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, its Directors and

Officers namely: HUANG KUO-CHANG, HUANG AN-CHUNG, This is where the proper remedy is certiorari under Rule 65 of the
JAMES J.R. CHEN, TRISTAN A. CATINDIG, VICENTE B. AMADOR, Revised Rules of Court. It is to be borne in mind, however, that this
ROCK A.C. HUANG, JEM S.C. HUANG, MARIA TERESA SOLIVEN action will lie only where a grave abuse of discretion or an act without or
and VIRGILIO M. DEL ROSARIO, petitioners, vs. COURT OF in excess of jurisdiction on the part of the voluntary arbitrator is clearly
APPEALS, HON. FRANCISCO X. VELEZ (Presiding Judge, shown.
Regional Trail Court of Makati [Branch 57]) and ROBLECOR
PHILIPPINES, INC., respondents. Voluntary arbitrators by the nature of their functions act in a quasi-judicial
G.R. No. 96283 | February 25, 1992 capacity.
 It should be stressed too, that voluntary arbitrators, by the nature
FACTS: of their functions, act in a quasi-judicial capacity. It stands to
Petitioner Chung Fu Industries (Philippines) and private respondent reason, therefore, that their decisions should not be beyond the
Roblecor Philippines, Inc. forged a construction agreement whereby scope of the power of judicial review of this Court.
respondent contractor committed to construct and finish petitioner
corporation’s industrial/factory complex. In the case at bar, petitioners assailed the arbitral award on the
 In the event of disputes arising from the performance of subject following grounds, most of which allege error on the part of the arbitrator
contract, it was stipulated therein that the issue(s) shall be in granting compensation for various items which apparently are
submitted for resolution before a single arbitrator chosen by disputed by said petitioners.
both parties.  After closely studying the list of errors, as well as petitioners’
discussion of the same in their Motion to Remand Case For Further
Roblecor filed a petition for Compulsory Arbitration with prayer for Hearing and Reconsideration and Opposition to Motion for
TRO before respondent RTC to claim the unsatisfied account and Confirmation of Award,
unpaid progress billings.  we find that petitioners have amply made out a case where the
 Chung Fu moved to dismiss the petition and further prayed for the voluntary arbitrator failed to apply the terms and provisions of the
quashing of the restraining order. Construction Agreement which forms part of the law applicable as
 Subsequent negotiations between the parties eventually led to the between the parties, thus committing a grave abuse of
formulation of an arbitration agreement which, among others, discretion.
provides:  Furthermore, in granting unjustified extra compensation to
o The parties mutually agree that the decision of the respondent for several items, he exceeded his powers — all of
arbitrator shall be final and unappealable. which would have constituted ground for vacating the award
o Therefore, there shall be no further judicial recourse if under Section 24 (d) of the Arbitration Law.
either party disagrees with the whole or any part of the
arbitrator’s award. Wherefore, the petition is granted. The Resolutions of the CA as well as
the Orders of respondent RTC are hereby SET ASIDE. Accordingly, this
Respondent RTC approved the arbitration agreement and thereafter, case is REMANDED to the court of origin for further hearing on this
Engr. Willardo Asuncion was appointed as the sole arbitrator. matter. All incidents arising therefrom are reverted to the status quo
 Arbitrator Asuncion ordered petitioner to immediately pay ante until such time as the trial court shall have passed upon the merits
respondent contractor and further declared the award as final of this case.
and unappealable.
 Roblecor then moved for the confirmation of said award which was 2. BF CORPORATION, petitioner, vs. COURT OF APPEALS,
accordingly confirmed and a writ of execution granted to it. SHANGRI-LA PROPERTIES, COLAYCO, ALFREDO C.
Meanwhile, Chung Fu moved to remand the case for further hearing BENJAMIN C. RAMOS, respondents.
and asked for a reconsideration of the judgment award claiming that ROMERO, J.:
Arbitrator Asuncion committed twelve (12) instances of grave error by
disregarding the provisions of the parties’ contract. FACTS:
 Chung Fu’s Motion was denied and similarly its motion for  BF Corporation (BF) and respondent Shangri-La Properties, Inc.
reconsideration. (Shang) entered into the 1ST AGREEMENT whereby Shang
Chung Fu elevated the case via a petition for certiorari to respondent engaged BF to construct the main structure of the EDSA Plaza
CA. Project – the EDSA Shangri-La Mall – in Mandaluyong City.
 The respondent appellate court concurred with the findings and - While the construction work was in progress Shang once
conclusions of respondent trial court. A motion for reconsideration again hired BF for the expansion of the project, the 2ND
of said resolution was filed by petitioner, but was similarly denied. AGREEMENT.

 BF incurred delay in the construction work that SPI considered as

ISSUE: Whether or not petitioners are estopped from questioning the serious and substantial.
arbitration award allegedly in view of the stipulations in the parties’ - BF contended that they had faithfully complied with the first
arbitration agreement that “the decision of the arbitrator shall be final agreement until a fire broke out on [Nov 30, 1990]
and unappealable” and that “there shall be no further judicial recourse if damaging phase 1 of the project, Hence SPI proposed the
either party disagrees with the whole or any part of the arbitrator’s renegotiation of the agreement between them.
award.” – NO
 Parties entered into another agreement named “Agreement for the
RULING: Execution of Builders Work for the EDSA Plaza Project” (3RD
Civil Law; Arbitration; The finality of the arbitrator’s award is not absolute AGREEMENT) that would cover the construction work on said
and without exceptions.— project as of May 1, 1991 until its eventual completion.
 It is stated explicitly under Art. 2044 of the Civil Code that the finality
of the arbitrators’ award is not absolute and without exceptions.  BF filed with the RTC of Pasig a complaint for the collection of
 Where the conditions described in Articles 2038, 2039 and 2040 the balance due under the construction agreement.
applicable to both compromises and arbitrations are - Named Defendants therein were Shang and members of its
obtaining, the arbitrators’ award may be annulled or BOD – A. Ramos, Colayco, Obles, Lanuza Jr., Licauco &
rescinded. B.Ramos.
 Additionally, under Sections 24 and 25 of the Arbitration Law, there
are grounds for vacating, modifying or rescinding an arbitrator’  Shang and its co-defendants filed a motion to suspend
award. proceedings instead of filing an answer.
 Thus, if and when the factual circumstances referred to in the - Motion was anchored on the defendants allegation that the
above-cited provisions are present, judicial review of the award formal trade contract of the the construction project provided
is properly warranted.
for a clause requiring prior resort to arbitration before judicial evidenced by the fact that such demands were acted upon only months.
intervention. Jul 12 conference - Jul 14 Shang complaint against BF - Aug 13
Request for arbitration.
 Shang submitted a copy of the condition of the contract containing
arbitration clause that it failed to attach its motion to suspend ISSUE: WON the parties entered into an arbitrary agreement
BF OPPOSITION:  Yes, according to Sec 4 of R.A. 876 a contract to arbitrate a
 BF opposed said motion stating that there was no formal contract controversy thereafter arising between the parties, as well as a
between the parties although they entered into an agreement. They submission to arbitrate an existing controversy, shall be in writing
emphasized that the agreement did not provide for an arbitration and subscribed by the party sought to be charged, or by his lawful
thus cannot deprive the court of its jurisdiction. agent.
 The making of a contract or submission for arbitration described in
SHANG CONTENTION: section 2 hereof, providing for arbitration of any controversy, shall
 Shang insisted that there was an arbitration clause in the existing be deemed a consent of the parties of the province or city where
contract between them. It alleged that the suspension would not any of the parties resides, to enforce such contract of submission.
deprive the court of its jurisdiction and would expedite the
settlement proceedings rather than delay it. Contracts; Arbitration; Words and Phrases; Formal Requirements
of an Agreement to Arbitrate; To “subscribe” means to write
BF REJOINDER underneath, as one’s name; to sign at the end of a document.—
 In a rejoinder, BF reiterated that there was no arbitration clause  The formal requirements of an agreement to arbitrate are therefore
in the contract between the parties. the following:
 It averred that if there was an arbitration clause, suspension of the a) it must be in writing and
proceedings was no longer proper and that defendants should be b) it must be subscribed by the parties or their representatives.
declared in default for failure to answer within the reglementary  There is no denying that the parties entered into a written contract
period. that was submitted in evidence before the lower court.
 To “subscribe” means to write underneath, as one’s name; to sign
SHANG SUR-REJOINDER at the end of a document. That word may sometimes be construed
 In its sur-rejoinder, Shang pointed out the significance of the to mean to give consent to or to attest.
petitioner’s admission of the due execution of the Articles of
Agreement. The failure of a party to initial the ‘Conditions of Contract’ does not
 It was shown that the Signature of Colayco (Shang President) and affect compliance with the formal requirements for arbitration
Bayani Fernando (BF President) was in such agreement and was agreements where that particular portion of the covenants between
even duly notarized. the parties is included by reference in the Articles of Agreement. –
 The Court finds that, upon a scrutiny of the records of this case,
RTC: found that the arbitration clause did exist, however the lower court these requisites were complied with in the contract in question. The
denied motion to suspend proceedings and ruled in favor of BF Articles of Agreement, which incorporates all the other contracts
 This was because despite the fact there was an arbitration agreement, and agreements between the parties, was signed by
the Conditions of Contract only the initials of Bayani Fernando was representatives of both parties and duly notarized.
present, while no signature on the part of Shang.
 There were no signed documents to prove Shang’s claims thus A contract may be encompassed in several instruments even
there is serious doubt to the validity of the arbitration clause found though every instrument is not signed by the parties, since it is
in the Conditions of Contract sufficient if the unsigned instruments are clearly identified or
 Assuming that the arbitration clause was valid and binding, it was too referred to and made part of the signed instrument or
late for Shang to invoke arbitration because: instruments.—
- the demand should have been made before the time of final  Petitioner’s contention that there was no arbitration clause because
payment except as otherwise expressly stipulated in the contract
the contract incorporating said provision is part of a “hodgepodge”
- the court found that the project was to be completed on Oct 31,
document, is therefore untenable.
1991 and any delays would incur 80K for each day of delay from
Nov 1,1991 with liquefied damages up to a maximum of 5% of the  A contract need not be contained in a single writing. It may be
total contract price collected from several different writings which do not conflict with
- the court found out that the project was completed in accordance each other and which, when connected, show the parties, subject
with the agreement and Shang had took possession and started matter, terms and consideration, as in contracts entered into by
operations thereof by opening the same to the public in Nov, 1911. correspondence.
- BF billed Shang the total amount of P110,883,101.52 contained in  Similarly, a written agreement of which there are two copies, one
a demand letter sent on Feb 17, 1993. Instead of paying the signed by each of the parties, is binding on both to the same extent
amound demanded, SPI set up its own claim of P220,000,000.00 as though there had been only one copy of the agreement and both
and scheduled a conference on that claim for July 12, 1993. The had signed it.
conference took place but was futile.
The subscription of the principal agreement effectively covers the
 Shang filed MR - denied because of lack of merit and directed the other other documents incorporated by reference therein.—
defendants to file their responsive pleading within the reglementary
 The flaw in petitioner’s contentions therefore lies in its having
- Instead of filing an answer to the complaint, SPI filed a petition for segmented the various components of the whole contract between
Certiorari under Rule 65 before the Court of appeals. the parties into several parts.
 This notwithstanding, petitioner ironically admits the
CA: granted the petition and annulled and set aside the orders and stayed execution of the Articles of Agreement.
the proceedings in the lower court.  Notably, too, the lower court found that the said Articles of
 According to the contract the project manager and the contractor should Agreement “also provides that the ‘Contract Documents’ therein
coordinate with the owner, should there be failure to resolve differences, listed ‘shall be deemed an integral part of this Agreement,’ and one
dispute shall be submitted for arbitration. of the said documents is the ‘Conditions of Contract’ which contains
 Although it was only the initials of Bayani Fernando and De La Cruz the Arbitration Clause.’
present and none from Shang, it does not affect its effectivity. BF  It is this Articles of Agreement that was duly signed by Rufo B.
categorically admitted that the document is the agreement bewtween Colayco, president of private respondent SPI, and Bayani F.
the parties, the initial signature of BF representative to signify Fernando, president of petitioner corporation. The same
conformity to arbitration is no longer necessary. The parties should be
agreement was duly subscribed before notary public Nilberto R.
allowed to submit their dispute to arbitration in accordance with their
 Demand for arbitration was made within a reasonable time after the
dispute has arisen and attempts to settle amicably has failed. This was
“Reasonableness” is a relative term and the question of whether in the record of the case. Consequently, this would have resulted in a judicial
the time within which an act has to be done is reasonable depends rejection of a contractual provision agreed by the parties to the contract.
on attendant circumstances.—
 The arbitration clause provides for a “reasonable time” within which 3. HI-PRECISION STEEL CENTER, INC., vs. LIM KIM STEEL
the parties may avail of the relief under that clause. BUILDERS, INC., and CONSTRUCTION INDUSTRY ARBITRATION
 This Court finds that under the circumstances obtaining in this COMMISSION || G.R. No. 110434 December 13, 1993 ||
case, a one-month period from the time the parties held a FELICIANO, J.:
conference on July 12, 1993 until private respondent SPI notified
petitioner that it was invoking the arbitration clause, is a reasonable FACTS:
time. Indeed, petitioner may not be faulted for resorting to the court  Petitioner Hi-Precision entered into a contract with private
to claim what was due it under the contract. However, we find its respondent Steel Builders under which the latter as Contractor was
denial of the existence of the arbitration clause as an attempt to to complete a P21 Million construction project owned by the former
cover up its misstep in hurriedly filing the complaint before the lower within a period of 153 days, i.e. from 8 May 1990 to 8 October
court. 1990. The project completion date was first moved to 4 November
1990. On that date, however, only 75.8674% of the project was
RA 876; The potentials of arbitration as one of the alternative actually completed. Petitioner attributed this non-completion to
dispute resolution methods that are now rightfully vaunted as “the Steel Builders which allegedly had frequently incurred delays
wave of the future” in international relations, is recognized during the original contract period and the extension period.
worldwide.— - Upon the other hand, Steel Builders insisted that the delays in
 It should be noted that in this jurisdiction, arbitration has been held the project were either excusable or due to Hi-Precision's own
valid and constitutional. fault and issuance of change orders. The project was taken
 Even before the approval on June 19, 1953 of RA No. 876, this over on 7 November 1990, and eventually completed on
Court has countenanced the settlement of disputes through February 1991, by Hi-Precision.
arbitration.  Steel Builders filed a "Request for Adjudication" with public
 RA. 876 was adopted to supplement the New Civil Code’s respondent CIAC. In its Complaint filed with the CIAC, Steel
provisions on arbitration. Builders sought payment of its unpaid progress buildings, alleged
 To brush aside a contractual agreement calling for arbitration in unearned profits and other receivables. Hi-Precision, upon the
case of disagreement between the parties would therefore be a other hand, in its Answer and Amended Answer, claimed actual
step backward. and liquidated damages, reimbursement of alleged additional costs
it had incurred in order to complete the project and attorney's fees.
The special civil action of certiorari may not be invoked as a substitute for The CIAC formed an Arbitral Tribunal with three (3) members, two (2)
the remedy of appeal.— being appointed upon nomination of Hi-Precision and Steel Builders,
 This is reiterated in Ongsitco v. Court of Appeals as follows: “Countless times respectively; the third member (the Chairman) was appointed by the
in the past, this Court has held that ‘where appeal is the proper remedy, CIAC as a common nominee of the two (2) parties. On the Chairman
certiorari will not lie.’ was a lawyer.
 The writs of certiorari and prohibition are remedies to correct lack or excess
of jurisdiction or grave abuse of discretion equivalent to lack of jurisdiction
committed by a lower court. Arbitral Tribunal: petitioner Hi-Precision] is ordered to pay the
 ‘Where the proper remedy is appeal, the action for certiorari will not be Contractor [private respondent Steel Builders] the amount of
entertained. Certiorari is not a remedy for errors of judgment. Errors of P6,400,717.83 and all other claims of the parties against each other are
judgment are correctible by appeal, errors of jurisdiction are reviewable by deemed compensated and offset.
certiorari.’  In its Award, the Arbitral Tribunal stated that it was guided by
 Rule 65 is very clear. The extraordinary remedies of certiorari, Articles 1169, 1192 and 2215 of the Civil Code. With such
prohibition and mandamus are available only when ‘there is no appeal guidance, the arbitrators concluded that (a) both parties were at
or any plain, speedy and adequate remedy in the ordinary course of
law.’ That is why they are referred to as ‘extraordinary.’
fault, though the Tribunal could not point out which of the parties
was the first infractor; and (b) the breaches by one party affected
Certiorari will not be issued to cure errors in proceedings or correct the discharge of the reciprocal obligations of the other party.
erroneous conclusions of law or fact.—
 As long as a court acts within its jurisdiction, any alleged errors committed in  Petitioner Hi-Precision now asks this Court to set aside the Award,
the exercise of its jurisdiction will amount to nothing more than errors of contending basically that it was the contractor Steel Builders who
judgment which are reviewable by timely appeal and not by a special civil had defaulted on its contractual undertakings and so could not be
action of certiorari.”
the injured party and should not be allowed to recover any losses
If a lower court prematurely assumes jurisdiction over a case, then it it may have incurred in the project. Petitioner Hi-Precision insists it
becomes an error of jurisdiction which is a proper subject of a petition for is still entitled to damages, and claims that the Arbitral Tribunal
certiorari. — committed grave abuse of discretion when it allowed certain claims
 This is not exactly so in the instant case. While this Court does not deny the by Steel Builders and offset them against claims of Hi-Precision.
eventual jurisdiction of the lower court over the controversy, the issue posed
basically is whether the lower court prematurely assumed jurisdiction over it. ISSUES: W/N Petitioner is correct in asking this Court to correct legal
If the lower court indeed prematurely assumed jurisdiction over the case,
errors committed by the Arbitral Tribunal, which at the same time
then it becomes an error of jurisdiction which is a proper subject of a petition
for certiorari before the Court of Appeals. And if the lower court does not constitute grave abuse of discretion amounting to lack of jurisdiction on
have jurisdiction over the controversy, then any decision or order it may the part of the Arbitral Tribunal
render may be annulled and set aside by the appellate court.
HELD: No, questions of fact cannot be raised in proceedings before the
Where the issue posed is a question of law, the special civil action of Supreme Court — which is not a trier of facts — in respect of an arbitral
certiorari may be rightfully invoked.— award rendered under the aegis of the CIAC.
 The CA found that an Arbitration Clause does in fact exist. In resolving
Executive Order No. 1008, as amended, provides, in its Section 19, as
said question of fact, the CA interpreted the construction of the subject
contract documents containing the Arbitration Clause in accordance with RA follows:
876 (Arbitration Law) and existing jurisprudence which will be extensively Sec. 19. Finality of Awards. — The arbitral award shall be
discussed hereunder. binding upon the parties. It shall be final and inappealable
 In effect, the issue posed before the CA was likewise a question of law. Being except on questions of law which shall be appealable to the
a question of law, the private respondents rightfully invoked the special civil Supreme Court.
action of certiorari. Section 19 makes it crystal clear that questions of fact cannot
be raised in proceedings before the Supreme Court — which
Where a rigid application of the rule that certiorari cannot be a substitute for
appeal will result in a manifest failure or miscarriage of justice, the
is not a trier of facts — in respect of an arbitral award rendered
provisions of the Rules of Court which are technical rules may be relaxed.— under the aegis of the CIAC. Consideration of the animating
 As we shall show hereunder, had the Court of Appeals dismissed the petition purpose of voluntary arbitration in general, and arbitration
for certiorari, the issue of whether or not an arbitration clause exists in the under the aegis of the CIAC in particular, requires us to apply
contract would not have been resolved in accordance with evidence extant rigorously the above principle embodied in Section 19 that the
Arbitral Tribunal's findings of fact shall be final and place of business at J.P. Laurel Avenue, Bajada Drive,
inappealable. Davao City last 14 December 1996.
 All of the five 5 checks were denominated to the PAYEE’S
 Voluntary arbitration involves the reference of a dispute to an ACCOUNT only, the payee being Mabuhay
impartial body, the members of which are chosen by the parties Electronics Corporation although the proceeds of the checks were
themselves, which parties freely consent in advance to abide by actually intended for Samsung Mabuhay Corporation. After the
the arbitral award issued after proceedings where both parties had Joint Venture Agreement, Samsung dealers were duly requested
the opportunity to be heard. by Samsung Mabuhay Corporation to make all
- The basic objective is to provide a speedy and inexpensive checks payable to the order of Samsung Mabuhay Corporation
method of settling disputes by allowing the parties to avoid the instead of Mabuhay Electronics Corporation. Nevertheless, sole
formalities, delay, expense and aggravation which commonly dealers, like Conpinco Trading, still made out checks payable to
accompany ordinary litigation, especially litigation which goes Mabuhay Electronics Corporation
through the entire hierarchy of courts. Executive Order No.  Plaintiff Samsung Mabuhay Corporation continued to receive
1008 created an arbitration facility to which the construction checks from its local dealers payable to the order of Mabuhay
industry in the Philippines can have recourse. Electronics Corporation. Plaintiff Samsung Mabuhay Corporation
- The Executive Order was enacted to encourage the early and deposited the said checks to its bank account with Far East Bank
expeditious settlement of disputes in the construction industry, and Trust Company (FEBTC), Adriatico Branch. FEBTC
a public policy the implementation of which is necessary and accepted for deposit into Samsung Mabuhay Corporation’s accou
important for the realization of national development goals. 21 nt therein all checks payable to Mabuhay Electronics Corporation.
 Aware of the objective of voluntary arbitration in the labor field, in  Two of the five checks picked-up by Reynaldo Senson were
the construction industry, and in any other area for that matter, the remitted to Samsung Mabuhay Corporation, were cleared by the
Court will not assist one or the other or even both parties in any drawee Bank, UCPB, and the amount credited to the account
effort to subvert or defeat that objective for their private purposes. of Samsung Mabuhay Corporation with FEBTC
- The Court will not review the factual findings of an arbitral  However, the three remaining UCPB checks were not remitted by
tribunal upon the artful allegation that such body had Reynaldo Senson to Samsung Mabuhay Corporation. Instead,
"misapprehended the facts" and will not pass upon issues Reynaldo Senson, using an alias name, Eduardo Bacea, opened
which are, at bottom, issues of fact, no matter how cleverly an account with defendant Real BanK, Malolos, Bulacan branch
disguised they might be as "legal questions." under the account name of one Mabuhay Electronics Company, a
- The parties here had recourse to arbitration and chose the business entity in no way related to plaintiff Mabuhay Electronics
arbitrators themselves; they must have had confidence in Corporation. Mabuhay Electronics Company is a single
such arbitrators. proprietorship owned and managed by Reynaldo Senson, alias
- The Court will not, therefore, permit the parties to relitigate Eduardo Bacea.
before it the issues of facts previously presented and argued
before the Arbitral Tribunal, save only where a very clear  Reynaldo Senson, alias Eduardo Bacea, opened an account with
showing is made that, in reaching its factual conclusions, the defendant Real Bank by presenting an identification card bearing
Arbitral Tribunal committed an error so egregious and hurtful Mabuhay Electronics Company, the alias name Eduardo Bacea
to one party as to constitute a grave abuse of discretion identifying him as the General Manager of Mabuhay Electronics
resulting in lack or loss of jurisdiction. Company, and the photograph of Reynaldo Senson. Reynaldo
Senson and Eduardo Bacea are one and the same person as
 We consider that in asking this Court to go over each individual shown in the identification card issued by Samsung Mabuhay
claim submitted by it and each individual countering claim Corporation to Reynaldo Senson.
submitted by Steel Builders to the Arbitral Tribunal, petitioner Hi- - Reynaldo Senson, alias Eduardo Bacea, through the
Precision is asking this Court to pass upon claims which are either negligence of defendant Real Bank, indorsed the checks and
clearly and directly factual in nature or require previous then deposited all the three checks in the account of Mabuhay
determination of factual issues. Electronics Company.
 Upon the other hand, the Court considers that petitioner Hi-
Precision has failed to show any serious errors of law amounting to  Defendant, Real Bank, then sent 3 checks for clearing and for
grave abuse of discretion resulting in lack of jurisdiction on the part payment thru FEBTC, Malolos, Bulacan Branch after stamping at
of the Arbitral Tribunal, in either the methods employed or the the back of the checks the ususal endorsements: “ALL PRIOR
results reached by the Arbitral Tribunal, in disposing of the detailed ENDORSEMENT and/or LACK OF ENDORSEMENT
claims of the respective parties. GUARANTEED.” Copinco Trading’s account with the drawee bank,
UCPB, was eventually debited for the value of the 3 checks and
Petition DISMISSED. Mabuhay Electronics Company’s account with the defendant Real
Bank was credited for the same account although it was not the
payee nor the person authorized by the payee. Subsequently,
4. Reynaldo Seson, alias Eduardo CBacea, was able to withdraw the
amount of P1,563,750. The value of the 3 checks were negligently
credited by defendant to the account of Mabuhay Electronics
5. REAL BANK VS SAMSUNG MABUHAY CORP. Company, although the check was payable only to Mabuhay
Electronics Corporation and to no one else
FACTS:  Despite plaintiffs’, Samsung Mabihay Corporation’s, demands,
 Plaintiff SAMSUNG MABUHAY ELECTRONIC CORPORATION is defendant ignored and refused to reimburse them with the value of
a joint venture corporation between SAMSUNG ELECTRONICS 3 checks. Thus, plaintiffs were constrained to hire the legal services
CO. LTD., a foreign corporation duly organized and existing of the law firm of V.E. Del Rosario and Partners
under Korean laws, and plaintiff MABUHAY ELECTRONICS COR  Real Bank Inc filed its Answer and Samsung filed a Reply. On 12
PORATION, a corporation organized and existing under Philippine March 1998, Samsung filed an Ex-Parte Motion to Set Case for
laws. Pre-Trial, asking that the case be set for pre-trial. In a notice, Judge
 As a result of the joint venture Agreement, Samsung Mabuhay El Amelia Tria-Infante of RTC Manila, set the case fro pre-trial.
ectronics Corporation became the exclusive distributor for
Samsung products in the Philippines.  RTC issued an Order requiring both petitioner Real Bank and
 Sometime in December of 1996, Conpinco Trading, a regular respondent Samsung to appear in mediation proceeding. This
dealer of respondent Samsung Mabuhay Corporation in Davao Order was sent to respondent Samsung’s former counsel, V.E. Del
City, issued five postdated UCPB checks payable to the order of Rosario and Partners which had at that time already filed a notice
Samsung Mabuhay Corporation, to wit of withdrawal of appearance.
- These five checks were picked up by Reynaldo Senson,
former Collection Supervisor of Samsung Mabuhay  The mediation proceedings took place as scheduled and Mediator
Corporation for Visayas and Mindanao, at Conpinco Trading’s Tammy Ann C. Reyes, who handled the mediation proceedings
submitted her report to the Court stating therein that no action was This is a Petition for Review on Certiorari filed by the petitioner LM
taken on the case referred for mediation because respondent Power against Respondent Capitol Industrial seeking to set aside the
Samsung failed to appear. decision of CA.

 On 04 June 2001, the new counsel of respondent, Ortega, Del Petitioner LM Power Engineering Corporation and Respondent
Castillo, Bacorro, Odulio, Calma and Carbonell, entered its Capitol Industrial Construction Groups Inc.
appearancce. This was filed and received by the Court on 06 June - entered into a Subcontract Agreement involving electrical
2001. work at the Third Port of Zamboanga.

 Subsequently, RTC Branch 9 of Manila, where the case was Due to the inability of the petitioner to procure materials,
pending was designated as a Family Court. Hence the case was - Capitol Industial took over some of the work contracted to the
re-raffle to RTC Judge Marivic Balisi-Umali, RTC Branch 20. former.

RTC: issued an Order, dismissed the complaint of respondent Samsung After the completion of the contract,
for failure to appear at the mediation conference previously scheduled - petitioner billed respondent in the amount of P6, 711,813.90
by the trial judge. but the respondent refused to pay.
 Samsung’s new counsel challenged the Order in a Motion for
Reconsideration alleging that the dismissal as improper and Petitioner filed with the RTC of Makati a Complaint for the collection of
inappropriate as it was not notified of the scheduled mediation the amount representing the alleged balance due it under the
conference. Besides, the notice of the scheduled mediation was subcontract.
sent to the previous counsel who had already withdrawn.
 Judge Umali denied the MR. Respondent filed a Motion to Dismiss, alleging that the Complaint was
premature, due to the absence of prior recourse to arbitration.
CA: Respondent Judge did not even peruse or verify the records of the
case. Has she done so, she would have discovered that the former RTC denied the Motion on the ground that the dispute did not involve
counsel of petitioner to whom she sent the Notice of the Order would the interpretation or the implementation of the Agreement and was not
have already withdrawn and that a new counsel for petitioner had covered by the arbitral clause and ruled in favor of the petitioner.
already entered their appearance. Likewise, she should have discovered
that at that time the Order was issued, petitioner was no longer holding Respondent appealed to the CA, the latter reversed the decision of the
Office at its given address. Clearly, respondent Judge committed a RTC and ordered the referral of the case to arbitration.
grave abuse of discretion in issue such Order
Petitioner Real Bank;s Motion for Reconsideration was denied by the CA Hence, this Petition.

a) WON CA erred in setting aside theo0rder of the trial court dismissing ISSUE: WON there is a need for the prior arbitration before filing of the
the case before it due to the failure of respondent and its counsel to complaint with the court.
attend the mediation conference
b) WON the CA erred in holding that respondent was not notified of the RULING: AFFIRMATIVE.
mediation conference
SC ruled that in the case at hand it involves technical discrepancies
HELD: that are better left to an arbitral body that has expertise in the
a) NO. Mediation is part of pre-trial and failure of the plaintiff to appear subject matter.
threat merits sanction on the part of the absent party. The Second
Revised Guidelines for the Implementation of Mediation Proceedings Moreover, the agreement between the parties contains arbitral clause
and Section 5, Rule 18 of the ROC grant judges the discretion to dismiss that
an action for failure of the plaintiff to appear at mediation proceedings. - “any dispute or conflict as regards to interpretation and
implementation of this agreement which cannot be settled
b) NO. Under Rule 138, Section 26 of the ROC, the withdrawal of between respondent and petitioner amicably shall be settled
counsel with the conformity of the client is completed once the same is by means of arbitration”.
filed in court. No further action thereon by the court is needed other than
the mechanical act of the Clerk of Court of entering the name of the new The resolution of the dispute between the parties herein requires a
counsel in the docket and of giving written notice thereof to the adverse referral to the provisions of their agreement.
party. - Within the scope of the arbitration clause are discrepancies
as to the amount of advances and billable
 In this case, it is uncontroverted that the withdrawal of respondent accomplishments, the application of the provision on
Samsung’s original counsel, V.E. Del Rosario and Partners was termination, and the consequent set-off of expenses.
with the client’s consent. Thus no approval thereof by the trial court
was required because a court’s approval is indispensable only if With respect to the disputes on the take-over/termination and the
the withdrawal is without the client’s consent. expenses incurred by respondent in the take-over,
 It being daylight clear that the withdrawal of respondent Samsung’s - the SC ruled that the agreement provides specific provisions
original counsel was sufficient as the same carried the stamp of that any delay, expenses and any other acts in violation to
approval of the client, the notice of mediation sent to respondent such agreement, the respondent can terminate and can set
Samsung’s original counsel was ineffectual as the same was sent off the amount it incurred in the completion of the contract.
at the time when such counsel had already validly withdrawn its
representation. Corollarily, the absence of respondent Samsung SC tackled also that there’s no need for the prior request for
during the scheduled mediation conference was excusable and arbitration by the parties with the Construction Industry Arbitration
justified. Therefore, the trial court erroneously dismissed the case. Commission (CIAC) in order for it to acquire jurisdiction.
- Because pursuant to Section 1 of Article III of the new
Rules of Procedure Governing Construction Arbitration,
when a contract contains a clause for the submission of a
Alternative dispute resolution methods or ADRs -- like arbitration,
future controversy to arbitration,
mediation, negotiation and conciliation -- are encouraged by the
- it is not necessary for the parties to enter into a
Supreme Court. By enabling parties to resolve their disputes amicably,
submission agreement BEFORE the claimant may invoke
they provide solutions that are less time-consuming, less tedious, less
the jurisdiction of CIAC.
confrontational, and more productive of goodwill and lasting
- Furthermore, the arbitral clause in the agreement is a
commitment on the part of the parties to submit to
arbitration the disputes covered therein.
- Because that clause is binding, they are expected to abide  Hence, if only to inspire confidence in the pursuit of a middle ground
by it in good faith. between petitioner and respondents, we must not interpret the trial
court’s Ordersas dismissing the action on its own motion because
Since a complaint with the RTC has been filed without prior recourse to the parties, specifically petitioner, were anxious to litigate their case
arbitration, under RA 876 (Arbitration Law) as exhibited in their several manifestations and motions.
- the proper procedure is to request the stay or suspension
of such action in order to settle the dispute with the CIAC.


and ANDERSON UY, respondents.
G.R. No. 152878 | May 5, 2003

Petitioner RCBC filed a complaint for recovery of a sum

of money against Magwin Marketing Corporation, Nelson Tiu,
Benito Sy and Anderson Uy.
 Discussions between petitioner and respondents were undertaken
to restructure the indebtedness of respondent.
 Petitioner approved a debt payment scheme for the corporation
which was communicated to the latter by means of a letter for the
conformity of its officers and respondent.
 Only respondent Nelson Tiu affixed his signature on the letter to
signify his agreement to the terms and conditions of the

The TRIAL COURT dismissed the case for failure to prosecute its
action for an unreasonable length of time.
 Petitioner moved for reconsideration and filed a Manifestation and
Motion to Set Case for Pre-Trial.

Conference alleging that only defendant Nelson Tiu had affixed his
signature on the letter which informed the defendants that petitioner
already approved defendant Magwin Marketing Corporations request for
restructuring of its loan obligations.

The trial court denied petitioner's motion to calendar the Case for pre-

Whether or not failure to compromise warrants procedural sanction.

A compromise agreement or amicable settlement is a remedy strongly
encouraged under our jurisdiction.
 However, the failure to consummate one does not warrant any
procedural sanction, much less provide an authority for the court
to jettison the case.

This Court's ruling is pursuant to the case of Goldloop Properties, Inc. v.

Court of Appeals, where it was held that the trial court cannot dismiss a
complaint for failure of the parties to submit a compromise

Alternative Dispute Resolution; Compromise Agreements

 As also explained therein, the proper course of action that should
have been taken by the court a quo, upon manifestation of the
parties of their willingness to discuss a settlement, was to suspend
the proceedings and allow them reasonable time to come to
 (a) If willingness to discuss a possible compromise is expressed by
one or both parties; or (b) If it appears that one of the parties, before
the commencement of the action or proceeding, offered to discuss
a possible compromise but the other party refused the offer,
pursuant to Art. 2030 of the Civil Code.
 If despite efforts exerted by the trial court and the parties the
negotiations still fail, only then should the action continue as if no
suspension had taken place.

Ostensibly, while the rules allow the trial court to suspend its
proceedings consistent with the policy to encourage the use of
alternative mechanisms of dispute resolution, in the instant case, the trial
court only gave the parties fifteen (15) days to conclude a deal.
 This was, to say the least, a passive and paltry attempt of the
court a quo in its task of persuading litigants to agree upon a
reasonable concession.