TRANSFIELD
PHILIPPINES, INC., G.R. No.
146717
Petitioner,
Present:
PUNO, J.,
Chairman,
- versus - AUSTRIA-MARTINEZ,
CALLEJO, SR.,
TINGA, and
CHICO-NAZARIO, JJ.
LUZON
HYDRO CORPORATION,
BANKING GROUP LIMITED and
SECURITY BANK CORPORATION, Promulgated:
Respondents.
x---------------------------------------------------------------------------------x
Tinga, J.:
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 of the
case, specifically the question of the propriety of calling on the securities
during the pendency of the arbitral proceedings, was
resolved in favor of Luzon Hydro Corporation (LHC) with the Court’s Decision[1] of
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.[3]
LHC
claims that Transfield Philippines, Inc. (TPI) is
guilty of forum-shopping when it filed the following suits:
1.
Civil Case No.
04-332 filed on 19 March 2004, pending
before the Regional Trial Court (RTC) of Makati,
Branch 56 for confirmation, recognition and enforcement of the Third Partial
Award in case 11264 TE/MW, ICC International Court of Arbitration, entitled Transfield
Philippines, Inc. v. Luzon Hydro Corporation.[4]
2.
ICC Case No.
11264/TE/MW, Transfield Philippines, Inc.
v. Luzon Hydro Corporation filed before the International Court of
Arbitration, International Chamber of Commerce
(ICC) a request for arbitration
dated 3 November 2000 pursuant to the Turnkey Contract between LHC and
TPI;
3.
G.R. No. 146717, Transfield Philippines, Inc. v. Luzon Hydro
Corporation, Australia and New Zealand Banking Group Limited and
Security Bank Corp. filed on 5 February 2001, which was an appeal by
certiorari with prayer for TRO/preliminary prohibitory and mandatory
injunction, of the Court of Appeals Decision dated
a. CA-G.R. SP No. 61901 was a petition for review of the
Decision in Civil Case No. 00-1312, wherein
TPI claimed that LHC’s call on the securities
was premature considering that the issue of default has not yet been resolved
with finality; the petition was however denied by the Court of Appeals;
b. Civil Case No. 00-1312 was a complaint for
injunction with prayer for temporary restraining order and/or writ of
preliminary injunction dated
On
the other hand, 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. Moreover, TPI argues
that LHC is relitigating in Civil Case No. 04-332 the
very same causes of action in ICC Case No. 11264/TE/MW, and even manifesting
therein that it will present evidence earlier presented before the arbitral
tribunal.[5]
Meanwhile,
ANZ Bank and Security Bank moved to be excused from filing a memorandum. They claim that with the finality of the
Court’s Decision dated
On
1 August 2005, TPI moved to set the case for oral argument, positing that the
resolution of the Court on the issue of forum-shopping may have significant
implications on the interpretation of the Alternative Dispute Resolution Act of
2004, as well as the viability of international commercial arbitration as an
alternative mode of dispute resolution in the country.[7] Said motion was opposed by LHC in its
opposition filed on
The
essence of forum-shopping is the filing of multiple suits involving the same
parties for the same cause of action, either simultaneously or successively,
for the purpose of obtaining a favorable judgment.[12]
Forum-shopping has likewise been defined as the act of a party against whom an
adverse judgment has been rendered in one forum, seeking and possibly getting a
favorable opinion in another forum, other than by appeal or the special civil
action of certiorari, or the institution of two or more actions or proceedings
grounded on the same cause on the supposition that one or the other court would
make a favorable disposition.[13]
Thus,
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.[14]
There
is no identity of causes of action between and among the arbitration case, the
instant petition, and Civil Case No. 04-332.
The arbitration case, ICC Case No.
11264 TE/MW, is an arbitral proceeding commenced pursuant to the Turnkey
Contract between TPI and LHC, to determine the primary issue of whether the
delays in the construction of the project were excused delays, which would
consequently render valid TPI’s claims for extension
of time to finish the project. Together
with the primary issue to be settled in the arbitration case is the equally
important question of monetary awards to the aggrieved party.
On the other hand, Civil Case No.
00-1312, the precursor of the instant petition, was filed to enjoin LHC from
calling on the securities and respondent banks from transferring or paying the
securities in case LHC calls on them.
However, in view of the fact that LHC collected the proceeds, TPI, in its
appeal and petition for review asked that the same be returned and placed in
escrow pending the resolution of the disputes before the ICC arbitral tribunal.[15]
While the ICC case thus calls for a
thorough review of the facts which led to the delay in the construction of the
project, as well as the attendant responsibilities of the parties therein, in
contrast, the present petition puts in issue the propriety of drawing on the
letters of credit during the pendency of the arbitral
case, and of course, absent a final determination by the ICC Arbitral tribunal. Moreover, as pointed out by TPI, it did not
pray for the return of the proceeds of the letters of credit. What it asked
instead is that the said moneys be placed in escrow until the final resolution
of the arbitral case. Meanwhile, in
Civil Case No. 04-332, TPI no longer seeks the issuance of a provisional
relief, but rather the issuance of a writ of execution to enforce the Third
Partial Award.
Neither is there an identity of
parties between and among the three (3) cases.
The ICC case only involves TPI and LHC logically since they are the
parties to the Turnkey Contract. In
comparison, the instant petition includes Security Bank and ANZ Bank, the banks
sought to be enjoined from releasing the funds of the letters of credit. The Court agrees with TPI that it would be
ineffectual to ask the ICC to issue writs of preliminary injunction against
Security Bank and ANZ Bank since these banks are not parties to the arbitration
case, and that the ICC Arbitral tribunal would not even be able to compel LHC
to obey any writ of preliminary injunction issued from its end.[16] Civil Case No. 04-322, on the other hand,
logically involves TPI and LHC only, they being the parties to the arbitration
agreement whose partial award is sought to be enforced.
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.[17] Likewise, Section 14 of Republic Act (R.A.) No. 876 (The Arbitration Law)[18] 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.[19]
TPI’s 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).”[20] In the said petition, TPI prayed:
1.
That the THIRD
PARTIAL AWARD dated February 18, 2004 in Case No. 11264/TE/MW made by the ICC
International Court of Arbitration, the signed original copy of which is hereto
attached as Annex “H” hereof, be confirmed, recognized and enforced in
accordance with law.
2.
That the
corresponding writ of execution to enforce Question 31 of the said Third
Partial Award, be issued, also in accordance with law.
3.
That TPI be
granted such other relief as may be deemed just and equitable, and allowed, in
accordance with law.[21]
The pertinent portion of the Third
Partial Award[22] relied
upon by TPI were the answers to Questions 10 to 26, to wit:
“Question 30 Did
TPI [LHC] wrongfully draw upon the security?
Yes
“Question 31 Is
TPI entitled to have returned to it any sum wrongfully taken by LHC for
liquidated damages?
Yes
“Question 32 Is TPI entitled to any acceleration costs?
TPI is entitled to the reasonable costs TPI incurred
after Typhoon Zeb as a result of LHC’s
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. 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, LHC
argues. In fact, even the Fifth Partial
Award,[24]
dated
R.A. No.
9825 provides that international commercial arbitrations shall be
governed shall be governed by the Model Law on International Commercial
Arbitration (“Model Law”) adopted by the United Nations Commission on
International Trade Law (UNCITRAL).[26] The UNCITRAL Model Law provides:
ARTICLE 35.
Recognition and enforcement
(1) An arbitral award, irrespective of the country in
which it was made, shall be recognized as binding and, upon application in
writing to the competent court, shall be enforced subject to the provisions of
this article and of article 36.
(2) The party relying on an award or applying for
its enforcement shall supply the duly authenticated original award or a duly
certified copy thereof, and the original arbitration agreement referred to in
article 7 or a duly certified copy thereof.
If the award or agreement is not made in an official language of this
State, the party shall supply a duly certified translation thereof into such
language.
Moreover, the New York Convention,[27]
to which the
2142. All other
issues, including any issues as to quantum and costs, are reserved to a future
award.[28]
Meanwhile, the tribunal issued its Fifth Partial
Award[29]
on
6.
Order
6.1
General
166. This Fifth Partial Award deals with many
issues of quantum. However, it does not
resolve them all. The outstanding
quantum issues will be determined in a future award. It will contain a reconciliation of the
amounts awarded to each party and a determination of the net amount payable to
Claimant or Respondent, as the case may be.
167. In view of this the Tribunal will make no
orders for payment in this Fifth Partial Award. The Tribunal will make a number
of declarations concerning the quantum issues it has resolved in this Award
together with the outstanding liability issues.
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.[31] (Emphasis
Supplied.)
Further, in the Declarations part of the
award, the tribunal held:
6.2 Declarations
168. The
Tribunal makes the following declarations:
x x x
3. LHC is liable to repay TPI the face
value of the securities drawn down by it, namely, $17,977,815. It is not liable for any further damages claimed
by TPI in respect of the drawdown of the securities.
x x x.[32]
Finally, on
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 LHC’s 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.
Anent the claim of TPI that it was LHC which committed
forum-shopping, suffice it to say that its bare allegations are not sufficient
to sustain the charge.
WHEREFORE,
the Court RESOLVES to DISMISS the charges of forum-shopping filed by both
parties against each other.
No
pronouncement as to costs.
SO ORDERED.
DANTE
O. TINGA
Associate
Justice
WE CONCUR:
REYNATO S. PUNO
Associate Justice
Chairman
MA. ALICIA AUSTRIA-MARTINEZ ROMEO J. CALLEJO, SR.
Associate Justice Associate Justice
MINITA
V. CHICO-NAZARIO
Associate Justice
I attest that the conclusions in the
above Resolution were reached in consultation before the case was assigned to
the writer of the opinion of the Court’s Division.
REYNATO
S. PUNO
Associate Justice
Chairman, Second Division
C E R T I F I C A T I
O N
Pursuant to Article VIII, Section 13
of the Constitution, and the Division Chairman’s Attestation, it is hereby
certified that the conclusions in the above Resolution were reached in
consultation before the case was assigned to the writer of the opinion of the
Court.
ARTEMIO
V. PANGANIBAN
Chief Justice
[3]The
growth of international commercial arbitration (
[4]The award purportedly held that LHC wrongfully drew on the securities; and that TPI is entitled to the return of the said sums, liquidated damages, and liquidation costs.
[6]ANZ Bank’s Motion to be Excused, id. at 1220; Security Bank’s Motion to be Excused, temporary rollo.
[12]Mondragon Leisure and Resorts Corporation v. United Coconut
Planters Bank, G.R. No. 154187, 14
April 2004, 427 SCRA 585, 590.
[14]Korea Exchange Bank v. Hon. Rogelio C. Gonzales, et al., G.R. Nos. 142286-87, 15 April 2005, 456 SCRA 224, 243, citing Benedicto v. Court of Appeals, G.R. No. 125359, 4 September 2001, 364 SCRA 334.
[17]Art. 23 (2), Rules of Arbitration of the International Chamber of Commerce provides:
Before the file is transmitted to the Arbitral tribunal and in appropriate circumstances even thereafter, the parties may apply to any competent judicial authority for interim or conservatory measures. The application of a party to a judicial authority for such measure or for the implementation of any such measure ordered by an Arbitral tribunal shall not be deemed to be an infringement or a waiver of the arbitration agreement and shall not affect the relevant powers reserved to the Arbitral tribunal. Any such application and any measures taken by the judicial authority must be notified without delay to the Secretariat. The Secretariat shall inform the Arbitral tribunal thereof. (emphasis supplied)
[18]Section 14.
Subpoena and subpoena duces tecum. - Arbitrators shall have the power to
require any person to attend a hearing as a witness. They shall have the power to subpoena witnesses
and documents when the relevancy of the testimony and the materiality thereof
has been demonstrated to the arbitrators.
Arbitrators may also require the retirement of any witness during the
testimony of any other witness. All of
the arbitrators appointed in any controversy must attend all the hearings in
that matter and hear all the allegations and proofs of the parties; but an
award by the majority of them is valid unless the concurrence of all of them is
expressly required in the submission or contract to arbitrate. The arbitrator or arbitrators shall have the
power at any time, before rendering the award, without prejudice to the
rights of any party to petition the court to take measures to safeguard and/or
conserve any matter which is the subject of the dispute in arbitration. (Emphasis
supplied.)
[19]Sec. 28, R..A. No. 9285. Grant of Interim Measure of Protection. (a) It is not incompatible with an arbitration agreement for a party to request, before constitution of the tribunal, from a Court an interim measure of protection and for the Court to grant such measure. After constitution of the arbitral tribunal and during arbitral proceedings, a request for an interim measure of protection, or modification thereof, may be made with the arbitral tribunal or to the extent that the arbitral tribunal has no power to act or is unable to act effectively, the request may be made with the Court. x x x. (Emphasis supplied.)
[27]Convention
on the Recognition and Enforcement of Foreign Arbitral Awards, signed at