.plai"t o" t$e grou"% t$at t$ere eCists a" ar/itratio" agree.e"t /et4ee" it a"% respo"%e"t A++L. 2" Septe./er 2(, 1!!3, t$e lo4er

9'RS# D'E'S'2N .%.&. 'o. 120212. M"r19 2, 2)))3 S-A$LA'D S-&,+C-, +'C., petitioner, vs. C/U&5 /4 A**-ALS, A.*. M/LL-&LMA-&S= L+'- "n MA-&S=$

ourt issue% a" 2r%er %e"yi"g petitio"erBs +otio" to Dis.iss. ,etitio"erBs +otio" for Re o"si%eratio" 4as li7e4ise %e"ie% /y t$e lo4er ourt i" its August 22, 1!!* 2r%er. ="%au"te%, petitio"er file% a petitio" for certiorariGFH 4it$ t$e Court of Appeals o" Nove./er 23, 1!!*. +ea"4$ile, petitio"er also file% its A"s4er to t$e #$ir% ,arty Co.plai"t i" t$e trial ourt. 2" Septe./er 2!, 1!!5, respo"%e"t Court of Appeals re"%ere% t$e assaile% De isio" %is.issi"g t$e petitio" for certiorari. <it$ t$e %e"ial of its +otio" for Re o"si%eratio", petitio"er file% t$e i"sta"t petitio" for revie4, raisi"g t$e follo4i"g issues R +. #H5 C2=R# 29 A,,5ALS D'SR5GARD5D AN AGR55+5N# #2 AR&'#RA#5 'N E'2LA#'2N 29 S#A#=#5 AND S=,R5+5 C2=R# D5C'S'2NS H2LD'NG #HA# AR&'#RA#'2N 'S A C2ND'#'2N ,R5C5D5N# #2 S='# <H5R5 S=CH AN AGR55+5N# #2 AR&'#RA#5 5O'S#S. ++. #H5 C2=R# 29 A,,5ALS HAS R=L5D 'N A +ANN5R N2# 'N ACC2RD <'#H 8=R'S,R=D5NC5 <H5N '# R59=S5D #2 HAE5 #H5 #H'RD:,AR#6 C2+,LA'N# D'S+'SS5D 92R 9A'L=R5 #2 S#A#5 A CA=S5 29 AC#'2N AND 92R R=L'NG #HA# #H5 9A'L=R5 #2 S#A#5 A CA=S5 29 AC#'2N +A6 &5 R5+5D'5D &6 R595R5NC5 #2 '#S A##ACH+5N#S.@0A Resolvi"g first t$e issue of failure to state a ause of a tio", respo"%e"t Court of Appeals %i% "ot err i" rea%i"g t$e Co.plai"t of 9loreC a"% respo"%e"t A++LBs A"s4er toget$er 4it$ t$e #$ir% ,arty Co.plai"t to %eter.i"e 4$et$er a ause of a tio" is properly allege%. '" :il5!state +ol( and *evelo ment, $nc. vs. Court o( ' eals,G/H t$is Court rule% t$at i" t$e %eter.i"atio" of 4$et$er or "ot t$e o.plai"t states a ause of a tio", t$e a""eCes atta $e% to t$e o.plai"t .ay /e o"si%ere%, t$ey /ei"g parts of t$e o.plai"t. Co.i"g "o4 to t$e .ai" issue of ar/itratio", t$e perti"e"t lauses of t$e LCo:operatio" i" t$e ,a ifi L o"tra t e"tere% i"to /y t$e parties provi%eG 16.2 9or t$e purposes of t$is agree.e"t t$e Co"tai"ers$ip 2perator s$all /e %ee.e% to $ave issue% to t$e ,ri" ipal Carrier for goo% o"si%eratio" a"% for /ot$ loa%e% a"% e.pty o"tai"ers its "o": "egotia/le .e.o /ills of la%i"g i" t$e for. atta $e% $ereto as Appe"%iC 6, o"sig"e% o"ly to t$e ,ri" ipal Carrier or its age"ts, provisio"s of 4$i $ s$all gover" t$e lia/ility /et4ee" t$e ,ri" ipal Carrier a"% t$e Co"tai"ers$ip 2perator a"% t$at for t$e purpose of %eter.i"i"g t$e lia/ility i" a or%a" e 4it$ eit$er Li"esB .e.o /ill of la%i"g, t$e "u./er of pa 7ages or usto.ary freig$t u"its s$o4" o" t$e /ill of

la%i"g issue% /y t$e ,ri" ipal Carrier to its s$ippers s$all /e o"trolli"g. 16.3 #$e ,ri" ipal Carrier s$all use all reaso"a/le e"%eavours to %efe"% all i" perso"a. a"% i" re. suits for loss of or %a.age to argo arrie% pursua"t to /ills of la%i"g issue% /y it, or to settle su $ suits for as lo4 a figure as reaso"a/ly possi/le. 59e *r;n1;p"l C"rr;er s9"ll 9"ve t9e r;:9t to seeE "2":es "n Lor "n ;n e2n;ty 8ro2 t9e Cont";ners9;p /per"tor #y "r#;tr"t;on pursu"nt to Cl"use 32 9ereo8. Not4it$sta"%i"g t$e provisio"s of t$e Li"esB .e.o /ills of la%i"g or a"y statutory rules i" orporate% t$erei" or appli a/le t$ereto, t9e *r;n1;p"l C"rr;er s9"ll #e ent;tle to 1o22en1e su19 "r#;tr"t;on "t "ny t;2e unt;l one ye"r "8ter ;ts l;"#;l;ty 9"s #een 8;n"lly eter2;ne #y ":ree2ent, "r#;tr"t;on "A"r or Du :2ent, su19 "A"r or Du :2ent not #e;n: t9e su#De1t o8 "ppe"l, prov; e t9"t t9e Cont";ners9;p /per"tor 9"s #een :;ven not;1e o8 t9e s"; 1l";2 ;n Ar;t;n: #y t9e *r;n1;p"l C"rr;er A;t9;n t9ree 2ont9s o8 t9e *r;n1;p"l C"rr;er re1e;v;n: not;1e ;n Ar;t;n: o8 t9e 1l";2. 9urt$er t$e ,ri" ipal Carrier s$all $ave t$e rig$t to gra"t eCte"sio"s of ti.e for t$e o..e" e.e"t of suit to a"y t$ir% party i"tereste% i" t$e argo 4it$out prior refere" e to t$e Co"tai"ers$ip 2perator provi%e% t$at "oti e of a"y eCte"sio" so gra"te% is give" to t$e Co"tai"ers$ip 2perator 4it$i" 3) %ays of a"y su $ eCte"sio" /ei"g gra"te%. CCC 32. CCC CCC AR&'#RA#'2N

32.1 'f at a"y ti.e a %ispute or lai. arises out of or i" o""e tio" 4it$ t$e Agree.e"t t$e Li"es s$all e"%eavour to settle su $ a.i a/ly, faili"g 4$i $ it s$all /e referre% to ar/itratio" /y a si"gle ar/itrator i" Lo"%o", su $ ar/itrator to /e appoi"te% /y agree.e"t /et4ee" t$e Li"es 4it$i" 1* %ays after servi e /y o"e Li"e upo" t$e ot$er of a "oti e spe ifyi"g t$e "ature of t$e %ispute or lai. a"% re;uiri"g refere" e of su $ %ispute or lai. to ar/itratio" pursua"t to t$is Arti le. 32.2 9aili"g agree.e"t upo" a" ar/itrator 4it$i" su $ perio% of 1* %ays, t$e %ispute s$all /e settle% /y t$ree Ar/itrators, ea $ party appoi"ti"g o"e Ar/itrator, t$e t$ir% /ei"g appoi"te% /y t$e ,resi%e"t of t$e Lo"%o" +ariti.e Ar/itrators Asso iatio". 32.3 'f eit$er of t$e appoi"te% Ar/itrators refuses or is i" apa/le of a ti"g, t$e party 4$o appoi"te% $i. s$all appoi"t a "e4 Ar/itrator i" $is pla e. 32.* 'f o"e of t$e parties fails to appoi"t a" Ar/itrator R eit$er origi"ally or /y 4ay of

su/stitutio" R for t4o 4ee7s after t$e ot$er party $avi"g appoi"te% $is Ar/itrator $as se"t t$e party .a7i"g %efault "oti e /y .ail, faC or teleC to .a7e t$e appoi"t.e"t, t$e party appoi"ti"g t$e t$ir% Ar/itrator s$all, after appli atio" fro. t$e party $avi"g appoi"te% $is Ar/itrator, also appoi"t a" Ar/itrator i" /e$alf of t$e party .a7i"g %efault. 32.5 A"y su $ ar/itratio" s$all /e i" a or%a" e 4it$ t$e Ar/itratio" A t 1!5) as a.e"%e% /y t$e Ar/itratio" A t 1!(! or a"y ot$er su/se;ue"t legislatio" a"% t$e ar/itratorBs a4ar% s$all /e fi"al a"% /i"%i"g upo" Li"es. #o t$e eCte"t per.itte% /y t$e Ar/itratio" A t 1!(! t$e Li"es $ereto eC lu%e pursua"t to S 3113 of t$at A t t$e Duris%i tio" of t$e 5"glis$ Hig$ Court of 8usti e to e"tertai" a"y appeal or appli atio" u"%er Se tio" 1 a"% 2 of t$e Ar/itratio" A t 1!(!.
@1)A

t$e Co"tai"ers$ip 2perator .ay /e fi"ally %eter.i"e%. #$is is lear fro. t$e .a"%ate of Clause 16.3 t$at L1#3$e ,ri" ipal Carrier s$all $ave t$e rig$t to see7 %a.ages a"%Jor a" i"%e."ity fro. t$e Co"tai"ers$ip 2peratorb' arbitrationL a"% t$at it Ls$all /e e"title% to o..e" e su $ ar/itratio" at a"y ti.e u"til o"e year a"ter its liabilit' !as been "inall' deter%ined /y agree.e"t, arbitration a ard or Du%g.e"tL. 9or respo"%e"t Court of Appeals to say t$at t$e ter.s of t$e o"tra t %o "ot re;uire ar/itratio" as a o"%itio" pre e%e"t to Du%i ial a tio" is erro"eous. '" t$e lig$t of t$e Agree.e"t lauses afore;uote%, it is lear t$at ar/itratio" is t$e .o%e provi%e% /y 4$i $ respo"%e"t A++L as ,ri" ipal Carrier a" see7 %a.ages a"%Jor i"%e."ity fro. petitio"er, as Co"tai"ers$ip 2perator. State% %iffere"tly, respo"%e"t A++L is /arre% fro. ta7i"g Du%i ial a tio" agai"st petitio"er /y t$e lear ter.s of t$eir Agree.e"t. As t$e ,ri" ipal Carrier 4it$ 4$i $ 9loreC %ire tly %ealt 4it$, respo"%e"t A++L a" a"% s$oul% /e $el% a ou"ta/le /y 9loreC i" t$e eve"t t$at it $as a vali% lai. agai"st t$e for.er. ,ursua"t to Clause 16.3 of t$e Agree.e"t, respo"%e"t A++L, 4$e" fa e% 4it$ su $ a suit Ls$all use all reaso"a/le e"%eavours to %efe"%L itself or Lsettle su $ suits for as lo4 a figure as reaso"a/ly possi/leL. '" tur", respo"%e"t A++L a" see7 %a.ages a"%Jor i"%e."ity fro. petitio"er as Co"tai"ers$ip 2perator for 4$atever fi"al Du%g.e"t .ay /e a%Du%ge% agai"st it u"%er t$e Co.plai"t of 9loreC. #$e ru ial poi"t is t$at olle tio" of sai% %a.ages a"%Jor i"%e."ity fro. petitio"er s$oul% /e /y ar/itratio". All tol%, 4$e" t$e teCt of a o"tra t is eCpli it a"% leaves "o %ou/t as to its i"te"tio", t$e ourt .ay "ot rea% i"to it a"y ot$er i"te"tio" t$at 4oul% o"tra%i t its plai" i.port.@11A Ar/itratio" /ei"g t$e .o%e of settle.e"t /et4ee" t$e parties eCpressly provi%e% for /y t$eir Agree.e"t, t$e #$ir% ,arty Co.plai"t s$oul% $ave /ee" %is.isse%. #$is Court $as previously $el% t$at ar/itratio" is o"e of t$e alter"ative .et$o%s of %ispute resolutio" t$at is "o4 rig$tfully vau"te% as Lt$e 4ave of t$e futureL i" i"ter"atio"al relatio"s, a"% is re og"i-e% 4orl%4i%e. #o /rus$ asi%e a o"tra tual agree.e"t alli"g for ar/itratio" i" ase of %isagree.e"t /et4ee" t$e parties 4oul% t$erefore /e a step /a 74ar%.@12A >H-&-4/&-, pre.ises o"si%ere%, t$e i"sta"t ,etitio" for Revie4 o" Certiorari is GRAN#5D. #$e %e isio" of t$e Court of Appeals i" CA:G.R. S, No. 35((( is R5E5RS5D a"% S5# AS'D5. #$e Regio"al #rial Court of Que-o" City, &ra" $ ((, is or%ere% to D'S+'SS Respo"%e"t A++LBs #$ir% ,arty Co.plai"t i" Civil Case No. Q:!2:125!3. No pro"ou" e.e"t as to osts. S/ /&D-&-D. *avide, Jr., C.J., (Chairman), 4uno, >a unan, a"% 4ardo, JJ., o" ur. S-C/'D D+,+S+/' *H+L+**+'- -C/'/M+C ?/'- AU5H/&+5<, *et;t;oner, %.&. 'o. ,rese"tG 17(537

9ro. t$e foregoi"g, t$e follo4i"g .atters are learG 9irst, %isputes /et4ee" t$e ,ri" ipal Carrier a"% t$e Co"tai"ers$ip 2perator arisi"g fro. o"tra ts of arriage s$all /e gover"e% /y t$e provisio"s of t$e /ills of la%i"g issue% to t$e ,ri" ipal Carrier /y t$e Co"tai"ers$ip 2perator. Se o"%, t$e ,ri" ipal Carrier s$all use its /est efforts to %efe"% or settle all suits agai"st it for loss of or %a.age to argo pursua"t to /ills of la%i"g issue% /y it. #$ir%, t$e ,ri" ipal Carrier s$all $ave t$e rig$t to see7 %a.ages a"%Jor i"%e."ity fro. t$e Co"tai"ers$ip 2perator /y ar/itratio", pursua"t to Clause 32 of t$e agree.e"t. 9ourt$, t$e ,ri" ipal Carrier s$all $ave t$e rig$t to o..e" e su $ ar/itratio" a"y ti.e u"til o"e year after its lia/ility $as /ee" fi"ally %eter.i"e% /y agree.e"t, ar/itratio" a4ar% or Du%g.e"t, provi%e% t$at t$e Co"tai"ers$ip 2perator 4as give" "oti e i" 4riti"g /y t$e ,ri" ipal Carrier 4it$i" t$ree .o"t$s of t$e ,ri" ipal Carrier re eivi"g "oti e i" 4riti"g of sai% lai.. ,res i"%i"g fro. t$e foregoi"g .atters, 4e fi"% t$at /ot$ t$e trial ourt a"% t$e Court of Appeals erre% i" %e"yi"g petitio"erBs prayer for ar/itratio". #o /egi" 4it$, allo4i"g respo"%e"t A++LBs #$ir% ,arty Clai. agai"st petitio"er to pro ee% 4oul% /e i" violatio" of Clause 16.2 of t$e Agree.e"t. As su..ari-e%, t$e lause provi%es t$at 4$atever %ispute t$ere .ay /e /et4ee" t$e ,ri" ipal Carrier a"% t$e Co"tai"ers$ip 2perator arisi"g fro. o"tra ts of arriage s$all /e gover"e% /y t$e provisio"s of t$e /ills of la%i"g %ee.e% issue% to t$e ,ri" ipal Carrier /y t$e Co"tai"ers$ip 2perator. 2" t$e ot$er $a"%, to sustai" t$e #$ir% ,arty Co.plai"t 4oul% /e to allo4 private respo"%e"t to $ol% petitio"er lia/le u"%er t$e provisio"s of t$e /ill of la%i"g issue% /y t$e ,ri" ipal Carrier to 9loreC, u"%er 4$i $ t$e latter is sui"g i" its Co.plai"t, "ot u"%er t$e /ill of la%i"g petitio"er, as o"tai"ers$ip operator, issue% to respo"%e"t A++L, as ,ri" ipal Carrier, o"trary to 4$at is o"te.plate% i" Clause 16.2. #$e Court of Appeals rule% t$at t$e ter.s of t$e Agree.e"t LeCpli itly re;uire% t$at t$e pri" ipal arrierBs lai. agai"st t$e o"tai"ers$ip operator first /e fi"ally %eter.i"e% /y, a.o"g ot$ers, a ourt Du%g.e"t, /efore t$e rig$t to ar/itratio" a rues.L Ho4ever, t$e Court of Appeals faile% to o"si%er t$at, pre isely, ar/itratio" is t$e .o%e /y 4$i $ t$e lia/ility of

$ versus $

Q='S=+&'NG, J., Cha CAR,'2,Y CAR,'2 +2RAL5S,

&5RSA+'N,YY a"% A&AD, JJ. -D+S/' H!A5AA'I C/%-'-&A5+/' C/&*/&A5+/', &espon ent.

,ro.ulgate%G 2 to/er 23, 2))!

/efore a" Ar/itratio" Co..ittee o.pose% of o"e represe"tative of ea $ party a"% a t$ir% .e./er 4$o s$all /e .utually a epta/le to t$e partiesG CCC CCC

C::::::::::::::::::::::::::::::::::::::::::::: ::::: C

5.

D-C+S+/' CA&*+/ M/&AL-S, J.7 ,etitio"er ,$ilippi"e 5 o"o.i ?o"e Aut$ority 1,5?A3 a"% 5%iso" 1&ataa"3 Coge"eratio" Corporatio" 1respo"%e"t3 e"tere% i"to a ,o4er Supply a"% ,ur $ase Agree.e"t 1,S,A or agree.e"t3 for a 1):year perio% effe tive 2 to/er 25, 1!!( 4$ere/y respo"%e"t u"%ertoo7 to o"stru t, operate, a"% .ai"tai" a po4er pla"t 4$i $ 4oul% sell, supply a"% %eliver ele tri ity to ,5?A for resale to /usi"ess lo ators i" t$e &ataa" 5 o"o.i ,ro essi"g ?o"e. '" t$e ourse of t$e %is $arge of its o/ligatio", respo"%e"t re;ueste% fro. ,5?A a tariff i" rease 4it$ a .e $a"is. for a%Dust.e"t of t$e ost of fuel a"% lu/ri ati"g oil, 4$i $ re;uest it reiterate% o" +ar $ 5, 2))*. ,5?A %i% "ot respo"% to /ot$ re;uests, $o4ever, %ra4i"g respo"%e"t to 4rite ,5?A o" +ay 3, 2))*. Citi"g a tariff i" rease 4$i $ ,5?A gra"te% to t$e 5ast Asia =tilities Corporatio" 15A=C3, a"ot$er supplier of ele tri ity i" t$e +a ta" 5 o"o.i ?o"e, respo"%e"t i"for.e% ,5?A of a violatio" of its o/ligatio" u"%er Clause *.! of t$e ,S,A "ot to give prefere"tial treat.e"t to ot$er po4er suppliers. After t$e lapse of !) %ays, respo"%e"t ter.i"ate% t$e ,S,A, i"vo7i"g its rig$t t$ereu"%er, a"% %e.a"%e% ,()0,6!1,5*3.)) as pre:ter.i"atio" fee. ,5?A %ispute% respo"%e"tBs rig$t to ter.i"ate t$e agree.e"t a"% refuse% to pay t$e pre:ter.i"atio" fee, pro.pti"g respo"%e"t to re;uest ,5?A to su/.it t$e %ispute to ar/itratio" pursua"t to t$e ar/itratio" lause of t$e ,S,A. ,etitio"er refuse% to su/.it to ar/itratio", $o4ever, pro.pti"g respo"%e"t to file a Co.plai"t @1A agai"st ,5?A for spe ifi perfor.a" e /efore t$e Regio"al #rial Court 1R#C3 of ,asay, allegi"g t$at, inter aliaG C C C C

Co"for.a/ly 4it$ t$e Agree.e"t, plai"tiff "otifie% %efe"%a"t i" a letter %ate% Septe./er 6, 2))* re;uesti"g t$at t$e parties su/.it t$eir %ispute to ar/itratio". '" a letter %ate% Septe./er 0, 2))*, 4$i $ %efe"%a"t re eive% o" t$e sa.e %ate, %efe"%a"t u"Dustifia/ly refuse% to o.ply 4it$ t$e re;uest for ar/itratio", i" violatio" of its u"%erta7i"g u"%er t$e Agree.e"t. Defe"%a"t li7e4ise refuse% to "o.i"ate its represe"tative to t$e Ar/itratio" Co..ittee as re;uire% /y t$e Agree.e"t. ="%er Se tio" 0 of Repu/li A t No. 0(6 11!533, ot$er4ise 7"o4" as t$e Ar/itratio" La4, 1a3 if eit$er party to t$e o"tra t fails or refuses to "a.e $is ar/itrator 4it$i" 15 %ays after re eipt of t$e %e.a"% for ar/itratio"F or 1/3 if t$e ar/itrators appoi"te% /y ea $ party to t$e o"tra t, or appoi"te% /y o"e party to t$e o"tra t a"% /y t$e proper ourt, s$all fail to agree upo" or to sele t t$e t$ir% ar/itrator, t9en t9;s Honor"#le Court s9"ll "ppo;nt t9e "r#;tr"tor or "r#;tr"tors. @2A 15.p$asis a"% u"%ers ori"g supplie%3 or%i"gly praye% for Du%g.e"t

6.

Respo"%e"t a

C C C 1a3 %esig"ati"g 1i3 a" ar/itrator to represe"t %efe"%a"tF a"% 1ii3 t$e t$ir% ar/itrator 4$o s$all a t as C$air.a" of t$e Ar/itratio" Co..itteeF a"% 1/3 referri"g t$e atta $e% Re;uest for Ar/itratio" to t$e Ar/itratio" Co..ittee to o..e" e t$e ar/itratio".
@3A

a"% for ot$er Dust a"% e;uita/le reliefs. '" its A"s4er,@*A ,5?A 1$ereafter petitio"er3G 1. *. ="%er Clauses 1*.1 a"% 1*.2 of t$e Agree.e"t, t$e %ispute s$all /e resolve% t$roug$ ar/itratio" AD+'#@#5DA t$e allegatio"s i" paragrap$s 1, 2, 3, *, a"% 6 of t$e

o.plai"t, 4it$ t$e ;ualifi atio" t$at t$e allege% %ispute su/De t of t$e plai"tiffBs Re;uest for Ar/itratio" %ate% 2 to/er 2), 2))* is not "n "r#;tr"#le ;ssue, o"si%eri"g t$at t$e provisio" o" pre:ter.i"atio" fee i" t$e ,o4er Sales a"% ,ur $ase Agree.e"t 1,S,A3, is gravely o"erous, u" o"s io"a/le, greatly %isa%va"tageous to t$e gover".e"t, agai"st pu/li poli y a"% t$erefore i"vali% a"% u"e"for ea/le. 2. AD+'#@#5DA t$e allegatio" i" paragrap$ 5 of t$e o.plai"t 4it$ t$e ;ualifi atio" t$at t$e refusal of t$e %efe"%a"t to ar/itrate is Dustifie% o"si%eri"g t$at t$e prov;s;on on t9e pre$ ter2;n"t;on 8ee su/De t of t$e plai"tiffBs Re;uest for Ar/itratio" is ;nv"l; "n unen8or1e"#le. + oreover, t$e pre: ter.i"atio" of t$e ,S,A is 4$i.si al, $as "o vali% /asis a"% i" violatio" of t$e provisio"s t$ereof, o"stituti"g /rea $ of o"tra t o" t$e part of t$e plai"tiff.@5A 15.p$as is a"% u"%ers ori"g supplie%3

%efe"%a"t refuse% to su/.it t$e %ispute to ar/itratio" /y "a.i"g its represe"tative i" t$e ar/itratio" o..ittee, Du%g.e"t .ay /e re"%ere% %ire ti"g t$e appoi"t.e"t of t$e t4o ot$er .e./ers to o.plete t$e o.positio" of t$e ar/itratio" o..ittee t$at 4ill resolve t$e %ispute of t$e parties.@(A &y 2r%er of April 5, 2))5, &ra" $ 110 of t$e ,asay City R#C gra"te% respo"%e"tBs +otio" to Re"%er 8u%g.e"t o" t$e ,lea%i"gs, %isposi"g as follo4sG <H5R592R5, all t$e foregoi"g o"si%ere%, t$is Court $ere/y re"%ers Du%g.e"t i" favor of t$e plai"tiff a"% agai"st t$e %efe"%a"t. ,ursua"t to Se tio" 0 of RA 0(6, also 7"o4" as t$e Ar/itratio" La4, a"% ,o4er Sales a"% ,ur $ase Agree.e"t, t$is Court $ere/y appoi"ts, su/De t to t$eir agree.e"t as ar/itrators, retire% Supre.e Court C$ief 8usti e A"%res Narvasa, as $air.a" of t$e o..ittee, a"% retire% Supre.e Court 8usti es Hugo Gutierre-, a"% 8usti e 8ose 6. 9eria, as %efe"%a"tBs a"% plai"tiffBs represe"tative, respe tively, to t$e ar/itratio" o..ittee. A or%i"gly, let t$e Re;uest for Ar/itratio" /e i..e%iately referre% to t$e Ar/itratio" Co..ittee so t$at it a" o..e" e 4it$ t$e ar/itratio".
@0A

S2 1="%ers ori"g supplie%3

2RD5R5D.

2" appeal,@!A t$e Court of Appeals, /y De isio" of April 1), 2))(, affir.e% t$e R#C 2r%er.@1)A 'ts +otio" for Re o"si%eratio"@11A $avi"g /ee" %e"ie%,@12A petitio"er file% t$e prese"t ,etitio" for Revie4 o" Certiorari,@13A faulti"g t$e appellate ourt ' . . . <H5N '# D'S+'SS5D ,5#'#'2N5RBS A,,5AL AND A99'R+5D #H5 )5 A,R'L 2))* 2RD5R 29 #H5 #R'AL C2=R# <H'CH R5ND5R5D 8=DG+5N# 2N #H5 ,L5AD'NGS,D5S,'#5 #H5 9AC# #HA# ,5#'#'2N5RBS ANS<5R #5ND5R5D AN 'SS=5. '' . . . <H5N '# A99'R+5D #H5 2RD5R 29 #H5 #R'AL C2=R# <H'CH R595RR5D R5S,2ND5N#BS R5Q=5S# 92R AR&'#RA#'2N D5S,'#5 #H5 9AC# #HA# #H5 'SS=5 ,R5S5N#5D &6 #H5 R5S,2ND5N# 'S N2# AN

OCC C Respo"%e"t t$ereafter file% a Reply a"% +otio" to Re"%er 8u%g.e"t o" t$e ,lea%i"gs,@6A o"te"%i"g t$at si" e petitio"er C C C %oes "ot $alle"ge t$e fa t t$at 1a3 t$ere is a %ispute /et4ee" t$e partiesF 1/3 t$e %ispute .ust /e resolve% t$roug$ ar/itratio" /efore a t$ree: .e./er ar/itratio" o..itteeF a"% 1 3

AR&'#RA&L5 supplie%3

'SS=5.@1*A 1="%ers ori"g

a separate agree.e"t a"% t$e ar/itratio" agree.e"t %oes "ot auto.ati ally ter.i"ate 4$e" t$e o"tra t of 4$i $ it is a part o.es to a" e"%. #$e separa/ility of t$e ar/itratio" agree.e"t is espe ially sig"ifi a"t to t$e %eter.i"atio" of 4$et$er t$e i"vali%ity of t$e .ai" o"tra t also "ullifies t$e ar/itratio" lause. '"%ee%, t$e %o tri"e %e"otes t$at t$e i"vali%ity of t$e .ai" o"tra t, also referre% to as t$e H o"tai"erI o"tra t, %oes not affe t t$e vali%ity of t$e ar/itratio" agree.e"t. 'rrespe tive of t$e fa t t$at t$e .ai" o"tra t is i"vali%, t$e ar/itratio" lauseJagree.e"t still re.ai"s vali% a"% e"for ea/le.@16A 15.p$asis i" t$e origi"alF u"%ers ori"g supplie%3 ,etitio"er "evert$eless o"te"%s t$at t$e legality of t$e pre:ter.i"atio" fee lause is "ot ar/itra/le, iti"g +onzales v. Clima& Mining )td. @1(A 4$i $ %e lare% t$at t$e t$erei" o.plai"t s$oul% /e /roug$t /efore t$e regular ourts, a"% "ot /efore a" ar/itral tri/u"al, as it i"volve% a Du%i ial issue. Hel% t$e CourtG <e agree t$at t$e ase s$oul% "ot /e /roug$t u"%er t$e a./it of t$e Ar/itratio" La4 CCC. #$e ;uestio" of vali%ity of t$e o"tra t o"tai"i"g t$e agree.e"t to su/.it to ar/itratio" 4ill affe t t$e appli a/ility of t$e ar/itratio" lause itself. A party a""ot rely o" t$e o"tra t a"% lai. rig$ts or o/ligatio"s u"%er it a"% at t$e sa.e ti.e i.pug" its eCiste" e or vali%ity. '"%ee%, litiga"ts are e"Doi"e% fro. ta7i"g i" o"siste"t positio"s. As previously %is usse%, t$e o.plai"t s$oul% $ave /ee" file% /efore t$e regular ourts as it i"volve% issues 4$i $ are Du%i ial i" "ature.@10A #$e ruli"g i" +onzales 4as, o" .otio" for re o"si%eratio" file% /y t$e parties, .o%ifie%, $o4ever, i" t$is 4iseG C C C #$e a%Du%i atio" of t$e petitio" i" G.R. No. 16(!!* effe tively .o%ifies part of t$e De isio" %ate% 20 9e/ruary 2))5 i" %.&. 'o. 101(57. He" e, 4e "o4 $ol% t$at t9e v"l; ;ty o8 t9e 1ontr"1t o"tai"i"g t$e agree.e"t to su/.it to ar/itratio" oes not "88e1t t9e "ppl;1"#;l;ty o8 t9e "r#;tr"t;on 1l"use ;tsel8. A o"trary ruli"g 4oul% suggest t$at a partyBs .ere repu%iatio" of t$e .ai" o"tra t is suffi ie"t to avoi% ar/itratio". #$at is eCa tly t$e situatio" t$at t$e separa/ility %o tri"e, as 4ell as Durispru%e" e applyi"g it, see7s to avoi%. <e a%% t$at 4$e" it 4as %e lare% i" %.&. 'o. 101(57 t$at t$e ase s$oul% "ot /e /roug$t for ar/itratio", it s$oul% /e larifie% t$at t$e ase referre% to is t$e ase a tually file% /y Go"-ales /efore t$e D5NR ,a"el of Ar/itrators, 4$i $ 4as for t$e null;8;1"t;on o8 t9e 2";n 1ontr"1t o" t$e grou"% of frau%, as it

#$e petitio" fails. #$e %ispute raise% /y respo"%e"t alls for a pro ee%i"g u"%er Se tio" 6 of Repu/li A t No. 0(6, HAN AC# #2 A=#H2R'?5 #H5 +A>'NG 29 AR&'#RA#'2N AND S=&+'SS'2N AGR55+5N#S, #2 ,R2E'D5 92R #H5 A,,2'N#+5N# 29 AR&'#RA#2RS AND #H5 ,R2C5D=R5 92R AR&'#RA#'2N 'N C'E'L C2N#R2E5RS'5S, AND 92R 2#H5R ,=R,2S5SI 4$i $ rea%sG S5C#'2N 6. Heari"g /y ourt. W A party aggrieve% /y t$e failure, "egle t or refusal of a"ot$er to perfor. u"%er a" agree.e"t i" 4riti"g provi%i"g for ar/itratio" .ay petitio" t$e ourt for a" or%er %ire ti"g t$at su $ ar/itratio" pro ee% i" t$e .a""er provi%e% for i" su $ agree.e"t. 9ive %ays "oti e i" 4riti"g of t$e $eari"g of su $ appli atio" s$all /e serve% eit$er perso"ally or /y registere% .ail upo" t$e party i" %efault. #$e ourt s$all $ear t$e parties, a"% upo" /ei"g satisfie% t$at t$e .a7i"g of t$e agree.e"t or su $ failure to o.ply t$ere4it$ is "ot i" issue, s$all .a7e a" or%er %ire ti"g t$e parties to pro ee% to ar/itratio" i" a or%a" e 4it$ t$e ter.s of t$e agree.e"t. 'f t$e .a7i"g of t$e agree.e"t or %efault /e i" issue t$e ourt s$all pro ee% to su..arily $ear su $ issue. 'f t$e fi"%i"g /e t$at "o agree.e"t i" 4riti"g provi%i"g for ar/itratio" 4as .a%e, or t$at t$ere is "o %efault i" t$e pro ee%i"g t$ereu"%er, t$e pro ee%i"g s$all /e %is.isse%. 'f t$e fi"%i"g /e t$at a 4ritte" provisio" for ar/itratio" 4as .a%e a"% t$ere is a %efault i" pro ee%i"g t$ereu"%er, a" or%er s$all /e .a%e su..arily %ire ti"g t$e parties to pro ee% 4it$ t$e ar/itratio" i" a or%a" e 4it$ t$e ter.s t$ereof. C C C C 1="%ers ori"g supplie%3 R.A. No. 0(6 HeCpli itly o"fi"es t$e ourtBs aut$ority o"ly to t$e %eter.i"atio" of 4$et$er or "ot t$ere is a" agree.e"t i" 4riti"g provi%i"g for ar/itratio".I@15A Give" petitio"erBs a%.issio" of t$e .aterial allegatio"s of respo"%e"tBs o.plai"t i" lu%i"g t$e eCiste" e of a 4ritte" agree.e"t to resolve %isputes t$roug$ ar/itratio", t$e assaile% appellate ourtBs affir.a" e of t$e trial ourtBs gra"t of respo"%e"tBs +otio" for 8u%g.e"t o" t$e ,lea%i"gs is i" or%er. ,etitio"er argues t$at it te"%ere% a" issue i" its A"s4er as it %ispute% t$e legality of t$e pre:ter.i"atio" fee lause of t$e ,S,A. 5ve" assu.i"g arguendo t$at t$e lause is illegal, it 4oul% "ot affe t t$e agree.e"t /et4ee" petitio"er a"% respo"%e"t to resolve t$eir %ispute /y ar/itratio". #$e %o tri"e of separa/ility, or severa/ility as ot$er 4riters all it, e"u" iates t$at a" ar/itratio" agree.e"t is i"%epe"%e"t of t$e .ai" o"tra t. #$e ar/itratio" agree.e"t is to /e treate% as

$a% alrea%y /ee" %eter.i"e% t$at t$e ase s$oul% $ave /ee" /roug$t /efore t$e regular ourts i"volvi"g as it %i% Du%i ial issues.@1!A 15.p$asis a"% u"%ers ori"g supplie%3

Repu/li of t$e ,$ilippi"es Supre.e Court +a"ila 5H+&D D+,+S+/' -S5A5- /4 '-LS/' &. DULA<, represente #y 9;s A;8e M-&&+D< 6A'- *. DULA<, ,etitio"er, : versus R

%.&. 'o

*resen

't /ears "oti"g t$at respo"%e"t %oes "ot see7 to "ullify t$e .ai" o"tra t. 't .erely su/.its t$ese issues for resolutio" /y t$e ar/itratio" o..ittee, vizG a. <$et$er or "ot t$e i"terest of Clai.a"t i" t$e proDe t or its e o"o.i retur" i" its i"vest.e"t 4as .aterially re%u e% as a result of a"y la4s or regulatio"s of t$e ,$ilippi"e Gover".e"t or a"y age" y or /o%y u"%er its o"trolF <$et$er or "ot t$e parties faile% to rea $ a" agree.e"t o" t$e a.e"%.e"ts to t$e Agree.e"t 4it$i" !) %ays fro. "oti e to respo"%e"t o" +ay 3, 2))* of t$e .aterial re%u tio" i" lai.a"tBs e o"o.i retur" u"%er t$e Agree.e"tF <$et$er or "ot as a result of 1a3 a"% 1/3 a/ove, Clai.a"t is e"title% to ter.i"ate t$e Agree.e"tF <$et$er or "ot Respo"%e"t a or%e% prefere"tial treat.e"t to 5A=C i" violatio" of t$e Agree.e"tF <$et$er or "ot as a result of 1%3 a/ove, Clai.a"t is e"title% to ter.i"ate t$e Agree.e"tF <$et$er or "ot Clai.a"t is e"title% to a ter.i"atio" fee e;uivale"t to ,()0,6!1,5*3.))F a"% <$o /et4ee" Clai.a"t a"% Respo"%e"t s$all /ear t$e ost a"% eCpe"ses of t$e ar/itratio", i" lu%i"g ar/itratorBs fees, a%.i"istrative eCpe"ses a"% legal fees.@2)A A!/+5+? 6-!S-' MA&+5+M-, +'C. "n CHA&5-&-&S, +'C., Respo"%e"ts. %-'-&AL

,5RAL A&AD, E'LLAR +5ND2 ,5RLA

*ro2u

8u"e 1 C:::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: :::::::C D-C+S+/' *-&AL5A, J.7 &efore t$e Court is a petitio" for revie4 o" certiorari u"%er Rule *5 of t$e Rules of Court see7i"g to reverse a"% set asi%e t$e De isio"@1A a"% Resolutio"@2A %ate% 8uly 11, 2))5 a"% April 10, 2))6 of t$e Court of Appeals 1CA3 i" CA:G.R. S, No. (6*0!. #$e fa tual a"% pro e%ural a"te e%e"ts of t$e ase, as su..ari-e% /y t$e CA, are as follo4sG Nelso" R. Dulay 1Nelso", for /revity3 4as e.ploye% /y @$erei" respo"%e"tA Ge"eral C$arterers '" . 1GC'3, a su/si%iary of o:petitio"er @$erei" o: respo"%e"tA A/oiti- 8e/se" +ariti.e '" . si" e 1!06. He i"itially 4or7e% as a" or%i"ary sea.a" a"% later as /osu" o" a o"tra tual /asis. 9ro. Septe./er 3, 1!!! up to 8uly 1!, 2))), Nelso" 4as %etaile% i" petitio"ersB vessel, t$e +E >i 7apoo &elle. 2" August 13, 2))), or 25 %ays after t$e o.pletio" of $is e.ploy.e"t o"tra t, Nelso" %ie% %ue to a ute re"al failure se o"%ary to septi e.ia. At t$e ti.e of $is %eat$, Nelso" 4as a /o"a fi%e .e./er of t$e Asso iate% +ari"e 2ffi ers a"% Sea.a"Bs ="io" of t$e ,$ilippi"es 1A+2S=,3, GC'Bs olle tive /argai"i"g age"t. Nelso"Bs 4i%o4, +erri%y 8a"e, t$ereafter lai.e% for %eat$ /e"efits t$roug$ t$e grieva" e pro e%ure of t$e Colle tive &argai"i"g Agree.e"t 1C&A3 /et4ee" A+2S=, a"% GC'. Ho4ever, o" 8a"uary 2!, 2))1, t$e grieva" e pro e%ure 4as H%e lare% %ea%lo 7e%I as petitio"ers refuse% to gra"t t$e /e"efits soug$t /y t$e 4i%o4. 2" +ar $ 5, 2))1, +erri%y 8a"e file% a o.plai"t 4it$ t$e NLRC Su/:Regio"al

/.

%.

e.

f.

g.

'" fi"e, t$e issues raise% /y respo"%e"t are su/De t to ar/itratio" i" a or%a" e 4it$ t$e ar/itratio" lause i" t$e partiesB agree.e"t. >H-&-4/&-, t$e petitio" is D-'+-D. S2 2RD5R5D.

Ar/itratio" &oar% i" Ge"eral Sa"tos City agai"st GC' for %eat$ a"% .e%i al /e"efits a"% %a.ages. 2" +ar $ 0, 2))1, 8ove" +ar, Nelso"Bs /rot$er, re eive% ,2),))).)) fro. @respo"%e"tsA pursua"t to arti le 2)1A32 of t$e C&A a"% sig"e% a HCertifi atio"I a 7"o4le%gi"g re eipt of t$e a.ou"t a"% releasi"g A+2S=, fro. furt$er lia/ility. +erri%y 8a"e o"te"%e% t$at s$e is e"title% to t$e aggregate su. of Ni"ety #$ousa"% Dollars 1P!),))).))3 pursua"t to @AArti le 2) 1A31 of t$e C&A C C C CCCC +erri%y 8a"e averre% t$at t$e ,2),))).)) alrea%y re eive% /y 8ove" +ar s$oul% /e o"si%ere% a%va" e pay.e"t of t$e total lai. of =SP!),))). @))A. @Herei" respo"%e"tsA, o" t$e ot$er $a"%, asserte% t$at t$e NLRC $a% "o Duris%i tio" over t$e a tio" o" a ou"t of t$e a/se" e of e.ployer:e.ployee relatio"s$ip /et4ee" GC' a"% Nelso" at t$e ti.e of t$e latterBs %eat$. Nelso" also $a% "o lai.s agai"st petitio"ers for si 7 leave allo4a" eJ.e%i al /e"efit /y reaso" of t$e o.pletio" of $is o"tra t 4it$ GC'. #$ey furt$er allege% t$at private respo"%e"t is "ot e"title% to %eat$ /e"efits /e ause petitio"ers are o"ly lia/le for su $ Hi" ase of %eat$ of t$e seafarer %uri"g t$e ter. of $is o"tra t pursua"t to t$e ,25A o"tra tI a"% t$e ause of $is %eat$ is "ot 4or7:relate%. ,etitio"ers a%.itte% lia/ility o"ly 4it$ respe t to arti le 2)1A32 @of t$e C&AA. C C C CCCC Ho4ever, as petitio"ers stresse%, t$e sa.e 4as alrea%y %is $arge%. #$e La/or Ar/iter rule% i" favor of private respo"%e"t. 't too7 og"i-a" e of t$e ase /y virtue of Arti le 21( 1a3, paragrap$ 6 of t$e La/or Co%e a"% t$e eCiste" e of a reaso"a/le ausal o""e tio" /et4ee" t$e e.ployer: e.ployee relatio"s$ip a"% t$e lai. asserte%. 't or%ere% t$e petitio"er to pay ,*,621,3)).)), t$e e;uivale"t of =SP!),))).)) less ,2),))).)), at t$e ti.e of Du%g.e"t C C C CCCC #$e La/or Ar/iter also rule% t$at t$e proCi.ate ause of Nelso"Bs %eat$ 4as "ot 4or7:relate%. 2" appeal, @t$e NLRCA affir.e% t$e La/or Ar/iterBs %e isio" as to t$e gra"t of %eat$ /e"efits u"%er t$e C&A /ut

reverse% t$e latterBs ruli"g as to t$e proCi.ate ause of Nelso"Bs %eat$.@3A Herei" respo"%e"ts t$e" file% a spe ial ivil a tio" for certiorari 4it$ t$e CA o"te"%i"g t$at t$e NLRC o..itte% grave a/use of %is retio" i" affir.i"g t$e Duris%i tio" of t$e NLRC over t$e aseF i" ruli"g t$at a %iffere"t provisio" of t$e C&A overs t$e %eat$ lai.F i" reversi"g t$e fi"%i"gs of t$e La/or Ar/iter t$at t$e ause of %eat$ is "ot 4or7:relate%F a"%, i" setti"g asi%e t$e release a"% ;uit lai. eCe ute% /y t$e attor"ey:i":fa t a"% "ot o"si%eri"g t$e ,2),))).)) alrea%y re eive% /y +erri%y 8a"e t$roug$ $er attor"ey:i":fa t. 2" 8uly 11, 2))5, t$e CA pro.ulgate% its assaile% De isio", t$e %ispositive portio" of 4$i $ rea%s as follo4sG <H5R592R5, i" vie4 of t$e foregoi"g, t$e petitio" is $ere/y GRAN#5D a"% t$e ase is R595RR5D to t$e Natio"al Co" iliatio" a"% +e%iatio" &oar% for t$e %esig"atio" of t$e Eolu"tary Ar/itrator or t$e o"stitutio" of a pa"el of Eolu"tary Ar/itrators for t$e appropriate resolutio" of t$e issue o" t$e .atter of t$e appli a/le C&A provisio". S2 2RD5R5D.@*A #$e CA rule% t$at 4$ile t$e suit file% /y +erri%y 8a"e is a .o"ey lai., t$e sa.e /asi ally i"volves t$e i"terpretatio" a"% appli atio" of t$e provisio"s i" t$e su/De t C&A. As su $, Duris%i tio" /elo"gs to t$e volu"tary ar/itrator a"% "ot t$e la/or ar/iter. ,etitio"er file% a +otio" for Re o"si%eratio" /ut t$e CA %e"ie% it i" its Resolutio" of April 10, 2))6. He" e, t$e i"sta"t petitio" raisi"g t$e sole issue of 4$et$er or "ot t$e CA o..itte% error i" ruli"g t$at t$e La/or Ar/iter $as "o Duris%i tio" over t$e ase. ,etitio"er o"te"%s t$at Se tio" 1) of Repu/li A t 1R.A.3 0)*2, ot$er4ise 7"o4" as t$e +igra"t <or7ers a"% 2verseas 9ilipi"os A t of 1!!5, vests Duris%i tio" o" t$e appropriate /ra" $es of t$e NLRC to e"tertai" %isputes regar%i"g t$e i"terpretatio" of a olle tive /argai"i"g agree.e"t i"volvi"g .igra"t or overseas 9ilipi"o 4or7ers. ,etitio"er argues t$at t$e a/ove.e"tio"e% Se tio" a.e"%e% Arti le 21( 1 3 of t$e La/or Co%e 4$i $, i" tur", o"fers Duris%i tio" upo" volu"tary ar/itrators over i"terpretatio" or i.ple.e"tatio" of olle tive /argai"i"g agree.e"ts a"% i"terpretatio" or e"for e.e"t of o.pa"y perso""el poli ies. #$e perti"e"t provisio"s of Se tio" 1) of R.A. 0)*2 provi%e as follo4sG S-C. 1). Mone6 Claims. : Not4it$sta"%i"g a"y provisio" of la4 to t$e o"trary, t$e La/or Ar/iters of t$e Natio"al La/or Relatio"s Co..issio" 1NLRC3 s$all $ave t$e origi"al a"% eC lusive Duris%i tio" to $ear a"% %e i%e, 4it$i" "i"ety 1!)3 ale"%ar %ays after fili"g of t$e o.plai"t, t$e lai.s arisi"g out of a" e.ployer:e.ployee relatio"s$ip or /y virtue of a"y la4 or o"tra t i"volvi"g 9ilipi"o 4or7ers for overseas

%eploy.e"t i" lu%i"g lai.s for a tual, .oral, eCe.plary a"% ot$er for.s of %a.ages. Arti le 21(1 3 of t$e La/or Co%e, o" t$e ot$er $a"%, states t$atG CCCC 1 3 Cases arisi"g fro. t$e i"terpretatio" or i.ple.e"tatio" of olle tive /argai"i"g agree.e"ts a"% t$ose arisi"g fro. t$e i"terpretatio" or e"for e.e"t of o.pa"y perso""el poli ies s$all /e %ispose% /y t$e La/or Ar/iter /y referri"g t$e sa.e to t$e grieva" e .a $i"ery a"% volu"tary ar/itratio" as .ay /e provi%e% i" sai% agree.e"ts. 2" t$eir part, respo"%e"ts i"sist t$at i" t$e prese"t ase, Arti le 21(, paragrap$ 1 3 as 4ell as Arti le 261 of t$e La/or Co%e re.ai" to /e t$e gover"i"g provisio"s of la4 4it$ respe t to u"resolve% grieva" es arisi"g fro. t$e i"terpretatio" a"% i.ple.e"tatio" of olle tive /argai"i"g agree.e"ts. ="%er t$ese provisio"s of la4, Duris%i tio" re.ai"s 4it$ volu"tary ar/itrators. Arti le 261 of t$e La/or Co%e rea%s, t$usG A&5+CL- 201. Jurisdiction o( Voluntar6 'rbitrators or anel o( Voluntar6 'rbitrators. R #$e Eolu"tary Ar/itrator or pa"el of Eolu"tary Ar/itrators s$all $ave origi"al a"% eC lusive Duris%i tio" to $ear a"% %e i%e all u"resolve% grieva" es arisi"g fro. t$e i"terpretatio" or i.ple.e"tatio" of t$e Colle tive &argai"i"g Agree.e"t a"% t$ose arisi"g fro. t$e i"terpretatio" or e"for e.e"t of o.pa"y perso""el poli ies referre% to i" t$e i..e%iately pre e%i"g arti le. A or%i"gly, violatio"s of a Colle tive &argai"i"g Agree.e"t, eC ept t$ose 4$i $ are gross i" $ara ter, s$all "o lo"ger /e treate% as u"fair la/or pra ti e a"% s$all /e resolve% as grieva" es u"%er t$e Colle tive &argai"i"g Agree.e"t. 9or purposes of t$is arti le, gross violatio"s of Colle tive &argai"i"g Agree.e"t s$all .ea" flagra"t a"%Jor .ali ious refusal to o.ply 4it$ t$e e o"o.i provisio"s of su $ agree.e"t. #$e Co..issio", its Regio"al 2ffi es a"% t$e Regio"al Dire tors of t$e Depart.e"t of La/or a"% 5.ploy.e"t s$all "ot e"tertai" %isputes, grieva" es or .atters u"%er t$e eC lusive a"% origi"al Duris%i tio" of t$e Eolu"tary Ar/itrator or pa"el of Eolu"tary Ar/itrators a"% s$all i..e%iately %ispose a"% refer t$e sa.e to t$e Grieva" e +a $i"ery or Eolu"tary Ar/itratio" provi%e% i" t$e Colle tive &argai"i"g Agree.e"t. #$e petitio" is 4it$out .erit. 't is true t$at R.A. 0)*2 is a spe ial la4 gover"i"g overseas 9ilipi"o 4or7ers. Ho4ever, a areful rea%i"g of t$is spe ial la4 4oul% rea%ily s$o4 t$at t$ere is "o spe ifi provisio" t$ereu"%er 4$i $ provi%es for Duris%i tio" over %isputes or u"resolve% grieva" es regar%i"g t$e i"terpretatio"

or i.ple.e"tatio" of a C&A. Se tio" 1) of R.A. 0)*2, 4$i $ is ite% /y petitio"er, si.ply spea7s, i" ge"eral, of H lai.s arisi"g out of a" e.ployer:e.ployee relatio"s$ip or /y virtue of a"y la4 or o"tra t i"volvi"g 9ilipi"o 4or7ers for overseas %eploy.e"t i" lu%i"g lai.s for a tual, .oral, eCe.plary a"% ot$er for.s of %a.ages.I 2" t$e ot$er $a"%, Arti les 21(1 3 a"% 261 of t$e La/or Co%e are very spe ifi i" stati"g t$at volu"tary ar/itrators $ave Duris%i tio" over ases arisi"g fro. t$e i"terpretatio" or i.ple.e"tatio" of olle tive /argai"i"g agree.e"ts. State% %iffere"tly, t$e i"sta"t ase i"volves a situatio" 4$ere t$e spe ial statute 1R.A. 0)*23 refers to a su/De t i" ge"eral, 4$i $ t$e ge"eral statute 1La/or Co%e3 treats i" parti ular.@5A '" t$e prese"t ase, t$e /asi issue raise% /y +erri%y 8a"e i" $er o.plai"t file% 4it$ t$e NLRC isG 4$i $ provisio" of t$e su/De t C&A applies i"sofar as %eat$ /e"efits %ue to t$e $eirs of Nelso" are o" er"e%. #$e Court agrees 4it$ t$e CA i" $ol%i"g t$at t$is issue learly i"volves t$e i"terpretatio" or i.ple.e"tatio" of t$e sai% C&A. #$us, t$e spe ifi or spe ial provisio"s of t$e La/or Co%e gover". '" a"y ase, t$e Court agrees 4it$ petitio"erMs o"te"tio" t$at t$e C&A is t$e la4 or o"tra t /et4ee" t$e parties. Arti le 13.1 of t$e C&A e"tere% i"to /y a"% /et4ee" respo"%e"t GC' a"% A+2S=,, t$e u"io" to 4$i $ petitio"er /elo"gs, provi%es as follo4sG 59e Co2p"ny "n t9e Un;on ":ree t9"t ;n 1"se o8 ;spute or 1on8l;1t ;n t9e ;nterpret"t;on or "ppl;1"t;on o8 "ny o8 t9e prov;s;ons o8 t9;s A:ree2ent, or en8or1e2ent o8 Co2p"ny pol;1;es, t9e s"2e s9"ll #e settle t9rou:9 ne:ot;"t;on, 1on1;l;"t;on or volunt"ry "r#;tr"t;on. #$e Co.pa"y a"% t$e ="io" furt$er agree t$at t$ey 4ill use t$eir /est e"%eavor to e"sure t$at a"y %ispute 4ill /e %is usse%, resolve% a"% settle% a.i a/ly /y t$e parties $ereof 4it$i" "i"ety 1!)3 %ays fro. t$e %ate of fili"g of t$e %ispute or o"fli t a"% i" ase of failure to settle t$ereof a"y of t$e parties retai" t$eir free%o. to ta7e appropriate a tio". @6A 15.p$asis supplie%3 9ro. t$e foregoi"g, it is lear t$at t$e parties, i" t$e first pla e, really i"te"%e% to /ri"g to o" iliatio" or volu"tary ar/itratio" a"y %ispute or o"fli t i" t$e i"terpretatio" or appli atio" of t$e provisio"s of t$eir C&A. 't is settle% t$at 4$e" t$e parties $ave vali%ly agree% o" a pro e%ure for resolvi"g grieva" es a"% to su/.it a %ispute to volu"tary ar/itratio" t$e" t$at pro e%ure s$oul% /e stri tly o/serve%.@(A 't .ay "ot /e a.iss to poi"t out t$at t$e a/ove;uote% provisio"s of t$e C&A are i" o"so"a" e 4it$ Rule E'', Se tio" ( of t$e prese"t 2."i/us Rules a"% Regulatio"s '.ple.e"ti"g t$e +igra"t <or7ers a"% 2verseas 9ilipi"os A t of 1!!5, as a.e"%e% /y Repu/li A t No. 1))22, 4$i $ states t$at H@fAor 29<s 4it$ olle tive /argai"i"g agree.e"ts, t$e ase s$all /e su/.itte% for volu"tary ar/itratio" i" a or%a" e 4it$ Arti les 261 a"% 262 of t$e La/or Co%e.I #$e Court "otes t$at t$e sai% 2."i/us Rules a"% Regulatio"s 4ere pro.ulgate% /y t$e Depart.e"t of La/or a"% 5.ploy.e"t 1D2L53 a"% t$e Depart.e"t of 9oreig" Affairs 1D9A3 a"% t$at t$ese %epart.e"ts 4ere .a"%ate% to o"sult 4it$ t$e Se"ate Co..ittee o" La/or a"% 5.ploy.e"t a"% t$e House of Represe"tatives Co..ittee o" 2verseas <or7ers Affairs. '" t$e sa.e .a""er, Se tio" 2! of t$e prevaili"g Sta"%ar% #er.s a"% Co"%itio"s Gover"i"g t$e 5.ploy.e"t of

9ilipi"o Seafarers o" &oar% 2 ea" Goi"g Eessels, pro.ulgate% /y t$e ,$ilippi"e 2verseas 5.ploy.e"t A%.i"istratio" 1,25A3, provi%es as follo4sG Se tio" 2!. *is ute Settlement 4rocedures. ] +n 1"ses o8 1l";2s "n ;sputes "r;s;n: 8ro2 t9;s e2ploy2ent, t9e p"rt;es 1overe #y " 1olle1t;ve #"r:";n;n: ":ree2ent s9"ll su#2;t t9e 1l";2 or ;spute to t9e or;:;n"l "n e@1lus;ve Dur;s ;1t;on o8 t9e volunt"ry "r#;tr"tor or p"nel o8 "r#;tr"tors. 'f t$e parties are "ot overe% /y a olle tive /argai"i"g agree.e"t, t$e parties .ay at t$eir optio" su/.it t$e lai. or %ispute to eit$er t$e origi"al a"% eC lusive Duris%i tio" of t$e Natio"al La/or Relatio"s Co..issio" 1NLRC3, pursua"t to Repu/li A t 1RA3 0)*2, ot$er4ise 7"o4" as t$e +igra"t <or7ers a"% 2verseas 9ilipi"os A t of 1!!5 or to t$e origi"al a"% eC lusive Duris%i tio" of t$e volu"tary ar/itrator or pa"el of ar/itrators. 'f t$ere is "o provisio" as to t$e volu"tary ar/itrators to /e appoi"te% /y t$e parties, t$e sa.e s$all /e appoi"te% fro. t$e a re%ite% volu"tary ar/itrators of t$e Natio"al Co" iliatio" a"% +e%iatio" &oar% of t$e Depart.e"t of La/or a"% 5.ploy.e"t. #$e ,$ilippi"e 2verseas 5.ploy.e"t A%.i"istratio" 1,25A3 s$all eCer ise origi"al a"% eC lusive Duris%i tio" to $ear a"% %e i%e %is ipli"ary a tio" o" ases, 4$i $ are a%.i"istrative i" $ara ter, i"volvi"g or arisi"g out of violatio"s of re ruit.e"t la4s, rules a"% regulatio"s i"volvi"g e.ployers, pri" ipals, o"tra ti"g part"ers a"% 9ilipi"o seafarers. 15.p$asis supplie%3 't is lear fro. t$e a/ove t$at t$e i"terpretatio" of t$e D2L5, i" o"sultatio" 4it$ t$eir ou"terparts i" t$e respe tive o..ittees of t$e Se"ate a"% t$e House of Represe"tatives, as 4ell as t$e D9A a"% t$e ,25A is t$at 4it$ respe t to %isputes i"volvi"g lai.s of 9ilipi"o seafarers 4$erei" t$e parties are overe% /y a olle tive /argai"i"g agree.e"t, t$e %ispute or lai. s$oul% /e su/.itte% to t$e Duris%i tio" of a volu"tary ar/itrator or pa"el of ar/itrators. 't is o"ly i" t$e a/se" e of a olle tive /argai"i"g agree.e"t t$at parties .ay opt to su/.it t$e %ispute to eit$er t$e NLRC or to volu"tary ar/itratio". 't is ele.e"tary t$at rules a"% regulatio"s issue% /y a%.i"istrative /o%ies to i"terpret t$e la4 4$i $ t$ey are e"truste% to e"for e, $ave t$e for e of la4, a"% are e"title% to great respe t.@0A Su $ rules a"% regulatio"s parta7e of t$e "ature of a statute a"% are Dust as /i"%i"g as if t$ey $ave /ee" 4ritte" i" t$e statute itself.@!A '" t$e i"sta"t ase, t$e Court fi"%s "o oge"t reaso" to %epart fro. t$is rule. #$e a/ove i"terpretatio" of t$e D2L5, D9A a"% ,25A is also i" o"so"a" e 4it$ t$e poli y of t$e state to pro.ote volu"tary ar/itratio" as a .o%e of settli"g la/or %isputes.@1)A No less t$a" t$e ,$ilippi"e Co"stitutio" provi%es, u"%er t$e t$ir% paragrap$, Se tio" 3, Arti le O''', t$ereof t$at H@tA$e State s$all pro.ote t$e pri" iple of s$are% respo"si/ility /et4ee" 4or7ers a"% e.ployers a"% t$e prefere"tial use of volu"tary .o%es i" settli"g %isputes, i" lu%i"g o" iliatio", a"%

s$all e"for e t$eir .utual i"%ustrial pea e.I

o.plia" e t$ere4it$ to foster

Co"siste"t 4it$ t$is o"stitutio"al provisio", Arti le 211 of t$e La/or Co%e provi%es t$e %e lare% poli y of t$e State H@tAo pro.ote a"% e.p$asi-e t$e pri.a y of free olle tive /argai"i"g a"% "egotiatio"s, i" lu%i"g volu"tary ar/itratio", .e%iatio" a"% o" iliatio", as .o%es of settli"g la/or or i"%ustrial %isputes.I 2" t$e /asis of t$e foregoi"g, t$e Court fi"%s "o error i" t$e ruli"g of t$e CA t$at t$e volu"tary ar/itrator $as Duris%i tio" over t$e i"sta"t ase. >H-&-4/&-, t$e petitio" is D-'+-D. #$e De isio" a"% Resolutio" of t$e Court of Appeals i" CA:G.R. S, No. (6*0! %ate% 8uly 11, 2))5 a"% April 10, 2))6, respe tively, are A44+&M-D. S/ /&D-&-D.

.%.&. 'o. 1)8))1. M"r19 15, 1((03 SA' M+%U-L C/&*/&A5+/', A'%-L %. &/A "n M-L+'DA MACA&A+%, petitioners, vs. 'A5+/'AL LA!/& &-LA5+/'S C/MM+SS+/' HSe1on D;v;s;onI, LA!/& A&!+5-& -DUA&D/ 6. CA&*+/, +LA> A5 !U=L/D '% MA'%%A>A H+!MI, -5 AL., respondents. S<LLA!US 1. LA!/& LA> A'D S/C+AL L-%+SLA5+/'G LA!/& C/D-G LA!/& A&!+5-&G /&+%+'AL A'D -SCLUS+,6U&+SD+C5+/'G 5-&M+'A5+/' D+S*U5-S A'D U'4A+& LA!/& *&AC5+C-SG -SC-*5+/'SG '/5 *&-S-'5 +' CAS- A5 !A&. $ #$e la4 i" poi"t is Arti le 21( 1a3 of t$e La/or Co%e. 't is ele.e"tary t$at t$is la4 is %ee.e% 4ritte" i"to t$e C&A. '" fa t, t$e la4 spea7s i" plai" a"% u"a./iguous ter.s t$at ter.i"atio" %isputes, toget$er 4it$ u"fair la/or pra ti es, are .atters falli"g u"%er t$e origi"al a"% eC lusive Duris%i tio" of t$e La/or Ar/iter. #$e sole eC eptio" a" /e fou"% u"%er Arti le 262 of t$e sa.e Co%e, 4$i $ provi%esG H#$e volu"tary ar/itrator or pa"el of volu"tary ar/itrators, upo" agree.e"t of t$e parties, s$all also $ear a"% %e i%e all ot$er la/or %isputes i" lu%i"g u"fair la/or pra ti es a"% /argai"i"g %ea%lo 7s.I #$e eC eptio", /ei"g prese"t, t$e La/or Ar/iter properly $as Duris%i tio" over t$e o.plai"t file% /y t$e respo"%e"t u"io" for illegal %is.issal a"% u"fair la/or pra ti e. #$e fili"g of a re;uest for re o"si%eratio" /y t$e respo"%e"t u"io", 4$i $ is t$e o"%itio" sine =ua nonto ategori-e t$e ter.i"atio" %ispute a"% t$e =L, o.plai"t as a grieva/le %ispute as per C&A, 4as %e i%e%ly a/se"t i" t$e ase at /e" $. He" e, t$e respo"%e"t u"io" a te% 4ell 4it$i" t$eir rig$ts i" fili"g t$eir o.plai"t %ire tly 4it$ t$e La/or Ar/iter. +D.G +D.G +D.G +D.G +D.G D-5-&M+'-D !< ALL-%A5+/'S /4 5H- C/M*LA+'5. #$e ;uestio"e% %is $arges %ue to allege% re%u"%a" y a" $ar%ly /e o"si%ere% o.pa"y perso""el poli ies a"% t$erefore "ee% "ot %ire tly /e su/De t to t$e grieva" e .a $i"ery "or to volu"tary ar/itratio". All of t$e %is.isse% e.ployees 4ere offi ers a"% .e./ers of t$eir respe tive u"io"s, a"% t$eir e.ployers faile% to give a satisfa tory

2.

eCpla"atio" as to 4$y t$is group of e.ployees 4as si"gle% out. 't .ay /e t$e ase t$at t$e %is $arges .ay really /e for a bona (ideaut$ori-e% ause% u"%er Arti le 203 of t$e La/or Co%e. &ut it is also possi/le t$at su $ .ay /e a s $e.e to a.ouflage t$e real i"te"tio" of %is ri.i"ati"g agai"st u"io" .e./ers. '" a"y ase, t$ese .atters 4ill /e /est ve"tilate% i" a $eari"g /efore t$e La/or Ar/iter. #$e o.plai"t alleges fa ts suffi ie"t to o"stitute a /o"a fi%e ase of =L,, og"i-a/le /y t$e La/or Ar/iter. #$is is o"siste"t 4it$ t$e rule t$at Duris%i tio" over t$e su/De t .atter is %eter.i"e% /y t$e allegatio"s of t$e o.plai"t. A**-A&A'C-S /4 C/U'S-L ,oco +uPag >a unan Migallos J Jardeleza for petitio"ers. 1he Solicitor +eneral for pu/li respo"%e"t. 4otenciano '. :lores, Jr. for private respo"%e"ts. D-C+S+/' H-&M/S+S+MA, 6&., J.9 '" t$e $erei" petitio" for ertiorari u"%er Rule ED, petitio"ers ;uestio" t$e Duris%i tio" of t$e La/or Ar/iter to $ear a o.plai"t for u"fair la/or pra ti e, illegal %is.issal, a"% %a.ages, "ot4it$sta"%i"g t$e provisio" for grieva" e a"% ar/itratio" i" t$e Colle tive &argai"i"g Agree.e"t. Let us u"furl t$e fa ts. ,rivate respo"%e"ts, e.ploye% /y petitio"er Sa" +iguel Corporatio" 1S+C3 as .e $a"i s, .a $i"ists, a"% arpe"ters, 4ere a"% still are, bona (ide offi ers a"% .e./ers of private respo"%e"t 'la4 at &u7lo% "g +a"ggaga4a. 2" or a/out 8uly 31, 1!!), private respo"%e"ts 4ere serve% a +e.ora"%u. fro. petitio"er A"gel G. Roa, Ei e: ,resi%e"t a"% +a"ager of S+CBs &usi"ess Logisti s Divisio" 1&LD3, to t$e effe t t$at t$ey $a% to /e seperate% fro. t$e servi e effe tive 2 to/er 31, 1!!) o" t$e grou"% of Hre%u"%a" y or eC esss perso""el.I Respo"%e"t u"io", i" /e$alf of private respo"%e"ts, oppose% t$e i"te"%e% %is.issal a"% as7e% for a %ialogue 4it$ .a"age.e"t. A or%i"gly, a series of %ialogues 4ere $el% /et4ee" petitio"ers a"% private respo"%e"ts. 5ve" /efore t$e o" lusio" of sai% %ialogues, t$e aforesai% petitio"er A"gel Roa issue% a"ot$er +e.ora"%u. o" 2 to/er 1, 1!!) i"for.i"g private respo"%e"ts t$at t$ey 4oul% /e %is.isse% fro. 4or7 effe tive as of t$e lose of /usi"ess $ours o" Nove./er 2, 1!!). ,rivate respo"%e"ts 4ere i" fa t purge% o" t$e %ate aforesai%. #$us, o" 9e/ruary 2D, 1!!1, private respo"%e"ts file% a o.plai"t agai"st petitio"ers for 'llegal Dis.issal a"% ="fair La/or ,ra ti es, 4it$ a prayer for %a.ages a"% attor"eyBs fees, 4it$ t$e Ar/itratio" &ra" $ of respo"%e"t Natio"al La/or Relatio"s Co..issio". #$e o.plai"t@1A 4as assig"e% to La/or Ar/iter 5%uar%o 9. Carpio for $eari"g a"% proper %ispositio". 2" April 3D, 1!!1, petitio"ers file% a .otio" to %is.iss t$e o.plai"t, allegi"g t$at respo"%e"t La/or Ar/iter $a% "o Duris%i tio" over t$e su/De t .atter of t$e o.plai"t, a"% t$at respo"%e"t La/or Ar/iter .ust %efer o"si%eratio" of t$e u"fair la/or pra ti e o.plai"t u"til after t$e parties $ave go"e t$roug$ t$e grieva" e pro e%ure provi%e% for i" t$e eCisti"g Colle tive &argai"i"g Agree.e"t 1C&A3. Respo"%e"t La/or

Ar/iter %e"ie% t$is .otio" i" a Resolutio", %ate% Septe./er 23, 1!!1. #$e petitio"ers appeale% t$e %e"ial to respo"%e"t Co..issio" o" Nove./er 0, 1!!1. ="i.presse% /y t$e grou"%s t$erefor, respo"%e"t Co..issio" %is.isse% t$e appeal i" its assaile% Resolutio", %ate% August 11, 1!!2. ,etitio"ers pro.ptly file% a +otio" for Re o"si%eratio" 4$i $, $o4ever, 4as %e"ie% t$roug$ t$e li7e4ise assaile% Resolutio", %ate% 2 to/er 2!, 1!!2. He" e, t$e i"sta"t petitio" for ertiorari allegi"g t$e follo4i"g grou"%s 4as file% /y t$e petitio"ersG +. R5S,2ND5N# LA&2R AR&'#5R CANN2# 5O5RC'S5 8=R'SD'C#'2N 2E5R #H5 ALL5G5D 'LL5GAL #5R+'NA#'2N AND ALL5G5D =L, CAS5S <'#H2=# ,R'2R R5S2R# #2 GR'5EANC5 AND AR&'#RA#'2N ,R2E'D5D =ND5R #H5 C&A. ++ #H5 S#R2NG S#A#5 ,2L'C6 2N #H5 ,R2+2#'2N 29 E2L=N#AR6 +2D5S 29 S5##L5+5N# 29 LA&2R D'S,=#5S CRA9#5D 'N #H5 C2NS#'#=#'2N AND #H5 LA&2R C2D5 D'C#A#5S #H5 S=&+'SS'2N 29 #H5 C&A D'S,=#5 #2 GR'5EANC5 AND AR&'#RA#'2N.@2A ,etitio"ers posit t$e /asi pri" iple t$at a olle tive /argai"i"g agree.e"t is a o"tra t /et4ee" .a"age.e"t a"% la/or t$at .ust /i"% a"% /e e"for e% i" t$e first i"sta" e as /et4ee" t$e parties t$ereto. '" t$is ase, t$e C&A /et4ee" t$e petitio"ers a"% respo"%e"t u"io" provi%es, u"%er Se tio" 1, Arti le E e"title% AR&'#RA#'2N, t$at H4ages, $ours of 4or7, o"%itio"s of e.ploy.e"t a"%Jor e.ployer:e.ployee relatio"s s$all /e settle% /y ar/itratio".I ,etitio"ersB t$esis is t$at t$e %ispute as to t$e ter.i"atio" of t$e u"io" .e./ers a"% t$e u"fair la/or pra ti e s$oul% first /e settle% /y ar/itratio", a"% "ot %ire tly /y t$e la/or ar/iter, follo4i"g t$e a/ove provisio" of t$e C&A, 4$i $ oug$t to /e treate% as t$e la4 /et4ee" t$e parties t$ereto. #$e argu.e"t is u".eritorious. #$e la4 i" poi"t is Arti le 21( 1a3 of t$e La/or Co%e. 't is ele.e"tary t$at t$is la4 is %ee.e% 4ritte" i"to t$e C&A. '" fa t, t$e la4 spea7s i" plai" a"% u"a./iguous ter.s t$at ter.i"atio" %isputes, toget$er 4it$ u"fair la/or pra ti es, are .atters falli"g u"%er t$e origi"al a"% eC lusive Duris%i tio" of t$e La/or Ar/iter, to 4itG HArti le 21(. 8uris%i tio" of La/or Ar/iters a"% t$e Co..issio" : 1a3 5C ept as ot$er4ise provi%e% u"%er t$is Co%e, t$e La/or Ar/iters s$all $ave origi"al a"% eC lusive Duris%i tio" to $ear a"% %e i%e C C C t$e follo4i"g ases i"volvi"g all 4or7ers, 4$et$er agri ultural or "o":agri ulturalG 113 ="fair la/or pra ti e asesG 123 #er.i"atio" %isputesF HC C C CCC C C C.I

#$e sole eC eptio" to t$e a/ove rule a" /e fou"% u"%er Arti le 262 of t$e sa.e Co%e, 4$i $ provi%esG HAri le 262. 8uris%i tio" over ot$er la/or %isputes : #$e volu"tary ar/itrator or pa"el of volu"tary ar/itrators, upon ":ree2ent o8 t9e p"rt;es, s$all also $ear a"% %e i%e all ot$er

la/or %isputes i" lu%i"g u"fair la/or pra ti es a"% /argai"i"g %ea%lo 7s.I 1As a%%e% /y R.A. 6(153 <e su/De te% t$e re or%s of t$is ase, parti ularly t$e C&A, to .eti ulous s ruti"y a"% 4e fi"% "o agree.e"t /et4ee" S+C a"% t$e respo"%e"t u"io" t$at 4oul% state i" u"e;uivo al la"guage t$at petitio"ers a"% t$e respo"%e"t u"io" o"for. to t$e su/.issio" of ter.i"atio" %isputes a"% u"fair la/or pra ti es to volu"tary ar/itratio". Se tio" 1, Arti le E of t$e C&A, ite% /y t$e $erei" petitio"ers, ertai"ly %oes "ot provi%e so. He" e, o"siste"t 4it$ t$e ge"eral rule u"%er Arti le 21( 1a3 of t$e La/or Co%e, t$e La/or Ar/iter properly $as Duris%i tio" over t$e o.plai"t file% /y t$e respo"%e"t u"io" o" 9e/ruary 25, 1!!1 for illegal %is.issal a"% u"fair la/or pra ti e. ,etitio"ers poi"t $o4ever to Se tio" 2, Arti le ''' of t$e C&A, u"%er t$e $ea%i"g 8o/ Se urity, to s$o4 t$at t$e %ispute is a proper su/De t of t$e grieva" e pro e%ure, vi-G HC C C #$e =N'2N, $o4ever, s$all $ave t$e rig$t to see7 re o"si%eratio" of a"y %is $arge, lay:off or %is ipli"ary a tio", a"% su $ re;uests for re o"si%eratio" s$all /e o"si%ere% a %ispute or grieva" e to /e %ealt 4it$ i" a or%a" e 4it$ t$e pro e%ure outli"e% i" Arti le 'E $ereof @o" Grieva" e +a $i"eryA C C C@3AI 15.p$asis ours3 ,etitio"ers allege t$at respo"%e"t u"io" re;ueste% .a"age.e"t for a Hre o"si%eratio" a"% revie4I of t$e o.pa"yBs %e isio" to ter.i"ate t$e e.ploy.e"t of t$e u"io" .e./ers. &y t$is a t, petitio"ers argue, respo"%e"t u"io" re og"i-e% t$at t$e ;uestio"e% %is.issal is a grieva/le %ispute /y virtue of Se tio" 2, Arti le ''' of t$e C&A. #$is allegatio" 4as stro"gly %e"ie% /y t$e respo"%e"t u"io". '" a +e.ora"%u. file% for t$e pu/li respo"%e"t NLRC, t$e Soli itor Ge"eral supporte% t$e positio" of t$e respo"%e"t u"io" t$at it %i% "ot see7 re o"si%eratio" fro. t$e S+C .a"age.e"t i" regar% to t$e %is.issal of t$e e.ployees. ,etitio"ers fail .isera/ly to prove t$at, i"%ee%, t$e respo"%e"t u"io" re;ueste% for a re o"si%eratio" or revie4 of t$e .a"age.e"t %e isio" to %is.iss t$e private respo"%e"ts. A pu" tilious eCa.i"atio" of t$e re or%s i"%u/ita/ly reveals t$at at "o ti.e %i% t$e respo"%e"t u"io" eCer ise its rig$t to see7 re o"si%eratio" of t$e o.pa"yBs .ove to ter.i"ate t$e e.ploy.e"t of t$e u"io" .e./ers, 4$i $ re;uest for re o"si%eratio" 4oul% $ave triggere% t$e appli atio" of Se tio" 2, Arti le ''' of t$e C&A, t$us resulti"g i" t$e treat.e"t of t$e %ispute as a grieva" e to /e %ealt 4it$ i" a or%a" e 4it$ t$e Grieva" e +a $i"ery lai% %o4" i" Arti le 'E of, t$e C&A. State% %iffere"tly, t$e fili"g of a re;uest. for re o"si%eratio" /y t$e respo"%e"t u"io", 4$i $ is t$e o"%itio" sine =ua non to ategori-e t$e ter.i"atio" %ispute a"% t$e =L, o.plai"t as a grieva/le %ispute, 4as %e i%e%ly a/se"t i" t$e ase at /e" $. He" e, t$e respo"%e"t u"io" a te% 4ell 4it$i" t$eir rig$ts i" fili"g t$eir o.plai"t for illegal %is.issal a"% =L, %ire tly 4it$ t$e La/or Ar/iter u"%er Arti le 21( 1a3 of t$e La/or Co%e. Se o"%. ,etitio"ers i"sist t$at i"volve% i" t$e o"troversy is t$e i"terpretatio" a"% i.ple.e"tatio" of t$e C&A 4$i $ is grieva/le a"% ar/itra/le /y la4 u"%er Arti le 21(1 3 of t$e La/or Co%e,viz9 HAR#. 21(1 3. Cases arisi"g fro. t$e i"terpretatio" or i.ple.e"tatio" of olle tive /argai"i"g agree.e"ts a"% t$ose arisi"g fro. t$e i"terpretatio" or e"for e.e"t of o.pa"y perso""el poli ies s$all /e %ispose% of /y t$e La/or Ar/iter /y referri"g t$e sa.e to t$e grieva" e .a $i"ery a"% volu"tary

ar/itratio" as .ay /e provi%e% i" sai% agree.e"ts.I 1As a.e"%e% /y R.A. 6(153. ,etitio"ers t$eori-e t$at si" e respo"%e"ts ;uestio"e% t$e %is $arges, t$e .ai" ;uestio" for resolutio" is 4$et$er S+C $a% t$e .a"age.e"t rig$t or prerogative to effe t t$e %is $arges o" t$e grou"% of re%u"%a" y, a"% t$is "e essarily alls for t$e i"terpretatio" or i.ple.e"tatio" of Arti le ''' 18o/ Se urity3 i" relatio" to Arti le 'E 1Grieva" e +a $i"ery3of t$e C&A.@*A ,etitio"erBs t$eory %oes "ot $ol% 4ater. #$ere is "o o""e tio" 4$atsoever /et4ee" S+CBs .a"age.e"t prerogative to effe t t$e %is $arges a"% t$e i"terpretatio" or i.ple.e"tatio" of Arti les ''' a"% 'E of t$e C&A. #$e o"ly releva"t provisio" u"%er Arti le ''' t$at .ay "ee% i"terpretatio" or i.ple.e"tatio" is Se tio" 2 4$i $ 4as ite% $erei". Ho4ever, as patie"tly poi"te% out /y t$is ourt, sai% provisio" %oes "ot o.e i"to play o"si%eri"g t$at t$e u"io" "ever eCer ise% its rig$t to see7 re o"si%eratio" of t$e %is $arges effe te% /y t$e o.pa"y. 't 4oul% $ave /ee" %iffere"t $a% t$e u"io" soug$t re o"si%eratio". Su $ re ourse u"%er Se tio" 2 4oul% $ave /ee" treate% as a grieva" e u"%er Arti le 'E 1Grieva" e +a $i"ery3 of t$e C&A, t$us alli"g for t$e possi/le i"terpretatio" or i.ple.e"tatio" of t$e e"tire provisio" o" Grieva" e +a $i"ery as agree% upo" /y t$e parties. #$is 4as "ot t$e ase $o4ever. #$e u"io" /roug$t t$e ter.i"atio" %ispute %ire tly to t$e La/or Ar/iter re"%eri"g Arti les ''' a"% 'E of t$e C&A i"appli a/le for t$e resolutio" of t$is ase. #$e %is $arges, petitio"ers also o"te"%, all for t$e i"terpretatio" or e"for e.e"t of o.pa"y perso""el poli ies, parti ulary S+CBs perso""el poli ies o" lay:offs arisi"g fro. re%u"%a y, a"% so, t$ey .ay /e o"si%ere% grieva/le a"% ar/itra/le /y virtue of Arti le 2 1(1 3. Not "e essarily so. Co.pa"y perso""el poli ies are gui%i"g pri" iples state% i" /roa%, lo"g:ra"ge ter.s t$at eCpress t$e p$ilosop$y or /eliefs of a" orga"i-atio"Bs top aut$ority regar%i"g perso""el .atters. #$ey %eal 4it$ .atters affe ti"g effi ie" y a"% 4ell: /ei"g of e.ployees a"% i" lu%e, a.o"g ot$ers, t$e pro e%ure i" t$e a%.i"istratio" of 4ages, /e"efits, pro.otio"s, tra"sfer a"% ot$er perso""el .ove.e"ts 4$i $ are usually "ot spelle% out i" t$e olle tive agree.e"t. #$e usual sour e of grieva" es, $o4ever, is t$e rules a"% regulatio"s gover"i"g %is ipli"ary a tio"s.@5A 8u%gi"g t$erefro., t$e ;uestio"e% %is $arges %ue to allege% re%u"%a" y a" $ar%ly /e osi%ere% o.pa"y perso""el poli ies a"% t$erefore "ee% "ot %ire tly /e su/De t to t$e grieva" e .a $i"ery "or to volu"tary ar/itratio". #$ir%. ,etitio"ers 4oul% li7e to persua%e us t$at respo"%e"tsB =L, lai.s are .erely o" lusory a"% a""ot serve to vest Duris%i tio" to t$e La/or Ar/iters. ,etitio"ers argue 4it$ passio"G HHo4 4as t$e %is $argesB 1si 3 rig$t to self: orga"i-atio" restrai"e% /y t$eir ter.i"atio"S Respo"%e"t %i% "ot s$o4.. #$ere is "o allegatio" of t$e eCiste" e of a"ti:u"io" a"i.us or of t$e ulti.ate fa ts s$o4i"g $o4 t$e %is $arges affe te% t$e rig$ts to self:orga"i-atio" of i"%ivi%ual respo"%e"ts.I@6A '" s$ort, petitio"ers .ai"tai" t$at respo"%e"tsB o.plai"t %oes "ot allege a ge"ui"e ase for =L,. #$e Court is "ot o"vi" e%. #$e o.plai"t alleges t$atG H5. '"%ivi%ual o.plai"a"ts are /o"a fi%e offi ers a"% .e./ers of o.plai"a"t 'la4 at &u7lo% "g +a"ggaga4a 1'&+3. #$ey are a tive a"% .ilita"t i" t$e affairs a"% a tivities of t$e u"io". CCC CCC CCC

23. #$e %is.issal or lo 7:out fro. 4or7 of t$e i"%ivi%ual o.plai"a"ts learly o"stitutes a" a t of u"fair la/or pra ti es i" t$e lig$t of t$e fa t t$at t$e 4or7 /ei"g perfor.e% /y t$e i"%ivi%ual o.plai"a"ts are /ei"g o"tra te% out /y t$e respo"%e"t o.pa"y, a"%, t$erefore, %eprives i"%ivi%ual o.plai"a"ts of t$eir rig$t to 4or7 a"% it o"stitutes a ri.i"al violatio" of eCisti"g la4s. CCC CCC CCC

"1t A9;19 "2ounts to ;nter8eren1e ;n t9e e2ployeesF e@er1;se o8 t9e;r r;:9t o8 sel8$or:"n;z"t;on. ="%er Art. 2*! 1"o4 Art. 2*03 of t$e La/or Co%e of t$e ,$ilippi"es, su $ i"terfere" e is o"si%ere% a" a t of u"fair la/or pra ti e o" t$e part of t$e Co.pa"y C C C. 15.p$asis ours3 't .atters "ot t$at t$e ause of ter.i"atio" i" t$e a/ove ite% ases 4as retre" $.e"t 4$ile t$at i" t$e i"sta"t ase 4as re%u"%a" y. #$e i.porta"t fa t is t$at i" all of t$ese ases, i" lu%i"g t$e o"e at /ar, all of t$e %is.isse% e.ployees 4ere offi ers a"% .e./ers of t$eir respe tive u"io"s, a"% t$eir e.ployers faile% to give a satisfa tory eCpla"atio" as to 4$y t$is group of e.ployees 4as si"gle% out. 't .ay /e t$e ase t$at e.ployees ot$er t$a" u"io" .e./ers .ay $ave /ee" ter.i"ate% also /y petitio"er S+C o" a ou"t of its re%u"%a" y progra.. 'f t$at is true, t$e %is $arges .ay really /e for a /o"a fi%e aut$ori-e% ause u"%er Arti le 203@11A of t$e La/or Co%e. 2" t$e ot$er $a"%, it is also possi/le t$at su $ .ay o"ly /e a lever s $e.e of t$e petitio"er o.pa"y to a.ouflage its real i"te"tio" of %is ri.i"ati"g agai"st u"io" .e./ers parti ularly t$e private respo"%e"ts. '" a"y ase, t$ese .atters 4ill /e /est ve"tilate% i" a $eari"g /efore t$e La/or Ar/iter. 't is for t$e a/ove reaso" t$at 4e a""ot $ol% t$e petitio"ers guilty of t$e =L, $arge. #$is 4ill /e t$e tas7 of t$e La/or Ar/iter. <e $o4ever fi"% t$at /ase% o" t$e i u.sta" es surrou"%i"g t$is ase a"% settle% Durispru%e" e o" t$e su/De t, t$e o.plai"t file% /y t$e private respo"%e"ts o" 9e/ruary 2D, 1!!1 alleges fa ts suffi ie"t to ostitute a /o"a fi%e ase of =L,, a"% t$erefore properly og"i-a/le /y t$e La/or Ar/iter u"%er Arti le 2 1(1a3 of t$e La/or Co%e. #$is is o"siste"t 4it$ t$e rule t$at Duris%i tioi" over t$e su/De t .atter is %eter.i"e% /y t$e allegatio"s of t$e o.plai"t.@12A 9i"ally, petitio"ers try to i.press o" t$is Court t$e stro"g State poli y o" t$e pro.otio" of volu"tary .o%es of settle.e"t of la/or %isputes rafte% i" t$e Co"stitutio" a"% t$e La/or Co%e 4$i $ %i tate t$e su/.issio" of t$e C&A %ispute to grieva" e a"% ar/itratio".@13A '" t$is regar%, t$e respo"se of t$e Soli itor Ge"eral is aptG H,etitio"ers %eserve o..e"%atio" for %ivulgi"g a"% /ri"gi"g to pu/li respo"%e"tsB atte"tio" t$e "o/le legislative i"te"t /e$i"% t$e la4 .a"%ati"g t$e i" lusio" of grieva" e a"% volu"tary ar/itratio" provisio"s i" t$e C&A. Ho4ever, i" t$e a/se" e of a" eCpress legal o"fer.e"t t$ereof, Duris%i tio" a""ot /e appropriate% /y a" offi ial or tri/u"al 1si 3 "o .atter $o4 4ell:i"te"tio"e% it is, eve" i" t$e pursuit of t$e learest su/sta"tial rig$t 1Co" urri"g 2pi"io" of 8usti e &arre%o, 5sta"islao v. Ho"ra%o, 11* SCRA (*0, 2! 8u"e 1!023.I@1*A H'" t$e sa.e .a""er, petitio"ers a""ot arrogate i"to t$e po4ers of volu"tary ar/itrators t$e origi"al a"% eC lusive Duris%i tio" of La/or Ar/iters over u"fair la/or pra ti es, ter.i"atio" %isputes, a"% lai.s for %a.ages, i" t$e a/se" e of a" eCpress agree.e"t /et4ee" t$e parties i" or%er for Arti le 262@15A of t$e La/or La4 to apply i" t$e ase at /ar.@16A >H-&-4/&-, t$e i"sta"t petitio" is D'S+'SS5D for la 7 of .erit a"% t$e resolutio"s of t$e Natio"al La/or Relatio"s Co..issio" %ate% August 11, 1!!2 a"% 2 to/er 2!, 1!!2 are $ere/y A99'R+5D. S/ /&D-&-D Bellosillo, Vitug a"% >a unan, JJ., o" ur. 4adilla, J., too7 "o part i" vie4 of i"terests i" petitio"er orporatio".

25. #$e a ts of t$e respo"%e"t o.pa"y i" e o"o.i ally oer i"g e.ployees to a ept pay.e"t of seperatio" a"%Jor retire.e"t /e"efits, pe"%i"g fi"al resolutio" of t$e la/or %isputes /et4ee" t$e parties o"stitute a ts of u"fair la/or pra ti e i" t$e lig$t of t$e fa t t$at t$ere is u"%ue i"terfere" e, restrai"t, a"% oer io" of e.ployees i" t$e eCer ise of t$eir rig$t to self:orga"i-atio" a"% olle tive /argai"i"g.I@(A S$ort of pre:e.pti"g t$e pro ee%i"gs /efore t$e La/or Ar/iter, t$e a/ove o.plai"t, .a7es 2ut a ge"ui"e ase for =L,. '" +a"ila ,e" il Co. v. C'R,@0A #$is Court $a% o asio" to o/serve t$at eve" 4$ere /usi"ess o"%itio"s Dustifie% a lay:off of e.ployees, u"fair la/or pra ti es 4ere o..itte% i" t$e for. of %is ri.i"atory %is.issal 4$ere o"ly u"io"ists 4ere per.a"e"tly %is.isse%. #$is 4as %espite t$e vali% eC use give" /y t$e +a"ila ,e" il Co.pa"y t$at t$e %is.issal of t$e e.ployees 4as %ue to t$e re%u tio" of t$e o.pa"yBs %ollar allo atio"s for i.portatio" a"% t$at /ot$ u"io" .e./ers a"% "o":u"io" .e./ers 4ere lai%:off. #$e Court, t$ru 8usti e +a7ali"tal, re/uffe% t$e petitio"er Co.pa"y a"% sai%G HC C C #$e eCpla"atio", $o4ever, %oes "ot /y a"y .ea"s a ou"t for t$e per.a"e"t %is.issal of five of t$e u"io"ists, 4$ere it %oes "ot appear t$at "o":u"io"ists 4ere si.ilarly %is.isse%. CCC CCC CCC

A"% t$e %is ri.i"atio" s$o4" /y t$e Co.pa"y stro"gly is o"fir.e% /y t$e fa t t$at %uri"g t$e perio% fro. 2 to/er 1!50 to August 1(, 1!5! it $ire% fro. fiftee" to t4e"ty "e4 e.ployees a"% te" appre"ti es. 't says t$ese e.ployees 4ere for its "e4 lea% fa tory, /ut is 1si 3 "ot s$o4" t$at t$e five 4$o $a% /ee" per.a"e"tly %is.isse% 4ere "ot suita/le for 4or7 i" t$at "e4 fa tory.I A si.ilar ruli"g 4as .a%e /y t$is Court i" ,eopleBs &a"7 a"% #rust Co. v. ,eopleBs &a"7 a"% #rust Co. 5.ployees ="io"@!A i"volvi"g t$e lay:off /y a /a"7 of siCty: five 1653 e.ployees 4$o 4ere a tive u"io" .e./ers allege%ly /y reaso" of retre $.e"t. #$e Court li7e4ise fou"% t$e e.ployer i" t$at ase to $ave o..itte% =L, i" effe ti"g t$e %is $arges. #$is Court 4as .ore e.p$ati $o4ever i" &ataa" S$ipyar% a"% 5"gi"eeri"g Co., '" . v. NLRC, et al.G@1)A H="%er t$e ir u.sta" es o/tai"i"g i" t$is ase, <e are i" li"e% to /elieve t$at t$e o.pa"y $a% i"%ee% /ee" %is ri.i"atory i" sele ti"g t$e e.ployees 4$o 4ere to /e retre" $e%. All o8 t9e retren19e e2ployees "re o88;1ers "n 2e2#ers o8 t9e 'A4LU. #$e re or% of t$e ase is /ereft of a"y satisfa tory eCpla"atio" fro. t$e Co.pa"y regar%i"g t$is situatio". As su $, t$e a tio" ta7e" /y t$e fir. /e o.es $ig$ly suspe t. +t le" s Us to 1on1lu e t9"t t9e 8;r2 9" #een ;s1r;2;n"t;n: ":";nst 2e2#ers9;p ;n t9e 'A4LU, "n

Repu/li SU*&-M+a"ila S5C2ND D'E'S'2N %.&. 'o. 1(73)(

of

t$e

,$ilippi"es C/U&5

la/or ar/iter, i" a or%a" e 4it$ Se tio" 1) of R.A. No. 0)*2. A%%itio"ally, it %e lare% t$at t$e %e"ial of t$e .otio" to %is.iss is a" i"terlo utory or%er 4$i $ is "ot appeala/le. A or%i"gly, it re.a"%e% t$e ase to t$e la/or ar/iter for furt$er pro ee%i"gs. #$e petitio"ers .ove% for re o"si%eratio", /ut t$e NLRC %e"ie% t$e .otio", pro.pti"g t$e petitio"ers to elevate t$e ase to t$e CA t$roug$ a petitio" for certiorari u"%er Rule 65 of t$e Rules of Court. #$e CA De isio" #$roug$ its %e isio" of Septe./er 22, 2)1),( t$e CA %e"ie% t$e petitio" o" pro e%ural a"% su/sta"tive grou"%s. ,ro e%urally, it fou"% t$e petitio"ers to $ave availe% of t$e 4ro"g re.e%y 4$e" t$ey $alle"ge% t$e la/or ar/iterBs %e"ial of t$eir .otio" to %is.iss /y 4ay of a" appeal to t$e NLRC. 't stresse% t$at pursua"t to t$e NLRC rules,0 a" or%er %e"yi"g a .otio" to %is.iss is i"terlo utory a"% is "ot su/De t to appeal. 2" t$e .erits of t$e ase, t$e CA /elieve% t$at t$e petitio" a""ot also prosper. 't reDe te% t$e petitio"ersB su/.issio" t$at t$e grieva" e a"% volu"tary ar/itratio" pro e%ure of t$e partiesB C&A $as Duris%i tio" over t$e ase, to t$e eC lusio" of t$e la/or ar/iter a"% t$e NLRC. As t$e la/or ar/iter a"% t$e NLRC %i%, it opi"e% t$at u"%er Se tio" 1) of R.A. No. 0)*2, t$e la/or ar/iter $as t$e origi"al a"% eC lusive Duris%i tio" to $ear 9er"a"%e-Bs .o"ey lai.s. 9urt$er, t$e CA larifie% t$at 4$ile t$e la4! allo4s parties to su/.it to volu"tary ar/itratio" ot$er la/or %isputes, i" lu%i"g .atters falli"g 4it$i" t$e origi"al a"% eC lusive Duris%i tio" of t$e la/or ar/iters u"%er Arti le 21( of t$e La/or Co%e as t$is Court re og"i-e% i" Vivero v. Court o( ' eals,1) t$e partiesB su/.issio" agree.e"t .ust /e eCpresse% i" u"e;uivo al la"guage. 't fou"% "o su $ u"e;uivo al la"guage i" t$e A+2S=,J#CC C&A t$at t$e parties agree% to su/.it .o"ey lai.s or, .ore spe ifi ally, lai.s for %isa/ility /e"efits to volu"tary ar/itratio". #$e CA also too7 "ote of t$e ,25A:S5C11 4$i $ provi%es i" its Se tio" 2! t$at i" ases of lai.s a"% %isputes arisi"g fro. a 9ilipi"o seafarerBs e.ploy.e"t, t$e parties overe% /y a C&A s$all su/.it t$e lai. or %ispute to t$e origi"al a"% eC lusive Duris%i tio" of t$e volu"tary ar/itrator or pa"el of volu"tary ar/itrators. #$e CA eCplai"e% t$at t$e releva"t ,25A:S5C provisio"s s$oul% li7e4ise /e ;ualifie% /y t$e ruli"g i" t$e Vivero ase, t$e La/or Co%e, a"% ot$er appli a/le la4s a"% Durispru%e" e. '" su., t$e CA stresse% t$at t$e Duris%i tio" of volu"tary ar/itrators is li.ite% to t$e seafarersB lai.s 4$i $ %o "ot fall 4it$i" t$e la/or ar/iterBs origi"al a"% eC lusive Duris%i tio" or eve" i" ases 4$ere t$e la/or ar/iter $as Duris%i tio", t$e parties $ave agree% i" u".ista7a/le ter.s 1t$roug$ t$eir C&A3 to su/.it t$e ase to volu"tary ar/itratio". #$e petitio"ers .ove% for re o"si%eratio" of t$e CA %e isio", /ut t$e appellate ourt %e"ie% t$e .otio", reiterati"g its earlier pro"ou" e.e"t t$at o" t$e grou"% alo"e of t$e petitio"ersB 4ro"g $oi e of re.e%y, t$e petitio" .ust fail. #$e ,etitio" #$e petitio"ers are "o4 /efore t$is Court prayi"g for a reversal of t$e CA Du%g.e"t o" t$e follo4i"g grou"%sG

/1to#er 1), 2)12

AC- 'A,+%A5+/' C/., +'C., ,-LA +'5-&'A5+/'AL MA&+'- L5D., "n Lor &/D/L4/ *AM+'5UA', ,etitio"ers, vs. 5-/D/&+C/ 4-&'A'D-?, "ss;ste #y %L-'+5A 4-&'A'D-?, Respo"%e"t. D5C'S'2N !&+/', J.9 9or resolutio" is t$e petitio" for revie4 o" certiorari1 4$i $ see7s to "ullify t$e %e isio"2 %ate% Septe./er 22, 2)1) a"% t$e resolutio"3 %ate% +ay 26,2)11 oft$e Court of Appeals (C') i" CA:G.R. S, No. 112)01. #$e A"te e%e"ts 2" 2 to/er !, 2))0, sea.a" #eo%ori o 9er"a"%e1:ernandez3, assiste% /y $is 4ife, Gle"ita 9er"a"%e-, file% 4it$ t$e Natio"al La/or Relatio"s Co..issio" 1N),C3 a o.plai"t for %isa/ility /e"efits, 4it$ prayer for .oral a"% eCe.plary %a.ages, plus attor"eyBs fees, agai"st A e Navigatio" Co., '" ., Eela '"ter"atio"al +ari"e Lt%., a"%Jor Ro%olfo ,a.i"tua" 1 etitioners3. #$e petitio"ers .ove% to %is.iss t$e o.plai"t,* o"te"%i"g t$at t$e la/or ar/iter $a% "o Duris%i tio" over t$e %ispute. #$ey argue% t$at eC lusive origi"al Duris%i tio" is 4it$ t$e volu"tary ar/itrator or pa"el of volu"tary ar/itrators, pursua"t to Se tio" 2! of t$e ,25A Sta"%ar% 5.ploy.e"t Co"tra t 147!'5S!C3, si" e t$e parties are overe% /y t$e A+2S=,:#CC or A+2S=,:E5LA 1as later ite% /y t$e petitio"ers3 olle tive /argai"i"g agree.e"t 1CB'3. ="%er Se tio" 1* of t$e C&A, a %ispute /et4ee" a seafarer a"% t$e o.pa"y s$all /e settle% t$roug$ t$e grieva" e .a $i"ery a"% .a"%atory volu"tary ar/itratio". 9er"a"%e- oppose% t$e .otio".5 He argue% t$at i"as.u $ as $is o.plai"t i"volves a .o"ey lai., origi"al a"% eC lusive Duris%i tio" over t$e ase is veste% 4it$ t$e la/or ar/iter. #$e Co.pulsory Ar/itratio" Ruli"gs 2" De e./er !, 2))0, La/or Ar/iter Ro.elita N. Rioflori%o %e"ie% t$e .otio" to %is.iss, $ol%i"g t$at u"%er Se tio" 1) of Repu/li A t 1,.'.3 No. 0)*2, t$e +igra"t <or7ers a"% 2verseas 9ilipi"os A t of 1!!5, t$e la/or ar/iter $as origi"al a"% eC lusive Duris%i tio" over .o"ey lai.s arisi"g out of a" e.ployer:e.ployee relatio"s$ip or /y virtue of a"y la4 or o"tra t, "ot4it$sta"%i"g a"y provisio" of la4 to t$e o"trary.6 #$e petitio"ers appeale% to t$e NLRC, /ut t$e la/or age" y %e"ie% t$e appeal. 't agree% 4it$ t$e la/or ar/iter t$at t$e ase i"volves a .o"ey lai. a"% is 4it$i" t$e Duris%i tio" of t$e

1. #$e CA o..itte% a reversi/le error i" %isregar%i"g t$e 2."i/us '.ple.e"ti"g Rules a"% Regulatio"s 1$,,3 of t$e +igra"t <or7ers a"% 2verseas 9ilipi"os A t of 1!!5,12 as a.e"%e% /y R.A. No. 1))22,13 .a"%ati"g t$at L9or 29<s 4it$ olle tive /argai"i"g agree.e"ts, t$e ases$all /e su/.itte% for volu"tary ar/itratio" i" a or%a" e 4it$ Arti les 261 a"% 262 of t$e La/or Co%e.L1* #$e petitio"ers /e4ail t$e CABs reDe tio" of t$e a/ove argu.e"t for t$e reaso" t$at t$e re.e%y t$ey pursue% 4as i" o"siste"t 4it$ t$e 2))5 Revise% Rules of ,ro e%ure of t$e NLRC. Citi"g Munici alit6 o( Sta. :e v. Munici alit6 o( 'ritao,15 t$ey argue t$at t$e L%is.issal of a ase for la 7 of Duris%i tio" .ay /e raise% at a"y stage of t$e pro ee%i"gs.L '" a"y eve"t, t$ey posit t$at t$e 'RR of R.A. No. 1))22 is i" t$e "ature of a" a%De tive or pro e%ural la4 4$i $ .ust /e give" retroa tive effe t a"% 4$i $ s$oul% $ave /ee" applie% /y t$e CA i" resolvi"g t$e prese"t ase. 2. #$e CA o..itte% a reversi/le error i" ruli"g t$at t$e A+2S=,:E5LA C&A %oes "ot o"tai" u"e;uivo al 4or%i"gs for t$e .a"%atory referral of 9er"a"%e-Bs lai. to volu"tary ar/itratio". #$e petitio"ers assail t$e CABs failure to eCplai" t$e /asis Lfor ruli"g t$at "o eCpli it or u"e;uivo al 4or%i"gs appeare% o" sai% C&A for t$e .a"%atory referral of t$e %isa/ility lai. to ar/itratio".L16#$ey sur.ise t$at t$e CA o"strue% t$e p$rase Leit$er party 2"y refer t$e ase to a +ANDA#2R6 AR&'#RA#'2N C2++'##55L u"%er Se tio" 1*.(1a3 of t$e C&A as .erely per.issive a"% "ot .a"%atory /e ause of t$e use of t$e 4or% L2"y.L #$ey o"te"% t$at "ot4it$sta"%i"g t$e use of t$e 4or% L2"y,L t$e parties u"e;uivo ally a"% u".ista7a/ly agree% to refer t$e prese"t %isa/ility lai. to .a"%atory ar/itratio". 3. #$e CA o..itte% a reversi/le error i" %isregar%i"g t$e NLRC .e.ora"%u. pres ri/i"g t$e appropriate a tio" for o.plai"ts a"%Jor pro ee%i"gs 4$i $ 4ere i"itially pro esse% i" t$e grieva" e .a $i"ery of eCisti"g C&As. '" t$eir .otio" for re o"si%eratio" 4it$ t$e CA, t$e petitio"ers .a"ifeste% t$at t$e appellate ourtBs assaile% %e isio" $a% /ee" .o%ifie% /y t$e follo4i"g %ire tive of t$e NLRCG As o"e of t$e .easures /ei"g a%opte% /y our age" y i" respo"se to t$e ,latfor. a"% ,oli y ,ro"ou" e.e"ts o" La/or 5.ploy.e"t, you are $ere/y %ire te% to i..e%iately %is.iss t$e o.plai"t a"%Jor ter.i"ate pro ee%i"gs 4$i $ 4ere i"itially pro esse% i" t$e grieva" e .a $i"ery as provi%e% i" t$e eCisti"g Colle tive &argai"i"g Agree.e"ts 1C&As3 /et4ee" parties, t$roug$ t$e issua" e of a" 2r%er of Dis.issal a"% referral of t$e %isputes to t$e Natio"al Co" iliatio" +e%iatio" &oar% 1NC+&3 for volu"tary ar/itratio". 92R S#R'C# C2+,L'ANC5.1( *. 2" 8uly 31, 2)12,10 t$e petitio"ers .a"ifeste% /efore t$e Court t$at o" 8u"e 13, 2)12, t$e CourtBs Se o"% Divisio" issue% a ruli"g i" G.R. No. 1(26*2, e"title% !state o( Nelson ,. *ula6, re resented b6 his ;i(e Merrid6 Jane 4. *ula6 v. 'boitiz Jebsen Maritime, $nc., a"% +eneral Charterers, $nc.,up$ol%i"g t$e Duris%i tio" of t$e volu"tary ar/itrator or pa"el of volu"tary ar/itrators over a seafarerBs .o"ey lai.. #$ey i.plore t$e Court t$at si" e t$e fa tual /a 7%rop a"% t$e issues i"volve% i" t$e ase are si.ilar to t$e prese"t %ispute,

t$e *ula6 ruli"g s$oul% /e applie% to t$is ase a"% 4$i $ s$oul% a or%i"gly /e referre% to t$e Natio"al Co" iliatio" a"% +e%iatio" &oar% for volu"tary ar/itratio". #$e Case for 9er"a"%e'" o.plia" e 4it$ t$e CourtBs %ire tive,1! 9er"a"%e- file% o" 2 to/er (, 2)11 $is Co..e"t2) 1o" t$e ,etitio"3 4it$ t$e plea t$at t$e petitio" /e %is.isse% for la 7 of .erit. 9er"a"%eprese"ts t$e follo4i"g argu.e"tsG 1. #$e 'RR of t$e +igra"t <or7ers a"% 2verseas 9ilipi"os A t of 1!!5 1R.A. No. 0)*23, as a.e"%e% /y R.A. No. 1))22,21 %i% "ot %ivest t$e la/or ar/iters of t$eir origi"al a"% eC lusive Duris%i tio" over .o"ey lai.s arisi"g fro. e.ploy.e"t, for "o4$ere i" sai% 'RR is t$ere su $ a %ivest.e"t. 2. #$e volu"tary ar/itrators %o "ot $ave Duris%i tio" over t$e prese"t o"troversy as a" /e %e%u e% fro. Arti les 261 a"% 262 of t$e La/or Co%e. 9er"a"%eeCplai"s t$at $is o.plai"t %oes "ot i"volve a"y Lu"resolve% grieva" es arisi"g fro. t$e i"terpretatio" or i.ple.e"tatio" of t$e Colle tive &argai"i"g Agree.e"t @"orA fro. t$e i"terpretatio" or e"for e.e"t of o.pa"y perso""el poli ies@.AL22 As $e "ever referre% $is lai. to t$e grieva" e .a $i"ery, t$ere is "o Lu"resolve% grieva" eL to spea7 of. His o.plai"t i"volves a lai. for o.pe"satio" a"% %a.ages 4$i $ is outsi%e t$e volu"tary ar/itratorBs Duris%i tio" u"%er Arti le 261. 9urt$er, o"ly %isputes i"volvi"g t$e u"io" a"% t$e o.pa"y s$all /e referre% to t$e grieva" e .a $i"ery a"% to volu"tary ar/itratio", as t$e Court $el% i" San6o 4hili ines "or#ers Inion54SS)I v. CaPizares 23 a"% Silva v. C'.2* 3. #$e CA orre tly rule% t$at "o u"e;uivo al 4or%i"gs appear i" t$e C&A for t$e .a"%atory referral of 9er"a"%e-Bs %isa/ility lai. to a volu"tary ar/itrator. #$e CourtBs Ruli"g <e first rule o" t$e pro e%ural ;uestio" arisi"g fro. t$e la/or ar/iterBs %e"ial of t$e petitio"ersB .otio" to %is.iss t$e o.plai"t. 2" t$is poi"t, Se tio" 6, Rule E of #$e 2))5 Revise% Rules of ,ro e%ure of t$e NLRC provi%esG 2" or /efore t$e %ate set for t$e .a"%atory o" iliatio" a"% .e%iatio" o"fere" e, t$e respo"%e"t .ay file a .otio" to %is.iss. A"y .otio" to %is.iss o" t$e grou"% of la 7 of Duris%i tio", i.proper ve"ue, or t$at t$e ause of a tio" is /arre% /y prior Du%g.e"t, pres riptio", or foru. s$oppi"g, s$all /e i..e%iately resolve% /y t$e La/or Ar/iter t$roug$ a 4ritte" or%er. A" or%er %e"yi"g t$e .otio" to %is.iss, or suspe"%i"g its resolutio" u"til t$e fi"al %eter.i"atio" of t$e ase, is "ot appeala/le. @u"%ers ori"g oursA Corollarily, Se tio" 1), Rule E' of t$e sa.e Rules statesG :rivolous or *ilator6 ' eals. R No appeal fro. a" i"terlo utory or%er s$all /e e"tertai"e%. #o %is ourage frivolous or %ilatory appeals, i" lu%i"g t$ose ta7e" fro. i"terlo utory or%ers, t$e Co..issio" .ay e"sure or ite i" o"te.pt t$e erri"g parties a"% t$eir ou"sels, or su/De t t$e. to reaso"a/le fi"e or pe"alty.

'" $ndiana 'eros ace Iniversit6 v. Comm. on Cigher !duc.,25 t$e Court %e lare% t$at L@aA" or%er %e"yi"g a .otio" to %is.iss is i"terlo utoryLF t$e proper re.e%y i" t$is situatio" is to appeal after a %e isio" $as /ee" re"%ere%. Clearly, t$e %e"ial of t$e petitio"ersB .otio" to %is.iss i" t$e prese"t ase 4as a" i"terlo utory or%er a"%, t$erefore, "ot su/De t to appeal as t$e CA aptly "ote%. #$e petitio"Bs pro e%ural lapse "ot4it$sta"%i"g, t$e CA pro ee%e% to revie4 t$e .erits of t$e ase a"% a%Du%ge% t$e petitio" u".eritorious. <e fi"% t$e CABs a tio" i" or%er. #$e La/or Co%e itself %e lares t$at Lit is t$e spirit a"% i"te"tio" of t$is Co%e t$at t$e Co..issio" a"% its .e./ers a"% t$e La/or Ar/iters s$all use every a"% all reaso"a/le .ea"s to as ertai" t$e fa ts i" ea $ ase spee%ily a"% o/De tively a"% 4it$out regar% to te $"i alities of la4 or pro e%ure, all i" t$e i"terest of %ue pro ess.L26 <e "o4 a%%ress t$e fo al ;uestio" of 4$o $as t$e origi"al a"% eC lusive Duris%i tio" over 9er"a"%e-Bs %isa/ility lai. W t$e la/or ar/iter u"%er Se tio" 1) of R.A. No. 0)*2, as a.e"%e%, or t$e volu"tary ar/itratio" .e $a"is. as pres ri/e% i" t$e partiesB C&A a"% t$e ,25A:S5CS #$e a"s4er lies i" t$e StateBs la/or relatio"s poli y lai% %o4" i" t$e Co"stitutio" a"% fles$e% out i" t$e e"a/li"g statute, t$e La/or Co%e. Se tio" 3, Arti le O''' 1o" So ial 8usti e a"% Hu.a" Rig$ts3 of t$e Co"stitutio" %e laresG CCCC #$e State s$all pro.ote t$e pri" iple of s$are% respo"si/ility /et4ee" 4or7ers a"% e.ployers a"% t$e prefere"tial use of volu"tary .o%es i" settli"g %isputes, i" lu%i"g o" iliatio", a"% s$all e"for e t$eir .utual o.plia" e t$ere4it$ to foster i"%ustrial pea e. Arti le 26) of t$e La/or Co%e 1Grieva" e .a $i"ery a"% volu"tary ar/itratio"3 statesG #$e parties to a Colle tive &argai"i"g Agree.e"t s$all i" lu%e t$erei" provisio"s t$at 4ill e"sure t$e .utual o/serva" e of its ter.s a"% o"%itio"s. #$ey s$all esta/lis$ a .a $i"ery for t$e a%Dust.e"t a"% resolutio" of grieva" es arisi"g fro. t$e i"terpretatio" or i.ple.e"tatio" of t$eir Colle tive &argai"i"g Agree.e"t a"% t$ose arisi"g fro. t$e i"terpretatio" or e"for e.e"t of o.pa"y perso""el poli ies. Arti le 261 of t$e La/or Co%e 18uris%i tio" of Eolu"tary Ar/itrators or pa"el of Eolu"tary Ar/itrators3, o" t$e ot$er $a"%, rea%s i" partG #$e Eolu"tary Ar/itrator or pa"el of Eolu"tary Ar/itrators s$all $ave origi"al a"% eC lusive Duris%i tio" to $ear a"% %e i%e all u"resolve% grieva" es arisi"g fro. t$e i"terpretatio" or i.ple.e"tatio" of t$e Colle tive &argai"i"g Agree.e"t a"% t$ose arisi"g fro. t$e i"terpretatio" or e"for e.e"t of o.pa"y perso""el poli ies@.A Arti le 262 of t$e La/or Co%e 18uris%i tio" over ot$er la/or %isputes3 %e laresG #$e Eolu"tary Ar/itrator or pa"el of Eolu"tary Ar/itrators, upo" agree.e"t of t$e parties, s$all also $ear a"% %e i%e all ot$er

la/or %isputes i" lu%i"g u"fair la/or pra ti es a"% /argai"i"g %ea%lo 7s. 9urt$er, t$e ,25A:S5C, 4$i $ gover"s t$e e.ploy.e"t of 9ilipi"o seafarers, provi%es i" its Se tio" 2! o" Dispute Settle.e"t ,ro e%uresG +n 1"ses o8 1l";2s "n ;sputes "r;s;n: 8ro2 t9;s e2ploy2ent, t9e p"rt;es 1overe #y " 1olle1t;ve #"r:";n;n: ":ree2ent s9"ll su#2;t t9e 1l";2 or ;spute to t9e or;:;n"l "n e@1lus;ve Dur;s ;1t;on o8 t9e volunt"ry "r#;tr"tor or p"nel o8 volunt"ry "r#;tr"tors . 'f t$e parties are "ot overe% /y a olle tive /argai"i"g agree.e"t, t$e parties .ay at t$eir optio" su/.it t$e lai. or %ispute to eit$er t$e origi"al a"% eC lusive Duris%i tio" of t$e Natio"al La/or Relatio"s Co..issio" 1NLRC3, pursua"t to Repu/li A t 1RA3 0)*2 ot$er4ise 7"o4" as t$e +igra"t <or7ers a"% 2verseas 9ilipi"os A t of 1!!5 or to t$e origi"al a"% eC lusive Duris%i tio" of t$e volu"tary ar/itrator or pa"el of volu"tary ar/itrators. 'f t$ere is "o provisio" as to t$e volu"tary ar/itrators to /e appoi"te% /y t$e parties, t$e sa.e s$all /e appoi"te% fro. t$e a re%ite% volu"tary ar/itrators of t$e Natio"al Co" iliatio" a"% +e%iatio" &oar% of t$e Depart.e"t of La/or a"% 5.ploy.e"t. @e.p$asis oursA >e 8;n 2er;t ;n t9e pet;t;on. ="%er t$e a/ove:;uote% o"stitutio"al a"% legal provisio"s, t$e volu"tary ar/itrator or pa"el of volu"tary ar/itrators $as origi"al a"% eC lusive Duris%i tio" over 9er"a"%e-Bs %isa/ility lai.. #$ere is "o %ispute t$at t$e lai. arose out of 9er"a"%e-Bs e.ploy.e"t 4it$ t$e petitio"ers a"% t$at t$eir relatio"s$ip is overe% /y a C&A W t$e A+2S=,J#CC or t$e A+2S=,: E5LA C&A. #$e C&A provi%es for a grieva" e pro e%ure for t$e resolutio" of grieva" es or %isputes 4$i $ o ur %uri"g t$e e.ploy.e"t relatio"s$ip a"%, li7e t$e grieva" e .a $i"ery reate% u"%er Arti le 261 of t$e La/or Co%e, it is a t4o:tiere% .e $a"is., 4it$ volu"tary ar/itratio" as t$e last step.3Q; hi3 Co"trary to t$e CABs rea%i"g of t$e C&ABs Arti le 1*, t$ere is u"e;uivo al or u".ista7a/le la"guage i" t$e agree.e"t 4$i $ .a"%atorily re;uires t$e parties to su/.it to t$e grieva" e pro e%ure a"y %ispute or ause of a tio" t$ey .ay $ave agai"st ea $ ot$er. #$e releva"t provisio"s of t$e C&A stateG 14.0 Any D;spute, :r;ev"n1e, or 2;sun erst"n ;n: 1on1ern;n: "ny rul;n:, pr"1t;1e, A":es or AorE;n: 1on ;t;ons ;n t9e C/M*A'< or "ny #re"19 o8 t9e Contr"1t o8 -2ploy2ent, or "ny ;spute "r;s;n: 8ro2 t9e 2e"n;n: or "ppl;1"t;on o8 t9e prov;s;ons o8 t9;s A:ree2ent or " 1l";2 o8 v;ol"t;on t9ereo8 or "ny 1o2pl";nt or 1"use o8 "1t;on t9"t "ny su19 Se"2"n 2"y 9"ve ":";nst t9e C/M*A'<, "s Aell "s 1o2pl";nts A9;19 t9e C/M*A'< 2"y 9"ve ":";nst su19 Se"2"n s9"ll #e #rou:9t to t9e "ttent;on o8 t9e %&+-,A'C- &-S/LU5+/' C/MM+55-#e8ore e;t9er p"rty t"Ees "ny "1t;on, le:"l or ot9erA;se. !r;n:;n: su19 " ;spute to t9e %r;ev"n1e &esolut;on Co22;ttee s9"ll #e unA";v"#le prereBu;s;te or 1on ;t;on pre1e ent 8or #r;n:;n: "ny "1t;on, le:"l or ot9erA;se, ;n "ny 8oru2 "n t9e 8";lure to so re8er t9e ;spute s9"ll #"r "ny "n "ll le:"l or ot9er "1t;ons. 1*.(a3 +8 #y re"son o8 t9e n"ture o8 t9e D;spute, t9e p"rt;es "re un"#le to "2;1"#ly settle t9e ;spute, e;t9er p"rty 2"y re8er t9e 1"se to " MA'DA5/&< A&!+5&A5+/' C/MM+55--. #$e +ANDA#2R6 AR&'#RA#'2N C2++'##55 s$all o"sist of o"e represe"tative to /e

%esig"ate% /y t$e =N'2N, a"% o"e represe"tative to /e %esig"ate% /y t$e C2+,AN6 a"% a t$ir% .e./er 4$o s$all a t as C$air.a" a"% s$all /e "o.i"ate% /y .utual $oi e of t$e parties. CCC $3 &e8err"l o8 "ll unresolve ;sputes 8ro2 t9e %r;ev"n1e &esolut;on Co22;ttee to t9e M"n "tory Ar#;tr"t;on Co22;ttee s9"ll #e unA";v"#le prereBu;s;te or 1on ;t;on pre1e ent 8or #r;n:;n: "ny "1t;on, 1l";2, or 1"use o8 "1t;on, le:"l or ot9erA;se, #e8ore "ny 1ourt, tr;#un"l, or p"nel ;n "ny Dur;s ;1t;on. 59e 8";lure #y " p"rty or se"2"n to so re8er "n "v";l onesel8 to t9e ;spute resolut;on 2e19"n;s2 1ont";ne ;n t9;s "1t;on s9"ll #"r "ny le:"l or ot9er "1t;on. All p"rt;es e@pressly ":ree t9"t t9e or erly resolut;on o8 "ll 1l";2s ;n t9e pres1r;#e 2"nner serve t9e ;nterests o8 re"19;n: settle2ents or 1l";2s ;n "n or erly "n un;8or2 2"nner, "s Aell "s preserv;n: pe"1e8ul "n 9"r2on;ous l"#or rel"t;ons #etAeen se"2"n, t9e Un;on, "n t9e Co2p"ny.2( 1e.p$ases ours3 <$at .ig$t $ave ause% t$e CA to .iss t$e lear i"te"t of t$e parties i" pres ri/i"g a grieva" e pro e%ure i" t$eir C&A is, as t$e petitio"ersB $ave i"ti.ate%, t$e use of t$e auCiliary ver/ L2"yL i" Arti le 1*.(1a3 of t$e C&A 4$i $, to reiterate, prov; es t9"t T;8 #y re"son o8 t9e n"ture o8 t9e D;spute, t9e p"rt;es "re un"#le to "2;1"#ly settle t9e ;spute, e;t9er p"rty 2"y re8er t9e 1"se to " MA'DA5/&< A&!+5&A5+/' C/MM+55--.L20 <$ile t$e CA %i% "ot ;ualify its rea%i"g of t$e su/De t provisio" of t$e C&A, it is reaso"a/le to o" lu%e t$at it vie4e% as optio"al t$e referral of a %ispute to t$e .a"%atory ar/itratio" o..ittee 4$e" t$e parties are u"a/le to a.i a/ly settle t$e %ispute. <e fi"% t$is a strai"e% i"terpretatio" of t$e C&A provisio". #$e CA rea% t$e provisio" separately, or i" isolatio" of t$e ot$er se tio"s of Arti le 1*, espe ially 1*.(1$3, 4$i $, i" lear, eCpli it la"guage, states t$at t9e Tre8err"l o8 "ll unresolve ;sputes 8ro2 t9e %r;ev"n1e &esolut;on Co22;ttee to t9e M"n "tory Ar#;tr"t;on Co22;ttee s9"ll #e unA";v"#le prereBu;s;te or 1on ;t;on pre1e ent 8or #r;n:;n: "ny "1t;on, 1l";2, or 1"use o8 "1t;on, le:"l or ot9erA;se, #e8ore "ny 1ourt, tr;#un"l, or p"nel ;n "ny Dur;s ;1t;onT 2( "n t9"t t9e 8";lure #y " p"rty or se"2"n to so re8er t9e ;spute to t9e pres1r;#e ;spute resolut;on 2e19"n;s2 s9"ll #"r "ny le:"l or ot9er "1t;on. Rea% i" its e"tirety, t$e C&ABs Arti le 1* 1Grieva" e ,ro e%ure3 u".ista7a/ly refle ts t$e partiesB agree.e"t to su/.it a"y u"resolve% %ispute at t$e grieva" e resolutio" stage to .a"%atory volu"tary ar/itratio" u"%er Arti le 1*.(1$3 of t$e C&A. A"%, it s$oul% /e a%%e% t$at, i" o.plia" e 4it$ Se tio" 2! of t$e ,25A:S5C 4$i $ re;uires t$at i" ases of lai.s a"% %isputes arisi"g fro. a seafarerBs e.ploy.e"t, t$e parties overe% /y a C&A s$all su/.it t$e lai. or %ispute to t$e origi"al a"% eC lusive Duris%i tio" of t$e volu"tary ar/itrator or pa"el of volu"tary ar/itrators. Si" e t$e parties use% u"e;uivo al la"guage i" t$eir C&A for t$e su/.issio" of t$eir %isputes to volu"tary ar/itratio" 1a o"%itio" lai% %o4" i" Vivero for t$e re og"itio" of t$e su/.issio" to volu"tary ar/itratio" of .atters 4it$i" t$e origi"al a"% eC lusive Duris%i tio" of la/or ar/iters3, 4e fi"% t$at t$e CA o..itte% a reversi/le error i" its ruli"gF it %isregar%e% t$e lear .a"%ate of t$e C&A /et4ee" t$e parties a"% t$e ,25A:

S5C for su/.issio" of t$e prese"t %ispute to volu"tary ar/itratio". Co"siste"t 4it$ t$is fi"%i"g, 9er"a"%e-Bs o"te"tio" W t$at $is o.plai"t for %isa/ility /e"efits is a .o"ey lai. t$at falls 4it$i" t$e origi"al a"% eC lusive Duris%i tio" of t$e la/or ar/iter u"%er Se tio" 1) of R.A. No. 0)*2 W is u"te"a/le. <e li7e4ise reDe t $is argu.e"t t$at $e "ever referre% $is lai. to t$e grieva" e .a $i"ery 1so t$at "o u"resolve% grieva" e eCists as re;uire% u"%er Arti le 261 of t$e La/or Co%e3, a"% t$at t$e parties to t$e ase are "ot t$e u"io" a"% t$e e.ployer.3) Nee%less to state, "o su $ %isti" tio" eCists i" t$e partiesB C&A a"% t$e ,25A:S5C. 't /ears stressi"g at t$is poi"t t$at 4e are up$ol%i"g t$e Duris%i tio" of t$e volu"tary ar/itrator or pa"el of volu"tary ar/itrators over t$e prese"t %ispute, "ot o"ly /e ause of t$e lear la"guage of t$e partiesB C&A o" t$e .atterF .ore i.porta"tly, 4e so up$ol% t$e volu"tary ar/itratorBs Duris%i tio", i" re og"itio" of t$e StateBs eCpress prefere" e for volu"tary .o%es of %ispute settle.e"t, su $ as o" iliatio" a"% volu"tary ar/itratio" as eCpresse% i" t$e Co"stitutio", t$e la4 a"% t$e rules. '" t$is lig$t, 4e see "o "ee% to furt$er o"si%er t$e petitio"ersB su/.issio" regar%i"g t$e 'RR of t$e +igra"t <or7ers a"% 2verseas 9ilipi"os A t of 1!!5, as a.e"%e% /y R.A. No. 1))22, eC ept to "ote t$at t$e 'RR le"%s furt$er support to our ruli"g. '" losi"g, 4e ;uote 4it$ approval a .ost re e"t Court pro"ou" e.e"t o" t$e sa.e issue, t$us R +t ;s settle t9"t A9en t9e p"rt;es 9"ve v"l; ly ":ree on " pro1e ure 8or resolv;n: :r;ev"n1es "n to su#2;t " ;spute to volunt"ry "r#;tr"t;on t9en t9"t pro1e ure s9oul #e str;1tly o#serve .31 1e.p$asis ours3 >H-&-4/&-, pre.ises o"si%ere%, t$e petitio" is %&A'5-D. #$e assaile% %e isio" a"% resolutio" of t$e Court of Appeals are S-5 AS+D-. #eo%ori o 9er"a"%e-Ms %isa/ility lai. is &-4-&&-D to t$e Grieva" e Resolutio" Co..ittee of t$e partiesM olle tive /argai"i"g agree.e"t a"%Jor t$e +a"%atory Ar/itratio" Co..ittee, if 4arra"te%. S2 2RD5R5D. A&5U&/ Asso iate 8usti e <5 C2NC=RG D. !&+/'