A.

International Commercial Arbitration

1. Korea Technologies Co., v. Hon. Alberto A. Lerma and Pacific General Steel Manufacturing Corporation
(G.R. No. 143581, Jan. 7, 2008.)

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. PGSMC and KOGIES executed a Contract [March 5, 1997 contract] whereby KOGIES would
set up an LPG Cylinder Manufacturing Plant in Carmona, Cavite. The contract was executed in the Philippines. The parties executed,
in Korea, an Amendment for Contract No. KLP-970301 [March 5, 1997 contract] amending the terms of payment [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; Total contract price amounted to USD 1,530,000.]

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 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, KOGIES sent a demand letter to PGSMC threatening criminal action for violation of Batas
Pambansa Blg. 22 in case of nonpayment.

The wife of PGSMCs President faxed a letter to KOGIES President who was then staying at a Makati City hotel. She
complained that not only did KOGIES deliver a different brand of hydraulic press from that agreed upon but it had not
delivered several equipment parts already paid for. PGSMC replied that the two checks it issued KOGIES were fully funded but
the payments were stopped for reasons previously made known to KOGIES. PGSMC informed KOGIES that PGSMC was
canceling their Contract dated March 5, 1997 on the ground that KOGIES had altered the quantity and lowered the quality of
the machineries and equipment it delivered to PGSMC, and that PGSMC would dismantle and transfer the machineries,
equipment, and facilities installed in the Carmona plant.

PGSMC filed before the Office of the Public Prosecutor an Affidavit-Complaint for Estafa docketed as I.S. No. 98-03813
against Mr. Dae Hyun Kang, President of KOGIES. KOGIES wrote PGSMC informing the latter that PGSMC could not unilaterally
rescind their contract nor dismantle and transfer the machineries and equipment on mere imagined violations by KOGIES. It also
insisted that their disputes should be settled by arbitration as agreed upon in Article 15, the arbitration clause of their
contract. KOGIES instituted an Application for Arbitration before the Korean Commercial Arbitration Board (KCAB)
in Seoul, Korea pursuant to Art. 15 of the Contract as amended. KOGIES filed a Complaint for Specific Performance against PGSMC
before the Muntinlupa City Regional Trial Court (RTC). The RTC granted a temporary restraining order (TRO).

PGSMC filed an opposition to the TRO arguing that KOGIES was not entitled to the TRO because Art. 15, the
arbitration clause, was null and void for being against public policy as it ousts the local courts of jurisdiction over the instant
controversy [among others]. RTC issued an Order denying the application for a writ because Art. 15 of the Contract as
amended was invalid as it tended to oust the trial court or any other court jurisdiction over any dispute that may arise
between the parties. KOGIES points out that the arbitration clause under Art. 15 of the Contract as amended was a valid
arbitration stipulation under Art. 2044 of the Civil Code and as held by this Court in Chung Fu Industries (Phils.), Inc. The
trial court issued an Order denying KOGIES motion for reconsideration of the RTC Order.

KOGIES filed before the Court of Appeals (CA) a petition for certiorari seeking annulment of the RTC Orders and praying
for the issuance of writs of prohibition, mandamus, and preliminary injunction to enjoin the RTC and PGSMC from inspecting,
dismantling, and transferring the machineries and equipment in the Carmona plant, and to direct the RTC to enforce the specific
agreement on arbitration to resolve the dispute. the CA rendered the assailed Decision affirming the RTC Orders and dismissing the
petition for certiorari filed by KOGIES. On the issue of the validity of the arbitration clause, the CA agreed with the lower court
that an arbitration clause which provided for a final determination of the legal rights of the parties to the contract by
arbitration was against public policy.

Hence, we have this Petition for Review on Certiorari under Rule 45.

ISSUE: WHETHER OR NOT THE ART. 15 OF THE CONTRACT [ARBITRATION CLAUSE] IS VALID.
HELD: YES. [RULING ON PROCEDURAL ISSUES NOT COVERED BY THIS SUMMARY, PLS READ FULL TXT ON
THIS 😊]

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.

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, 2039, and 2040 refer to instances where a compromise or an arbitral award, as applied to
Art. 2044 pursuant to Art. 2043, 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.

ARBITRATION CLAUSE 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 had
occasion to rule that an arbitration clause to resolve differences and breaches of mutually agreed contractual terms is valid. 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 Codes provisions on arbitration. Being an inexpensive, speedy and amicable method of settling
disputes, arbitration along with mediation, conciliation and negotiation is encouraged by the Supreme Court. Aside from
unclogging judicial dockets, arbitration also hastens the resolution of disputes, especially of the commercial kind. It is thus
regarded as the wave of the future in international civil and commercial disputes. Brushing aside a contractual agreement
calling for arbitration between the parties would be a step backward. courts should liberally construe arbitration clauses.
Provided such clause is susceptible of an interpretation that covers the asserted dispute, an order to arbitrate should be granted. Any
doubt should be resolved in favor of arbitration.

RA 9285 INCORPORATED THE UNCITRAL MODEL LAW TO WHICH WE ARE A SIGNATORY

For domestic arbitration proceedings, we have particular agencies to arbitrate disputes arising from contractual relations. In
case a foreign arbitral body is chosen by the parties, the arbitration rules of our domestic arbitration bodies would not be applied. As
signatory to the Arbitration Rules of the UNCITRAL Model Law on International Commercial Arbitration of the United Nations
Commission on International Trade Law (UNCITRAL) in the New York Convention on June 21, 1985, the Philippines committed
itself to be bound by the Model Law. We have even incorporated the Model Law in Republic Act No. (RA) 9285, otherwise
known as the Alternative Dispute Resolution Act of 2004 entitled An Act to Institutionalize the Use of an Alternative Dispute
Resolution System in the Philippines and to Establish the Office for Alternative Dispute Resolution, and for Other
Purposes, promulgated on April 2, 2004.

While RA 9285 was passed only in 2004, it nonetheless applies in the instant case since it is a procedural law which has a
retroactive effect. KOGIES filed its application for arbitration before the KCAB on July 1, 1998 and it is still pending because no
arbitral award has yet been rendered. Thus, RA 9285 is applicable to the instant case. Well-settled is the rule that procedural laws are
construed to be applicable to actions pending and undetermined at the time of their passage, and are deemed retroactive in that sense
and to that extent. As a general rule, the retroactive application of procedural laws does not violate any personal rights because no
vested right has yet attached nor arisen from them. Among the pertinent features of RA 9285 applying and incorporating the
UNCITRAL Model Law are the following:

(1) The RTC must refer to arbitration in proper cases: Under Sec. 24, the RTC does not have jurisdiction over disputes that are
properly the subject of arbitration pursuant to an arbitration clause, and mandates the referral to arbitration in such cases

(2) Foreign arbitral awards must be confirmed by the RTC: Foreign arbitral awards while mutually stipulated by the parties in the
arbitration clause to be final and binding are not immediately enforceable or cannot be implemented immediately. Sec. 35 of the
UNCITRAL Model Law stipulates the requirement for the arbitral award to be recognized by a competent court for enforcement,
which court under Sec. 36 of the UNCITRAL Model Law may refuse recognition or enforcement on the grounds provided for. foreign
arbitral awards when confirmed by the RTC are deemed not as a judgment of a foreign court but as a foreign arbitral award, and when
confirmed, are enforced as final and executory decisions of our courts of law. Thus, it can be gleaned that the concept of a final and
binding arbitral award is similar to judgments or awards given by some of our quasi-judicial bodies whose final judgments are
stipulated to be final and binding, but not immediately executory in the sense that they may still be judicially reviewed, upon the
instance of any party. Therefore, the final foreign arbitral awards are similarly situated in that they need first to be confirmed by the
RTC.

(3) The RTC has jurisdiction to review foreign arbitral awards: Thus, while the RTC does not have jurisdiction over disputes
governed by arbitration mutually agreed upon by the parties, still the foreign arbitral award is subject to judicial review by the RTC
which can set aside, reject, or vacate it. In this sense, what this Court held in Chung Fu Industries (Phils.), Inc. relied upon by
KOGIES is applicable insofar as the foreign arbitral awards, while final and binding, do not oust courts of jurisdiction since these
arbitral awards are not absolute and without exceptions as they are still judicially reviewable. Chapter 7 of RA 9285 has made it clear
that all arbitral awards, whether domestic or foreign, are subject to judicial review on specific grounds provided for.

(4) Grounds for judicial review different in domestic and foreign arbitral awards: The differences between a final arbitral award
from an international or foreign arbitral tribunal and an award given by a local arbitral tribunal are the specific grounds or conditions
that vest jurisdiction over our courts to review the awards. For foreign or international arbitral awards which must first be confirmed
by the RTC, the grounds for setting aside, rejecting or vacating the award by the RTC are provided under Art. 34(2) of the
UNCITRAL Model Law. For final domestic arbitral awards, which also need confirmation by the RTC pursuant to Sec. 23 of RA 876
and shall be recognized as final and executory decisions of the RTC, they may only be assailed before the RTC and vacated on the
grounds provided under Sec. 25 of RA 876.

(5) RTC decision of assailed foreign arbitral award appealable: Thereafter, the CA decision may further be appealed or reviewed
before this Court through a petition for review under Rule 45 of the Rules of Court.

PGSMC HAS REMEDIES TO PROTECT ITS INTERESTS

Based on the foregoing features of RA 9285, PGSMC must submit to the foreign arbitration as it bound itself through the
subject contract. While it may have misgivings on the foreign arbitration done in Korea by the KCAB, it has available remedies under
RA 9285. Its interests are duly protected by the law which requires that the arbitral award that may be rendered by KCAB must be
confirmed here by the RTC before it can be enforced. it must be noted that there is nothing in the subject Contract which provides that
the parties may dispense with the arbitration clause.

UNILATERAL RESCISSION IMPROPER AND ILLEGAL

Having ruled that the arbitration clause of the subject contract is valid and binding on the parties, and not contrary to public
policy; consequently, being bound to the contract of arbitration, a party may not unilaterally rescind or terminate the contract for
whatever cause without first resorting to arbitration. The issues arising from the contract between PGSMC and KOGIES on whether
the equipment and machineries delivered and installed were properly installed and operational in the plant in Carmona, Cavite; the
ownership of equipment and payment of the contract price; and whether there was substantial compliance by KOGIES in the
production of the samples, given the alleged fact that PGSMC could not supply the raw materials required to produce the sample LPG
cylinders, are matters proper for arbitration. Indeed, we note that on July 1, 1998, KOGIES instituted an Application for Arbitration
before the KCAB in Seoul, Korea pursuant to Art. 15 of the Contract as amended. Thus, it is incumbent upon PGSMC to abide by its
commitment to arbitrate.

ISSUE ON OWNERSHIP OF PLANT PROPER FOR ARBITRATION

It is settled that questions of fact cannot be raised in an original action for certiorari. Whether or not there was full payment
for the machineries and equipment and installation is indeed a factual issue prohibited by Rule 65. However, what appears to
constitute a grave abuse of discretion is the order of the RTC in resolving the issue on the ownership of the plant when it is the arbitral
body (KCAB) and not the RTC which has jurisdiction and authority over the said issue. The RTCs determination of such factual issue
constitutes grave abuse of discretion and must be reversed and set aside.

RTC HAS INTERIM JURISDICTION TO PROTECT THE RIGHTS OF THE PARTIES

Anent the Order denying the issuance of the injunctive writ paving the way for PGSMC to dismantle and transfer the
equipment and machineries, we find it to be in order considering the factual milieu of the instant case.
 Firstly, while the issue of the proper installation of the equipment and machineries might well be under the primary
jurisdiction of the arbitral body to decide, yet the RTC under Sec. 28 of RA 9285 has jurisdiction to hear and grant interim measures to
protect vested rights of the parties: “It is not incompatible with an arbitration agreement for a party to request, before
constitution of the tribunal, from a Court to grant such measure. xxx Any party may request that provisional relief be granted
against the adverse party. xxx Such relief may be granted: to prevent irreparable loss or injury xxx The order shall be binding
upon the parties.”

Art. 17(2) of the UNCITRAL Model Law on ICA defines an interim measure of protection as: (2) An interim measure is
any temporary measure, whether in the form of an award or in another form, by which, at any time prior to the issuance of the award
by which the dispute is finally decided, the arbitral tribunal orders a party to:
(a) Maintain or restore the status quo pending determination of the dispute;
(b) Take action that would prevent, or refrain from taking action that is likely to cause, current or imminent harm or prejudice to the
arbitral process itself;
(c) Provide a means of preserving assets out of which a subsequent award may be satisfied; or
(d) Preserve evidence that may be relevant and material to the resolution of the dispute.

As a fundamental point, the pendency of arbitral proceedings does not foreclose resort to the courts for provisional reliefs.
The Rules of the ICC, which governs the parties arbitral dispute, allows the application of a party to a judicial authority for interim or
conservatory measures. Likewise, Section 14 of Republic Act (R.A.) No. 876 (The Arbitration Law) recognizes 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. In
addition, R.A. 9285, otherwise known as the Alternative Dispute Resolution Act of 2004, allows the filing of provisional or interim
measures with the regular courts whenever the arbitral tribunal has no power to act or to act effectively. It is thus beyond cavil that the
RTC has authority and jurisdiction to grant interim measures of protection.

Secondly, considering that the equipment and machineries are in the possession of PGSMC, it has the right to protect and
preserve the equipment and machineries in the best way it can. Considering that the LPG plant was non-operational, PGSMC has the
right to dismantle and transfer the equipment and machineries either for their protection and preservation or for the better way to make
good use of them which is ineluctably within the management discretion of PGSMC.

Thirdly, and of greater import is the reason that maintaining the equipment and machineries in Worths property is not to the
best interest of PGSMC due to the prohibitive rent while the LPG plant as set-up is not operational. PGSMC was losing PhP322,560
as monthly rentals or PhP3.87M for 1998 alone without considering the 10% annual rent increment in maintaining the plant.

Fourthly, and corollarily, while the KCAB can rule on motions or petitions relating to the preservation or transfer of the
equipment and machineries as an interim measure, yet on hindsight, the July 23, 1998 Order of the RTC allowing the transfer of the
equipment and machineries given the non-recognition by the lower courts of the arbitral clause, has accorded an interim measure of
protection to PGSMC which would otherwise been irreparably damaged.

Fifth, KOGIES is not unjustly prejudiced as it has already been paid a substantial amount based on the
contract. Moreover, KOGIES is amply protected by the arbitral action it has instituted before the KCAB, the award of which can be
enforced in our jurisdiction through the RTC. Besides, by our decision, PGSMC is compelled to submit to arbitration pursuant to the
valid arbitration clause of its contract with KOGIES.

PGSMC TO PRESERVE THE SUBJECT EQUIPMENT AND MACHINERIES

Finally, while PGSMC may have been granted the right to dismantle and transfer the subject equipment and machineries, it
does not have the right to convey or dispose of the same considering the pending arbitral proceedings to settle the differences of the
parties. PGSMC therefore must preserve and maintain the subject equipment and machineries with the diligence of a good father of a
family until final resolution of the arbitral proceedings and enforcement of the award, if any.

2. TRANSFIELD PHILIPPINES, INC., vs. LUZON HYDRO CORPORATION, G.R.. No. 146717 May 19, 2006

SHORTER VERSION WITH EMPHASIS ON ARBITRATION

Facts: Transfield Philippines (Transfield) entered into a turn-key contract with Luzon Hydro Corp.
(LHC).Under the contract, Transfield were to construct a hydro-electric plants in Benguet and Ilocos.
Transfield was given the sole responsibility for the design, construction, commissioning, testing and
completion of the Project. The contract provides for a period for which the project is to be completed and
also allows for the extension of the period provided that the extension is based on justifiable grounds such
as fortuitous event. In order to guarantee performance by Transfield, two stand-by letters of credit were
required to be opened. During the construction of the plant, Transfield requested for extension of time
citing typhoon and various disputes delaying the construction. LHC did not give due course to the
extension of the period prayed for but referred the matter to arbitration committee. Because of the delay in
the construction of the plant, LHC called on the stand-by letters of credit because of default. However, the
demand was objected by Transfield on the ground that there is still pending arbitration on their request for
extension of time.

Issue: Whether or not LHC can collect from the letters of credit despite the pending arbitration case

Held: Transfield’s argument that any dispute must first be resolved by the parties, whether through
negotiations or arbitration, before the beneficiary is entitled to call on the letter of credit in essence would
convert the letter of credit into a mere guarantee.

The independent nature of the letter of credit may be: (a) independence in toto where the credit is
independent from the justification aspect and is a separate obligation from the underlying agreement like
for instance a typical standby; or (b) independence may be only as to the justification aspect like in a
commercial letter of credit or repayment standby, which is identical with the same obligations under the
underlying agreement. In both cases the payment may be enjoined if in the light of the purpose of the
credit the payment of the credit would constitute fraudulent abuse of the credit.

Jurisprudence has laid down a clear distinction between a letter of credit and a guarantee in that the
settlement of a dispute between the parties is not a pre-requisite for the release of funds under a letter of
credit. In other words, the argument is incompatible with the very nature of the letter of credit. If a letter of
credit is drawable only after settlement of the dispute on the contract entered into by the applicant and the
beneficiary, there would be no practical and beneficial use for letters of credit in commercial transactions.

The engagement of the issuing bank is to pay the seller or beneficiary of the credit once the draft and the
required documents are presented to it. The so-called “independence principle” assures the seller or the
beneficiary of prompt payment independent of any breach of the main contract and precludes the issuing
bank from determining whether the main contract is actually accomplished or not. Under this principle,
banks assume no liability or responsibility for the form, sufficiency, accuracy, genuineness, falsification or
legal effect of any documents, or for the general and/or particular conditions stipulated in the documents
or superimposed thereon, nor do they assume any liability or responsibility for the description, quantity,
weight, quality, condition, packing, delivery, value or existence of the goods represented by any
documents, or for the good faith or acts and/or omissions, solvency, performance or standing of the
consignor, the carriers, or the insurers of the goods, or any other person whomsoever.

LONGER VERSION

FACTS:
The adjudication of this case proved to be a two-stage process as its constituent parts involve two segregate but equally important
issues: the first stage relating to the merits, specifically the question of the propriety of calling on the securities during the pendency of
the arbitral proceedings, was resolved in favour of Luzon Hydro Corporation (LHC) with the Court’s Decision, and the second stage
involving the issue of forum-shopping. The disposal of the forum-shopping charge is crucial to the parties to this case on account of its
profound effect on the final outcome of the international arbitral proceedings which they have chosen as their principal dispute
resolution mechanism
 Luzon Hydro Corporation (LHC) claims that Transfield Philippines, Inc. (TPI) is guilty of forum-shopping when it filed the following
suits:

Civil Case No. 04-332
(filed on March 19, 2004)
RTC Makati- for confirmation, recognition and enforcement
Philippines of the Third Partial Award in case 11264
TE/MW, ICC International Court of
Arbitration, entitled Transfield Philippines,
Inc. v. Luzon Hydro Corporation.

ICC Case No. International Court of a request for arbitration pursuant to the
11264/TE/MW, Transfield Philippi Arbitration, International Turnkey Contract between LHC and TPI
nes, Inc. v. Luzon Hydro Chamber of
Corporation Commerce (ICC)-
Singapore
(November 3, 2000)
G.R. No. Supreme Court- an appeal by certiorari with prayer for
146717, Transfield Philippines, Philippines TRO/preliminary prohibitory and mandatory
Inc. v. Luzon Hydro Corporation, injunction, of the Court of Appeals Decision
Australia and New Zealand
Banking Group Limited and
Security Bank Corp.
(February 5, 2001)

TPI claims that it is LHC which is guilty of forum-shopping when it raised the issue of forum shopping not only in this case, but also
in Civil Case No. 04-332, and even asked for the dismissal of the other case based on this ground.
TPI filed its Manifestation and Reiterative Motion to set the case for oral argument, where it manifested that the International
Chamber of Commerce (ICC) arbitral tribunal had issued its Final Award ordering LHC to pay TPI US$24,533,730.00 (including the
US$17,977,815.00 proceeds of the two standby letters of credit).
TPI also submitted a copy thereof with a Supplemental Petition to the RTC, seeking recognition and enforcement of the said award.
TPIs verified petition in Civil Case No. 04-332, filed on 19 March 2004, was captioned as one For: Confirmation, Recognition and
Enforcement of Foreign Arbitral Award in Case 11264 TE/MW, ICC International Court of Arbitration, Transfield Philippines, Inc. v.
Luzon Hydro Corporation (Place of arbitration: Singapore). In the said petition, TPI prayed that the corresponding writ of execution to
enforce Third Partial Award be enforced.

According to LHC, the filing of the above case constitutes forum-shopping since it is the same claim for the return of US$17.9 Million
which TPI made before the ICC Arbitral Tribunal and before this Court.

LHC adds that while Civil Case No. 04-332 is styled as an action for money, the Third Partial Award used as basis of the suit does
not authorize TPI to seek a writ of execution for the sums drawn on the letters of credit. LHC further argues that said award does not
even contain an order for the payment of money, but instead has reserved the quantification of the amounts for a subsequent
determination. In fact, even the Fifth Partial Award, does not contain such orders.

LHC insists that the declarations or the partial awards issued by the ICC Arbitral Tribunal do not constitute orders for the payment of
money and are not intended to be enforceable as such, but merely constitute amounts which will be included in the Final Award and
will be taken into account in determining the actual amount payable to the prevailing party

ISSUE(S):
1. Whether the parties are guilty of forum shopping.
2. Whether the pendency of arbitral proceedings foreclose the resort to the courts for provisional reliefs.
 3. Whether the partial awards issued by the ICC Arbitral Tribunal constitute orders for the payment of money hence cannot be
enforced as such.

RULING:
1. The Court RESOLVES to DISMISS the charges of forum-shopping filed by both parties against each other.
For forum-shopping to exist, there must be (a) identity of parties, or at least such parties as represent the same interests in both actions;
(b) identity of rights asserted and relief prayed for, the relief being founded on the same facts; and (c) the identity of the two preceding
particulars is such that any judgment rendered in the other action will, regardless of which party is successful, amount
to res judicata in the action under consideration.

ARBITRATION CASE (ICC Case No. CIVIL CASE No. 04- INSTANT PETITION
11264) 332 (Supreme Court)

CAUSES OF -an arbitral proceeding commenced - filed to enjoin LHC -puts in issue the propriety
ACTION pursuant to the Turnkey Contract between from calling on the of drawing on the letters of
TPI and LHC securities and respondent credit during
banks from transferring
(SC: No -to determine the primary issue of whether the pendency of the arbitral
or paying the securities
identity of the delays in the construction of the project in case LHC calls on case, and of course, absent a
causes of were excused delays, which would them. final determination by the
action) consequently render valid TPIs claims for ICC Arbitral tribunal.
extension of time to finish the project - issuance of a writ of
execution to enforce the
-Together with the primary issue to be Third Partial Award.
settled in the arbitration case is the equally
important question of monetary awards to
the aggrieved party.

PARTIES involves TPI and LHC, the parties to the TPI and LHC only, they -includes Security Bank and
Turnkey Contract. being the parties to the ANZ Bank, the banks
(SC: No arbitration agreement sought to be enjoined from
whose partial award is
identity of releasing the funds of the
sought to be enforced.
parties) letters of credit.

2. The pendency of arbitral proceedings does not foreclose resort to the courts for provisional reliefs. The Rules of the ICC, which
governs the parties’ arbitral dispute, allows the application of a party to a judicial authority for interim or conservatory measures.

Likewise, Section 14 of Republic Act (R.A.) No. 876 (The Arbitration Law) recognizes 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. In addition, R.A. 9285,
otherwise known as the Alternative Dispute Resolution Act of 2004, allows the filing of provisional or interim measures with the
regular courts whenever the arbitral tribunal has no power to act or to act effectively.

3. R.A. No. 9825 provides that international commercial arbitrations shall be governed by the Model Law on International
Commercial Arbitration (Model Law) adopted by the United Nations Commission on International Trade Law (UNCITRAL).
Moreover, the New York Convention, to which the Philippines is a signatory, governs the recognition and enforcement of foreign
arbitral awards. The applicability of the New York Convention in the Philippines was confirmed in Section 42 of R.A. 9285. Said law
also provides that the application for the recognition and enforcement of such awards shall be filed with the proper RTC.

Declarations in Third Partial Award do not constitute order for payment of money

While TPIs resort to the RTC for recognition and enforcement of the Third Partial Award sanctioned by both the New York
Convention and R.A. 9285, its application for enforcement, however, was premature, to say the least. True, the ICC Arbitral
Tribunal had indeed ruled that LHC wrongfully drew upon the securities, yet there is no order for the payment or return of the
proceeds of the said securities. In fact, Paragraph 2142, which is the final paragraph of the Third Partial Award, reads:

2142. All other issues, including any issues as to quantum and costs, are reserved to a future award.

In Re: Fifth Partial Award

The Fifth Partial Award issued by the Tribunal contains, among others, a declaration that while LHC wrongfully drew on the
securities, the drawing was made in good faith, under the mistaken assumption that the contractor, TPI, was in default. Thus, the
tribunal ruled that while the amount drawn must be returned, TPI is not entitled to any damages or interests due to LHCs drawing on
the securities. Also, the tribunal in this Award declared:
The declarations do not constitute orders for the payment of money and are not intended to be enforceable as
such. They merely constitute amounts which will be included in the Final Award and will be taken into account in
determining the actual amount payable

Final Award already constitutes orders for the payment of money

Finally, on 9 August 2005, the ICC Arbitral tribunal issued its Final Award, in essence awarding US$24,533,730.00, which
included TPIs claim of U$17,977,815.00 for the return of the securities from LHC.

The fact that the ICC Arbitral tribunal included the proceeds of the securities shows that it intended to make a final
determination/award as to the said issue only in the Final Award and not in the previous partial awards. This supports LHCs position
that when the Third Partial Award was released and Civil Case No. 04-332 was filed, TPI was not yet authorized to seek the issuance
of a writ of execution since the quantification of the amounts due to TPI had not yet been settled by the ICC Arbitral
tribunal. Notwithstanding the fact that the amount of proceeds drawn on the securities was not disputed the application for the
enforcement of the Third Partial Award was precipitately filed. To repeat, the declarations made in the Third Partial Award do not
constitute orders for the payment of money.
 3. Agan vs. PIATCO, G.R. No. 155001, May 5, 2003

FACTS:

On October 5, 1994, AEDC submitted an unsolicited proposal to the Government through the DOTC/MIAA for the development of
NAIA International Passenger Terminal III (NAIA IPT III).

DOTC constituted the Prequalification Bids and Awards Committee (PBAC) for the implementation of the project and submitted with
its endorsement proposal to the NEDA, which approved the project.

On June 7, 14, and 21, 1996, DOTC/MIAA caused the publication in two daily newspapers of an invitation for competitive or
comparative proposals on AEDC’s unsolicited proposal, in accordance with Sec. 4-A of RA 6957, as amended.

On September 20, 1996, the consortium composed of People’s Air Cargo and Warehousing Co., Inc. (Paircargo), Phil. Air and
Grounds Services, Inc. (PAGS) and Security Bank Corp. (Security Bank) (collectively, Paircargo Consortium) submitted their
competitive proposal to the PBAC. PBAC awarded the project to Paircargo Consortium. Because of that, it was incorporated into
Philippine International Airport Terminals Co., Inc.

AEDC subsequently protested the alleged undue preference given to PIATCO and reiterated its objections as regards the
prequalification of PIATCO.

On July 12, 1997, the Government and PIATCO signed the “Concession Agreement for the Build-Operate-and-Transfer Arrangement
of the NAIA Passenger Terminal III” (1997 Concession Agreement). The Government granted PIATCO the franchise to operate and
maintain the said terminal during the concession period and to collect the fees, rentals and other charges in accordance with the rates
or schedules stipulated in the 1997 Concession Agreement. The Agreement provided that the concession period shall be for twenty-
five (25) years commencing from the in-service date, and may be renewed at the option of the Government for a period not exceeding
twenty-five (25) years. At the end of the concession period, PIATCO shall transfer the development facility to MIAA.

Meanwhile, the MIAA which is charged with the maintenance and operation of the NAIA Terminals I and II, had existing concession
contracts with various service providers to offer international airline airport services, such as in-flight catering, passenger handling,
ramp and ground support, aircraft maintenance and provisions, cargo handling and warehousing, and other services, to several
international airlines at the NAIA.

On September 17, 2002, the workers of the international airline service providers, claiming that they would lose their job upon the
implementation of the questioned agreements, filed a petition for prohibition. Several employees of MIAA likewise filed a petition
assailing the legality of the various agreements.

During the pendency of the cases, PGMA, on her speech, stated that she will not “honor (PIATCO) contracts which the Executive
Branch’s legal offices have concluded (as) null and void.”
In March 2003, PIATCO commenced arbitration proceedings before the International Chamber of Commerce, International Court of
Arbitration.

Should the dispute be referred to arbitration prior to judicial recourse?

Respondent Piatco claims that Section 10.02 of the Amended and Restated Concession Agreement (ARCA) provides for arbitration
under the auspices of the International Chamber of Commerce to settle any dispute or controversy or claim arising in connection with
the Concession Agreement, its amendments and supplements. The government disagrees; however, insisting that there can be no
arbitration based on Section 10.02 of the ARCA, since all the Piatco contracts are void ab initio.

ISSUE:

Whether or not the State can temporarily take over a business affected with public interest.

RULING:

Yes. PIATCO cannot, by mere contractual stipulation, contravene the Constitutional provision on temporary government takeover and
obligate the government to pay “reasonable cost for the use of the Terminal and/or Terminal Complex.”

Article XII, Section 17 of the 1987 Constitution provides:

Section 17. In times of national emergency, when the public interest so requires, the State may, during the emergency and under
reasonable terms prescribed by it, temporarily take over or direct the operation of any privately owned public utility or business
affected with public interest.

The above provision pertains to the right of the State in times of national emergency, and in the exercise of its police power, to
temporarily take over the operation of any business affected with public interest. The duration of the emergency itself is the
determining factor as to how long the temporary takeover by the government would last. The temporary takeover by the government
extends only to the operation of the business and not to the ownership thereof. As such the government is not required to compensate
the private entity-owner of the said business as there is no transfer of ownership, whether permanent or temporary. The private entity-
owner affected by the temporary takeover cannot, likewise, claim just compensation for the use of the said business and its properties
as the temporary takeover by the government is in exercise of its police power and not of its power of eminent domain.

Article XII, section 17 of the 1987 Constitution envisions a situation wherein the exigencies of the times necessitate the government to
“temporarily take over or direct the operation of any privately owned public utility or business affected with public interest.” It is the
welfare and interest of the public which is the paramount consideration in determining whether or not to temporarily take over a
particular business. Clearly, the State in effecting the temporary takeover is exercising its police power. Police power is the “most
essential, insistent, and illimitable of powers.” Its exercise therefore must not be unreasonably hampered nor its exercise be a source of
obligation by the government in the absence of damage due to arbitrariness of its exercise. Thus, requiring the government to pay
reasonable compensation for the reasonable use of the property pursuant to the operation of the business contravenes the Constitution.

4. Tuna Processing Inc. vs. Phil. Kingford, Inc., (GRN 185582, 2/29/2012)

FACTS:

Philippine Kingford, Inc. (Kingford) is a corporation duly organized and existing under the laws of the Philippines while Tuna
Processing, Inc. (TPI) is a foreign corporation not licensed to do business in the Philippines. Due to circumstances not mentioned in
the case, Kingford withdrew from petitioner TPI and correspondingly, reneged on their obligations. Petitioner submitted the dispute
for arbitration before the International Centre for Dispute Resolution in the State of California, United States and won the case against
respondent. To enforce the award, petitioner TPI filed a Petition for Confirmation, Recognition, and Enforcement of Foreign Arbitral
Award before the RTC of Makati City. The RTC dismissed the petition on the ground that the petitioner lacked legal capacity to sue in
the Philippines.

ISSUE: Can a foreign corporation not licensed to do business in the Philippines, but which collects royalties from entities in the
Philippines, sue here to enforce a foreign arbitral award?

HELD: RTCs decision is reversed.

POLITICAL LAW: special vs. general law

The Alternative Dispute Resolution Act of 2004 shall apply in this case as the Act, as its title - An Act to Institutionalize the Use of an
Alternative Dispute Resolution System in the Philippines and to Establish the Office for Alternative Dispute Resolution, and for Other
Purposes - would suggest, is a law especially enacted to actively promote party autonomy in the resolution of disputes or the freedom
of the party to make their own arrangements to resolve their disputes. It specifically provides exclusive grounds available to the party
opposing an application for recognition and enforcement of the arbitral award. The Corporation Code is the general law providing for
the formation, organization and regulation of private corporations. As between a general and special law, the latter shall prevail
generalia specialibus non derogant.

The Special Rules of Court on Alternative Dispute Resolution provides that any party to a foreign arbitration may petition the court to
recognize and enforce a foreign arbitral award.Indeed, it is in the best interest of justice that in the enforcement of a foreign arbitral
award, the losing party can not avail of the rule that bars foreign corporations not licensed to do business in the Philippines from
maintaining a suit in our courts. When a party enters into a contract containing a foreign arbitration clause and, as in this case, in fact
submits itself to arbitration, it becomes bound by the contract, by the arbitration and by the result of arbitration, conceding thereby the
capacity of the other party to enter into the contract, participate in the arbitration and cause the implementation of the result.
 B. Labor Dispute (with CBA)

5. Manila Electric Company vs. Hon Secretary of Labor Leonardo Quisumbing and MERALCO EMPLOYEES AND
WORKERS ASSOCIATION (MEWA), G.R. No. 127598. August 1, 2000

 In a Supreme Court Resolution, a motion for reconsideration is PARTIALLY GRANTED and the assailed Decision
is MODIFIED as follows: (1) the arbitral award shall retroact from December 1, 1995 to November 30, 1997; and (2) the
award of wage is increased from the original amount of One Thousand Nine Hundred Pesos (P1,900.00) to Two Thousand
Pesos (P2,000.00) for the years 1995 and 1996. In the assailed resolution, it was held:

Labor laws are silent as to when an arbitral award in a labor dispute where the Secretary (of Labor and Employment)
had assumed jurisdiction by virtue of Article 263 (g) of the Labor Code shall retroact.

In general, a CBA negotiated within six months after the expiration of the existing CBA retroacts to the day
immediately following such date and if agreed thereafter, the effectivity depends on the agreement of the parties.

On the other hand, the law is silent as to the retroactivity of a CBA arbitral award or that granted not by virtue of the
mutual agreement of the parties but by intervention of the government.

Despite the silence of the law, the Court rules herein that CBA arbitral awards granted after six months from the
expiration of the last CBA shall retroact to such time agreed upon by both employer and the employees or their
union.

Absent such an agreement as to retroactivity, the award shall retroact to the first day after the six-month period
following the expiration of the last day of the CBA should there be one.

In the absence of a CBA, the Secretarys determination of the date of retroactivity as part of his discretionary powers
over arbitral awards shall control.

 Petitioner Arguments:

- While it alludes to the Secretary’s discretionary powers only in the absence of a CBA, Article 253-A of the Labor Code
always presupposes the existence of a prior or subsisting CBA; hence the exercise by the Secretary of his discretionary
powers will never come to pass.
- The Resolution contravenes the jurisprudential rule laid down in the cases of Union of Filipro Employees v.
NLRC,[1] Pier 8 Arrastre and Stevedoring Services v. Roldan-Confesor[2] and St. Luke s Medical Center v. Torres.
- The Supreme Court erred in holding that the effectivity of CBA provisions are automatically retroactive. In the absence
of an agreement between the parties, an arbitrated CBA takes on the nature of any judicial or quasi-judicial award; it
operates and may be executed only prospectively unless there are legal justifications for its retroactive application.
- Petitioner assigns as error this Courts interpretation of certain acts of petitioner as consent to the retroactive application
of the arbitral award.
- The Resolution is internally flawed because when it held that the award shall retroact to the first day after the six-month
period following the expiration of the last day of the CBA, the reckoning date should have been June 1, 1996, not
December 1, 1995, which is the last day of the three-year lifetime of the economic provisions of the CBA.
- The retroactive application of the arbitral award will cost it no less than P800 Million. Thus, petitioner prays that the
two-year term of the CBA be fixed from December 28, 1996 to December 27, 1998
- On the award of P2,000.00 be paid to petitioners rank-and-file employees during this two-year period: Petitioner prays
that the award of P2,000.00 be made to retroact to June 1, 1996 as the effectivity date of the CBA.

 Respondent’s arguments:

- The Motion for Partial Modification was unauthorized inasmuch as Mr. Manuel M. Lopez, President of petitioner
corporation, has categorically stated in a memorandum to the rank-and-file employees that management will comply
with this Courts ruling and will not file any motion for reconsideration;
- The assailed Resolution should be modified to conform to the St. Lukes ruling, to the effect that, in the absence of a
specific provision of law prohibiting retroactivity of the effectivity of arbitral awards issued by the Secretary of Labor
 pursuant to Article 263(g) of the Labor Code, he is deemed vested with plenary and discretionary powers to determine
the effectivity thereof.

HELD: the Motion for Partial Modification is GRANTED. The Resolution of February 22, 2000 is PARTIALLY MODIFIED
as follows:

(a) the arbitral award shall retroact to the two-year period from June 1, 1996 to May 31, 1998;

(b) the increased wage award of Two Thousand Pesos (P2,000.00) shall be paid to the rank-and-file employees during the said
two-year period.

This Resolution is subject to the monetary advances granted by petitioner to said employees during the pendency of this case,
assuming such advances had actually been distributed to them.

- This Court has re-examined the assailed portion of the Resolution in this case vis--vis the rulings cited by petitioner.
Invariably, these cases involve Articles 253-A in relation to Article 263 (g)[4]of the Labor Code. Article 253-A is
hereunder reproduced for ready reference:

ART. 253-A. Terms of a collective bargaining agreement. --- xxx Any agreement on such other provisions of the
Collective Bargaining Agreement entered into within six (6) months from the date of expiry of the term of such
other provisions as fixed in such Collective Bargaining Agreement, shall retroact to the day immediately following
such date. If any such agreement is entered into beyond six months, the parties shall agree on the duration of
retroactivity thereof.

- In resolving the motions for reconsideration in this case, this Court took into account the fact that petitioner belongs to an
industry imbued with public interest. As such, this Court cannot ignore the enormous cost that petitioner will have
to bear as a consequence of the full retroaction of the arbitral award to the date of expiry of the CBA, and the
inevitable effect that it would have on the national economy.

On the other hand, under the policy of social justice, the law bends over backward to accommodate the interests of
the working class on the humane justification that those with less privilege in life should have more in law.

- Balancing these two contrasting interests, this Court turned to the dictates of fairness and equitable justice and
thus arrived at a formula that would address the concerns of both sides.

Hence, this Court held that the arbitral award in this case be made to retroact to the first day after the six-month
period following the expiration of the last day of the CBA, i.e., from June 1, 1996 to May 31, 1998.

This Court, therefore, maintains the foregoing rule in the assailed Resolution pro hac vice (for or on this occasion only).

- It must be clarified, however, that consonant with this rule, the two-year effectivity period must start from June 1,
1996 up to May 31, 1998, not December 1, 1995 to November 30, 1997.
- During the interregnum between the expiration of the economic provisions of the CBA and the date of effectivity of the
arbitral award, it is understood that the hold-over principle shall govern, viz:

"[I]t shall be the duty of both parties to keep the status quo and to continue in full force and effect the terms and
conditions of the existing agreement during the 60-day freedom period and/or until a new agreement is reached by
the parties." Despite the lapse of the formal effectivity of the CBA the law still considers the same as continuing in
force and effect until a new CBA shall have been validly executed. [16]

- This Court finds that petitioners prayer, that the award of Two Thousand Pesos shall be paid to rank-and-file employees
during the two-year period, is well-taken. The award does not extend to supervisory employees of petitioner.
 6. CIRTEK EMPLOYEES LABOR UNION-FEDERATION OF FREE WORKERS v. CIRTEK ELECTRONICS,
INC., G.R. No. 190515 , November 15, 2010

FACTS: Cirtek Electronics, Inc. (respondent), had an existing Collective Bargaining Agreement (CBA) with Cirtek Employees Labor
Union-Federation of Free Workers (petitioner) for the period January 1, 2001 up to December 31, 2005. Prior to the 3rd year of the
CBA, the parties renegotiated its economic provisions but failed to reach a settlement, particularly on the issue of wage increases.
Petitioner thereupon declared a bargaining deadlock and filed a Notice of Strike with the National Conciliation and Mediation Board-
Regional Office No. IV. Respondent, upon the other hand, filed a Notice of Lockout on June 16, 2004.
While the conciliation proceedings were ongoing, respondent placed seven union officers including the President, a Vice President,
the Secretary and the Chairman of the Board of Directors under preventive suspension for allegedly spearheading a boycott of
overtime work. The officers were eventually dismissed from employment, prompting petitioner to file another Notice of Strike which
was, after conciliation meetings, converted to a voluntary arbitration case. The dismissal of the officers was later found to be legal,
hence, petitioner appealed.
In the meantime, as amicable settlement of the CBA was deadlocked, petitioner went on strike on June 20, 2005. By Order dated June
23, 2005, the Secretary of Labor assumed jurisdiction over the controversy and issued a Return to Work Order.
Before the Secretary of Labor could rule on the controversy, respondent created a Labor Management Council (LMC) through which
it concluded with the remaining officers of petitioner a Memorandum of Agreement (MOA) providing for daily wage increases of
₱6.00 per day effective January 1, 2004 and ₱9.00 per day effective January 1, 2005. Petitioner submitted the MOA via Motion and
Manifestation to the Secretary of Labor, alleging that the remaining officers signed the MOA under respondent’s assurance that should
the Secretary order a higher award of wage increase, respondent would comply.
By Order dated March 16, 2006, the Secretary of Labor resolved the CBA deadlock by awarding a wage increase of from ₱6.00 to
₱10.00 per day effective January 1, 2004 and from ₱9.00 to ₱15.00 per day effective January 1, 2005, and adopting all other benefits
as embodied in the MOA.
Respondent moved for a reconsideration of the Decision as petitioner’s vice-president submitted a "Muling Pagpapatibay ng Pagsang-
ayon sa Kasunduan na may Petsang ika-4 ng Agosto 2005," stating that the union members were waiving their rights and benefits
under the Secretary’s Decision. Reconsideration of the Decision was denied. Hence, respondent filed a petition for certiorari before
the Court of Appeals.
CA ruled in favor of respondent and accordingly set aside the Decision of the Secretary of Labor. It held that the Secretary of Labor
gravely abused his discretion in not respecting the MOA. MR was denied. Hence, this petition.
ISSUES: 1) whether the Secretary of Labor is authorized to give an award higher than that agreed upon in the MOA, and
2) whether the MOA was entered into and ratified by the remaining officers of petitioner under the condition, which was not
incorporated in the MOA, that respondent would honor the Secretary of Labor’s award in the event that it is higher.

RULING: The Court resolves both issues in the affirmative.

It is well-settled that the Secretary of Labor, in the exercise of his power to assume jurisdiction under Art. 263 (g)11 of the Labor
Code, may resolve all issues involved in the controversy including the award of wage increases and benefits. While an arbitral award
cannot per se be categorized as an agreement voluntarily entered into by the parties because it requires the intervention and imposing
power of the State thru the Secretary of Labor when he assumes jurisdiction, the arbitral award can be considered an approximation of
a collective bargaining agreement which would otherwise have been entered into by the parties, hence, it has the force and effect of a
valid contract obligation.
That the arbitral award was higher than that which was purportedly agreed upon in the MOA is of no moment. For the Secretary, in
resolving the CBA deadlock, is not limited to considering the MOA as basis in computing the wage increases. He could, as he
did, consider the financial documents submitted by respondent as well as the parties’ bargaining history and respondent’s financial
outlook and improvements as stated in its website.
The appellate court’s brushing aside of the "Paliwanag" and the minutes of the meeting that resulted in the conclusion of the MOA
because they were not verified and notarized, thus violating, so the appellate court reasoned, the rules on parol evidence, does not lie.
Like any other rule on evidence, parol evidence should not be strictly applied in labor cases.
While a contract constitutes the law between the parties, this is so in the present case with respect to the CBA, not to the MOA in
which even the union’s signatories had expressed reservations thereto. But even assuming arguendo that the MOA is treated as a new
CBA, since it is imbued with public interest, it must be construed liberally and yield to the common good.
While the terms and conditions of a CBA constitute the law between the parties, it is not, however, an ordinary contract to
which is applied the principles of law governing ordinary contracts. A CBA, as a labor contract within the contemplation of
Article 1700 of the Civil Code of the Philippines which governs the relations between labor and capital, is not merely contractual in
nature but impressed with public interest, thus, it must yield to the common good. As such, it must be construed liberally rather
than narrowly and technically, and the courts must place a practical and realistic construction upon it, giving due consideration to the
context in which it is negotiated and purpose which it is intended to serve.
WHEREFORE, the petition is GRANTED. The Decision dated September 24, 2009 and the Resolution dated December 2, 2009 of
the Court of Appeals are REVERSED and SET ASIDE and the Order dated March 16, 2006 and Resolution dated August 12, 2008 of
the Secretary of Labor are REINSTATED.
SO ORDERED.
 C. Construction Arbitration

7. (MCWD vs. MACTAN ROCK INDUSTRIES, INC., (G.R. NO. 172438, JULY 4, 2012)

Facts:

Petitioner Metropolitan Cebu Water District (MCWD), a government-owned and controlled corporation, entered into a Water
Supply Contract with herein respondent, Mactan Rock Industries, Inc. (MRII), wherein the latter would supply MCWD with
potable water with a minimum guaranteed annual volume. Respondent filed a complaint against MCWD with the CIAC
citing the arbitration clause of the contract and seeking the reformation of Clause 17 of the Contract or the Price
Escalation/De-Escalation Clause in order to include Capital Cost Recovery in the price escalation formula. MCWD filed its
Answer, including a motion to dismiss the complaint on the ground that CIAC had no jurisdiction over the case, as the
contract was not one for construction or infrastructure. Petitioner then filed two petitions before the CA which were both
denied, hence this petition.

Issues:

(1) Whether or not CIAC may exercise jurisdiction over disputes arising from a water supply contract; and if so,

(2) Whether or not CIAC have a jurisdiction over a complaint praying for a reformation of a water supply contract.

Ruling:

(1) The Court finds in the affirmative. The motion for reconsideration was denied by CA and MCWD never appealed the
case. Thus, the decision of the CA became final and executory. The Court has held time and again that a final and executory
judgment, no matter how erroneous, cannot be changed even by this Court. The CA affirming the CIAC’s jurisdiction and it
becoming final, is now beyond the jurisdiction of the Court to review or modify, even supposing for the sake of argument,
that it is indeed erroneous.

(2) Where the law does not delineate, neither should we. Neither the provisions of the Civil Code on reformation of contracts
nor the law creating CIAC exclude reformation in its jurisdiction. Therefore, because the CIAC has been held to have
jurisdiction over the contract, it follows that it has jurisdiction to order the reformation of the contract as well.

8. PRO BUILDERS, INC., vs. TG UNIVERSAL BUSINESS VENTURES, INC.,(G.R. No. 194960, February 03, 2016

Petition: This Petition for Review on Certiorari assails the Decision dated 13 October 2010 and Resolution dated 16 December 2010
issued by the Court of Appeals in CA-G.R. SP No. 106407 which modified the Decision of the Arbitral Tribunal of the Construction
Industry Arbitration Commission (CIAC).

Parties of the case:

Petitioner: Pro Builders ,Inc.
Respondent: TG Universal Business Ventures, Inc.

Facts:
On 29 May 2007, TG Universal Business Ventures, Inc. (TG) entered into an Owner-Contractor Agreement (Agreement) with Pro
Builders, Inc. (Pro Builders) for the construction of a 15-storey building at Asiatown LT. Park in Lahug, Cebu City. In consideration
of the sum of Seventy Million Pesos (P70,000,000.00), Pro Builders undertook to provide the labor, materials and equipment, and to
perform all structural works for the project. On the other hand, TG undertook to pay Pro Builders a down payment of Twenty-One
Million Pesos (P21,000,000.00), or equivalent to 30% of the amount of contract. Pursuant to the Agreement, the completion of the
project is slated on 31 May 2008 but is subject to extension upon request of Pro Builders to TG, through its Project Manager, Prime
Edifice, Inc., on the grounds of force majeure or fortuitous event and/or additional work approved by TG, or any other special
circumstances as may be determined by TG. Upon signing of the Agreement, Pro Builders posted a performance bond obtained from
Prudential Guarantee and Assurance, Inc.
The Notice of Award was issued to Pro Builders on 15 May 2007. The project site was turned over to Pro Builders on 22 May 2007.
The construction was set to officially begin on 1 June 2007.

On 19 June 2007, Pro Builders received the 30% down payment equivalent to P21,000,000.00.

Extremely unsatisfied with the progress of the works, TG took over the project, hired another contractor to finish the work, and
demanded the balance of its overpayment from Pro Builders. Due to the dismal performance of Pro Builders, TG invoked Article 9 of
the Agreement or the Option to Complete Work Takeover. Pro Builders refused to turn over the works and demanded the payment
of its unpaid progress billings.

The parties failed to reach an amicable settlement, prompting TG to file a Request for Arbitration with the CIAC praying for the
payment of cost to complete the project, amounting to P13,489,807.48.1 On the other hand, Pro Builders counterclaimed for the
payment of damages amounting to P10,700,092.11.2

Arbitral Tribunal's Decision (1 October 2008)

The Arbitral Tribunal found that both parties failed to comply with their respective obligations and responsibilities under the
Agreement. It also ruled that Pro Builders is entitled to P2, 104,642.11 as the amount of unpaid accomplishment by subtracting the
P21,000.000.00 down payment from the total accomplishment of P23, 104,642.11.

TG filed a petition for review with the Court of Appeals challenging in part the Decision of the Arbitral Tribunal.

The Court of Appeals Decision (13 October 2010)

The Court of Appeals rendered the assailed Decision favoring TG. It found that all inadequate performance was attributable to Pro
Builders alone. Pro Builders filed a motion for reconsideration but it was denied by the appellate court

Issues:
1) Whether or not the Supreme Court shall take cognizance to review issues based on question of fact.
2) Whether or not Pro Builders is entitled to the unpaid work accomplishment wholly based on progress billings submitted to
TG Universal through its Project Manager, Prime Edifice, Inc.

Held:

1) Yes. Only when the factual findings of the Court of Appeals and the trial court are contradictory. The factual finding of the Court
of Appeals is contrary to the Arbitral Tribunal. This necessitates a review of the evidence adduced in this case.

On the Procedural Issue

Executive Order (EO) No. 1008 vests upon the CIAC 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. Section 19 thereof declares the arbitral award of the CIAC as final
and unappealable, except on questions of law, which are appealable to the Supreme Court. By virtue of the amendments
introduced by R.A. No. 7902 and promulgation of the 1997 Rules 'of Civil Procedure, as amended, the CIAC was included in the
enumeration of quasi-judicial agencies whose decisions or awards may be appealed to the Court of Appeals in a petition for review

1 P5,582,92 l. l 0 - unconsumed down payment (21,000,000.00 - 15,417,078.90 assessed value of Pro Builders
accomplishment as of 15 October 2007); P7, 771,553 .04 - additional expenses by engaging another contractor;
P135,333.34 - miscellaneous expenses (violation of Asiatown's guidelines, damage to property, lot rental); P700,000.00 -
Litigation expenses; and P300,000.00-Attorney’s fees.

2 P2,104,642.11 - Unpaid work accomplishment (P23, 104,642.11-21,000,000.00); P5,000,000.00 - compensatory damages;

P1,500,00.00 - rental deposit of the forms and scaffoldings for the period of one year; P157,000.00 -surety bond; P142,000.00-
construction all risk bond; P96,450.00- performance bond; P1,000,000.00- litigation expenses; P500,000.00- exemplary damages;
and P200,000.00- attorney’s fees.
under Rule 43. Such review of the CIAC award may involve either questions of fact, of law, or of fact and law. Hence, the Court of
Appeals is correct in taking cognizance of TG's appeal filed via petition for review.

2) Yes. The Arbitral Tribunal's expertise is well recognized in the field of construction arbitration, as CIAC is indeed the body upon
which the law vested with exclusive jurisdiction over any dispute arising from, or connected with construction contracts.

The progress billings prepared by Pro Builders provide an accurate summary of Pro Builders' accomplishments. Article 5.03
of the Agreement states: 3

Clearly, it is the Project Manager's responsibility to evaluate, certify and recommend the payment of the progress billings. Pursuant to
the Agreement, the appropriate recommendation should be completed within fifteen (15) calendar days from receipt of complete
billing documents. Pro Builders sent four (4) progress billings to TG from August to October 2007. None of these progress billings
were acted upon, paid or contested by TG in violation of the Agreement. On account of TG's failure to act upon the progress
billings, it had effectively waived its right to question the accuracy and veracity of Pro Builders' computation, thus the amounts stated
in the progress billings are deemed valid and binding on TG.

In F.F. Cruz & Co., Inc. v. HR Construction Corp., the Court held that the owner is barred from contesting the contractor's
valuation of the completed works when it waived its right to demand the joint measurement requirement. In the same vein,
truly with more reason should it be concluded that TG had effectively waived its right to contest the computations in the progress
billings since it failed to even act, one way or the other, on the progress billings within the time allowed under the Agreement.

As shown by the numbers, Pro Builders is entitled to payment of P2, 104.,642.11 for unpaid accomplishment of works, which amount
is arrived at by subtracting the 30% down payment from the total unpaid billings and adding the change order.

9. NATIONAL TRANSMISSION CORPORATION, vs. ALPHAOMEGA INTEGRATED CORPORATION, G.R. No.

184295 July 30, 2014

AIC, a duly licensed transmission line contractor, participated in the public biddings conducted by TRANSCO and was
awarded six ( 6) government construction projects. In the course of the performance ofthe contracts, AIC encountered
difficulties and incurred losses allegedly due to TRANSCO’s breach of their contracts, prompting it to surrender the projects
to TRANSCO under protest. In accordance with an express stipulation in the contracts that disagreements shall be settled by
the parties through arbitration before the CIAC, AIC submitted a request for arbitration before the CIAC on August 28, 2006,
and, thereafter, filed an Amended Complaint against TRANSCO alleging that the latter breached the contracts by its failure
to: (a) furnish the required Detailed Engineering; (b) arrange a well-established right-of-way to the project areas; (c) secure
the necessary permits and clearances from the concerned local government units (LGUs); (d) ensure a continuous supply of
construction materials; and (e) carry out AIC’s requests for power shut down.

AIC prayed for judgment declaring all six (6) contracts rescinded and ordering TRANSCO to pay, in addition to what had
already been paid under the contracts, moral damages, exemplary damages, and attorney’s fees at ₱100,000.00 each, and a
total of ₱40,201,467.19 as actual and compensatory damages.

TRANSCO, for its part, contended that: (a) it had conducted Detailed Engineering prior to the conduct of the bidding; and (b)
it had obtained the necessary government permits and endorsements from the affected LGUs. It asserted that AIC was guilty
of frontloading– that is,collecting the bulk of the contract price for work accomplished at the early stages of the project and
then abandoning the later stagesof the project which has a lower contract price9 –and that it disregarded the workable
portions of the projects not affected by the lack of supplies and drawings. TRANSCO further argued that AIC was estopped
from asking for standby fees to cover its overhead expenses during project suspensions considering that the delays, such as

3 5.03 The CONTRACTOR shall submit to the OWNER through the PROJECT MANAGER progress billing based on actual
accomplishment of the various phases of the PROJECT. The PROJECT MANAGER shall process, certify to the correctness of, and
make appropriate recommendations, and based on the recommendations, the OWNER shall make the actual payments. The
appropriate recommendation shall be completed within fifteen (15) calendar days from receipt of complete billing documents.
Final Payment shall be made in accordance with Article 17 of this Agreement.
the unresolved right-of-way issues and non-availability of materials, were factors already covered by the time extensions and
suspensions of work allowed under the contracts.

On April 18, 2007, the CIAC Arbitral Tribunal rendered its Final Award in CIAC Case No. 21-2006 ordering the payment of
actual and compensatory damages which AIC would not have suffered had it not been for the project delays attributable to
TRANSCO. It found ample evidence to support the claim for the increase in subcontract cost in BTRP Schedule I, as well as
such items of cost as house and yard rentals, electric bills, water bills, and maintained personnel, but disallowed the claims
for communications bills, maintenance costs for idle equipment, finance charges, and materials cost increases. According to
the Arbitral Tribunal, even if AIC itself made the requests for contract time extensions, this did not bar its claim for damages
as a result of project delayssince a contrary ruling would allow TRANSCO to profit from its own negligence and leave AIC
to suffer serious material prejudice as a direct consequence of that negligence leaving it without any remedy at law. The
Arbitral Tribunal upheld AIC’s right to rescind the contracts in accordancewith Resolution No. 018-2004 of the Government
Procurement Policy Board (GPPB), which explicitly gives the contractor the right to terminate the contract if the works are
completely stopped for a continuous period of at least 60 calendar days, through no fault of its own, due to the failure of the
procuring entity to deliver within a reasonable time, supplied materials, right-of-way, or other items that it is obligated to
furnish under the terms of the contract, among others.

Unconvinced, TRANSCO instituted a petition for review with the CA.

Before filing its comment to the petition, AIC moved for the issuance of a writ of execution, not for the amount of
17,495,117.44 awarded in the Final Award, but for the increased amount of 18,967,318.49.19 sought correction of the
discrepancies between the amount of the award appearing in the dispositive portion and the body of the Final Award. The
Arbitral Tribunal, however, denied AIC’s motion, holding that while the CIAC Revised Rules of Procedure Governing
Construction Arbitration (CIAC Rules) would have allowed the correction of the Final Award for evident miscalculation of
figures, typographical or arithmetical errors, AIC failed to file its motionfor the purpose within the time limitation of 15 days
from its receipt of the Final Award.

The CA affirmed the Arbitral Tribunal’s factual findings that TRANSCOfailed to exercise due diligence in resolving the
problems regarding the right-of-way and the lack of materials before undertaking the bidding process and entering into the
contracts with AIC. The CA upheld the Arbitral Tribunal’s Final Award as having been sufficiently established by evidence
but modified the total amount of the award after noting a supposed mathematical error in the computation. Setting aside
TRANSCO’s objections, it ruled that when a case is brought to a superior court on appeal every aspect of the case is thrown
open for review, hence, the subject error could be rectified. The CA held that the correct amount of the award should be
₱18,896,673.31, and not ₱17,495,117.44 as stated in the Arbitral Tribunal’s Final Award. Dissatisfied, TRANSCO moved for
reconsideration but was, however, denied by the CA in a Resolution.

The Issues Before the Court

The essential issues for the Court’s consideration are whether or not the CA erred (a) in affirming the CIAC Arbitral
Tribunal’s findings that AIC was entitled to its claims for damages as a result of project delays, and (b) in increasing the total
amount of compensation awarded in favor of AIC despite the latter’s failure to raise the allegedly erroneous computation of
the award before the CIAC in a timely manner, that is, within fifteen (15) days from receipt of the Final Award as provided
under Section 17.1 of the CIAC Rules.

This issue involves a question of fact. Such question exists when a doubt or difference arises as to the truth or the falsehood
of alleged facts; and when there is need for a calibration of the evidence, considering mainly the credibility of witnesses and
the existence and the relevancy of specific surrounding circumstances, their relation to each other and to the whole, and the
probabilities of the situation.

The Court finds no reason to disturb the factual findings of the CIAC Arbitral Tribunal on the matter of AIC’s entitlement to
damages which the CA affirmed as being well supported by evidence and properly referred to in the record. It is well-settled
that findings of fact of quasijudicial bodies, which have acquired expertise because their jurisdiction is confined to specific
matters, are generally accorded not only respect, but also finality, especially when affirmed by the CA.

While the CA correctly affirmed infull the CIAC Arbitral Tribunal’s factual determinations, it improperly modified the
amount of the award in favor of AIC, which modification did not observe the proper procedure for the correction of an
evident miscalculation of figures, including typographical or arithmetical errors, in the arbitral award. Section 17.1 of the
CIAC Rules mandates the filing of a motion for the foregoing purpose within fifteen (15) days from receipt thereof.
 Failure to file said motion would consequentlyrender the award final and executory under Section 18. 1 of the same rules,
viz.:
Section 18.1 Execution of Award – A final arbitral award shall become executory upon the lapse of fifteen (15) days from
receipt thereof by the parties.

SC AFFIRMED THE AWARD BUT IT WAS MODIFIED THE AMOUNT TO ₱17,495,117.44.

10. STRONGHOLD INSURANCE COMPANY, INC. v. SPOUSES RUNE AND LEA STROEM, G.R. No. 204689,
January 21, 2015

This case involves the proper invocation of the Construction Industry Arbitration Committee's (CIAC) jurisdiction through an
arbitration clause in a construction contract. The main issue here is whether the dispute liability of a surety under a performance
bond is connected to a construction contract and, therefore, falls under the exclusive jurisdiction of the CIAC.

FACTS:

Spouses Rune and Lea Stroem entered into an Owners-Contractor Agreement with Asis-Leif & Company, Inc. for the construction of
a two-storey house on the lot owned by Spouses Stroem in Antipolo, Rizal. The Contractor, as required by the Agreement, secured a
performance bond from Stronghold Insurance Company for Php4.5 million. The project was not finished on time, prompting the
Owner to file a complaint in court against the Contractor and the Surety. The spouses Stroem filed a Complaint (with Prayer for
Preliminary Attachment) for breach of contract and for sum of money with a claim for damages against Asis-Leif, Ms. Cynthia Asis-
Leif, and Stronghold. Only Stronghold was served summons. Ms. Cynthia Asis-Leif allegedly absconded and moved out of the
country.

The Regional Trial Court rendered a judgment in favor of the Spouses Stroem. The trial court ordered Stronghold to pay the Spouses
Stroem Php4,500,000.00 with 6% legal interest from the time of first demand. CA affirmed the lower court and increased the
attorney's fees awarded to the Stroem spouses.

ISSUE:

Whether or not the dispute should have been brought to arbitration under the rules of the Construction Industry Arbitration
Commission, in light of the arbitration clause in the Agreement.

HELD:

The Supreme Court rejected this argument ruling that “contracts take effect only between the parties, their assigns and heirs” and, not
being a party to the Agreement, the Surety cannot invoke the arbitration clause and the jurisdiction of the CIAC.

RATIO:

Executive Order No. 1008 is clear in defining the exclusive jurisdiction of the CIAC:

SEC. 35. Coverage of the Law. - Construction disputes which fall within the original and exclusive jurisdiction of the Construction
Industry Arbitration Commission shall include those between or among parties to, or who are otherwise bound by, an arbitration
agreement, directly or by reference whether such parties are project owner, contractor, subcontractor, quantity surveyor, bondsman or
issuer of an insurance policy in a construction project.

This court has previously held that a performance bond, which is meant "to guarantee the supply of labor, materials, tools, equipment,
and necessary supervision to complete the project[,]" is significantly and substantially connected to the construction contract and,
therefore, falls under the jurisdiction of the CIAC.

In the Prudential v. Anscor case:

In the case at bar, the performance bond was silent with regard to arbitration. On the other hand, the construction contract was clear
as to arbitration in the event of disputes. Applying the said doctrine, we rule that the silence of the accessory contract in this case
could only be construed as acquiescence to the main contract. The construction contract breathes life into the performance bond. We
are not ready to assume that the performance bond contains reservations with regard to some of the terms and conditions in the
construction contract where in fact it is silent. On the other hand, it is more reasonable to assume that the party who issued the
performance bond carefully and meticulously studied the construction contract that it guaranteed, and if it had reservations, it would
have and should have mentioned them in the surety contract.
It was clear in the Prudential case that the Agreement incorporated the performance bond contract; thus, it must be interpreted along
with the rest of the Agreement.

In the Stroem case, the SC ruled that:

1. The performance bond contract was not deemed incorporated in the main contract. The Bond contract merely referenced the
Agreement.

2. In terms of jurisdiction, where a surety in a construction contract actively participates in a collection suit, it is estopped from raising
jurisdiction later. The Surety has submitted to the jurisdiction of the Court through its active participation.

{* The Stronghold case suggests that persons entering into agreements which are ancillary to a main agreement (e.g. a performance
bond) should be aware of the risk that they may be impleaded in arbitration proceedings under the main agreement (even if they are
not themselves parties thereto) if said agreement contains language incorporating the said ancillary agreement. Steps should be taken
by said persons to clarify, whether in the main agreement or in the ancillary agreement, that they do not agree to be bound – if this is
the case, by the arbitration clause of the main agreement.}

{ * 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.}

11. GERARDO LANUZA, JR. AND ANTONIO O. OLBES, v. BF CORPORATION, SHANGRI-LA PROPERTIES,
INC., ALFREDO C. RAMOS, RUFO B. COLAYCO, MAXIMO G. LICAUCO III, AND BENJAMIN C. RAMOS,
G.R. No. 174938, October 01, 2014

Corporate representatives may be compelled to submit to arbitration proceedings pursuant to a contract entered into by the
corporation they represent if there are allegations of bad faith or malice in their acts representing the corporation.

This is a Rule 45 petition, assailing the Court of Appeals' May 11, 2006 decision and October 5, 2006 resolution. The Court of
Appeals affirmed the trial court's decision holding that petitioners, as director, should submit themselves as parties tothe arbitration
proceedings between BF Corporation and Shangri-La Properties, Inc. (Shangri-La).

35. Arbitration

(1) Provided always that in case any dispute or difference shall arise between the Owner or the Project Manager on his behalf
and the Contractor, either during the progress or after the completion or abandonment of the Works as to the construction of
this Contract or as to any matter or thing of whatsoever nature arising there under or inconnection therewith (including any
matter or thing left by this Contract to the discretion of the Project Manager or the withholding by the Project Manager of
any certificate to which the Contractor may claim to be entitled or the measurement and valuation mentioned in clause
30(5)(a) of these Conditions or the rights and liabilities of the parties under clauses 25, 26, 32 or 33 of these Conditions), the
owner and the Contractor hereby agree to exert all efforts to settle their differences or dispute amicably. Failing these efforts
then such dispute or difference shall be referred to arbitration in accordance with the rules and procedures of the Philippine
Arbitration Law.

{What I understand from this case is whether or not the petitioners should be made parties to the arbitration proceedings. Although
there was already a decision from the Arbitral Tribunal (absolving the petitioners from liability), the court rendered a decision because
this is capable of repetition. The dispositive portion of which: Thus, we rule that petitioners may be compelled to submit to the
arbitration proceedings in accordance with Shangri-Laand BF Corporation’s agreement, in order to determine if the distinction
between Shangri-La’s personality and their personalities should be disregarded.}

FACTS:

In 1993, BF Corporation filed a collection complaint with the Regional Trial Court against Shangri-La and the members of its board of
directors: Alfredo C. Ramos, Rufo B.Colayco, Antonio O. Olbes, Gerardo Lanuza, Jr., Maximo G. Licauco III, and Benjamin C.
Ramos. BF Corporation alleged in its complaint that on December 11, 1989 and May 30, 1991, it entered into agreements with
Shangri-La wherein it undertook to construct for Shangri-La a mall and a multilevel parking structure along EDSA.Shangri-La had
been consistent in paying BF Corporation in accordance with its progress billing statements. However, by October 1991, Shangri-La
started defaulting in payment.

BF Corporation alleged that Shangri-La induced BF Corporation to continue with the construction of the buildings using its own funds
and credit despite Shangri-La’s default. According to BF Corporation, Shangri-La misrepresented that it had funds to pay for its
obligations with BF Corporation, and the delay in payment was simply a matter of delayed processing of BF Corporation’s progress
billing statements. BF Corporation eventually completed the construction of the buildings. Shangri-La allegedly took possession of the
buildings while still owing BF Corporation an outstanding balance. BF Corporation alleged that despite repeated demands, Shangri-La
refused to pay the balance owed to it.It also alleged that the Shangri-La’s directors were in bad faith in directing Shangri-La’s affairs.
Therefore, they should be held jointly and severally liable with Shangri-La for its obligations as well as for the damages that BF
Corporation incurred as a result of Shangri-La’s default. On August 3, 1993, Shangri-La, Alfredo C. Ramos, Rufo B. Colayco,
Maximo G. Licauco III, and Benjamin C. Ramos filed a motion to suspend the proceedings in view of BF Corporation’s failure to
submit its dispute to arbitration, in accordance with the arbitration clause provided in its contract. Petitioners filed their comment on
Shangri-La’s and BF Corporation’s motions, praying that they be excluded from the arbitration proceedings for being non-parties to
Shangri-La’s and BF Corporation’s agreement.

ISSUE:

Whether or not petitioners as directors of Shangri-La is personally liable for the contractual obligations entered into by the
corporation.

HELD:

No. Because a corporation’s existence is only by fiction of law, it can only exercise its rights and powers through its directors,
officers, or agents, who are all natural persons. A corporation cannot sue or enter into contracts without them.

A consequence of a corporation’s separate personality is that consent by a corporation through its representatives is not consent of the
representative, personally. Its obligations, incurred through official acts of its representatives, are its own. A stockholder, director, or
representative does not become a party to a contract just because a corporation executed a contract through that stockholder, director
or representative.

Hence, a corporation’s representatives are generally not bound by the terms of the contract executed by the corporation. They are not
personally liable for obligations and liabilities incurred on or in behalf of the corporation.

A submission to arbitration is a contract. As such, the Agreement, containing the stipulation on arbitration, binds the parties thereto, as
well as their assigns and heirs.

When there are allegations of bad faith or malice against corporate directors or representatives, it becomes the duty of courts or
tribunals to determine if these persons and the corporation should be treated as one. Without a trial, courts and tribunals have no basis
for determining whether the veil of corporate fiction should be pierced. Courts or tribunals do not have such prior knowledge. Thus,
the courts or tribunals must first determine whether circumstances exist towarrant the courts or tribunals to disregard the distinction
between the corporation and the persons representing it. The determination of these circumstances must be made by one tribunal or
court in a proceeding participated in by all parties involved, including current representatives of the corporation, and those persons
whose personalities are impliedly the sameas the corporation. This is because when the court or tribunal finds that circumstances exist
warranting the piercing of the corporate veil, the corporate representatives are treated as the corporation itself and should be held
liable for corporate acts. The corporation’s distinct personality is disregarded, and the corporation is seen as a mere aggregation of
persons undertaking a business under the collective name of the corporation.

A corporation is an artificial entity created by fiction of law. This means that while it is not a person, naturally, the law gives it a
distinct personality and treats it as such. A corporation, in the legal sense, is an individual with a personality that is distinct and
separate from other persons including its stockholders, officers, directors, representatives, and other juridical entities. The law vests in
corporations rights,powers, and attributes as if they were natural persons with physical existence and capabilities to act on their own.
For instance, they have the power to sue and enter into transactions or contracts. Section 36 of the Corporation Code enumerates some
of a corporation’s powers, thus:

Section 36. Corporate powers and capacity.– Every corporation incorporated under this Code has the power and capacity: 1. To sue
and be sued in its corporate name; 2. Of succession by its corporate name for the period of time stated in the articles of incorporation
and the certificate ofincorporation; 3. To adopt and use a corporate seal; 4. To amend its articles of incorporation in accordance with
the provisions of this Code; 5. To adopt by-laws, not contrary to law, morals, or public policy, and to amend or repeal the same in
accordance with this Code; 6. In case of stock corporations, to issue or sell stocks to subscribers and to sell treasury stocks in
accordance with the provisions of this Code; and to admit members to the corporation if it be a non-stock corporation; 7. To purchase,
receive, take or grant, hold, convey, sell, lease, pledge, mortgage and otherwise deal with such real and personal property, including
securities and bonds of other corporations, as the transaction of the lawful business of the corporation may reasonably and necessarily
require, subject to the limitations prescribed by law and the Constitution; 8. To enter into merger or consolidation with other
corporations as provided in this Code; 9. To make reasonable donations, including those for the public welfare or for hospital,
charitable, cultural, scientific, civic, or similar purposes: Provided, That no corporation, domestic or foreign, shall give donations in
aid of any political party or candidate or for purposes of partisan political activity; 10. To establish pension, retirement, and other
plans for the benefit of its directors, trustees, officers and employees; and 11. To exercise such other powers as may be essential or
necessary to carry out its purpose or purposes as stated in its articles of incorporation.