ALTERNATIVE DISPUTE RESOLUTION

Digested Cases
I

UNIWIDE SALES REALTY AND RESOURCES CORPORATION, petitioner,

vs.
TITAN-IKEDA CONSTRUCTION AND DEVELOPMENT CORPORATION,
respondent.
G.R. No. 126619, December 20, 2006

II

JORGE GONZALES and PANEL OF ARBITRATORS, petitioners, vs.

CLIMAX MINING LTD., CLIMAX-ARIMCO MINING CORP., and
AUSTRALASIAN PHILIPPINES MINING INC., respondents.
G.R. No. 161957, February 28, 2005

III

IV

CARGILL PHILIPPINES, INC., Petitioner,

VS.
SAN FERNANDO REGALA TRADING, INC., Respondent.
G.R. No. 175404, January 31, 2011

EQUITABLE PCI BANKING CORPORATION., Petitioner,

vs.
RCBC CAPITAL CORPORATION., Respondent.
G.R. No. 182248, December 18, 2008

ABS-CBN BROADCASTING CORPORATION, petitioner,

vs.
WORLD INTERACTIVE NETWORK SYSTEMS (WINS) JAPAN CO., LTD.,
respondent.
G.R. No. 169332, February 11, 2008

Submitted by:
Maria D. Rodriguez
(Student)
Alternative Dispute Resolution

Saturday ( 7:00 9:00 p.m.)

UNIWIDE SALES REALTY AND RESOURCES CORPORATION, petitioner,

vs.
TITAN-IKEDA CONSTRUCTION AND DEVELOPMENT CORPORATION,
respondent.
G.R. No. 126619
December 20, 2006
FACTS:
This case involved Titan-Ikeda who entered into 3 construction agreement/
contract /project with Uniwide. Later Titan-Ikeda filed an action for sum of money
against Uniwide with the RTC because Uniwide allegedly failed to pay certain claims
billed by Titan after the completion of the 3 projects. Uniwide moved for the
dismissal/suspension of the proceeding for them to first undergo arbitration. The
Arbitrators issued terms of reference which was signed by the parties, (Uniwide did
not attempt to modify the TOR to accommodate its belated counterclaim on
deadlines for liquidated damages.)Titan then refiled the case with CIAC.
CIAC Decision: Project 1: Uniwide is absolved of any liability. Project 2: Uniwide
is absolved of any liability for VAT payment and for the account of Titan, and Titan is
absolved from liability for defective construction. Project 3: Uniwide id held liable for
unpaid balance (5,158,364.63) plus 12% interest/annum and to pay the full VAT for
the additional work where no written authorization was presented.
CIAC likewise rejected the claim on liquidated damages.
After Uniwides motion for reconsideration was denied by CIAC, it filed a
petition for review with CA but same was denied, thus, Uniwide filed a petition for
review under rule 45 to seek partial reversal of the decision of CA which modified
the decision of CIAC. Uniwide claims that CIAC should have applied procedural rules
such as section 5, Rule 10 with more liberality because it was an administrative
tribubal free from all rigid technicalities of regular courts because CA held that the
issue on liquidated damages should be left for determination in future proceedings.
ISSUE:
Whether or not CIAC should have applied the Rules of Court in the arbitration
proceeding.
HELD:

Rule of Procedure Governing Construction Arbitration promulgated by the CIAC

contains no provision on the application of the Rules of Court to arbitration
proceedings, even in a suppletory capacity. Such importation of the Rules of Court
provision on amendment to conform to evidence would contravene the spirit, if not
the letter of the CIAC rules. This is for the reason that the formulation of the Terms
of Reference is done with the active participation of the parties and their counsel
themselves. The TOR is further required to be signed by all the parties, their
respective counsel and all the members of the Arbitral Tribunal. Unless the issues
thus carefully formulated in the Terms of Reference were expressly showed to be
amended, issues outside thereof may not be resolved. As already noted in the
Decision, "no attempt was ever made by the [Uniwide] to modify the TOR in order to
accommodate the issues related to its belated counterclaim" on this issue.
Arbitration has been defined as "an arrangement for taking and abiding by the
judgment of selected persons in some disputed matter, instead of carrying it to
established tribunals of justice, and is intended to avoid the formalities, the delay,
the expense and vexation of ordinary litigation.

JORGE GONZALES and PANEL OF ARBITRATORS, petitioners,

vs.
CLIMAX MINING LTD., CLIMAX-ARIMCO MINING CORP., and AUSTRALASIAN
PHILIPPINES MINING INC., respondents.
G.R. No. 161957. February 28, 2005

FACTS:
Petitioner Jorge Gonzales, as claimowner of mineral deposits located within the
Addendum Area of Influence in Didipio, in the provinces of Quirino and Nueva
Vizcaya, entered into a co-production, joint venture and/or production-sharing letteragreement designated as the May 14, 1987 Letter of Intent with Geophilippines, Inc,
and Inmex Ltd.

Under the agreement, petitioner, as claimowner, granted to

Geophilippines, Inc. and Inmex Ltd. collectively, the exclusive right to explore and
survey the mining claims for a period of thirty-six (36) months within which the
latter could decide to take an operating agreement on the mining claims and/or

develop, operate, mine and otherwise exploit the mining claims and market any and
all minerals that may be derived therefrom.
On

28

February

1989,

the

parties

to

the May

14,

1987

Letter

of

Intent renegotiated the same into the February 28, 1989 Agreement whereby the
exploration of the mining claims was extended for another period of three years. On
9 March 1991, petitioner Gonzales, Arimco Mining Corporation, Geophilippines Inc.,
Inmex Ltd., and Aumex Philippines, Inc. signed a document designated as
theAddendum to the May 14, 1987 Letter of Intent and February 28, 1989
Agreement with Express Adhesion Thereto (hereafter, the Addendum Contract).
Under the Addendum Contract, Arimco Mining Corporation would apply to the
Government of the Philippines for permission to mine the claims as the
Governments

contractor

under

a Financial

and

Technical

Assistance

Agreement (FTAA). On 20 June 1994, Arimco Mining Corporation obtained the FTAA
and carried out work under the FTAA.
On 8 November 1999, petitioner Gonzales filed before the Panel of Arbitrators,
Region II, Mines and Geosciences Bureau of the Department of Environment and
Natural Resources, against respondents Climax-Arimco Mining Corporation, Climax,
and APMI, a Complaint Seeking the declaration of nullity or termination of the
Addendum

Contract, the

Contract, the Assignment,

FTAA,

the Operating

Accession

and

Financial

Agreement, and

Accommodation

the Memorandum

of

Agreement. Petitioner Gonzales prayed for an unspecified amount of actual and

exemplary damages plus attorneys fees and for the issuance of a temporary
restraining order and/or writ of preliminary injunction to restrain or enjoin
respondents from further implementing the questioned agreements.
ISSUE:
1. Whether the complaint filed by petitioner raises a mining dispute over which
the Panel of Arbitrators has jurisdiction, or a judicial question which should
properly be brought before the regular courts.
2. Whether the dispute between the parties should be brought for arbitration
under Rep. Act No. 876.

RULING:
1. On the other hand, a mining dispute is a dispute involving (a) rights to mining
areas, (b) mineral agreements, FTAAs, or permits, and (c) surface owners,
occupants and claimholders/concessionaires. Under Republic Act No. 7942
(otherwise known as the Philippine Mining Act of 1995), the Panel of
Arbitrators has exclusive and original jurisdiction to hear and decide these
mining disputes. The Court of Appeals, in its questioned decision, correctly
stated that the Panels jurisdiction is limited only to those mining disputes
which raise questions of fact or matters requiring the application of
technological knowledge and experience. It is apparent that the Panel of
Arbitrators is bereft of jurisdiction over the Complaint filed by petitioner. The
basic

issue

in

petitioners Complaint is

the

presence

of

fraud

or

misrepresentation allegedly attendant to the execution of the Addendum

Contract and the other contracts emanating from it, such that the contracts
are rendered invalid and not binding upon the parties. It avers that petitioner
was misled by respondents into agreeing to the Addendum Contract. This
constitutes fraud which vitiated petitioners consent, and under Article 1390 of
the Civil Code, is one of the grounds for the annulment of a voidable contract.
Voidable or annullable contracts, before they are set aside, are existent, valid,
and binding, and are effective and obligatory between the parties. They can
be ratified.
2. Arbitration before the Panel of Arbitrators is proper only when there is a
disagreement between the parties as to some provisions of the contract
between them, which needs the interpretation and the application of that
particular knowledge and expertise possessed by members of that Panel. It is
not proper when one of the parties repudiates the existence or validity of such
contract or agreement on the ground of fraud or oppression as in this case.
The validity of the contract cannot be subject of arbitration proceedings.
Allegations of fraud and duress in the execution of a contract are matters
within the jurisdiction of the ordinary courts of law. These questions are legal
in nature and require the application and interpretation of laws and
jurisprudence which is necessarily a judicial function. Petitioner also disagrees

with the Court of Appeals ruling that the case should be brought for
arbitration under Rep. Act 876, pursuant to the arbitration clause in
the Addendum Contract which states that [a]ll disputes arising out of or in
connection with the Contract, which cannot be settled amicably among the
Parties, shall finally be settled under R.A. 876. He points out that respondents
Climax and APMI are not parties to the Addendum Contract and are thus not
bound by the arbitration clause in said contract.
The court agreed that the case should not be brought under the ambit of the
Arbitration Law, but for a different reason. The question of validity of the
contract containing the agreement to submit to arbitration will affect the
applicability of the arbitration clause itself.

A party cannot rely on the

contract and claim rights or obligations under it and at the same time impugn
its existence or validity. Indeed, litigants are enjoined from taking inconsistent
positions. As previously discussed, the complaint should have been filed
before the regular courts as it involved issues which are judicial in nature.

CARGILL PHILIPPINES, INC., Petitioner,

VS.
SAN FERNANDO REGALA TRADING, INC., Respondent.
G.R. No. 175404, January 31, 2011
FACTS:
Cargill Philippines, Inc. and Regala Trading, Inc. entered into a contract and
agreed upon that San Fernando Regala Trading, Inc. would purchase from Cargill a
Thailand origin cane blackstrap molasses and the delivery was to be made in
January or February however, the delivery was moved to April or May and the
payment would be by an Irrevocable Letter of Credit Payable at Sight. Cargill failed
to comply with the obligation and Regala Trading filed a complaint with the RTC for

the Rescission of the Contract with Damages against Cargill. Cargill filed a Motion to
Dismiss / Suspend Proceedings and refer controversy to Voluntary Arbitration, it
argued that the contract between the parties was never consummated because
Regala Trading did not return the proposed agreement bearing its written
acceptance.
ISSUE:
Whether or not the validity and enforceability of the contract containing the
arbitration agreement violate any provision of the Arbitration Law.
HELD:
Applying the Gonzales ruling, an arbitration agreement which forms part of
the main contract shall not be regarded as invalid or non-existent just because the
main contract is invalid or did not come into existence, since the arbitration
agreement shall be treated as a separate agreement independent of the main
contract. A contrary ruling would suggest that a party's mere repudiation of the
main contract is sufficient to avoid arbitration and that is exactly the situation that
the separability doctrine sought to avoid. Thus, we find that even the party who has
repudiated the main contract is not prevented from enforcing its arbitration clause.
The separability of the arbitration agreement is especially significant to the
determination of whether the invalidity of the main contract also nullifies the
arbitration clause. Indeed, the doctrine denotes that the invalidity of the main
contract, also referred to as the "container" contract, does not affect the validity of
the arbitration agreement. Irrespective of the fact that the main contract is invalid,
the arbitration clause/agreement still remains valid and enforceable.

EQUITABLE PCI BANKING CORPORATION., Petitioner,

vs.
RCBC CAPITAL CORPORATION., Respondent.
G.R. No. 182248. December 18, 2008
FACTS:

On May 24, 2000, petitioners Equitable PCI Bank, Inc. (EPCIB) and the
individual shareholders of Bankard, Inc., as sellers, and respondent RCBC Capital
Corporation (RCBC), as buyer, executed a Share Purchase Agreement[5] (SPA) for the
purchase of petitioners interests in Bankard, representing 226,460,000 shares, for
the price of PhP 1,786,769,400. To expedite the purchase, RCBC agreed to dispense
with the conduct of a due diligence audit on the financial status of Bankard.
Under the SPA, RCBC undertakes, on the date of contract execution, to
deposit, as downpayment, 20% of the purchase price, or PhP 357,353,880, in an
escrow account. The escrowed amount, the SPA stated, should be released to
petitioners on an agreed-upon release date and the balance of the purchase price
shall be delivered to the share buyers upon the fulfillment of certain conditions
agreed upon, in the form of a managers check.
Sometime in September 2000, RCBC had Bankards accounts audited, creating
for the purpose an audit team led by a certain Rubio, the Vice-President for Finance
of RCBC at the time. Rubios conclusion was that the warranty, as contained in
Section 5(h) of the SPA (simply Sec. 5[h] hereinafter), was correct. On December 28,
2000, RCBC paid the balance of the contract price. The corresponding deeds of sale
for the shares in question were executed in January 2001. Thereafter, in a letter of
May 5, 2003, RCBC informed petitioners of its having overpaid the purchase price of
the subject shares, claiming that there was an overstatement of valuation of
accounts amounting to PhP 478 million, resulting in the overpayment of over PhP
616 million. Thus, RCBC claimed that petitioners violated their warranty, as sellers,
embodied in Sec. 5(g) of the SPA (Sec. 5[g] hereinafter).
Following unsuccessful attempts at settlement, RCBC, in accordance with Sec.
10 of the SPA, filed a Request for Arbitration dated May 12, 2004[8] with the ICCICA. In the request, RCBC charged Bankard with deviating from, contravening and
not following generally accepted accounting principles and practices in maintaining
their books. Due to these improper accounting practices, RCBC alleged that both
the audited and unaudited financial statements of Bankard prior to the stock
purchase were far from fair and accurate and, hence, violated the representations
and warranties of petitioners in the SPA. Per RCBC, its overpayment amounted to

PhP 556 million. It thus prayed for the rescission of the SPA, restitution of the
purchase price, payment of actual damages in the amount of PhP 573,132,110,
legal interest on the purchase price until actual restitution, moral damages, and
litigation and attorneys fees. As alternative to rescission and restitution, RCBC
prayed for damages in the amount of at least PhP 809,796,092 plus legal interest.
ISSUE:
Whether or not the trial court acted contrary to law and judicial authority in refusing
to vacate and in confirming the arbitral award, notwithstanding that the arbitrators
had plainly and admittedly failed to accord petitioners due process by denying
them a hearing on the basic factual matter upon which their liability is predicated.
RULING:
Petitioners right to due process was not breached. As regards petitioners claim that
its right to due process was violated when they were allegedly denied the right to
cross-examine RCBCs witnesses, their claim is also bereft of merit.
Sec. 15 of RA 876 or the Arbitration Law provides that:
Section 15.

Hearing by arbitrators. Arbitrators may, at the

commencement of the hearing, ask both parties for brief statements of

the issues in controversy and/or an agreed statement of facts.
Thereafter the parties may offer such evidence as they desire, and shall
produce such additional evidence as the arbitrators shall require or
deem necessary to an understanding and determination of the
dispute. The arbitrators shall be the sole judge of the relevancy
and materiality of the evidence offered or produced, and shall
not be bound to conform to the Rules of Court pertaining to
evidence. Arbitrators shall receive as exhibits in evidence any
document which the parties may wish to submit and the
exhibits

shall

be

properly

identified

at

the

time

of

submission. All exhibits shall remain in the custody of the Clerk of

Court during the course of the arbitration and shall be returned to the
parties at the time the award is made. The arbitrators may make an

ocular inspection of any matter or premises which are in dispute, but

such inspection shall be made only in the presence of all parties to the
arbitration, unless any party who shall have received notice thereof fails
to appear, in which event such inspection shall be made in the absence
of such party. (Emphasis supplied.)
The well-settled rule is that administrative agencies exercising quasi-judicial
powers shall not be fettered by the rigid technicalities of procedure, albeit they are,
at all times required, to adhere to the basic concepts of fair play.

ABS-CBN BROADCASTING CORPORATION, petitioner,

vs.
WORLD INTERACTIVE NETWORK SYSTEMS (WINS) JAPAN CO., LTD.,
respondent.
G.R. No. 169332

February 11, 2008

FACTS:
ABS-CBN Broadcasting Corporation (ABS-CBN) entered into a licensing
agreement with World Interactive Network Systems (WINS) to distribute and
sublicense the distribution of the television service known as "The Filipino Channel"
(TFC) in Japan. ABS-CBN undertook to transmit the TFC programming signals to
WINS which the latter received through its decoders and distributed to its
subscribers. A dispute arose between the parties when ABS-CBN accused WINS of
inserting nine episodes of WINS WEEKLY into the TFC programming. ABS-CBN
claimed that these were "unauthorized insertions" constituting a material breach of
their agreement. WINS filed an arbitration suit pursuant to the arbitration clause of
its agreement with ABS-CBN. It contended that the airing of WINS WEEKLY was
made with petitioner's prior approval. It also alleged that petitioner only threatened
to terminate their agreement because it wanted to renegotiate the terms thereof to
allow it to demand higher fees. It also prayed for damages for petitioner's alleged
grant of an exclusive distribution license to another entity, NHK (Japan Broadcasting
Corporation). The parties appointed Professor Alfredo F. Tadiar to act as sole
arbitrator. The arbitrator found in favor of World Interactive Network Systems. ABS-

CBN filed in the CA a petition for review under Rule 43 of the Rules of Court or, in
the alternative, a petition for certiorari under Rule 65 of the same Rules, with
application for temporary restraining order and writ of preliminary injunction. WINS,
on the other hand, filed a petition for confirmation of arbitral award before the RTC
of Quezon City. The CA dismissed ABS-CBNs petition for lack of jurisdiction. It stated
that as the terms or reference (TOR) itself provided that the arbitrator's decision
shall be final and unappealable and that no motion for reconsideration shall be filed,
then the petition for review must fail. It ruled that it is the RTC which has jurisdiction
over questions relating to arbitration. It held that the only instance it can exercise
jurisdiction over an arbitral award is an appeal from the trial court's decision
confirming, vacating or modifying the arbitral award. It further stated that a petition
for certiorari under Rule 65 of the Rules of Court is proper in arbitration cases only if
the courts refuse or neglect to inquire into the facts of an arbitrator's award.
ISSUE:
Whether or not a party in a voluntary arbitration dispute may avail of, directly
in the CA, a petition for review under Rule 43 or a petition for certiorari under Rule
65 of the Rules of Court, instead of filing a petition to vacate the award in the RTC
when the grounds invoked to overturn the arbitrators decision are other than those
for a petition to vacate an arbitral award enumerated under RA 876.
HELD:
The assigned errors reveals that the real issues calling for the CA's resolution
were less the alleged grave abuse of discretion exercised by the arbitrator and more
about the arbitrators appreciation of the issues and evidence presented by the
parties. Therefore, the issues clearly fall under the classification of errors of fact and
law questions which may be passed upon by the CA via a petition for review
under Rule 43. Petitioner cleverly crafted its assignment of errors in such a way as
to straddle both judicial remedies, that is, by alleging serious errors of fact and law
(in which case a petition for review under Rule 43 would be proper) and grave abuse
of discretion (because of which a petition for certiorari under Rule 65 would be
permissible).
Section 24 of RA 876 clearly provides that the RTC must issue an order
vacating an arbitral award only "in any one of the . . . cases" enumerated therein.
Under the legal maxim in statutory construction expressio unius est exclusio
alterius, the explicit mention of one thing in a statute means the elimination of
others not specifically mentioned. As RA 876 did not expressly provide for errors of
fact and/or law and grave abuse of discretion (proper grounds for a petition for
review under Rule 43 and a petition for certiorari under Rule 65, respectively) as

grounds for maintaining a petition to vacate an arbitral award in the RTC, it

necessarily follows that a party may not avail of the latter remedy on the grounds of
errors of fact and/or law or grave abuse of discretion to overturn an arbitral award.
Proper issues that may be raised in a petition for review under Rule 43 pertain
to errors of fact, law or mixed questions of fact and law. While a petition for
certiorari under Rule 65 should only limit itself to errors of jurisdiction, that is, grave
abuse of discretion amounting to a lack or excess of jurisdiction. Moreover, it cannot
be availed of where appeal is the proper remedy or as a substitute for a lapsed
appeal.
The remedy ABS-CBN Broadcasting Corporation availed of, entitled
"alternative petition for review under Rule 43 or petition for certiorari under Rule
65," was wrong. The petition is DENIED.