UNIWIDE SALES REALTY v. TITAN-IKEDA

UNIWIDE SALES REALTY AND RESOURCES CORP v. TITAN-IKEDA CONSTRUCTION

G.R. No. 126619; December 20, 2006

Ponente: J. Tinga

FACTS:

The case originated from an action for a sum of money filed by Titan-Ikeda Construction and Development Corporation (Titan) against Uniwide Sales Realty and Resources Corporation (Uniwide) with the Regional Trial Court (RTC), Branch 119, Pasay City arising from Uniwide’s non-payment of certain claims billed by Titan after completion of three projects covered by agreements they entered into with each other. 

Upon Uniwide’s motion to dismiss/suspend proceedings and Titan’s open court manifestation agreeing to the suspension, Civil Case No. 98-0814 was suspended for it to undergo arbitration. Titan’s complaint was thus re-filed with the CIAC. Before the CIAC, Uniwide filed an answer which was later amended and re-amended, denying the material allegations of the complaint, with counterclaims for refund of overpayments, actual and exemplary damages, and attorney’s fees. 

An Arbitral Tribunal consisting of a chairman and two members was created in accordance with the CIAC Rules of Procedure Governing Construction Arbitration. It conducted a preliminary conference with the parties and thereafter issued a Terms of Reference (TOR) which was signed by the parties. The tribunal also conducted an ocular inspection, hearings, and received the evidence of the parties consisting of affidavits which were subject to cross-examination. 

On 17 April 1995, the Arbitral Tribunal promulgated a Decision, the decretal portion of which is as follows:

 “WHEREFORE, judgment is hereby rendered as follows:

On Project 1 – Libis:

            [Uniwide] is absolved of any liability for the claims made by [Titan] on this Project.

Project 2 – Edsa Central:

            [Uniwide] is absolved of any liability for VAT payment on this project, the same being for the account of the [Titan]. On the other hand, [Titan] is absolved of any liability on the counterclaim for defective construction of this project.

            [Uniwide] is held liable for the unpaid balance in the amount of P6,301,075.77 which is ordered to be paid to the [Titan] with 12% interest per annum commencing from 19 December 1992 until the date of payment.

On Project 3 – Kalookan:

            [Uniwide] is held liable for the unpaid balance in the amount of P5,158,364.63 which is ordered to be paid to the [Titan] with 12% interest per annum commencing from 08 September 1993 until the date of payment.

            [Uniwide] is held liable to pay in full the VAT on this project, in such amount as may be computed by the Bureau of Internal Revenue to be paid directly thereto. The BIR is hereby notified that [Uniwide]  Sales Realty and Resources Corporation has assumed responsibility and is held liable for VAT payment on this project. This accordingly exempts Claimant Titan-Ikeda Construction and Development Corporation from this obligation.

ISSUE:

Whether the award given by CIAC is final

HELD:

As a rule, findings of fact of administrative agencies and quasi-judicial bodies, which have acquired expertise because their jurisdiction is confined to specific matters, are generally accorded not only respect, but also finality, especially when affirmed by the Court of Appeals. In particular, factual findings of construction arbitrators are final and conclusive and not reviewable by this Court on appeal. This rule, however admits of certain exceptions.

In David v. Construction Industry and Arbitration Commission, we ruled that, as exceptions, factual findings of construction arbitrators may be reviewed by this Court when the petitioner proves affirmatively that: 

(1) the award was procured by corruption, fraud or other undue means; 

(2) there was evident partiality or corruption of the arbitrators or of any of them; (3) the arbitrators were guilty of misconduct in refusing to hear evidence pertinent and material to the controversy; 

(4) one or more of the arbitrators were disqualified to act as such under Section nine of Republic Act No. 876 and willfully refrained from disclosing such disqualifications or of any other misbehavior by which the rights of any party have been materially prejudiced; or 

(5) 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. 

Other recognized exceptions are as follows: 

(1) when there is a very clear showing of grave abuse of discretion resulting in lack or loss of jurisdiction as when a party was deprived of a fair opportunity to present its position before the Arbitral Tribunal or when an award is obtained through fraud or the corruption of arbitrators,

 (2) when the findings of the Court of Appeals are contrary to those of the CIAC, and 

(3) when a party is deprived of administrative due process. 

FIESTA WORLD MALL CORP v. LINDBERG PHILS Inc.

G.R 152471; August 18, 2006

Ponente: Sandoval-Guiterrez

FACTS:

Fiesta World Mall Corporation, petitioner, owns and operates Fiesta World Mall located 

at Barangay Maraouy, Lipa City;while Linberg Philippines,Inc., respondent, is a corporation that builds and operates power plants.

On January 19, 2000, respondent filed with the Regional Trial Court (RTC), Branch 267, Pasig City, a Complaint for Sum of Money against petitioner.

The complaint alleges that on November 12, 1997, petitioner and respondent executed a build-own-operate agreement, entitled “Contract Agreement for Power Supply Services, 3.8 MW Base Load Power Plant” (the Contract).  

Under this Contract, respondent will construct, at its own cost, and operate as owner a power plant,and to supply petitioner power/electricity at its shopping mall in Lipa City.   

Petitioner, on the other hand, will pay respondent “energy fees” to be computed in accordance with the Seventh Schedule of the Contract

The complaint further alleges that respondent constructed the power plant in Lipa City at a cost of about P130,000,000.00.   In November 1997, the power plant became operational and started supplying power/electricity to petitioner’s shopping mall in Lipa City.   In December 1997, respondent started billing petitioner.

As of May 21, 1999, petitioner’s unpaid obligation amounted to P15,241,747.58, exclusive of interest.   However, petitioner questioned the said amount and refused to pay despite respondent’s repeated demands.

In its Answer with Compulsory Counterclaim, petitioner specifically denied the allegations in the complaint, claiming that respondent failed to fulfill its obligations under the Contract by failing to supply all its power/fuel needs.   

From November 10, 1998 until May 21, 1999, petitioner personally shouldered the cost of fuel.   Petitioner also disputed the amount of energy fees specified in the billings made by respondent because the latter failed to monitor, measure, and record the quantities of electricity delivered by taking photographs of the electricity meter reading prior to the issuance of its invoices and billings, also in violation of the Contract.  

Moreover, in the computation of the electrical billings, the minimum off-take of energy (E2) was based solely on the projected consumption as computed by respondent. 

However, based onpetitioner’s actual experience, it could not consume the energy pursuant to the minimum off-take even if it kept open all its lights and operated all its machinery and equipment for twenty-four hours a day for a month.   This fact was admitted by respondent.   While both parties had discussions on the questioned billings, however, “there were no earnest efforts to resolve the differences in accordance with the arbitration clause provided for in the Contract.”             

Finally, as a special affirmative defense in its answer, petitioner alleged that respondent’s filing of the complaint is premature and should be dismissed on the ground of non-compliance with paragraph 7.4 of the Contract which provides:

                   
7.4       Disputes
If  FIESTA WORLD disputes the amount specified by any invoice, it shall pay the undisputed amount on or before such date(s), and the disputed amount shall be resolved by arbitration of three (3) persons, one (1) by mutual choice, while the other two (2) to be each chosen by the parties themselves, within fourteen (14) days after the due date for such invoice and all or any part of the disputed amount paid to LINBERG shall be paid together with interest pursuant to Article XXV from the due date of the invoice.   It is agreed, however, that both parties must resolve the disputes within thirty (30) days, otherwise any delay in payment resulting to loss to LINBERG when converted to $US as a result of depreciation of the Pesos shall be for the account of FIESTA WORLD.   Corollarily, in case of erroneous billings, however, LINBERG shall be liable to pay FIESTA WORLD for the cost of such deterioration, plus interest computed pursuantto Art. XXV from the date FIESTA WORLD paid for the erroneous billing.  (Underscoring supplied)      

 Thereafter, petitioner filed a Motion to Set Case for Preliminary Hearing on the ground that respondent violated the arbitration clause provided in the Contract, thereby rendering its cause of action premature.  

This was opposed by respondent, claiming that paragraph 7.4 of the Contract on arbitration is not the provision applicable to this case; and that since the parties failed to settle their dispute, then respondent may resort to court action pursuant to paragraph 17.2 of the same Contract which provides:

17.2          Amicable Settlement
The parties hereto agree that in the event there is any dispute or difference between them arising out of this Agreement or in the interpretation of any of the provisions hereto, they shall endeavor to meet together in an effort to resolve such dispute by discussion between them but failing such resolution the Chief Executives of LINBERG and FIESTA WORLD shall meet to resolve such dispute or difference and the joint decision of such shall be binding upon the parties hereto, and in the event that a settlement of any such dispute or difference is not reached, then the provisions of Article XXI shall apply.
 

 In its Order dated October 3, 2000, the trial court denied petitioner’s motion for lack of merit.

Petitioner then filed a Motion for Reconsideration but it was denied in an Order dated January 11, 2001.       

Dissatisfied, petitioner elevated the matter to the Court of Appeals via a Petition for Certiorari. 

On December 12, 2001, the appellate court rendered its Decision dismissing the petition and affirming the challenged Orders of the trial court.

Petitioner’s Motion for Reconsideration of the above Decision was likewise denied by the appellate.

Hence, the instant Petition for Review on Certiorari.

ISSUE:
Whether the filing with the trial court of respondent’s complaint is premature

HELD:

YES, the filing with the trial court of the complaint is premature.

Paragraph 7.4 of the Contract, quoted earlier, mandates that should petitioner dispute any amount of energy fees in the invoice and billings made by respondent, the same“shall be resolved by arbitration of three (3) persons, one (1) by mutual choice, while the other two (2) to be each chosen by the parties themselves.”   The parties, in incorporating such agreement in their Contract, expressly intended that the said matter in dispute must first be resolved by an arbitration panel before it reaches the court.  They made such arbitration mandatory.  

It is clear from the records that petitioner disputed the amount of energy fees demanded by respondent.  However, respondent, without prior recourse to arbitration as required in the Contract, filed directly with the trial court its complaint, thus violating the arbitration clause in the Contract.  

It bears stressing that such arbitration agreement is the law between the parties.   Since that agreement is binding between them, they are expected to abide by it in good faith.  And because it covers the dispute between them in the present case, either of them may compel the other to arbitrate. Thus, it is well within petitioner’s right to demand recourse to arbitration.          

We cannot agree with respondent that it can directly seek judicial recourse by filing an action against petitioner simply because both failed to settle their differences amicably.   Suffice it to state that there is nothing in the Contract providing that the parties may dispense with the arbitration clause.   Article XXI on jurisdiction cited by respondent, i.e., that “the parties hereto submit to the exclusive jurisdiction of the proper courts of Pasig City” merely provides for the venue of any action arising out of or in connection with the stipulations of the parties in the Contract.

Moreover, we note that the computation of the energy fees disputed by petitioner also involves technical matters that are better left to an arbitration panel who has expertise in those areas.  Alternative dispute resolution methods or ADRs – like arbitration, mediation, negotiation and conciliation – are encouraged by this Court.   By enabling the parties to resolve their disputes amicably, they provide solutions that are less time-consuming, less tedious, less confrontational, and more productive of goodwill and lasting relationships

INSULAR SAVINGS BANK v. FAR EAST BANK and TRUST COMPANY

INSULAR SAVINGS BANK v. FAR EAST BANK AND TRUST COMPANY

G.R No. 141818; June 22, 2006

Ponente: J. Ynares-Santiago

FACTS:

 On December 11, 1991, Far East Bank and Trust Company (Respondent) filed a complaint against Home Bankers Trust and Company (HBTC) with the Philippine Clearing House Corporation’s (PCHC) Arbitration Committee.

 Respondent sought to recover from the petitioner, the sum of P25,200,000.00 representing the total amount of the three checks drawn and debited against its clearing account.  HBTC sent these checks to respondent for clearing by operation of the PCHC clearing system.  Thereafter, respondent dishonored the checks for insufficiency of funds and returned the checks to HBTC.  However, the latter refused to accept them since the checks were returned by respondent after the reglementary regional clearing period.

Meanwhile, on January 17, 1992, before the termination of the arbitration proceedings, respondent filed another complaint but this time with the Regional Trial Court (RTC) in Makati City for Sum of Money and Damages with Preliminary Attachment.  

The complaint was filed not only against HBTC but also against Robert Young, Eugene Arriesgado and Victor Tancuan (collectively known as Defendants), who were the president and depositors of HBTC respectively. Aware of the arbitration proceedings between respondent and petitioner, the RTC, in an Omnibus Order suspended the proceedings in the case against all the defendants pending the decision of the Arbitration Committee

           

On February 2, 1998, the PCHC Arbitration Committee rendered its decision in favor of respondent. The motion for reconsideration filed by petitioner was denied by the Arbitration Committee. 

Consequently, to appeal the decision of the Arbitration Committee, petitioner filed a petition for review in the earlier case filed by respondent in Branch 135 of the RTC of Makati. 

In an order dated January 20, 1999, the RTC directed both petitioner and respondent to file their respective memoranda, after which, said petition would be deemed submitted for resolution.

Both parties filed several pleadings.  On February 8, 1999, respondent filed a Motion to Dismiss Petition for Review for Lack of Jurisdiction, which was opposed by the petitioner.   

On November 9, 1999, the RTC dismissed the petition for review.

The RTC denied petitioner’s motion for reconsideration, hence, this petition.

ISSUE:

Whether the Regional Trial Court erred in dismissing the Petition of Petitioner for lack of jurisdiction on the ground that it should have been docketed as a separate case.

HELD:

No, As provided in the PCHC Rules, the findings of facts of the decision or award rendered by the Arbitration Committee shall be final and conclusive upon all the parties in said arbitration dispute.  Under Article 2044 of the New Civil Code, the validity of any stipulation on the finality of the arbitrators’ award or decision is recognized. However, where the conditions described in Articles 2038, 2039 and 2040 applicable to both compromises and arbitrations are obtaining, the arbitrators’ award may be annulled or rescinded.  Consequently, the decision of the Arbitration Committee is subject to judicial review.

Furthermore, petitioner had several judicial remedies available at its disposal after the Arbitration Committee denied its Motion for Reconsideration.  

It may petition the proper RTC to issue an order vacating the award 

• Invoking the grounds provided for under Section 24 of the Arbitration Law;  

• Filing a petition for review under Rule 43 of the Rules of Court with the Court of Appeals  on questions of fact, of law, or mixed questions of fact and law; and   Lastly, 

• Petitioner may file a petition for certiorari under Rule 65 of the Rules of Court on the  ground that the Arbitrator Committee acted without or in excess of its jurisdiction or with grave abuse of discretion amounting to lack or excess of jurisdiction.  

Since this case involves acts or omissions of a quasi-judicial agency, the petition should be filed in and cognizable only by the Court of Appeals.

In this instance, petitioner did not avail of any of the abovementioned remedies available to it.  Instead it filed a petition for review with the RTC where Civil Case No. 92-145 is pending pursuant to Section 13 of the PCHC Rules to sustain its action.  Clearly, it erred in the procedure it chose for judicial review of the arbitral award.

Jurisdiction over the subject matter is conferred by law and not by the consent or acquiescence of any or all of the parties or by erroneous belief of the court that it exists. 

In the instant case, petitioner and respondent have agreed that the PCHC Rules would govern in case of controversy.  However, since the PCHC Rules came about only as a result of an agreement between and among member banks of PCHC and not by law, it cannot confer jurisdiction to the RTC.  Thus, the portion of the PCHC Rules granting jurisdiction to the RTC to review arbitral awards, only on questions of law, cannot be given effect. 

Consequently, the proper recourse of petitioner from the denial of its motion for reconsideration by the Arbitration Committee is to file either a motion to vacate the arbitral award with the RTC, a petition for review with the Court of Appeals under Rule 43 of the 

Rules of Court, or a petition for certiorari under Rule 65 of the Rules of Court.

Alternative dispute resolution methods or ADRs – like arbitration, mediation, negotiation and conciliation – are encouraged by the Supreme Court.  By enabling parties to resolve their disputes amicably, they provide solutions that are less time-consuming, less tedious, less confrontational, and more productive of goodwill and lasting relationships. It must be borne in mind that arbitration proceedings are mainly governed by the Arbitration Law and suppletorily by the Rules of Court