DR. LUCAS G. ADAMSON AND ADAMSON MANAGEMENT

CORPORATION VS HON. COURT OF APPEALS

G.R. No. 106879 May 27, 1994

FACTS: On June 15, 1990, the parties, Adamson Management Corporation and Lucas Adamson on the

one hand, and APAC Holdings Limited on the other, entered into a contract whereby the former sold

99.97% of outstanding common shares of stocks of Adamson and Adamson, Inc. to the latter for

P24,384,600.00 plus the Net Asset Value (NAV) of Adamson and Adamson, Inc. as of June 19, 1990. But

the parties failed to agree on a reasonable Net Asset Value. This prompted them to submit the case for

arbitration in accordance with Republic Act No. 876, otherwise known as the Arbitration Law.

The Arbitral Tribunal rendered the award in favor of APAC Holdings Limited. Thereafter, APAC

Holdings Ltd. filed a petition for confirmation of the arbitration award before the Regional Trial Court of

Makati. Herein petitioners opposed the petition and prayed for the nullification, modification and/or

correction of the same, alleging that the arbitrators committed evident partiality and grave abuse of

discretion. The Regional Trial Court rendered a decision vacating the arbitration award.

Thereafter, the Court of Appeals, in reversing the trial court's decision held that the nullification of the

decision of the Arbitration Committee was not based on the grounds provided by the Arbitration Law and

that private respondents [petitioners herein] have failed to substantiate with any evidence their claim of

partiality. Significantly, even as respondent judge ruled against the arbitrators' award, he could not find

fault with their impartiality and integrity. Evidently, the nullification of the award rendered at the case at

bar was made not on the basis of any of the grounds provided by law.

ISSUE: Whether or not, the Court of Appeals err in affirming the arbitration award and in reversing the

decision of the trial court?

HELD: No. Section 24 of the Arbitration Law provides as follows:

Sec. 24. Grounds for vacating award. - In any one of the following cases, the court must

make an order vacating the award upon the petition of any party to the controversy when

such party proves affirmatively that in the arbitration proceedings:

(b) That there was evident partiality or corruption in the arbitrators or any of them;

Petitioners herein failed to prove their allegation of partiality on the part of the arbitrators. Proofs other

than mere inferences are needed to establish evident partiality. That they were disadvantaged by the

decision of the Arbitration Committee does not prove evident partiality. Too much reliance has been

accorded by petitioners on the decision of the trial court. However, we find that the same is but an

adaptation of the arguments of petitioners to defeat the petition for confirmation of the arbitral award in

the trial court by herein private respondent.

It is clear therefore, that the award was vacated not because of evident partiality of the arbitrators but

because the latter interpreted the contract in a way which was not favourable to herein petitioners and

because it considered that herein private respondents, by submitting the controversy to arbitration, was

seeking to renege on its obligations under the contract.

That the award was unfavourable to petitioners herein did not prove evident partiality. That the arbitrators

resorted to contract interpretation neither constituted a ground for vacating the award because under the

circumstances, the same was necessary to settle the controversy between the parties regarding the amount

of the NAV. In any case, this Court finds that the interpretation made by the arbitrators did not create a

new contract, as alleged by herein petitioners but was a faithful application of the provisions of the

Agreement. Neither was the award arbitrary for it was based on the statements prepared by the SGV

which was chosen by both parties to be the "auditors."

CHUNG FU VS. COURT OF APPEALS

G.R. No. 96283, February 25, 1992

FACTS: Petitioner filed in the Supreme Court a Motion to Remand Case for Further Hearing and

Reconsideration and Opposition to Motion for Confirmation of Award against the honourable

CA. The issue arises when Respondent Court of Appeals affirmed the ruling of the trial court

that herein petitioners, after submitting themselves for arbitration and agreeing to the terms and

conditions thereof, providing that the arbitration award shall be final and unappealable, are

precluded from seeking judicial review of subject arbitration award. In the case at bar, petitioners

assailed the arbitral award on the following grounds, most of which allege errors on the part of

the arbitrator in granting compensation for various items which apparently are disputed by said

petitioners.

ISSUE: Whether or not, the arbitration award is beyond the scope of the power of judicial

review?

HELD: No. The SC found that petitioners have amply made out a case where the voluntary

arbitrator failed to apply the terms and provisions of the Construction Agreement which forms

part of the law applicable as between the parties, thus committing a grave abuse of discretion.

Furthermore, in granting unjustified extra compensation to respondent for several items, he

exceeded his powers -- all of which would have constituted ground for vacating the award under

Section 24 (d) of the Arbitration Law.

But the respondent trial court's refusal to look into the merits of the case, despite prima facie

showing of the existence of grounds warranting judicial review, effectively deprived petitioners

of their opportunity to prove or substantiate their allegations. In so doing, the trial court itself

committed grave abuse of discretion. Likewise, the appellate court, in not giving due course to

the petition, committed grave abuse of discretion. Respondent courts should not shirk from

exercising their power to review, where under the applicable laws and jurisprudence, such power

may be rightfully exercised; more so where the objections raised against an arbitration award

may properly constitute grounds for annulling, vacating or modifying said award under the laws

on arbitration.

DEL MONTE CORPORATION-US VS. COURT OF APPEALS

G.R. No. 136154, February 07, 2001

FACTS: On 1 July 1994, in a Distributorship Agreement, petitioner Del Monte Corporation-USA (DMC-USA)

appointed private respondent Montebueno Marketing, Inc. (MMI) as the sole and exclusive distributor of its Del

Monte products in the Philippines for a period of five (5) years, renewable for two (2) consecutive five (5) year

periods with the consent of the parties. The Agreement provided, among others, for an arbitration clause which

states –

12. GOVERNING LAW AND ARBITRATION

This Agreement shall be governed by the laws of the State of California and/or, if applicable, the

United States of America. All disputes arising out of or relating to this Agreement or the parties'

relationship, including the termination thereof, shall be resolved by arbitration in the City of San

Francisco, State of California, under the Rules of the American Arbitration Association. Xxx

In October 1994 the appointment of private respondent MMI as the sole and exclusive distributor of Del Monte

products in the Philippines was published in several newspapers in the country. Immediately after its appointment,

private respondent MMI appointed Sabrosa Foods, Inc. (SFI), with the approval of petitioner DMC-USA, as MMI's

marketing arm to concentrate on its marketing and selling function as well as to manage its critical relationship with

the trade.

On 3 October 1996 private respondents MMI, SFI and MMI's Managing Director Liong Liong C. Sy (LILY SY)

filed a Complaint against petitioners DMC-USA, Paul E. Derby, Jr., Daniel Collins and Luis Hidalgo, and Dewey

Ltd. before the Regional Trial Court of Malabon, Metro Manila. Private respondents predicated their complaint on

the alleged violations by petitioners of Arts. 20, 21 and 23 of the Civil Code. According to private respondents,

DMC-USA products continued to be brought into the country by parallel importers despite the appointment of

private respondent MMI as the sole and exclusive distributor of Del Monte products thereby causing them great

embarrassment and substantial damage.

The petitioner contends that the issue is subject for arbitration as stipulated in the agreement. DMC-USA filed a

petition to compel private respondent MMI to arbitrate before the United States District Court in Northern

California.

ISSUE: Whether or not, the petitioner can compel the respondent to arbitration.

HELD: No. The Agreement between petitioner DMC-USA and private respondent MMI is a contract. The provision

to submit to arbitration any dispute arising therefrom and the relationship of the parties is part of that contract and is

itself a contract. As a rule, contracts are respected as the law between the contracting parties and produce effect as

between them, their assigns and heirs. Clearly, only parties to the Agreement, i.e., petitioners DMC-USA and its

Managing Director for Export Sales Paul E. Derby, Jr., and private respondents MMI and its Managing Director

LILY SY are bound by the Agreement and its arbitration clause as they are the only signatories thereto. Petitioners

Daniel Collins and Luis Hidalgo, and private respondent SFI, not parties to the Agreement and cannot even be

considered assigns or heirs of the parties, are not bound by the Agreement and the arbitration clause therein.

Consequently, referral to arbitration in the State of California pursuant to the arbitration clause and the suspension of

the proceedings in Civil Case pending the return of the arbitral award could be called for but only as to petitioners

DMC-USA and Paul E. Derby, Jr., and private respondents MMI and LILY SY, and not as to the other parties in this

case. Clearly, the issue before us could not be speedily and efficiently resolved in its entirety if we allow

simultaneous arbitration proceedings and trial, or suspension of trial pending arbitration. Accordingly, the interest of

justice would only be served if the trial court hears and adjudicates the case in a single and complete proceeding.

HOME BANKERS SAVINGS AND TRUST COMPANY VS.

COURT OF APPEALS AND FAR EAST BANK & TRUST COMPANY

G.R. No. 115412, November 19, 1999

FACTS: The private petitioner impliedly honoured checks that are being drawn against insufficient funds against the

respondent bank by means of by returning the check trough PCHC beyond reglementary period.

Thus, on December 12, 1991, respondent submitted the dispute for arbitration before the PCHC Arbitration Committee,

under the PCHC's Supplementary Rules on Regional Clearing to which respondent and petitioner are bound as participants

in the regional clearing operations administered by the PCHC.

On January 17, 1992, while the arbitration proceedings were still pending, the respondent filed an action for sum of money

and damages with preliminary attachment.

The private respondent appeal by certiorari to annul and set aside the decision of the Court of Appeals dismissing the

petition for certiorari filed by private respondent to annul the two orders issued by the Regional Trial Court of Makati, the

first, dated April 30, 1992, denying private respondent's motion to dismiss and the second, dated October 1, 1992 denying

private respondent's motion for reconsideration thereof. Petitioner contends that first, "no party litigant can file a non-

existent complaint," arguing that "...one cannot file a complaint in court over a subject that is undergoing arbitration."

Second, petitioner submits that "since arbitration is a special proceeding by a clear provision of law, the civil suit filed

below is, without a shadow of doubt, barred by litis pendencia and should be dismissed de plano insofar as HBSTC is

concerned." Third, petitioner insists that "[w]hen arbitration is agreed upon and suit is filed without arbitration having

been held and terminated, the case that is filed should be dismissed."

ISSUE: Whether or not, private respondent can obtain a provisional remedy of attachment even the arbitration has

commenced.

HELD: Yes. Section 14 of Republic Act 876, otherwise known as the Arbitration Law, allows any party to the arbitration

proceeding to petition the court to take measures to safeguard and/or conserve any matter which is the subject of the

dispute in arbitration, thus:

Section 14. Subpoena and subpoena duces tecum. - Arbitrators shall have the power to require any

person to attend a hearing as a witness. They shall have the power to subpoena witnesses and

documents when the relevancy of the testimony and the materiality thereof has been demonstrated to

the arbitrators. Arbitrators may also require the retirement of any witness during the testimony of any

other witness. All of the arbitrators appointed in any controversy must attend all the hearings in that

matter and hear all the allegations and proofs of the parties; but an award by the majority of them is

valid unless the concurrence of all of them is expressly required in the submission or contract to

arbitrate. The arbitrator or arbitrators shall have the power at any time, before rendering the award,

without prejudice to the rights of any party to petition the court to take measures to safeguard and/or

conserve any matter which is the subject of the dispute in arbitration.

Petitioner's exposition of the foregoing provision deserves scant consideration. Section 14 simply grants an arbitrator the

power to issue subpoena and subpoena duces tecum at any time before rendering the award. The exercise of such power is

without prejudice to the right of a party to file a petition in court to safeguard any matter which is the subject of the dispute

in arbitration. In the case at bar, private respondent filed an action for a sum of money with prayer for a writ of preliminary

attachment. Undoubtedly, such action involved the same subject matter as that in arbitration, i.e., the sum of

P25,200,000.00 which was allegedly deprived from private respondent in what is known in banking as a "kiting scheme."

However, the civil action was not a simple case of a money claim since private respondent has included a prayer for a writ

of preliminary attachment, which is sanctioned by section 14 of the Arbitration Law.

Simply put, participants in the regional clearing operations of the Philippine Clearing House Corporation cannot bypass

the arbitration process laid out by the body and seek relief directly from the courts. In the case at bar, undeniably, private

respondent has initiated arbitration proceedings as required by the PCHC rules and regulations, and pending arbitration has

sought relief from the trial court for measures to safeguard and/or conserve the subject of the dispute under arbitration, as

sanctioned by section 14 of the Arbitration Law, and otherwise not shown to be contrary to the PCHC rules and

regulations.

LUZON DEVELOPMENT BANK VS ASSOCIATION

OF LUZON DEVELOPMENT BANK EMPLOYEES

G.R. No. 120319, October 06, 1995

FACTS: The issue was raised in during the Collective Bargaining Agreement between Luzon

Development Bank and Association of Luzon Development Bank Employees. The arbitration

case has been raised to resolve to the issue that whether or not the company has violated the

Collective Bargaining Agreement provision and the Memorandum of Agreement, on promotion.

The Voluntary Arbitrator asked both parties to submit their position papers in order to resolve

the issue. The Employees Association submitted the position paper while the private petitioner

failed to comply. Due to its failure to submit, the arbitrator rendered its decision finding that the

Bank has not adhered to the Collective Bargaining Agreement provision nor the Memorandum of

Agreement on promotion. Hence, they come to the Supreme Court for the petition for certiorari

and prohibition seeking to set aside the decision of the Voluntary Arbitrator and to prohibit her

from enforcing the same.

ISSUE: Whether or not, they can avail the remedy in the Supreme Court.

HELD: No. 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 Regional Trial Court 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. A party to the controversy may, at any time within one (1) month after an award is

made, apply to the court having jurisdiction for an order confirming the award and the court must

grant such order unless the award is vacated, modified or corrected. In effect, this equates the

award or decision of the voluntary arbitrator with that of the regional trial court. Consequently,

in a petition for certiorari from that award or decision, the Court of Appeals must be deemed to

have concurrent jurisdiction with the Supreme Court. As a matter of policy, this Court shall

henceforth remand to the Court of Appeals petitions of this nature for proper disposition.