Korea Technologies vs.
Lerma (Maine)  the Korean Commercial Arbitration Board (KCAB) in Korea pursuant
Doctrine/Principle: ​Lex loci contractus​ - The law of the place where
the contract is made governs.
 
Facts:  ​Petitioner Korea Technologies Co., Ltd. (KOGIES) is a
Korean corporation which is engaged in the supply and installation of
Liquefied Petroleum Gas (LPG) Cylinder manufacturing plants, while
private respondent Pacific General Steel Manufacturing Corp.
(PGSMC) is a domestic corporation. On March 5, 1997, PGSMC and
KOGIES executed a Contract whereby KOGIES would set up an
LPG Cylinder Manufacturing Plant in Carmona, Cavite. The contract
was executed in the Philippines. On April 7, 1997, the parties
executed, in Korea, an Amendment for Contract amending the terms
of payment. The contract and its amendment stipulated that KOGIES
will ship the machinery and facilities necessary for manufacturing
LPG cylinders for which PGSMC would pay USD 1,224,000. KOGIES
would install and initiate the operation of the plant for which PGSMC
bound itself to pay USD 306,000 upon the plants production of the
11-kg. LPG cylinder samples. Thus, the total contract price amounted
to USD 1,530,000. On October 14, 1997, PGSMC entered into a
Contract of Lease with Worth Properties, Inc. (Worth) for use of
Worths 5,079-square meter property with a 4,032-square meter
warehouse building to house the LPG manufacturing plant.
Subsequently, the machineries, equipment, and facilities for the
manufacture of LPG cylinders were shipped, delivered, and installed
in the Carmona plant. PGSMC paid KOGIES USD 1,224,000.
However, gleaned from the Certificate executed by the parties on
January 22, 1998, after the installation of the plant, the initial
operation could not be conducted as PGSMC encountered financial
difficulties affecting the supply of materials, thus forcing the parties to
agree that KOGIES would be deemed to have completely complied
with the terms and conditions of the March 5, 1997 contract. For the
remaining balance of USD306,000 for the installation and initial
operation of the plant, PGSMC issued two postdated checks. When
KOGIES deposited the checks, these were dishonored for the reason
PAYMENT STOPPED. Thus, on May 8, 1998, KOGIES sent a
demand letter to PGSMC threatening criminal action for violation of
Batas Pambansa Blg. 22 in case of nonpayment. PGSMC informed
KOGIES that PGSMC was cancelling their Contract on the ground
that KOGIES had altered the quantity and lowered the quality of the
machineries and facilities installed. KOGIES, on the other hand,
wrote that PGSMC could not unilaterally rescind their contract on
mere imagined violations. It also insisted that their disputes should
be settled by arbitration as agreed in Art. 15, the arbitration clause of
their contract. PGSMC again wrote KOGIES threatening that the
machineries, equipment, and facilities installed in the plant would be
dismantled. KOGIES instituted an Application for Arbitration before
to Art. 15 of the Contract.
Issue:  
1. Whether or not the arbitration clause in the contract of the
parties is against public policy
2. Whether or not the stipulation in the arbitration clause that
foreign arbitral award shall be final and binding ousts the
court of jurisdiction
Ruling: 
Article 15. ​Arbitration​. — All disputes,
controversies, or differences which may
arise between the parties, out of or in
relation to or in connection with this
Contract or for the breach thereof, shall
finally be settled by arbitration in Seoul,
Korea in accordance with the
Commercial Arbitration Rules of the
Korean Commercial Arbitration Board.
The award rendered by the arbitration(s)
shall be ​final and binding upon both
parties concerned. (Emphasis supplied.)
The arbitration clause in the case at bar is not against
public policy. Established in this jurisdiction is the rule that
the law of the place where the contract is made governs.
Lex loci contractus​. The contract in this case was
perfected here in the Philippines. Therefore, our laws
ought to govern. Nonetheless, Art. 2044 of the Civil Code
sanctions the validity of mutually agreed arbitral clause or
the finality and binding effect of an arbitral award. Art.
2044 provides, "​Any stipulation that the arbitrators'
award or decision shall be final, is valid​, without
prejudice to Articles 2038, 2039 and 2040.
Arts. 2038, ​31 2039, ​32 and 2040 ​33 abovecited refer to
instances where a compromise or an arbitral award, as
applied to Art. 2044 pursuant to Art. 2043, ​34 may be
voided, rescinded, or annulled, but these would not
denigrate the finality of the arbitral award.
The arbitration clause was mutually and voluntarily agreed
upon by the parties. It has not been shown to be contrary
to any law, or against morals, good customs, public order,
or public policy. There has been no showing that the
parties have not dealt with each other on equal footing.
We find no reason why the arbitration clause should not
be respected and complied with by both parties. In
Gonzales v. Climax Mining Ltd​.​, ​35 we held that
submission to arbitration is a contract and that a clause in
 a contract providing that all matters in dispute between the
parties shall be referred to arbitration is a contract. ​36
Again in ​Del Monte Corporation-USA v. Court of Appeals​,
we likewise ruled that "[t]he 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."​37
The arbitration clause which stipulates that the arbitration must
be done in Seoul, Korea in accordance with the Commercial
Arbitration Rules of the KCAB, and that the arbitral award is
final and binding, is not contrary to public policy.
The arbitration clause which stipulates that the arbitration must
be done in Seoul, Korea in accordance with the Commercial
Arbitration Rules of the KCAB, and that the arbitral award is
final and binding, is not contrary to public policy. This Court
has sanctioned the validity of arbitration clauses in a catena of
cases. In the 1957 case of Eastboard Navigation Ltd. v. Juan
Ysmael and Co., Inc., 38 this Court had occasion to rule that
an arbitration clause to resolve differences and breaches of
mutually agreed contractual terms is valid. In BF Corporation v.
Court of Appeals, we held that "[i]n this jurisdiction, arbitration
has been held valid and constitutional. Even before the
approval on June 19, 1953 of Republic Act No. 876, this Court
has countenanced the settlement of disputes through
arbitration. Republic Act No. 876 was adopted to supplement
the New Civil Code's provisions on arbitration."
 
2. ​No, the stipulation in the arbitration clause that foreign arbitral
award shall be final and binding does not oust the courts of
jurisdiction. It is because RA 9285 which incorporated the UNCITRAL
Model Law and should be given retroactive effect being remedial in
nature provides on how to enforce a foreign arbitral award in this
jurisdiction. These are as follows:
a. The RTC must refer to arbitration in proper cases;
b. Foreign arbitral awards must be confirmed by the RTC.
When confirmed, it is deemed not as a judgment of the
foreign court but as a foreign arbitral award and enforce as
final and executory decisions of our courts of law;
c. RTC has jurisdiction to review foreign arbitral awards;
d. Grounds for judicial review different in domestic and foreign
awards;
e. RTC decision of assailed foreign arbitral award appealable;
ABS-CBN Broadcasting vs. World Interactive (Mikee) 
Doctrine/Principle: ​expressio unius est exclusio alterius - the explicit
mention of one thing in a statute means the elimination of others not
specifically mentioned.
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. Under the agreement, respondent was
granted the exclusive license to distribute and sublicense the
distribution of the television service known as The Filipino Channel
(TFC) in Japan.
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 from March to May 2002. Petitioner claimed that
these were unauthorized insertions constituting a material breach of
their agreement.
Petitioner notified respondent of its intention to terminate the
agreement effective June 10, 2002. Respondent filed an arbitration
suit pursuant to the arbitration clause of its agreement with petitioner.
It contended that the airing of WINS WEEKLY was made with
petitioner's prior approval. It also alleged that petitioner only
threatened to terminate their agreement because it wanted to
renegotiate the terms thereof to allow it to demand higher fees.
The parties appointed Professor 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 renegotiate 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.
He also ruled that, had there really been a material breach of the
agreement, petitioner should have terminated the same instead of
sending a mere notice to terminate said agreement.
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. It stated that as the TOR itself 
provided  that  the  arbitrator's  decision  shall  be  final  and 
unappealable and that no motion for reconsideration shall be 
filed, then the petition for review must fail. It ruled that it is the 
RTC  which  has  jurisdiction  over  questions  relating  to 
arbitration.  It  held  that  the  only  instance  it  can  exercise  in the RTC which is not based on the grounds enumerated in Section
jurisdiction over an arbitral award is an appeal from the trial  24 of RA 876 should be dismissed.
court's decision confirming, vacating or modifying the arbitral 
award. It further stated that a petition for certiorari under Rule 65  In cases not falling under any of the aforementioned grounds to
of the Rules of Court is proper in arbitration cases only if the  vacate an award, the Court has already made several
courts  refuse  or  neglect  to  inquire  into  the  facts  of  an  pronouncements that a petition for review under Rule 43 or a petition
arbitrator's award.  for certiorari under Rule 65 may be availed of in the CA. Which one
  would depend on the grounds relied upon by petitioner. The
Issue: ​whether or not an aggrieved party in a voluntary arbitration decisions handed down by voluntary arbitrators fall within the
dispute may avail of, directly in the CA, a petition for review under exclusive appellate jurisdiction of the CA. This decision was taken
Rule 43 or a petition for certiorari under Rule 65 of the Rules of into consideration in approving Section 1 of Rule 43 of the Rules of
Court, instead of filing a petition to vacate the award in the RTC when Court.
the grounds invoked to overturn the arbitrators decision are other
than those for a petition to vacate an arbitral award enumerated The proper remedy from the adverse decision of a voluntary
under RA 876. arbitrator, if errors of fact and/or law are raised, is a petition for
  review under Rule 43 of the Rules of Court. Thus, petitioner's
Ruling:  ​RA 876 itself mandates that it is the RTC, which has contention that it may avail of a petition for review under Rule 43
jurisdiction over questions relating to arbitration, such as a petition to under the circumstances of this case is correct.
vacate an arbitral award.
Section 24 of RA 876 provides for the specific grounds for Nevertheless,  although  petitioners  position  on  the  judicial 
a petition to vacate an award made by an arbitrator: remedies available to it was correct, we sustain the dismissal of 
1. The award was procured by corruption, fraud, or its petition by the CA. The remedy petitioner availed of, entitled 
other undue means; or alternative  petition  for  review  under  Rule  43  or petition for 
2. That there was evident partiality or corruption in certiorari under Rule 65, was wrong. The remedies of appeal and 
the arbitrators or any of them; or certiorari  are  mutually  exclusive  and  not  alternative  or 
3. That the arbitrators were guilty of misconduct in successive. Proper issues that may be raised in a petition for 
refusing to postpone the hearing upon sufficient review under Rule 43 pertain to errors of fact, law or mixed 
cause shown, or in refusing to hear evidence questions of fact and law. While a petition for certiorari under 
pertinent and material to the controversy; that Rule 65 should only limit itself to errors of jurisdiction, that is, 
one or more of the arbitrators was disqualified to grave  abuse of discretion amounting to a lack or excess of 
act as such under section nine hereof, and jurisdiction. Moreover, it cannot be availed of where appeal is 
willfully refrained from disclosing such the proper remedy or as a substitute for a lapsed appeal. 
disqualifications or of any other misbehavior by  
which the rights of any party have been materially A careful reading of the assigned errors reveals that the real issues
prejudiced; or calling for the CA's resolution were less the alleged grave abuse of
4. That the arbitrators exceeded their powers, or so discretion exercised by the arbitrator and more about the arbitrators
imperfectly executed them, that a mutual, final appreciation of the issues and evidence presented by the parties.
and definite award upon the subject matter Therefore, the issues clearly fall under the classification of errors of
submitted to them was not made. fact and law questions which may be passed upon by the CA via a
petition for review under Rule 43. Petitioner cleverly crafted its
As RA 876 did not expressly provide for errors of fact and/or law and assignment of errors in such a way as to straddle both judicial
grave abuse of discretion (proper grounds for a petition for review remedies, that is, by alleging serious errors of fact and law (in which
under Rule 43 and a petition for certiorari under Rule 65, case a petition for review under Rule 43 would be proper) and grave
respectively) as grounds for maintaining a petition to vacate an abuse of discretion (because of which a petition for certiorari under
arbitral award in the RTC, it necessarily follows that a party may not Rule 65 would be permissible).
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 Thus, the alternative petition filed in the CA, being an inappropriate
v. Court of Appeals gave ample warning that a petition to vacate filed mode of appeal, should have been dismissed outright by the CA.
 
 Adamson vs. Court of Appeals (Krissy) 
Doctrine/Principle: 
 
Facts: 
 
Adamson Management Corp. 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.
However, the parties failed to agree on a reasonable Net Asset Value
(NAV). This prompted them to submit the case for arbitration in
accordance with Republic Act No. 876, otherwise known as the
Arbitration Law.
● NET  ASSET  VALUE - ​the value of a mutual fund that is
reached by deducting the fund's liabilities from the market
value of all of its shares and then dividing by the number of
issued shares.
The Arbitration Committee rendered a decision finding the Net
Asset Value of the Company to be P167,118. The Arbitration
Committee disregarded petitioners' argument. According to the
Committee, however, the amount of P5,146,000 which was
claimed as initial NAV by petitioners, was merely an estimate of the
Company's NAV as of February 28, 1990 which was still subject to
financial developments until June 19, 1990, the cut-off date.
Aside from deciding the amount of NAV, the Committee also held
that any ambiguity in the contract should not necessarily be
interpreted against private respondents because the parties had
stipulated that the draft of the agreement was submitted to
petitioners for approval and that the latter even proposed changes
which were eventually incorporated in the final form of the
Agreement.
APAC Holdings Ltd. filed a petition for confirmation of the
arbitration award before the Makati RTC. 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 RTC
vacated the arbitration award. The CA reversed.
 
Issue:  the contract in a way which was not favorable to herein petitioners
WON the CA erred in affirming the arbitration award.
Ruling: 
No.
The CA, 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
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.
Further, the SC in upholding the decision of the appellate court ruled:
We find no reason to depart from the Court of Appeal's conclusion.
Section 24 of the Arbitration Law​ provides as follows:​Cdpr
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:
a.) The award was procured by corruption, fraud or undue means; or
b.) That there was evident partiality or corruption in the arbitrators or
nay 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
9 hereof, and willfully refrained from disclosing such disqualifications
or 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. . . ."
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.
The Court further stated that:
It is clear therefore, that the award was vacated not because of
evident partiality of the arbitrators but because the latter interpreted
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 unfavorable to petitioners herein did not prove
evident partiality. 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."
The trial court held that herein private respondent could not shirk
from performing its obligations on account of the difficulty of
complying with the terms of the contract. It said further that the
contract may be harsh but private respondent could not excuse itself
from performing its obligations on account of the ambiguity of the
contract because as its drafter, private respondent was well aware of
the implications of the Agreement.
We note herein that during the arbitration proceedings, the parties
agreed that the contract as prepared by private respondent, was
submitted to petitioners for approval. Petitioners, therefore, are
presumed to have studied the provisions of the Agreement and
agreed to its import when they approved and signed the same. When
it was submitted to arbitration to settle the issue regarding the
computation of the NAV, petitioners agreed to be bound by the
judgment of the arbitration committee, except in cases where the
grounds for vacating the award existed. Petitioners cannot now
refuse to perform its obligation after realizing that it had erred in its
understanding of the Agreement.​LLpr
Petitioners also assailed the arbitrator's reliance upon the financial
statements submitted by SGV as they allegedly served the interests
of private respondents and did not reflect the true intention of the
parties. We agree with the observation made by the arbitrators that
SGV, being a reputable firm, it should be presumed to have prepared
the statements in accordance with sound accounting principles.
Petitioners have presented no proof to establish that SGV's
computation was erroneous and biased.
We also note that the computation by petitioners of the NAV did not
reflect the liabilities of the company. The term "net asset value"
indicates the amount of assets exceeding the liabilities as
differentiated from total assets which include the liabilities. If
petitioners were not satisfied, they could have presented their own
financial statements to rebut SGV's report but this, they did not do.
Lastly, in assailing the decision of the Court of Appeals, petitioners
would have this Court believe that the respondent court held that the
decision of the arbitrators was not subject to review by the courts.
This was not the position taken by the respondent court.
The Court of Appeals, in its decision stated, thus:
It is settled that arbitration awards are subject to judicial review. In
the recent case of Chung Fu Industries (Philippines), Inc., et al. v.
Court of Appeals, Hon. Francisco X. Velez, et. al. G.R. No. 96283,
February 25, 1992, the Supreme Court categorically ruled that:
"It is stated expressly under Art. 2044 of the Civil Code that the
finality of the arbitrators' award is not absolute and without
exceptions. Where the conditions described in Articles 2038, 2039
and 2040 applicable to both compromises and arbitration are
obtaining, the arbitrators' award may be annulled or rescinded,
Additionally, under Sections 24 and 25 of the Arbitration Law, there
are grounds for vacating, modifying or rescinding an arbitrators'
award. Thus, if and when the factual circumstances referred to in the
above-cited provisions are present, judicial review of the award is
properly warranted."
Clearly, though recourse to the courts may be availed of by parties
aggrieved by decisions or awards rendered by arbitrator/s, the extent
of such is neither absolute nor all encompassing.
It is clear then that the Court of Appeals reversed the trial court not
because the latter reviewed the arbitration award involved herein, but
because the respondent appellate court found that the trial court had
no legal basis for vacating the award.​LLpr
WHEREFORE, in view of the foregoing, this petition is hereby 
DISMISSED​ and the
decision of the Court of Appeals AFFIRMED.
 
 
 
Heunghwa Industry vs. DJ Builders Corp. (Selina) 
Doctrine/Principle: 
—An arbitration clause in a construction contract or a submission to
arbitration of a construction dispute shall be deemed an agreement
to submit an existing or future controversy to CIAC
jurisdiction,notwithstanding the reference to a different arbitration
institution or arbitral body in such contract or submission. When a
contract contains a clause for the submission of a future controversy
to arbitration, it is not necessary for the parties to enter into a
submission agreement before the claimant may invoke the
jurisdiction of CIAC.
 
Facts: (consolidated case)
Petitioner secured a contract with DPWH to construct a certain road
in Palawan and subsequently entered into a subcontract agreement
with respondent to do earthwork, sub base course and box culvert of
said project, with an arbitration clause.
For failure to fully pay the agreed price, respondent filed before the
RTC of Puerto Princesa a complaint for “Breach of Contract,
Collection of Sum of Money with Application for Preliminary
Injunction, Preliminary Attachment, and Prayer for TRO and
Damages”. According to petitioner, it was not obliged to pay
respondent because the latter caused the stoppage of work and
further claimed that it failed to collect from DPWH due to
respondent’s poor equipment performance.
Later, parties, through their respective counsels, filed a “Joint Motion
to Submit Specific Issued to the CIAC. Specific issues submitted to
CIAC are as follows:
● Manpower and equipment standby time;
● Unrecouped mobilization expenses;
● Retention;
● Discrepancy of billings; and
● Price escalation for fuel and oil usage
On the same day, RTC issued an order granting the motion.
On October 9, 2000, petitioner, through its counsel, filed an “Urgent
Manifestation” praying that additional matters be referred to CIAC for
arbitration, to wit:
● Additional mobilization costs incurred by [petitioner] for
work abandoned by [respondent];
● Propriety of liquidated damages in favor of [petitioner] for
delay incurred by [respondent];
● Propriety of downtime costs on a daily basis during the
period of the existence of the previous temporary
restraining order against [petitioner].
On Oct. 24,2000, respondent filed with CIAC a request for
Adjudication accompanied by a complaint. Petitioner, in turn files a
“Reply/Manifestation”6
informing the CIAC that it was abandoning the submission to aCoac
and pursuing the case before RTC.
CIAC the. Issued an order dated Nov 27, 2000 ordering the
respondent to move fot the dismissal of the Civil Case pending
before the RTC. Respondent filed a partial motion for reconsideration
on the said order whole petitioner moved to suspend the proceeding
before the CIAC until the RTC had dismissed the Civil Case.
On Jan. 8, 2000, CIAC issued an order setting aside the order of
Nov. 27, 2000 by directing the dismissal of civil case only insofar as
the 5 issues referred to it were concerned.
Subsequently, petitioner, through its counsel, filed with RTC a motion
to withdraw the order which referred the case to CIAC, claiming that it
never authorized the referral. Respondent opposed the motion
contending that petitioner was already estopped from asking for the
recall of the order.
CIAC denied petitioner’s motion to dismiss on the ground that the
November 27, 2000 order (dismissal of civil case pending before
RTC) has been superseded by its order of January 8, 2001.
A series of succeeding proceedings occurred before the RTC and
CIAC. Both parties filed two separate petitions for certiorari whereby
the petitioner is questioning the jurisdiction of CIAC on one hand,
while the respondent is questioning the jurisdiction of RTC over the
case.
CA ruled against petitioner on procedural and substantive grounds.
Hence, this petition.
Issue:  
Main Issue (in relation to ADR)
Which among the CIAC and RTC has jurisdiction over the case?
Other issues (not sure if this will be asked during the recitation)
1. WON reliance to NIA v CA is accurate
2. WON a motion for reconsideration was fatal to the petition
for certiorari filed before the CA
3. WON a petition for certiorari is the proper remedy to assail
an order denying a motion to dismiss
 
Ruling: 
Re: Main Issue
CIAC has jurisdiction over the case.
Executive Order 1008 50 grants to the CIAC original and exclusive
jurisdiction over disputes arising from, or connected with, contracts
entered into by parties involved in construction in the Philippines. In
the case at the bar, it is undeniable that the controversy involves a
construction dispute.
Submission to CIAC Jurisdiction —An arbitration clause in a
construction contract or a submission to arbitration of a construction
dispute shall be deemed an agreement to submit an existing or future
controversy to CIAC jurisdiction,notwithstanding the reference to a
different arbitration institution or arbitral body in such contract or
submission. When a contract contains a clause for the submission of
a future controversy to arbitration, it is not necessary for the parties
to enter into a submission agreement before the claimant may invoke
the jurisdiction of CIAC.
It is plain and clear that as long as the parties agree to submit to
voluntary arbitration, regardless of what forum they may choose, their
agreement will fall within the jurisdiction of the CIAC, such that, even
if they specifically choose another forum, the parties will not be
precluded from electing to submit their dispute before the CIAC
because this right has been vested upon each party by law, i.e., E.O.
No. 1008.
there are two acts which may vest the CIAC with jurisdiction over a
construction dispute. One is the presence of an arbitration clause in a
construction contract, and the other is the agreement by the parties
to submit the dispute to the CIAC.
The first act is applicable to the case at bar. The bare fact that the
parties incorporated an arbitration clause in their contract is sufficient
to vest the CIAC with jurisdiction over any construction controversy or
claim between the parties. The rule is explicit that the CIAC has
jurisdiction notwithstanding any reference made to another arbitral
body.
2. CA took note of the fact that petitioner did not file a motion
for reconsideration of the March 22, 2002 order of CIAC
and held that it is in violation of the well settled rule that a
motion for reconsideration should be filed to allow
respondent tribunal to correct its error before a petition can
be entertained and that it is well-settled that a denial of a
motion to dismiss, being an interlocutory order, is not the
proper subject for a petition for certiorari. —- GR, a petition
for certiorari before a higher court will not prosper unless
the inferior court has been given, through a motion for
reconsideration, a chance to correct the errors imputed to
it, subject to certain exceptions. Since the petition involved
a question of jurisdiction (pure question of law), the
non-filing of motion for reconsideration by petitioner to
CIAC order should have been recognized as an exception
to the rule.
3. An order denying motion to dismiss cannot be the subject
of a petition for certiorari subject to certain exceptions.
—-/Under certain situations, recourse to certiorari or
mandamus is considered appropriate, i.e., (a) when the trial
court issued the order without or in excess of jurisdiction;
(b) where there is patent grave abuse of discretion by the
trial court; etc. —— since CIAC acted within its jurisdiction,
it did not commit patent grave abuse of discretion when.
Thus, the court ruled in the negative.
Gonzales vs. Climax MIning (Eunice) 
 

Other Issues

1. No. It NIA v CA, NIA agreed to submit the dispute for

arbitration to CIAC and actively participated in the
arbitration proceedings. In this case, the only participation
that can be attributed to petitioner is the hoint referral of
specific issues to the CIAC and the manifestation praying
that additional matters be reffered to CIAC. Both acts have
been disputed by petitioner because said acts were
performed by theor lawyer who was not authorized to
submit the case for arbitration. However, this does not
change the fact that CIAC had jurisdiction over the dispute
because the arbitration clause in the subcontract
agreement ipso facto vested the CIAC with jurisdiction.
  And because of the deductions the payment made by
PNCC in Billings 3 – 5 are only partially paid.
The CIAC found the following :
No claims for defects were made by PNCC when the
project was completed
The billing and their respective deductions for
accommodation were made in between the subcontract
and the amended contract.
There was no documentation of the receipt and
recognition of the deduction by CMS.
In the amended contract, the stipulated Final
subcontract price was P8,872,593.74. The amended
contract was agreed to supercede the Subcontract
agreement and any other commitment of agreement
prior to the former.
It was found that the billings and the deducted
accommodations existed before the amended contract.
Hence the CIAC ruled in favor of CMS
PNCC appealed to CA
CA affirmed the findings of CIAC
PNCC then elevated the case to the SC.
Issue:
Whether or not Sole Arbitrator Lazatin acted arbitrarily
or with grave abuse of discretion when he denied the
deductions being claimed by petitioner?
Ruling
  The Court rules in favor of respondent CMS
  ● As found by the Court, there is no mention of
  accommodations to be deducted in the
  Amended Contract. The logical explanation
  being that, PNCC had determined the necessary
Phil National Construction vs. Court of Appeals (Elaine)  deductions prior to the amended contract, it
PHILIPPINE NATIONAL CONSTRUCTION CORPORATION would have included the accommodations if
VS CA and CMS CONSTRUCTION AND DEVELOPMENT there had been any. The Court goes to explain
CORPORATION that:
Facts: “ The agreement or contract between
PNCC entered into a MOA for relocating MWSS utilities the parties is the formal expression of
along the South Superhighway affected by the the parties rights, duties and
construction of the Manila South Skyway Project. PNCC obligations. It is the best evidence of
then subcontracted the relocation of the 450mm steel the intention of the parties. Thus, when
pipes to CMS. In its subcontract agreement both parties the terms of an agreement have
agreed that the contract price is P7,990,172.61. The reduced to writing, it is considered as
same was increased to P8,872,593.74 which shall be containing all the terms agreed upon
subject to the 10% deduction by PNCC for any defect or and there can be, between the parties
deficiency in the workmanship. and their successors in interest, no
CMS submitted for arbitration before the CIAC a evidence of such terms other than the
complaint for sum of money with damages against contents of the written agreement.
PNCC. It argues that the deduction of the PNCC in its Furthermore, it is a cardinal rule that if
Billing 3 – 5 as accommodations do not have any basis. the terms of a contract are clear and
 leave no doubt as to the intention of
the contracting parties, the literal
meaning of its stipulation shall control.
“ was hired by Licomcen as an engineering consultant. Licomcen
● Furthermore, petitioner has not been able to
prove that Sole Arbitrator Lazatin committed
grave abuse of discretion by denying the
deductions. Any error that could have been
committed by the Sole Arbitrator could only be
attributable to error of judgment.
● The findings of the Sole Arbitrator cannot be
disregarded nonetheless. In the absence of
grave abuse of discretion,
jurisprudenceprovides that “determination of
certain questions of fact falling within the
peculiar technical expertise of an administrative
agency, must be accorded great respect, if not
finality..” And furthermore that “the court will
not interfere in matters which are addressed to
the sound discretion of government agencies
entrusted with the regulation of activities
coming under the special technical knowledge
and training of such agencies. The CIAC, having
been duly constituted by as the quasi-judicial
agency accorded with jurisdiction to resolve
disputes arising from contracts involving
construction in the Philippines, this Court must
confer finality to its findings as they are
supported by the evidence in this case.”
 
 
 
LINCOMCEN vs. Foundation Specialists (Denise)  Philippines, whether the dispute arises before or after the completion
 
Doctrine/Principle: ​The CIAC shall have original and
exclusive jurisdiction over disputes arising from, or
connected with, contracts entered into by parties
involved in construction in the Philippines, whether the
dispute arises before or after the completion of the
contract, or after the abandonment or breach thereof.
Both parties must submit themselves for arbitration.
Facts:  arbitrable before it. An arbitration agreement or a submission to
Licomcen- a domestic corporation operating shopping malls in the Ph
FSI- contractor
ESCA- Engineering consultant
Licomcen entered into a construction agreement with FSI for a
high-rise building for a mall called (LCC Citimall in Legaspi. ESCA
wanted to do some revisions of the initial plan but FSI expressed its
concern on the revision since they have already ordered the
steelbars and has fully mobilized its manpower and equipment.
ESCA wrote to FSI to ship the rest of the steel bars to Manila since in
the revised plan they will only need 50% of the said bars. However,
all the steelbars arrived in Legaspi. The said construction was put on
hold since there was a pending administrative case against City
Gvernment of Legaspi and Licomcen. FSI requested for payment of
costs amounting to Php 22,667,026.97 sent to ESCA. ESCA
disagreed since the steel bars should not be included since it was
done in complete disregard of the revised plan. FSI sent demand
letter to Licomcen for payment but Licomcen took no positive action.
FSI filed a petition for arbitration in CIAC.
Licomcen opposed claiming that CIAC does not have jurisdiction.
CIAC ruled in favor FSI. CA affirmed CIAC’s decision.
Licomcen Arguments:
CIAC has no jurisdiction citing GC-61 “in connection with, or arising
out of the execution of the works” Licomcen should settle any dispute
before proceeding arbitration in the CIAC. Should the other party
disagree the other party should send a notice to contest such
decision by the Licomcen
Also citing Gc-05 “may arise out of or in connection with the
contract.”
FSI claimed that the project was maliciously suspended.
Issue: ​Does CIAC jurisdiction?
Ruling: ​Sec. 4. Jurisdiction. The CIAC shall have original and
exclusive jurisdiction over ​disputes arising from, or connected with,
contracts entered into by parties involved in construction​ in the
of the contract, or after the abandonment or breach thereof. Both
parties must submit themselves for arbitration.
The text of Section 4 of E.O. 1008 is broad enough to cover any
dispute arising from, or connected with construction contracts,
whether these involve mere contractual money claims or execution of
the works. Considering the intent behind the law and the broad
language adopted, LICOMCEN erred in insisting on its restrictive
interpretation of GC-61. The CIAC’s jurisdiction cannot be limited by
the parties’ stipulation that only disputes in connection with or arising
out of the physical construction activities (execution of the works) are
arbitration shall be in writing, but it need not be signed by the parties,
as long as the intent is clear that the parties agree to submit a
present or future controversy arising from a construction contract to Respondents, entered into a Memorandum of Agreement (1996 
arbitration. MOA) whereby each agreed to contribute cash, property, and 
LICOMCEN deliberately ignores one of the exceptions to the general services  for  the  construction  and development of Philamlife 
rule stated in GC-05: Tower (office condominium along Paseo de Roxas) 
.. or ​except when such question is submitted for settlement thru   
arbitration as provided herein​. The second exception clause Respondents  executed  a  Deed  of  Assignment  (1996  DOA) 
authorizes the submission to arbitration of any dispute between wherein  they  assigned  to  Frabelle  Properties  Corporation 
LICOMCEM and FSI, even if the dispute does not directly involve the (Frabelle) their rights and obligations under the 1996 MOA with 
execution of physical construction works. This was precisely the respect  to  the  construction,  development,  and  subsequent 
avenue taken by FSI when it filed its petition for arbitration with the ownership of Unit No. 38-B located at the 38th floor of Philamlife 
CIAC. Tower. The parties also stipulated that the assignee shall be 
Lincomcen’s suspsension of the project was valid. GC-38 authorizes deemed  as  a  co-developer  of  the  construction  project  with 
the suspension of the works for factors or causes which ESCA respect to Unit No. 38-B. 
deems necessary in the interests of the works and LICOMCEN. It   
was not necessary for ESCA/LICOMCEN to wait for a restraining or Frabelle,  in  turn,  assigned  to  petitioner  Frabelle  Fishing 
injunctive order to be issued in any of the cases filed against Corporation  (Frabelle  Fishing)  its  rights,  obligations  and 
LICOMCEN before it can suspend the works. The language of GC-38 interests over Unit No. 38-B. 
gives ESCA/LICOMCEN sufficient discretion to determine whether   
the existence of a particular situation or condition necessitates the Petitioner  Frabelle  Fishing  and  respondents  executed  a 
suspension of the works and serves the interests of LICOMCEN. Memorandum  of  Agreement  (1998  MOA)  to  fund  the 
However, prolonged the suspension since the Ombudsman case was construction of designated office floors in Philamlife Tower. 
already dismissed but neither FSI nor ESCA were informed.   
Regarding material costs for the site, ​circumstances prove that FSI The dispute between the parties started when petitioner found 
acted imprudently in proceeding with the delivery, contrary to material  concealment  on  the  part  of  respondents  regarding 
LICOMCEN’s instructions. The CA was correct in holding certain details in the 1996 DOA and 1998 MOA and their gross 
LICOMCEN liable for only 50% of the costs of the steel bars violation  of  their  contractual  obligations  as  condominium 
delivered. developers. 
No claim for equipment and labor standby costs. Nonetheless, on   
account of our earlier discussion of LICOMCEN’s failure to Petitioner,  on  October  22,  2001,  referred  the  matter  to  the 
Philippine  Dispute  Resolution  Center,  Inc.  (PDRCI)  for 
observe the proper procedure in terminating the contract by
arbitration. However, in a letter, respondents manifested their 
declaring that it was merely indefinitely suspended, we deem that
refusal to submit to PDRCI's jurisdiction. 
FSI is entitled to the payment of nominal damages. FSI is entitled
  
to recover the amount of ₱100,000.00 as nominal damages.
Petitioner then filed with the Housing and Land Use Regulatory 
Licomcen should bear the costs of arbitration. Board  (HLURB)  a  complaint  for  reformation  of  instrument, 
  specific  performance  and  damages  against  respondents. 
  Petitioner  alleged,  among  others,  that  the  contracts  do  not 
  reflect the true intention of the parties.  HLURB set the initial 
  preliminary hearing. 
Frabelle Fishing vs. Phil American Insurance (Melcah)    
  Respondents assailed the jurisdiction of the HLURB. The parties 
DOCTRINE:  Arbitration  is  one  of  the alternative methods of  should resort to compulsory arbitration as provided by their 
dispute resolution that is now rightfully vaunted as "the wave of  contracts. 
the  future"  in  international  relations,  and  is  recognized    
worldwide. To brush aside a contractual agreement calling for  ISSUES: 
arbitration in case of disagreement between the parties would  1. whether the HLURB has jurisdiction over the complaint for 
therefore be a step backward.  reformation of instruments, specific performance and damages. 
   (NO) 
FACTS:  2. whether the parties should initially resort to arbitration. (YES) 
  
   would serve as the base or foundation for any commercial
   development. MRTDC then engaged Parsons Interpro JV (PIJV) to
RULING:  act as the Project Management Team (PMT) to supervise and
1. ​NO. As the records show, the complaint filed by  monitor the project. Filipinas Systems, Inc. (FSI), through its
petitioner with the HLURB is one for reformation of  President, Felipe A. Cruz, Jr., accepted the Notice of Award/Notice to
instruments. Petitioner claimed that the terms of the  Proceed (NOA/NTP) for the construction of the project.
contract are not clear and prayed that they should be  In the course of the construction, there were several
reformed to reflect the true stipulations of the parties.  change orders issued by MRTDC to FSI which included the
Being  an  action  for  reformation  of  instruments,  realignment or shifting of several columns and the construction of a
petitioner's  complaint  necessarily  falls  under  the  sewerage treatment plant and septic tank, among others. Thereafter,
jurisdiction of the RTC pursuant to Section 1, Rule 63  FSI issued several letters to MRTDC asking for payment of additional
of the 1997 Rules of Civil Procedure, as amended.  amounts for owner-caused delays. FSI also demanded from MRTDC
   the payment of actual extended cost in the amount of PhP
Any  disagreement  as  to  the  nature  of  the  parties'  33,145,515.13 due to the extended Project time attributable to
relationship  which  would require first an amendment or  MRTDCs change orders. MRTDC refused to pay the claims. It
reformation of their contract is an issue which the courts  alleged that FSI failed to finish the construction of the Project within
may and can resolve without the need of the expertise and  the 180-day period agreed upon and that it had already paid FSI the
specialized knowledge of the HLURB.  amounts due for work accomplished as well as for interest on
   delayed payments.
2. ​YES. Paragraph 4.2 of the 1998 MOA mandates that any  FSI filed with the Construction Industry Arbitration
dispute between or among the parties "shall finally be  Commission (CIAC) a Request for Adjudication of its claims against
settled by arbitration conducted in accordance with the  MRTDC.
Rules  of  Conciliation  and  Arbitration  of  the  After due hearing, the CIAC issued an Award in favor of
International  Chamber  of  Commerce."  Petitioner  FSI for USD 2,820,000 as early completion bonus, denying FSIs
referred  the  dispute  to  the  PDRCI but respondents  other claims.CA affirmed but modified and removed the award and
refused to submit to its jurisdiction.  reasoned that the consent of the Project Manager was insufficient as
   change orders require a modification of the contract which must be
It bears stressing that such arbitration agreement is the law  consented to by MRTDC itself.
between the parties. They are, therefore, expected to abide 
by it in good faith.  Issues: 
   1. Whether FSI is entitled to be paid early completion bonus
Arbitration  is  one  of the alternative methods of dispute  based on technical time extension;
resolution that is now rightfully vaunted as "the wave of the  2. Whether FSI is entitled to be paid early compensation
future"  in  international  relations,  and  is  recognized  bonus based on financial time extension;
worldwide. To brush aside a contractual agreement calling  3. Whether FSI is entitled to be paid for extended overhead
for arbitration in case of disagreement between the parties  cost;
would therefore be a step backward.  4. Whether FSI is entitled to be paid for costs due to change
   in construction methodology; and
  5. Whether MRTDC should bear the arbitration costs alone.
   
  Ruling: 
  1.  ​FSI is entitled to be paid early completion bonus based on 
Filipinas Systems vs. MRT Devt Corp (Shera)   technical time extension 
  There was no evidence presented before the CIAC to
Doctrine/Principle:  prove that MRTDC authorized any technical time extension. The
Facts:   court did not agree with the CA and stated that par. (c) of Art. 20.07
The Metro Rail Transit Development Corporation (MRTDC) of the General Conditions of Contract would show that change orders
is the owner of the MRT-3 North Triangle Development Project which can be executed immediately and that contract modification is not a
would serve as the depot and maintenance area for the trains and pre-condition for it.
 While the general rule is one cannot be bound to a contract
entered into by another person, there are exceptions, such as when
the contracting person was authorized to enter a contract on behalf
of another, or when such contract was ratified. Here, David Sampson
was clearly authorized to issue change orders. The relationship
between MRTDC as the owner, PIJV as the PMT, and David
Sampson as the Project Manager is embodied in Sections 1.02, 1.03
and 1.05 of the General Conditions of the Bid Documents. Thus,
David Sampson was authorized to order changes in the Contract
Work as well as binding MRTDC to it.
2.  FSI is not entitled to financial time extension 
Clearly, in the computation for early accomplishment
bonus, MRTDC only contemplated time extensions when the actual
work had to cease. It thus becomes clear that MRTDC never
consented to nor ratified the inclusion of financial time extensions in
the computation of early accomplishment bonus. Thus, FSI is not
entitled to financial time extension
3.​ ​ ​FSI is not entitled to be paid for extended overhead cost 
During the hearing before the CIAC, it was found that FSI
failed to adduce admissible evidence in support of its claim for
extended overhead cost. The pieces of evidence that it presented in
support of its claim for extended overhead costs were summaries
and not actual receipts, invoices, contracts and similar documents.
4.  ​FSI is not entitled to be paid for costs due to change in 
construction methodology 
Increases in the cost of the Project unless authorized by
the owner will not make the latter liable for its cost. Here, no evidence
supports the proposition that the owner authorized the change in
construction methodology. FSI must bear the costs of such change in
construction methodology having executed the same unilaterally.
5.​ ​The parties must equally share the arbitration costs 
The court found no basis for assessing the arbitration costs
against one party or the other, as the parties prayers were only
partially granted and both parties shall equally share the costs of
arbitration.