G.R. No.

143581

January 7, 2008

KOREA TECHNOLOGIES CO., LTD., petitioner, vs.HON. ALBERTO A. LERMA, in his capacity as Presiding Judge of Branch 256 of Regional Trial Court of
Muntinlupa City, and PACIFIC GENERAL STEEL MANUFACTURING CORPORATION, respondents.
DECISION
VELASCO, JR., J.:
In our jurisdiction, the policy is to favor alternative methods of resolving disputes, particularly in civil and commercial disputes. Arbitration along with mediation,
conciliation, and negotiation, being inexpensive, speedy and less hostile methods have long been favored by this Court. The petition before us puts at issue an
arbitration clause in a contract mutually agreed upon by the parties stipulating that they would submit themselves to arbitration in a foreign country. Regrettably,
instead of hastening the resolution of their dispute, the parties wittingly or unwittingly prolonged the controversy.
Petitioner Korea Technologies Co., Ltd. (KOGIES) is a Korean corporation which is engaged in the supply and installation of Liquefied Petroleum Gas (LPG)
Cylinder manufacturing plants, while private respondent Pacific General Steel Manufacturing Corp. (PGSMC) is a domestic corporation.
On March 5, 1997, PGSMC and KOGIES executed a Contract 1 whereby KOGIES would set up an LPG Cylinder Manufacturing Plant in Carmona, Cavite. The
contract was executed in the Philippines. On April 7, 1997, the parties executed, in Korea, an Amendment for Contract No. KLP-970301 dated March 5, 1997 2
amending the terms of payment. The contract and its amendment stipulated that KOGIES will ship the machinery and facilities necessary for manufacturing LPG
cylinders for which PGSMC would pay USD 1,224,000. KOGIES would install and initiate the operation of the plant for which PGSMC bound itself to pay USD
306,000 upon the plants production of the 11-kg. LPG cylinder samples. Thus, the total contract price amounted to USD 1,530,000.
On October 14, 1997, PGSMC entered into a Contract of Lease 3 with Worth Properties, Inc. (Worth) for use of Worths 5,079-square meter property with a 4,032square meter warehouse building to house the LPG manufacturing plant. The monthly rental was PhP 322,560 commencing on January 1, 1998 with a 10%
annual increment clause. Subsequently, the machineries, equipment, and facilities for the manufacture of LPG cylinders were shipped, delivered, and installed in
the Carmona plant. PGSMC paid KOGIES USD 1,224,000.
However, gleaned from the Certificate4 executed by the parties on January 22, 1998, after the installation of the plant, the initial operation could not be conducted
as PGSMC encountered financial difficulties affecting the supply of materials, thus forcing the parties to agree that KOGIES would be deemed to have completely
complied with the terms and conditions of the March 5, 1997 contract.
For the remaining balance of USD306,000 for the installation and initial operation of the plant, PGSMC issued two postdated checks: (1) BPI Check No. 0316412
dated January 30, 1998 for PhP 4,500,000; and (2) BPI Check No. 0316413 dated March 30, 1998 for PhP 4,500,000.5
When KOGIES deposited the checks, these were dishonored for the reason "PAYMENT STOPPED." Thus, on May 8, 1998, KOGIES sent a demand letter 6 to
PGSMC threatening criminal action for violation of Batas Pambansa Blg. 22 in case of nonpayment. On the same date, the wife of PGSMCs President faxed a
letter dated May 7, 1998 to KOGIES President who was then staying at a Makati City hotel. She complained that not only did KOGIES deliver a different brand of
hydraulic press from that agreed upon but it had not delivered several equipment parts already paid for.
On May 14, 1998, PGSMC replied that the two checks it issued KOGIES were fully funded but the payments were stopped for reasons previously made known to
KOGIES.7
On June 1, 1998, PGSMC informed KOGIES that PGSMC was canceling their Contract dated March 5, 1997 on the ground that KOGIES had altered the quantity
and lowered the quality of the machineries and equipment it delivered to PGSMC, and that PGSMC would dismantle and transfer the machineries, equipment,
and facilities installed in the Carmona plant. Five days later, PGSMC filed before the Office of the Public Prosecutor an Affidavit-Complaint for Estafa docketed as
I.S. No. 98-03813 against Mr. Dae Hyun Kang, President of KOGIES.
On June 15, 1998, KOGIES wrote PGSMC informing the latter that PGSMC could not unilaterally rescind their contract nor dismantle and transfer the machineries
and equipment on mere imagined violations by KOGIES. It also insisted that their disputes should be settled by arbitration as agreed upon in Article 15, the
arbitration clause of their contract.
On June 23, 1998, PGSMC again wrote KOGIES reiterating the contents of its June 1, 1998 letter threatening that the machineries, equipment, and facilities
installed in the plant would be dismantled and transferred on July 4, 1998. Thus, on July 1, 1998, KOGIES instituted an Application for Arbitration before the
Korean Commercial Arbitration Board (KCAB) in Seoul, Korea pursuant to Art. 15 of the Contract as amended.
On July 3, 1998, KOGIES filed a Complaint for Specific Performance, docketed as Civil Case No. 98-117 8 against PGSMC before the Muntinlupa City Regional
Trial Court (RTC). The RTC granted a temporary restraining order (TRO) on July 4, 1998, which was subsequently extended until July 22, 1998. In its complaint,
KOGIES alleged that PGSMC had initially admitted that the checks that were stopped were not funded but later on claimed that it stopped payment of the checks
for the reason that "their value was not received" as the former allegedly breached their contract by "altering the quantity and lowering the quality of the machinery
and equipment" installed in the plant and failed to make the plant operational although it earlier certified to the contrary as shown in a January 22, 1998
Certificate. Likewise, KOGIES averred that PGSMC violated Art. 15 of their Contract, as amended, by unilaterally rescinding the contract without resorting to
arbitration. KOGIES also asked that PGSMC be restrained from dismantling and transferring the machinery and equipment installed in the plant which the latter
threatened to do on July 4, 1998.
On July 9, 1998, PGSMC filed an opposition to the TRO arguing that KOGIES was not entitled to the TRO since Art. 15, the arbitration clause, was null and void
for being against public policy as it ousts the local courts of jurisdiction over the instant controversy.
On July 17, 1998, PGSMC filed its Answer with Compulsory Counterclaim 9 asserting that it had the full right to dismantle and transfer the machineries and
equipment because it had paid for them in full as stipulated in the contract; that KOGIES was not entitled to the PhP 9,000,000 covered by the checks for failing to

completely install and make the plant operational; and that KOGIES was liable for damages amounting to PhP 4,500,000 for altering the quantity and lowering the
quality of the machineries and equipment. Moreover, PGSMC averred that it has already paid PhP 2,257,920 in rent (covering January to July 1998) to Worth and
it was not willing to further shoulder the cost of renting the premises of the plant considering that the LPG cylinder manufacturing plant never became operational.
After the parties submitted their Memoranda, on July 23, 1998, the RTC issued an Order denying the application for a writ of preliminary injunction, reasoning that
PGSMC had paid KOGIES USD 1,224,000, the value of the machineries and equipment as shown in the contract such that KOGIES no longer had proprietary
rights over them. And finally, the RTC held that Art. 15 of the Contract as amended was invalid as it tended to oust the trial court or any other court jurisdiction over
any dispute that may arise between the parties. KOGIES prayer for an injunctive writ was denied.10 The dispositive portion of the Order stated:
WHEREFORE, in view of the foregoing consideration, this Court believes and so holds that no cogent reason exists for this Court to grant the writ of preliminary
injunction to restrain and refrain defendant from dismantling the machineries and facilities at the lot and building of Worth Properties, Incorporated at Carmona,
Cavite and transfer the same to another site: and therefore denies plaintiffs application for a writ of preliminary injunction.
On July 29, 1998, KOGIES filed its Reply to Answer and Answer to Counterclaim. 11 KOGIES denied it had altered the quantity and lowered the quality of the
machinery, equipment, and facilities it delivered to the plant. It claimed that it had performed all the undertakings under the contract and had already produced
certified samples of LPG cylinders. It averred that whatever was unfinished was PGSMCs fault since it failed to procure raw materials due to lack of funds.
KOGIES, relying on Chung Fu Industries (Phils.), Inc. v. Court of Appeals,12 insisted that the arbitration clause was without question valid.
After KOGIES filed a Supplemental Memorandum with Motion to Dismiss 13 answering PGSMCs memorandum of July 22, 1998 and seeking dismissal of
PGSMCs counterclaims, KOGIES, on August 4, 1998, filed its Motion for Reconsideration 14 of the July 23, 1998 Order denying its application for an injunctive writ
claiming that the contract was not merely for machinery and facilities worth USD 1,224,000 but was for the sale of an "LPG manufacturing plant" consisting of
"supply of all the machinery and facilities" and "transfer of technology" for a total contract price of USD 1,530,000 such that the dismantling and transfer of the
machinery and facilities would result in the dismantling and transfer of the very plant itself to the great prejudice of KOGIES as the still unpaid owner/seller of the
plant. Moreover, KOGIES points out that the arbitration clause under Art. 15 of the Contract as amended was a valid arbitration stipulation under Art. 2044 of the
Civil Code and as held by this Court in Chung Fu Industries (Phils.), Inc.15
In the meantime, PGSMC filed a Motion for Inspection of Things16 to determine whether there was indeed alteration of the quantity and lowering of quality of the
machineries and equipment, and whether these were properly installed. KOGIES opposed the motion positing that the queries and issues raised in the motion for
inspection fell under the coverage of the arbitration clause in their contract.
On September 21, 1998, the trial court issued an Order (1) granting PGSMCs motion for inspection; (2) denying KOGIES motion for reconsideration of the July
23, 1998 RTC Order; and (3) denying KOGIES motion to dismiss PGSMCs compulsory counterclaims as these counterclaims fell within the requisites of
compulsory counterclaims.
On October 2, 1998, KOGIES filed an Urgent Motion for Reconsideration 17 of the September 21, 1998 RTC Order granting inspection of the plant and denying
dismissal of PGSMCs compulsory counterclaims.
Ten days after, on October 12, 1998, without waiting for the resolution of its October 2, 1998 urgent motion for reconsideration, KOGIES filed before the Court of
Appeals (CA) a petition for certiorari 18 docketed as CA-G.R. SP No. 49249, seeking annulment of the July 23, 1998 and September 21, 1998 RTC Orders and
praying for the issuance of writs of prohibition, mandamus, and preliminary injunction to enjoin the RTC and PGSMC from inspecting, dismantling, and transferring
the machineries and equipment in the Carmona plant, and to direct the RTC to enforce the specific agreement on arbitration to resolve the dispute.
In the meantime, on October 19, 1998, the RTC denied KOGIES urgent motion for reconsideration and directed the Branch Sheriff to proceed with the inspection
of the machineries and equipment in the plant on October 28, 1998.19
Thereafter, KOGIES filed a Supplement to the Petition 20 in CA-G.R. SP No. 49249 informing the CA about the October 19, 1998 RTC Order. It also reiterated its
prayer for the issuance of the writs of prohibition, mandamus and preliminary injunction which was not acted upon by the CA. KOGIES asserted that the Branch
Sheriff did not have the technical expertise to ascertain whether or not the machineries and equipment conformed to the specifications in the contract and were
properly installed.
On November 11, 1998, the Branch Sheriff filed his Sheriffs Report21 finding that the enumerated machineries and equipment were not fully and properly installed.
The Court of Appeals affirmed the trial court and declaredthe arbitration clause against public policy
On May 30, 2000, the CA rendered the assailed Decision 22 affirming the RTC Orders and dismissing the petition for certiorari filed by KOGIES. The CA found that
the RTC did not gravely abuse its discretion in issuing the assailed July 23, 1998 and September 21, 1998 Orders. Moreover, the CA reasoned that KOGIES
contention that the total contract price for USD 1,530,000 was for the whole plant and had not been fully paid was contrary to the finding of the RTC that PGSMC
fully paid the price of USD 1,224,000, which was for all the machineries and equipment. According to the CA, this determination by the RTC was a factual finding
beyond the ambit of a petition for certiorari.
On the issue of the validity of the arbitration clause, the CA agreed with the lower court that an arbitration clause which provided for a final determination of the
legal rights of the parties to the contract by arbitration was against public policy.
On the issue of nonpayment of docket fees and non-attachment of a certificate of non-forum shopping by PGSMC, the CA held that the counterclaims of PGSMC
were compulsory ones and payment of docket fees was not required since the Answer with counterclaim was not an initiatory pleading. For the same reason, the
CA said a certificate of non-forum shopping was also not required.
Furthermore, the CA held that the petition for certiorari had been filed prematurely since KOGIES did not wait for the resolution of its urgent motion for
reconsideration of the September 21, 1998 RTC Order which was the plain, speedy, and adequate remedy available. According to the CA, the RTC must be given
the opportunity to correct any alleged error it has committed, and that since the assailed orders were interlocutory, these cannot be the subject of a petition for

certiorari.
Hence, we have this Petition for Review on Certiorari under Rule 45.
The Issues
Petitioner posits that the appellate court committed the following errors:
a. PRONOUNCING THE QUESTION OF OWNERSHIP OVER THE MACHINERY AND FACILITIES AS "A QUESTION OF FACT" "BEYOND THE AMBIT OF A
PETITION FOR CERTIORARI" INTENDED ONLY FOR CORRECTION OF ERRORS OF JURISDICTION OR GRAVE ABUSE OF DISCRETION AMOUNTING
TO LACK OF (SIC) EXCESS OF JURISDICTION, AND CONCLUDING THAT THE TRIAL COURTS FINDING ON THE SAME QUESTION WAS IMPROPERLY
RAISED IN THE PETITION BELOW;
b. DECLARING AS NULL AND VOID THE ARBITRATION CLAUSE IN ARTICLE 15 OF THE CONTRACT BETWEEN THE PARTIES FOR BEING "CONTRARY
TO PUBLIC POLICY" AND FOR OUSTING THE COURTS OF JURISDICTION;
c. DECREEING PRIVATE RESPONDENTS COUNTERCLAIMS TO BE ALL COMPULSORY NOT NECESSITATING PAYMENT OF DOCKET FEES AND
CERTIFICATION OF NON-FORUM SHOPPING;
d. RULING THAT THE PETITION WAS FILED PREMATURELY WITHOUT WAITING FOR THE RESOLUTION OF THE MOTION FOR RECONSIDERATION OF
THE ORDER DATED SEPTEMBER 21, 1998 OR WITHOUT GIVING THE TRIAL COURT AN OPPORTUNITY TO CORRECT ITSELF;
e. PROCLAIMING THE TWO ORDERS DATED JULY 23 AND SEPTEMBER 21, 1998 NOT TO BE PROPER SUBJECTS OF CERTIORARI AND PROHIBITION
FOR BEING "INTERLOCUTORY IN NATURE;"
f. NOT GRANTING THE RELIEFS AND REMEDIES PRAYED FOR IN HE (SIC) PETITION AND, INSTEAD, DISMISSING THE SAME FOR ALLEGEDLY
"WITHOUT MERIT."23
The Courts Ruling
The petition is partly meritorious.
Before we delve into the substantive issues, we shall first tackle the procedural issues.
The rules on the payment of docket fees for counterclaims and cross claims were amended effective August 16, 2004
KOGIES strongly argues that when PGSMC filed the counterclaims, it should have paid docket fees and filed a certificate of non-forum shopping, and that its
failure to do so was a fatal defect.
We disagree with KOGIES.
As aptly ruled by the CA, the counterclaims of PGSMC were incorporated in its Answer with Compulsory Counterclaim dated July 17, 1998 in accordance with
Section 8 of Rule 11, 1997 Revised Rules of Civil Procedure, the rule that was effective at the time the Answer with Counterclaim was filed. Sec. 8 on existing
counterclaim or cross-claim states, "A compulsory counterclaim or a cross-claim that a defending party has at the time he files his answer shall be contained
therein."
On July 17, 1998, at the time PGSMC filed its Answer incorporating its counterclaims against KOGIES, it was not liable to pay filing fees for said counterclaims
being compulsory in nature. We stress, however, that effective August 16, 2004 under Sec. 7, Rule 141, as amended by A.M. No. 04-2-04-SC, docket fees are
now required to be paid in compulsory counterclaim or cross-claims.
As to the failure to submit a certificate of forum shopping, PGSMCs Answer is not an initiatory pleading which requires a certification against forum shopping
under Sec. 524 of Rule 7, 1997 Revised Rules of Civil Procedure. It is a responsive pleading, hence, the courts a quo did not commit reversible error in denying
KOGIES motion to dismiss PGSMCs compulsory counterclaims.
Interlocutory orders proper subject of certiorari
Citing Gamboa v. Cruz,25 the CA also pronounced that "certiorari and Prohibition are neither the remedies to question the propriety of an interlocutory order of the
trial court."26 The CA erred on its reliance on Gamboa. Gamboa involved the denial of a motion to acquit in a criminal case which was not assailable in an action
for certiorari since the denial of a motion to quash required the accused to plead and to continue with the trial, and whatever objections the accused had in his
motion to quash can then be used as part of his defense and subsequently can be raised as errors on his appeal if the judgment of the trial court is adverse to
him. The general rule is that interlocutory orders cannot be challenged by an appeal.27 Thus, in Yamaoka v. Pescarich Manufacturing Corporation, we held:
The proper remedy in such cases is an ordinary appeal from an adverse judgment on the merits, incorporating in said appeal the grounds for assailing the
interlocutory orders. Allowing appeals from interlocutory orders would result in the sorry spectacle of a case being subject of a counterproductive ping-pong to
and from the appellate court as often as a trial court is perceived to have made an error in any of its interlocutory rulings. However, where the assailed
interlocutory order was issued with grave abuse of discretion or patently erroneous and the remedy of appeal would not afford adequate and expeditious relief, the
Court allows certiorari as a mode of redress.28
Also, appeals from interlocutory orders would open the floodgates to endless occasions for dilatory motions. Thus, where the interlocutory order was issued
without or in excess of jurisdiction or with grave abuse of discretion, the remedy is certiorari.29
The alleged grave abuse of discretion of the respondent court equivalent to lack of jurisdiction in the issuance of the two assailed orders coupled with the fact that
there is no plain, speedy, and adequate remedy in the ordinary course of law amply provides the basis for allowing the resort to a petition for certiorari under Rule
65.
Prematurity of the petition before the CA

Neither do we think that KOGIES was guilty of forum shopping in filing the petition for certiorari. Note that KOGIES motion for reconsideration of the July 23, 1998
RTC Order which denied the issuance of the injunctive writ had already been denied. Thus, KOGIES only remedy was to assail the RTCs interlocutory order via a
petition for certiorari under Rule 65.
While the October 2, 1998 motion for reconsideration of KOGIES of the September 21, 1998 RTC Order relating to the inspection of things, and the allowance of
the compulsory counterclaims has not yet been resolved, the circumstances in this case would allow an exception to the rule that before certiorari may be availed
of, the petitioner must have filed a motion for reconsideration and said motion should have been first resolved by the court a quo. The reason behind the rule is "to
enable the lower court, in the first instance, to pass upon and correct its mistakes without the intervention of the higher court." 30
The September 21, 1998 RTC Order directing the branch sheriff to inspect the plant, equipment, and facilities when he is not competent and knowledgeable on
said matters is evidently flawed and devoid of any legal support. Moreover, there is an urgent necessity to resolve the issue on the dismantling of the facilities and
any further delay would prejudice the interests of KOGIES. Indeed, there is real and imminent threat of irreparable destruction or substantial damage to KOGIES
equipment and machineries. We find the resort to certiorari based on the gravely abusive orders of the trial court sans the ruling on the October 2, 1998 motion for
reconsideration to be proper.
The Core Issue: Article 15 of the Contract
We now go to the core issue of the validity of Art. 15 of the Contract, the arbitration clause. It provides:
Article 15. Arbitration.All disputes, controversies, or differences which may arise between the parties, out of or in relation to or in connection with this Contract or
for the breach thereof, shall finally be settled by arbitration in Seoul, Korea in accordance with the Commercial Arbitration Rules of the Korean Commercial
Arbitration Board. The award rendered by the arbitration(s) shall be final and binding upon both parties concerned. (Emphasis supplied.)
Petitioner claims the RTC and the CA erred in ruling that the arbitration clause is null and void.
Petitioner is correct.
Established in this jurisdiction is the rule that the law of the place where the contract is made governs. Lex loci contractus. The contract in this case was perfected
here in the Philippines. Therefore, our laws ought to govern. Nonetheless, Art. 2044 of the Civil Code sanctions the validity of mutually agreed arbitral clause or
the finality and binding effect of an arbitral award. Art. 2044 provides, "Any stipulation that the arbitrators award or decision shall be final, is valid, without
prejudice to Articles 2038, 2039 and 2040." (Emphasis supplied.)
Arts. 2038,31 2039,32 and 204033 abovecited refer to instances where a compromise or an arbitral award, as applied to Art. 2044 pursuant to Art. 2043, 34 may be
voided, rescinded, or annulled, but these would not denigrate the finality of the arbitral award.
The arbitration clause was mutually and voluntarily agreed upon by the parties. It has not been shown to be contrary to any law, or against morals, good customs,
public order, or public policy. There has been no showing that the parties have not dealt with each other on equal footing. We find no reason why the arbitration
clause should not be respected and complied with by both parties. In Gonzales v. Climax Mining Ltd.,35 we held that submission to arbitration is a contract and that
a clause in a contract providing that all matters in dispute between the parties shall be referred to arbitration is a contract. 36 Again in Del Monte Corporation-USA v.
Court of Appeals, we likewise ruled that "[t]he provision to submit to arbitration any dispute arising therefrom and the relationship of the parties is part of that
contract and is itself a contract."37
Arbitration clause not contrary to public policy
The arbitration clause which stipulates that the arbitration must be done in Seoul, Korea in accordance with the Commercial Arbitration Rules of the KCAB, and
that the arbitral award is final and binding, is not contrary to public policy. This Court has sanctioned the validity of arbitration clauses in a catena of cases. In the
1957 case of Eastboard Navigation Ltd. v. Juan Ysmael and Co., Inc.,38 this Court had occasion to rule that an arbitration clause to resolve differences and
breaches of mutually agreed contractual terms is valid. In BF Corporation v. Court of Appeals, we held that "[i]n this jurisdiction, arbitration has been held valid and
constitutional. Even before the approval on June 19, 1953 of Republic Act No. 876, this Court has countenanced the settlement of disputes through arbitration.
Republic Act No. 876 was adopted to supplement the New Civil Codes provisions on arbitration." 39 And in LM Power Engineering Corporation v. Capitol Industrial
Construction Groups, Inc., we declared that:
Being an inexpensive, speedy and amicable method of settling disputes, arbitrationalong with mediation, conciliation and negotiationis encouraged by the
Supreme Court. Aside from unclogging judicial dockets, arbitration also hastens the resolution of disputes, especially of the commercial kind. It is thus regarded as
the "wave of the future" in international civil and commercial disputes. Brushing aside a contractual agreement calling for arbitration between the parties would be
a step backward.
Consistent with the above-mentioned policy of encouraging alternative dispute resolution methods, courts should liberally construe arbitration clauses. Provided
such clause is susceptible of an interpretation that covers the asserted dispute, an order to arbitrate should be granted. Any doubt should be resolved in favor of
arbitration.40
Having said that the instant arbitration clause is not against public policy, we come to the question on what governs an arbitration clause specifying that in case of
any dispute arising from the contract, an arbitral panel will be constituted in a foreign country and the arbitration rules of the foreign country would govern and its
award shall be final and binding.
RA 9285 incorporated the UNCITRAL Model lawto which we are a signatory
For domestic arbitration proceedings, we have particular agencies to arbitrate disputes arising from contractual relations. In case a foreign arbitral body is chosen
by the parties, the arbitration rules of our domestic arbitration bodies would not be applied. As signatory to the Arbitration Rules of the UNCITRAL Model Law on
International Commercial Arbitration41 of the United Nations Commission on International Trade Law (UNCITRAL) in the New York Convention on June 21, 1985,

the Philippines committed itself to be bound by the Model Law. We have even incorporated the Model Law in Republic Act No. (RA) 9285, otherwise known as the
Alternative Dispute Resolution Act of 2004 entitled An Act to Institutionalize the Use of an Alternative Dispute Resolution System in the Philippines and to
Establish the Office for Alternative Dispute Resolution, and for Other Purposes, promulgated on April 2, 2004. Secs. 19 and 20 of Chapter 4 of the Model Law are
the pertinent provisions:
CHAPTER 4 - INTERNATIONAL COMMERCIAL ARBITRATION
SEC. 19. Adoption of the Model Law on International Commercial Arbitration.International commercial arbitration shall be governed by the Model Law on
International Commercial Arbitration (the "Model Law") adopted by the United Nations Commission on International Trade Law on June 21, 1985 (United Nations
Document A/40/17) and recommended for enactment by the General Assembly in Resolution No. 40/72 approved on December 11, 1985, copy of which is hereto
attached as Appendix "A".
SEC. 20. Interpretation of Model Law.In interpreting the Model Law, regard shall be had to its international origin and to the need for uniformity in its
interpretation and resort may be made to the travaux preparatories and the report of the Secretary General of the United Nations Commission on International
Trade Law dated March 25, 1985 entitled, "International Commercial Arbitration: Analytical Commentary on Draft Trade identified by reference number A/CN.
9/264."
While RA 9285 was passed only in 2004, it nonetheless applies in the instant case since it is a procedural law which has a retroactive effect. Likewise, KOGIES
filed its application for arbitration before the KCAB on July 1, 1998 and it is still pending because no arbitral award has yet been rendered. Thus, RA 9285 is
applicable to the instant case. Well-settled is the rule that procedural laws are construed to be applicable to actions pending and undetermined at the time of their
passage, and are deemed retroactive in that sense and to that extent. As a general rule, the retroactive application of procedural laws does not violate any
personal rights because no vested right has yet attached nor arisen from them.42
Among the pertinent features of RA 9285 applying and incorporating the UNCITRAL Model Law are the following:
(1) The RTC must refer to arbitration in proper cases
Under Sec. 24, the RTC does not have jurisdiction over disputes that are properly the subject of arbitration pursuant to an arbitration clause, and mandates the
referral to arbitration in such cases, thus:
SEC. 24. Referral to Arbitration.A court before which an action is brought in a matter which is the subject matter of an arbitration agreement shall, if at least one
party so requests not later than the pre-trial conference, or upon the request of both parties thereafter, refer the parties to arbitration unless it finds that the
arbitration agreement is null and void, inoperative or incapable of being performed.
(2) Foreign arbitral awards must be confirmed by the RTC
Foreign arbitral awards while mutually stipulated by the parties in the arbitration clause to be final and binding are not immediately enforceable or cannot be
implemented immediately. Sec. 3543 of the UNCITRAL Model Law stipulates the requirement for the arbitral award to be recognized by a competent court for
enforcement, which court under Sec. 36 of the UNCITRAL Model Law may refuse recognition or enforcement on the grounds provided for. RA 9285 incorporated
these provisos to Secs. 42, 43, and 44 relative to Secs. 47 and 48, thus:
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.
The applicant shall establish that the country in which foreign arbitration award was made in party to the New York Convention. x x x x
SEC. 43. Recognition and Enforcement of Foreign Arbitral Awards Not Covered by the New York Convention.The recognition and enforcement of foreign
arbitral awards not covered by the New York Convention shall be done in accordance with procedural rules to be promulgated by the Supreme Court. The Court
may, on grounds of comity and reciprocity, recognize and enforce a non-convention award as a convention award.
SEC. 44. Foreign Arbitral Award Not Foreign Judgment.A foreign arbitral award when confirmed by a court of a foreign country, shall be recognized and
enforced as a foreign arbitral award and not as a judgment of a foreign court.
A foreign arbitral award, when confirmed by the Regional Trial Court, shall be enforced in the same manner as final and executory decisions of courts of law of the
Philippines x x x x
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.
The applicant shall establish that the country in which foreign arbitration award was made is party to the New York Convention.
If the application for rejection or suspension of enforcement of an award has been made, the Regional Trial Court may, if it considers it proper, vacate its decision
and may also, on the application of the party claiming recognition or enforcement of the award, order the party to provide appropriate security. x x x x
SEC. 45. Rejection of a Foreign Arbitral Award.A party to a foreign arbitration proceeding may oppose an application for recognition and enforcement of the
arbitral award in accordance with the procedures and rules to be promulgated by the Supreme Court only on those grounds enumerated under Article V of the
New York Convention. Any other ground raised shall be disregarded by the Regional Trial Court.
Thus, while the RTC does not have jurisdiction over disputes governed by arbitration mutually agreed upon by the parties, still the foreign arbitral award is subject
to judicial review by the RTC which can set aside, reject, or vacate it. In this sense, what this Court held in Chung Fu Industries (Phils.), Inc. relied upon by
KOGIES is applicable insofar as the foreign arbitral awards, while final and binding, do not oust courts of jurisdiction since these arbitral awards are not absolute
and without exceptions as they are still judicially reviewable. Chapter 7 of RA 9285 has made it clear that all arbitral awards, whether domestic or foreign, are
subject to judicial review on specific grounds provided for.
(4) Grounds for judicial review different in domestic and foreign arbitral awards
The differences between a final arbitral award from an international or foreign arbitral tribunal and an award given by a local arbitral tribunal are the specific
grounds or conditions that vest jurisdiction over our courts to review the awards.
For foreign or international arbitral awards which must first be confirmed by the RTC, the grounds for setting aside, rejecting or vacating the award by the RTC are
provided under Art. 34(2) of the UNCITRAL Model Law.
For final domestic arbitral awards, which also need confirmation by the RTC pursuant to Sec. 23 of RA 876 44 and shall be recognized as final and executory
decisions of the RTC,45 they may only be assailed before the RTC and vacated on the grounds provided under Sec. 25 of RA 876.46
(5) RTC decision of assailed foreign arbitral award appealable
Sec. 46 of RA 9285 provides for an appeal before the CA as the remedy of an aggrieved party in cases where the RTC sets aside, rejects, vacates, modifies, or
corrects an arbitral award, thus:
SEC. 46. Appeal from Court Decision or Arbitral Awards.A decision of the Regional Trial Court confirming, vacating, setting aside, modifying or correcting an
arbitral award may be appealed to the Court of Appeals in accordance with the rules and procedure to be promulgated by the Supreme Court.
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.
PGSMC has remedies to protect its interests
Thus, based on the foregoing features of RA 9285, PGSMC must submit to the foreign arbitration as it bound itself through the subject contract. While it may have
misgivings on the foreign arbitration done in Korea by the KCAB, it has available remedies under RA 9285. Its interests are duly protected by the law which
requires that the arbitral award that may be rendered by KCAB must be confirmed here by the RTC before it can be enforced.

With our disquisition above, petitioner is correct in its contention that an arbitration clause, stipulating that the arbitral award is final and binding, does not oust our
courts of jurisdiction as the international arbitral award, the award of which is not absolute and without exceptions, is still judicially reviewable under certain
conditions provided for by the UNCITRAL Model Law on ICA as applied and incorporated in RA 9285.
Finally, it must be noted that there is nothing in the subject Contract which provides that the parties may dispense with the arbitration clause.
Unilateral rescission improper and illegal
Having ruled that the arbitration clause of the subject contract is valid and binding on the parties, and not contrary to public policy; consequently, being bound to
the contract of arbitration, a party may not unilaterally rescind or terminate the contract for whatever cause without first resorting to arbitration.
What this Court held in University of the Philippines v. De Los Angeles47 and reiterated in succeeding cases,48 that the act of treating a contract as rescinded on
account of infractions by the other contracting party is valid albeit provisional as it can be judicially assailed, is not applicable to the instant case on account of a
valid stipulation on arbitration. Where an arbitration clause in a contract is availing, neither of the parties can unilaterally treat the contract as rescinded since
whatever infractions or breaches by a party or differences arising from the contract must be brought first and resolved by arbitration, and not through an
extrajudicial rescission or judicial action.
The issues arising from the contract between PGSMC and KOGIES on whether the equipment and machineries delivered and installed were properly installed
and operational in the plant in Carmona, Cavite; the ownership of equipment and payment of the contract price; and whether there was substantial compliance by
KOGIES in the production of the samples, given the alleged fact that PGSMC could not supply the raw materials required to produce the sample LPG cylinders,
are matters proper for arbitration. Indeed, we note that on July 1, 1998, KOGIES instituted an Application for Arbitration before the KCAB in Seoul, Korea pursuant
to Art. 15 of the Contract as amended. Thus, it is incumbent upon PGSMC to abide by its commitment to arbitrate.
Corollarily, the trial court gravely abused its discretion in granting PGSMCs Motion for Inspection of Things on September 21, 1998, as the subject matter of the
motion is under the primary jurisdiction of the mutually agreed arbitral body, the KCAB in Korea.
In addition, whatever findings and conclusions made by the RTC Branch Sheriff from the inspection made on October 28, 1998, as ordered by the trial court on
October 19, 1998, is of no worth as said Sheriff is not technically competent to ascertain the actual status of the equipment and machineries as installed in the
plant.
For these reasons, the September 21, 1998 and October 19, 1998 RTC Orders pertaining to the grant of the inspection of the equipment and machineries have to
be recalled and nullified.
Issue on ownership of plant proper for arbitration
Petitioner assails the CA ruling that the issue petitioner raised on whether the total contract price of USD 1,530,000 was for the whole plant and its installation is
beyond the ambit of a Petition for Certiorari.
Petitioners position is untenable.
It is settled that questions of fact cannot be raised in an original action for certiorari. 49 Whether or not there was full payment for the machineries and equipment
and installation is indeed a factual issue prohibited by Rule 65.
However, what appears to constitute a grave abuse of discretion is the order of the RTC in resolving the issue on the ownership of the plant when it is the arbitral
body (KCAB) and not the RTC which has jurisdiction and authority over the said issue. The RTCs determination of such factual issue constitutes grave abuse of
discretion and must be reversed and set aside.
RTC has interim jurisdiction to protect the rights of the parties
Anent the July 23, 1998 Order denying the issuance of the injunctive writ paving the way for PGSMC to dismantle and transfer the equipment and machineries,
we find it to be in order considering the factual milieu of the instant case.
Firstly, while the issue of the proper installation of the equipment and machineries might well be under the primary jurisdiction of the arbitral body to decide, yet the
RTC under Sec. 28 of RA 9285 has jurisdiction to hear and grant interim measures to protect vested rights of the parties. Sec. 28 pertinently provides:
SEC. 28. Grant of interim Measure of Protection.(a) It is not incompatible with an arbitration agreement for a party to request, before constitution of the
tribunal, from a Court to grant such measure. After constitution of the arbitral tribunal and during arbitral proceedings, a request for an interim measure of
protection, or modification thereof, may be made with the arbitral or to the extent that the arbitral tribunal has no power to act or is unable to act effectivity,
the request may be made with the Court. The arbitral tribunal is deemed constituted when the sole arbitrator or the third arbitrator, who has been nominated,
has accepted the nomination and written communication of said nomination and acceptance has been received by the party making the request.
(b) The following rules on interim or provisional relief shall be observed:
Any party may request that provisional relief be granted against the adverse party.
Such relief may be granted:
(i) to prevent irreparable loss or injury;

(ii) to provide security for the performance of any obligation;

(iii) to produce or preserve any evidence; or
(iv) to compel any other appropriate act or omission.
(c) The order granting provisional relief may be conditioned upon the provision of security or any act or omission specified in the order.
(d) Interim or provisional relief is requested by written application transmitted by reasonable means to the Court or arbitral tribunal as the case may be and the
party against whom the relief is sought, describing in appropriate detail the precise relief, the party against whom the relief is requested, the grounds for the relief,
and the evidence supporting the request.
(e) The order shall be binding upon the parties.
(f) Either party may apply with the Court for assistance in implementing or enforcing an interim measure ordered by an arbitral tribunal.
(g) A party who does not comply with the order shall be liable for all damages resulting from noncompliance, including all expenses, and reasonable attorney's
fees, paid in obtaining the orders judicial enforcement. (Emphasis ours.)
Art. 17(2) of the UNCITRAL Model Law on ICA defines an "interim measure" of protection as:
Article 17. Power of arbitral tribunal to order interim measures
xxx xxx xxx
(2) An interim measure is any temporary measure, whether in the form of an award or in another form, by which, at any time prior to the issuance of the award by
which the dispute is finally decided, the arbitral tribunal orders a party to:
(a) Maintain or restore the status quo pending determination of the dispute;
(b) Take action that would prevent, or refrain from taking action that is likely to cause, current or imminent harm or prejudice to the arbitral process itself;
(c) Provide a means of preserving assets out of which a subsequent award may be satisfied; or
(d) Preserve evidence that may be relevant and material to the resolution of the dispute.

Art. 17 J of UNCITRAL Model Law on ICA also grants courts power and jurisdiction to issue interim measures:
Article 17 J. Court-ordered interim measures
A court shall have the same power of issuing an interim measure in relation to arbitration proceedings, irrespective of whether their place is in the territory of this
State, as it has in relation to proceedings in courts. The court shall exercise such power in accordance with its own procedures in consideration of the specific
features of international arbitration.
In the recent 2006 case of Transfield Philippines, Inc. v. Luzon Hydro Corporation, we were explicit that even "the pendency of an arbitral proceeding does not
foreclose resort to the courts for provisional reliefs." We explicated this way:
As a fundamental point, the pendency of arbitral proceedings does not foreclose resort to the courts for provisional reliefs. The Rules of the ICC, which governs
the parties arbitral dispute, allows the application of a party to a judicial authority for interim or conservatory measures. Likewise, Section 14 of Republic Act (R.A.)
No. 876 (The Arbitration Law) recognizes the rights of any party to petition the court to take measures to safeguard and/or conserve any matter which is the
subject of the dispute in arbitration. In addition, R.A. 9285, otherwise known as the "Alternative Dispute Resolution Act of 2004," allows the filing of provisional or
interim measures with the regular courts whenever the arbitral tribunal has no power to act or to act effectively.50
It is thus beyond cavil that the RTC has authority and jurisdiction to grant interim measures of protection.
Secondly, considering that the equipment and machineries are in the possession of PGSMC, it has the right to protect and preserve the equipment and
machineries in the best way it can. Considering that the LPG plant was non-operational, PGSMC has the right to dismantle and transfer the equipment and
machineries either for their protection and preservation or for the better way to make good use of them which is ineluctably within the management discretion of
PGSMC.
Thirdly, and of greater import is the reason that maintaining the equipment and machineries in Worths property is not to the best interest of PGSMC due to the
prohibitive rent while the LPG plant as set-up is not operational. PGSMC was losing PhP322,560 as monthly rentals or PhP3.87M for 1998 alone without
considering the 10% annual rent increment in maintaining the plant.
Fourthly, and corollarily, while the KCAB can rule on motions or petitions relating to the preservation or transfer of the equipment and machineries as an interim
measure, yet on hindsight, the July 23, 1998 Order of the RTC allowing the transfer of the equipment and machineries given the non-recognition by the lower
courts of the arbitral clause, has accorded an interim measure of protection to PGSMC which would otherwise been irreparably damaged.
Fifth, KOGIES is not unjustly prejudiced as it has already been paid a substantial amount based on the contract. Moreover, KOGIES is amply protected by the
arbitral action it has instituted before the KCAB, the award of which can be enforced in our jurisdiction through the RTC. Besides, by our decision, PGSMC is
compelled to submit to arbitration pursuant to the valid arbitration clause of its contract with KOGIES.

PGSMC to preserve the subject equipment and machineries

Finally, while PGSMC may have been granted the right to dismantle and transfer the subject equipment and machineries, it does not have the right to convey or
dispose of the same considering the pending arbitral proceedings to settle the differences of the parties. PGSMC therefore must preserve and maintain the
subject equipment and machineries with the diligence of a good father of a family 51 until final resolution of the arbitral proceedings and enforcement of the award,
if any.
WHEREFORE, this petition is PARTLY GRANTED, in that:
(1) The May 30, 2000 CA Decision in CA-G.R. SP No. 49249 is REVERSED and SET ASIDE;
(2) The September 21, 1998 and October 19, 1998 RTC Orders in Civil Case No. 98-117 are REVERSED and SET ASIDE;
(3) The parties are hereby ORDERED to submit themselves to the arbitration of their dispute and differences arising from the subject Contract before the KCAB;
and
(4) PGSMC is hereby ALLOWED to dismantle and transfer the equipment and machineries, if it had not done so, and ORDERED to preserve and maintain them
until the finality of whatever arbitral award is given in the arbitration proceedings.
No pronouncement as to costs. SO ORDERED.

G.R. No. 169332

February 11, 2008

ABS-CBN BROADCASTING CORPORATION, petitioner, vs.WORLD INTERACTIVE NETWORK SYSTEMS (WINS) JAPAN CO., LTD., respondent.
DECISION
CORONA, J.:
This petition for review on certiorari under Rule 45 of the Rules of Court seeks to set aside the February 16, 2005 decision 1 and August 16, 2005 resolution 2 of the
Court of Appeals (CA) in CA-G.R. SP No. 81940.
On September 27, 1999, petitioner ABS-CBN Broadcasting Corporation entered into a licensing agreement with respondent World Interactive Network Systems
(WINS) Japan Co., Ltd., a foreign corporation licensed under the laws of Japan. Under the agreement, respondent was granted the exclusive license to distribute
and sublicense the distribution of the television service known as "The Filipino Channel" (TFC) in Japan. By virtue thereof, petitioner undertook to transmit the
TFC programming signals to respondent which the latter received through its decoders and distributed to its subscribers.
A dispute arose between the parties when petitioner accused respondent of inserting nine episodes of WINS WEEKLY, a weekly 35-minute community news
program for Filipinos in Japan, into the TFC programming from March to May 2002. 3 Petitioner claimed that these were "unauthorized insertions" constituting a
material breach of their agreement. Consequently, on May 9, 2002,4 petitioner notified respondent of its intention to terminate the agreement effective June 10,
2002.
Thereafter, respondent filed an arbitration suit pursuant to the arbitration clause of its agreement with petitioner. 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. Respondent also prayed for damages for petitioner's alleged grant of an exclusive distribution license to another entity, NHK
(Japan Broadcasting Corporation).5
The parties appointed Professor Alfredo F. Tadiar to act as sole arbitrator. They stipulated on the following issues in their terms of reference (TOR) 6:
1. Was the broadcast of WINS WEEKLY by the claimant duly authorized by the respondent [herein petitioner]?
2. Did such broadcast constitute a material breach of the agreement that is a ground for termination of the agreement in accordance with Section 13 (a)
thereof?
3. If so, was the breach seasonably cured under the same contractual provision of Section 13 (a)?
4. Which party is entitled to the payment of damages they claim and to the other reliefs prayed for?
xxx
xxx
xxx
The arbitrator found in favor of respondent. 7 He held that petitioner gave its approval to respondent for the airing of WINS WEEKLY as shown by a series of
written exchanges between the parties. He also ruled that, had there really been a material breach of the agreement, petitioner should have terminated the same
instead of sending a mere notice to terminate said agreement. The arbitrator found that petitioner threatened to terminate the agreement due to its desire to
compel respondent to re-negotiate the terms thereof for higher fees. He further stated that even if respondent committed a breach of the agreement, the same
was seasonably cured. He then allowed respondent to recover temperate damages, attorney's fees and one-half of the amount it paid as arbitrator's fee.
Petitioner 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. It was docketed as CA-G.R. SP No. 81940. It alleged serious errors of fact and
law and/or grave abuse of discretion amounting to lack or excess of jurisdiction on the part of the arbitrator.
Respondent, on the other hand, filed a petition for confirmation of arbitral award before the Regional Trial Court (RTC) of Quezon City, Branch 93, docketed as
Civil Case No. Q-04-51822.
Consequently, petitioner filed a supplemental petition in the CA seeking to enjoin the RTC of Quezon City from further proceeding with the hearing of respondent's
petition for confirmation of arbitral award. After the petition was admitted by the appellate court, the RTC of Quezon City issued an order holding in abeyance any

further action on respondent's petition as the assailed decision of the arbitrator had already become the subject of an appeal in the CA. Respondent filed a motion
for reconsideration but no resolution has been issued by the lower court to date. 8
On February 16, 2005, the CA rendered the assailed decision dismissing ABS-CBNs petition for lack of jurisdiction. It stated that as the 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. The dispositive portion of the CA decision read:
WHEREFORE, the instant petition is hereby DISMISSED for lack of jurisdiction. The application for a writ of injunction and temporary restraining order is likewise
DENIED. The Regional Trial Court of Quezon City Branch 93 is directed to proceed with the trial for the Petition for Confirmation of Arbitral Award.
SO ORDERED.
Petitioner moved for reconsideration. The same was denied. Hence, this petition.
Petitioner contends that the CA, in effect, ruled that: (a) it should have first filed a petition to vacate the award in the RTC and only in case of denial could it elevate
the matter to the CA via a petition for review under Rule 43 and (b) the assailed decision implied that an aggrieved party to an arbitral award does not have the
option of directly filing a petition for review under Rule 43 or a petition for certiorari under Rule 65 with the CA even if the issues raised pertain to errors of fact and
law or grave abuse of discretion, as the case may be, and not dependent upon such grounds as enumerated under Section 24 (petition to vacate an arbitral
award) of RA 876 (the Arbitration Law). Petitioner alleged serious error on the part of the CA.
The issue before us is whether or not an aggrieved 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.
RA 876 itself mandates that it is the Court of First Instance, now the RTC, which has jurisdiction over questions relating to arbitration, 9 such as a petition to vacate
an arbitral award.
Section 24 of RA 876 provides for the specific grounds for a petition to vacate an award made by an arbitrator:
Sec. 24. Grounds for vacating award. - In any one of the following cases, the court must make an order vacating the award upon the petition of any party to
the controversy when such party proves affirmatively that in the arbitration proceedings:
(a) The award was procured by corruption, fraud, or other undue means; or
(b) That there was evident partiality or corruption in the arbitrators or any of them; or
(c) That the arbitrators were guilty of misconduct in refusing to postpone the hearing upon sufficient cause shown, or in refusing to hear evidence
pertinent and material to the controversy; that one or more of the arbitrators was disqualified to act as such under section nine hereof, and willfully
refrained from disclosing such disqualifications or of any other misbehavior by which the rights of any party have been materially prejudiced; or
(d) That the arbitrators exceeded their powers, or so imperfectly executed them, that a mutual, final and definite award upon the subject matter
submitted to them was not made.
Based on the foregoing provisions, the law itself clearly provides that the RTC must issue an order vacating an arbitral award only "in any one of the . . . cases"
enumerated therein. Under the legal maxim in statutory construction expressio unius est exclusio alterius, the explicit mention of one thing in a statute means the
elimination of others not specifically mentioned. As RA 876 did not expressly provide for errors of fact and/or law and grave abuse of discretion (proper grounds for
a petition for review under Rule 43 and a petition for certiorari under Rule 65, respectively) as grounds for maintaining a petition to vacate an arbitral award in the
RTC, it necessarily follows that a party may not avail of the latter remedy on the grounds of errors of fact and/or law or grave abuse of discretion to overturn an
arbitral award.
Adamson v. Court of Appeals10 gave ample warning that a petition to vacate filed in the RTC which is not based on the grounds enumerated in Section 24 of RA
876 should be dismissed. In that case, the trial court vacated the arbitral award seemingly based on grounds included in Section 24 of RA 876 but a closer reading
thereof revealed otherwise. On appeal, the CA reversed the decision of the trial court and affirmed the arbitral award. In affirming the CA, we held:
The Court of Appeals, in reversing the trial court's decision held that the nullification of the decision of the Arbitration Committee was not based on the grounds
provided by the Arbitration Law and that xxx private respondents (petitioners herein) have failed to substantiate with any evidence their claim of partiality.
Significantly, even as respondent judge ruled against the arbitrator's award, he could not find fault with their impartiality and integrity. Evidently, the nullification
of the award rendered at the case at bar was not made on the basis of any of the grounds provided by law.
xxx

xxx

xxx

It is clear, therefore, that the award was vacated not because of evident partiality of the arbitrators but because the latter interpreted the contract in a way
which was not favorable to herein petitioners and because it considered that herein private respondents, by submitting the controversy to arbitration, was seeking
to renege on its obligations under the contract.
xxx

xxx

xxx

It is clear then that the Court of Appeals reversed the trial court not because the latter reviewed the arbitration award involved herein, but because the
respondent appellate court found that the trial court had no legal basis for vacating the award. (Emphasis supplied).
In cases not falling under any of the aforementioned grounds to vacate an award, the Court has already made several pronouncements that a petition for review
under Rule 43 or a petition for certiorari under Rule 65 may be availed of in the CA. Which one would depend on the grounds relied upon by petitioner.
In Luzon Development Bank v. Association of Luzon Development Bank Employees,11 the Court held that a voluntary arbitrator is properly classified as a "quasijudicial instrumentality" and is, thus, within the ambit of Section 9 (3) of the Judiciary Reorganization Act, as amended. Under this section, the Court of Appeals
shall exercise:
xxx

xxx

xxx

(3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders or awards of Regional Trial Courts and quasi-judicial agencies,
instrumentalities, boards or commissions, including the Securities and Exchange Commission, the Employees Compensation Commission and the Civil Service
Commission, except those falling within the appellate jurisdiction of the Supreme Court in accordance with the Constitution, the Labor Code of the Philippines
under Presidential Decree No. 442, as amended, the provisions of this Act and of subparagraph (1) of the third paragraph and subparagraph (4) of the fourth
paragraph of Section 17 of the Judiciary Act of 1948. (Emphasis supplied)
As such, decisions handed down by voluntary arbitrators fall within the exclusive appellate jurisdiction of the CA. This decision was taken into consideration in
approving Section 1 of Rule 43 of the Rules of Court.12 Thus:
SECTION 1. Scope. - This Rule shall apply to appeals from judgments or final orders of the Court of Tax Appeals and from awards, judgments, final orders or
resolutions of or authorized by any quasi-judicial agency in the exercise of its quasi-judicial functions. Among these agencies are the Civil Service Commission,
Central Board of Assessment Appeals, Securities and Exchange Commission, Office of the President, Land Registration Authority, Social Security Commission,
Civil Aeronautics Board, Bureau of Patents, Trademarks and Technology Transfer, National Electrification Administration, Energy Regulatory Board, National
Telecommunications Commission, Department of Agrarian Reform under Republic Act Number 6657, Government Service Insurance System, Employees
Compensation Commission, Agricultural Inventions Board, Insurance Commission, Philippine Atomic Energy Commission, Board of Investments, Construction
Industry Arbitration Commission, and voluntary arbitrators authorized by law. (Emphasis supplied)
This rule was cited in Sevilla Trading Company v. Semana,13 Manila Midtown Hotel v. Borromeo,14 and Nippon Paint Employees Union-Olalia v. Court of Appeals. 15
These cases held that the proper remedy from the adverse decision of a voluntary arbitrator, if errors of fact and/or law are raised, is a petition for review under
Rule 43 of the Rules of Court. Thus, petitioner's contention that it may avail of a petition for review under Rule 43 under the circumstances of this case is correct.
As to petitioner's arguments that a petition for certiorari under Rule 65 may also be resorted to, we hold the same to be in accordance with the Constitution and
jurisprudence.
Section 1 of Article VIII of the 1987 Constitution provides that:
SECTION 1. The judicial power shall be vested in one Supreme Court and in such lower courts as may be established by law.
Judicial power includes the duty of the courts of justice to settle actual controversies involving rights which are legally demandable and enforceable, and to
determine whether or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or
instrumentality of the Government. (Emphasis supplied)
As may be gleaned from the above stated provision, it is well within the power and jurisdiction of the Court to inquire whether any instrumentality of the
Government, such as a voluntary arbitrator, has gravely abused its discretion in the exercise of its functions and prerogatives. Any agreement stipulating that "the
decision of the arbitrator shall be final and unappealable" and "that no further judicial recourse if either party disagrees with the whole or any part of the arbitrator's
award may be availed of" cannot be held to preclude in proper cases the power of judicial review which is inherent in courts. 16 We will not hesitate to review a
voluntary arbitrator's award where there is a showing of grave abuse of authority or discretion and such is properly raised in a petition for certiorari 17 and there is
no appeal, nor any plain, speedy remedy in the course of law.18
Significantly, Insular Savings Bank v. Far East Bank and Trust Company 19 definitively outlined several judicial remedies an aggrieved party to an arbitral award
may undertake:
(1) a petition in the proper RTC to issue an order to vacate the award on the grounds provided for in Section 24 of RA 876;
(2) a petition for review in the CA under Rule 43 of the Rules of Court on questions of fact, of law, or mixed questions of fact and law; and
(3) a petition for certiorari under Rule 65 of the Rules of Court should the arbitrator have acted without or in excess of his jurisdiction or with grave abuse of
discretion amounting to lack or excess of jurisdiction.
Nevertheless, although petitioners position on the judicial remedies available to it was correct, we sustain the dismissal of its petition by the CA. The remedy
petitioner availed of, entitled "alternative petition for review under Rule 43 or petition for certiorari under Rule 65," was wrong.
Time and again, we have ruled that the remedies of appeal and certiorari are mutually exclusive and not alternative or successive. 20
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. 21 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. 22 Moreover, it
cannot be availed of where appeal is the proper remedy or as a substitute for a lapsed appeal.23
In the case at bar, the questions raised by petitioner in its alternative petition before the CA were the following:

A. THE SOLE ARBITRATOR COMMITTED SERIOUS ERROR AND/OR GRAVELY ABUSED HIS DISCRETION IN RULING THAT THE BROADCAST OF "WINS
WEEKLY" WAS DULY AUTHORIZED BY ABS-CBN.
B. THE SOLE ARBITRATOR COMMITTED SERIOUS ERROR AND/OR GRAVELY ABUSED HIS DISCRETION IN RULING THAT THE UNAUTHORIZED
BROADCAST DID NOT CONSTITUTE MATERIAL BREACH OF THE AGREEMENT.
C. THE SOLE ARBITRATOR COMMITTED SERIOUS ERROR AND/OR GRAVELY ABUSED HIS DISCRETION IN RULING THAT WINS SEASONABLY CURED
THE BREACH.
D. THE SOLE ARBITRATOR COMMITTED SERIOUS ERROR AND/OR GRAVELY ABUSED HIS DISCRETION IN RULING THAT TEMPERATE DAMAGES IN
THE AMOUNT OF P1,166,955.00 MAY BE AWARDED TO WINS.
E. THE SOLE ARBITRATOR COMMITTED SERIOUS ERROR AND/OR GRAVELY ABUSED HIS DISCRETION IN AWARDING ATTORNEY'S FEES IN THE
UNREASONABLE AMOUNT AND UNCONSCIONABLE AMOUNT OF P850,000.00.
F. THE ERROR COMMITTED BY THE SOLE ARBITRATOR IS NOT A SIMPLE ERROR OF JUDGMENT OR ABUSE OF DISCRETION. IT IS GRAVE ABUSE OF
DISCRETION TANTAMOUNT TO LACK OR EXCESS OF JURISDICTION.

A careful reading of 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).
It must be emphasized that every lawyer should be familiar with the distinctions between the two remedies for it is not the duty of the courts to determine under
which rule the petition should fall. 24 Petitioner's ploy was fatal to its cause. An appeal taken either to this Court or the CA by the wrong or inappropriate mode shall
be dismissed.25 Thus, the alternative petition filed in the CA, being an inappropriate mode of appeal, should have been dismissed outright by the CA.
WHEREFORE, the petition is hereby DENIED. The February 16, 2005 decision and August 16, 2005 resolution of the Court of Appeals in CA-G.R. SP No. 81940
directing the Regional Trial Court of Quezon City, Branch 93 to proceed with the trial of the petition for confirmation of arbitral award is AFFIRMED.
Costs against petitioner. SO ORDERED.

G.R. No. 106879 May 27, 1994

DR. LUCAS G. ADAMSON and ADAMSON MANAGEMENT CORPORATION, petitioners, vs.HON. COURT OF APPEALS and APAC HOLDINGS LIMITED,
respondents.
ROMERO, J.:
Before us is a petition for review on certiorari of a decision of the Court of Appeals, the dispositive portion of which is quoted hereunder:
WHEREFORE, judgment is hereby rendered setting aside respondent judge's questioned order dated 23 August 1991 and confirming the subject arbitration
award. Costs against private respondents.
SO ORDERED.
The antecedents of this case are as follows:
On June 15, 1990, the parties, Adamson Management Corporation and Lucas Adamson on the one hand, and APAC Holdings Limited on the other, entered into a
contract whereby the former sold 99.97% of outstanding common shares of stocks of Adamson and Adamson, Inc. to the latter for P24,384,600.00 plus the Net
Asset Value (NAV) of Adamson and Adamson, Inc. as of June 19, 1990. But the parties failed to agree on a reasonable Net Asset Value. This prompted them to
submit the case for arbitration in accordance with Republic Act No. 876, otherwise known as the Arbitration Law.
On May 15, 1991, the Arbitration Committee rendered a decision finding the Net Asset Value of the Company to be P167,118.00 which was computed on the basis
of a pro-forma balance sheet submitted by SGV and which was the difference between the total assets of the Company amounting to P65,554,258.00 (the sum of
the balance sheet asset amounting to P65,413,978.00 and the increase in Cuevo appraisal amounting to P140,280.00) and total liabilities amounting to
P65,387,140.00 (the difference between current liabilities and long term debt amounting to P68,356,132.00 and Tax Savings for 1987 amounting to P2,968,992).
In so holding that NAV equals P167,118.00, the Arbitration Committee disregarded petitioners' argument that there was a fixed NAV amounting to P5,146,000.00
as of February 28, 1990 to which should be added the value of intangible assets (P19,116,000.00), the increment of tangible assets excluding land
(P17,003,976.00), the 1987 tax savings (P2,968,992.00), and estimated net income from February 28, 1990 to June 19, 1990 (P1,500,000.00, later increased to
P3,949,772.00). According to the Committee, however, the amount of P5,146,000.00 which was claimed as initial NAV by petitioners, was merely an estimate of
the Company's NAV as of February 28, 1990 which was still subject to financial developments until June 19, 1990, the cut-off date. The basis for this ruling was
Clause 3(B) of the Agreement which fixed the said amount; Clause 1(A) which defined NAV and provided that it should be computed in accordance with Clause
7(A); Clause 7(A) which directed the auditors to prepare in accordance with good accounting principles a balance sheet as of cut-off date which would include the
goodwill and intangible assets (P19,116,000.00), the value of tangible assets excluding the land as per Cuervo appraisal, the adjustment agreed upon by the
parties, and the cost of redeeming preferred shares; and Clause 5(E). Furthermore, the Committee held that the parties used the figures in the pro-forma balance
sheet to arrive at the said amount of P5,146,000.00; that the same had already included the value of the intangible assets and of the Cuervo appraisal of the
tangible assets so that the latter items could not be added again to what Vendor claimed to be the initial NAV; and that apart from being an estimate, the amount
of P5,146,000.00 was tentative as it was still subject to the adjustments to be made thereto to reflect subsequent financial events up to the cut-off date.
In the computation of the NAV, the Committee deemed it proper to appreciate in favor of petitioners the 1987 tax savings because as of the date of the

proceedings, no assessment was ever made by the BIR and the three-year prescriptive period had already expired. However, it did not consider the estimated net
income for the period beginning February 28, 1990 to June 19, 1990 as part of the NAV because it found that as of June 1990, the books of the company carried a
net loss of P4,678,627.00 which increased to P8,547,868.00 after the proposed adjustments were included in the computation of the NAV. The Committee pointed
out that although petitioners herein contested the adjustments, they were, however, not able to prove that these were not valid, except with respect to the tax
savings.
Aside from deciding the amount of NAV, the Committee also held that any ambiguity in the contract should not necessarily be interpreted against herein private
respondents because the parties themselves had stipulated that the draft of the agreement was submitted to petitioners for approval and that the latter even
proposed changes which were eventually incorporated in the final form of the Agreement.
Thereafter, APAC Holdings Ltd. filed a petition for confirmation of the arbitration award before the Regional Trial Court of Makati. Herein petitioners opposed the
petition and prayed for the nullification, modification and/or correction of the same, alleging that the arbitrators committed evident partiality and grave abuse of
discretion as shown by the following errors:
a. In creating an entirely new contract for the parties that contradicts the essence of their agreement and results in the absurd situation where a seller incurs
enormous expense to sell his property;
b. In treating the provisions in the Agreement independently of one another and thereby nullifying the simple, clear and express stipulations therein;
c. In interpreting the Agreement although it is couched in plain, simple and clear language, contrary to the well established principle that if the terms of a contract
are clear, the literal meaning of its stipulations shall control;
d. In accepting SGV's proposed adjustments, contrary to the parties' stipulation that the final adjustment items shall pertain to a specific period and subject to their
agreement; and in giving full reliance on SGV report despite SGV's disclosure of its lack of independence because it acted solely to assist petitioner and its report
was intended solely for petitioner's information;
e. In not applying the "suppressed evidence" rule against petitioner inspite of its refusal to present the Company's income statement or any other similar report for
the adjustment period; and in disregarding respondent's estimate of the net income for the period as "Adjustment" using SGV's figures and ratios;
f. In not awarding damages and attorney's fee to respondents despite petitioner's bad faith in violating the contract.

The Regional Trial Court rendered a decision vacating the arbitration award. The dispositive portion of the decision reads as follows:
WHEREFORE, the Decision/Arbitration Award in question is hereby VACATED, and APAC (herein petitioner) is hereby ordered to pay ADAMSON (herein
respondents) the final NAV of Forty-seven Million One Hundred Twenty-One Thousand Four Hundred Sixty-Eight Pesos (P47,121,468.00), Philippine Currency, in
accordance with the pertinent stipulations expressed in the Agreement as discussed above, plus twelve (12) percent interest on the above amount which
ADAMSON should have earned had the balance of the final NAV been paid to the Escrow Agent after offset on August 2, 1990.
ADAMSON's claim for moral and exemplary damages and attorney's fees are (sic) dismissed for lack of sufficient merit.
SO ORDERED. 2
On appeal, the above decision was reversed and a petition for review was filed in this Court. Petitioners allege that the Court of Appeals erred and acted in excess
of jurisdiction or with grave abuse of discretion in holding that: (a) the trial judge reversed the arbitration award solely on the basis of the pleadings submitted by
the parties; (b) petitioners failed to substantiate with proofs their imputation of partiality to the members of the arbitration committee; (c) the nullification by the trial
court of the award was not based on any of the grounds provided by law; (d) to allow the trial judge to substitute his own findings in lieu of the arbitrators' would
defeat the object of arbitration which is to avoid litigation; and (e) if there really was a ground for vacating the award, it was improper for trial judge to reverse the
decision because it contravened Section 25 of R.A. No. 876.
Did the Court of Appeals err in affirming the arbitration award and in reversing the decision of the trial court?
The Court of Appeals, in reversing the trial court's decision held that the nullification of the decision of the Arbitration Committee was not based on the grounds
provided by the Arbitration Law and that ". . . private respondents [petitioners herein] have failed to substantiate with any evidence their claim of partiality.
Significantly, even as respondent judge ruled against the arbitrators' award, he could not find fault with their impartiality and integrity. Evidently, the nullification of
the award rendered at the case at bar was made not on the basis of any of the grounds provided by law." 3
Assailing the above conclusion, petitioners argue that ". . . evident partiality is a state of mind that need not be proved by direct evidence but may be inferred from
the circumstances of the case (citations omitted). It is related to intention which is a mental process, an internal state of mind that must be judged by the person's
conduct and acts which are the best index of his intention (citations omitted)." 4 They pointed out that from the following circumstances may be inferred the
arbitrators' evident partiality:
1. the material difference between the results of the arbitrators' computation of the NAV and that of petitioners;
2. the alleged piecemeal interpretation by the arbitrators of the Agreement which went beyond the clear provisions of the contract and negated the obvious
intention of the parties;
3. reliance by the arbitrators on the financial statements and reports submitted by SGV which, according to petitioners, acted solely for the interests of private
respondents; and

4. the finding of the trial court that "the arbitration committee has advanced no valid justification to warrant a departure from the well-settled rule in contract
interpretation that if the terms of the contract are clear and leave no doubt upon the intention of the contracting parties the literal meaning of its interpretation shall
control." 5
We find no reason to depart from the Court of Appeal's conclusion.
Section 24 of the Arbitration Law provides as follows:
Sec. 24. Grounds for vacating award. In any one of the following cases, the court must make an order vacating the award upon the petition of any party to the
controversy when such party proves affirmatively that in the arbitration proceedings:
(a) The award was procured by corruption, fraud or other undue means; or
(b) That there was evident partiality or corruption in the arbitrators or any of them; or
(c) That the arbitrators were guilty of misconduct in refusing to postpone the hearing upon sufficient cause shown, or in refusing to hear evidence pertinent and
material to the controversy; that one or more of the arbitrators was disqualified to act as such under section nine hereof, and willfully refrained from disclosing
such disqualifications or any other misbehavior by which the rights of any party have been materially prejudiced; or
(d) That the arbitrators exceeded their powers, or so imperfectly executed them, that a mutual, final and definite award upon the subject matter submitted to them
was not made. . . .
Petitioners herein failed to prove their allegation of partiality on the part of the arbitrators. Proofs other than mere inferences are needed to establish evident
partiality. That they were disadvantaged by the decision of the Arbitration Committee does not prove evident partiality.
Too much reliance has been accorded by petitioners on the decision of the trial court. However, we find that the same is but an adaptation of the arguments of
petitioners to defeat the petition for confirmation of the arbitral award in the trial court by herein private respondent. The trial court itself stated as follows:
In resolving the issues in favor of respondents, the Court has no alternative but to agree with the contention of said party, as supported by their exhaustive and
very convincing arguments contained in more than twenty-one (21) pages, doubled-spaced, which are adopted and reproduced herein by reference. Said
arguments may be CAPSULIZED as follows:
The penultimate paragraph of its decision reads, thus:
To allay any fear of petitioner that its reply and opposition, dated 11 June 1991, has not been taken into account in resolving this case, it will be well to state that
the court has carefully read the same and, what is more, it has also read respondents' comment, dated 19 June 1991, wherein they made convincing arguments
which are likewise adopted and incorporated herein by reference. 6
The justifications advanced by the trial court for vacating the arbitration award are the following: (a) ". . . that the arbitration committee had advanced no valid
justification to warrant a departure from the well-settled rule in contract interpretation that if the terms of the contract are clear and leave no doubt upon the
intention of the contracting parties the literal meaning of its interpretation shall control; (b) that the final NAV of P47,121,468.00 as computed by herein petitioners
was well within APAC's normal investment level which was at least US$1 million and to say that the NAV was merely P167,118.00 would negate Clause 6 of the
Agreement which provided that the purchaser would deposit in escrow P5,146,000.00 to be held for two (2) years and to be used to satisfy any actual or
contingent liability of the vendor under the Agreement; (c) that the provision for an escrow account negated any idea of the NAV being less than P5,146,000.00;
and (d) that herein private respondent, being the drafter of the Agreement could not avoid performance of its obligations by raising ambiguity of the contract, or its
failure to express the intention of the parties, or the difficulty of performing the same.
It is clear therefore, that the award was vacated not because of evident partiality of the arbitrators but because the latter interpreted the contract in a way which
was not favorable to herein petitioners and because it considered that herein private respondents, by submitting the controversy to arbitration, was seeking to
renege on its obligations under the contract.
That the award was unfavorable to petitioners herein did not prove evident partiality. That the arbitrators resorted to contract interpretation neither constituted a
ground for vacating the award because under the circumstances, the same was necessary to settle the controversy between the parties regarding the amount of
the NAV. In any case, this Court finds that the interpretation made by the arbitrators did not create a new contract, as alleged by herein petitioners but was a
faithful application of the provisions of the Agreement. Neither was the award arbitrary for it was based on the statements prepared by the SGV which was chosen
by both parties to be the "auditors."
The trial court held that herein private respondent could not shirk from performing its obligations on account of the difficulty of complying with the terms of the
contract. It said further that the contract may be harsh but private respondent could not excuse itself from performing its obligations on account of the ambiguity of
the contract because as its drafter, private respondent was well aware of the implications of the Agreement. We note herein that during the arbitration
proceedings, the parties agreed that the contract as prepared by private respondent, was submitted to petitioners for approval. Petitioners, therefore, are
presumed to have studied the provisions of the Agreement and agreed to its import when they approved and signed the same. When it was submitted to
arbitration to settle the issue regarding the computation of the NAV, petitioners agreed to be bound by the judgment of the arbitration committee, except in cases
where the grounds for vacating the award existed. Petitioners cannot now refuse to perform its obligation after realizing that it had erred in its understanding of the
Agreement.
Petitioners also assailed the arbitrator's reliance upon the financial statements submitted by SGV as they allegedly served the interests of private respondents and
did not reflect the true intention of the parties. We agree with the observation made by the arbitrators that SGV, being a reputable firm, it should be presumed to
have prepared the statements in accordance with sound accounting principles. Petitioners have presented no proof to establish that SGV's computation was
erroneous and biased.

Petitioners likewise pointed out that the computation of the arbitrators leads to the absurd result of petitioners incurring great expense just to sell its properties. In
arguing that the NAV could not be less than P5,146,000, petitioners quote Clause (B) of the Agreement as follows:
CLAUSE 3(B)
The consideration for the purchase of the Sale Shares by the Purchaser shall be equivalent to the Net Asset Value of the Company, . . . which the parties HAVE
FIXED at P5,146,000.00 prior to Adjustments . . .
However, such quotation is incomplete and, therefore, misleading. The full text of the above provision as quoted by the arbitration committee reads as follows:
(B) The consideration for the purchase of the Sale Shares by the purchaser shall be equivalent to the Net Asset Value of the Company, without the Property, which
the parties have fixed at P5,146,000 prior to Adjustments plus P24,384,600. The consideration for the sale of the Sale Shares by the Vendor, is the acquisition of
the property by the Vendor, through Aloha, from the Company at historical cost plus all Taxes due on said transfer of Property, and the release of all collaterals of
the Vendor securing the RSBS Credit Facility. However, in the implementation of this Agreement, the parties shall designate the amounts specified in Clause 5 as
the purchaser prices in the pro-forma deeds of sale and other documents required to effect the transfers contemplated in this Agreement.
Thus, petitioner cannot claim that the consideration for private respondent's acquisition of the outstanding common shares of stock was grossly inadequate. If the
NAV as computed was small, the result was not due to error in the computations made by the arbitrators but due to the extent of the liabilities being borne by
petitioners. During the arbitration proceedings, the committee found that petitioner has been suffering losses since 1983, a fact which was not denied by petitioner.
We cannot sustain the argument of petitioners that the amount of P5,146,000.00 was an initial NAV as of February 28, 1990 to which should still be added the
value of tangible assets (excluding the land) and of intangible assets. If indeed the P5,146,000.00 was the initial NAV as of February 28, 1990, then as of said
date, the total assets and liabilities of the company have already been set off against each other. NET ASSET VALUE is arrived at only after deducting TOTAL
LIABILITIES from TOTAL ASSETS. "TOTAL ASSETS" includes those that are tangible and intangible. If the amount of the tangible and intangible assets would still
be added to the "initial NAV," this would constitute double counting. Unless the company acquired new assets from February 28, 1990 up to June 19, 1990, no
value corresponding to tangible and intangible assets may be added to the NAV.
We also note that the computation by petitioners of the NAV did not reflect the liabilities of the company. The term "net asset value" indicates the amount of assets
exceeding the liabilities as differentiated from total assets which include the liabilities. If petitioners were not satisfied, they could have presented their own
financial statements to rebut SGV's report but this, they did not do.
Lastly, in assailing the decision of the Court of Appeals, petitioners would have this Court believe that the respondent court held that the decision of the arbitrators
was not subject to review by the courts. This was not the position taken by the respondent court.
The Court of Appeals, in its decision stated, thus:
It is settled that arbitration awards are subject to judicial review. In the recent case of Chung Fu Industries (Philippines), Inc., et. al. v. Court of Appeals, Hon
Francisco X. Velez, et. al., G. R. No. 96283, February 25, 1992, the Supreme Court categorically ruled that:
It is stated expressly under Art. 2044 of the Civil Code that the finality of the arbitrators' award is not absolute and without exceptions. Where the conditions
described in Articles 2038, 2039 and 2040 applicable to both compromises and arbitrations are obtaining, the arbitrators' award may be annulled or rescinded.
Additionally, under Sections 24 and 25 of the Arbitration Law, there are grounds for vacating, modifying or rescinding an arbitrators' award. Thus, if and when the
factual circumstances referred to in the above-cited provisions are present, judicial review of the award is properly warranted.
Clearly, though recourse to the courts may be availed of by parties aggrieved by decisions or awards rendered by arbitrator/s, the extent of such is neither
absolute nor all encompassing. . . . 7
It is clear then that the Court of Appeals reversed the trial court not because the latter reviewed the arbitration award involved herein, but because the respondent
appellate court found that the trial court had no legal basis for vacating the award.
WHEREFORE, in view of the foregoing, this petition is hereby DISMISSED and the decision of the Court of Appeals AFFIRMED.
SO ORDERED.
G.R. No. 169095

December 8, 2008

HEUNGHWA INDUSTRY CO., LTD., petitioner, vs.DJ BUILDERS CORPORATION, respondent.

DECISION
AUSTRIA-MARTINEZ, J.:
Before this Court is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Court, seeking to set aside the August 20, 2004 Decision 2 and August 1,
2005 Resolution3 of the Court of Appeals (CA) in CA-G.R. SP Nos. 70001 and 71621.
The facts of the case, as aptly presented by the CA, are as follows:
Heunghwa Industry Co., Ltd. (petitioner) is a Korean corporation doing business in the Philippines, while DJ Builders Corporation (respondent) is a corporation

duly organized under the laws of the Philippines. Petitioner was able to secure a contract with the Department of Public Works and Highways (DPWH) to construct
the Roxas-Langogan Road in Palawan.
Petitioner entered into a subcontract agreement with respondent to do earthwork, sub base course and box culvert of said project in the amount of Php113, 228,
918.00. The agreement contained an arbitration clause. The agreed price was not fully paid; hence, on January 19, 2000, respondent filed before the Regional
Trial Court (RTC) of Puerto Princesa, Branch 51, a Complaint for "Breach of Contract, Collection of Sum of Money with Application for Preliminary Injunction,
Preliminary Attachment, and Prayer for Temporary Restraining Order and Damages" docketed as Civil Case No. 3421. 4
Petitioner's Amended Answer5 averred that it was not obliged to pay respondent because the latter caused the stoppage of work. Petitioner further claimed that it
failed to collect from the DPWH due to respondent's poor equipment performance. The Amended Answer also contained a counterclaim for Php24,293,878.60.
On September 27, 2000, parties through their respective counsels, filed a "Joint Motion to Submit Specific Issues To The Construction Industry Arbitration
Commission"6 (CIAC), to wit:
5. Parties would submit only specific issues to the CIAC for arbitration, leaving other claims to this Honorable Court for further hearing and adjudication.
Specifically, the issues to be submitted to the CIAC are as follows:
a. Manpower and equipment standby time;
b. Unrecouped mobilization expenses;
c. Retention;
d. Discrepancy of billings; and
e. Price escalation for fuel and oil usage.7

On the same day, the RTC issued an Order8 granting the motion.
On October 9, 2000, petitioner, through its counsel, filed an "Urgent Manifestation"9 praying that additional matters be referred to CIAC for arbitration, to wit:
1. Additional mobilization costs incurred by [petitioner] for work abandoned by [respondent];
2. Propriety of liquidated damages in favor of [petitioner] for delay incurred by [respondent];
3. Propriety of downtime costs on a daily basis during the period of the existence of the previous temporary restraining order against [petitioner]. 10

On October 24, 2000, respondent filed with CIAC a Request for Adjudication 11 accompanied by a Complaint. Petitioner, in turn filed a "Reply/ Manifestation"
informing the CIAC that it was abandoning the submission to CIAC and pursuing the case before the RTC. In respondent's Comment on petitioner's Manifestation,
it prayed for CIAC to declare petitioner in default.
CIAC then issued an Order 12 dated November 27, 2000 ordering respondent to move for the dismissal of Civil Case No. 3421 pending before the RTC of Palawan
and directing petitioner to file anew its answer. The said Order also denied respondent's motion to declare petitioner in default.
Respondent filed a Motion for Partial Reconsideration of the November 27, 2000 Order while petitioner moved to suspend the proceeding before the CIAC until
the RTC had dismissed Civil Case No. 3421.
On January 8, 2000, CIAC issued an Order 13 setting aside its Order of November 27, 2000 by directing the dismissal of Civil Case No. 3421 only insofar as the
five issues referred to it were concerned. It also directed respondent to file a request for adjudication. In compliance, respondent filed anew a "Revised
Complaint"14 which increased the amount of the claim from Php23,391,654.22 to Php65,393,773.42.
On February 22 2001, petitioner, through its new counsel, filed with the RTC a motion to withdraw the Order dated September 27, 2000 which referred the case to
the CIAC, claiming it never authorized the referral. Respondent opposed the motion 15 contending that petitioner was already estopped from asking for the recall of
the Order.
Petitioner filed in the CIAC its opposition to the second motion to declare it in default, with a motion to dismiss informing the CIAC that it was abandoning the
submission of the case to it and asserting that the RTC had original and exclusive jurisdiction over Civil Case No. 3421, including the five issues referred to the
CIAC.
On March 5, 2001, the CIAC denied petitioner's motion to dismiss on the ground that the November 27, 2000 Order had already been superseded by its Order of
January 8, 2001.16
On March 13, 2001, the CIAC issued an Order setting the preliminary conference on April 10, 2001.17
On March 23, 2001 petitioner filed with the CIAC a motion for reconsideration of the March 5, 2001 Order.
For clarity, the succeeding proceedings before the RTC and CIAC are presented in graph form in chronological order.
RTC

CIAC
April 5, 2001 - Petitioner filed a Motion to Suspend proceedings because of the

Motion to Recall it filed with the RTC.

April 6, 2001 - CIAC granted petitioner's motion and suspended the hearings
dated April 10 and 17, 2001.
May 16, 2001 - the RTC issued a Resolution18 granting petitioner's Motion to
Recall.19
June 1, 2001- Respondent moved for a reconsideration of the May 16, 2001
Resolution and prayed for the dismissal of the case without prejudice to the
filing of a complaint with the CIAC.20
June 11, 2001- Petitioner opposed respondent's motion for reconsideration and
also prayed for the dismissal of the case but with prejudice.21
July 6, 2001 - The RTC denied respondent's motion for reconsideration but
stated that respondent may file a formal motion to dismiss if it so desired.22
July 16, 2001- Respondent filed with the RTC a Motion to Dismiss23 Civil Case
No. 3421 praying for the dismissal of the complaint without prejudice to the
filing of the proper complaint with the CIAC.
On the same day, the RTC granted the motion without prejudice to
petitioner's counterclaim.24
August 1, 2001- Petitioner moved for a reconsideration of the July 16, 2001
Order claiming it was denied due process.25
August 7, 2001 - Respondent filed with the CIAC a motion for the resumption of
the proceedings claiming that the dismissal of Civil Case No. 3421 became final
on August 3, 2001.
August 15, 2001 - Petitioner filed a counter-manifestation26 asserting that the RTC
Order dated July 16, 2001 was not yet final. Petitioner reiterated the prayer to
dismiss the case.
August 27, 2001 - CIAC issued an Order maintaining the suspension but did not
rule on petitioner's Motion to Dismiss.
January 22, 2002 - CIAC issued an Order setting the case for Preliminary
Conference on February 7, 2002.
February 1, 2002 - Petitioner filed a Motion for Reconsideration of the January 22,
2002 Order which also included a prayer to resolve the Motion for
Reconsideration of the July 16, 2001 Order.
February 5, 2002 - CIAC denied petitioner's Motion for Reconsideration.
February 7, 2002 - CIAC conducted a preliminary conference. 27
March 13, 2002 - the RTC issued a Resolution28 declaring the July 16,
2001 Order which dismissed the case "without force and effect" and set
the case for hearing on May 30, 2002.
March 15, 2002 - Petitioner filed a Manifestation before the CIAC that the CIAC
had no authority to hear the case.
March 18, 2002 - CIAC issued an Order setting the hearing on April 2, 2002.
March 21, 2002 - Petitioner filed a Manifestation/Motion that the RTC had recalled
the July 16, 2001 Order and had asserted jurisdiction over the entire case and
praying for the dismissal of the pending case.29
March 22, 2002 - CIAC issued an Order30 denying the Motion to Dismiss filed

by petitioner and holding that the CIAC had jurisdiction over the case.
March 25, 2002- Respondent moved for a reconsideration31 of the March 13,
2002 Order recalling the July 16, 2001 Order which petitioner opposed.

March 26, 2002 - CIAC ordered respondent to file a reply to petitioner's March 21,
2002 Manifestation.

June 17, 2002 - RTC denied respondent's Motion for Reconsideration.

The parties, without waiting for the reply required by the CIAC, 32 filed two separate petitions for certiorari: petitioner, on April 5, 2002, docketed as CA-G.R. SP No.
70001; and respondent, on July 5, 2002, docketed as CA-G.R. SP No. 71621 with the CA.
In CA-G.R. SP No. 70001, petitioner assailed the denial by the CIAC of its motion to dismiss and sought to enjoin the CIAC from proceeding with the case.
In CA-G.R. SP No. 71621, respondent questioned the March 13, 2002 Order of the RTC which reinstated Civil Case No. 3421 as well as the Order dated June 17,
2002 which denied respondent's motion for reconsideration. Respondent also sought to restrain the RTC from further proceeding with the civil case.
In other words, petitioner is questioning the jurisdiction of the CIAC; while respondent is questioning the jurisdiction of the RTC over the case.
Both cases were consolidated by the CA.
The CA ruled against petitioner on procedural and substantive grounds.
On matters of procedure, the CA took note of the fact that petitioner did not file a motion for reconsideration of the March 22, 2002 Order of the CIAC and held that
it is in violation of the well-settled rule that a motion for reconsideration should be filed to allow the respondent tribunal to correct its error before a petition can be
entertained.33 Moreover, the CA ruled that it is well-settled that a denial of a motion to dismiss, being an interlocutory order, is not the proper subject for a petition
for certiorari.34
Moreover, the CA ruled against petitioner's main argument that the arbitration clause found in the subcontract agreement between the parties did not refer to CIAC
as the arbitral body. The CA held that the CIAC had jurisdiction over the controversy because the construction agreement contained a provision to submit any
dispute for arbitration, and there was a joint motion to submit certain issues to the CIAC for arbitration. 35
Anent petitioner's argument that its previous lawyer was not authorized to submit the case for arbitration, the CA held that what is required for a dispute to fall
under the jurisdiction of the CIAC is for the parties to agree to submit to voluntary arbitration. Since the parties agreed to submit to voluntary arbitration in the
construction contract, the authorization insisted upon by petitioner was a mere superfluity.36
The CA further cited National Irrigation Administration v. Court of Appeals37 (NIA), where this Court ruled that active participation in the arbitration proceedings
serves to estop a party from denying that it had in fact agreed to submit the dispute for arbitration.
Lastly, the CA found no merit in petitioner's prayer to remand the case to the CIAC.
Petitioner's Motion for Reconsideration was denied by the CA. Hence, herein petition raising the following assignment of errors:
A.
THE COURT OF APPEALS COMMITTED SERIOUS ERROR WHEN IT RULED THAT THE PETITION SUFFERED FROM PROCEDURAL INFIRMITIES WHEN
PETITIONER HEUNGHWA, IN VIEW OF THE QUESTIONS OF LAW INVOLVED IN THE CASE, IMMEDIATELY INVOKED ITS AID BY WAY OF PETITION
FOR CERTIORARI WITHOUT FIRST FILING A MOTION FOR RECONSIDERATION OF THE CIAC'S ORDER DATED 22 MARCH 2002. THE COURT OF
APPEALS FURTHER ERRED IN RULING THAT A DENIAL OF A MOTION TO DISMISS (IN REFERENCE TO THE ORDER DATED 22 MARCH 2002), BEING
AN INTERLOCUTORY ORDER, IS NOT THE PROPER SUBJECT OF A PETITION FOR CERTIORARI.
B.
THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN CONFIRMING THE JURISDICTION OF THE CIAC OVER THE CASE. ITS RELIANCE ON
THE NATIONAL IRRIGATION AUTHORITY VS. COURT OF APPEALS ("NIA VS. CA") WAS MISPLACED AS THE FACTS OF THE INSTANT CASE ARE
SERIOUSLY AND SUBSTANTIALLY DIFFERENT FROM THOSE OF NIA VS. CA.
C.
THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN DISREGARDING PETITIONER'S REQUEST TO AT LEAST REMAND THE CASE TO THE
CIAC FOR FURTHER RECEPTION OF EVIDENCE IN THE INTEREST OF JUSTICE AND EQUITY AS PETITIONER COULD NOT HAVE AVAILED OF ITS
OPPORTUNITY TO PRESENT ITS SIDE ON ACCOUNT OF ITS JURISDICTIONAL OBJECTION. 38
The petition is devoid of merit.
The first assignment of error raises two issues: first, whether or not the non-filing of a motion for reconsideration was fatal to the petition for certiorari filed before
the CA; and second, whether or not a petition for certiorari is the proper remedy to assail an order denying a motion to dismiss as in the case at bar .
As a general rule, a petition for certiorari before a higher court will not prosper unless the inferior court has been given, through a motion for reconsideration, a
chance to correct the errors imputed to it. This rule, though, has certain exceptions: (1) when the issue raised is purely of law, (2) when public interest is involved,
or (3) in case of urgency. As a fourth exception, it has been held that the filing of a motion for reconsideration before availment of the remedy of certiorari is not a
condition sine qua non when the questions raised are the same as those that have already been squarely argued and exhaustively passed upon by the lower
court.39
The Court agrees with petitioner that the main issue of the petition for certiorari filed before the CA undoubtedly involved a question of jurisdiction as to which

between the RTC and the CIAC had authority to hear the case. Whether the subject matter falls within the exclusive jurisdiction of a quasi-judicial agency is a
question of law.40 Thus, given the circumstances present in the case at bar, the non-filing of a motion for reconsideration by petitioner to the CIAC Order should
have been recognized as an exception to the rule.
Anent the second issue, petitioner argues that when its motion to dismiss was denied by the CIAC, the latter acted without jurisdiction or with grave abuse of
discretion amounting to lack or excess of jurisdiction; thus, the same is the proper subject of a petition for certiorari.
As a general rule, an order denying a motion to dismiss cannot be the subject of a petition for certiorari. However, this Court has provided exceptions thereto:
Under certain situations, recourse to certiorari or mandamus is considered appropriate, i.e., (a) when the trial court issued the order without or in excess of
jurisdiction; (b) where there is patent grave abuse of discretion by the trial court ; or (c) appeal would not prove to be a speedy and adequate remedy as
when appeal would not promptly relieve a defendant from the injurious effects of the patently mistaken order maintaining the plaintiff's baseless action and
compelling the defendant needlessly to go through a protracted trial and clogging the court dockets by another futile case." 41 (Emphasis supplied)
The term "grave abuse of discretion" in its judicial sense connotes a capricious, despotic, oppressive or whimsical exercise of judgment as is equivalent to lack of
jurisdiction. The word "capricious," usually used in tandem with the term "arbitrary," conveys the notion of willful and unreasoning action. 42
The question then is: "Did the denial by the CIAC of the motion to dismiss constitute a patent grave abuse of discretion?"
Records show that the CIAC acted within its jurisdiction and it did not commit patent grave abuse of discretion when it issued the assailed Order denying
petitioner's motion to dismiss. Thus, this Court rules in the negative.
Based on law and jurisprudence, the CIAC has jurisdiction over the present dispute.
The CIAC, in its assailed Order, correctly applied the doctrine laid down in Philrock, Inc. v. Construction Industry Arbitration Commission 43 (Philrock) where this
Court held that what vested in the CIAC original and exclusive jurisdiction over the construction dispute was the agreement of the parties and not the Court's
referral order. The CIAC aptly ruled that the recall of the referral order by the RTC did not deprive the CIAC of the jurisdiction it had already acquired, 44 thus:
x x x The position of CIAC is anchored on Executive Order No. 1008 (1985) which created CIAC and vested in it "original and exclusive jurisdiction" over
construction disputes in construction projects in the Philippines provided the parties agreed to submit such disputes to arbitration. The basis of the Court referral is
precisely the agreement of the parties in court, and that, by this agreement as well as by the court referral of the specified issues to arbitration, under Executive
Order No. 1008 (1985), the CIAC had in fact acquired original and exclusive jurisdiction over these issues. 45
In the case at bar, the RTC was indecisive of its authority and capacity to hear the case. Respondent first sought redress from the RTC for its claim against
petitioner. Thereafter, upon motion by both counsels for petitioner and respondent, the RTC allowed the referral of five specific issues to the CIAC. However, the
RTC later recalled the case from the CIAC because of the alleged lack of authority of the counsel for petitioner to submit the case for arbitration. The RTC recalled
the case even if it already admitted its lack of expertise to deal with the intricacies of the construction business. 46
Afterwards, the RTC issued a Resolution recommending that respondent file a motion to dismiss without prejudice to the counterclaim of petitioner, so that it could
pursue arbitration proceedings under the CIAC. 47 Respondent complied with the recommendation of the RTC and filed a motion to dismiss which was granted by
the said court.48 Later, however, the RTC again asserted jurisdiction over the dispute because it apparently made a mistake in granting respondent's motion to
dismiss without conducting any hearing on the motion.49
On the other hand, the CIAC's assertion of its jurisdiction over the dispute was consistent from the moment the RTC allowed the referral of specific issues to it.
Executive Order 100850 grants to the CIAC original and exclusive jurisdiction over disputes arising from, or connected with, contracts entered into by parties
involved in construction in the Philippines. In the case at the bar, it is undeniable that the controversy involves a construction dispute as can be seen from the
issues referred to the CIAC, to wit:
1. Manpower and equipment standby time;
2. Unrecouped mobilization expenses;
3. Retention;
4. Discrepancy of billings; and
5. Price escalation for fuel and oil usage.51 x x x x
The Court notes that the Subcontract Agreement52 between the parties provides an arbitration clause, to wit:
Article 7 Arbitration
7. Any controversy or claim between the Contractor and the Subcontractor arising out of or related to this Subcontract, or the breach thereof, shall be settled by
arbitration, which shall be conducted in the same manner and under the same procedure as provided in the Prime Contract with Respect to claims
between the Owner and the Contractor, except that a decision by the Owner or Consultant shall not be a condition precedent to arbitration. If the Prime Contract
does not provide for arbitration or fails to specify the manner and procedure for arbitration, it shall be conducted in accordance with the law of the Philippines
currently in effect unless the Parties mutually agree otherwise.53 (Emphasis supplied)
However, petitioner insists that the General Conditions which form part of the Prime Contract provide for a specific venue for arbitration, to wit:
5.19.3. Any dispute shall be settled under the Rules of Conciliation and Arbitration of the International Chamber of Commerce by one or more arbitrators
appointed under such Rules.54

The claim of petitioner is not plausible.

In National Irrigation Administration v. Court of Appeals55 this Court recognized the new procedure in the arbitration of disputes before the CIAC, in this wise:
It is undisputed that the contracts between HYDRO and NIA contained an arbitration clause wherein they agreed to submit to arbitration any dispute between
them that may arise before or after the termination of the agreement. Consequently, the claim of HYDRO having arisen from the contract is arbitrable. NIA's
reliance with the ruling on the case of Tesco Services Incorporated v. Vera, is misplaced.
The 1988 CIAC Rules of Procedure which were applied by this Court in Tesco case had been duly amended by CIAC Resolutions No. 2-91 and 3-93, Section 1 of
Article III of which reads as follows:
Submission to CIAC Jurisdiction - An arbitration clause in a construction contract or a submission to arbitration of a construction dispute shall be
deemed an agreement to submit an existing or future controversy to CIAC jurisdiction, notwithstanding the reference to a different arbitration
institution or arbitral body in such contract or submission . When a contract contains a clause for the submission of a future controversy to arbitration, it is not
necessary for the parties to enter into a submission agreement before the claimant may invoke the jurisdiction of CIAC.
Under the present Rules of Procedure, for a particular construction contract to fall within the jurisdiction of CIAC, it is merely required that the parties agree to
submit the same to voluntary arbitration. Unlike in the original version of Section 1, as applied in the Tesco case, the law as it now stands does not provide that the
parties should agree to submit disputes arising from their agreement specifically to the CIAC for the latter to acquire jurisdiction over the same. Rather, it is plain
and clear that as long as the parties agree to submit to voluntary arbitration, regardless of what forum they may choose, their agreement will fall within
the jurisdiction of the CIAC, such that, even if they specifically choose another forum, the parties will not be precluded from electing to submit their
dispute before the CIAC because this right has been vested upon each party by law, i.e., E.O. No. 1008.56 (Emphasis and underscoring supplied)
Based on the foregoing, there are two acts which may vest the CIAC with jurisdiction over a construction dispute. One is the presence of an arbitration clause in a
construction contract, and the other is the agreement by the parties to submit the dispute to the CIAC.
The first act is applicable to the case at bar. The bare fact that the parties incorporated an arbitration clause in their contract is sufficient to vest the CIAC with
jurisdiction over any construction controversy or claim between the parties. The rule is explicit that the CIAC has jurisdiction notwithstanding any reference made
to another arbitral body.
It is well-settled that jurisdiction is conferred by law and cannot be waived by agreement or acts of the parties. Thus, the contention of petitioner that it never
authorized its lawyer to submit the case for arbitration must likewise fail. Petitioner argues that notwithstanding the presence of an arbitration clause, there must
be a subsequent consent by the parties to submit the case for arbitration. To stress, the CIAC was already vested with jurisdiction the moment both parties agreed
to incorporate an arbitration clause in the sub-contract agreement. Thus, a subsequent consent by the parties would be superfluous and unnecessary.
It must be noted however that the reliance of the CIAC in it's assailed Order on Philrock57is inaccurate. In Philrock, the Court ruled that the CIAC had jurisdiction
over the case because of the agreement of the parties to refer the case to arbitration. In the case at bar, the agreement to refer specific issues to the CIAC is
disputed by petitioner on the ground that such agreement was entered into by its counsel who was not authorized to do so. In addition, in Philrock, the petitioner
therein had actively participated in the arbitration proceedings, while in the case at bar there where only two instances wherein petitioner participated, to wit: 1) the
referral of five specific issues to the CIAC; and 2) the subsequent manifestation that additional matters be referred to the CIAC.
The foregoing notwithstanding, CIAC has jurisdiction over the construction dispute because of the mere presence of the arbitration clause in the subcontract
agreement.
Thus, the CIAC did not commit any patent grave abuse of discretion, nor did it act without jurisdiction when it issued the assailed Order denying petitioner's motion
to dismiss. Accordingly, there is no compelling reason for this Court to deviate from the rule that a denial of a motion to dismiss, absent a showing of lack of
jurisdiction or grave abuse of discretion amounting to lack of or excess jurisdiction, being an interlocutory order, is not the proper subject of a petition for certiorari.
Anent the second assigned error, the Court notes that the reliance of the CA on NIA is inaccurate. In NIA,58this Court observed:
Moreover, it is undeniable that NIA agreed to submit the dispute for arbitration to the CIAC. NIA through its counsel actively participated in the arbitration
proceedings by filing an answer with counterclaim, as well as its compliance wherein it nominated arbitrators to the proposed panel, participating in the
deliberations on, and the formulation of the Terms of Reference of the arbitration proceeding, and examining the documents submitted by HYDRO after NIA asked
for originals of the said documents."59
In the case at bar, the only participation that can be attributed to petitioner is the joint referral of specific issues to the CIAC and the manifestation praying that
additional matters be referred to the CIAC. Both acts, however, have been disputed by petitioner because said acts were performed by their lawyer who was not
authorized to submit the case for arbitration. And even if these were duly authorized, this would still not change the correct finding of the CA that the CIAC had
jurisdiction over the dispute because, as has been earlier stressed, the arbitration clause in the subcontract agreement ipso facto vested the CIAC with
jurisdiction.
In passing, even the RTC in its Resolution recognized the authority of the CIAC to hear the case, to wit:
Courts cannot and will not resolve a controversy involving a question which is within the jurisdiction of an administrative tribunal, especially where the question
demands the exercise of sound administrative discretion requiring the special knowledge, experience and services of the administrative tribunal to determine
technical and intricate matters of fact. And undoubtedly in this case, the CIAC it cannot be denied, is that administrative tribunal. 60(Emphasis supplied)
It puzzles this Court why petitioner would insist that the RTC should hear the case when the CIAC has the required skill and expertise in addressing construction
disputes. Records will bear out the fact that petitioner refused to and did not participate in the CIAC proceedings. In its defense, petitioner cited jurisprudence to
the effect that active participation before a quasi-judicial body would be tantamount to an invocation of the latter bodies' jurisdiction and a willingness to abide by

the resolution of the case.61 Pursuant to such doctrine, petitioner argued that had it participated in the CIAC proceedings, it would have been barred from
impugning the jurisdiction of the CIAC.
Petitioner cannot presume that it would have been estopped from questioning the jurisdiction of the CIAC had it participated in the proceedings. In fact, estoppel is
a matter for the court to consider. The doctrine of laches or of stale demands is based upon grounds of public policy which requires, for the peace of society, the
discouragement of stale claims and, unlike the statute of limitations, is not a mere question of time but is principally a question of the inequity or unfairness of
permitting a right or claim to be enforced or asserted. 62 The Court always looks into the attendant circumstances of the case so as not to subvert public policy. 63
Given that petitioner questioned the jurisdiction of the CIAC from the beginning, it was not remiss in enforcing its right. Hence, petitioner's claim that it would have
been estopped is premature.
The Court finds the last assigned error to be without merit.
It is well to note that in its petition for certiorari64 filed with the CA on April 9, 2002, petitioner prayed for the issuance of a temporary restraining order and a writ of
preliminary injunction to enjoin the CIAC from hearing the case. On September 27, 2002, the CIAC promulgated its decision awarding Php31,119,465.81 to
respondent. It is unfortunate for petitioner that the CA did not timely act on its petition. Records show that the temporary restraining order 65 was issued only on
October 15, 2002 and a writ of preliminary injunction 66 was granted on December 11, 2002, long after the CIAC had concluded its proceedings. The only effect of
the writ was to enjoin temporarily the enforcement of the award of the CIAC.
The Court notes that had the CA performed its duty promptly, then this present petition could have been avoided as the CIAC rules allow for the reopening of
hearings, to wit:
SECTION 13.14 Reopening of hearing - The hearing may be reopened by the Arbitral Tribunal on their own motion or upon the request of any party, upon
good cause shown, at any time before the award is rendered. When hearings are thus reopened, the effective date for the closing of the hearing shall be the
date of closing of the reopened hearing. (Emphasis supplied)
But because of the belated action of the CA, the CIAC had to proceed with the hearing notwithstanding the non-participation of petitioner.
Under the CIAC rules, even without the participation of petitioner in the proceedings, the CIAC was still required to proceed with the hearing of the construction
dispute. Section 4.2 of the CIAC rules provides:
SECTION 4.2 Failure or refusal to arbitrate - Where the jurisdiction of CIAC is properly invoked by the filing of a Request for Arbitration in accordance
with these Rules, the failure despite due notice which amounts to a refusal of the Respondent to arbitrate, shall not stay the proceedings
notwithstanding the absence or lack of participation of the Respondent. In such case, CIAC shall appoint the arbitrator/s in accordance with these Rules.
Arbitration proceedings shall continue, and the award shall be made after receiving the evidence of the Claimant. (Emphasis and underscoring supplied)
This Court finds that the CIAC simply followed its rules when it proceeded with the hearing of the dispute notwithstanding that petitioner refused to participate
therein.
To reiterate, the proceedings before the CIAC were valid, for the same had been conducted within its authority and jurisdiction and in accordance with the rules of
procedure provided by Section 4.2 of the CIAC Rules.
The ruling of the Supreme Court in Lastimoso v. Asayo67 is instructive: x x x x
In addition, it is also understandable why respondent immediately resorted to the remedy of certiorari instead of pursuing his motion for reconsideration of the
PNP Chief's decision as an appeal before the National Appellate Board (NAB). It was quite easy to get confused as to which body had jurisdiction over his
case. The complaint filed against respondent could fall under both Sections 41 and 42 of Republic Act (R.A.) No. 6975 or the Department of Interior and
Local Government Act of 1990. Section 41 states that citizens' complaints should be brought before the People's Law Enforcement Board (PLEB), while Section
42 states that it is the PNP Chief who has authority to immediately remove or dismiss a PNP member who is guilty of conduct unbecoming of a police officer.
It was only in Quiambao v. Court of Appeals, promulgated in 2005 or after respondent had already filed the petition for certiorari with the trial court,
when the Court resolved the issue of which body has jurisdiction over cases that fall under both Sections 41 and 42 of R.A. No. 6975. x x x
With the foregoing peculiar circumstances in this case, respondent should not be deprived of the opportunity to fully ventilate his arguments against the factual
findings of the PNP Chief. x x x x x x x
Thus, the opportunity to pursue an appeal before the NAB should be deemed available to respondent in the higher interest of substantial justice. 68 (Emphasis
supplied)
In Lastimoso, this Court allowed respondent to appeal his case before the proper agency because of the confusion as to which agency had jurisdiction over the
case. In the case at bar, law and supporting jurisprudence are clear and leave no room for interpretation that the CIAC has jurisdiction over the present
controversy.
The proceedings cannot then be voided merely because of the non-participation of petitioner. Section 4.2 of the CIAC Rules is clear and it leaves no room for
interpretation. Therefore, petitioner's prayer that the case be remanded to CIAC in order that it may be given an opportunity to present evidence is untenable.
Petitioner had its chance and lost it, more importantly so, by its own choice. This Court will not afford a relief that is apparently inconsistent with the law.
WHEREFORE, the petition is denied for lack of merit. The August 20, 2004 Decision and August 1, 2005 Resolution of the Court of Appeals in CA-G.R. SP Nos.
70001 and 71621 are AFFIRMED.

Double costs against petitioner. SO ORDERED.