[G.R. NO.
167261 : March 2, 2007] under the KatarungangPambarangay Law, so that, the case must be
ROSARIA LUPITAN PANG-ET, Petitioner, v. CATHERINE MANACNES-
DAO-AS, Heir of LEONCIO MANACNES and FLORENTINA
MANACNES, Respondent.
FACTS:
November 9, 1994 - an Action4 for recovery of possession of real
property situated in SitioAbatan, Barrio Dagdag, Sagada filed by
herein petitioner before the MCTC of Besao-Sagada, Mountain
Provinceagainst the spouses Leoncio and FlorentinaManacnes, the
predecessors-in-interest of herein respondent
February 23, 1995 – partiesagreed to refer the matter to the
Barangay Lupon (Lupon) of Dagdag, Sagada for arbitration in
accordance with the provisions of the KatarungangPambarangay
Law.proceedings before the MCTC were suspended, and the case
was remanded to the Lupon for resolution.
February 26, 1995 - the Lupon issued a Certification to File
Actiondue to the refusal of the Manacnes spouses to enter into an
Agreement for Arbitration and their insistence that the case should
go to court.
March 8, 1995 - the Certification, as well as the records of the case,
were forwarded to the MCTC
April 7, 1995 – MCTConce more remanding the matter for
conciliation by the Lupon and ordering the Lupon to render an
Arbitration Award thereon. Based on the records of the case, an
Agreement for Arbitration was executed by the parties concerned;
however, the Lupon failed to issue an Arbitration Award as provided
returned to the Lupon until an Arbitration Award is rendered.
May 10, 1995 - the Lupon rendered an Arbitration Awardordering
herein petitioner to retrieve the land upon payment to the spouses
Manacnes of the amount of P8,000.00 for the improvements on the
land. Aggrieved, Leoncio's widow,7 FlorentinaManacnes, repudiated
the Arbitration Award but her repudiation was rejected by the
Lupon. Thereafter, the MCTC was furnished with copies of the
Arbitration Award.
June 1, 1995 - petitioner filed with the Lupon a Motion for
Execution of the Arbitration Award. On the other hand,
FlorentinaManacnes filed a Motion with the MCTC for the
resumption of the proceedings in the original case for recovery of
possession and praying that the MCTC consider her repudiation of
the Arbitration Award issued by the Lupon.
MCTC heard the Motion of FlorentinaManacnes notwithstanding
the latter's failure to appear before the court despite notice.
MCTC - denied FlorentinaManacnes' Motion to repudiate the
Arbitration Award elucidating that since the movant failed to take
any action within the 10-day reglementary period provided for
under the KatarungangPambarangay Law, the arbitration award has
become final and executory. Upon motion of herein petitioner
Pang-et, the MCTC issued an Order remanding the records of the
case to the Lupon for the execution of the Arbitration Award.
August 31, 1995 - incumbent Punong Barangay of Dagdag issued a
Notice of Execution of the Award.
Said Notice of Execution was never implemented
October 16, 2001 - herein petitioner Pang-et filed with the MCTC an
action for enforcement of the Arbitration Award which was sought
to be dismissed by the heir of the Manacnes spouses.8 The heir of
the Manacnes spouses argues that the Agreement for Arbitration
and the Arbitration Award are void, the Agreement for Arbitration
not having been personally signed by the spouses Manacnes, and
the Arbitration Award having been written in English - a language
not understood by the parties.
August 20, 2002 - MCTC dismissed the Petition for Enforcement of
Arbitration Award.
MR: Denied
Appeal to RTC: reversed and set aside the Resolution of the MCTC
and remanded the case to the MCTC for further proceedings.
CA: enforcement of Arbitration Award is REINSTATED
Hence the current petition
ISSUE: WON the proceedings before the lupon is valid
HELD:
An "Agreement for Arbitration" was executed by the parties anent
the above-entitled case. However, said Lupon did not make any
arbitration award as mandated by the KatarungangPambarangay
Law but instead made a finding that the case may now be brought
to the court. This is violative of the KP Law, which cannot be
sanctioned by the court.
it must be stressed that the object of the KatarungangPambarangay
Law is the amicable settlement of disputes through conciliation
proceedings voluntarily and freely entered into by the
parties.15 Through this mechanism, the parties are encouraged to
settle their disputes without enduring the rigors of court litigation.
Nonetheless, the disputing parties are not compelled to settle their
controversy during the barangay proceedings before the Lupon or
the Pangkat, as they are free to instead find recourse in the
courts16 in the event that no true compromise is reached.
The key in achieving the objectives of an effective amicable
settlement under the KatarungangPambarangay Law is the free and
voluntary agreement of the parties to submit the dispute for
adjudication either by the Lupon or the Pangkat, whose award or
decision shall be binding upon them with the force and effect of a
final judgment of a court.17 Absent this voluntary submission by the
parties to submit their dispute to arbitration under the
KatarungangPambarangay Law, there cannot be a binding
settlement arrived at effectively resolving the case. Hence, we fail
to see why the MCTC further remanded the case to the Lupon ng
Tagapamayapa and insisted that the arbitration proceedings
continue, despite the clear showing that the spouses Manacnes
refused to submit the controversy for arbitration.
It would seem from the Order of the MCTC, which again remanded
the case for arbitration to the Lupon ng Tagapamayapa, that it is
compulsory on the part of the parties to submit the case for
arbitration until an arbitration award is rendered by the Lupon. This,
to our minds, is contrary to the very nature of the proceedings
under the KatarungangPambarangay Law which espouses the
principle of voluntary acquiescence of the disputing parties to
amicable settlement.
What is compulsory under the KatarungangPambarangay Law is that
there be a confrontation between the parties before the Lupon
Chairman or the Pangkat and that a certification be issued that no
conciliation or settlement has been reached, as attested to by the
Lupon or Pangkat Chairman, before a case falling within the
authority of the Lupon may be instituted in court or any other
government office for adjudication.18 In other words, the only
necessary pre-condition before any case falling within the authority
of the Lupon or the Pangkat may be filed before a court is that there
has been personal confrontation between the parties but despite
earnest efforts to conciliate, there was a failure to amicably settle
the dispute. It should be emphasized that while the spouses
Manacnes appeared before the Lupon during the initial hearing for
the conciliation proceedings, they refused to sign the Agreement for
Arbitration form, which would have signified their consent to
submit the case for arbitration. Therefore, upon certification by the
Lupon ng Tagapamayapa that the confrontation before the Pangkat
failed because the spouses Manacnes refused to submit the case for
arbitration and insisted that the case should go to court, the MCTC
should have continued with the proceedings in the case for recovery
of possession which it suspended in order to give way for the
possible amicable resolution of the case through arbitration before
the Lupon ng Tagapamayapa.
Petitioner's assertion that the parties must be bound by their
respective counsels' agreement to submit the case for arbitration
and thereafter enter into an amicable settlement is imprecise. What
was agreed to by the parties' respective counsels was the remand of
the case to the Lupon ng Tagapamayapa for conciliation
proceedings and not the actual amicable settlement of the case. As
stated earlier, the parties may only be compelled to appear before
the Lupon ng Tagapamayapa for the necessary confrontation, but
not to enter into any amicable settlement, or in the case at bar, to
sign the Agreement for Arbitration. Thus, when the Manacnes
spouses personally appeared during the initial hearing before the
Lupon ng Tagapamayapa, they had already complied with the
agreement during the pre-trial to submit the case for conciliation
proceedings. Their presence during said hearing is already their
acquiescence to the order of the MCTC remanding the case to the
Lupon for conciliation proceedings, as there has been an actual
confrontation between the parties despite the fact that no amicable
settlement was reached due to the spouses Manacnes' refusal to
sign the Agreement for Arbitration.
Furthermore, the MCTC should not have persisted in ordering the
Lupon ng Tagapamayapa to render an arbitration award upon the
refusal of the spouses Manacnes to submit the case for arbitration
since such arbitration award will not bind the spouses. As reflected
in Section 413 of the Revised KatarungangPambarangay Law, in
order that a party may be bound by an arbitration award, said party
must have agreed in writing that they shall abide by the arbitration
award of the Lupon or the Pangkat. Like in any other contract,
parties who have not signed an agreement to arbitrate will not be
bound by said agreement since it is axiomatic that a contract cannot
be binding upon and cannot be enforced against one who is not a
party to it.19 In view of the fact that upon verification by the Pangkat
Chairman, in order to settle the issue of whether or not they intend
to submit the matter for arbitration, the spouses Manacnes refused
to affix their signature or thumb mark on the Agreement for
Arbitration Form, the Manacnes spouses cannot be bound by the
Agreement for Arbitration and the ensuing arbitration award since
they never became privy to any agreement submitting the case for
arbitration by the Pangkat.
WHEREFORE, premises considered, the instant petition is hereby
DENIED
G.R. No. 169890 March 12, 2007
FELICIANO ESGUERRA, CANUTO ESGUERRA, JUSTA ESGUERRA,
ANGEL ESGUERRA, FIDELA ESGUERRA, CLARA ESGUERRA, and
PEDRO ESGUERRA, Petitioners,
vs.
VIRGINIA TRINIDAD, PRIMITIVA TRINIDAD, and THE REGISTER OF
DEEDS OF MEYCAUAYAN, BULACAN, Respondents.
FACTS:
Felipe Esguerra and Praxedes de Vera (Esguerra spouses) were the
owners of several parcels of land in Camalig, Meycauayan,
Bulacancovered by Tax Declaration No. 10374, half of whichthey
sold to their grandchildren, herein petitioners Feliciano, Canuto,
Justa, Angel, Fidela, Clara and Pedro, all surnamed Esguerra; and a
23,989-square meterparcel of land covered by Tax Declaration No.
12080, 23,489 square meters of which they also sold to petitioners,
and the remaining 500 square meters they sold to their other
grandchildren, the brothers Eulalio and Julian Trinidad.
Also sold to the Trinidad brothers were a 7,048-square meter parcel
of land covered by Tax Declaration No. 9059, a 4,618-square meter
parcel of land covered by Tax Declaration No. 12081, and a 768-
square meter parcel of land covered by Tax Declaration No. 13989.
The Esguerra spouses executed the necessary Deed of Sale in favor
of petitionersin favor of the Trinidad brothers. Both documents
were executed before notary public Maximo Abaño.
Eulalio Trinidad later sold his share of the land to his daughters-
respondents herein, via a notarized Kasulatan ng BilihangTuluyan
ng Lupa.
A portion of the land consisting of 1,693 square meters was later
assigned Lot No. 3593 during a cadastral survey conducted in the
late 1960s.
On respondents’ application for registration of title, the then CFI of
Bulacanawarded Lot No. 3593 in their favor.
Land Registration Commission (LRC, now the Land Registration
Authority [LRA]) issued Decree No. N-114039 by virtue of which the
Register of Deeds of Bulacan issued OCT No. 0-36315 in the name of
respondents.
November 10, 1958 - under a notarized Bilihan ng Lupa6petitioners
sold to respondents’ parents Eulalio Trinidad and
DamianaRodeadilla (Trinidad spouses) a portion of about 5,000
square meters of the 23,489-square meter of land which they
previously acquired from the Esguerra spouses.7
During the same cadastral survey conducted in the late 1960s, it
was discovered that the about 5,000-square meter portion of
petitioners’ parcel of land sold to the Trinidad spouses which was
assigned Lot No. 3591 actually measured 6,268 square meters.
In a subsequent application for registration of title over Lot No.
3591, docketed as Land Registration Case No. N-335-V, the CFI, by
Decision8 of August 21, 1972, awarded Lot No. 3591 in favor of
Eulalio Trinidad. Pursuant to the Decision, the LRC issued Decree
No. N-149491 by virtue of which the Register of Deeds of Bulacan
issued OCT No. 0-64989 in the name of Trinidad.
Upon the death of the Trinidad spouses, Lot No. 3591 covered by
OCT No. 0-6498 was transmitted to respondents by succession.
Petitioners, alleging that upon verification with the LRA they
discovered the issuance of the above-stated two OCTs, filed on
August 29, 1994 before the Regional Trial Court (RTC) of Malolos,
Bulacan two separate complaints for their nullification on the
ground that they were procured through fraud or
misrepresentation.
RTC: Both cases were consolidated, both case were dismissed after
trial.
CA: Denied
MR: Denied also
Hence the current petition.
ISSUE: WON fraud is involved
HELD: Negative
Appellant Pedro Esguerra even testified that he does not know how
appellees were able to secure a title over the lot in question and
that they never sold Lot No. 3593 to Virginia Trinidad since it is part
of the whole lot of 23,489 square meters. The said testimony is a
mere conclusion on the part of appellants. On the other hand, the
evidence shows that appellees acquired title over the subject
property by virtue of a deed of sale executed by their father Eulalio
Trinidad in their favor.
[T]hey failed to establish that appellees’ acquisition of the
certificate of title is fraudulent. In fact, in their two complaints,
appellants acknowledged that appellees observed and took the
initial procedural steps in the registration of the land, thus ruling
out fraud in the acquisition of the certificate of title.
Factual findings of the trial court, when affirmed by the Court of
Appeals, are final, conclusive and binding on this Court,20 which is
not a trier of facts,21 hence, bereft of function under Rule 45 to
examine and weigh the probative value of the evidence
presented,22 its jurisdiction being limited only to the review and
revision of errors of law.23Albeit there are exceptions24 to this rule,
the cases at bar do not fall thereunder, there being no showing that
the trial and appellate courts overlooked matters which, if
considered, would alter their outcome.
Under the Torrens System, an OCT enjoys a presumption of validity,
which correlatively carries a strong presumption that the provisions
of the law governing the registration of land which led to its
issuance have been duly followed.25 Fraud being a serious charge, it
must be supported by clear and convincing proof.26 Petitioners
failed to discharge the burden of proof, however.
On the questioned interpretation and application by the appellate
court of Article 1542 of the Civil Code reading:
In the sale of real estate, made for a lump sum and not at the rate
of a certain sum for a unit of measure or number, there shall be no
increase or decrease of the price, although there be a greater or less
areas or number than that stated in the contract.
The same rule shall be applied when two or more immovables are
sold for a single price; but if, besides mentioning the boundaries,
which is indispensable in every conveyance of real estate, its area or
number should be designated in the contract, the vendor shall be
bound to deliver all that is included within said boundaries, even
when it exceeds the area or number specified in the contract; and,
should he not be able to do so, he shall suffer a reduction in the
price, in proportion to what is lacking in the area or number, unless
the contract is rescinded because the vendee does not accede to
the failure to deliver what has been stipulated.
while petitioners admittedly sold Lot No. 3591 to the Trinidad
spouses, they contend that what they sold were only 5,000 square
meters and not 6,268 square meters, and thus claim the excess of
1,268 square meters.
In sales involving real estate, the parties may choose between two
types of pricing agreement: a unit price contract wherein the
purchase price is determined by way of reference to a stated rate
per unit area), or a lump sum contract which states a full purchase
price for an immovable the area of which may be declared based on
an estimate or where both the area and boundaries are stated.
In a unit price contract, the statement of area of immovable is not
conclusive and the price may be reduced or increased depending on
the area actually delivered. If the vendor delivers less than the area
agreed upon, the vendee may oblige the vendor to deliver all that
may be stated in the contract or demand for the proportionate
reduction of the purchase price if delivery is not possible. If the
vendor delivers more than the area stated in the contract, the
vendee has the option to accept only the amount agreed upon or to
accept the whole area, provided he pays for the additional area at
the contract rate.
In the case where the area of the immovable is stated in the
contract based on an estimate, the actual area delivered may not
measure up exactly with the area stated in the contract. According
to Article 1542 of the Civil Code, in the sale of real estate, made for
a lump sum and not at the rate of a certain sum for a unit of
measure or number, there shall be no increase or decrease of the
price, although there be a greater or less areas or number than that
stated in the contract.
Where both the area and the boundaries of the immovable are
declared, the area covered within the boundaries of the immovable
prevails over the stated area. In cases of conflict between areas and
boundaries, it is the latter which should prevail. What really defines
a piece of ground is not the area, calculated with more or less
certainty, mentioned in its description, but the boundaries therein
laid down, as enclosing the land and indicating its limits. In a
contract of sale of land in a mass, it is well established that the
specific boundaries stated in the contract must control over any
statement with respect to the area contained within its boundaries.
It is not of vital consequence that a deed or contract of sale of land
should disclose the area with mathematical accuracy. It is sufficient
if its extent is objectively indicated with sufficient precision to
enable one to identify it. An error as to the superficial area is
immaterial. Thus, the obligation of the vendor is to deliver
everything within the boundaries, inasmuch as it is the entirety
thereof that distinguishes the determinate object.28 (Emphasis and
underscoring supplied)
The courts below correctly characterized the sale of Lot No. 3591 as
one involving a lump sum contract. The Bilihan ng Lupa shows that
the parties agreed on the purchase price of ₱1,000.00 on a
predetermined, albeit unsurveyed, area of 5,000 square meters and
not on a particular rate per unit area. As noted by the Court of
Appeals, the identity of the realty was sufficiently described as
riceland:
It is clear from the afore-quoted Bilihan ng Lupa that what
appellants sold to Eulalio was the "bahagingpalayan." Though
measured as 5,000 square meters, more or less, such measurement
is only an approximation, and not an exact measurement.
Moreover, we take note of the fact that the said deed of sale
mentioned the boundaries covering the whole area of 33,489
square meters, including the "bahagingpalayan." Had appellants
intended to sell only a portion of the "bahagingpalayan," they could
have stated the specific area in the deed of sale and not the entire
"bahagingpalayan"
In fine, under Article 1542, what is controlling is the entire land
included within the boundaries, regardless of whether the real area
should be greater or smaller than that recited in the deed. This is
particularly true since the area of the land in OCT No. 0-6498 was
described in the deed as "humigitkumulang," that is, more or less.30
A caveat is in order, however. The use of "more or less" or similar
words in designating quantity covers only a reasonable excess or
deficiency. A vendee of land sold in gross or with the description
"more or less" with reference to its area does not thereby ipso
facto take all risk of quantity in the land.31
Numerical data are not of course the sole gauge of
unreasonableness of the excess or deficiency in area. Courts must
consider a host of other factors. In one case,32 the Court found
substantial discrepancy in area due to contemporaneous
circumstances. Citing change in the physical nature of the property,
it was therein established that the excess area at the southern
portion was a product of reclamation, which explained why the
land’s technical description in the deed of sale indicated the
seashore as its southern boundary, hence, the inclusion of the
reclaimed area was declared unreasonable.
In OCT No. 0-6498, the increase by a fourth of a fraction of the area
indicated in the deed of sale cannot be considered as an
unreasonable excess. Most importantly, the circumstances
attendant to the inclusion of the excess area bare nothing atypical
or significant to hint at unreasonableness. It must be noted that the
land was not yet technically surveyed at the time of the sale. As
vendors who themselves executed the Bilihan ng Lupa, petitioners
may rightly be presumed to have acquired a good estimate of the
value and area of the bahagingpalayan.
As for the last assigned error, the appellate court, in finding that the
complaints were time-barred, noted that when the complaints were
filed in 1994, more than 27 years had elapsed from the issuance of
OCT No. 0-3631 and more than 20 years from the issuance of OCT
No. 0-6498. The prescriptive period of one (1) year had thus set
in.1awphi1.nét
Petitioners’ reliance on Agne v. Director of Lands33 is misplaced
since the cancellation of title was predicated not on the ground of
fraud but on want of jurisdiction. Even assuming that petitioners’
actions are in the nature of a suit for quieting of title, which is
imprescriptible, the actions still necessarily fail since petitioners
failed to establish the existence of fraud.
A word on Republic Act No. 716034 which was raised by petitioners
in their petition. It expressly requires the parties to undergo a
conciliation process under the KatarungangPambarangay, as a
precondition to filing a complaint in court,35 non-compliance with
this condition precedent does not prevent a court of competent
jurisdiction from exercising its power of adjudication over a case
unless the defendants object thereto. The objection should be
seasonably made before the court first taking cognizance of the
complaint, and must be raised in the Answer or in such other
pleading allowed under the Rules of Court.36
While petitioners admittedly failed to comply with the requirement
of barangay conciliation, they assert that respondents waived such
objection when they failed to raise it in their Answer. Contrary to
petitioners’ claim, however, the records reveal that respondents
raised their objection in their Amended Answers37 filed in both
cases.
IN FINE, it is a fundamental principle in land registration that a
certificate of title serves as evidence of an indefeasible and
incontrovertible title to the property in favor of the person whose
name appears therein. Such indefeasibility commences after the
lapse or expiration of one year from the date of entry of the decree
of registration when all persons are considered to have a
constructive notice of the title to the property. After the lapse of
one year, therefore, title to the property can no longer be
contested. This system was so effected in order to quiet title to
land.38

WHEREFORE, the petition is DENIED

[G.R. No. 146195. November 18, 2004]
AVELINA ZAMORA, EMERITA ZAMORA-NICOL, SONNY NICOL,
TERESA ZAMORA-UMALI, CLARENCE UMALI, ROBERTO
ZAMORA, ROLANDO ZAMORA, MARY ANN ZAMORA,
MICHELLE ZAMORA and RODRIGO
ZAMORA, petitioners, vs. HEIRS of CARMEN IZQUIERDO,
represented by their attorney-in-fact, ANITA F.
PUNZALAN, respondents.
FACTS:
1973 - Carmen Izquierdo and Pablo Zamora entered into a
verbal stipulation whereby the former leased to the latter one of
her apartment units located at 117-B General Luna Street, Caloocan
City. They agreed on the following: the rental is P3,000.00 per
month; the leased premises is only for residence; and only a single
family is allowed to occupy it.
After the death of Carmen (lessor) in 1996 her attorney-in-fact,
Anita Punzalan, representing the heirs, herein respondents,
prepared a new contract of lease wherein the rental was increased
from P3,000.00 to P3,600.00 per month.[3] However, petitioners
refused to sign it.
January 1997, Pablo (lessee) died. His wife, Avelina Zamora,
and their children (two of whom have their own families), herein
petitioners, continued to reside in the apartment unit. However,
they refused to pay the increased rental and persisted in operating
a photocopying business in the same apartment.
Petitioner Avelina Zamora applied with the Metropolitan
Waterworks & Sewerage System (MWSS) for a water line
installation in the premises. Since a written consent from the owner
is required for such installation, she requested respondents
attorney-in-fact to issue it. However, the latter declined because
petitioners refused to pay the new rental rate and violated the
restrictions on the use of the premises by using a portion thereof
for photocopying business and allowing three families to reside
therein.
This prompted petitioner Avelina Zamora to file with the Office of
the Punong Barangay of Barangay 16, Sona 2, District I, Lungsod ng
Caloocan, a complaint against Anita Punzalan
August 24, 1997 - during the barangay conciliation
proceedings, petitioner Avelina Zamora declared that she refused to
sign the new lease contract because she is not agreeable with the
conditions specified therein.
The following day, Anita Punzalan sent Avelina a
letter[4] informing her that the lease is being terminated and
demanding that petitioners vacate the premises within 30 days
from notice.
Despite several barangay conciliation sessions, the parties
failed to settle their dispute amicably. Hence,
the Barangay Chairman issued a Certification to File Action.
October 2, 1997, respondents, represented by Anita Punzalan,
filed with the Metropolitan Trial Court (MTC), Branch 49, Caloocan
City, a complaint for unlawful detainer and damages against
petitioners. petitioners filed a motion to dismiss[7] the complaint on
the ground that the controversy was not referred to
the barangay for conciliation. First, they alleged that
the barangay Certification to File Action is fatally defective because
it pertains to another dispute, i.e., the refusal by respondents
attorney-in-fact to give her written consent to petitioners request
for installation of water facilities in the premises. And, second,
when the parties failed to reach an amicable settlement before
the LupongTagapamayapa, the Punong Barangay
(as Lupon Chairman), did not constitute the Pangkat ng
Tagapagkasundo before whom mediation or arbitration
proceedings should have been conducted, in violation of Section
410(b), Chapter 7 (KatarungangPambarangay), Title One, Book III of
Republic Act No. 7160[8] (otherwise known as the Local Government
Code of 1991)
SECTION 410. Procedure for Amicable Settlement
(b) Mediation by lupon chairman Upon receipt of the complaint,
the lupon chairman[9] shall, within the next working day, summon
the respondent(s), with notice to the complainant(s) for them and
their witnesses to appear before him for a mediation of their
conflicting interests. If he fails in his mediation effort within fifteen
(15) days from the first meeting of the parties before him, he shall
forthwith set a date for the constitution of the pangkat in
accordance with the provisions of this Chapter.
MTC: Denied the motion to dismiss
MR: rendered a Judgment[14] in favor of respondents and against
petitioners
RTC: Affirmed MTC decision
CA: Affirmed the RTC ruling
MR: Denied
Hence the current petition.
ISSUE: WON a conciliation process before the Lupon Chairman or
the Pangkat as a precondition to filing a complaint in court
HELD: Affirmative
SECTION 412. Conciliation. (a) Pre-condition to Filing of Complaint in
Court. No complaint, petition, action, or proceeding involving any
matter within the authority of the lupon shall be filed or instituted
directly in court or any other government office for adjudication,
unless there has been a confrontation between the parties before
the lupon chairman or the pangkat, and that no conciliation or
settlement has been reached as certified by
the lupon or pangkat secretary and attested to by
the lupon or pangkat chairman.
In the case at bar, the Punong Barangay, as Chairman of the Lupong
Tagapamayapa, conducted conciliation proceedings to resolve the
dispute between the parties herein. Contrary to petitioners
contention, the complaint does not only allege, as a cause of action,
the refusal of respondents attorney-in-fact to give her consent to
the installation of water facilities in the premises, but also
petitioners violation of the terms of the lease, specifically their use
of a portion therein for their photocopying business and their
failure to pay the increased rental.
It is of no moment that the complaint was initially made by
defendant-appellant Avelina Zamora because herein plaintiff-
appellee was given by the Sangguniang Barangay the authority to
bring her grievance to the Court for resolution. While it is true that
the Sertifikasyon dated September 14, 1997 is entitled Ukol Sa Hindi
Pagbibigay Ng Pahintulot Sa Pagpapakabit Ng Tubig, this title must
not prevail over the actual issues discussed in the proceedings.
Hence, to require another confrontation at the barangay level as a
sine qua non for the filing of the instant case would not serve any
useful purpose anymore since no new issues would be raised
therein and the parties have proven so many times in the past that
they cannot get to settle their differences amicably.[20]
As discussed earlier, the case was referred to
the Lupon Chairman for conciliation. Obviously, petitioners motion
to dismiss, even if allowed, is bereft of merit.
WHEREFORE, the petition is DENIED.

We cannot sustain petitioners contention that

the Lupon conciliation alone, without the proceeding before the
Pangkat ng Tagapagkasundo, contravenes the law on Katarungang
Pambarangay. Section 412(a) of R.A. No. 7160, quoted earlier,
clearly provides that, as a precondition to filing a complaint in court,
the parties shall go through the conciliation process either before
the Lupon Chairman (as what happened in the present
case), or the Pangkat.
We hold that petitioners motion to dismiss the complaint for
unlawful detainer is proscribed by Section 19(a) of the 1991 Revised
Rule on Summary Procedure, quoted earlier. Section 19(a) permits
the filing of such pleading only when the ground for dismissal of the
complaint is anchored on lack of jurisdiction over the subject
matter, or failure by the complainant to refer the subject matter of
his/her complaint to the Lupon for conciliation prior to its filing with
the court. This is clear from the provisions of Section 18 of the same
Rule, which reads:

SEC. 18. Referral to Lupon. Cases requiring referral to the Lupon for
conciliation under the provisions of Presidential Decree No.
1508 where there is no showing of compliance with such
requirement, shall be dismissed without prejudice, and may be
revived only after such requirement shall have been complied with.
This provision shall not apply to criminal cases where the accused
was arrested without a warrant. (Underscoring supplied)
G.R. No. 153567 February 18, 2008
LIBRADA M. AQUINO, petitioner,
vs.
ERNEST S. AURE1, respondent.
FACTS:
The subject of the present controversy is a parcel of land situated in
Roxas District, Quezon City, with an area of 449 square meters and
covered by Transfer Certificate of Title (TCT) No. 205447 registered
with the Registry of Deeds of Quezon City.
Aure and E.S. Aure Lending Investors, Inc. (Aure Lending) filed a
Complaint for ejectment against Aquino before the MeTC.
In their Complaint, Aure and Aure Lending alleged that they
acquired the subject property from Aquino and her husband
Manuel (spouses Aquino) by virtue of a Deed of Sale8 executed on 4
June 1996. Aure claimed that after the spouses Aquino received
substantial consideration for the sale of the subject property, they
refused to vacate the same.9
Aquino countered that the Complaint in Civil Case No. 17450 lacks
cause of action for Aure and Aure Lending do not have any legal
right over the subject property. Aquino admitted that there was a
sale but such was governed by the Memorandum of
Agreement11 (MOA) signed by Aure. As stated in the MOA, Aure
shall secure a loan from a bank or financial institution in his own
name using the subject property as collateral and turn over the
proceeds thereof to the spouses Aquino. However, even after Aure
successfully secured a loan, the spouses Aquino did not receive the
proceeds thereon or benefited therefrom.
MeTC: rendered a decision in favor of Aquino and dismissed the
Complaint for ejectment of Aure and Aure Lending for non-
compliance with the barangay conciliation process, among other
grounds. The MeTC observed that Aure and Aquino are residents of
the same barangay but there is no showing that any attempt has
been made to settle the case amicably at the barangay level. The
MeTC further observed that Aure Lending was improperly included
as plaintiff for it did not stand to be injured or benefited by the suit.
Finally, the MeTC ruled that since the question of ownership was
put in issue, the action was converted from a mere detainer suit to
one "incapable of pecuniary estimation" which properly rests within
the original exclusive jurisdiction of the RTC.
RTC: affirmed the dismissal of the Complaint on the same ground
that the dispute was not brought before the Barangay Council for
conciliation before it was filed in court.
MR: denied
CA: rendered a Decision, reversing the MeTC and RTC Decisions and
remanding the case to the MeTC for further proceedings and final
determination of the substantive rights of the parties. The appellate
court declared that the failure of Aure to subject the matter
to barangay conciliation is not a jurisdictional flaw and it will not
affect the sufficiency of Aure’s Complaint since Aquino failed to
seasonably raise such issue in her Answer.
MR: Denied
Hence the current petition
ISSUE: WON NON-COMPLIANCE WITH THE BARANGAY
CONCILIATION PROCEEDINGS IS A JURISDICTIONAL DEFECT THAT
WARRANTS THE DISMISSAL OF THE COMPLAINT
HELD:
The barangay justice system was established primarily as a means
of easing up the congestion of cases in the judicial courts. This could
be accomplished through a proceeding before the barangay courts
which, according to the conceptor of the system, the late Chief
Justice Fred Ruiz Castro, is essentially arbitration in character, and
to make it truly effective, it should also be compulsory. With this
primary objective of the barangay justice system in mind, it would
be wholly in keeping with the underlying philosophy of Presidential
Decree No. 1508, otherwise known as the Katarungang
Pambarangay Law, and the policy behind it would be better served
if an out-of-court settlement of the case is reached voluntarily by
the parties.17
The primordial objective of Presidential Decree No. 1508 is to
reduce the number of court litigations and prevent the
deterioration of the quality of justice which has been brought by the
indiscriminate filing of cases in the courts.18 To ensure this
objective, Section 6 of Presidential Decree No. 150819 requires the
parties to undergo a conciliation process before the Lupon
Chairman or the Pangkat ng Tagapagkasundo as a precondition to
filing a complaint in court subject to certain exceptions20 which are
inapplicable to this case. The said section has been declared
compulsory in nature.
Presidential Decree No. 1508 is now incorporated in Republic Act
No. 7160, otherwise known as The Local Government Code, which
took effect on 1 January 1992.
It is true that the precise technical effect of failure to comply with
the requirement of Section 412 of the Local Government Code
on barangay conciliation (previously contained in Section 5 of
Presidential Decree No. 1508) is much the same effect produced by
non-exhaustion of administrative remedies -- the complaint
becomes afflicted with the vice of pre-maturity; and the controversy
there alleged is not ripe for judicial determination. The complaint
becomes vulnerable to a motion to dismiss.22 Nevertheless, the
conciliation process is not a jurisdictional requirement, so that non-
compliance therewith cannot affect the jurisdiction which the court
has otherwise acquired over the subject matter or over the person
of the defendant.23
In the case at bar, we similarly find that Aquino cannot be allowed
to attack the jurisdiction of the MeTC over Civil Case No. 17450
after having submitted herself voluntarily thereto. We have
scrupulously examined Aquino’s Answer before the MeTC in Civil
Case No. 17450 and there is utter lack of any objection on her part
to any deficiency in the complaint which could oust the MeTC of its
jurisdcition.
By Aquino’s failure to seasonably object to the deficiency in the
Complaint, she is deemed to have already acquiesced or waived any
defect attendant thereto. Consequently, Aquino cannot thereafter
move for the dismissal of the ejectment suit for Aure and Aure
Lending’s failure to resort to the barangay conciliation process,
since she is already precluded from doing so. The fact that Aquino
raised such objection during the pre-trial and in her Position Paper
is of no moment, for the issue of non-recourse
to barangay mediation proceedings should be impleaded in
her Answer.
As provided under Section 1, Rule 9 of the 1997 Rules of Civil
Procedure:
Sec. 1. Defenses and objections not pleaded. – Defenses and
objections not pleaded either in a motion to dismiss or in the
answer are deemed waived. However, when it appears from the
pleadings or the evidence on record that the court has no Neither could the MeTC dismiss Civil Case No. 17450 motu proprio.
jurisdiction over the subject matter, that there is another action The 1997 Rules of Civil Procedure provide only three instances when
pending between the same parties for the same cause, or that the the court may motu proprio dismiss the claim, and that is when the
action is barred by a prior judgment or by statute of limitations, the pleadings or evidence on the record show that (1) the court has no
court shall dismiss the claim. jurisdiction over the subject matter; (2) there is another cause of
action pending between the same parties for the same cause; or (3)
While the aforequoted provision applies to a pleading (specifically, where the action is barred by a prior judgment or by a statute of
an Answer) or a motion to dismiss, a similar or identical rule is limitations. Thus, it is clear that a court may not motu
provided for all other motions in Section 8 of Rule 15 of the same proprio dismiss a case on the ground of failure to comply with the
Rule which states: requirement for barangay conciliation, this ground not being among
those mentioned for the dismissal by the trial court of a case on its
Sec. 8. Omnibus Motion. - Subject to the provisions of own initiative.
Section 1 of Rule 9, a motion attacking a pleading, order,
judgment, or proceeding shall include all objections then inferior courts are now "conditionally vested with adjudicatory
available, and all objections not so included shall be power over the issue of title or ownership raised by the parties in an
deemed waived. ejectment suit." These courts shall resolve the question of
ownership raised as an incident in an ejectment case where a
The spirit that surrounds the foregoing statutory norm is to require determination thereof is necessary for a proper and complete
the party filing a pleading or motion to raise all available exceptions adjudication of the issue of possession.33
for relief during the single opportunity so that single or multiple
objections may be avoided.26 It is clear and categorical in Section 1, WHEREFORE, premises considered, the instant Petition is DENIED.
Rule 9 of the Revised Rules of Court that failure to raise defenses
and objections in a motion to dismiss or in an answer is deemed a
waiver thereof; and basic is the rule in statutory construction that
when the law is clear and free from any doubt or ambiguity, there is
no room for construction or interpretation.27 As has been our
consistent ruling, where the law speaks in clear and categorical
language, there is no occasion for interpretation; there is only room
for application.28 Thus, although Aquino’s defense of non-
compliance with Presidential Decree No. 1508 is meritorious,
procedurally, such defense is no longer available for failure to plead
the same in the Answer as required by the omnibus motion rule.
[G.R. No. 159411. March 18, 2005]
TEODORO I. CHAVEZ, petitioner, vs. HON. COURT OF APPEALS and
JACINTO S. TRILLANA, respondents.
FACTS:
Petitioner Teodoro Chavez and respondent Jacinto Trillana
entered into a contract of lease[4] whereby the former leased to the
latter his fishpond at Sitio Pariahan, Taliptip, Bulacan, Bulacan, for a
term of six (6) years commencing from October 23, 1994 to October
23, 2000. The rental for the whole term was two million two
hundred forty thousand (P2,240,000.00) pesos, of which one million
(P1,000,000.00) pesos was to be paid upon signing of the contract.
The balance was payable as follows:
b. That, after six (6) months and/or, on or before one (1) year from
the date of signing this contract, the amount of THREE HUNDRED
FORTY-FOUR THOUSAND (P344,000.00) pesos shall be paid on April
23, 1995 and/or, on or before October 23, 1995 shall be paid by the
LESSEE to the LESSOR.
c. That, the LESSEE, shall pay the amount of FOUR HUNDRED FORTY-
EIGHT THOUSAND (P448,000.00) pesos x x x to the LESSOR on April
23, 1997 and/or, on or before October 23, 1997, and on April 23,
1998 and/or, on or before October 23, 1998 the amount of FOUR
HUNDRED FORTY-EIGHT THOUSAND (P448,000.00) pesos x x x.
Paragraph 5 of the contract further provided that respondent shall
undertake all construction and preservation of improvements in the
fishpond that may be destroyed during the period of the lease, at
his expense, without reimbursement from petitioner.
A powerful typhoon hit the country which damaged the subject
fishpond. Respondent did not immediately undertake the necessary
repairs as the water level was still high. Three (3) weeks later,
respondent was informed by a barangay councilor that major
repairs were being undertaken in the fishpond with the use of a
crane. Respondent found out that the repairs were at the instance
of petitioner who had grown impatient with his delay in
commencing the work.
Respondent filed a complaint before the Office of
the Barangay Captain of Taliptip, Bulacan, Bulacan. He complained
about the unauthorized repairs undertaken by petitioner, the ouster
of his personnel from the leased premises and its unlawful taking by
petitioner despite their valid and subsisting lease contract. After
conciliation proceedings, an agreement was reached
KASUNDUAN
Napagkasunduan ngayong araw na to ika-17 ng Setyembre ng
nagpabuwis Teodoro Chavez at bumubuwis na si G. Jay Trillana na
ibabalik ni G. Chavez ang halagang P150,000.00 kay G. Trillana
bilang sukli sa natitirang panahon ng buwisan.
Ngunit kung maibibigay ni G. Chavez ang halagang P100,000.00
bago sumapit o pagsapit ng ika-23 ng Setyembre, taong
kasalukuyan, to ay nangangahulugan ng buong kabayaran at
hindi P150,000.00.
Kung sakali at hindi maibigay ang P100,000.00 ang magiging
kabayaran ay mananatiling P150,000.00 na may paraan ng
pagbabayad ng sumusunod:
Ang P50,000.00 ay ibibigay bago sumapit o pagsapit ng ika-31 ng
Oktubre 1996 at ang balanseng P100,000.00 ay ibibigay sa loob ng
isang taon subalit magbibigay ng promissory note si G. Chavez at
kung mabubuwisang ang kanyang palaisdaan ay ibibigay lahat ni G.
Chavez ang buong P150,000.00 sa lalong madaling panahon.
Kung magkakaroon ng sapat at total na kabayaran si G. Chavez kay
G. Trillana ang huli ay lalagda sa kasulatan bilang waiver o walang
anumang paghahabol sa nabanggit na buwisan.
Alleging non-compliance by petitioner with their lease contract and
the foregoing Kasunduan, respondent filed a complaint against
petitioner before the RTC of Valenzuela City.
Petitioner filed his answer but failed to submit the required pretrial
brief and to attend the pretrial conference. On October 21, 1997,
respondent was allowed to present his evidence ex-parte before the
Acting Branch Clerk of Court.
RTC: rendered a decision in favor of respondent
CA: modified the decision of the trial court by deleting the award
of P500,000.00 for unrealized profits for lack of basis, and by
reducing the award for attorneys fees to P50,000.00.
MR: Denied
hence the current petition
ISSUE: WON RTC had jurisdiction over the action filed by respondent
considering that the subject matter thereof, his alleged violation of
the lease contract with respondent, was already amicably settled
before the Office of the Barangay Captain of Taliptip, Bulacan
HELD:
Indeed, the Revised Katarungang Pambarangay Law[8] provides that
an amicable settlement reached after barangay conciliation
proceedings has the force and effect of a final judgment of a court if
not repudiated or a petition to nullify the same is filed before the
proper city or municipal court within ten (10) days from its date.[9] It
further provides that the settlement may be enforced by execution
by the lupong tagapamayapa within six (6) months from its date, or
by action in the appropriate city or municipal court, if beyond the
six-month period.[10] This special provision follows the general
precept enunciated in Article 2037 of the Civil Code.
A compromise has upon the parties the effect and authority of res
judicata; but there shall be no execution except in compliance with
a judicial compromise.
Thus, we have held that a compromise agreement which is not
contrary to law, public order, public policy, morals or good customs
is a valid contract which is the law between the parties
themselves.[11] It has upon them the effect and authority of res
judicata even if not judicially approved,[12] and cannot be lightly set
aside or disturbed except for vices of consent and forgery.
If one of the parties fails or refuses to abide by the compromise, the
other party may either enforce the compromise or regard it as
rescinded and insist upon his original demand.
[B]efore the onset of the new Civil Code, there was no right to
rescind compromise agreements. Where a party violated the terms
of a compromise agreement, the only recourse open to the other
party was to enforce the terms thereof.
When the new Civil Code came into being, its Article 2041 x x x
created for the first time the right of rescission. That provision gives
to the aggrieved party the right to either enforce the compromise or
regard it as rescinded and insist upon his original demand. Article
2041 should obviously be deemed to qualify the broad precept
enunciated in Article 2037 that [a] compromise has upon the parties
the effect and authority of res judicata.
In exercising the second option under Art. 2041, the aggrieved party
may, if he chooses, bring the suit contemplated or involved in his
original demand, as if there had never been any compromise
agreement, without bringing an action for rescission.[15] This is
because he may regard the compromise as already rescinded[16] by
the breach thereof of the other party.
In the case at bar, the Revised Katarungang Pambarangay
Law provides for a two-tiered mode of enforcement of an amicable
settlement, to wit: (a) by execution by the Punong Barangay which
is quasi-judicial and summary in nature on mere motion of the party
entitled thereto; and (b) an action in regular form, which remedy is
judicial.[21] However, the mode of enforcement does not rule out
the right of rescission under Art. 2041 of the Civil Code. The
availability of the right of rescission is apparent from the wording of
Sec. 417[22] itself which provides that the amicable settlement may
be enforced by execution by the lupon within six (6) months from its
date or by action in the appropriate city or municipal court, if
beyond that period. The use of the word may clearly makes the
procedure provided in the Revised Katarungang Pambarangay Law
directory[23] or merely optional in nature.
Thus, although the Kasunduan executed by petitioner and
respondent before the Office of the Barangay Captain had the force
and effect of a final judgment of a court, petitioners non-
compliance paved the way for the application of Art. 2041 under
which respondent may either enforce the compromise, following
the procedure laid out in the Revised Katarungang Pambarangay
Law, or regard it as rescinded and insist upon his original demand.
Respondent chose the latter option when he instituted Civil Case
No. 5139-V-97 for recovery of unrealized profits and reimbursement
of advance rentals, moral and exemplary damages, and attorneys
fees. Respondent was not limited to claiming P150,000.00 because
although he agreed to the amount in the Kasunduan, it is axiomatic
that a compromise settlement is not an admission of liability but
merely a recognition that there is a dispute and an impending
litigation[24] which the parties hope to prevent by making reciprocal
concessions, adjusting their respective positions in the hope of
gaining balanced by the danger of losing.[25] Under the Kasunduan,
respondent was only required to execute a waiver of all possible
claims arising from the lease contract if petitioner fully complies
with his obligations thereunder.[26] It is undisputed that herein
petitioner did not.
[G.R. NO. 130864 : October 2, 2007]
MARIA L. HAROLD, Petitioner, v. AGAPITO T. ALIBA, Respondent.
FACTS:
Harold engaged the services of respondent Agapito T. Aliba, a
geodetic engineer, to conduct a relocation survey and to execute a
consolidation-subdivision of their properties including that of
Harold's sister, Alice Laruan, located in Pico, La Trinidad, Benguet.
After completing his work, Aliba was paid P4,050 for his services,
but he failed to return the certificates of title of the said properties
for more than one year, despite repeated demands to return them.
Aliba prevailed upon Harold and her husband to sign a document
which was supposedly needed to facilitate the consolidation-
subdivision and the issuance of separate transfer certificates of title
over the properties. Harold and her husband signed the document
without reading it.
A truck loaded with G.I. sheets and construction materials came to
the subject lot2 owned by Harold. Upon inquiry, Harold and her
husband were informed that Aliba had sold the lot to a third person.
On several occasions, Aliba tried to convince Harold to accept the
sum of P400,000 which was later on increased to P500,000, as
purchase price of the said lot. It was only after such offers were
made that Aliba told Harold that he had indeed sold the lot.
Harold agreed to accept the P500,000 from Aliba but only as partial
payment, considering that the lot has an aggregate value
of P1,338,0003 or P6,000 per square meter. On the same date,
Harold was made to sign an acknowledgment receipt and other
papers which were made to appear that Harold accepted the sum
of P480,000 as full and final payment for the lot.
Harold later discovered that Aliba made it appear that she had sold
the lot to him for P80,000 and had her certificates of title cancelled
and transferred to him. Harold also found out that the alleged deed
of sale was the document that Aliba caused Harold and her husband
to sign in January 1994.
Harold asked for the payment of the fair market value of her
property but to no avail. The dispute between Harold and Aliba was
referred to Punong Barangay Limson Ogas and the Lupong
Tagapamayapa.
June 8, 1994 - barangay conciliation proceedings, the parties herein
agreed that Aliba will pay an additional amount of P75,000 to the
initial P500,000 Aliba had already given to Harold. In the same
proceedings, Aliba tendered P70,000, which Harold accepted.4 The
receipt of the amount given was evidenced by an acknowledgment
receipt signed by the parties herein, attested to by
the Lupon chairman, and witnessed by several barangay officials.
June 9, 1994 - Aliba tendered the remaining P5,000 to Harold to
complete their amicable settlement. Unfortunately, Harold refused
to accept the same, saying that P5,000 is not enough and insisted
on the elevation of the case to the court.6 Thus, a certification to file
action7 was issued by the Office of the Lupong Tagapamayapa on
June 29, 1994. Immediately thereafter, Harold filed a
Complaint8 against Aliba before the Municipal Trial Court (MTC) of
La Trinidad, Benguet.
MTC: issued an Order dismissing Harold's complaint
RTC: Affirmed in toto
CA: denied
hence the current petition
ISSUE: WON the dispute between the parties had already been
amicably settled during the barangay conciliation proceedings.
HELD:
Harold's main contention was hinged on the alleged non-perfection
of the questioned amicable settlement between her and Aliba
because there was allegedly no meeting of the minds between them
regarding the subject matter and the cause thereof.14 On the other
hand, Aliba's principal defense is anchored on the alleged existence
and validity of the said amicable settlement.
Harold's submission that there was no meeting of the minds
between the parties herein pertaining to the subject matter and
cause of the questioned amicable settlement is a clear deviation
from the facts on record. Admittedly, both parties agreed during the
June 8, 1994 barangay conciliation proceedings for Aliba to pay an
additional amount of P75,000 (which was the object or subject
matter of the amicable settlement) to the initial P500,000 Aliba had
given to Harold as purchase price for the subject lot in order to put
an end to their dispute (which was the cause or reason of the
amicable settlement). Thus, it is evident that the parties herein
entered into an amicable settlement, or more specifically, a
compromise agreement, during the said barangay conciliation
proceedings.
Under Article 2028 of the Civil Code, a compromise agreement was
defined as "a contract whereby the parties, by making reciprocal
concessions, avoid litigation or put an end to one already
commenced."
Harold expressly acknowledged that the offer made by Aliba to pay
an additional P75,000 was made in order for her to desist from
pursuing her case against him.18 By reason of her unconditional
acceptance of the offer and the P70,000 tendered to her, Harold
had already effectively waived whatever claims she might have
against Aliba regarding the subject lot. Moreover, she is likewise
barred from pursuing her case against Aliba under the principle of
estoppel now.
Under Article 1431 of the Civil Code, through estoppel, an admission
or representation is rendered conclusive upon the person making it,
and cannot be denied or disproved as against the person relying on
it.
The doctrine of estoppel is based upon the grounds of public policy,
fair dealing, good faith and justice, and its purpose is to forbid one
to speak against his own act, representations, or commitments to
the injury of one to whom they were directed and who reasonably
relied thereon.
The issue concerning the alleged non-compliance of the amicable
settlement pursuant to the mandate of Section 41122 of Republic
Act No. 7160 or the Local Government Code (LGC) arose because
there was no formal document denominated as "Amicable
Settlement" signed by the parties. However, we agree with the
similar holdings of the Court of Appeals and the RTC that the
requirements under Section 411 of the LGC had been substantially
complied with. The minutes of the barangay conciliation
proceedings readily disclose the terms agreed upon by the parties
for the settlement of their dispute, and that the acknowledgment
receipt, which was written in a language known to the parties,
signed by them, attested to by the Lupon Chairman, and witnessed
by several barangay officials, serves as an indubitable proof of the
amicable settlement and of the substantial compliance of its terms
by respondent Aliba.

Moreover, even without the minutes of the meeting and the

acknowledgment receipt, the amicable settlement, or more
specifically the compromise agreement, entered into by the parties
is undeniably valid, considering that "a compromise agreement is a
consensual contract, and as such, it is perfected upon the meeting
of' the minds of the parties to the contract."23

Furthermore, to rule against the validity of the cited amicable

settlement herein would militate against the spirit and purpose of
the Katarungang Pambarangay Law,24 which is to encourage the
amicable settlement of disputes at the barangay level as an
alternative to court litigation.

Harold's refusal to accept the remaining P5,000 that Aliba had

tendered cannot constitute an effective repudiation of the
questioned amicable settlement, considering that the reason for her
refusal to accept the said amount or alleged repudiation of the
assailed amicable settlement is not one of the grounds for
repudiation clearly specified under Section 41825 of the LGC. As
borne out by the records, her refusal to accept the same was based
on the alleged insufficiency of the remaining P5,000 as settlement
for the lot, without any reference to vitiation of her consent by any
fraud, violence or intimidation on Aliba's part.

WHEREFORE, the petition is DENIED for lack of merit.

LIABILITIES OF DIRECTORS, TRUSTEES OR OFFICERS
GERARDO LANUZA, JR. AND ANTONIO O. OLBES v. BF
CORPORATION, SHANGRI-LA PROPERTIES, INC., ALFREDO C. RAMOS,
RUFO B. COLAYCO, MAXIMO G. LICAUCO III, AND BENJAMIN C.
RAMOS
G.R. No. 174938, October 01, 2014
Leonen, J.
Facts:
Gerardo Lanuza, Jr and Antonio Olbes are members of the Board of
Directors of Shangri-La.
This is an Appeal on Certiorari, assailing the CA's decision and
resolution that affirmed the trial court's decision holding that
petitioners, as directors, should submit themselves as parties to the
arbitration proceedings between BF Corporation and Shangri-La
Properties, Inc. (Shangri-La).
BF Corporation alleged that it entered into agreements with
Shangri-La wherein it undertook to construct for Shangri-La a mall
and a multilevel parking structure along EDSA. Shangri-La had been
consistent in paying BF Corp in accordance with its progress billing
statements. However, Shangri-La started defaulting in payment. BF
Corp filed a complaint against Shangri-La and its board of directors.
BF Corp alleged that Shangri-La misrepresented it had funds to pay
and that it was simply a matter of delayed processing of BF’s
progress billing statements. Construction eventually was completed
but despite demands, Shangri-La refused to pay the balance. BF also
alleged that Shangri-La’s directors were in bad faith so they should
be held jointly and severally liable with Shangri-La. Shangri-La and
respondent board members filed a motion to suspend the
proceedings in view of BF’s failure to submit its dispute to
arbitration. RTC denied the motion, however. Petitioners filed an
answer saying they are resigned members of the board since July
15, 1991. Shangri-La and respondents then filed certiorari with CA
which granted their petition and ordered submission to arbitration.
Issue:
Should petitioners be made parties to the arbitration proceedings,
pursuant to the arbitration clause provided in the contract between
BF Corporation and Shangri-La?
Held:
Yes. Petitioners point out, their personalities as directors of Shangri-
La are separate and distinct from Shangri-La. Because a
corporation's existence is only by fiction of law, it can only exercise
its rights and powers through its directors, officers, or agents, who
are all natural persons. A corporation cannot sue or enter into
contracts without them. A consequence of a corporation's separate
personality is that consent by a corporation through its
representatives is not consent of the representative, personally. Its
obligations, incurred through official acts of its representatives, are
its own. A stockholder, director, or representative does not become
a party to a contract. However, when there are allegations of bad
faith or malice against corporate directors or representatives, it
becomes the duty of courts or tribunals to determine if these
persons and the corporation should be treated as one. Section 31 of
the Corporation Code provides the instances when directors,
trustees, or officers may become solidarily liable for corporate acts:
a) The director or trustee willfully and knowingly voted for or
assented to a patently unlawful corporate act;
Hence, the issue of whether the corporation's acts in violation of
complainant's rights, and the incidental issue of whether piercing of
the corporate veil is warranted, should be determined in a single
proceeding.

b) The director or trustee was guilty of gross negligence or bad

faith in directing corporate affairs; and

c) The director or trustee acquired personal or pecuniary

interest in conflict with his or her duties as director or trustee.

When the courts disregard the corporation’s distinct and separate

personality from its directors or officers, the courts do not say that
the corporation, in all instances and for all purposes, is the same as
its directors, stockholders, officers, and agents. It does not result in
an absolute confusion of personalities of the corporation and the
persons composing or representing it. Courts merely discount the
distinction and treat them as one, in relation to a specific act, in
order to extend the terms of the contract and the liabilities for all
damages to erring corporate officials who participated in the
corporation’s illegal acts. This is done so that the legal fiction cannot
be used to perpetrate illegalities and injustices.

Thus, in cases alleging solidary liability with the corporation or

praying for the piercing of the corporate veil, parties who are
normally treated as distinct individuals should be made to
participate in the arbitration proceedings in order to determine if
such distinction should indeed be disregarded and, if so, to
determine the extent of their liabilities
BASES CONVERSION DEVELOPMENT AUTHORITY, Petitioner, v.
DMCI PROJECT DEVELOPERS, INC., Respondent.
G.R. No. 173137; January 11, 2016
NORTH LUZON RAILWAYS CORPORATION, Petitioner, v. DMCI
PROJECT DEVELOPERS, INC.Respondent.
G.R. No. 173170
Leonen, J.
Doctrine: An arbitration clause in a document of contract may
extend to subsequent documents of contract executed for the same
purpose. Nominees of a party to and beneficiaries of a contract
containing an arbitration clause may become parties to a
proceeding initiated based on that arbitration clause.
Facts: The. BCDA entered into a Joint Venture Agreement with the
PNR. The said Agreement contained an arbitration clause. BCDA
ordanized and incorporated Northrail and was registered to SEC.
BDCA invited investors for the said project, and the Respondent was
made an investor. BDCA and PNR, including the Respondent entered
into an Agreement.
Later, Northrail withdrew from the SEC its application for increased
authorized capital stock, and the DCMI-PCI started demanding the
return of its P300M deposit, which was not returned. Hence, DMCI
filed a case before the RTC a demand to arbitrate based on the
arbitration clause included in the Agreement previously entered
into between BCDA and PNR. Petitioners filed a motion to dismiss
on the ground that DCMI was not a party thereto.
Issue: WON DCMI can demand arbitration based on the Agreement
which it was not a party.
Ruling: WHEREFORE, the petitions are DENIED. The February 9,
2006 Regional Trial Court Decision and the June 9, 2006 Regional
Trial Court Order are AFFIRMED.
Arbitration is a mode of settling disputes between parties. Like
many alternative dispute resolution processes, it is a product of the
meeting of minds of parties submitting a pre-defined set of
disputes. They agree among themselves to a process of dispute
resolution that avoids extended litigation.
The state adopts a policy in favor of arbitration. Republic Act No.
9285 expresses this policy:
SEC. 2. Declaration of Policy. - It is hereby declared the policy of the
State to actively promote party autonomy in the resolution of
disputes or the freedom of the parties to make their own
arrangements to resolve their disputes. Towards this end, the State
shall encourage and actively promote the use of Alternative Dispute
Resolution (ADR) as an important means to achieve speedy and
impartial justice and declog court dockets. As such, the State shall
provide means for the use of ADR as an efficient tool and an
alternative procedure for the resolution of appropriate cases.
Likewise, the State shall enlist active private sector participation in
the settlement of disputes through ADR. This Act shall be without
prejudice to the adoption by the Supreme Court of any ADR system,
such as mediation, conciliation, arbitration, or any combination
thereof as a means of achieving speedy and efficient means of
resolving cases pending before all courts in the Philippines which
shall be governed by such rules as the Supreme Court may approve
from time to time. (Emphasis supplied)

Our policy in favor of party autonomy in resolving dispute has been

reflected in our laws as early as 1949 when our Civil Code was
approved. Republic 876 later explicitly recognized the validity and
enforceability of parties’ decision to submit disputes and related
issues to arbitration.

Arbitration agreements are liberally construed in favor of

proceeding to arbitration. We adopt the interpretation that would
render effective an arbitration clause if the terms of the agreement
allow for such interpretation. In LM Power Engineering Corporation
v. Capitol Industrial Construction Groups, Inc., this court said:

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.

This manner of interpreting arbitration clauses is made explicit in

Section 25 of Republic Act No. 9285:

SEC. 25. Interpretation of the Act.-In interpreting the Act, the court
shall have due regard to the policy of the law in favor of arbitration.
Where action is commenced by or against multiple parties, one or
more of whom are parties to an arbitration agreement, the court
shall refer to arbitration those parties who are bound by the
arbitration agreement although the civil action may continue as to
those who are not bound by such arbitration agreement.
DEPARTMENT OF FOREIGN AFFAIRS vs. BCA INTERNATIONAL
CORPORATION
G.R. No. 210858; June 29, 2016
FACTS:
 In an Amended Build-Operate-Transfer Agreement, petitioner DFA
awarded the Machine Readable Passport and Visa Project (MRPN
Project) to BCA International Corporation (BCA)
 During the implementation of the MRPN Project, DFA sought to
terminate the Agreement. However, BCA opposed the
termination and filed a Request for Arbitration in lieu of their
agreement that:
Section 19. 02. Failure to Settle Amicably - If the Dispute
cannot be settled amicably within ninety (90) days by mutual
discussion as contemplated under Section 19.01 herein, the
Dispute shall be settled with finality by an arbitrage tribunal
operating ' under International Law, hereinafter referred to as
the "Tribunal", under the UNCITRAL Arbitration Rules
contained in Resolution 31/98 adopted by the United Nations
General Assembly on December 15, 1976, and entitled
"Arbitration Rules on the United Nations Commission on the
International Trade Law". The DFA and the BCA undertake to
abide by and implement the arbitration award. The place of
arbitration shall be Pasay City, Philippines, or such other place
as may be mutually agreed upon by both parties. The
arbitration proceeding shall be conducted in the English
language.
 an ad hoc arbitral tribunal was constituted. In an Order, the
arbitral tribunal approved BCA's request to apply in court for the
issuance of subpoena, subject to the conditions that the
application will not affect its proceedings and the hearing set in
October 2013 will proceed whether the witnesses attend or not.
 BCA filed before the RTC a Petition for Assistance in Taking
Evidence pursuant to the Implementing Rules and Regulations of
The ADR Act of 2004 (RA 9285). In its petition, BCA sought the
issuance of subpoena ad testificandum and subpoena duces
tecum to the following witnesses and documents in their custody:
- Secretary of Foreign affairs or his representatives
- Secretary of Finance or his representatives
- Chairman of the Commission on Audit or her representatives
- Executive Director of the Department of Trade and Industry
Build-Operate Transfer Center
- Chairman of the DFA MRP/V Advisory Board or his
representatives
 DFA filed its comment, alleging that the presentation of the
witnesses and documents was prohibited by law and protected by
the deliberative process privilege.
RTC DECISION:
 RTC ruled in favor of BCA and held that the evidence sought to be
produced was no longer covered by the deliberative process
privilege.
 RTC issued the subpoena due es tecum and subpoena ad
testificandum. DFA filed a motion to quash the subpoena duces
tecum and subpoena ad testificandum, which BCA opposed. RTC
denied the motion to quash and held that the motion was actually
a motion for reconsideration, which is prohibited under Rule 9 .9 of
the Special Rules of Court on Alternative Dispute Resolution
(Special ADR Rules)
 Said persons/officers testified before the arbitral tribunal
pursuant to the subpoena.
 RTC denied the motion for reconsideration filed by DFA. The RTC
ruled that the motion became moot with the appearance of the
witnesses during the arbitration hearings. Hence, DFA filed this
petition with an urgent prayer for the issuance of a temporary
restraining order and/or a writ of preliminary injunction.
 The Court issued a temporary restraining order enjoining the
arbitral tribunal from taking cognizance of the testimonies
ISSUE/S:
(1) WON the 1976 UNCITRAL Arbitration Rules and the Rules of
Court apply to the present arbitration proceedings, not RA 9285 and
the Special ADR Rules; and
(2) WON the witnesses presented during the hearings before the ad
hoc arbitral tribunal are prohibited from disclosing information on
the basis of the deliberative process privilege.
SUPREME COURT DECISION:
We partially grant the petition.
(1) YES, the 1976 UNCITRAL Arbitration Rules and the Rules of
Court apply to the present arbitration proceedings, not RA
9285 and the Special ADR Rules.
The Special ADR Rules specifically provide that they shall
apply to assistance in taking evidence, and the RTC order
granting assistance in taking evidence shall be immediately
executory and not subject to reconsideration or appeal. An
appeal with the CA is only possible where the RTC denied a
petition for assistance in taking evidence. An appeal to the
SC from the CA is allowed only under any of the grounds
specified in the Special ADR Rules.
We rule that the DFA failed to follow the procedure and the
hierarchy of courts provided in RA 9285, its IRR, and the
Special ADR Rules, when DFA directly appealed before this
Court the RTC Resolution and Orders granting assistance in
taking evidence. DFA contends that the RTC issued the
subpoenas on the premise that RA 9285 and the Special
ADR Rules apply to this case. However, we find that even
without applying RA 9285 and the Special ADR Rules, the
RTC still has the authority to issue the subpoenas to assist
the parties in taking evidence.
The 1976 UNCITRAL Arbitration Rules, agreed upon by the
parties to govern them, state that the "arbitral tribunal shall
apply the law designated by the parties as applicable to the
substance of the dispute. Failing such designation by the
parties, the arbitral tribunal shall apply the law determined
by the conflict of laws rules which it considers applicable.
Established in this jurisdiction is the rule that the law of the
place where the contract is made governs, or lex loci
contractus. Since there is no law designated by the parties
as applicable and the Agreement was perfected in the
Philippines, "The Arbitration Law," or Republic Act No. 876
(RA 876), applies.
(2) In the present case, considering that the RTC erred in
applying the ruling in Chavez v. Public Estates Authority,
and both BCA's and DFA's assertions of subpoena of
evidence and the deliberative process privilege are broad
and lack specificity, we will not be able to determine
whether the evidence sought to be produced is covered by
the deliberative process privilege. The parties are directed
to specify their claims before the RTC and, thereafter, the
RTC shall determine which evidence is covered by the
deliberative process privilege, if there is any, based on the
standards provided in this Decision.
"Privileged information" should be outside the scope of the
constitutional right to information, just like military and
diplomatic secrets and similar matters affecting national
security and public order. In these exceptional cases, even
the occurrence of a "definite proposition" will not give rise
to the public's right to information. Deliberative process
privilege is one kind of privileged information, which is
within the exceptions of the constitutional right to
information.
The deliberative process privilege can also be invoked in
arbitration proceedings under RA 9285. Under RA 9285,
orders of an arbitral tribunal are appealable to the courts. If
an official is compelled to testify before an arbitral tribunal
and the order of an arbitral tribunal is appealed to the
courts, such official can be inhibited by fear of later being
subject to public criticism, preventing such official from
making candid discussions within his or her agency. The
decision of the court is widely published, including details
involving the privileged information. This disclosure of
privileged information can inhibit a public official from
expressing his or her candid opinion. Future quality of
deliberative process can be impaired by undue exposure of
the decision making process to public scrutiny after the
court decision is made.
Accordingly, a proceeding in the arbitral tribunal does not
prevent the possibility of the purpose of the privilege being
defeated, if it is not allowed to be invoked. In the same
manner, the disclosure of an information covered by the
deliberative process privilege to a court arbitrator will
defeat the policy bases and purpose of the privilege. DFA
did not waive the privilege in arbitration proceedings under
the Agreement. The Agreement does not provide for the
waiver of the deliberative process privilege by DFA.
The agreement, under Section 20.03 merely allows a party,
if it chooses, without the consent of the other party, to
disclose to the tribunal privileged information in such
disclosing party's possession. In short, a party can disclose
privileged information in its possession, even without the
consent of the other party, if the disclosure is to a tribunal.
However, a party cannot be compelled by the other party to
disclose privileged information to the tribunal, where such
privileged information is in its possession and not in the
possession of the party seeking the compulsory disclosure.
As a qualified privilege, the burden falls upon the
government agency asserting the deliberative process
privilege to prove that the information in question satisfies
both requirements - predecisional and deliberative. "The
determination of need must be made flexibly on a case-by-
case, ad hoc basis," and the "factors relevant to this
balancing include: the relevance of the evidence, whether
there is reason to believe the documents may shed light on
government misconduct, whether the information sought is
available from other sources and can be obtained without
compromising the government's deliberative processes, and
the importance of the material to the discoverant's case."
DISPOSITIVE PORTION:
WHEREFORE, we resolve to PARTIALLY GRANT the petition and
REMAND this case to the Regional Trial Court of Makati City, Branch
146, to determine whether the documents and records sought to be
subpoenaed are protected by the deliberative process privilege as
explained in this Decision. The Resolution dated 2 April 2014 issuing
a Temporary Restraining Order is superseded by this Decision.
DISCUSSION:
Deliberative Process Privilege
 Traditionally, U.S. courts have established two fundamental
Deliberative process privilege is one kind of privileged information, requirements, both of which must be met, for the deliberative
which is within the exceptions of the constitutional right to process privilege to be invoked:
information. In In Re: Production of Court Records and Documents
(1) the communication must be predecisional - antecedent to
and the Attendance of Court Officials and Employees as Witnesses,
the adoption of an agency policy
we held that:
Court deliberations are traditionally recognized as privileged (2) communication must be deliberative - a direct part of the
communication. Section 2, Rule 10 of the IRSC provides: deliberative process in that it makes recommendations or
Section 2. Confidentiality of court sessions. - Court expresses opinions on legal or policy matters.
sessions are executive in character, with only the
Members of the Court present. Court deliberations "The deliberative process privilege exempts materials that are
are confidential and shall not be disclosed to 'predecisional' and 'deliberative,' but requires disclosure of policy
outside parties, except as may be provided herein statements and final opinions 'that have the force of law or explain
or as authorized by the Court. actions that an agency has already taken.
The privilege against disclosure of these kinds of
information/communication is known as deliberative process
privilege, involving as it does the deliberative process of reaching a
decision. "Written advice from a variety of individuals is an
important element of the government's decision-making process
and that the interchange of advice could be stifled if courts forced
the government to disclose those recommendations;" the privilege
is intended "to prevent the 'chilling' of deliberative
communications." The privilege is not exclusive to the Judiciary.

The privileged character of the information does not end when an

agency has adopted a definite proposition or when a contract has
been perfected or consummated; otherwise, the purpose of the
privilege will be defeated. The deliberative process privilege applies
if its purpose is served, that is, "to protect the frank exchange of
ideas and opinions critical to the government's decision[-]making
process where disclosure would discourage such discussion in the
future."
FYFE v PHILIPPINE AIRLINES Whether or not the CA erred in dismissing their appeal for
being an inappropriate remedy that a petition for review on
G.R. No. 160071. June 6, 2016. certiorari under Rule 45 is the sole remedy?

DOCTRINE: Held:

Appeal as a remedy is not a matter of right, but a mere No. The CA emphasized that the petitioners should have led
statutory privilege to be exercised only in the manner and strictly in the petition for review on certiorari under Rule 45 considering that
accordance with the provisions of the law. Section 29 of the Arbitration Law has limited the ground of review
to "questions of law." Although the Special Rules of Court on
Facts:
Alternative Dispute Resolution provides that the appropriate
Philippine Airlines Inc (PAL) underwent rehabilitation remedy from an order of the RTC vacating a domestic arbitral award
proceedings in the Securities Exchange Commission (SEC). To is an appeal by petition for review in the CA, not an ordinary appeal
convince its creditors, they decided to hire technical advisers. Peter under Rule 41 of the Rules of Court, the Court cannot set aside and
Foster of Cathay Pacific and Michael Scantlebury organized Regent reverse the assailed decision on that basis because the decision was
Star Services Ltd. (Regent Star). Regent Star and PAL entered into a in full accord with the law or rule in force at the time of its
Technical Services Agreement (TSA) effective for five years. Regent promulgation.
Star subsequently engaged with Fyfe, Wald and Nuttall and
commenced to render their services immediately after the TSA was
executed. PAL dispatched a notice to Regent Star terminating the
TSA on the ground of lack of confidence. In its notice the
respondent demanded the offsetting of the penalties due with the
two year advance advisory fees it had paid to Regent Star. Regent
Star proposed that the issue be submitted to arbitration with the
Philippine Dispute Resolution Center Inc (PDRCI) pursuant to the
TSA. PDRCI rendered judgment ordering PAL to pay the termination
penalties. PAL filed its application to Vacate Arbitral Award in the
RTC of Manila.

Issue:
LUZON IRON DEVELOPMENT GROUP CORPORATION AND
CONSOLIDATED IRON SANDS, LTD. v. BRIDESTONE MINING AND
DEVELOPMENT CORPORATION AND ANACONDA MINING AND
DEVELOPMENT CORPORATION
GR no. 220546
Facts:
Respondents Bridestone Mining and Development Corporation
(Bridestone) and Anaconda Mining and Development Corporation
(Anaconda) filed separate complaints before the RTC for rescission
of contract and damages against petitioners Luzon Iron
Development Group Corporation (Luzon Iron) and Consolidated Iron
Sands, Ltd. (Consolidated Iron). Both complaints sought the
rescission of the Tenement Partnership and Acquisition Agreement
(TPAA) entered into by both petitioner and respondent for the
assignment of the Exploration Permit Application of the former in
favor of the latter. The complaints also sought the return of the
Exploration Permits to Bridestone and Anaconda. Petitioner filed a
motion to dismiss, they contended that the RTC could not acquire
jurisdiction over Consolidated Iron because it was a foreign
corporation that had never transacted business in the Philippines.
Petitioner further alleged that respondents are guilty of forum
shopping by filing a case with the RTC and the DENR. On the other
hand, respondents asserted that the trial court had jurisdiction over
the complaints because the TPAA itself allowed a direct resort
before the courts in exceptional circumstances. They cited
paragraph 14.8 thereof as basis explaining that when a direct
and/or blatant violation of the TPAA had been committed, a party
could go directly to the courts. RTC ruled in favor of respondents
which was later upheld by the CA.
Issue:
Whether or not respondents are guilty of forum shopping and has
violated the TPAA
Held:
Yes. The Supreme court ruled that there was forum shopping Filing
of complaints before the RTC and the DENR is forum shopping.
(Forum shopping is committed when multiple suits involving the
same parties and the same causes of action are filed, either
simultaneously or successively, for the purpose of obtaining a
favorable judgment through means other than appeal or
certiorari.)The summon was not properly served. The Court, finds
that Consolidated Iron was not properly served with summons
through any of the permissible modes under the Rules of Court.
Indeed, Consolidated Iron was served with summons through Luzon
Iron. Such service of summons, however, was defective. Lastly, the
controversy must be referred to arbitration as laid down in the
Agreement. Paragraphs 14.8 and 15.1 of the TPAA should be
harmonized in such a way that the arbitration clause is given life.
The complaints filed before the RTC should have been dismissed,
because petitioners were able to establish that responsdents
violated the prohibition on forum shopping. The parties,
nevertheless, are directed to initiate arbitration proceedings as
provided under Paragraph 15.1 of the TPAA.
ABS-CBN v. World Interactive Network Systems (G.R. No. 169332)
Facts:
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, in that the former granted respondent 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. Petitioner claimed that these were “unauthorized
insertions” constituting a material breach of their agreement.
Consequently, petitioner notified respondent of its intention to
terminate the agreement. Thereafter, respondent filed an
arbitration suit pursuant to the arbitration clause of its agreement
with petitioner. The parties appointed Professor Alfredo F. Tadiar to
act as sole arbitrator who then rendered a decision in favor of
respondent holding that petitioner gave its approval for the airing of
WINS WEEKLY as shown by a series of written exchanges between
the parties and that petitioner threatened to terminate the
agreement due to its desire to compel respondent to re-negotiate
the terms thereof for higher fees. 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. Respondent, on the other hand, filed a
petition for confirmation of arbitral award. The CA rendered the
assailed decision dismissing ABS-CBN’s petition for lack of
jurisdiction. Petitioner moved for reconsideration but the same was
denied.
Issue:
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
arbitrator’s decision are other than those for a petition to vacate an
arbitral award enumerated under RA 876.
Ruling:
RA 876 itself mandates that it is the Court of First Instance, now the
RTC, which has jurisdiction over questions relating to arbitration,
such as a petition to vacate an arbitral award. 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
Appeals gave ample warning that a petition to vacate filed in the
RTC which is not based on the grounds enumerated in Section 24 of Wherefore, the petition is hereby denied. The decision and
RA 876 should be dismissed. resolution of the CA directing the RTC to proceed with the trial of
the petition for confirmation of arbitral award is affirmed.
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.

Nevertheless, although petitioner’s 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.

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
arbitrator’s 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).
G.R. No. 185572 February 7, 2012
CHINA NATIONAL MACHINERY & EQUIPMENT CORP. (GROUP),
Petitioner,
vs.
HON. CESAR D. SANTAMARIA, in his official capacity as Presiding
Judge of Branch 145, Regional Trial Court of Makati City, et al.,
Respondents
Facts
On 14 September 2002, petitioner China National Machinery &
Equipment Corp. (Group) (CNMEG), represented by its chairperson,
Ren Hongbin, entered into a Memorandum of Understanding with
the North Luzon Railways Corporation (Northrail), represented by its
president, Jose L. Cortes, Jr. for the conduct of a feasibility study on
a possible railway line from Manila to San Fernando, La Union (the
Northrail Project).
On 30 August 2003, the Export Import Bank of China (EXIM Bank)
and the Department of Finance of the Philippines (DOF) entered
into a Memorandum of Understanding (Aug 30 MOU), wherein
China agreed to extend Preferential Buyer’s Credit to the Philippine
government to finance the Northrail Project. The Chinese
government designated EXIM Bank as the lender, while the
Philippine government named the DOF as the borrower. Under the
Aug 30 MOU, EXIM Bank agreed to extend an amount not exceeding
USD 400,000,000 in favor of the DOF, payable in 20 years, with a 5-
year grace period, and at the rate of 3% per annum.
On 1 October 2003, the Chinese Ambassador to the Philippines,
Wang Chungui (Amb. Wang), wrote a letter to DOF Secretary Jose
Isidro Camacho (Sec. Camacho) informing him of CNMEG’s
designation as the Prime Contractor for the Northrail Project.
On 30 December 2003, Northrail and CNMEG executed a Contract
Agreement for the construction of Section I, Phase I of the North
Luzon Railway System from Caloocan to Malolos on a turnkey basis
(the Contract Agreement). The contract price for the Northrail
Project was pegged at USD 421,050,000.
On 26 February 2004, the Philippine government and EXIM Bank
entered into a counterpart financial agreement – Buyer Credit Loan
Agreement No. BLA 04055 (the Loan Agreement). In the Loan
Agreement, EXIM Bank agreed to extend Preferential Buyer’s Credit
in the amount of USD 400,000,000 in favor of the Philippine
government in order to finance the construction of Phase I of the
Northrail Project.
On 13 February 2006, respondents filed a Complaint for Annulment
of Contract and Injunction with Urgent Motion for Summary
Hearing to Determine the Existence of Facts and Circumstances
Justifying the Issuance of Writs of Preliminary Prohibitory and
Mandatory Injunction and/or TRO against CNMEG, the Office of the
Executive Secretary, the DOF, the Department of Budget and
Management, the National Economic Development Authority and
Northrail. RTC Br. 145 issued an Order dated 17 March 2006 setting
the case for hearing on the issuance of injunctive reliefs. On 29
March 2006, CNMEG filed an Urgent Motion for Reconsideration of
this Order. Before RTC Br. 145 could rule thereon, CNMEG filed a
Motion to Dismiss dated 12 April 2006, arguing that the trial court
did not have jurisdiction over (a) its person, as it was an agent of the
Chinese government, making it immune from suit, and (b) the
subject matter, as the Northrail Project was a product of an
executive agreement.
On 15 May 2007, RTC Br. 145 issued an Omnibus Order denying
CNMEG’s Motion to Dismiss and setting the case for summary
hearing to determine whether the injunctive reliefs prayed for
should be issued. CNMEG then filed a Motion for Reconsideration,
which was denied by the trial court in an Order dated 10 March
2008. Thus, CNMEG filed before the CA a Petition for Certiorari with
Prayer for the Issuance of TRO and/or Writ of Preliminary Injunction
dated 4 April 2008.
In the assailed Decision dated 30 September 2008, the appellate
court dismissed the Petition for Certiorari. Subsequently, CNMEG
filed a Motion for Reconsideration, which was denied by the CA in a
Resolution dated 5 December 2008.
Issue
Whether CNMEG is entitled to immunity, precluding it from being
sued before a local court.
Ruling
There are two conflicting concepts of sovereign immunity, each
widely held and firmly established. According to the classical or
absolute theory, a sovereign cannot, without its consent, be made a
respondent in the courts of another sovereign. According to the
newer or restrictive theory, the immunity of the sovereign is
recognized only with regard to public acts or acts jure imperii of a
state, but not with regard to private acts or acts jure gestionis.
Since the Philippines adheres to the restrictive theory, it is crucial to
ascertain the legal nature of the act involved – whether the entity
claiming immunity performs governmental, as opposed to
proprietary, functions. The restrictive application of State immunity
is proper only when the proceedings arise out of commercial
transactions of the foreign sovereign, its commercial activities or
economic affairs. Stated differently, a State may be said to have
descended to the level of an individual and can thus be deemed to
have tacitly given its consent to be sued only when it enters into
business contracts. It does not apply where the contract relates to
the exercise of its sovereign functions.
It was CNMEG that initiated the undertaking, and not the Chinese
government. The Feasibility Study was conducted not because of
any diplomatic gratuity from or exercise of sovereign functions by
the Chinese government but was plainly a business strategy
employed by CNMEG with a view to securing this commercial
enterprise.
The use of the term “state corporation” to refer to CNMEG was only
descriptive of its nature as a government-owned and/or -controlled
corporation, and its assignment as the Primary Contractor did not
imply that it was acting on behalf of China in the performance of the
latter’s sovereign functions. To imply otherwise would result in an
absurd situation, in which all Chinese corporations owned by the
state would be automatically considered as performing
governmental activities, even if they are clearly engaged in Although there is no similar law in the Philippines, there is a reason
commercial or proprietary pursuits. to apply the legal reasoning behind the waiver in this case.

Even assuming arguendo that CNMEG performs governmental

functions, such claim does not automatically vest it with immunity.
This view finds support in Malong v. Philippine National Railways, in
which this Court held that “immunity from suit is determined by the
character of the objects for which the entity was organized.”

In the case at bar, it is readily apparent that CNMEG cannot claim

immunity from suit, even if it contends that it performs
governmental functions. Its designation as the Primary Contractor
does not automatically grant it immunity, just as the term
“implementing agency” has no precise definition for purposes of
ascertaining whether GTZ was immune from suit. Although CNMEG
claims to be a government-owned corporation, it failed to adduce
evidence that it has not consented to be sued under Chinese law.
Thus, following this Court’s ruling in Deutsche Gesellschaft, in the
absence of evidence to the contrary, CNMEG is to be presumed to
be a government-owned and -controlled corporation without an
original charter. As a result, it has the capacity to sue and be sued
under Section 36 of the Corporation Code.

An agreement to submit any dispute to arbitration may be

construed as an implicit waiver of immunity from suit.

In the United States, the Foreign Sovereign Immunities Act of 1976

provides for a waiver by implication of state immunity. In the said
law, the agreement to submit disputes to arbitration in a foreign
country is construed as an implicit waiver of immunity from suit.
ABOITIZ TRANSPORT SYSTEM CORPORATION v. CARLOS A.
GOTHONG LINES, GR No. 198226, 2014-07-18
Facts:
ASC, CAGLI, and William Lines, Inc. (WLI), principally owned by the
Aboitiz, Gothong, and Chiongbian families, respectively, entered
into an Agreement... hich was signed by Jon Ramon Aboitiz for ASC,
Benjamin D. Gothong (Gothong) for
CAGLI, and respondent Chiongbian for WLI.
In the said Agreement, ASC and CAGLI agreed to transfer their
shipping assets to WLI in exchange for the latter's shares of capital
stock. The parties likewise agreed that WLI would run the merged
shipping business and be renamed
"WG&A, Inc." Pertinently, Section 11.06 of the Agreement provides
that all disputes arising out of or in connection with the Agreement
shall be finally settled by arbitration in accordance with Republic Act
No. (RA) 876,... Thereafter, WLI received inventory valued at
P558.89 Million, but only paid CAGLI the amount of P400 Million as
agreed... upon in th
Agreement.[9] Dissatisfied, CAGLI sent to WLI various letters in
2001, demanding that the latter pay or return the inventory that it
received in excess of P400 Million.
Sometime in 2002, the Chiongbian and Gothong families decided to
sell their respective interests in WLI/WG&A to the Aboitiz family.
This resulted in the execution of a Share Purchase Agreement[11]
whereby Aboitiz Equity Ventures (AEV) agreed to purchase... and
acquire the WLI/WG&A shares of the Chiongbian and Gothong
families. Thereafter, the corporate name of WLI/WG&A was
changed to ATSC
Six (6) years later
CAGLI sent a letter... to ATSC demanding that the latter pay the
excess inventory it delivered to WLI amounting to P158,399,700.00.
CAGLI likewise demanded AEV and respondent Chiongbian that
they... refer their dispute to arbitration.
In response, AEV countered that the excess inventory had already
been returned to CAGLI and that it should not be included in the
dispute, considering that it is an entity separate and distinct from
ATSC.
Thus, CAGLI was constrained to file a complaint[16] before the RTC
against Chiongbian, ATSC, ASC, and AEV to compel them to submit
to arbitration.
ATSC and AEV moved for the dismissal of the case, contending that
CAGLI did not have a cause of action for arbitration since its claim
had already been paid
RTC dismissed the complaint only with respect to AEV for lack of
cause of action... but not as to the other defendants.
RTC issued an Order... irecting CAGLI, respondent Chiongbian, ATSC,
and ASC to proceed to arbitration, and accordingly, the parties
appointed their respective arbitrators, with ATSC and ASC doing so
only on an ad cautelam basi
ATSC filed a Motion for Reconsideration/To Exclude... praying that
respondent Chiongbian be excluded from the arbitration
proceedings since the latter was not a party to the Agreement.
CAGLI filed a Notice of Dismissal... averring that it has decided to
withdraw its complaint in view of the fact that the opposing parties
had not filed their respective responsive pleadings.
In an Order[24] dated August 13, 2010, the RTC found CAGLI's
Notice of Dismissal meritorious, and, thus, confirmed the same and
ordered the case dismissed without prejudice.
Dissatisfied, ATSC and ASC moved for reconsideration... denied in an
Order
Separately, the RTC issued an Order... denying ATSC's Motion for
Reconsideration/To Exclude, holding that the issue raised in the said
motion has been rendered moot and academic in view of the
confirmation of CAGLI's notice of... dismissal.
Issues:
whether or not respondent Chiongbian should be excluded from the
arbitration... proceedings.
Ruling:
At the outset, the Court notes that the nature of the complaint filed
by CAGLI before the RTC is for the enforcement of an arbitration
agreement
RA 876 explicitly confines the court's authority only to pass upon
the issue of whether there is or there is no agreement in writing
providing for arbitration. If there is such agreement, the court shall
issue an order summarily directing the parties to proceed... with the
arbitration in accordance with the terms thereof; otherwise, the
proceeding shall be dismissed.[31] To stress, such proceeding is
merely a summary remedy to enforce the agreement to arbitrate
and the duty of the court is not to resolve the merits... of the
parties' claims but only to determine if they should proceed to
arbitration or not
In the present case, the records show that the primary relief sought
for in CAGLI's complaint, i.e., to compel the parties to submit to
arbitration,[33] had already been granted by the RTC through its
Order
Undeniably, such Order partakes of a judgment on the merits of the
complaint for the enforcement of the arbitration agreement.
At this point, although no responsive pleading had been filed by
ATSC... it is the rules on appeal, or other proceedings after rendition
of a judgment or final order no longer those on notice of dismissal
that come into play.
As a consequence, a notice of dismissal filed by the plaintiff at such
judgment stage should no longer be entertained or confirmed.
it was an error on the part of the RTC to have confirmed the notice
of dismissal and to have dismissed the complaint without prejudice.
The three parties to the Agreement and necessarily to the
arbitration agreement embodied therein are: (a) ASC, (b) CAGLI, and
(c) WLI/WG&A/ATSC. Contracts, like the subject arbitration
agreement, take effect only between the parties, their assigns and
heirs.[42] Respondent Chiongbian, having merely physically signed
the Agreement as a representative of WLI, is not a party thereto and
to the arbitration agreement contained therein. Neither is he an
assignee or an heir of any of the parties to the arbitration...
agreement. Hence, respondent Chiongbian cannot be included in
the arbitration proceedings.

Principles:

"[d]isputes do not go to arbitration unless and until the parties have

agreed to abide by the arbitrator's decision.

Necessarily, a contract is required for arbitration to take place and

to be binding.
G.R. No. 187543 WERR CORPORATION INTERNATIONAL vs.
HIGHLANDS PRIME INC.
Werr Corporation International shall pay petitioner Highlands
Prime, Inc. liquidated damages.
Facts: Highlands Prime, Inc. (HPI) and Werr Corporation
International (Werr) are domestic corporations engaged in property
development and construction, respectively. For the construction of
54 residential units contained in three clusters of five-storey
condominium structures, known as “The Horizon-Westridge
Project,” in Tagaytay. The project was not completed on the last
extension given. Thus, HPI terminated its contract with Werr.
Not having received any payment, Werr filed a Complaint for
arbitration against HPI before the CIAC to recover the
₱14,834,926.71 representing the balance of its retention money. In
its Answer, HPI countered that it does not owe Werr because the
balance of the retention money answered for the payments made
to suppliers and for the additional costs and expenses incurred after
termination of the contract. By way of counterclaim, HPI prayed for
the payment of liquidated damages
After due proceedings, the CIAC rendered its Decision on August 11,
2008 where it granted Werr’s claim for the balance of the retention
money and arbitration costs. It also granted HPI’s claim for
liquidated damages in the amount of ₱2,535,059.0l equivalent to
9.327 days of delay, but denied its counterclaim for damages,
attorney’s fees, and litigation expenses.
The CIAC further ruled that Werr incurred only 9.327 days of delay.
Citing Article 137629 of the Civil Code and considering the failure of
the Agreement to state otherwise, it applied the industry practice in
the construction industry that liquidated damages do not accrue
after achieving substantial compliance. While according to the CA,
delay should be computed from October 27, 2006 until termination
of the contract on November 28, 2006, or 33 days, since the
contract prevails over the industry practice.
Werr argues that the CA erred in modifying the CIAC decision on the
amount of liquidated damages and arbitration costs. It insists that
the appellate court disregarded Articles 1234, 1235, and 1376 of the
Civil Code and the industry practice. On the other hand, HPI argues
that Werr was unjustly enriched when the CA disallowed HPI’ s
recovery of the amounts it paid to suppliers.
Issue: Whether or not the industry practice of computing liquidated
damages only up to substantial completion of the project applies in
the computation of liquidated damages. Consequently, whether
delay should be computed until termination of the contract or until
substantial completion of the project.
Ruling: We reject this claim of Werr and find that while this industry
practice may supplement the Agreement, Werr cannot benefit from
it.
At the outset, we do not agree with the CA that industry practice be
rejected because liquidated damages are provided in the
Agreement, autonomy of contracts prevails, and industry practice is
completely set aside. Contracting parties are free to stipulate as to
the terms and conditions of the contract for as long as they are not
contrary to law, morals, good customs, public order or public policy.
Corollary to this rule is that laws are deemed written in every
contract.
Deemed incorporated into every contract are the general provisions
on obligations and interpretation of contracts found in the Civil
Code. The Civil Code provides:
Art. 1234. If the obligation has been substantially performed in good
faith, the obligor may recover as though there had been a strict and
complete fulfillment, less damages suffered by the obligee.
Art. 1376. The usage or custom of the place shall be borne in mind
in the interpretation of the ambiguities of a contract, and shall fill
the omission of stipulations which are ordinarily established.
In previous cases, we applied these provisions in construction
agreements to determine whether the project owner is entitled to
liquidated damages. We held that substantial completion of the
project equates to achievement of 95% project completion which
excuses the contractor from the payment of liquidated damages.
Considering the foregoing, it: was error for the CA to immediately
dismiss the application of industry practice on the sole ground that
there is an existing agreement as to liquidated damages. As
expressly stated under Articles 1234 and 1376, and in jurisprudence,
the construction industry’s prevailing practice may supplement any
ambiguities or omissions in the stipulations of the contract.
In this case, clause 41.5 of the Agreement is undoubtedly a valid
stipulation. However, while clause 41.5 requires payment of
liquidated damages if there is delay, it is silent as to the period until
when liquidated damages shall run. The Agreement does not state
that liquidated damages is due until termination of the project;
neither does it completely reject that it is only due until substantial
completion of the project. This omission in the Agreement may be
supplemented by the provisions of the Civil Code, industry practice,
and the CIAP Document No. 102. Hence, the industry practice that
substantial compliance excuses the contractor from payment of
liquidated damages applies to the Agreement.
Nonetheless, we find that Werr cannot benefit from the effects of
substantial compliance. Here, there is no dispute that Werr failed to
prove that it completed 95% of the project before or at the time of
the termination of the contract. As found by CIAC, it failed to
present evidence as to what accomplishment it achieved from the
time of the last billing until the termination of the contract. What
was admitted as accomplishment at the last billing is 93.18%. For
this reason, even if we adopt the rule that no liquidated damages
shall run after the date of substantial completion of the project,
Werr cannot claim benefit for it failed to meet the condition
precedent, i.e., the contractor has successfully proven that it
actually achieved 95% completion rate.
More importantly, Werr failed to show that it is the construction
industry’s practice to project the date of substantial completion of a
project, and to compute the period of delay based on the rate in
past progress billings just as what the CIAC has done. Consequently,
the CIAC erred when it assumed that Werr continued to perform
works, and if it did, that it performed them at the rate of
accomplishment of the previous works in the absence of evidence.
November 23, 2016
G.R. No. 204197
FRUEHAUF ELECTRONICS PHILIPPINES CORPORATION, Petitioner,
vs.
TECHNOLOGY ELECTRONICS ASSEMBLY AND MANAGEMENT PACIFIC
CORPORATION, Respondent.
FACTS:
In 1978, Fruehauf Electronics Philippines Corp. (Fruehauf) leased
several parcels of land in Pasig City to Signetics Filipinas Corporation
(Signetics) for a period of 25 years (until May 28, 2003). Signetics
constructed a semiconductor assembly factory on the land on its
own account.
In 1983, Signetics ceased its operations and in 1986, Team Holdings
Limited (THL) bought Signetics. THL later changed its name to
Technology Electronics Assembly and Management Pacific Corp.
(TEAM)
In March 1987, Fruehauf filed an unlawful detainer case against
TEAM. In an effort to amicably settle the dispute, both parties
executed a Memorandum of Agreement (MOA) where TEAM
undertook to pay Fruehauf 14.7 million pesos as unpaid rent (for
the period of December 1986 to June 1988).
They also entered a 15-year lease contract4 (expiring on June 9,
2003) that was renewable for another 25 years upon mutual
agreement. The contract included an arbitration agreement:5 TEAM
subleased the property to Capitol Publishing House (Capitol) on
December 2, 1996 after notifying Fruehauf.
On May 2003, TEAM informed Fruehauf that it would not be
renewing the lease. On May 31, 2003, the sublease between TEAM
and Capitol expired. However, Capitol only vacated the premises on
March 5, 2005. In the meantime, the master lease between TEAM
and Fruehauf expired on June 9, 2003.
Fruehauf instituted SPProc. No. 11449 before the Regional Trial
Court (RTC) for "Submission of an Existing Controversy for
Arbitration”. The RTC granted the petition and directed the parties
to comply with the arbitration clause of the contract.
On December 3, 2008, the arbitral tribunal awarded Fruehauf: (1)
8.2 million pesos as (the balance of) unpaid rent from June 9, 2003
until March 5, 2005; and (2) 46.8 million pesos as damages.
TEAM moved for reconsideration which the tribunal denied. Thus,
TEAM petitioned the RTC to partially vacate or modify the arbitral
award. It argued that the tribunal failed to properly appreciate the
facts and the terms of the lease contract.
On April 29, 2009, the RTC found insufficient legal grounds under
Sections 24 and 25 of the Arbitration Law to modify or vacate the
award. It denied the petition and CONFIRMED, the arbitral award.
TEAM filed a Notice of Appeal.
The CA reversed and set aside the arbitral award and dismissed the
arbitral complaint for lack of merit.
ISSUE:
Whether or not an arbitral award is appealable or be subject for a
petition for certiorari.
RULING:
NO.
The right to an appeal is neither' a natural right nor an
indispensable component of due process; it is a mere statutory
privilege that cannot be invoked in the absence of an enabling
statute. Neither the Arbitration Law nor the ADR Law allows a losing
party to appeal from the arbitral award. The statutory absence of an
appeal mechanism reflects the State's policy of upholding the
autonomy of arbitration proceedings and their corresponding
arbitral awards.
(Rule 19.7. No appeal or certiorari on the merits of an arbitral award
- An agreement to refer a dispute to arbitration shall mean that the
arbitral award shall be final and binding. Consequently, a party to an
arbitration is precluded from filing an appeal or a petition for
certiorari questioning the merits of an arbitral award. )
More than a decade earlier in Asset Privatization Trust v. Court of
Appeals, we likewise defended the autonomy of arbitral awards
through our policy of non-intervention on their substantive merits:
As a rule, the award of an arbitrator cannot be set aside for mere
errors of judgment either as to the law or as to the facts. Courts are
without power to amend or overrule merely because of
disagreement with matters of law or facts determined by the
arbitrators. They will not review the findings of law and fact
contained in an award, and will not undertake to substitute their
judgment for that of the arbitrators, since any other rule would
make an award the commencement, not the end, of litigation.
Errors of law and fact, or an erroneous decision of matters
submitted to the judgment of the arbitrators, are insufficient to
invalidate an award fairly and honestly made. Judicial review of an
arbitration is, thus, more limited than judicial review of a trial.
Nonetheless, an arbitral award is not absolute. Rule 19.10 of the
Special ADR Rules - by referring to Section 24 of the Arbitration Law
and Article 34 of the 1985 United Nations Commission on
International Trade Law (UNCITRAL) Model Law - recognizes the
very limited exceptions to the autonomy of arbitral awards.
(Rule 19.10. Rule on judicial review on arbitration in the Philippines.
- As a general rule, the court can only vacate or set aside the
decision of an arbitral tribunal upon a clear showing' that the award
suffers from any of the infirmities or grounds for vacating an arbitral
award under Section 24 of Republic Act No. 876 or under Rule 34 of
the Model Law in a domestic arbitration, or for setting aside an
award in an international arbitration under Article 34 of the Model
Law, or for such other grounds provided under these Special Rules.)
If the Regional Trial Court is asked to set aside an arbitral award in a
domestic or international arbitration on any ground other than
those provided in the Special ADR Rules, the court shall entertain
such ground for the setting aside or non-recognition of the arbitral
award only if the same amounts to a violation of public policy.
The court shall not set aside or vacate the award of the arbitral
tribunal merely on the ground that the arbitral tribunal committed
errors of fact, or of law, or of fact and law, as the court cannot
substitute its judgment for that of the arbitral tribunal.

Federal Express Corp vs Airfreight GR No. 216600 – none

Steamship mutual underwriting vs Sulpicio lines GR No. 196072 -

none
FEDERAL BUILDERS, INC., Petitioner, vs. POWER FACTORS, INC.,
Respondent.
G.R. NO. 211504
MARCH 8, 2017
FACTS:
Federal Builders, Inc. (Federal) was the general contractor of the
Buillion Mall (Mall) under a construction agreement with Bullion
Investment and Development Corporaton (BIDC). Federal engaged
Power Factors, Inc. (Power) as its subcontractor for the electric
works at the Mall and the Precinct Building (Precinct). Upon
completion of the electrical works, Power demanded payment for
the unpaid amount for the electrical works performed at Precinct,
from Federal, which answered that its outstanding balance under
the original contract should be addressed directly to BDIC. Said
demand only fall unto the deaf ear of Federal. Anent to this, Power
seek intervention from Construction Industry Arbitration
Commission (CIAC) Construction Industry Arbitration Commission
(CIAC). After weighing the evidences presented, the CIAC rendered
the Final Award ordering Federal to pay Power the unpaid balance
on the original contract plus damages.
ISSUES:
Whether or not the CIAC has jurisdiction over the case; and
Whether or not Federal was liable to pay Power the amount of the
unpaid balance on the original contract plus damages.
HELD:
Both Federal and Power agreed to submit to voluntary arbitration,
hence the CIAC had jurisdiction over the case. All that is required
for the CIAC to acquire jurisdiction is for the parties of any
construction contract to agree to submit their dispute to arbitration.
It may be reflected in the arbitration clause of their contract, or by
subsequently agreeing to submit their dispute to voluntary
arbitration, which need not be signed or be formally agreed upon in
the contract, because it can also be in the form of other modes of
communication in writing. Consistent with the policy of
encouraging alternative dispute resolution methods, any doubt
should be resolved in favor of the arbitration. The Contract of
Service between Federal and Power, reads: “15. Arbitration
Committee – all disputes, controversies, or differences, which may
arise between the parties herein, out of or in relation to or in
connection with this Agreement, or for breach thereof shall be
settled by the CIAC which shall have original and exclusive
jurisdiction over the aforementioned disputes.”
NATIONAL TRANSMISSION CORPORATION v. ALPHAOMEGA
INTEGRATED CORPORATION, GR No. 184295, 2014-07-30
Facts:
petition for review on certiorari
AIC, a duly licensed transmission line contractor, participated in the
public biddings conducted by TRANSCO and was awarded six (6)
government construction projects
In the course of the performance of the contracts, AIC encountered
difficulties and incurred losses allegedly due to TRANSCO's breach of
their contracts, prompting it to surrender the projects to TRANSCO
under protest.
In accordance with an express stipulation in the... contracts that
disagreements shall be settled by the parties through arbitration
before the CIAC, AIC submitted a request for arbitration before the
CIAC on August 28, 2006, and, thereafter, filed an Amended
Complaint against TRANSCO alleging that the latter breached the...
contracts
AIC prayed for judgment declaring all six (6) contracts rescinded and
ordering TRANSCO to pay, in addition to what had already been
paid under the contracts, moral damages, exemplary damages, and
attorney's fees at P100,000.00 each, and a total of P40,201,467.19
as actual and... compensatory damages
TRANSCO further argued that AIC was estopped from asking for
standby fees to cover its overhead expenses during project
suspensions considering that the delays, such as the unresolved
right-of-way issues and non-availability of... materials, were factors
already covered by the time extensions and suspensions of work
allowed under the contracts.
On April 18, 2007, the CIAC Arbitral Tribunal rendered its Final
Award
6 ordering the payment of actual and compensatory damages which
AIC would not have suffered had it not been for the project delays
attributable to TRANSCO. It... found ample evidence to support the
claim for the increase in subcontract cost in BTRP Schedule I, as well
as such items of cost as house and yard rentals, electric bills, water
bills, and maintained personnel, but disallowed the claims for
communications bills, maintenance... costs for idle equipment,
finance charges, and materials cost increases.
According to the Arbitral Tribunal, even if AIC itself made the
requests for contract time extensions, this did not bar its claim for
damages as a result of project delays since a... contrary ruling would
allow TRANSCO to profit from its own negligence and leave AIC to
suffer serious material prejudice as a direct consequence of that
negligence leaving it without any remedy at law.
The Arbitral Tribunal upheld AIC's right to... rescind the contracts
Respondent, National Transmission Corporation [TRANSCO] is
hereby ordered to pay Claimant, Alphaomega Integrated
Corporation
Unconvinced, TRANSCO instituted a petition for review[16] with the
CA.
Before filing its comment[17] to the petition, AIC moved for the
issuance of awrit of execution,[18] not for the amount of
P17,495,117.44 awarded in the Final Award, but for the increased
amount of P18,967,318.49.[19] It sought correction of the
discrepancies between the amount of the award appearing in the
dispositive portion[20] and the body of the Final Award.[21] The
Arbitral Tribunal, however,... denied AIC's motion, holding that
while the CIAC Revised Rules of Procedure Governing Construction
Arbitration (CIAC Rules)would have allowed the correction of the
Final Award for evident miscalculation of figures, typographical or
arithmetical errors, AIC failed to file... its motion for the purpose
within the time limitation of 15 days from its receipt of the Final
Award.[22]... the CA affirmed the Arbitral Tribunal's factual findings
that TRANSCO failed to exercise due diligence in resolving the
problems regarding the right-of-way and the lack of materials
before undertaking the bidding... process and entering into the
contracts with AIC.
The CA upheld the Arbitral Tribunal's Final Award as having been
sufficiently established by evidence but modified the total amount
of the award after noting a supposed mathematical error in the
computation.
Issues:
The essential issues for the Court's consideration are whether or not
the CA erred (a) in affirming the CIAC Arbitral Tribunal's findings
that AIC was entitled to its claims for damages as a result of project
delays
Ruling:
TRANSCO seeks through this petition a recalibration of the evidence
presented before the CIAC Arbitral Tribunal, insisting that AIC is not
entitled to any damages not only because it had previously waived
all claims for standby fees in case of project delays but had...
eventually failed to perform the workable portions of the projects.
This is evidently a factual question which cannot be the proper
subject of the present petition. Section 1, Rule 45 of the Rules of
Court provides that a petition for review on certiorari under the...
said rule, as in this case, "shall raise only questions of law which
must be distinctly set forth." Thus, absent any of the existing
exceptions impelling the contrary, the Court is, as a general rule,
precluded from delving on factual determinations, as what
TRANSCO essentially... seeks in this case. Similar to the foregoing is
the Court's ruling in Hanjin Heavy Industries and Construction Co.,
Ltd. v. Dynamic Planners and Construction Corp.,[30] the pertinent
portions of which are hereunder quoted:
Dynamic maintains that the issues Hanjin raised in its petitions are
factual in nature and are, therefore, not proper subject of review
under Section 1 of Rule 45, prescribing that a petition under the said
rule, like the one at bench, "shall raise only questions of... law which
must be distinctly set forth."
Dynamic's contention is valid to point as, indeed, the matters raised
by Hanjin are factual, revolving as they do on the entitlement of
Dynamic to the awards granted and computed by the CIAC and the
CA. Generally, this would be a question of fact that this Court
would... not delve upon.
This issue involves a question of fact. Such question exists when a
doubt or difference arises as to the truth or the falsehood of alleged
facts; and when there is need for a calibration of the evidence,
considering mainly the credibility of witnesses and the existence...
and the relevancy of specific surrounding circumstances, their
relation to each other and to the whole, and the probabilities of the
situation.
The rule, however, precluding the Court from delving on the factual
determinations of the CA, admits of several exceptions. In Fuentes
v. Court of Appeals, we held that the findings of facts of the CA,
which are generally deemed conclusive, may admit review by the
Court... in any of the following instances, among others:
(1)... when the factual findings of the [CA] and the trial court are
contradictory;
(2)... when the findings are grounded entirely on speculation,
surmises, or conjectures;
(3)... when the inference made by the [CA] from its findings of fact is
manifestly mistaken, absurd, or impossible;
(4)... when there is grave abuse of discretion in the appreciation of
facts;
(5)... when the [CA], in making its findings, goes beyond the issues
of the case, and such findings are contrary to the admissions of both
appellant and appellee;
(6)... when the judgment of the [CA] is premised on a
misapprehension of facts;
(7)... when the [CA] fails to notice certain relevant facts which, if
properly considered, will justify a different conclusion;
(8)... when the findings of fact are themselves conflicting;
(9)... when the findings of fact are conclusions without citation of
the specific evidence on which they are based; and
(10)... when the findings of fact of the [CA] are premised on the
absence of evidence but such findings are contradicted by the
evidence on record.(G.R. No. 109849, February 26, 1997, 268 SCRA
703, 709)
Significantly, jurisprudence teaches that mathematical
computations as well as the propriety of the arbitral awards are
factual determinations. And just as significant is that the factual
findings of the CIAC and CA in each separate appealed decisions
practically... dovetail with each other. The perceptible essential
difference, at least insofar as the CIAC's Final Award and the CA
Decision in CA-G.R. SP No. 86641 are concerned, rests merely on
mathematical computations or adjustments of baseline amounts
which the CIAC may have... inadvertently utilized.
In any case, the Court finds no reason to disturb the factual findings
of the CIAC Arbitral Tribunal on the matter of AIC's entitlement to
damages which the CA affirmed as being well supported by
evidence and properly referred to in the record. It is well-settled
that findings... of fact of quasi-judicial bodies, which have acquired
expertise because their jurisdiction is confined to specific matters,
are generally accorded not only respect, but also finality, especially
when affirmed by the CA.[32]The CIAC possesses that required...
expertise in the field of construction arbitration and the factual
findings of its construction arbitrators are final and conclusive, not
reviewable by this Court on appeal.[33]

While the CA correctly affirmed in full the CIAC Arbitral Tribunal's

factual determinations, it improperly modified the amount of the
award in favor of AIC, which modification did not observe the
proper procedure for the correction of an evident miscalculation of
figures,... including typographical or arithmetical errors, in the
arbitral award.

Furthermore, it must be emphasized that the petition for review

before the CA was filed by TRANSCO.[39] AIC never elevated before
the courts the matter concerning the discrepancy between the
amount of the award stated in the body of the Final Award and
the... total award shown in its dispositive portion. The issue was
touched upon by the CA only after AIC raised the same through its
Comment (With Motion to Acknowledge Actual Amount of
Award)[40] to TRANSCO's petition for review. The CA should not
have... modified the amount of the award to favor AIC because it is
well-settled that no relief can be granted a party who does not
appeal[41] and that a party who did not appeal the decision may
not obtain any affirmative relief from the appellate court... other
than what he had obtained from the lower court, if any, whose
decision is brought up on appeal.[42] The disposition, as stated in
the fallo of the CIAC Arbitral Tribunal's Final Award, should
therefore stand.[43]
CE Construction Corp vs Araneta Center – none - [July 14, 1993] BF filed with the RTC of Pasig a complaint for
the collection of the balance due under the construction
BF Corporation v. Court of Appeals et.al. agreement. Named Defendants therein were Shang and members
G.R. No. 120105 of its board of directors – A. Ramos, Colayco, Obles, Lanuza Jr.,
Licauco & B.Ramos.
March 27, 1998
- [Aug 3, 1993] Shang and its co-defendants filed a motion to
ROMERO, J.: suspend proceedings instead of filing an answer.

FACTS: o Motion was anchored on the defendants allegation that the

formal trade contract of the the construction project provided for a
- BF Corporation (BF) and respondent Shangri-La Properties,
clause requiring prior resort to arbitration before judicial
Inc. (Shang) entered into the 1st agreement whereby Shang
intervention.
engaged BF to construct the main structure of the EDSA Plaza
Project – the EDSA Shangri-La Mall – in Mandaluyong City. - [Aug 4, 1993] Shang submitted a copy of the condition of
the contract containing arbitration clause that it failed to attach its
- While the construction work was in progress Shang once
motion to suspend proceedings.
again hired BF for the expansion of the project, the 2nd agreement.
- BF opposed said motion stating that there was no formal
- BF incurred delay in the construction work that SPI
contract between the parties although they entered into an
considered as serious and substantial. BF contended that they had
agreement. They emphasized that the agreement did not provide
faithfully complied with the first agreement until a fire broke out on
for an arbitration thus cannot deprive the court of its jurisdiction.
[Nov 30, 1990] damaging phase 1 of the project, Hence SPI
proposed the renegotiation of the agreement between them. - Shang insisted that there was an arbitration clause in the
existing contract between them. It alleged that the suspension
- [May 30, 1991] – Parties entered into another agreement
would not deprive the court of its jurisdiction and would expedite
named “Agreement for the Execution of Builders Work for the EDSA
the settlement proceedings rather than delay it.
Plaza Project” (3rd agreement) that would cover the construction
work on said project as of [May 1, 1991] until its eventual - In a rejoinder, BF reiterated that there was no arbitration
completion. clause in the contract bewtween the parties. It averred that if there
was an arbitration clause, suspension of the proceedings was no
longer proper and that defendants should be declared in default for
failure to answer within the reglementary period.
- In its sur-rejoinder, Shang pointed out the significance of
the petitioners admission of the due execution of the Articles of
Agreement. It was shown that the Signature of Colayco (Shang
President) and Bayani Fernando (BF President) was in such
agreement and was even duly notarized.
- The RTC found that the arbitration clause did exist, however
the lower court denied motion to suspend proceedings and ruled in
favor of BF (see reasons below)
o This was because despite the fact there was an arbitration
agreement, the Conditions of Contract only the initials of Bayani
Fernando was present, while no signature on the part of Shang.
o There were no singed documents to prove Shang’s claims
thus there is serious doubt to the validity of the arbitration clause
found in the Conditions of Contract
o Assuming that the arbitration clause was valid and binding,
it was too late for Shang to invoke arbitration because:
the demand should have been made before the time of final
payment except as otherwise expressly stipulated in the contract
the court found that the project was to be completed on
[Oct 31, 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 total contract price
the court found out that the project was completed in
accordance with the agreement and Shang had took possession and
started operations thereof by opening the same to the public in
[Nov, 1911].
BF billed Shang the total amount of P110,883,101.52
contained in a demand letter sent on Feb 17, 1993. Instead of
paying the amound demanded, SPI set up its own claim of
P220,000,000.00 and scheduled a conference on that claim for July
12, 1993. The conference took place but was futile.
- Shang filed a motion for reconsideration but was denied
because of lack of merit and directed the other defendants to file
their responsive pleading within the reglementary period.
- Instead of filing an answer to the complaint, SPI filed a
petition for Certiorari under Rule 65 before the Court of appeals.
- The Court of Appeals granted the petition and annulled and
set aside the orders and stayed the proceedings in the lower court.
o According to the contract the project manager and the
contractor should coordinate with the owner, should there be
failure to resolve differences, dispute shall be submitted for
arbitration.
o Although it was only the initials of Bayani Fernando and De
La Cruz present and none from Shang, it does not affect its
effectivity. BF categorically admitted that the document is the
agreement bewtween the parties, the initial signature of BF
representative to signify conformity to arbitration is no longer
necessary. The parties should be allowed to submit their dispute to
arbitration in accordance with their agreement.
o Demand for arbitration was made within a reasonable time
after the dispute has arisen and attempts to settle amicably has
failed. This was evidenced by the fact that such demands were
acted upon only months. Jul 12 conference > Jul 14 Shang complaint
against BF > Aug 13 Request for arbitration.
- Hence the petition before the Supreme Court.
ISSUE:
WON the parties entered into an arbitrary agreement
HELD:
Yes, according to Sec 4 of R.A. 876 a contract to arbitrate a
controversy thereafter arising between the parties, as well as a
submission to arbitrate an existing controversy, shall be in writing
and subscribed by the party sought to be charged, or by his lawful
agent.
The making of a contract or submission for arbitration described in
section two hereof, providing for arbitration of any controversy,
shall be deemed a consent of the parties of the province or city
where any of the parties resides, to enforce such contract of
submission. (Underscoring supplied.)
The formal requirements of an agreement to arbitrate are therefore
the following: (a) it must be in writing and (b) it must be subscribed
by the parties or their representatives. There is no denying that the
parties entered into a written contract that was submitted in
evidence before the lower court. To subscribe means to write
underneath, as ones name; to sign at the end of a document. That
word may sometimes be construed to mean to give consent to or to
attest.
The Court finds that, upon a scrutiny of the records of this case,
these requisites were complied with in the contract in question. The
Articles of Agreement, which incorporates all the other contracts
and agreements between the parties, was signed by representatives
of both parties and duly notarized. The failure of the private
respondents representative to initial the `Conditions of Contract
would therefore not affect compliance with the formal
requirements for arbitration agreements because that particular
portion of the covenants between the parties was included by
reference in the Articles of Agreement.
Petitioners contention that there was no arbitration clause because
the contract incorporating said provision is part of a hodge-podge
document, is therefore untenable. A contract need not be
contained in a single writing. It may be collected from several
different writings which do not conflict with each other and which,
when connected, show the parties, subject matter, terms and
consideration, as in contracts entered into by correspondence.[13]
A contract may be encompassed in several instruments even though
every instrument is not signed by the parties, since it is sufficient if
the unsigned instruments are clearly identified or referred to and
made part of the signed instrument or instruments. Similarly, a
written agreement of which there are two copies, one signed by
each of the parties, is binding on both to the same extent as though
there had been only one copy of the agreement and both had
signed it.[14]