Frabelle Fishing Corporation, petitioner vs.
Philippine American Life executive order or regulation, ordinance, or any other governmental
Insuranc Company, PHILAM Properties Corporation and PERF Realty
Corporation, respondents
FACTS: On May 8, 1996, respondents entered into a Memorandum of
Agreement (1996 MOA) whereby each agreed to contribute cash, property,
and services for the construction and development of Philamlife Tower, a 45-
storey office condominium along Paseo de Roxas, Makati City. On December
6, 1996, respondents executed a Deed of Assignment (1996 DOA) wherein
they assigned to Frabelle Properties Corporation (Frabelle) their rights and
obligations under the 1996 MOA with respect to the construction,
development, and subsequent ownership of Unit No. 38-B located at the
38th floor of Philamlife Tower. The parties also stipulated that the assignee
shall be deemed as a co-developer of the construction project with respect
to Unit No. 38-B. Frabelle, in turn, assigned to Frabelle Fishing Corporation
(Frabelle Fishing), petitioner herein, its rights, obligations and interests over
Unit No. 38-B. On March 9, 1998, petitioner Frabelle Fishing and respondents
executed a Memorandum of Agreement (1998 MOA) to fund the
construction of designated office floors inPhilamlife Tower. The dispute
between the parties started when petitioner found material concealment on
the part of respondents regarding certain details in the 1996 DOA and 1998
MOA and their gross violation of their contractual obligations as
condominium developers. These violations are: (a) the non-construction of a
partition wall between Unit No. 38-B and the rest of the floor area; and (b)
the reduction of the net usable floor area from four hundred sixty eight (468)
square meters to only three hundred fifteen (315) square meters.
Dissatisfied with its existing arrangement with respondents, petitioner, on
October 22, 2001, referred the matter to the Philippine Dispute Resolution
Center, Inc. (PDRCI) for arbitration. However, in a letter dated November 7,
2001, respondents manifested their refusal to submit to PDRCI’s jurisdiction.
On February 11, 2002, petitioner filed with the Housing and Land Use
Regulatory Board (HLURB), Expanded National Capital Region Field Office a
complaint for reformation of instrument, specific performance and damages
against respondents, docketed as HLURB Case No. REM-021102-11791.
Petitioner alleged, among others, that the contracts do not reflect the true
intention of the parties; and that it is a mere buyer and not co-developer
and/or co-owner of the condominium unit.
ISSUE: Whether or not the HLURB has jurisdiction over the complaint for
reformation of instruments, specific performance and damages
HELD: The petition lacks merit. As the records show, the complaint filed by
petitioner with the HLURB is one for reformation of instruments. Petitioner
claimed that the terms of the contract are not clear and prayed that they
should be reformed to reflect the true stipulations of the parties. Petitioner
prayed:
WHEREFORE, in view of all the foregoing, it is respectfully prayed of this
Honorable Office that after due notice and hearing, a judgment be please
rendered:
Declaring that the instruments executed by the complainant FRABELLE and
respondent PHILAM to have been in fact a Contract to Sell.The parties are
thereby governed by the provisions of P.D. 957 entitled, Regulating the Sale
of Subdivision Lots and Condominiums, Providing Penalties for Violations
Thereof as buyer and developer, respectively, of a condominium unit and not
as co-developer and/or co-owner of the same;
x x x (Emphasis supplied)
We hold that being an action for reformation of instruments, petitioners
complaint necessarily falls under the jurisdiction of the Regional Trial Court
pursuant to Section 1, Rule 63 of the 1997 Rules of Civil Procedure, as
amended, which provides:
SECTION 1. Who may file petition. Any person interested under a deed, will,
contract or other written instrument, whose rights are affected by a statute,
LA NAVAL DRUG CORPORATION, petitioner, vs. THE HONORABLE COURT
regulation may, before breach or violation thereof, bring an action in the
appropriate Regional Trial Court to determine any question of construction
or validity arising, and for a declaration of his rights or duties thereunder.
An action for the reformation of an instrument, to quiet title to real property
or remove clouds therefrom, or to consolidate ownership under Article 1607
of the Civil Code, may be brought under this Rule. (Emphasis ours) As
correctly held by the Court of Appeals, any disagreement as to the nature of
the parties relationship which would require first an amendment or
reformation of their contract is an issue which the courts may and can
resolve without the need of the expertise and specialized knowledge of the
HLURB.
WHEREFORE, we DENY the petition. They challenged Decision and
Resolution of the Court of Appeals in CA-G.R. SP No. 71389 are AFFIRMED.
Mindanao Portland Cement Corporation- Petitioner/Appelle vs. Mc
Donough Construction Company of Florida- Respondent/Appellant
FACTS: February 13, 1962, Mindanao Portland Cement Corporation &
respondent Mc Donough Construction Company of Florida USA executed a
contract for the construction by the respondent for the petitioner of a dry
portland cement plan at Iligan city. Turbull incorporated was engaged to
design and manage the construction of the plant, supervise the construction,
schedule deliveries amd the construction work as well as check and certify ill
contractors progress and fiscal request for payments. Extensions of time for
the termination of the project, initially agreed to be furnished on December
17, 1961were granted. October 22, 1962, respondent finally completed the
project and November 14, 1962, the delivery flood lamps were complied.
Petitioner claimed from respondent in damages in the amount of more
thanP2,000,000 allegedly occasioned by the delay in the projects completion
and respondent in turn asked for more than P450,000 from petitioner for
alleged losses due top cost of extra work and overhead as of April 1962.
August 8, 1962, petitioner sent respondent and on September 24, 1962
written invitation to arbitrate, invoking a provision in their contract
regarding arbitration of disputes. November 14, 1962, respondent with
Turnbull Inc.’s approval , asking for P403,700 as unpaid balance of the
consideration of contract. January 29, 1963, petitioner filed the present
action in the Court of First Instance of Manila to compel respondent to
arbitrate with it concerning alleged disputes arising from their contract.
February 23, 1963, respondent filed an answer denied the alleged existence
of disagreement between parties, that claims and and damages should be
resolved by Turnbull Inc.. May 13, 1964, court rendered decision with respect
to their rights and obligations under their contract and the same should be
submitted for arbitration pursuant to paragraph 39 of contract and the
arbitration clause – to R.A. 876- The Arbitration Law.
ISSUE: Whether or not disputes arises between parties should be subjected
to arbitration.
HELD: Yes, since there obtain a written provision for arbitration as well as
failure on respondent’s part to comply therewith, the court quo rightly
ordered the parties to proceed to arbitration in accordance with the terms
of the agreement (sec. 6, R.A. 876). respondent’s arguments touching upon
the merits of the dispute are improperly raised herein. They should be
addressed to the arbitrators. This proceeding is merely a summary remedy
to enforce the agreement to arbitrate. The duty of the court in this case is
not to resolve the merits of parties claims but only to determine if they
should proceed to arbitration or not. Frivolous/patently baseless claim
should not be ordered to arbitration, defense exist against a claim, does not
make it frivolous or baseless. Judgment rendered is affirmed with cost
against appellant.
OF APPEALS and WILSON C. YAO, respondents.
FACTS: Respondent Yao was the owner of a commercial building, a portion
of which is leased to herein petitioner. However, during the renewal of the
contract of lease, the two disagreed on the rental rate, and to resolve the
controversy, they submitted their disagreement to arbitration. Two
arbitrators (Alamarez and Sabile) has been appointed by the parties while
the appointment of the third arbitrator (Tupang) was held in abeyance
because La Naval Drug instructed its arbitrator to defer the same until its
Board of Directors could convene and approved Tupang’s appointment. This
was theorized by the respondent as dilatory tactics, hence, he prayed that a
summary hearing be conducted and direct the 2 arbitrators to proceed with
the arbitration in accordance with Contract of Lease and the applicable
provisions of the Arbitration law, by appointing and confirming the
appointment of the Third Arbitrator; and that the Board of Three Arbitrators
be ordered to immediately convene and resolve the controversy before it.
The respondent court announced that the two arbitrators chose Mrs. Eloisa
R. Narciso as the third arbitrator and ordered the parties to submit their
position papers on the issue as to wh ether or not respondent Yao's claim for
damages may be litigated upon in the summary proceeding for enforcement
of arbitration agreement. In moving for reconsideration of the said Order,
petitioner argued that in Special Case No. 6024, the respondent court sits as
a special court exercising limited jurisdiction and is not competent to act on
respondent Yao's claim for damages, which poses an issue litigable in an
ordinary civil action. However, respondent court was not persuaded by
petitioner's submission, hence, it denied the motion for reconsideration.
reconsideration. While the appellate court has agreed with petitioner that,
under Section 6 of Republic Act No. 876, a court, acting within the limits of
its i ts special jurisdiction, may in this case solely determine the issue of
whether the litigants should proceed or not to arbitration, it, however,
considered petitioner in estoppel from questioning the competence of the
court to additionally hear and decide in the summary proceedings private
respondent's claim for damages, it (petitioner) having itself filed similarly its
own counterclaim with the court a quo.
ISSUES: 1. WON THE COURT HAS JURISDICTION OVER THE PERSON. 2. WON
THE COURT A QUO HAS JURISDICTION OVER THE SUBJECT MATTER.
HELD: As to the first issue, it was held that jurisdiction over the person must
be seasonably raised, i.e., that it is pleaded in a motion to dismiss or by way
of an affirmative defense in an answer. Voluntary appearance shall be
deemed a waiver of this defense. The assertion, however, of affirmative
defenses shall not be constructed as an estoppel or as a waiver of such
defense. With regard to the second issue, it was held that where the court
itself clearly has no jurisdiction over the subject matter or the nature of the
action, the invocation of this defense may be done at any time. It is neither
for the courts nor the parties to violate or disregard that rule, let alone to
confer that jurisdiction, this matter being legislative in character. Barring
highly meritorious and exceptional circumstances, such as herein before
exemplified, neither estoppel nor waiver shall apply. The court must then
refrain from taking up the claims of the contending parties for damages,
which, upon the other hand, may be ventilated in separate regular
proceedings proceedings at an opportune.
PHILIPPINE ECONOMIC ZONE AUTHORITY, petitioner, vs. EDISON
(BATAAN) COGENERATION CORPORATION, respondent.
FACTS: Petitioner Philippine Economic Zone Authority (PEZA) and Edison
(Bataan) Cogeneration Corporation (respondent) entered into a Power
Supply and Purchase Agreement (PSPA or agreement) for a 10-year period
effective October 25, 1997 whereby respondent undertook to construct,
operate, and maintain a power plant which would sell, supply and deliver
electricity to PEZA for resale to business locators in the Bataan Economic
Processing Zone. Petitioner allegedly reneged in its obligation when it did not
heed the request of the respondent regarding tariff increase. Which
prompted the latter to invoke its right to terminate the PSPA. PEZA disputed
the termination prompting respondent to request PEZA to submit the
dispute to arbitration pursuant to the arbitration clause of the PSPA.
Petitioner refused to submit to arbitration, however, prompting respondent
to file a Complaint[1] against PEZA for specific performance before the
Regional Trial Court (RTC) of Pasay. Petitioner submits that the plaintiffs
Request for Arbitration dated October 20, 2004 is not an arbitrable issue,
considering that the provision on pretermination fee in the Power Sales and
Purchase Agreement (PSPA), is gravely onerous, unconscionable, greatly
disadvantageous to the government, against public policy and therefore
invalid and unenforceable.
RTC: Pursuant to Section 8 of RA 876, also known as the Arbitration Law, and
Power Sales and Purchase Agreement, this Court hereby appoints, subject to
their agreement as arbitrators, retired Supreme Court Chief Justice Andres
Narvasa, as chairman of the committee, and retired Supreme Court Justices
Hugo Gutierrez, and Justice Jose Y. Feria, as defendants and plaintiffs
representative, respectively, to the arbitration committee. Accordingly, let
the Request for Arbitration be immediately referred to the Arbitration
Committee so that it can commence with the arbitration.
ISSUE: WON THE CA ERRED WHEN IT AFFIRMED THE ORDER OF THE TRIAL
COURT WHICH REFERRED RESPONDENTS
REQUEST FOR ARBITRATION DESPITE THE FACT THAT THE ISSUE PRESENTED
BY THE RESPONDENT IS NOT AN ARBITRABLE ISSUE.
RULING: The petition fails. The dispute raised by respondent calls for a
proceeding under Section 6 of Republic Act No. 876, AN ACT TO AUTHORIZE
THE MAKING OF ARBITRATION AND SUBMISSION AGREEMENTS, TO
PROVIDE FOR THE APPOINTMENT OF ARBITRATORS AND THE PROCEDURE
FOR ARBITRATION IN CIVIL CONTROVERSIES, AND FOR OTHER PURPOSES
which reads: SECTION 6. Hearing by court. A party aggrieved by the failure,
neglect or refusal of another to perform under an agreement in writing
providing for arbitration may petition the court for an order directing that
such arbitration proceed in the manner provided for in such agreement. R.A.
No. 876 explicitly confines the courts authority only to the determination of
whether or not there is an agreement in writing providing for arbitration.[15]
Given petitioners admission of the material allegations of respondents
complaint including the existence of a written agreement to resolve disputes
through arbitration, the assailed appellate courts affirmance of the trial
courts grant of respondents Motion for Judgment on the Pleadings is in
order. Petitioner argues that it tendered an issue in its Answer as it disputed
the legality of the pretermination fee clause of the PSPA. Even assuming
arguendo that the clause is illegal, it would not affect the agreement
between petitioner and respondent to resolve their dispute by arbitration.
The doctrine of separability, or severability as other writers call it, enunciates
that an arbitration agreement is independent of the main contract. The
arbitration agreement is to be treated as a separate agreement and the
arbitration agreement does not automatically terminate when the contract
of which it is a part comes to an end. The separability of the arbitration
agreement is especially significant to the determination of whether the
invalidity of the main contract also nullifies the arbitration clause. Indeed,
the doctrine denotes that the invalidity of the main contract, also referred to
as the container contract, does not affect the validity of the arbitration
agreement. Irrespective of the fact that the main contract is invalid, the
arbitration clause/agreement still remains valid and enforceable. In fine, the
issues raised by respondent are subject to arbitration in accordance with the
arbitration clause in the parties agreement. WHEREFORE, the petition is
DENIED. SO ORDERED.
Magellan Capital Management Corporation v. Zosa
(G.R. No. 129916)
Facts: Under a management agreement entered into, MCHC appointed
MCMC as manager for the operation of its business and affairs. Pursuant
thereto, petitioners and private respondent Rolando Zosa entered into
“Employment Agreement” designating the latter as President and CEO of
MCHC. Respondent Zosa then was elected to a new position as MCHC’s Vice-
Chairman/Chairman New Ventures Development to which he communicated
his resignation on the ground that it had less responsibility and scope and
demanded that he be given termination benefits as provided in the
Employment Agreement. MCHC communicated its non-acceptance to the
resignation and advised respondent that the agreement is terminated on
account of the latter’s breach thereof. Respondent invoked the Arbitration
Clause of the agreement and both parties designated their arbitrators in the
panel. However, instead of submitting the dispute to arbitration, respondent
filed an action for damages against petitioners before the RTC. Petitioners’s
motion to dismiss was denied. Petitioners filed a petition for certiorari and
prohibition in the CA to which it was given due course. The RTC in compliance
with the decision, declared the arbitration clause in the agreement partially
void and of no effect insofar as it concerns the composition of arbitrators.
Petitioners then filed this petition for review on certiorari.
Issue: Whether or not the arbitration clause in the Employment Agreement
is partially void and of no effect.
Ruling: We rule against the petitioners. Even if procedural rules are
disregarded, and a scrutiny of the merits of the case is undertaken, this Court
finds the trial court’s observations on why the composition of the panel of
arbitrators should be voided, incisively correct so as to merit our approval.
Thus, “From the memoranda of both sides, the Court is of the view that the
defendants [petitioner] MCMC and MCHC represent the same interest.
There is no quarrel that both defendants are entirely two different
corporations with personalities distinct and separate from each other and
that a corporation has a personality distinct and separate from those persons
composing the corporation as well as from that of any other legal entity to
which it may be related. But as the defendants [herein petitioner] represent
the same interest, it could never be expected, in the arbitration proceedings,
that they would not protect and preserve their own interest, much less,
would both or either favor the interest of the plaintiff. The arbitration law,
as all other laws, is intended for the good and welfare of everybody. In fact,
what is being challenged by the plaintiff herein is not the law itself but the
provision of the Employment Agreement based on the said law, which is the
arbitration clause but only as regards the composition of the panel of
arbitrators.
“From the foregoing arbitration clause, it appears that the two (2)
defendants [petitioners] (MCMC and MCHC) have one (1) arbitrator each to
compose the panel of three (3) arbitrators. As the defendant MCMC is the
Manager of defendant MCHC, its decision or vote in the arbitration
proceeding would naturally and certainly be in favor of its employer and the
defendant MCHC would have to protect and preserve its own interest;
hence, the two (2) votes of both defendants (MCMC and MCHC) would
certainly be against the lone arbitrator for the plaintiff [herein defendant].
Hence, apparently, plaintiff [defendant] would never get or receive justice
and fairness in the arbitration proceedings from the panel of arbitrators as
provided in the aforequoted arbitration clause. In fairness and justice to the
plaintiff [defendant], the two defendants (MCMC and MCHC) [herein
petitioners] which represent the same interest should be considered as one
and should be entitled to only one arbitrator to represent them in the
arbitration proceedings. Accordingly, the arbitration clause, insofar as the
composition of the panel of arbitrators is concerned should be declared void
and of no effect, because the law says, “Any clause giving one of the parties
power to choose more arbitrators than the other is void and of no effect”
(Article 2045, Civil Code).
“The dispute or controversy between the defendants (MCMC and MCHC)
[herein petitioners] and the plaintiff [herein defendant] should be settled in
the arbitration proceeding in accordance with the Employment Agreement,
but under the panel of three (3) arbitrators, one (1) arbitrator to represent
the plaintiff, one (1) arbitrator to represent both defendants (MCMC and
MCHC) [herein petitioners] and the third arbitrator to be chosen by the
plaintiff [defendant Zosa] and defendants [petitioners].
We need only to emphasize in closing that arbitration proceedings are
designed to level the playing field among the parties in pursuit of a mutually
acceptable solution to their conflicting claims. Any arrangement or scheme
that would give undue advantage to a party in the negotiating table is
anathema to the very purpose of arbitration and should, therefore, be
resisted. Wherefore, premises considered, the petition is hereby dismissed
and the decision of the trial court is affirmed.
OIL AND NATURAL GAS COMMISSION v CA
FACTS: This proceeding involves the enforcement of a foreign judgment
rendered by the Civil Judge of Dehra Dun, India in favor of the petitioner,
against the private respondent, PACIFIC CEMENT COMPANY,
INCORPORATED. The petitioner is a foreign corporation owned and
controlled by the Government of India while the private respondent is a
private corporation duly organized and existing under the laws of the
Philippines. The conflict between the petitioner and the private respondent
rooted from the failure of the respondent to deliver 43,000 metric tons of oil
well cement to the petitioner even it had already received payment and
despite petitioner’s several demands. The petitioner then informed the
private respondent that it was referring its claim to an arbitrator pursuant to
Clause 16 of their contract which stipulates that he venue for arbitration shall
be at Dehra dun. The chosen arbitrator, one Shri N.N. Malhotra, resolved the
dispute in favour of the petitioner setting forth the arbitral award. To enable
the petitioner to execute the above award, it filed a Petition before the Court
of the Civil Judge in Dehra Dun. India praying that the decision of the
arbitrator be made "the Rule of Court" in India. This was objected by the
respondent but foreign court refused to admit the private respondent's
objections for failure to pay the required filing fees. Despite notice sent to
the private respondent of the foregoing order and several demands by the
petitioner for compliance therewith, the private respondent refused to pay
the amount adjudged by the foreign court as owing to the petitioner. The
petitioner filed a complaint with Branch 30 of the Regional Trial Court (RTC)
of Surigao City for the enforcement of the aforementioned judgment of the
foreign court. The private respondent moved to dismiss the complaint. RTC
dismissed the complaint for lack of a valid cause of action. The petitioner
then appealed to the respondent Court of Appeals which affirmed the
dismissal of the complaint. In its decision, the appellate court concurred with
the RTC's ruling that the arbitrator did not have jurisdiction over the dispute
between the parties, thus, the foreign court could not validly adopt the
arbitrator's award. The petitioner filed this petition for review on certiorari,
ISSUE: Whether or not the arbitrator had jurisdiction over the dispute
between the petitioner and the private respondent under Clause 16 of the
contract.
RULING: The constitutional mandate that no decision shall be rendered by
any court without expressing therein dearly and distinctly the facts and the
law on which it is based does not preclude the validity of "memorandum
decisions" which adopt by reference the findings of fact and conclusions of
law contained in the decisions of inferior tribunals. Furthermore, the
recognition to be accorded a foreign judgment is not necessarily affected by
the fact that the procedure in the courts of the country in which such
judgment was rendered differs from that of the courts of the country in
which the judgment is relied on. If the procedure in the foreign court
mandates that an Order of the Court becomes final and executory upon
failure to pay the necessary docket fees, then the courts in this jurisdiction
cannot invalidate the order of the foreign court simply because our rules
provide otherwise.
WHEREFORE, the instant petition is GRANTED, and the assailed decision of
the Court of Appeals sustaining the trial court's dismissal of the OIL AND
NATURAL GAS COMMISSION's complaint before Branch 30 of the RTC of
Surigao City is REVERSED.
LUZON DEVELOPMENT BANK vs. ASSO. OF LDB EMPLOYEES and GARCIA
G.R. No. 120319
FACTS: From a submission agreement of the LDB and the Association of
Luzon Development Bank Employees (ALDBE) arose an arbitration case to
resolve the following issue: Whether or not the company has violated the
CBA provision and the MOA on promotion. At a conference, the parties
agreed on the submission of their respective Position Papers. Atty. Garcia, in
her capacity as Voluntary Arbitrator, received ALDBE’s Position Paper ; LDB,
on the other hand, failed to submit its Position Paper despite a letter from
the Voluntary Arbitrator reminding them to do so. As of May 23, 1995 no
Position Paper had been filed by LDB. Without LDB’s Position Paper, the
Voluntary Arbitrator rendered a decision disposing as follows: WHEREFORE,
finding is hereby made that the Bank has not adhered to the CBA provision
nor the MOA on promotion. Hence, this petition for certiorari and
prohibition seeking to set aside the decision of the Voluntary Arbitrator and
to prohibit her from enforcing the same.
ISSUE: WON a voluntary arbiter’s decision is appealable to the CA and not
the SC
HELD: the Court resolved to REFER this case to the Court of Appeals. YES. The
jurisdiction conferred by law on a voluntary arbitrator or a panel of such
arbitrators is quite limited compared to the original jurisdiction of the labor
arbiter and the appellate jurisdiction of the NLRC for that matter. The
“(d)ecision, awards, or orders of the Labor Arbiter are final and executory
unless appealed to the Commission …” Hence, while there is an express
mode of appeal from the decision of a labor arbiter, Republic Act No. 6715 is
silent with respect to an appeal from the decision of a voluntary arbitrator.
Yet, past practice shows that a decision or award of a voluntary arbitrator is,
more often than not, elevated to the SC itself on a petition for certiorari, in
effect equating the voluntary arbitrator with the NLRC or the CA. In the view
of the Court, this is illogical and imposes an unnecessary burden upon it. In
Volkschel Labor Union, et al. v. NLRC, et al., 8 on the settled premise that the
judgments of courts and awards of quasi-judicial agencies must become final
at some definite time, this Court ruled that the awards of voluntary
arbitrators determine the rights of parties; hence, their decisions have the
same legal effect as judgments of a court. In Oceanic Bic Division (FFW), et
al. v. Romero, et al., this Court ruled that “a voluntary arbitrator by the
nature of her functions acts in a quasi-judicial capacity.” Under these rulings,
it follows that the voluntary arbitrator, whether acting solely or in a panel,
enjoys in law the status of a quasi-judicial agency but independent of, and
apart from, the NLRC since his decisions are not appealable to the latter.
Section 9 of B.P. Blg. 129, as amended by Republic Act No. 7902, provides
that the Court of Appeals shall exercise:
(B) Exclusive appellate jurisdiction over all final judgments, decisions,
resolutions, orders or awards of RTC s and quasi-judicial agencies,
instrumentalities, boards or commissions, including the Securities and
Exchange Commission, the Employees Compensation Commission and the
Civil Service Commission, except those falling within the appellate
jurisdiction of the Supreme Court in accordance with the Constitution, the
Labor Code of the Philippines under Presidential Decree No. 442, as
amended, the provisions of this Act, and of subparagraph (1) of the third
paragraph and subparagraph (4) of the fourth paragraph of Section 17 of the
Judiciary Act of 1948.
Assuming arguendo that the voluntary arbitrator or the panel of voluntary
arbitrators may not strictly be considered as a quasi-judicial agency, board
or commission, still both he and the panel are comprehended within the
concept of a “quasi-judicial instrumentality.” An “instrumentality” is
anything used as a means or agency. Thus, the terms governmental “agency”
or “instrumentality” are synonymous in the sense that either of them is a
means by which a government acts, or by which a certain government act or
function is performed. The word “instrumentality,” with respect to a state,
contemplates an authority to which the state delegates governmental power
for the performance of a state function. An individual person, like an
administrator or executor, is a judicial instrumentality in the settling of an
estate, in the same manner that a sub-agent appointed by a bankruptcy
court is an instrumentality of the court, and a trustee in bankruptcy of a
defunct corporation is an instrumentality of the state. The voluntary
arbitrator no less performs a state function pursuant to a governmental
power delegated to him under the provisions therefor in the Labor Code and
he falls, therefore, within the contemplation of the term “instrumentality” in
the aforequoted Sec. 9 of B.P. 129. The fact that his functions and powers
are provided for in the Labor Code does not place him within the exceptions
to said Sec. 9 since he is a quasi-judicial instrumentality as contemplated
therein. It will be noted that, although the Employees Compensation
Commission is also provided for in the Labor Code, Circular No. 1-91, which
is the forerunner of the present Revised Administrative Circular No. 1-95, laid
down the procedure for the appealability of its decisions to the CA under the
foregoing rationalization, and this was later adopted by Republic Act No.
7902 in amending Sec. 9 of B.P. 129. A fortiori, the decision or award of the
voluntary arbitrator or panel of arbitrators should likewise be appealable to
the CA, in line with the procedure outlined in Revised Administrative Circular
No. 1-95, just like those of the quasi-judicial agencies, boards and
commissions enumerated therein. In the same vein, it is worth mentioning
that under Section 22 of Republic Act No. 876, also known as the Arbitration
Law, arbitration is deemed a special proceeding of which the court specified
in the contract or submission, or if none be specified, the RTC for the
province or city in which one of the parties resides or is doing business, or in
which the arbitration is held, shall have jurisdiction. In effect, this equates
the award or decision of the voluntary arbitrator with that of the RTC.
Consequently, in a petition for certiorari from that award or decision, the CA
must be deemed to have concurrent jurisdiction with the SC. As a matter of
policy, this Court shall henceforth remand to the Court of Appeals petitions
of this nature for proper disposition.
NOTES:
1. In labor law context, arbitration is the reference of a labor dispute to an
impartial third person for determination on the basis of evidence and
arguments presented by such parties who have bound themselves to accept
the decision of the arbitrator as final and binding. Arbitration may be
classified, on the basis of the obligation on which it is based, as either
compulsory or voluntary. Compulsory arbitration is a system whereby the
parties to a dispute are compelled by the government to forego their right
to strike and are compelled to accept the resolution of their dispute through
arbitration by a third party. 1 The essence of arbitration remains since a
resolution of a dispute is arrived at by resort to a disinterested third party
whose decision is final and binding on the parties, but in compulsory
arbitration, such a third party is normally appointed by the government.
Under voluntary arbitration, on the other hand, referral of a dispute by the
parties is made, pursuant to a voluntary arbitration clause in their collective
agreement, to an impartial third person for a final and binding resolution. 2
Ideally, arbitration awards are supposed to be complied with by both parties
without delay, such that once an award has been rendered by an arbitrator,
nothing is left to be done by both parties but to comply with the same. After
all, they are presumed to have freely chosen arbitration as the mode of
settlement for that particular dispute. Pursuant thereto, they have chosen a
mutually acceptable arbitrator who shall hear and decide their case. Above
all, they have mutually agreed to de bound by said arbitrator’s decision.
2. Article 261 of the Labor Code accordingly provides for exclusive original
jurisdiction of such voluntary arbitrator or panel of arbitrators over
(1) the interpretation or implementation of the CBA and
(2) the interpretation or enforcement of company personnel policies.
Article 262 authorizes them, but only upon agreement of the parties, to
exercise jurisdiction over other labor disputes. On the other hand, a labor
arbiter under Article 217 of the Labor Code has jurisdiction over the following
enumerated cases:
. . . (a) Except as otherwise provided under this Code the Labor Arbiters shall
have original and exclusive jurisdiction to hear and decide, within thirty (30)
calendar days after the submission of the case by the parties for decision
without extension, even in the absence of stenographic notes, the following
cases involving all workers, whether agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that workers
may file involving wages, rates of pay, hours of work and other terms and
conditions of employment;
4. Claims for actual, moral, exemplary and other forms of damages arising
from the employer-employee relations;
5. Cases arising from any violation of Article 264 of this Code, including
questions involving the legality of strikes and lockouts;
6. Except claims for Employees Compensation, Social Security, Medicare and
maternity benefits, all other claims, arising from employer-employee
relations, including those of persons in domestic or household service,
involving an amount exceeding five thousand pesos (P5,000.00) regardless
of whether accompanied with a claim for reinstatement.
National Steel Corporation v. RTC of Lanao Del Norte
(G.R. No. 127004)
Facts: Respondent Edward Willkom Enterprises Inc. (EWEI) and Ramiro
Construction executed a contract with petitioner National Steel Corporation
(NSC) whereby the former jointly undertook the Contract for Site
Development for the latter’s Integrated Iron and Steel Mills Complex.
Sometime in 1983, the services of Ramiro Construction was terminated and
EWEI took over the contractual obligation. Due to this and to other causes
deemed sufficient by EWEI, extensions of time for the termination of the
project were granted by NSC. Differences later arose, EWEI filed a case
before the RTC praying essentially for payments with interest from the time
of delay; the price adjustment as provided by PD 1594; and exemplary
damages and attorney’s fees. NSC filed an answer with counterclaim to
plaintiffs complaints. The court upon joint motion of both parties had issued
an order dismissing the said complaint and counterclaim in view of the desire
of both parties to implement Sec. 19 of the contract, providing for a
resolution of any conflict by arbitration. In accordance with the aforesaid
order and pursuant to Sec. 19 of the Contract, herein parties constituted an
Arbitration Board after which of a series of hearings, rendered the decision
directing NSC to pay EWEI. The RTC affirmed and confirmed the award of the
arbitrators. NSC’s Motion for Reconsideration was denied, hence has come
to this court via the present petition.
Issue: Whether or not the lower court acted with grave abuse of discretion
in not vacating the arbitrator’s award.

Ruling: Thus, in a Petition to Vacate Arbitrator’s Decision before the trial

court, regularity in the performance of official functions is presumed and the
complaining party has the burden of proving the existence of any of the
grounds for vacating the award, as provided for by Sections 24 of the
Arbitration Law, to wit: (a) The award was procured by corruption, fraud or
other undue means; (b) That there was evident partiality or corruption in the
arbitrators of any of them; or (c) That the arbitrators were guilty of
misconduct in refusing to postpone the hearing upon sufficient cause shown,
or in refusing to hear evidence pertinent and material to the controversy;
that one or more of the arbitrators was disqualified to act as such under
section nine hereof, and wilfully refrained from disclosing such
disqualification or of any other misbehavior by which the rights of any party
have been materially prejudiced; or (d) That the arbitrators exceeded their
powers, or so imperfectly executed them, that a mutual, final and definite
award upon the subject matter submitted to them was not made. The
grounds relied upon by the petitioner were the following (a) That there was
evident partiality in the assailed decision of the Arbitrators in favor of the
respondent; and (b) That there was mistaken appreciation of the facts and
application of the law by the Arbitrators. Petitioner’s allegation that there
was evident partiality is untenable. It is anemic of evidentiary support. In the
case of Adamson vs. Court of Appeals, in upholding the decision of the Board
of Arbitrators, this Court ruled that the fact that a party was disadvantaged
by the decision of the Arbitration Committee does not prove evident
partiality. Proofs other than mere inference are needed to establish evident
partiality. Here, petitioner merely averred evident partiality without any
proof to back it up. Petitioner was never deprived of the right to present
evidence nor was there any showing that the Board showed signs of any bias
in favor of EWEI. Parentethically, and in the light of the record above-
mentioned, this Court hereby holds that the Board of Arbitrators did not
commit any “evident partiality” imputed by petitioner NSC. Above all, this
Court must sustain the said decision for it is a well-settled rule that the actual
findings of an administrative body should be affirmed if there is substantial
evidence to support them and the conclusions stated in the decision are not
clearly against the law and jurisprudence, similar to the instant case,
Henceforth, every reasonable intendment will be indulged to give effect such
proceedings and in favor of the regulatory and integrity of the arbitrators act.
Indeed, the allegation of evident partiality is not well-taken because the
petitioner failed to substantiate the same.

WHEREFORE, the awards made by the Board of Arbitrators which the trial
court adopted in its decision are modified.