February 2009 Decisions on Arbitration Law and Remedial Law

Here are some of the decisions promulgated by the Supreme Court in February 2009 on arbitration law and remedial law.

Arbitration Law

1.     Collection of money claim. Excellent Quality Apparel, Inc. (Excellent) entered into a contract with Multi-Rich Builders (Multi-Rich) for the construction of a garment factory. The construction contract provided that any dispute, controversy or difference between the parties shall be settled by arbitration pursuant to the Arbitration Law (Republic Act No. 876). In relation to the issue of whether the regional trial court (RTC) has jurisdiction over money claims arising from the construction contract, the Supreme Court ruled that the RTC should not have taken cognizance of the collection suit. The presence of the arbitration clause vested jurisdiction to the Construction Industry Arbitration Commission (CIAC) over all construction disputes between Excellent and Multi-Rich. There is nothing in the law which limits the exercise of jurisdiction to complex or difficult cases. E.O. No. 1008 does not distinguish between claims involving payment of money or not. The CIAC acquires jurisdiction over a construction contract by the mere fact that the parties agreed to submit to voluntary arbitration.  Excellent Quality Apparel, Inc vs. Win Multi Rich Builders, Inc., G.R, No.175048, February 10, 2009.

2.      Assignment of receivables. A dispute relating to the assignment of receivables by a construction contactor to a third party does not fall within the jusridiction of the CIAC. Fort Bonifacio Development Corp. vs. Domingo, G.R. No. 180765, February 27, 2009.

3.     Invalidation of arbitral award.  The Court of Appeals annulled and set aside the order of the Arbitral Tribunal’s order on the ground that said orders completely failed to give Daiichi (a party to the arbitration) vital piece of information necessary for the judicious resolution of the case.  According to the Court of Appeals,  this ignored the letter, spirit, policy and objective of the Rules of Procedure Governing Construction Arbitration which require, among other things, that arbitrators must employ all reasonable means to ascertain facts in each case.  According to the Court of Appeals, since it is Daiichi’s claim that the deductive cost can only be established by finding out the quantities of materials required to complete the project under the original plan and the revised plan, the Arbitral Tribunal should have allowed the commissioning of an independent expert who would give an objective information for the tribunal to reach a sensible, if not well-informed, resolution of the controversy.”  The Supreme Court sustained the Court of Appeals.  Federal Builders, Inc. vs. Daiichi Properties and Development, Inc., G.R. No. 142525, February 13, 2009.

4.    Court jurisdiction to review awards.  The rules of the Philippine Clearing House Corporation  cannot confer jurisdiction on the RTC to review arbitral awards.   Metropolitan Bank & Trust Company Vs. The Hon. CA, G.R. No.166260, February 18, 2009.

Remedial Law

1.     Petition for declaration of nullity of decision.  The Court of Appeals erred in taking cognizance and fully ruling on Pantangco’s Petition for Declaration of Nullity of the RTC Decision since Pantangco’s availed of a wrong remedy; Pantangco should have appealed the RTC decision and the availability of appeal foreclosed all other review remedies. However, the Supreme Court refused to rule that the Court of Appeal’s error result sin the full enforcement of the RTC decision since this decision itself is partly void (as discussed by the Supreme Court).  Vios vs. Patangco, G.R. No. 16310, February 6, 2009.

2. Filing Fees for Real Actions.  The true nature of the action instituted by petitioner against respondents is the recovery of title to and possession of real property.  Since the action is a real action necessarily involving real property, the docket fees must be computed in accordance with Section 7(1), Rule 141 of the Rules of Court, as amended. It provides that in computing the docket fees for cases involving real properties, the courts, instead of relying on the assessed or estimated value, would use the fair market value of the real properties (as stated in the Tax Declaration or the Zonal Valuation of the Bureau of Internal Revenue, whichever is higher) or, in the absence thereof, the stated value of the same.  Ruby Shelter Builders & Reality Devt. Corporation vs. Hon. Pablo C. Formaran III, et al., G.R. No. 175914, February 10, 2009.

3.     Execution inconsistent with CA decisions.  The Supreme Court held that it was improper for the regional trial court to award to respondents possession over the lands in dispute, as the December 5, 2001 Court of Appeals Decision it sought to execute and the April 11, 2002 CA Resolution clearly did not award possession to respondents, but instead held that the owner of the subject lands is the State. Possession was not a relief granted by the aforementioned CA Decisions.  It is therefore not a relief which the RTC may grant on execution. Accordingly, the CA seriously erred in issuing its June 6, 2005 Resolution affirming the assailed RTC Order awarding possession to respondents.   Sps. Iglecerio Mahinay, et al.  vs. Hon. Enrique C. Asis etc. et al./Sps. Simeon Narrido, et al. Vs. Hon. Enrique C. Asis etc., et al., GR 170349, February 12, 2009.

4.    Withdrawal of complaint.  Once a complaint or information is filed in court, any disposition of the case, i.e., its dismissal or the conviction or acquittal of the accused, rests on the sound discretion of the court. Although the fiscal retains the direction and control of the prosecution of the criminal cases even while the case is already in court, he cannot impose his opinion on the trial court. The determination of the case is within the court’s exclusive jurisdiction and competence. A motion to dismiss the case filed by the fiscal should be addressed to the sound discretion of the court which has the option to grant or deny the same.  Rufina L. Caliwan Vs Mario Ocampo, et al., G.R. No. 183270, February 13, 2009.

5.     Non-redemption.  In foreclosure proceedings, the buyer becomes the absolute owner of the property purchased if it is not redeemed during the prescribed period of redemption, which is one year from the date of registration of the sale. In the case at bar, the 3 November 1994 Decision of the Court of Appeals in CA-G.R. CV No. 34856 not only determined and declared that the foreclosure sale of the subject properties occurred on 25 March 1976; it also acknowledged that there existed in the record a Certificate of Sale dated 31 March 1976 issued by the Sheriff of Quezon City and subsequently annotated on the titles of the subject properties. Hence, although the said decision did not categorically state the date of the registration of sale, which was 30 April 1976, and while the inclusion of this piece of information in the decision would have been ideal, such precision is not absolutely necessary nor the lack thereof fatal to the certainty of the judgment. Besides, fixing the date at one year from said registration, or on 1 May 1977, is easily discernible as the logical consequence of the meaning of the period stated.  La Campana Development Corporation Vs. Development Bank of the Philippines, G.R. No. 146157, February 13, 2009.

6.     Res judicata.  The requisites for res judicata to apply are: (1) the former judgment must be final; (2) the court which rendered said judgment or Order must have jurisdiction over the subject matter and the parties; (3) said judgment or order must be on the merits; and (4) there must be, between the first and second actions, identity of parties, subject matter and cause of action.  Concordia Medel Gomez Vs. Corazon Medel Alcantara, G.R. No. 179556, February 13, 2009.

7.     Res judicata.  Res judicata literally means “a matter adjudged; a thing judicially acted upon or decided; a thing or matter settled by judgment.” Res judicata lays the rule that an existing final judgment or decree rendered on the merits, and without fraud or collusion, by a court of competent jurisdiction, upon any matter within its jurisdiction, is conclusive of the rights of the parties or their privies, in all other actions or suits in the same or any other judicial tribunal of concurrent jurisdiction on the points and matters in issue in the first suit.

For the preclusive effect of res judicata to be enforced, however, the following requisites must be present: (1) the judgment or order sought to bar the new action must be final; (2) the decision must have been rendered by a court having jurisdiction over the subject matter and the parties; (3) the disposition of the first case must be a judgment on the merits; and (4) there must be between the first and second action, identity of parties, subject matter and causes of action

In the present case, the first three elements of res judicata are present. As to the fourth element, it is important to note that the doctrine of res judicata has two aspects: first, “bar by prior judgment” which is provided in Rule 39, Section 47 (b) of the Rules of Court and second, “conclusiveness of judgment” which is provided in Section 47 (c) of the same Rule.

There is “bar by prior judgment” when, as between the first case where the judgment was rendered, and the second case that is sought to be barred, there is identity of parties, subject matter, and causes of action. But where there is identity of parties and subject matter in the first and second cases, but no identity of causes of action, the first judgment is conclusive only as to those matters actually and directly controverted and determined and not as to matters merely involved therein. This is “conclusiveness of judgment.” Under the doctrine of conclusiveness of judgment, facts and issues actually and directly resolved in a former suit cannot again be raised in any future case between the same parties, even if the latter suit may involve a different claim or cause of action. The identity of causes of action is not required but merely identity of issues.

In this case, conclusiveness of judgment exists because respondents again seek to enforce their right and title over the same subject matter, the litigated property, basing their claim on the nullity of the judgment in Civil Case No. 84-27347, for failure to implead them therein as indispensable parties, which had been overruled by final and executory judgments. The same question cannot be raised again even in a different proceeding involving the same parties. Philippine National Bank Vs. Adela Sia and Robert Ngo, G.R. No. 165836, February 18, 2009.

8.     Action in personam.  An action for specific performance is an action in personam.  Being a judgment in personam, Civil Case No. 741-93 is binding only upon the parties properly impleaded therein and duly heard or given an opportunity to be heard. Therefore, it cannot bind respondent since he was not a party therein.  Sps. Ernesto V. Yu and Elsie Ong Yu Vs. Baltazar Pacleb, et al., G.R. No. 172172, February 24, 2009.

9.     Certiorari as substitute for appeal. Time and again, we said that the special civil action for certiorari is not and cannot be made a substitute for the lost remedy of an appeal under Rule 45. Petitioner should have appealed the NLRC’s adverse ruling of illegal dismissal to the Court of Appeals. This, petitioner failed to do. Thus, with regard to petitioner, the factual findings of illegal dismissal by the NLRC had already become final. Hanjin Heavy Industries & Construction Co. Ltd. vs.. Hon. CA, et al., G.R. No. 167938. February 19, 2009

10.   Appeal to the Office of the President.  The Omnibus Investments Code contains no provision specifically governing the remedy of a party whose application for an income tax holiday was denied by the Board of Investments (in the same manner that Articles 7 and 36 of the Code allow recourse to the Office of the President in the instances described in those articles).   On the other hand, Article 82 of the Code is the catch-all provision allowing the appeal to the courts from all decisions of the BOI involving the other provisions of the Omnibus Investments Code.  The Supreme Court ruled that the intention of the law is to afford immediate judicial relief from the decision of BOI, save in cases mentioned under Articles 7 and 36.  Phillips Seafood (Philippines) Corporation vs. Board of Investments G.R. No. 175787, February 4, 2009.

11.     Injunction.  The National Commission on Indigenous People has the power to issue injunctions as provided in the Indigenous Peoples Right Act of 1977.  However, in this case, the respondents were not entitled to injunctive relief.  City Government of Baguio vs. Basweng, G.R. No. 180206, February 4, 2009.