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GR 160071 2016 PDF
GR 160071 2016 PDF
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31\epublic of tbe J)IJilippineg -
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FIRST DIVISION
x-------------------------------------------------------------------
DECISION
BERSAMIN, J.
This case concerns the order issued by the Regional Trial Court
granting the respondent's application to vacate the adverse arbitral award of
the panel of arbitrators, and the propriety of the recourse from such order.
The Case
On leave.
Acting Chairperson per Special Order No. 2355 dated June 2, 2016.
Rollo (Vol. I), pp. 75-77; penned by Associate Justice Amelita G. Tolentino (retired), concurred in by
Associate Justice Buenaventura J. Guerrero (retired/deceased) and Associate Justice Mariano C. de!
Castillo (now a Member of this Court).
1
Id. at 79.
}\
1 , - Decision 2 G.R. No. 160071
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. ._' Motfol:J .. to Dismiss Appeal (without Prejudice to the Filing of Appellee 's
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B~t-ejt %nd deni~d
"' ~ ... the petitioners' Motion for Reconsideration.
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Antecedents
xx xx
Si
Decision 3 G.R. No. 160071
xx xx
xx xx
Regent Star, through Foster, conformed to the terms stated in the Side
Letter. 13 The SEC approved the TSA on January 19, 1999. 14
'
13
Id. at 100-102.
Id.at103.
14
Id. at 104-105.
15
Id. at 14.
16
Id. at 106-107.
5"J
Decision 4 G.R. No. 160071
The side letter stipulates that "[i]n the event of a full or partial
termination of the Agreement for whatever reason by either the Company
or a Senior Technical Adviser/Regent Star prior to the end of the term of
the Agreement, the following penalties are payable by the terminating
party:"
TOTAL US$3,300,000.00
However, RSS has been paid by PAL advance "advisory fee for
two (2) years from date of signature of the Agreement" the amount of
US$5,700,000. Since RSS has rendered advisory services from 4 January
to 31 July 1999, or a period of seven months, it is entitled to retain only
the advisory fees for seven months. This is computed as follows:
17
Id. at 106- 107.
18
Jd.at303.
~
Decision 5 G.R. No. 160071
After due proceedings, the PDRCI rendered its decision ordering the
respondent to pay termination penalties, 21 viz.:
Agreement. Hence when PAL signed the Agreement with RSS, it was for
all intents and purposes an Agreement signed individually with the Senior
Technical Advisers including the Complainants. The RSS and the five (5)
Senior Technical Advisers should be treated as one and the same,
xx xx
22
Id. at 428-429, 447, 453.
23
Id. at 453.
24
Id. at 4 74-528.
15
Id. at 523-524.
14
Decision 7 G.R. No. 160071
SO ORDERED. 29
Anent jurisdiction over the persons of the petitioners, the RTC opined:
On the objection that the Court has not acquired jurisdiction over
the person of the complainants because summonses were not issued and
served on them, the Court rules that complainants have voluntarily
submitted themselves to the jurisdiction of the Court by praying the Court
to grant them affirmative relief, i.e., that the Court confirm and declare
final and executory the subject arbitral award. Moreover, under Sections
22 and 26 of the Arbitration Law (R.A. 876), an application or petition to
vacate arbitral award is deemed a motion and service of such motion on
the adverse party or his counsel is enough to confer jurisdiction upon the
Court over the adverse party.
26
Id.at612-633.
27
Rollo (Vol. II), p. 1396.
78
- Rollo (Vol. I), pp. 1064-1069.
29
Id.at 1069.
30
Id. at 1064-1065.
h
Decision 8 G.R. No. 160071
the July 1, 1998 order of the SEC deprived the Panel of Arbitrators of the
authority to hear the petitioners' claim, the RTC held:
xx xx
Unless and until the SEC lifts the Order dated 1 July 1998, the
Panel of Arbitrators cannot take cognizance of complainant' claims
against PAL without violating the exclusive jurisdiction of the SEC. The
law has granted SEC the exclusive jurisdiction to pursue the rehabilitation
of a private corporation through the appointment of a rehabilitation
receiver (Sec 6 (d), PD No. 902-A, as amended by PD 1799). "exclusive
jurisdiction precludes the idea of co-existence and refers to jurisdiction
possessed to the exclusion of others. x xx. Thus, "(I)nstead of vexing the
courts with suits against the distressed firm, they are directed to file their
claims with the receiver who is the duly appointed officer of the SEC.
xx x. 31
Resolution of the CA
JI
Id. at I066.
12
Id. at I 070-1085.
:n
Id. at 1101-1102.
34
Id. at 1279-1285.
]5
Id. at 28.
''' Id. at 75-77.
..
~
Decision 9 G.R. No. 160071
SO ORDERED. 37
Issues
I
SECTION 29 OF THE ARBITRATION LAW, WHICH LIMITS THE
MODE OF APPEAL FROM THE ORDER OF A REGIONAL TRIAL
COURT IN A PROCEEDING MADE UNDER THE ARBITRATION
LAW TO A PETITION FOR REVIEW ON CERTIORARI UNDER
RULE 45 OF THE RULES, IS UNCONSTITUTIONAL FOR UNDULY
EXPANDING THE JURISDICTION OF THIS HONORABLE COURT
WITHOUT THIS HONORABLE COURT'S CONCURRENCE;
II
THE COURT OF APPEALS HAD JURISDICTION OVER THE CA
APPEAL BECAUSE:
37
Id. at 77.
38
Id. at 1340-1357.
39
Id. at 79.
<
~
Decision 10 G.R. No. 160071
A.
THIS HONORABLE COURT HAS PREVIOUSLY UPHELD
THE EXERCISE BY THE COURT OF APPEALS OF
JURISDICTION OVER AN APPEAL INVOL YING
QUESTIONS OF FACT OR OF MIXED QUESTIONS OF FACT
AND LAW FROM A REGIONAL TRIAL COURT'S ORDER
VACATING AN ARBITRAL AWARD
B.
WHERE, AS IN THIS CASE, THE ISSUES ON APPEAL
CONCERNED THE ABSENCE OF EVIDENCE AND LACK OF
LEGAL BASIS TO SUPPORT THE REGIONAL TRIAL
COURT'S ORDER VACATING THE ARBITRAL AWARD,
GRAVE MISCHIEF WOULD RESULT IF THE REGIONAL
TRIAL COURT'S BASELESS FINDINGS OF FACT OR
MIXED FINDINGS OF FACT ARE PLACED BEYOND
APPELLATE REVIEW; AND
C.
THE COURT OF APPEALS' DISMISSAL OF THE CA APPEAL
WOULD IN EFFECT RESULT IN THE AFFIRMATION OF
THE REGIONAL TRIAL COURT'S EXERCISE OF
JURISDICTION, OVER PERSONS UPON WHOM IT FAILED
TO VALIDLY ACQUIRE SUCH JURISDICTION AND OF
APPELLATE JURISDICTION OVER THE PDRCI ARBITRAL
AWARD EVEN IF SUCH APPELLATE POWER IS
EXCLUSIVELY LODGED WITH THE COURT OF APPEALS
UNDER RULE 43 OF THE RULES
III
INSTEAD OF DISMISSING THE CA APPEAL OUTRIGHT, THE
COURT OF APPEALS SHOULD HAVE SHORTENED THE
PROCEEDINGS AND EXPEDITED JUSTICE BY EXERCISING
ORIGINAL JURISDICTION OVER THE APPLICATION TO VACA TE
PURSUANT TO RULE 43 OF THE RULES, ESPECIALLY
CONSIDERING THAT THE PARTIES HAD IN FACT ALREADY
FILED THEIR RESPECTIVE BRIEFS AND THE COMPLETE
RECORDS OF BOTH THE RTC APPLICATION TO VACATE AND
THE PDRCI ARBITRATION WERE ALREADY IN ITS POSSESSION;
AND
IV
IN THE EVENT THAT AN APPEAL FROM AN ORDER VACA TING
AN ARBITRAL AW ARD MAY BE MADE ONLY IN CERTIORARI
PROCEEDINGS AND ONLY TO THE SUPREME COURT, THE
COURT OF APPEALS SHOULD NOT HAVE DISMISSED THE CA
APPEAL, BUT IN THE HIGHER INTEREST OF JUSTICE, SHOULD
HA VE INSTEAD ENDORSED THE SAME TO THIS HONORABLE
COURT, AS WAS DONE IN SANTIAGO V GONZALES. 40
The petitioners contend that an appeal from the order arising from
arbitration proceedings cannot be by petition for review on certiorari under
Rule 45 of the Rules of Court because the appeal inevitably involves mixed
40
Id. at 30-31.
.(,
Decision 11 G.R. No. 160071
questions of law and fact; that their appeal in the CA involved factual issues
in view of the RTC's finding that the panel of arbitrators had been guilty of
evident partiality even without having required the respondent to submit
independent proof thereon; that the appropriate remedy was either a petition
for certiorari under Rule 65 of the Rules of Court, or an ordinary appeal
under Rule 41 of the Rules of Court, conformably with the rulings in Asset
Privatization Trust v. Court of Appeals41 and Adamson v. Court of Appeals,42
respectively; and that the CA erroneously upheld the RTC's denial of their
Motion To Dismiss Appeal on the basis of their counsel's voluntary
appearance to seek affirmative relief because under Section 20, Rule 14 of
the Rules of Court their objection to the personal jurisdiction of the court
was not a voluntary appearance even if coupled with other grounds for a
motion to dismiss.
On the merits, the respondent maintains that: (a) the term certiorari
used in Section 29 of the Arbitration Law refers to a petition for review
under Rule 4 5 of the Rules of Court; ( b) the constitutional challenge against
Section 29 of the Arbitration Law was belatedly made; (c) the petitioners'
claim of lack of jurisdiction on the part of the RTC should fail because an
application to vacate an arbitral award under Sections 22 and 26 of the
Arbitration Law is only required to be in the form of a motion; and (d) the
complete record of the arbitration proceedings submitted to the RTC
sufficiently proved the manifest paiiiality and grave abuse of discretion on
the part of the panel of arbitrators.
To be resolved are: (a) whether or not the petition for review should
be dismissed for containing a defective verification/certification; and (b)
whether or not the CA erred in dismissing the appeal of the petitioners for
being an inappropriate remedy.
41
G.R. No. 121171, December 29, 1998, 300 SCRA 579
42
G.R. No. 106879, May 27, 1994, 232 SCRA 602.
.
J4
Decision 12 G.R. No. 160071
I
There was sufficient compliance with the rule on
verification and certification against forum shopping
43
Bank of' the Philippine Islands v. Court ofAppeals, G.R. No. 146923, April 30, 2003, 402 SCRA 449,
454.
44
Rollo (Vol. I), p. 66.
45
Navarro v. Court ofAppeals, G.R. No. 141307, March 28, 2001, 355 SCRA 672, 679.
~
Decision 13 G.R. No. 160071
II
Appealing the RTC order
vacating an arbitral award
Firstly, the assailed resolution of the CA did not expressly declare that
the petition for review on certiorari under Rule 45 was the sole remedy from
the RTC's order vacating the arbitral award. The CA rather emphasized that
the petitioners should have filed the petition for review on certiorari under
Rule 45 considering that Section 29 of the Arbitration Law has limited the
46
Hydro Resources Contractors Corporation v. National Irrigation Administration, G.R. No. 160215,
November 10, 2004, 441SCRA614, 636.
47
Rollo (Vol. I), p. 66.
48
Pilipinas Shell Petroleum Corporation v. John Bordman Ltd. <?f lloilo, Inc., G.R. No. 15983 l, October
14, 2005, 473 SCRA 151, 162.
p., "
Decision 14 G.R. No. 160071
49
Sec. 2. Modes (~j'appea/.-
(a) Ordinary appeal.- The appeal to the Court of Appeals in cases decided by the Regional Trial
Court in the exercise of its original jurisdiction shall be taken by filing a notice of appeal with the court
which rendered the judgment or final order appealed from and serving a copy thereof upon the adverse
party. No record on appeal shall be required except in special proceedings and other cases of multiple or
separate appeals where the law or these Rules so require. In such cases, the record on appeal shall be filed
and served in like manner.
(b) Petition for review.-- The appeal to the Court of Appeals in cases decided by the Regional Trial
Court in the exercise of its appellate jurisdiction shall be by petition for review in accordance with Rule 42.
(c) Appeal by certiorari.- In all cases where only questions of law arc raised or involved, the
appeal shall be to the Supreme Court by petition for review on certiorari in accordance with Ruic 45.
(n)
~
Decision 15 G.R. No. 160071
Also, the petitioners have erroneously assumed that the appeal filed
by the aggrieved party in Adamson v. Court of Appeals 52 was an ordinary
one. Adamson concerned the correctness of the ruling of the CA in reversing
the decision of the trial court, not the propriety of the remedy availed of by
the aggrieved party. Nor did Adamson expressly declare that an ordinary
appeal could be availed of to assail the RTC's ruling involving arbitration.
As such, the petitioners' reliance on Adamson to buttress their resort to the
erroneous remedy was misplaced.
50
Supra, note 41, at 600-60 l
51
Celina, Sr. v. Court ofAppeals, G.R. No. 170562, June 29, 2007, 526 SCRA 195, 200.
52
Supra, note 42.
53
Boardwalk Business Ventures, Inc. v Villareal. Jr., G.R. No. 181182, April l 0, 2013, 695 SCRA 468,
477; R Transport Corporation v. Philippine Hawk Transport Corporation, G.R. No. 155737, October 19,
2005, 473 SCRA 342, 348.
~
Decision 16 G.R. No. 160071
III
Panel of Arbitrators had no jurisdiction
to hear and decide the petitioners' claim
54
G.R. No. 169725, April 30, 2010, 619 SCRA 641.
..e
Decision 17 G.R. No. 160071
IV
The requirement of due process was observed
v
Issue of the constitutionality of the
Arbitration Law is devoid of merit
55
Id. at 648-650.
Sec. 22. Arbitration deemed a ~pecial proceeding. - Arbitration under a contract or submission shall be
56
deemed a special proceeding, of which the court specified in the contract or submission, or if none be
specified, the Court of First Instance for the province or city in which one of the parties resides or is doing
business, or in which the arbitration was held, shall have jurisdiction. Any application to the court, or a
judge thereof, hereunder shall be made in manner provided for the making and hearing of motions, except
as otherwise herein expressly provided.
57
Sec. 26. Motion to vacate, modijv, or correct an award: when made. - Notice of a motion to vacate,
modify or correct the award must be served upon the adverse party or his counsel within thirty days after
the award is filed or delivered, as prescribed by law for the service upon an attorney in an action.
~
Decision 18 G.R. No. 160071
SO ORDERED.
WE CONCUR:
(On Leave)
MARIA LOURDES P. A. SERENO
Chief Justice
~~~~
TERESITA J. LEONARDO-DE CASTRO
JA (}. . IJ.vuJv'
ESTELA M.'l>ERLAS-BERNABE
.
Associate Justice Associate Justice
Acting Chairperson
Decision 19 G.R. No. 160071
ATTESTATION
I attest that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the
Court's Division.
~~it~
TERESITA J. LEONARDO-DE CASTRO
Associate Justice
Acting Chairperson, First Division
CERTIFICATION
~ft
Acting Chief Justice