Professional Documents
Culture Documents
132848-49
PANGANIBAN, J.:
SO ORDERED.'
Courts encourage the use of alternative methods of dispute
resolution. When parties agree to settle their disputes arising
from or connected with construction contracts, the
Construction Industry Arbitration Commission (CIAC)
acquires primary jurisdiction. It may resolve not only the
merits of such controversies; when appropriate, it may also
award damages, interests, attorneys fees and expenses of
litigation.
"The Cid spouses then filed with said Branch of the Regional
Trial Court of Quezon City a Motion To Set Case for Hearing
which motion was opposed by Philrock.
"On June 13, 1995, the trial court declared that it no longer
had jurisdiction over the case and ordered the records of the
case to be remanded anew to the CIAC for arbitral
proceedings.
The Case
Before us is a Petition for Review under Rule 45 of the Rules
of Court. The Petition seeks the reversal of the July 9, 1997
Decision1 and the February 24, 1998 Resolution of the Court
of Appeals (CA) in the consolidated cases docketed as CAGR SP Nos. 39781 and 42443. The assailed Decision
disposed as follows:
"WHEREFORE, judgment is hereby rendered DENYING the
petitions and, accordingly, AFFIRMING in toto the CIACs
decision. Costs against petitioner."2
The assailed Resolution ruled in this wise:
"Considering that the matters raised and discussed in the
motion for reconsideration filed by appellants counsel are
substantially the same arguments which the Court had
passed upon and resolved in the decision sought to be
reconsidered, and there being no new issue raised, the
subject motion is hereby DENIED."3
The Facts
The undisputed facts of the consolidated cases are
summarized by the CA as follows:
"On September 14, 1992, the Cid spouses, herein private
respondents, filed a Complaint for damages against Philrock
and seven of its officers and engineers with the Regional
Trial Court of Quezon City, Branch 82.
"On December 7, 1993, the initial trial date, the trial court
issued an Order dismissing the case and referring the same
to the CIAC because the Cid spouses and Philrock had filed
an Agreement to Arbitrate with the CIAC.
"Thereafter, preliminary conferences were held among the
parties and their appointed arbitrators. At these conferences,
disagreements arose as to whether moral and exemplary
damages and tort should be included as an issue along with
breach of contract, and whether the seven officers and
engineers of Philrock who are not parties to the Agreement
to Arbitrate should be included in the arbitration proceedings.
First Issue:
Jurisdiction
Petitioner avers that the CIAC lost jurisdiction over the
arbitration case after both parties had withdrawn their
consent to arbitrate. The June 13, 1995 RTC Order
remanding the case to the CIAC for arbitration was allegedly
an invalid mode of referring a case for arbitration.
We disagree. Section 4 of Executive Order 1008 expressly
vests in the CIAC original and exclusive jurisdiction over
disputes arising from or connected with construction
contracts entered into by parties that have agreed to submit
their dispute to voluntary arbitration.8
It is undisputed that the parties submitted themselves to the
jurisdiction of the Commission by virtue of their Agreement to
Arbitrate dated November 24, 1993. Signatories to the
Agreement were Atty. Ismael J. Andres and Perry Y. Uy
(president of Philippine Rock Products, Inc.) for petitioner,
and Nelia G. Cid and Atty. Esteban A. Bautista for
respondent spouses.9
Petitioner claims, on the other hand, that this Agreement
was withdrawn by respondents on April 8, 1994, because of
the exclusion of the seven engineers of petitioners in the
arbitration case. This withdrawal became the basis for the
April 13, 1994 CIAC Order dismissing the arbitration case
and referring the dispute back to the RTC. Consequently, the
CIAC was divested of its jurisdiction to hear and decide the
case.
This contention is untenable. First, private respondents
removed the obstacle to the continuation of the arbitration,
precisely by withdrawing their objection to the exclusion of
the seven engineers. Second, petitioner continued
participating in the arbitration even after the CIAC Order had
been issued. It even concluded and signed the Terms of
Reference10 on August 21, 1995, in which the parties
stipulated the circumstances leading to the dispute;
summarized their respective positions, issues, and claims;
and identified the composition of the tribunal of arbitrators.
The document clearly confirms both parties intention and
agreement to submit the dispute to voluntary arbitration. In
view of this fact, we fail to see how the CIAC could have
been divested of its jurisdiction.
Finally, as pointed out by the solicitor general, petitioner
maneuvered to avoid the RTCs final resolution of the
dispute by arguing that the regular court also lost jurisdiction
after the arbitral tribunals April 13, 1994 Order referring the
case back to the RTC. In so doing, petitioner conceded and
estopped itself from further questioning the jurisdiction of the
CIAC. The Court will not countenance the effort of any party
to subvert or defeat the objective of voluntary arbitration for
its own private motives. After submitting itself to arbitration
proceedings and actively participating therein, petitioner is
estopped from assailing the jurisdiction of the CIAC, merely
because the latter rendered an adverse decision.11
Second Issue:
Cause of Action
PROJECT 1.6
The first agreement (Project 1) was a written "Construction
Contract" entered into by Titan and Uniwide sometime in
May 1991 whereby Titan undertook to construct Uniwide's
Warehouse Club and Administration Building in Libis,
Quezon City for a fee of P120,936,591.50, payable in
monthly progress billings to be certified to by Uniwide's
representative.7 The parties stipulated that the building shall
be completed not later than 30 November 1991. As found by
the CIAC, the building was eventually finished on 15
February 19928 and turned over to Uniwide.
PROJECT 2.
Sometime in July 1992, Titan and Uniwide entered into the
second agreement (Project 2) whereby the former agreed to
construct an additional floor and to renovate the latter's
warehouse located at the EDSA Central Market Area in
Mandaluyong City. There was no written contract executed
between the parties for this project. Construction was
allegedly to be on the basis of drawings and specifications
provided by Uniwide's structural engineers. The parties
proceeded on the basis of a cost estimate of P21,301,075.77
inclusive of Titan's 20% mark-up. Titan conceded in its
complaint to having received P15,000,000.00 of this amount.
This project was completed in the latter part of October 1992
and turned over to Uniwide.
PROJECT 3.9
The parties executed the third agreement (Project 3) in May
1992. In a written "Construction Contract," Titan undertook to
construct the Uniwide Sales Department Store Building in
Kalookan City for the price of P118,000,000.00 payable in
progress billings to be certified to by Uniwide's
representative.10 It was stipulated that the project shall be
completed not later than 28 February 1993. The project was
completed and turned over to Uniwide in June 1993.
Liquidated Damages
On the third issue of liquidated damages, the CIAC rejected
such claim while the Court of Appeals held that the matter
should be left for determination in future proceedings where
the issue has been made clear.
In rejecting Uniwide's claim for liquidated damages, the
CIAC held that there is no legal basis for passing upon and
resolving Uniwide's claim for the following reasons: (1) no
claim for liquidated damages arising from the alleged delay
was ever made by Uniwide at any time before the
commencement of Titan's complaint; (2) the claim for
liquidated damages was not included in the counterclaims
stated in Uniwide's answer to Titan's complaint; (3) the claim
was not formulated as an issue to be resolved by the CIAC
in the TOR;39 and (4) no attempt was made to modify the
TOR to accommodate the same as an issue to be resolved.
Uniwide insists that the CIAC should have applied Section 5,
Rule 10 of the Rules of Court.40 On this matter, the Court of
Appeals held that the CIAC is an arbitration body, which is
not necessarily bound by the Rules of Court. Also, the Court
of Appeals found that the issue has never been made
concrete enough to make Titan and the CIAC aware that it
will be an issue. In fact, Uniwide only introduced and
quantified its claim for liquidated damages in its
Memorandum submitted to the CIAC at the end of the
arbitration proceeding. The Court of Appeals also noted that
the only evidence on record to prove delay in the
construction of Project 1 is the testimony of Titan's engineer
regarding the date of completion of the project while the only
evidence of delay in the construction of Project 3 is the
affidavit of Uniwide's President.
According to Uniwide, the ruling of the Court of Appeals on
the issue of liquidated damages goes against the
established judicial policy that a court should always strive to
settle in one proceeding the entire controversy leaving no
root or branch to bear the seeds of future litigations.41
Uniwide claims that the required evidence for an affirmative
ruling on its claim is already on the record. It cites the
pertinent provisions of the written contracts which contained
deadlines for liquidated damages. Uniwide also noted that
the evidence show that Project 1 was completed either on 15
February 1992, as found by the CIAC, or 12 March 1992, as
shown by Titan's own evidence, while Project 3, according to
Uniwide's President, was completed in June 1993.
Furthermore, Uniwide asserts, the CIAC should have applied
procedural rules such as Section 5, Rule 10 with more
xxxx
G.R. No. 143581
On insistence of the Tribunal, the plaster was chipped off
and revealed a structurally sound column x x x
Further, it turns out that what was being passed off as a
defective construction by [Titan], was in fact an old column,
as admitted by Mr. Gow himself x x x x53 (Emphasis
supplied.)
Uniwide had the burden of proving that there was defective
construction in Project 2 but it failed to discharge this
burden. Even the credibility of its own witness was severely
impaired. Further, it was found that the concrete slab placed
by Titan was not attached to the old columns where cracks
were discovered. The CIAC held that the post-tensioning of
the new concrete slab could not have caused any of the
defects manifested by the old columns. We are bound by
this finding of fact by the CIAC.
It is worthy to stress our ruling in Hi-Precision Steel Center,
Inc. v. Lim Kim Steel Builders, Inc.54 which was reiterated in
David v. Construction Industry and Arbitration Commission, 55
that:
x x x Executive Order No. 1008 created an arbitration facility
to which the construction industry in the Philippines can have
recourse. The Executive Order was enacted to encourage
the early and expeditious settlement of disputes in the
construction industry, a public policy the
implementation of which is necessary and important for
the realization of national development goals.
Aware of the objective of voluntary arbitration in the labor
field, in the construction industry, and in any other area for
that matter, the Court will not assist one or the other or even
both parties in any effort to subvert or defeat that objective
for their private purposes. The Court will not review the
factual findings of an arbitral tribunal upon the artful
allegation that such body had "misapprehended facts" and
will not pass upon issues which are, at bottom, issues of
fact, no matter how cleverly disguised they might be as
"legal questions." The parties here had recourse to
January 7, 2008
xxxx
SEC. 47. Venue and Jurisdiction.Proceedings for
recognition and enforcement of an arbitration agreement or
for vacations, setting aside, correction or modification of an
arbitral award, and any application with a court for arbitration
assistance and supervision shall be deemed as special
proceedings and shall be filed with the Regional Trial Court
(i) where arbitration proceedings are conducted; (ii) where
the asset to be attached or levied upon, or the act to be
enjoined is located; (iii) where any of the parties to the
dispute resides or has his place of business; or (iv) in the
National Judicial Capital Region, at the option of the
applicant.
SEC. 48. Notice of Proceeding to Parties.In a special
proceeding for recognition and enforcement of an arbitral
award, the Court shall send notice to the parties at their
address of record in the arbitration, or if any part cannot be
served notice at such address, at such partys last known
address. The notice shall be sent al least fifteen (15) days
before the date set for the initial hearing of the application.
It is now clear that foreign arbitral awards when confirmed by
the RTC are deemed not as a judgment of a foreign court
but as a foreign arbitral award, and when confirmed, are
enforced as final and executory decisions of our courts of
law.
Thus, it can be gleaned that the concept of a final and
binding arbitral award is similar to judgments or awards
given by some of our quasi-judicial bodies, like the National
Labor Relations Commission and Mines Adjudication Board,
whose final judgments are stipulated to be final and binding,
but not immediately executory in the sense that they may still
be judicially reviewed, upon the instance of any party.
Therefore, the final foreign arbitral awards are similarly
situated in that they need first to be confirmed by the RTC.
(3) The RTC has jurisdiction to review foreign arbitral
awards
Sec. 42 in relation to Sec. 45 of RA 9285 designated and
vested the RTC with specific authority and jurisdiction to set
aside, reject, or vacate a foreign arbitral award on grounds
provided under Art. 34(2) of the UNCITRAL Model Law.
Secs. 42 and 45 provide:
SEC. 42. Application of the New York Convention.The
New York Convention shall govern the recognition and
enforcement of arbitral awards covered by said Convention.
The recognition and enforcement of such arbitral awards
shall be filed with the Regional Trial Court in accordance
with the rules of procedure to be promulgated by the
Supreme Court. Said procedural rules shall provide that the
party relying on the award or applying for its enforcement
shall file with the court the original or authenticated copy of
the award and the arbitration agreement. If the award or
agreement is not made in any of the official languages, the
party shall supply a duly certified translation thereof into any
of such languages.
No pronouncement as to costs.
SO ORDERED.
G.R. No. 136154
February 7, 2001
SO ORDERED.
G.R. No. 182248
where
Amount by which negative adjustment
exceeds P100 Million
X=
-------------------------------------------(1.925)
338,000,000
xxxx
Section 7. Remedies for Breach of Warranties
a. If any of the representations and warranties of any or all of
the SELLERS or the BUYER (the "Defaulting Party")
contained in Sections 5 and 6 shall be found to be untrue
when made and/or as of the Closing Date, the other party,
i.e., the BUYER if the Defaulting Party is any or all of the
SELLERS and the SELLERS if the Defaulting Party is the
BUYER (hereinafter referred to as the "Non-Defaulting
Party") shall have the right to require the Defaulting Party, at
the latters expense, to cure such breach, and/or seek
damages, by providing notice or presenting a claim to the
Defaulting Party, reasonably specifying therein the
particulars of the breach. The foregoing remedies shall be
available to the Non-Defaulting Party only if the demand
therefor is presented in writing to the Defaulting Party within
three (3) years from the Closing Date except that the remedy
for a breach of the SELLERS representation and warrant in
Section 5 (h) shall be available only if the demand therefor is
(f) All other issues, including any issue relating to costs, will
be dealt with in a further or final award.
15.2 A further Procedural Order will be necessary
subsequent to the delivery of this Partial Award to deal with
the determination of quantum and in particular, whether
there should be an Expert appointed by the Tribunal under
Article 20(4) of the ICC Rules to assist the Tribunal in this
regard.
15.3 This Award is delivered by a majority of the Tribunal
(Sir Ian Barker and Mr. Kaplan). Justice Kapunan is unable
to agree with the majoritys conclusion on the claim of
estoppel brought by the respondents.
On the matter of prescription, the tribunal held that RCBCs
claim is not time-barred, the claim properly falling under the
contemplation of Sec. 5(g) and not Sec. 5(h). As such, the
tribunal concluded, RCBCs claim was filed within the three
(3)-year period under Sec. 5(g) and that the six (6)-month
period under Sec. 5(h) did not apply.
The tribunal also exonerated RCBC from laches, the latter
having sought relief within the three (3)-year period
prescribed in the SPA. On the matter of estoppel suggested
in petitioners answer, the tribunal stated in par. 10.27 of the
Partial Award the following:
10.27 Clearly, there has to be both an admission or
representation by (in this case) the Claimant [RCBC], plus
reliance upon it by (in this case) the Respondents [herein
petitioners]. The Tribunal cannot find as proved any
admission/representation that the Claimant was abandoning
a 5(g) claim, any reliance by the Respondents on an
admission, and any detriment to the Respondents such as
would entitle them to have the Claimant deprived of the
benefit of clause 5(g). These aspects of the claim for
estoppels are rejected.11
Notably, the tribunal considered the rescission of the SPA
and ASPA as impracticable and "totally out of the
question."12
In his Dissenting Opinion13 which he submitted to and which
was received on September 24, 2007 by the ICC-ICA,
Justice Kapunan stated the observation that RCBCs claim is
time-barred, falling as such claim did under Sec. 5(h), which
prescribes a comparatively shorter prescriptive period, not
5(g) as held by the majority of the tribunal, to wit:
Claimant admits that the Claim is for recovery of P431
million on account of alleged "overvaluation of the net worth
of Bankard," allegedly for "improper accounting practices"
resulting in "its book value per share as of 31 December
1999 [being] overstated." Claimants witness, Dean Echanis
asserts that "the inadequate provisioning for Bankards
doubtful accounts result[ed] in an overstatement of its
December 31, 1999 total assets and net worth of by [sic]
least P418.2 million."
In addition, Claimants demand letter addressed to the
Respondents alleged that "we overpaid for the Shares to the
extent of the impact of the said overstatement on the Book
Value per share".
The losing party who appeals from the judgment of the court
confirming an arbitral award shall be required by the
appellate court to post a counterbond executed in favor of
the prevailing party equal to the amount of the award in
accordance with the rules to be promulgated by the
Supreme Court.
Thereafter, the CA decision may further be appealed or
reviewed before this Court through a petition for review
under Rule 45 of the Rules of Court.15
It is clear from the factual antecedents that RA 9285 applies
to the instant case. This law was already effective at the time
the arbitral proceedings were commenced by RCBC through
a request for arbitration filed before the ICC-ICA on May 12,
2004. Besides, the assailed confirmation order of the RTC
was issued on March 17, 2008. Thus, petitioners clearly took
the wrong mode of appeal and the instant petition can be
outright rejected and dismissed.
Even if we entertain the petition, the outcome will be the
same.
The Court Will Not Overturn an Arbitral Award
Unless It Was Made in Manifest Disregard of the Law
16
xxxx
Section 7. Remedies for Breach of Warranties
If any of the representations and warranties of any or all of
the SELLERS or the BUYER (the "Defaulting Party")
contained in Sections 5 and 6 shall be found to be untrue
when made and/or as of the Closing Date, the other party,
i.e., the BUYER if the Defaulting is any of the SELLERS and
the SELLERS if the Defaulting Party is the BUYER
(hereinafter referred to as the "Non-Defaulting Party") shall
have the right to require the Defaulting Party, at the
latters expense, to cure such breach, and/or seek
damages, by providing notice or presenting a claim to
the Defaulting Party, reasonably specifying therein the
particulars of the breach. The foregoing remedies shall be
available to the Non-Defaulting Party only if the demand
therefor is presented in writing to the Defaulting Party
within three (3) years from the Closing Date, except that
the remedy for a breach of the SELLERS representation
and warranty in Section 5 (h) shall be available only if
the demand therefor is presented to the Defaulting Party
in writing together with schedules and data to substantiate
such demand, within six (6) months from the Closing
Date. (Emphasis supplied.)
Before we address the issue put forward by petitioners, there
is a necessity to determine the nature and application of the
reliefs provided under Sec. 5(g) and Sec. 5(h) in conjunction
with Sec. 7, thus:
(1) The relief under Sec. 5(h) is specifically for price
reduction as said section explicitly states that the "Purchase
Price shall be reduced in accordance with the following
formula x x x." In addition, Sec. 7 gives the aggrieved party
the right to ask damages based on the stipulation that the
non-defaulting party "shall have the right to require the
Defaulting Party, at the latters expense, to cure such breach
and/or seek damages."
On the other hand, the remedy under Sec. 5(g) in
conjunction with Sec. 7 can include specific performance,
damages, and other reliefs excluding price reduction.
(2) Sec. 5(g) warranty covers the audited financial
statements (AFS) for the three (3) years ending December
31, 1997 to 1999 and the unaudited financial statements
(UFS) for the first quarter ending March 31, 2000. On the
other hand, the Sec. 5(h) warranty refers only to the AFS for
the year ending December 31, 1999 and the UFS up to May
31, 2000. It is undenied that Sec. 5(h) refers to price
reduction as it covers "only the most up-to-date audited and
unaudited financial statements upon which the price must
have been based."19
(3) Under Sec. 5(h), the responsibility of petitioners for its
warranty shall exclude the disclosures and reservations
made in AFS of Bankard as of December 31, 1999 and its
UFS up to May 31, 2000. No such exclusions were made
under Sec. 5(g) with respect to the warranty of petitioners in
the AFS and UFS of Bankard.
(4) Sec. 5(h) gives relief only if there is material adverse
effect in the net worth in excess of PhP 100 million and it
provides a formula for price reduction.20 On the other hand,
Sec. 5(g) can be the basis for remedies like specific
10.25 The fact that the purchase price was paid over in full
without any deduction in terms of clause 5(h) is not a bar to
the Claimant bringing a claim under 5(g) within the threeyear period. The fact that payment was made can be, as the
Tribunal has held, a barrier to a claim for rescission and
restitution ad inegrum. A claim for estoppel needs a finding
of representation by words of conduct or a shared
presumption that a right would not be relied upon. The party
relying on estoppel has to show reliance to its detriment or
that, otherwise, it would be unconscionable to resile from the
provision.
denied
Benguets
Motion
for
Reconsideration.
The Facts
Considering the seriousness of the charge of forumshopping and the severity of the sanctions for its violation,
the Court will refrain from making any definitive ruling on this
issue until after petitioner has been given ample opportunity
to respond to the charge.
Resolution
into
acknowledged
a
as
RAWOP,
the
wherein
owner
of
J.G.
Realty
was
Petitioner is hereby required to answer the charge of forumshopping within fifteen (15) days from notice.
SO ORDERED.
In the RAWOP, Benguet obligated itself to perfect
GR No. 163101, February 13, 2008
Benguet Corporation v. DENR,
Benguet
or development periods.
a.
The fact that your company has failed to
perform the obligations set forth in the RAWOP,
i.e., to undertake development works within 2
years from the execution of the Agreement;
b.
Violation of the Contract by allowing high
graders to operate on our claim.
c.
No stipulation was provided with respect to
the term limit of the RAWOP.
On
d.
Non-payment of the royalties thereon as
provided in the RAWOP.7[7]
March
19,
2001,
the
POA
issued
In
response,
Benguets
Manager
for
Legal
WHEREFORE,
premises
considered, the June 01, 1987
[RAWOP]
and
its
Supplemental
Agreement is hereby declared cancelled
and without effect. BENGUET is hereby
excluded from the joint MPSA
Application over the mineral claims
denominated as BONITO-I, BONITOII, BONITO-III and BONITO-IV.
SO ORDERED.
We held, thus:
The Issues
1.
There was serious and palpable error when
the Honorable Board failed to rule that the
contractual obligation of the parties to arbitrate
under the Royalty Agreement is mandatory.
2.
The Honorable Board exceeded its
jurisdiction when it sustained the cancellation of
the Royalty Agreement for alleged breach of
contract despite the absence of evidence.
3.
The Questioned Decision of the Honorable
Board in cancelling the RAWOP prejudice[d] the
substantial rights of Benguet under the contract to
the unjust enrichment of JG Realty.12[12]
Restated, the issues are: (1) Should the
controversy have first been submitted to arbitration
before the POA took cognizance of the case?; (2)
Was the cancellation of the RAWOP supported by
evidence?; and (3) Did the cancellation of the
RAWOP amount to unjust enrichment of J.G.
Realty at the expense of Benguet?
The Courts Ruling
Before we dwell on the substantive issues, we find
that the instant petition can be denied outright as Benguet
resorted to an improper remedy.
11.01 Arbitration
Any disputes, differences or disagreements
between BENGUET and the OWNER with
reference to anything whatsoever pertaining to this
Agreement that cannot be amicably settled by
them shall not be cause of any action of any kind
whatsoever in any court or administrative agency
but shall, upon notice of one party to the other, be
referred to a Board of Arbitrators consisting of
three (3) members, one to be selected by
BENGUET, another to be selected by the OWNER
and the third to be selected by the aforementioned
two arbitrators so appointed.
xxxx
11.02
Court Action
To reiterate, availment of
arbitration:
Section 6. Hearing by court.A party aggrieved
by the failure, neglect or refusal of another to
perform under an agreement in writing
providing for arbitration may petition the court
for an order directing that such arbitration
proceed in the manner provided for in such
agreement. Five days notice in writing of the
hearing of such application shall be served either
personally or by registered mail upon the party in
default. The court shall hear the parties, and
upon being satisfied that the making of the
agreement or such failure to comply therewith
is not in issue, shall make an order directing
the parties to proceed to arbitration in
xxxx
Section 7. Stay of civil action.If any suit or
proceeding be brought upon an issue arising out
of an agreement providing for the arbitration
thereof, the court in which such suit or proceeding
is pending, upon being satisfied that the issue
involved in such suit or proceeding is referable to
arbitration, shall stay the action or proceeding until
an arbitration has been had in accordance with the
terms of the agreement: Provided, That the
applicant, for the stay is not in default in
proceeding with such arbitration. (Emphasis
supplied.)
In other words, in the event a case that should
properly be the subject of voluntary arbitration is erroneously
body
which
forms
part
of
the
DENR,
an
However,
is
already
As it
its predicament.
No costs.
SO ORDERED.
on
the
foregoing
discussion,
the
September 4, 2013
SO ORDERED.67
Hence, this appeal.
On 5 September 2011, this Court granted petitioners prayer
for the issuance of a Temporary Restraining Order68 staying
the immediate implementation of the decisions adverse to it.
OUR RULING
As to the existing improvements belonging to the defendantappellee, as these were built in good faith, the provisions of
Art. 1678of the Civil Code shall apply.
SO ORDERED.57
The Court in Gonzales did not simply base its rejection of the
complaint for arbitration on the ground that the issue raised
therein, i.e. , the validity of contracts, is per se nonarbitrable. The real consideration behind the ruling was the
limitation that was placed by R.A. No. 7942 upon the
jurisdiction of the PA-MGB as an arbitral body . Gonzales
rejected the complaint for arbitration because the issue
raised therein is not a mining dispute per R.A. No. 7942 and
it is for this reason, and only for this reason, that such issue
is rendered non-arbitrable before the PA-MGB. As stated
beforehand, R.A. No. 7942 clearly limited the jurisdiction of
the PA-MGB only to mining disputes.87
Much more instructive for our purposes, on the other hand,
is the recent case of Cargill Philippines, Inc. v. San
Fernando Regal Trading, Inc.88 In Cargill , this Court
answered the question of whether issues involving the
rescission of a contract are arbitrable. The respondent in
Cargill argued against arbitrability, also citing therein
Gonzales . After dissecting Gonzales , this Court ruled in
favor of arbitrability.89 Thus, We held:
Respondent contends that assuming that the existence of
the contract and the arbitration clause is conceded, the CA's
decision declining referral of the parties' dispute to arbitration
is still correct. It claims that its complaint in the RTC presents
the issue of whether under the facts alleged, it is entitled to
rescind the contract with damages; and that issue
constitutes a judicial question or one that requires the
exercise of judicial function and cannot be the subject of an
arbitration proceeding. Respondent cites our ruling in
Gonzales, wherein we held that a panel of arbitrator is bereft
of jurisdiction over the complaint for declaration of nullity/or
termination of the subject contracts on the grounds of fraud
and oppression attendant to the execution of the addendum
contract and the other contracts emanating from it, and that
the complaint should have been filed with the regular courts
as it involved issues which are judicial in nature.
Such argument is misplaced and respondent cannot rely on
the Gonzales case to support its argument.90 (Emphasis
ours)
Second. Petitioner may still invoke the arbitration clause of
the 2005 Lease Contract notwithstanding the fact that it
assails the validity of such contract. This is due to the
doctrine of separability.91
Under the doctrine of separability, an arbitration agreement
is considered as independent of the main contract.92 Being a
separate contract in itself, the arbitration agreement may
thus be invoked regardless of the possible nullity or invalidity
of the main contract.93
must make the same if only to stress the point that, in our
jurisdiction, bona fide arbitration agreements are recognized
as valid;102 and that laws,103 rules and regulations104 do exist
protecting and ensuring their enforcement as a matter of
state policy. Gone should be the days when courts treat
otherwise valid arbitration agreements with disdain and
hostility, if not outright " jealousy,"105 and then get away with
it. Courts should instead learn to treat alternative means of
dispute resolution as effective partners in the administration
of justice and, in the case of arbitration agreements, to afford
them judicial restraint.106 Today, this Court only performs its
part in upholding a once disregarded state policy.
Civil Case No. CV 09-0346
This Court notes that, on 30 September 2009, petitioner filed
with the RTC of Paraaque City, a complaint107 for the
rescission or cancellation of the Deed of Donation and
Amended Deed of Donation against the respondent. The
case is currently pending before Branch 257 of the RTC,
docketed as Civil Case No. CV 09-0346.
This Court recognizes the great possibility that issues raised
in Civil Case No. CV 09-0346 may involve matters that are
rightfully arbitrable per the arbitration clause of the 2005
Lease Contract. However, since the records of Civil Case
No. CV 09-0346 are not before this Court, We can never
know with true certainty and only speculate. In this light, let a
copy of this Decision be also served to Branch 257of the
RTC of Paraaque for its consideration and, possible,
application to Civil Case No. CV 09-0346.
WHEREFORE, premises considered, the petition is hereby
GRANTED . Accordingly, We hereby render a Decision:
1. SETTING ASIDE all the proceedings undertaken by the
Metropolitan Trial Court, Branch 77, of Paraaque City in
relation to Civil Case No. 2009-307 after the filing by
petitioner of its Answer with Counterclaim ;
2. REMANDING the instant case to the MeTC,
SUSPENDED at the point after the filing by petitioner of its
Answer with Counterclaim;
3. SETTING ASIDE the following:
a. Decision dated 19 August 2011 of the Court of Appeals in
C.A.-G.R. SP No. 116865,
b. Decision dated 29 October 2010 of the Regional Trial
Court, Branch 274, of Paraaque City in Civil Case No. 100255,
c. Decision dated 27 April 2010 of the Metropolitan Trial
Court, Branch 77, of Paraaque City in Civil Case No. 2009307; and
4. REFERRING the petitioner and the respondent to
arbitration pursuant to the arbitration clause of the 2005
Lease Contract, repeatedly included in the 2000 Lease
Contract and in the 1976 Amended Deed of Donation.
PRAYER
WHEREFORE, BDO UNIBANK, INC. and RCBC CAPITAL
CORPORATION respectfully pray that this Honorable Court
order the termination and dismissal of the above-captioned
case, with prejudice.
BDO and RCBC Capital respectfully pray for such other
relief as may be deemed just or equitable under the
premises.3
Under this Court s Resolution dated November 27, 2013,
G.R. No. 200213 is ordered consolidated with G.R. Nos.
196171 199238.
IN VIEW OF THE FOREGOING and as prayed for, G.R.
Nos. 196171, 199238 and 200213 are hereby ordered
DISMISSED with prejudice and are deemed CLOSED and
TERMINATED.
SO ORDERED.