CASES

JORGE GONZALES and PANEL OF ARBITRATORS, petitioners,

vs.

CLIMAX MINING LTD., CLIMAX-ARIMCO MINING CORP., and

AUSTRALASIAN PHILIPPINES MINING INC., respondents.

G.R. No. 161957. February 28, 2005

FACTS:
Petitioner Jorge Gonzales, as claimowner of mineral deposits located
within the Addendum Area of Influence in Didipio, in the provinces of Quirino
and Nueva Vizcaya, entered into a co-production, joint venture and/or
production-sharing letter-agreement designated as the May 14, 1987 Letter
of Intent with Geophilippines, Inc, and Inmex Ltd. Under the agreement,
petitioner, as claimowner, granted to Geophilippines, Inc. and Inmex Ltd.
collectively, the exclusive right to explore and survey the mining claims for a
period of thirty-six (36) months within which the latter could decide to take
an operating agreement on the mining claims and/or develop, operate, mine
and otherwise exploit the mining claims and market any and all minerals that
may be derived therefrom.
On 28 February 1989, the parties to the May 14, 1987 Letter of
Intent renegotiated the same into the February 28, 1989 Agreement whereby
the exploration of the mining claims was extended for another period of three
years. On 9 March 1991, petitioner Gonzales, Arimco Mining Corporation,
Geophilippines Inc., Inmex Ltd., and Aumex Philippines, Inc. signed a
document designated as the Addendum to the May 14, 1987 Letter of Intent
and February 28, 1989 Agreement with Express Adhesion Thereto (hereafter,
the Addendum Contract). Under the Addendum Contract, Arimco Mining
Corporation would apply to the Government of the Philippines for permission
to mine the claims as the Governments contractor under a Financial and
Technical Assistance Agreement (FTAA). On 20 June 1994, Arimco Mining
Corporation obtained the FTAA and carried out work under the FTAA.

On 8 November 1999, petitioner Gonzales filed before the Panel of

Arbitrators, Region II, Mines and Geosciences Bureau of the Department of
Environment and Natural Resources, against respondents Climax-Arimco
Mining Corporation, Climax, and APMI, a Complaint Seeking the declaration of
nullity or termination of the Addendum Contract, the FTAA, the Operating and
Financial Accommodation Contract, the Assignment, Accession
Agreement, and the Memorandum of Agreement. Petitioner Gonzales prayed
for an unspecified amount of actual and exemplary damages plus attorneys
fees and for the issuance of a temporary restraining order and/or writ of
preliminary injunction to restrain or enjoin respondents from further
implementing the questioned agreements.

ISSUE:
1 Whether the complaint filed by petitioner raises a mining dispute over
which the Panel of Arbitrators has jurisdiction, or a judicial question
which should properly be brought before the regular courts.
 2 Whether the dispute between the parties should be brought for
arbitration under Rep. Act No. 876.

RULING:
1 On the other hand, a mining dispute is a dispute involving (a) rights to
mining areas, (b) mineral agreements, FTAAs, or permits, and (c)
surface owners, occupants and claimholders/concessionaires. Under
Republic Act No. 7942 (otherwise known as the Philippine Mining Act of
1995), the Panel of Arbitrators has exclusive and original jurisdiction to
hear and decide these mining disputes. The Court of Appeals, in its
questioned decision, correctly stated that the Panels jurisdiction is
limited only to those mining disputes which raise questions of fact or
matters requiring the application of technological knowledge and
experience. It is apparent that the Panel of Arbitrators is bereft of
jurisdiction over the Complaint filed by petitioner. The basic issue in
petitioners Complaint is the presence of fraud or misrepresentation
allegedly attendant to the execution of the Addendum Contract and
the other contracts emanating from it, such that the contracts are
rendered invalid and not binding upon the parties. It avers that
petitioner was misled by respondents into agreeing to the Addendum
Contract. This constitutes fraud which vitiated petitioners consent,
and under Article 1390 of the Civil Code, is one of the grounds for the
annulment of a voidable contract. Voidable or annullable contracts,
before they are set aside, are existent, valid, and binding, and are
effective and obligatory between the parties. They can be ratified.
2 Arbitration before the Panel of Arbitrators is proper only when there is
a disagreement between the parties as to some provisions of the
contract between them, which needs the interpretation and the
application of that particular knowledge and expertise possessed by
members of that Panel. It is not proper when one of the parties
repudiates the existence or validity of such contract or agreement on
the ground of fraud or oppression as in this case. The validity of the
contract cannot be subject of arbitration proceedings. Allegations of
fraud and duress in the execution of a contract are matters within the
jurisdiction of the ordinary courts of law. These questions are legal in
nature and require the application and interpretation of laws and
jurisprudence which is necessarily a judicial function. Petitioner also
disagrees with the Court of Appeals ruling that the case should be
brought for arbitration under Rep. Act 876, pursuant to the arbitration
clause in the Addendum Contract which states that [a]ll disputes
arising out of or in connection with the Contract, which cannot be
settled amicably among the Parties, shall finally be settled under R.A.
876. He points out that respondents Climax and APMI are not parties
to the Addendum Contract and are thus not bound by the arbitration
clause in said contract.
3 The court agreed that the case should not be brought under the ambit
of the Arbitration Law, but for a different reason. The question of
validity of the contract containing the agreement to submit to
arbitration will affect the applicability of the arbitration clause itself. A
party cannot rely on the contract and claim rights or obligations under
it and at the same time impugn its existence or validity. Indeed,
litigants are enjoined from taking inconsistent positions. As previously
discussed, the complaint should have been filed before the regular
courts as it involved issues which are judicial in nature.

CARGILL PHILIPPINES, INC., Petitioner,

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

Cargill Philippines, Inc. and Regala Trading, Inc. entered into a contract
and agreed upon that San Fernando Regala Trading, Inc. would purchase from
Cargill a Thailand origin cane blackstrap molasses and the delivery was to be
made in January or February however, the delivery was moved to April or May
and the payment would be by an Irrevocable Letter of Credit Payable at Sight.
Cargill failed to comply with the obligation and Regala Trading filed a
complaint with the RTC for the Rescission of the Contract with Damages
against Cargill. Cargill filed a Motion to Dismiss / Suspend Proceedings and
refer controversy to Voluntary Arbitration, it argued that the contract between
the parties was never consummated because Regala Trading did not return
the proposed agreement bearing its written acceptance.

ISSUE:

Whether or not the validity and enforceability of the contract

containing the arbitration agreement violate any provision of the Arbitration
Law.

HELD:

Applying the Gonzales ruling, an arbitration agreement which forms

part of the main contract shall not be regarded as invalid or non-existent just
because the main contract is invalid or did not come into existence, since the
arbitration agreement shall be treated as a separate agreement independent
of the main contract. A contrary ruling would suggest that a party's mere
repudiation of the main contract is sufficient to avoid arbitration and that is
exactly the situation that the separability doctrine sought to avoid. Thus, we
find that even the party who has repudiated the main contract is not
prevented from enforcing its arbitration clause.

The separability of the arbitration agreement is especially significant to

the determination of whether the invalidity of the main contract also nullifies
the arbitration clause. Indeed, the doctrine denotes that the invalidity of the
main contract, also referred to as the "container" contract, does not affect the
validity of the arbitration agreement. Irrespective of the fact that the main
contract is invalid, the arbitration clause/agreement still remains valid and
enforceable.

EQUITABLE PCI BANKING CORPORATION., Petitioner,

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

FACTS:
On May 24, 2000, petitioners Equitable PCI Bank, Inc. (EPCIB) and the
individual shareholders of Bankard, Inc., as sellers, and respondent RCBC
Capital Corporation (RCBC), as buyer, executed a Share Purchase
Agreement[5] (SPA) for the purchase of petitioners interests in Bankard,
representing 226,460,000 shares, for the price of PhP 1,786,769,400. To
expedite the purchase, RCBC agreed to dispense with the conduct of a due
diligence audit on the financial status of Bankard.
Under the SPA, RCBC undertakes, on the date of contract execution, to
deposit, as downpayment, 20% of the purchase price, or PhP 357,353,880, in
an escrow account. The escrowed amount, the SPA stated, should be released
to petitioners on an agreed-upon release date and the balance of the
purchase price shall be delivered to the share buyers upon the fulfillment of
certain conditions agreed upon, in the form of a managers check.
Sometime in September 2000, RCBC had Bankards accounts audited,
creating for the purpose an audit team led by a certain Rubio, the Vice-
President for Finance of RCBC at the time. Rubios conclusion was that the
warranty, as contained in Section 5(h) of the SPA (simply Sec. 5[h]
hereinafter), was correct. On December 28, 2000, RCBC paid the balance of
the contract price. The corresponding deeds of sale for the shares in
question were executed in January 2001. Thereafter, in a letter of May 5,
2003, RCBC informed petitioners of its having overpaid the purchase price of
the subject shares, claiming that there was an overstatement of valuation of
accounts amounting to PhP 478 million, resulting in the overpayment of over
PhP 616 million. Thus, RCBC claimed that petitioners violated their warranty,
as sellers, embodied in Sec. 5(g) of the SPA (Sec. 5[g] hereinafter).
Following unsuccessful attempts at settlement, RCBC, in accordance
with Sec. 10 of the SPA, filed a Request for Arbitration dated May 12,
2004[8] with the ICC-ICA. In the request, RCBC charged Bankard with
deviating from, contravening and not following generally accepted
accounting principles and practices in maintaining their books. Due to these
improper accounting practices, RCBC alleged that both the audited and
unaudited financial statements of Bankard prior to the stock purchase were
far from fair and accurate and, hence, violated the representations and
warranties of petitioners in the SPA. Per RCBC, its overpayment amounted to
PhP 556 million. It thus prayed for the rescission of the SPA, restitution of the
purchase price, payment of actual damages in the amount of PhP
573,132,110, legal interest on the purchase price until actual restitution,
moral damages, and litigation and attorneys fees. As alternative to rescission
and restitution, RCBC prayed for damages in the amount of at least PhP
809,796,092 plus legal interest.

ISSUE:
Whether or not the trial court acted contrary to law and judicial
authority in refusing to vacate and in confirming the arbitral award,
notwithstanding that the arbitrators had plainly and admittedly failed to
accord petitioners due process by denying them a hearing on the basic
factual matter upon which their liability is predicated.

RULING:
Petitioners right to due process was not breached. As regards
petitioners claim that its right to due process was violated when they were
allegedly denied the right to cross-examine RCBCs witnesses, their claim is
also bereft of merit.
Sec. 15 of RA 876 or the Arbitration Law provides that:
Section 15. Hearing by arbitrators. Arbitrators may, at the
commencement of the hearing, ask both parties for brief statements of the
issues in controversy and/or an agreed statement of facts. Thereafter the
parties may offer such evidence as they desire, and shall produce such
additional evidence as the arbitrators shall require or deem necessary to an
understanding and determination of the dispute. The arbitrators shall be
the sole judge of the relevancy and materiality of the evidence
offered or produced, and shall not be bound to conform to the Rules
of Court pertaining to evidence. Arbitrators shall receive as exhibits
in evidence any document which the parties may wish to submit and
the exhibits shall be properly identified at the time of
submission. All exhibits shall remain in the custody of the Clerk of Court
during the course of the arbitration and shall be returned to the parties at
the time the award is made. The arbitrators may make an ocular inspection
of any matter or premises which are in dispute, but such inspection shall be
made only in the presence of all parties to the arbitration, unless any party
who shall have received notice thereof fails to appear, in which event such
inspection shall be made in the absence of such party.
The well-settled rule is that administrative agencies exercising quasi-
judicial powers shall not be fettered by the rigid technicalities of procedure,
albeit they are, at all times required, to adhere to the basic concepts of fair
play.

ABS-CBN BROADCASTING CORPORATION, petitioner,

vs.
WORLD INTERACTIVE NETWORK SYSTEMS (WINS) JAPAN CO., LTD.,
respondent.

G.R. No. 169332 February 11, 2008

FACTS:

ABS-CBN Broadcasting Corporation (ABS-CBN) entered into a licensing

agreement with World Interactive Network Systems (WINS) to distribute and
sublicense the distribution of the television service known as "The Filipino
Channel" (TFC) in Japan. ABS-CBN undertook to transmit the TFC
programming signals to WINS which the latter received through its decoders
and distributed to its subscribers. A dispute arose between the parties when
ABS-CBN accused WINS of inserting nine episodes of WINS WEEKLY into the
TFC programming. ABS-CBN claimed that these were "unauthorized
insertions" constituting a material breach of their agreement. WINS filed an
arbitration suit pursuant to the arbitration clause of its agreement with ABS-
CBN. It contended that the airing of WINS WEEKLY was made with petitioner's
prior approval. It also alleged that petitioner only threatened to terminate
their agreement because it wanted to renegotiate the terms thereof to allow
it to demand higher fees. It also prayed for damages for petitioner's alleged
grant of an exclusive distribution license to another entity, NHK (Japan
Broadcasting Corporation). The parties appointed Professor Alfredo F. Tadiar
to act as sole arbitrator. The arbitrator found in favor of World Interactive
Network Systems. ABS-CBN filed in the CA a petition for review under Rule 43
of the Rules of Court or, in the alternative, a petition for certiorari under Rule
65 of the same Rules, with application for temporary restraining order and
writ of preliminary injunction. WINS, on the other hand, filed a petition for
confirmation of arbitral award before the RTC of Quezon City. The CA
dismissed ABS-CBNs petition for lack of jurisdiction. It stated that as the
terms or reference (TOR) itself provided that the arbitrator's decision shall be
final and unappealable and that no motion for reconsideration shall be filed,
then the petition for review must fail. It ruled that it is the RTC which has
jurisdiction over questions relating to arbitration. It held that the only
instance it can exercise jurisdiction over an arbitral award is an appeal from
the trial court's decision confirming, vacating or modifying the arbitral award.
It further stated that a petition for certiorari under Rule 65 of the Rules of
Court is proper in arbitration cases only if the courts refuse or neglect to
inquire into the facts of an arbitrator's award.

ISSUE:

Whether or not a party in a voluntary arbitration dispute may avail of,

directly in the CA, a petition for review under Rule 43 or a petition for
certiorari under Rule 65 of the Rules of Court, instead of filing a petition to
vacate the award in the RTC when the grounds invoked to overturn the
arbitrators decision are other than those for a petition to vacate an arbitral
award enumerated under RA 876.

HELD:

The assigned errors reveals that the real issues calling for the CA's
resolution were less the alleged grave abuse of discretion exercised by the
arbitrator and more about the arbitrators appreciation of the issues and
evidence presented by the parties. Therefore, the issues clearly fall under the
classification of errors of fact and law questions which may be passed upon
by the CA via a petition for review under Rule 43. Petitioner cleverly crafted
its assignment of errors in such a way as to straddle both judicial remedies,
that is, by alleging serious errors of fact and law (in which case a petition for
review under Rule 43 would be proper) and grave abuse of discretion
(because of which a petition for certiorari under Rule 65 would be
permissible).

Section 24 of RA 876 clearly provides that the RTC must issue an order
vacating an arbitral award only "in any one of the . . . cases" enumerated
therein. Under the legal maxim in statutory construction expressio unius est
exclusio alterius, the explicit mention of one thing in a statute means the
elimination of others not specifically mentioned. As RA 876 did not expressly
provide for errors of fact and/or law and grave abuse of discretion (proper
grounds for a petition for review under Rule 43 and a petition for certiorari
under Rule 65, respectively) as grounds for maintaining a petition to vacate
an arbitral award in the RTC, it necessarily follows that a party may not.