[G.R. No. 196171. December 10, 2012.] constituting 67% of the latter's capital stock.

After completing payment of

the contract price (P1,786,769,400), the corresponding deeds of sale
over the subject shares were executed in January 2001. ITcCaS
RCBC CAPITAL CORPORATION, petitioner, vs. BANCO
DE ORO UNIBANK, INC.,  respondent. The dispute between the parties arose sometime in May 2003
when RCBC informed EPCIB and the other selling shareholders of an
overpayment of the subject shares, claiming there was an overstatement
[G.R. No. 199238. December 10, 2012.] of valuation of accounts amounting to P478 million and that the sellers
violated their warranty under Section 5 (g) of the SPA. 7
BANCO DE ORO UNIBANK, INC.,  petitioner, vs. COURT As no settlement was reached, RCBC commenced arbitration
OF APPEALS and RCBC CAPITAL proceedings with the ICC-ICA in accordance with Section 10 of the SPA
CORPORATION,  respondents. which states:
Section 10. Arbitration. —
Should there be any dispute arising between the
DECISION parties relating to this Agreement including the
interpretation or performance hereof which cannot be
resolved by agreement of the parties within fifteen (15)
days after written notice by a party to another, such matter
VILLARAMA, JR.,  J p:
shall then be finally settled by arbitration under the Rules
of Conciliation and Arbitration of the International Chamber
Before the Court are two consolidated petitions separately filed
of Commerce in force as of the time of arbitration, by three
by the parties in an arbitration case administered by the International
arbitrators appointed in accordance with such rules. The
Chamber of Commerce-International Court of Arbitration (ICC-ICA)
venue of arbitration shall be in Makati City, Philippines and
pursuant to the arbitration clause in their contract.
the arbitration proceedings shall be conducted in the
The Case English language. Substantive aspects of the dispute shall
be settled by applying the laws of the Philippines. The
In G.R. No. 196171, a petition for review under Rule 45 of decision of the arbitrators shall be final and binding upon
the 1997 Rules of Civil Procedure, as amended, RCBC Capital the parties hereto and the expenses of arbitration
Corporation (RCBC) seeks to reverse the Court of Appeals (CA) (including without limitation the award of attorney's fees to
Decision 1 dated December 23, 2010 in CA-G.R. SP No. 113525 which the prevailing party) shall be paid as the arbitrators shall
reversed and set aside the June 24, 2009 Order 2 of the Regional Trial determine. 8
Court (RTC) of Makati City, Branch 148 in SP Proc. Case No. M-6046.
In its Request for Arbitration 9 dated May 12, 2004, Claimant
In G.R. No. 199238, a petition for certiorari  under Rule 65,
RCBC charged Bankard with deviating from and contravening generally
Banco De Oro Unibank, Inc. (BDO) assails the Resolution 3 dated
accepted accounting principles and practices, due to which the financial
September 13, 2011 in CA-G.R. SP No. 120888 which denied BDO's
statements of Bankard prior to the stock purchase were far from fair and
application for the issuance of a stay order and/or temporary restraining
accurate, and resulted in the overpayment of P556 million. For this
order (TRO)/preliminary injunction against the implementation of the Writ
violation of sellers' representations and warranties under the SPA, RCBC
of Execution 4 dated August 22, 2011 issued by the Makati City RTC,
sought its rescission, as well as payment of actual damages in the
Branch 148 in SP Proc. Case No. M-6046.
amount of P573,132,110, legal interest on the purchase price until actual
Factual Antecedents restitution, moral damages and litigation and attorney's fees, with
alternative prayer for award of damages in the amount of at least
On May 24, 2000, RCBC entered into a Share Purchase
P809,796,082 plus legal interest.
Agreement 5 (SPA) with Equitable-PCI Bank, Inc. (EPCIB), George L.
Go and the individual shareholders 6 of Bankard, Inc. (Bankard) for the In their Answer, 10 EPCIB, Go and the other selling individual
sale to RCBC of 226,460,000 shares (Subject Shares) of Bankard, shareholders (Respondents) denied RCBC's allegations contending that
RCBC's claim is one for overpayment or price reduction under Section 5 expiry thereof, the counterclaims would be considered
(h) of the SPA which is already time-barred, the remedy of rescission is withdrawn. 15 ECDAcS
unavailable, and even assuming that rescission is permitted by the SPA,
In a fax-letter dated January 4, 2005, the ICC-ICA invited RCBC
RCBC failed to file its claim within a reasonable time. They further
to pay the said amount in substitution of Respondents. It also granted an
asserted that RCBC is not entitled to its alternative prayer for damages,
extension until January 17, 2005 within which to pay the balance of the
being guilty of laches and failing to set out the details of the breach as
advance cost (US$175,000). RCBC replied that it was not willing to
required under Section 7 of the SPA. A counterclaim for litigation
shoulder the share of Respondents in the advance on costs but
expenses and costs of arbitration in the amount of US$300,000, as well
nevertheless requested for a clarification as to the effect of such refusal
as moral and exemplary damages, was likewise raised by the
to substitute for Respondents' share. 16
Respondents. ASTIED
On March 10, 2005, the ICC-ICA instructed the Arbitration
RCBC submitted a Reply 11 to the aforesaid Answer.
Tribunal to suspend its work and granted the parties a final time-limit of
Subsequently, the Arbitration Tribunal was constituted. Mr. Neil 15 days to pay the balance of the advance on costs, failing which the
Kaplan was nominated by RCBC; Justice Santiago M. Kapunan (a retired claims shall be considered withdrawn, without prejudice to their
Member of this Court) was nominated by the Respondents; and Sir Ian reintroduction at a later date in another proceeding. The parties were
Barker was appointed by the ICC-ICA as Chairman. advised that if any of them objects to the measure, it should make a
request in writing within such period. 17 For the same reason of non-
On August 13, 2004, the ICC-ICA informed the parties that they
receipt of the balance of the advance cost, the ICC-ICA issued
are required to pay US$350,000 as advance on costs pursuant to Article
Procedural Order No. 3 for the adjournment of the substantive hearings
30 (3) of the ICC Rules of Arbitration (ICC Rules). RCBC paid its share of
and granting the Respondents a two-month extension within which to
US$107,000, the balance remaining after deducting payments of
submit their brief of evidence and witnesses.
US$2,500 and US$65,000 it made earlier. Respondents' share of the
advance on costs was thus fixed at US$175,000. RCBC objected to the cancellation of hearings, pointing out that
Respondents have been given ample time and opportunity to submit their
Respondents filed an Application for Separate Advances on
brief of evidence and prepare for the hearings and that their request for
Costs 12 dated September 17, 2004 under Article 30 (2) of the ICC
postponement serves no other purpose but to delay the proceedings. It
Rules, praying that the ICC fix separate advances on the cost of the
alleged that Respondents' unjustified refusal to pay their share in the
parties' respective claims and counterclaims, instead of directing them to
advance on costs warrants a ruling that they have lost standing to
share equally on the advance cost of Claimant's (RCBC) claim.
participate in the proceedings. It thus prayed that Respondents be
Respondents deemed this advance cost allocation to be proper, pointing
declared as in default, the substantive hearings be conducted as
out that the total amount of RCBC's claim is substantially higher — more
originally scheduled, and RCBC be allowed to submit rebuttal evidence
than 40 times — the total amount of their counterclaims, and that it would
and additional witness statements. 18
be unfair to require them to share in the costs of arbitrating what is
essentially a price issue that is now time-barred under the SPA. On December 15, 2005, the ICC-ICA notified the parties of its
decision to increase the advances on costs from US$350,000 to
On September 20, 2004, the ICC-ICA informed Respondents
US$450,000 subject to later readjustments, and again invited the
that their application for separate advances on costs was premature
Respondents to pay the US$100,000 increment within 30 days from
pending the execution of the Terms of Reference (TOR). 13 The TOR
notice. Respondents, however, refused to pay the increment, insisting
was settled by the parties and signed by the Chairman and Members of
that RCBC should bear the cost of prosecuting its own claim and that
the Arbitral Tribunal by October 11, 2004. On December 3, 2004, 14 the
compelling the Respondents to fund such prosecution is inequitable.
ICC-ICA denied the application for separate advances on costs and
Respondents reiterated that it was willing to pay the advance on costs for
invited anew the Respondents to pay its share in the advance on costs.
their counterclaim. 19 HTScEI
However, despite reminders from the ICC-ICA, Respondents refused to
pay their share in the advance cost fixed by the ICC-ICA. On December On December 27, 2005, the ICC-ICA advised that it was not
16, 2004, the ICC-ICA informed the parties that if Respondents still failed possible to fix separate advances on costs as explained in its December
to pay its share in the advance cost, it would apply Article 30 (4) of the 3, 2004 letter, and again invited Respondents to pay their share in the
ICC Rules and request the Arbitration Tribunal to suspend its work and advance on costs. Respondents' response contained in the letter dated
set a new time limit, and if such requested deposit remains unpaid at the January 6, 2006 was still the same: it was willing to pay only the separate
advance on costs of their counterclaim. 20 In view of Respondents' If the costs are not paid, the arbitration cannot
continuing refusal to pay its equal share in the advance on costs and proceed. 22 (Italics in the original; emphasis supplied)
increment, RCBC wrote the ICC-ICA stating that the latter should compel
the Respondents to pay as otherwise RCBC will be prejudiced and the RCBC paid the additional US$100,000 under the second
inaction of the ICC-ICA and the Arbitration Tribunal will detract from the assessment to avert suspension of the Arbitration Tribunal's
effectiveness of arbitration as a means of settling disputes. In proceedings.
accordance with Article 30 (4) of the ICC Rules, RCBC reiterated its Upon the commencement of the hearings, the Arbitration
request to declare the Respondents as in default without any personality Tribunal decided that hearings will be initially confined to issues of
to participate in the proceedings not only with respect to their liability (liability phase) while the substantial issues will be heard on a
counterclaims but also to the claim of RCBC. 21 later date (quantum phase).
Chairman Ian Barker, in a letter dated January 25, 2006, stated Meanwhile, EPCIB's corporate name was officially changed to
in part: Banco De Oro (BDO)-EPCIB after its merger with BDO was duly
xxx xxx xxx approved by the Securities and Exchange Commission. As such, BDO
assumed all the obligations and liabilities of EPCIB under the SPA.
2. The Tribunal has no power under the ICC Rules to
On September 27, 2007, the Arbitration Tribunal rendered a
order the Respondents to pay the advance on costs
Partial Award 23 (First Partial Award) in ICC-ICA Case No.
sought by the ICC or to give the Claimant any relief
13290/MS/JB/JEM, as follows:
against the Respondents' refusal to pay. The ICC
Rules differ from, for example, the Rules of the LCIA 15AWARD AND DIRECTIONS
(Article 24.3) which enables a party paying the share of
costs which the other party has refused to pay, to 15.1 The Tribunal makes the following
recover "that amount as a debt immediately due from declarations by way of Partial Award:
the defaulting party." (a) The Claimant's claim is not time-barred under
3. The only sanction under the ICC Rules is contained the provisions of this SPA.
within Article 30 (4). Where a request for an advance on (b) The Claimant is not estopped by its conduct or
costs has not been complied with, after consultation with the equitable doctrine of laches from
the Tribunal, the Secretary-General may direct the pursuing its claim.
Tribunal to suspend its work. After expiry of a time limit,
all claims and counterclaims are then considered as (c) As detailed in the Partial Award, the Claimant
withdrawn. This provision cannot assist a Claimant who has established the following breaches by
is anxious to litigate its claim. Such a Claimant has to the Respondents of clause 5(g) of the
pay the sums requested (including the Respondents' SPA:
share) if it wishes the arbitration to proceed.
i) the assets, revenue and net worth of
4. It may be possible for a Claimant in the course of Bankard were overstated by
the arbitral hearing (or whenever costs are being reason of its policy on and
considered by the Tribunal) to make submissions recognition of Late Payment Fees;
based on the failure of the Respondents to pay their
share of the costs advance. What relief, if any, would ii) reported receivables were higher than
have to be then determined by the Tribunal after their realisable values by reason
having heard submissions from the of the 'bucketing' method, thus
Respondents. cSHIaA overstating Bankard's assets;
and cDACST
5. I should be pleased if the Claimant will advise the
Tribunal of its intention in relation to the costs advance. iii) the relevant Bankard statements were
inadequate and misleading in that
 their disclosures caused readers 8. Contrary to the Complainant's view, the Tribunal has no
to be misinformed about jurisdiction to declare that the Respondents have
Bankard's accounting policies on no right to participate in the proceedings
revenue and receivables. concerning the claim. Article 30(4) of the ICC
Rules applies only to any counterclaim of the
(d) Subject to proof of loss the Claimant is entitled Respondents.
to damages for the foregoing breaches.
9. The Tribunal interprets the Claimant's latest letter as
(e) The Claimant is not entitled to rescission of the an application by the Claimant to the Tribunal
SPA. for the issue of a partial award against the
(f) All other issues, including any issue relating Respondents in respect of their failure to pay
to costs, will be dealt with in a further their share of the ICC's requests for advance
or final award. on costs.

15.2 A further Procedural Order will be necessary 10. I should be grateful if the Claimant would confirm that
subsequent to the delivery of this Partial Award to deal this is the situation. If so, the Claimant should
with the determination of quantum and in particular, propose a timetable for which written submissions
whether there should be an Expert appointed by the should be made by both parties. This is an
Tribunal under Article 20(4) of the ICC Rules to assist the application which can be considered by the
Tribunal in this regard. Tribunal on written submissions. 30 (Emphasis
supplied)
15.3 This Award is delivered by a majority of the
Tribunal (Sir Ian Barker and Mr. Kaplan). Justice Kapunan RCBC, in a letter dated December 26, 2007, confirmed the
is unable to agree with the majority's conclusion on the Arbitration Tribunal's interpretation that it was applying for a partial award
claim of estoppel brought by the against Respondents' failure to pay their share in the advance on
Respondents. 24 (Emphasis supplied) costs. 31
Meanwhile, on January 8, 2008, the Makati City RTC, Branch
On October 26, 2007, RCBC filed with the Makati City RTC,
148 issued an order in SP Proc. Case No. M-6046 confirming the First
Branch 148 (SP Proc. Case No. M-6046) a motion to confirm the First
Partial Award and denying Respondents' separate motions to vacate and
Partial Award, while Respondents filed a motion to vacate the same.
to suspend and inhibit Barker and Kaplan. Respondents' motion for
ICC-ICA by letter 25 dated October 12, 2007 increased the reconsideration was likewise denied. Respondents directly filed with this
advance on costs from US$450,000 to US$580,000. Under this third Court a petition for review on certiorari  under Rule 45, docketed as G.R.
assessment, RCBC paid US$130,000 as its share on the increment. No. 182248 and entitled Equitable PCI Banking Corporation v. RCBC
Respondents declined to pay its adjudged total share of US$290,000 on Capital Corporation. 32 In our Decision dated December 18, 2008, we
account of its filing in the RTC of a motion to vacate the First Partial denied the petition and affirmed the RTC's ruling confirming the First
Award. 26 The ICC-ICA then invited RCBC to substitute for Respondents Partial Award.
in paying the balance of US$130,000 by December 21, 2007. 27 RCBC
On January 18, 2008, the Arbitration Tribunal set a timetable for
complied with the request, making its total payments in the amount of
the filing of submission by the parties on whether it should issue a
US$580,000. 28
Second Partial Award in respect of the Respondents' refusal to pay an
While RCBC paid Respondents' share in the increment advance on costs to the ICC-ICA.
(US$130,000), it reiterated its plea that Respondents be declared as in
In compliance, RCBC filed on February 7, 2008 an Application
default and the counterclaims deemed as withdrawn. 29
for Reimbursement of Advance on Costs Paid, praying for the issuance
Chairman Barker's letter dated December 18, 2007 states in of a partial award directing the Respondents to reimburse its payment in
part: aHECST the amount of US$290,000 representing Respondents' share in the
Advance on Costs and to consider Respondents' counterclaim for actual
xxx xxx xxx
damages in the amount of US$300,000, and moral and exemplary
damages as withdrawn for their failure to pay their equal share in the 2. The Tribunal notes that neither party has referred to
advance on costs. RCBC invoked the plain terms of Article 30 (2) and (3) an article by Mat[t]hew Secomb on this very
to stress the liability of Respondents to share equally in paying the subject which appears in the ICC Bulletin Vol.
advance on costs where the Arbitration Tribunal has fixed the 14 No. 1 (Spring 2003). To assist both sides and
same. 33 ICAcHE to ensure that the Tribunal does not consider
material on which the parties have not been given
Respondents, on the other hand, filed their Opposition 34 to the
an opportunity to address, I attach a copy of this
said application alleging that the Arbitration Tribunal has lost its
article, which also contains reference to other
objectivity in an unnecessary litigation over the payment of Respondents'
scholarly works on the subject.
share in the advance costs. They pointed out that RCBC's letter merely
asked that Respondents be declared as in default for their failure to pay 3. The Tribunal will give each party seven days within
advance costs but the Arbitration Tribunal, while denying the request which to submit further written comments as a
offered an alternative to RCBC: a Partial Award for Respondents' share consequence of being alerted to the above
in the advance costs even if it was clear from the language of RCBC's authorities. 35 (Additional emphasis supplied)
December 11, 2007 letter that it had no intention of litigating for the
advance costs. Chairman Barker, after ruling earlier that it cannot grant The parties complied by submitting their respective comments.
RCBC's request to declare the Respondents as having no right to RCBC refuted Respondents' allegation of partiality on the part of
participate in the proceedings concerning the claim, interpreted RCBC's Chairman Barker and reiterated the prayer in its application for
letter as an application for the Arbitration Tribunal to issue a partial award reimbursement of advance on costs paid to the ICC-ICA. RCBC
in respect of such refusal of Respondents to pay their share in the contended  that based on Mr. Secomb's article, whether the "contractual"
advance on costs, and subsequently directed the parties to make or "provisional measures" approach is applied, the Arbitration Tribunal is
submissions on the matter. Aside from violating their right to due process vested with jurisdiction and authority to render an award with respect to
and to be heard by an impartial tribunal, Respondents also argued that in said reimbursement of advance cost paid by the non-defaulting party. 36
issuing the award for advance cost, the Arbitration Tribunal decided an
issue beyond the terms of the TOR. Respondents, on the other hand, maintained that RCBC's
application for reimbursement of advance cost has no basis under the
Respondents also emphasized that the parties agreed on a two- ICC Rules. They contended that no manifest injustice can be inferred
part arbitration: the first part of the Tribunal's proceedings would from an act of a party paying for the share of the defaulting party as this
determine Respondents' liability, if any, for alleged violation of Section 5 scenario is allowed by the ICC Rules. Neither can a partial award for
(g) and (h) of the SPA; and the second part of the proceedings would advance cost be justified under the "contractual approach" since the
determine the amounts owed by one party to another as a consequence matter of costs for arbitration is between the ICC and the parties, not the
of a finding of liability or lack thereof. An award for "reimbursement of Arbitration Tribunal and the parties. An arbitration tribunal can issue
advances for costs" clearly falls outside the scope of either proceedings. decisions on costs only for those costs not fixed by the ICC. 37
Neither can the Tribunal justify such proceedings under Article 23 of the
ICC Rules (Conservatory and Interim Measures) because that provision Respondents reiterated their position that Article 30 (3) envisions
does not contemplate an award for the reimbursement of advance on a situation whereby a party would refuse to pay its share on the advance
costs in arbitration cases. Respondents further asserted that since the on costs and provides a remedy therefor — the other party "shall be free
advances on costs have been paid by the Claimant (RCBC), the main to pay the whole of the advance on costs." Such party's reimbursement
claim and counterclaim may both be heard by the Arbitration Tribunal. for payments of the defaulting party's share depends on the final arbitral
award where the party liable for costs would be determined. This is the
In his letter dated March 13, 2008, Chairman Barker advised the only remedy provided by the ICC Rules. 38
parties, as follows:
On May 28, 2008, the Arbitration Tribunal rendered the Second
1. The Tribunal acknowledges the Respondents' response Partial Award, 39 as follows: DEHcTI
to the Claimant's application for a Partial Award,
based on the Respondents' failure to pay their 7AWARD
share of the costs, as requested by the
ICC. aESTAI
 7.1 Having read and considered the submissions of both at the conclusion of the arbitration. It also pointed out that the Arbitration
parties, the Tribunal AWARDS, DECLARES AND Tribunal was empowered by the parties' arbitral clause to determine the
ORDERS as follows: manner of payment of expenses of arbitration, and that the Second
Partial Award was based on authorities and treatises on the mandatory
(a) The Respondents are forthwith to pay to the and contractual nature of the obligation to pay advances on costs.
Claimant the sum of US$290,000.
In its Reply, 44 EPCIB contended that RCBC had the option to
(b) The Respondents' counterclaim is to be agree to its proposal for separate advances on costs but decided against
considered as withdrawn. it; RCBC's act of paying the balance of the advance cost in substitution
of EPCIB was for the purpose of having EPCIB defaulted and the latter's
(c) All other questions, including interest and
counterclaim withdrawn. Having agreed to finance the arbitration until its
costs, will be dealt with in a subsequent
completion, RCBC is not entitled to immediate reimbursement of the
award. 40
amount it paid in substitution of EPCIB under an interim award, as its
The above partial award was received by RCBC and right to a partial or total reimbursement will have to be determined under
Respondents on June 12, 2008. the final award. EPCIB asserted that the matter of reimbursement of
advance cost paid cannot be said to have properly arisen during
On July 11, 2008, EPCIB filed a Motion to Vacate Second Partial arbitration. EPCIB reiterated that Chairman Barker's interpretation of
Award 41 in the Makati City RTC, Branch 148 (SP Proc. Case No. M- RCBC's December 11, 2007 letter as an application for interim award for
6046). On July 10, 2008, RCBC filed in the same court a Motion to reimbursement is tantamount to a promise that the award will be issued
Confirm Second Partial Award. 42 in due course.
EPCIB raised the following grounds for vacating the Second After a further exchange of pleadings, and other motions seeking
Partial Award: (a) the award is voidab initio  having been rendered by the relief from the court in connection with the arbitration proceedings
arbitrators who exceeded their power or acted without it; and (b) the (quantum phase), the Makati City RTC, Branch 148 issued the
award was procured by undue means or issued with evident partiality or Order 45 dated June 24, 2009 confirming the Second Partial Award and
attended by misbehavior on the part of the Tribunal which resulted in a denying EPCIB's motion to vacate the same. Said court held that since
material prejudice to the rights of the Respondents. EPCIB argued that the parties agreed to submit any dispute under the SPA to arbitration and
there is no express agreement either in the SPA or the ICC Rules for to be bound by the ICC Rules, they are also bound to pay in equal
such right of reimbursement. There is likewise no implied agreement shares the advance on costs as provided in Article 30 (2) and (3). It
because from the ICC Rules, the only inference is that the parties agreed noted that RCBC was forced to pay the share of EPCIB in substitution of
to await the dispositions on costs liability in the Final Award, not before. the latter to prevent a suspension of the arbitration proceedings, while
On the ruling of the Arbitration Tribunal that Respondents' EPCIB's non-payment seems more like a scheme to delay such
application for costs are not counterclaims, EPCIB asserted that this is proceedings. On the Arbitration Tribunal's ruling on EPCIB's
contrary to Philippine law as it is basic in our jurisdiction that counterclaim, no error was committed in considering it withdrawn for
counterclaims for litigation expenses, moral and exemplary damages are failure of EPCIB to quantify and substantiate it with supporting evidence.
proper counterclaims, which rule should be recognized in view of Section As to EPCIB's claim for attorney's fees, the RTC agreed that these
10 of the SPA which provides that "substantive aspects of the dispute should be brought only at the close of arbitration.
shall be settled by applying the laws of the Philippines." Finally, EPCIB EPCIB moved to reconsider the June 24, 2009 Order and for the
takes issue with Chairman Barker's interpretation of RCBC's December voluntary inhibition of the Presiding Judge (Judge Oscar B. Pimentel) on
11, 2007 letter as an application for a partial award for reimbursement of the ground that EPCIB's new counsel represented another client in
the substituted payments. Such conduct of Chairman Barker is another case before him in which said counsel assailed his conduct and
prejudicial and proves his evident partiality in favor of RCBC. CSIHDA had likewise sought his inhibition. Both motions were denied in the Joint
RCBC filed its Opposition, 43 asserting that the Arbitration Order 46 dated March 23, 2010. cDHAaT
Tribunal had jurisdiction to consider Respondents' counterclaim as On April 14, 2010, EPCIB filed in the CA a petition for
withdrawn, the same having been abandoned by not presenting any review 47 with application for TRO and/or writ of preliminary injunction
computation or substantiation by evidence, their only computation relates (CA-G.R. SP No. 113525) in accordance with Rule 19, Section 4 of the
only to attorney's fees which are simply cost of litigation properly brought
Special Rules of Court on Alternative Dispute Resolution 48 (Special (e) The Respondents are to pay to the Claimant
ADR Rules). EPCIB assailed the Makati City RTC, Branch 148 in the sum of P7,000,000 for party-and-party
denying its motion to vacate the Second Partial Award despite (a) said legal costs.
award having been rendered in excess of jurisdiction or power, and
contrary to public policy; (b) the fact that it was issued with evident (f) The Counterclaims of the Respondents are all
partiality and serious misconduct; (c) the award deals with a dispute not dismissed.
contemplated within the terms of submission to arbitration or beyond the (g) All claims of the Claimant are dismissed, other
scope of such submission, which therefore ought to be vacated pursuant than those referred to above.
to Article 34 of the UNCITRAL Model Law; and (d) the Presiding Judge
having exhibited bias and prejudice against BDO and its counsel as 15.2 Justice Kapunan does not agree with the majority of
confirmed by his pronouncements in the Joint Order dated March 23, the members of the Tribunal and has issued a
2010 in which, instead of recusing himself, he imputed malice and dissenting opinion. He has refused to sign this
unethical conduct in the entry of appearance of Belo Gozon Elma Award. 50
Asuncion and Lucila Law Offices in SP Proc. Case No. M-6046, which
warrants his voluntary inhibition. On July 1, 2010 BDO filed in the Makati City RTC a Petition to
Vacate Final Award Ad Cautelam, 51 docketed as SP Proc. Case No. M-
Meanwhile, on June 16, 2010, the Arbitration Tribunal issued the 6995, which was raffled to Branch 65.
Final Award, 49 as follows:
On July 28, 2010, RCBC filed with the Makati City RTC, Branch
15AWARD 148 (SP Proc. Case No. M-6046) a Motion to Confirm Final
Award. 52 BDO filed its Opposition with Motion to Dismiss 53 on grounds
15.1 The Tribunal by a majority (Sir Ian Barker & Mr. that a Petition to Vacate Final Award  Ad Cautelam had already been
Kaplan) awards, declares and adjudges as filed in SP Proc. Case No. M-6995. BDO also pointed out that RCBC did
follows: not file the required petition but instead filed a mere motion which did not
(a) the Respondents are to pay damages to the go through the process of raffling to a proper branch of the RTC of
Claimant for breach of the sale and Makati City and the payment of the required docket/filing fees. Even
purchase agreement for Bankard shares assuming that Branch 148 has jurisdiction over RCBC's motion to
in the sum of P348,736,920.29. confirm final award, BDO asserted that RCBC had filed before the
Arbitration Tribunal an Application for Correction and Interpretation of
(b) The Respondents are to pay to the Claimant Award under Article 29 of the ICC Rules, which is irreconcilable with its
the sum of US$880,000 in respect of the Motion to Confirm Final Award before said court. Hence, the Motion to
costs of the arbitration as fixed by the ICC Confirm Award was filed precipitately. TICDSc
Court.
On August 18, 2010, RCBC filed an Omnibus Motion in SP Proc.
(c) The Respondents are to pay to the Claimant Case No. M-6995 (Branch 65) praying for the dismissal of BDO's Petition
the sum of US$582,936.56 for the fees to Vacate Final Award or the transfer of the same to Branch 148 for
and expenses of Mr. Best. consolidation with SP Proc. Case No. M-6046. RCBC contended that
BDO's filing of its petition with another court is a blatant violation of the
(d) The Respondents are to pay to the Claimant Special ADR Rules and is merely a subterfuge to commit forum-
their expenses of the arbitration as shopping. BDO filed its Opposition to the Omnibus Motion. 54
follows: cDCIHT
On October 28, 2010, Branch 65 issued a Resolution 55 denying
Experts' fees P7,082,788.55 RCBC's omnibus motion and directing the service of the petition to
Costs of without prejudice meeting P22,571.45 RCBC for the latter's filing of a comment thereon. RCBC's motion for
Costs of arbitration hearings P553,420.66 reconsideration was likewise denied in the said court's Order dated
Costs of transcription service P483,597.26 December 15, 2010. RCBC then filed its Opposition to the Petition to
  ————————————— Vacate Final Award  Ad Cautelam.
Total P8,144,377.62
  ===========
 Meanwhile, on November 10, 2010, Branch 148 (SP Proc. Case On February 25, 2011, Branch 65 rendered a Decision 61 in SP
No. M-6046) issued an Order 56 confirming the Final Award "subject to Proc. Case No. M-6995, as follows:
the correction/interpretation thereof by the Arbitral Tribunal pursuant to
WHEREFORE, premises considered, the Final
the ICC Rules and the UNCITRAL Model Law," and denying BDO's
Award dated June 16, 2010 in ICC Ref. No.
Opposition with Motion to Dismiss.
13290/MS/JB/JEM is hereby VACATED with cost against
On December 30, 2010, George L. Go, in his personal capacity the respondent.
and as attorney-in-fact of the other listed shareholders of Bankard, Inc. in
the SPA (Individual Shareholders), filed a petition in the CA, CA-G.R. SP SO ORDERED. 62
No. 117451, seeking to set aside the above-cited November 10, 2010 In SP Proc. Case No. M-6046, Branch 148 issued an
Order and to enjoin Branch 148 from further proceeding in SP Proc. Order 63 dated August 8, 2011 resolving the following motions: (1)
Case No. M-6046. By Decision 57 dated June 15, 2011, the CA Motion for Reconsideration filed by BDO, Go and Individual Shareholders
dismissed the said petition. Their motion for reconsideration of the said of the November 10, 2010 Order confirming the Final Award; (2) RCBC's
decision was likewise denied by the CA in its Resolution 58 dated Omnibus Motion to expunge the motion for reconsideration filed by Go
December 14, 2011. and Individual Shareholders, and for execution of the Final Award; (3)
On December 23, 2010, the CA rendered its Decision in CA-G.R. Motion for Execution filed by RCBC against BDO; (4) BDO's Motion for
SP No. 113525, the dispositive portion of which states: Leave to File Supplement to the Motion for Reconsideration; and (5)
Motion for Inhibition filed by Go and Individual Shareholders. Said Order
WHEREFORE, premises considered, the following decreed:
are hereby REVERSED and SET ASIDE:
WHEREFORE, premises considered, it is hereby
1. the Order dated June 24, 2009 issued in SP ORDERED, to wit: IcaEDC
Proc. Case No. M-6046 by the Regional
Trial Court of Makati City, Branch 148, 1. Banco De Oro's Motion for Reconsideration,
insofar as it denied the Motion to Vacate Motion for Leave to File Supplement to Motion for
Second Partial Award dated July 8, 2008 Reconsideration, and Motion to Inhibit are  DENIED for
and granted the Motion to Confirm Second lack of merit.
Partial Award dated July 10, 2008; cACEaI 2. RCBC Capital's Motion to Expunge, Motion to
2. the Joint Order dated March 23, 2010 issued in Execute against Mr. George L. Go and the Bankard
SP Proc. Case No. M-6046 by the Shareholders, and the Motion to Execute against Banco
Regional Trial Court of Makati City, De Oro are hereby  GRANTED.
Branch 148, insofar as it denied the 3. The damages awarded to RCBC Capital
Motion for Reconsideration dated July 28, Corporation in the amount of PhP348,736,920.29 is
2009 relative to the motions concerning subject to an interest of 6% per annum reckoned from the
the Second Partial Award immediately date of RCBC Capital's extra-judicial demand or from May
mentioned above; and 5, 2003 until the confirmation of the Final Award. Likewise,
3. the Second Partial Award dated May 28, 2008 this compounded amount is subject to 12% interest per
issued in International Chamber of annum from the date of the confirmation of the Final Award
Commerce Court of Arbitration Reference until its satisfaction. The costs of the arbitration amounting
No. 13290/MS/JB/JEM. to US$880,000.00, the fees and expenses of Mr. Best
amounting to US$582,936.56, the Claimant's expenses of
SO ORDERED. 59 the arbitration amounting to PhP8,144,377.62, and the
party-and-party legal costs amounting to PhP7,000,000.00
RCBC filed a motion for reconsideration but the CA denied the
all ruled in favor of RCBC Capital Corporation in the Final
same in its Resolution 60 dated March 16, 2011. On April 6, 2011, it filed
Award of the Arbitral Tribunal dated June 16, 2010 are
a petition for review on  certiorari in this Court (G.R. No. 196171).
subject to 12% legal interest per annum, also reckoned
 from the date of the confirmation of the Final Award until discretionary execution under Section 2 (a), Rule 39 of the Rules of
its satisfaction. Court.
4. Pursuant to Section 40 of R.A. No. 9285, BDO further contended that the writ of execution should be
otherwise known as the Alternative Dispute Resolution Act quashed for having been issued with grave abuse of discretion
of 2004 in relation to Rule 39 of the Rules of Court, since amounting to lack or excess of jurisdiction as Branch 148 modified the
the Final Award have been confirmed, the same shall be Final Award at the time of execution by imposing the payment of
enforced in the same manner as final and executory interests though none was provided therein nor in the Order confirming
decisions of the Regional Trial Court, let a writ of execution the same.
be issued commanding the Sheriff to enforce this instant During the pendency of CA-G.R. SP No. 120888, Branch 148
Order confirming this Court's Order dated November 10, continued with execution proceedings and on motion by RCBC
2010 that judicially confirmed the June 16, 2010 Final designated/deputized additional sheriffs to replace Sheriff Flora who was
Award. supposedly physically indisposed. 68 These court personnel went to the
SO ORDERED. 64 offices/branches of BDO attempting to serve notices of garnishment and
to levy the furniture, fixtures and equipment. EcAHDT
Immediately thereafter, RCBC filed an Urgent Motion for
Issuance of a Writ of Execution. 65 On August 22, 2011, after approving On September 12, 2011, BDO filed a Very Urgent Motion to Lift
the execution bond, Branch 148 issued a Writ of Execution for the Levy and for Leave to Post Counter-Bond 69 before Branch 148 praying
implementation of the said court's "Order dated August 8, 2011 for the lifting of the levy of BDO Private Bank, Inc. (BPBI) shares and the
confirming the November 10, 2010 Order that judicially confirmed the cancellation of the execution sale thereof scheduled on September 15,
June 16, 2010 Final Award . . . ." 66 aDcHIS 2011, which was set for hearing on September 14, 2011. BDO claimed
that the levy was invalid because it was served by the RTC Sheriffs not
BDO then filed in the CA, a "Petition for Review (With Application to the authorized representatives of BPBI, as provided under Section 9
for a Stay Order or Temporary Restraining Order and/or Writ of (b), Rule 39 in relation to Section 7, Rule 57 of the Rules of Court stating
Preliminary Injunction," docketed as CA-G.R. SP No. 120888. BDO that a notice of levy on shares of stock must be served to the president
sought to reverse and set aside the Orders dated November 10, 2010 or managing agent of the company which issued the shares. However,
and August 8, 2011, and any writ of execution issued pursuant thereto, BDO was advised by court staff that Judge Sarabia was on leave and the
as well as the Final Award dated June 16, 2010 issued by the Arbitration case could not be set for hearing.
Tribunal.
In its Opposition to BDO's application for injunctive relief, RCBC
In its Urgent Omnibus Motion 67 to resolve the application for a prayed for its outright denial as BDO's petition raises questions of fact
stay order and/or TRO/writ of preliminary injunction, and to quash the and/or law which call for the CA to substitute its judgment with that of the
Writ of Execution dated August 22, 2011 and lift the Notices of Arbitration Tribunal, in patent violation of applicable rules of procedure
Garnishment dated August 22, 2011, BDO argued that the assailed governing domestic arbitration and beyond the appellate court's
orders of execution (Writ of Execution and Notice of Garnishment) were jurisdiction. RCBC asserted that BDO's application has become moot
issued with indecent haste and despite the non-compliance with the and academic as the writ of execution was already implemented and/or
procedures in Special ADR Rules of the November 10, 2010 Order enforced. It also contended that BDO has no clear and unmistakable
confirming the Final Award. BDO was not given sufficient time to respond right to warrant injunctive relief because the issue of jurisdiction was
to the demand for payment or to elect the method of satisfaction of the already ruled upon in CA-G.R. SP No. 117451 which dismissed the
judgment debt or the property to be levied upon. In any case, with the petition filed by Go and the Individual Shareholders of Bankard
posting of a bond by BDO, Branch 148 has no jurisdiction to implement questioning the authority of Branch 148 over RCBC's motion to confirm
the appealed orders as it would pre-empt the CA from exercising its the Final Award despite the earlier filing by BDO in another branch of the
review under Rule 19 of the Special ADR Rules after BDO had perfected RTC (Branch 65) of a petition to vacate the said award.
its appeal. BDO stressed that the bond posted by RCBC was for a
measly sum of P3,000,000.00 to cause execution pending appeal of a On September 13, 2011, BDO, to avert the sale of the BPBI
monetary award that may reach P631,429,345.29. RCBC also failed to shares scheduled on September 15, 2011 and prevent further disruption
adduce evidence of "good cause" or "good reason" to justify in the operations of BDO and BPBI, paid under protest by tendering a
Manager's Check in the amount of P637,941,185.55, which was
accepted by RCBC as full and complete satisfaction of the writ of BDO raises the following arguments in G.R. No. 199238:
execution. BDO manifested before Branch 148 that such payment was
THE COURT OF APPEALS COMMITTED GRAVE
made without prejudice to its appeal before the CA. 70
ABUSE OF DISCRETION AMOUNTING TO LACK OR
On even date, the CA denied BDO's application for a stay order EXCESS OF JURISDICTION IN PERFUNCTORILY
and/or TRO/preliminary injunction for non-compliance with Rule 19.25 of DENYING PETITIONER BDO'S APPLICATION FOR
the Special ADR Rules. The CA ruled that BDO failed to show the STAY ORDER, AND/OR TEMPORARY RESTRAINING
existence of a clear right to be protected and that the acts sought to be ORDER AND PRELIMINARY INJUNCTION DESPITE
enjoined violated any right. Neither was BDO able to demonstrate that THE EXISTENCE AND CONCURRENCE OF ALL THE
the injury to be suffered by it is irreparable or not susceptible to ELEMENTS FOR THE ISSUANCE OF SAID
mathematical computation. PROVISIONAL RELIEFS EICScD
BDO did not file a motion for reconsideration and directly filed A. PETITIONER BDO HAS CLEAR AND UNMISTAKABLE
with this Court a petition for certiorari  with urgent application for writ of RIGHTS TO BE PROTECTED BY THE
preliminary mandatory injunction (G.R. No. 199238). ISSUANCE OF THE INJUNCTIVE RELIEF
The Petitions PRAYED FOR, WHICH, HOWEVER, WERE
DISREGARDED BY PUBLIC RESPONDENT
In G.R. No. 196171, RCBC set forth the following grounds for the WHEN IT DENIED PETITIONER BDO'S PRAYER
reversal of the CA Decision dated December 23, 2010: FOR ISSUANCE OF A STAY ORDER AND/OR
TRO
I.
B. PETITIONER BDO'S RIGHT TO DUE PROCESS AND
THE COURT OF APPEALS ACTED CONTRARY TO
EQUAL PROTECTION OF THE LAW WAS
LAW AND PRIOR RULINGS OF THIS HONORABLE
GROSSLY VIOLATED BY THE RTC-MAKATI
COURT AND COMMITTED REVERSIBLE ERROR IN
CITY BRANCH 148, THE DEPUTIZED SHERIFFS
VACATING THE SECOND PARTIAL AWARD ON THE
AND RESPONDENT RCBC CAPITAL, WHICH
BASIS OF CHAIRMAN BARKER'S ALLEGED
VIOLATION WAS AIDED BY PUBLIC
PARTIALITY, WHICH IT CLAIMS IS INDICATIVE OF
RESPONDENT'S INACTION ON AND
BIAS CONSIDERING THAT THE ALLEGATIONS
EVENTUAL DENIAL OF THE PRAYER FOR
CONTAINED IN BDO/EPCIB'S PETITION FALL SHORT
STAY ORDER AND/OR TRO
OF THE JURISPRUDENTIAL REQUIREMENT THAT
THE SAME BE SUPPORTED BY CLEAR AND C. DUE TO THE ACTS AND ORDERS OF RTC BRANCH
CONVINCING EVIDENCE. IaEHSD 148, PETITIONER BDO SUFFERED
IRREPARABLE DAMAGE AND INJURY, AND
II.
THERE WAS DIRE AND URGENT NECESSITY
THE COURT OF APPEALS ACTED CONTRARY TO FOR THE ISSUANCE OF THE INJUNCTIVE
LAW AND PRIOR RULINGS OF THIS HONORABLE RELIEF PRAYED FOR WHICH PUBLIC
COURT AND COMMITTED REVERSIBLE ERROR RESPONDENT DENIED IN GRAVE ABUSE OF
WHEN IT REVERSED THE ARBITRAL TRIBUNAL'S DISCRETION 72
FINDINGS OF FACT AND LAW IN THE SECOND
Essentially, the issues to be resolved are: (1) whether there is
PARTIAL AWARD IN PATENT CONTRAVENTION OF
legal ground to vacate the Second Partial Award; and (2) whether BDO is
THE SPECIAL ADR RULES WHICH EXPRESSLY
entitled to injunctive relief in connection with the execution proceedings
PROHIBITS THE COURTS, IN AN APPLICATION TO
in SP Proc. Case No. M-6046.
VACATE AN ARBITRAL AWARD, FROM DISTURBING
THE FINDINGS OF FACT AND/OR In their TOR, the parties agreed on the governing law and rules
INTERPRE[TA]TION OF LAW OF THE ARBITRAL as follows:
TRIBUNAL. 71
Laws to be Applied
 13 The Tribunal shall determine the issues to be resolved a. The arbitral award was procured through
in accordance with the laws of the Republic of the corruption, fraud or other undue means;
Philippines.
b. There was evident partiality or corruption in
Procedure to be Applied the arbitral tribunal or any of its members;
14 The proceedings before the Tribunal shall be governed c. The arbitral tribunal was guilty of misconduct or
by the ICC Rules of Arbitration (1 January 1998) any form of misbehavior that has materially prejudiced the
and the law currently applicable to arbitration in rights of any party such as refusing to postpone a hearing
the Republic of the Philippines. 73 upon sufficient cause shown or to hear evidence pertinent
and material to the controversy;
As stated in the Partial Award dated September 27, 2007,
although the parties provided in Section 10 of the SPA that the arbitration d. One or more of the arbitrators was disqualified
shall be conducted under the ICC Rules, it was nevertheless arbitration to act as such under the law and willfully refrained from
under Philippine law since the parties are both residents of this country. disclosing such disqualification; or cDEHIC
The provisions of Republic Act No. 876 74 (RA 876), as amended by
Republic Act No. 9285 75 (RA 9285) principally applied in the arbitration e. The arbitral tribunal exceeded its powers, or
between the herein parties. 76 aCSDIc so imperfectly executed them, such that a complete, final
and definite award upon the subject matter submitted to
The pertinent provisions of R.A. 9285 provide: them was not made.
SEC. 40. Confirmation of Award. — The The award may also be vacated on any or all of
confirmation of a domestic arbitral award shall be the following grounds:
governed by Section 23 of R.A. 876.
a. The arbitration agreement did not exist, or is
A domestic arbitral award when confirmed shall be invalid for any ground for the revocation of a contract or is
enforced in the same manner as final and executory otherwise unenforceable; or
decisions of the Regional Trial Court.
b. A party to arbitration is a minor or a person
The confirmation of a domestic award shall be judicially declared to be incompetent.
made by the regional trial court in accordance with the
Rules of Procedure to be promulgated by the Supreme xxx xxx xxx
Court.
In deciding the petition to vacate the arbitral
xxx xxx xxx award, the court shall disregard any other ground than
those enumerated above. (Emphasis supplied)
SEC. 41. Vacation Award. — A party to a
domestic arbitration may question the arbitral award with Judicial Review
the appropriate regional trial court in accordance with the At the outset, it must be stated that a review brought to this Court
rules of procedure to be promulgated by the Supreme under the Special ADR Rules is not a matter of right. Rule 19.36 of said
Court only on those grounds enumerated in Section 25 of Rules specified the conditions for the exercise of this Court's
Republic Act No. 876. Any other ground raised against a discretionary review of the CA's decision.
domestic arbitral award shall be disregarded by the
regional trial court. Rule 19.36. Review discretionary.  — A review by
the Supreme Court is not a matter of right, but of sound
Rule 11.4 of the Special ADR Rules sets forth the grounds for judicial discretion, which will be granted only for serious
vacating an arbitral award: and compelling reasons resulting in grave prejudice to
Rule 11.4. Grounds. — (A) To vacate an arbitral the aggrieved party. The following, while neither
award. — The arbitral award may be vacated on the controlling nor fully measuring the court's discretion,
following grounds: indicate the serious and compelling, and necessarily,
 restrictive nature of the grounds that will warrant the setting aside an award in an international arbitration under
exercise of the Supreme Court's discretionary Article 34 of the Model Law, or for such other grounds
powers, when the Court of Appeals: provided under these Special Rules.
a. Failed to apply the applicable standard or xxx xxx xxx
test for judicial review prescribed in these Special
ADR Rules in arriving at its decision resulting in The court shall not set aside or vacate the award
substantial prejudice to the aggrieved party; acCETD of the arbitral tribunal merely on the ground that the arbitral
tribunal committed errors of fact, or of law, or of fact and
b. Erred in upholding a final order or decision law, as the court cannot substitute its judgment for that of
despite the lack of jurisdiction of the court that rendered the arbitral tribunal. (Emphasis supplied) DAaHET
such final order or decision;
The above rule embodied the stricter standard in deciding
c. Failed to apply any provision, principle, policy or appeals from arbitral awards established by jurisprudence. In the case
rule contained in these Special ADR Rules resulting in of Asset Privatization Trust v. Court of Appeals, 77 this Court held:
substantial prejudice to the aggrieved party; and
As a rule, the award of an arbitrator cannot be set
d. Committed an error so egregious and harmful to aside for mere errors of judgment either as to the law or as
a party as to amount to an undeniable excess of to the facts. Courts are without power to amend or overrule
jurisdiction. merely because of disagreement with matters of law or
facts determined by the arbitrators. They will not review
The mere fact that the petitioner disagrees with the findings of law and fact contained in an award, and will
the Court of Appeals' determination of questions of fact, of not undertake to substitute their judgment for that of the
law or both questions of fact and law, shall not warrant the arbitrators, since any other rule would make an award the
exercise of the Supreme Court's discretionary power. The commencement, not the end, of litigation. Errors of law
error imputed to the Court of Appeals must be and fact, or an erroneous decision of matters submitted to
grounded upon any of the above prescribed grounds the judgment of the arbitrators, are insufficient to invalidate
for review or be closely analogous thereto. an award fairly and honestly made. Judicial review of an
arbitration is, thus, more limited than judicial review of a
A mere general allegation that the Court of
trial. 78
Appeals has committed serious and substantial error or
that it has acted with grave abuse of discretion resulting in Accordingly, we examine the merits of the petition before us
substantial prejudice to the petitioner without indicating solely on the statutory ground raised for vacating the Second Partial
with specificity the nature of such error or abuse of Award: evident partiality, pursuant to Section 24 (b) of the Arbitration Law
discretion and the serious prejudice suffered by the (RA 876) and Rule 11.4 (b) of the Special ADR Rules.
petitioner on account thereof, shall constitute sufficient
ground for the Supreme Court to dismiss outright the Evident Partiality
petition. (Emphasis supplied) Evident partiality is not defined in our arbitration laws. As one of
The applicable standard for judicial review of arbitral awards in the grounds for vacating an arbitral award under the Federal Arbitration
this jurisdiction is set forth in Rule 19.10 which states: Act (FAA) in the United States (US), the term "encompasses both an
arbitrator's explicit bias toward one party and an arbitrator's inferred bias
Rule 19.10. Rule on judicial review on arbitration when an arbitrator fails to disclose relevant information to the parties." 79
in the Philippines. — As a general rule, the court can only
vacate or set aside the decision of an arbitral tribunal upon From a recent decision 80 of the Court of Appeals of Oregon, we
a clear showing that the award suffers from any of the quote a brief discussion of the common meaning of evident partiality:
infirmities or grounds for vacating an arbitral award To determine the meaning of "evident partiality,"
under Section 24 of Republic Act No. 876 or under we begin with the terms themselves. The common
Rule 34 of the Model Law in a domestic arbitration, or for meaning of "partiality" is "the inclination to favor one
 side." Webster's Third New Int'l Dictionary 1646 advance, or where the parties are unaware of the circumstances but the
(unabridged ed 2002); see also id. (defining "partial" as relationship is trivial. However, in the event that the arbitrator has a
"inclined to favor one party in a cause or one side of a "substantial interest" in the transaction at hand, such information must be
question more than the other: biased, predisposed" disclosed. HSDIaC
(formatting in original)). "Inclination," in turn, means "a
Subsequent cases decided by the US Court of Appeals Circuit
particular disposition of mind or character: propensity,
Courts adopted different approaches, given the imprecise standard of
bent" or "a tendency to a particular aspect, state,
evident partiality in  Commonwealth Coatings.
character, or action."  Id. at 1143 (formatting in
original); see also id. (defining "inclined" as "having In Morelite Construction Corp. v. New York District Council
inclination, disposition, or tendency"). ECcTaS Carpenters Benefit Funds, 87 the Second Circuit reversed the judgment
of the district court and remanded with instructions to vacate the
The common meaning of "evident" is "capable of arbitrator's award, holding that the existence of a father-son relationship
being perceived esp[ecially] by sight: distinctly visible: between the arbitrator and the president of appellee union provided
being in evidence: discernable[;] . . . clear to the strong evidence of partiality and was unfair to appellant construction
understanding: obvious, manifest, apparent."  Id. at 789 contractor. After examining prior decisions in the Circuit, the court
(formatting in original); see also id. (stating that synonyms concluded that —
of "evident" include "apparent, patent, manifest, plain,
clear, distinct, obvious, [and] palpable" and that, "[s]ince . . . we cannot countenance the promulgation of a
evident rather naturally suggests  evidence, it may standard for partiality as insurmountable as "proof of actual
imply the existence of signs and indications that must bias" — as the literal words of Section 10 might suggest.
lead to an identification or inference" (formatting in Bias is always difficult, and indeed often impossible, to
original)). (Emphasis supplied) "prove." Unless an arbitrator publicly announces his
partiality, or is overheard in a moment of private
Evident partiality in its common definition thus implies "the admission, it is difficult to imagine how "proof" would be
existence of signs and indications that must lead to an identification or obtained. Such a standard, we fear, occasionally would
inference" of partiality. 81 Despite the increasing adoption of arbitration require that we enforce awards in situations that are
in many jurisdictions, there seems to be no established standard for clearly repugnant to our sense of fairness, yet do not yield
determining the existence of evident partiality. In the US, evident "proof" of anything.
partiality "continues to be the subject of somewhat conflicting and
inconsistent judicial interpretation when an arbitrator's failure to disclose If the standard of "appearance of bias" is too
prior dealings is at issue." 82 low for the invocation of Section 10, and "proof of
actual bias" too high, with what are we left? Profoundly
The first case to delineate the standard of evident partiality in aware of the competing forces that have already been
arbitration proceedings was Commonwealth Coatings Corp. v. discussed, we hold that "evident partiality" within the
Continental Casualty Co., et al. 83 decided by the US Supreme Court in meaning of 9 U.S.C. § 10 will be found where a
1968. The Court therein addressed the issue of whether the requirement reasonable person would have to conclude that an
of impartiality applies to an arbitration proceeding. The plurality opinion arbitrator was partial to one party to the
written by Justice Black laid down the rule that the arbitrators must arbitration. . . . 88 (Emphasis supplied)
disclose to the parties "any dealings that might create an impression of
possible bias," 84 and that underlying such standard is "the premise that In Apperson v. Fleet Carrier Corporation, 89 the Sixth Circuit
any tribunal permitted by law to try cases and controversies not only agreed with the Morelite court's analysis, and accordingly held that to
must be unbiased but also must avoid even the appearance of invalidate an arbitration award on the grounds of bias, the challenging
bias." 85 In a separate concurring opinion, Justice White joined by party must show that "a reasonable person would have to conclude that
Justice Marshall, remarked that "[t]he Court does not decide today that an arbitrator was partial" to the other party to the arbitration.
arbitrators are to be held to the standards of judicial decorum of Article III
This "myriad of judicial interpretations and approaches to evident
judges, or indeed of any judges." 86 He opined that arbitrators should not
partiality" resulted in a lack of a uniform standard, leaving the courts "to
automatically be disqualified from an arbitration proceeding because of a
examine evident partiality on a case-by-case basis." 90 The case at bar
business relationship where both parties are aware of the relationship in
does not present a non-disclosure issue but conduct allegedly showing That there was an action to be taken beforehand
an arbitrator's partiality to one of the parties. TAHCEc is confirmed by Chairman Barker's furnishing the parties
with a copy of the Secomb article. This article ultimately
EPCIB/BDO, in moving to vacate the Second Partial Award
favored RCBC by advancing its cause. Chairman
claimed that the Arbitration Tribunal exceeded its powers in deciding the
Barker makes it appear that he intended good to be
issue of advance cost not contemplated in the TOR, and that Chairman
done in doing so but due process dictates the cold
Barker acted with evident partiality in making such award. The RTC held
neutrality of impartiality. This means that "it is not
that BDO failed to substantiate these allegations. On appeal, the CA
enough . . . [that] cases [be decided] without bias and
likewise found that the Arbitration Tribunal did not go beyond the
favoritism. Nor is it sufficient that . . . prepossessions [be
submission of the parties because the phrasing of the scope of the
rid of]. [A]ctuations should moreover inspire that belief."
agreed issues in the TOR ("[t]he issues to be determined by the Tribunal
These put into the equation, the furnishing of the Secomb
are those issues arising from the said Request for Arbitration, Answer
article further marred the trust reposed in Chairman
and Reply and such other issues as may properly arise during the
Barker. The suspicion of his partiality on the subject matter
arbitration") is broad enough to accommodate a finding on the liability
deepened. Specifically, his act established that he had
and the repercussions of BDO's failure to share in the advances on
pre-formed opinions.
costs. Section 10 of the SPA also gave the Arbitration Tribunal authority
to decide how the costs should be apportioned between them. Chairman Barker's providing of copies of the said
However, the CA found factual support in BDO's charge of text is easily interpretable that he had prejudged the matter
partiality, thus: before him. In any case, the Secomb article tackled bases
upon which the Second Partial Award was founded. The
On the issue on evident partiality, the rationale in subject article reflected in advance the disposition of
the American case of Commonwealth Coatings Corp. v. the ICC arbitral tribunal. The award can definitely be
Continental Cas. Co. appears to be very prudent. viewed as an affirmation that the bases in the Secomb
In Commonwealth, the United States Supreme Court article were adopted earlier on. To the Court, actuations of
reasoned that courts "should . . . be even more scrupulous arbitrators, like the language of judges, "must be guarded
to safeguard the impartiality of arbitrators than judges, and measured lest the best of intentions be misconstrued."
since the former have completely free rein to decide the
law as well as the facts, and are not subject to appellate xxx xxx xxx 91 (Emphasis supplied)
review" in general. This taken into account, the Court We affirm the foregoing findings and conclusion of the appellate
applies the standard demanded of the conduct of court save for its reference to the  obiter in  Commonwealth Coatings  that
magistrates by analogy. After all, the ICC Rules require arbitrators are held to the same standard of conduct imposed on judges.
that an arbitral tribunal should act fairly and impartially. Instead, the Court adopts the  reasonable impression of
Hence, an arbitrator's conduct should be beyond partiality standard, which requires a showing that a reasonable person
reproach and suspicion. His acts should be free from would have to conclude that an arbitrator was partial to the other party to
the appearances of impropriety. the arbitration. Such interest or bias, moreover, "must be direct, definite
An examination of the circumstances claimed to and capable of demonstration rather than remote, uncertain, or
be illustrative of Chairman Barker's partiality is indicative of speculative." 92 When a claim of arbitrator's evident partiality is made,
bias. Although RCBC had repeatedly asked for "the court must ascertain from such record as is available whether the
reimbursement and the withdrawal of BDO's counterclaims arbitrators' conduct was so biased and prejudiced as to destroy
prior to Chairman Barker's December 18, 2007 letter, it is fundamental fairness." 93 HICSTa
baffling why it is only in the said letter that RCBC's Applying the foregoing standard, we agree with the CA in finding
prayer was given a complexion of being an application that Chairman Barker's act of furnishing the parties with copies of
for a partial award. To the Court, the said letter Matthew Secomb's article, considering the attendant circumstances, is
signaled a preconceived course of action that the indicative of partiality such that a reasonable man would have to
relief prayed for by RCBC will be granted. HaTISE conclude that he was favoring the Claimant, RCBC. Even before the
issuance of the Second Partial Award for the reimbursement of advance
costs paid by RCBC, Chairman Barker exhibited strong inclination to expressly allowed by the Rules but in practice has been resorted to by
grant such relief to RCBC, notwithstanding his categorical ruling that the parties in international commercial arbitration proceedings. It may also be
Arbitration Tribunal "has no power under the ICC Rules  to order the mentioned that the author, Matthew Secomb, is a member of the ICC
Respondents to pay the advance on costs sought by the ICC or to give Secretariat and the "Counsel in charge of the file", as in fact he signed
the Claimant any relief against the Respondents' refusal to pay." 94 That some early communications on behalf of the ICC Secretariat pertaining
Chairman Barker was predisposed to grant relief to RCBC was shown by to the advance costs fixed by the ICC. 99 This bolstered the impression
his act of interpreting RCBC's letter, which merely reiterated its plea to that Chairman Barker was predisposed to grant relief to RCBC by issuing
declare the Respondents in default and consider all counterclaims a partial award.
withdrawn — as what the ICC Rules provide — as an application to the
Indeed, fairness dictates that Chairman Barker refrain from
Arbitration Tribunal to issue a partial award in respect of BDO's failure to
suggesting to or directing RCBC towards a course of action to advance
share in the advance costs. It must be noted that RCBC in said letter did
the latter's cause, by providing it with legal arguments contained in an
not contemplate the issuance of a partial order, despite Chairman
article written by a lawyer who serves at the ICC Secretariat and was
Barker's previous letter which mentioned the possibility of granting relief
involved or had participation — insofar as the actions or
upon the parties making submissions to the Arbitration Tribunal.
recommendations of the ICC — in the case. Though done purportedly to
Expectedly, in compliance with Chairman Barker's December 18, 2007
assist both parties, Chairman Barker's act clearly violated Article 15 of
letter, RCBC formally applied for the issuance of a partial award ordering
the ICC Rules declaring that "[i]n all cases, the Arbitral Tribunal shall act
BDO to pay its share in the advance costs.
fairly and impartially and ensure that each party has a reasonable
Mr. Secomb's article, "Awards and Orders Dealing with the opportunity to present its case." Having pre-judged the matter in dispute,
Advance on Costs in ICC Arbitration: Theoretical Questions and Chairman Barker had lost his objectivity in the issuance of the Second
Practical Problems"  95 specifically dealt with the situation when one of Partial Award.
the parties to international commercial arbitration refuses to pay its share
In fine, we hold that the CA did not err in concluding that the
on the advance on costs. After a brief discussion of the provisions of ICC
article ultimately favored RCBC as it reflected in advance the disposition
Rules dealing with advance on costs, which did not provide for issuance
of the Arbitral Tribunal, as well as "signalled a preconceived course of
of a partial award to compel payment by the defaulting party, the author
action that the relief prayed for by RCBC will be granted." This
stated:
conclusion is further confirmed by the Arbitral Tribunal's pronouncements
4. As we can see, the Rules have certain mechanisms to in its Second Partial Award which not only adopted the "contractual
deal with defaulting parties. Occasionally, however, approach" but even cited Secomb's article along with other references,
parties have sought to use other methods to tackle the thus: CScaDH
problem of a party refusing to pay its part of the advance
6.1 It appears to the Tribunal that the issue posed by this
on costs. These have included seeking an order or
application is essentially a contractual one. . . .
award from the arbitral tribunal condemning the
defaulting party to pay its share of the advance on costs. xxx xxx xxx
Such applications are the subject of this
article. 96 acSECT 6.5 Matthew Secomb, considered these points in the
article in 14 ICC Bulletin No. 1 (2003) which was
By furnishing the parties with a copy of this article, Chairman sent to the parties. At Para. 19, the learned author
Barker practically armed RCBC with supporting legal arguments under quoted from an ICC Tribunal (Case No. 11330) as
the "contractual approach" discussed by Secomb. True enough, RCBC in follows:
its Application for Reimbursement of Advance Costs Paid utilized said
approach as it singularly focused on Article 30 (3) 97 of the ICC Rules "The Arbitral Tribunal concludes that the
and fiercely argued that BDO was contractually bound to share in the parties in arbitrations conducted under
advance costs fixed by the ICC. 98 But whether under the "contractual the ICC Rules have a mutually binding
approach" or "provisional approach" (an application must be treated as obligation to pay the advance on costs
an interim measure of protection under Article 23 [1] rather than as determined by the ICC Court, based
enforcement of a contractual obligation), both treated in the Secomb on Article 30-3 ICC Rules which — by
article, RCBC succeeded in availing of a remedy which was not reference — forms part of the parties'
 agreement to arbitration under such We find no reversible error or grave abuse of discretion in the
Rules." 100 CA's denial of the application for stay order or TRO upon its finding that
BDO failed to establish the existence of a clear legal right to enjoin
The Court, however, must clarify that the merits of the parties' execution of the Final Award confirmed by the Makati City RTC, Branch
arguments as to the propriety of the issuance of the Second Partial 148, pending resolution of its appeal. It would be premature to address
Award are not in issue here. Courts are generally without power to on the merits the issues raised by BDO in the present petition
amend or overrule merely because of disagreement with matters of law considering that the CA still has to decide on the validity of said court's
or facts determined by the arbitrators. They will not review the findings of orders confirming the Final Award. But more important, since BDO had
law and fact contained in an award, and will not undertake to substitute already paid P637,941,185.55 in manager's check, albeit under protest,
their judgment for that of the arbitrators. A contrary rule would make an and which payment was accepted by RCBC as full and complete
arbitration award the commencement, not the end, of litigation. 101 It is satisfaction of the writ of execution, there is no more act to be enjoined.
the finding of evident partiality which constitutes legal ground for vacating
the Second Partial Award and not the Arbitration Tribunal's application of Settled is the rule that injunctive reliefs are preservative
the ICC Rules adopting the "contractual approach" tackled in Secomb's remedies for the protection of substantive rights and interests. Injunction
article. is not a cause of action in itself, but merely a provisional remedy, an
adjunct to a main suit. When the act sought to be enjoined has
Alternative dispute resolution methods or ADRs — like become fait accompli, the prayer for provisional remedy should be
arbitration, mediation, negotiation and conciliation — are encouraged by denied. 106
this Court. By enabling parties to resolve their disputes amicably, they
provide solutions that are less time-consuming, less tedious, less Thus, the Court ruled in  Go v. Looyuko 107 that when the events
confrontational, and more productive of goodwill and lasting sought to be prevented by injunction or prohibition have already
relationship. 102 Institutionalization of ADR was envisioned as "an happened, nothing more could be enjoined or prohibited. Indeed, it is a
important means to achieve speedy and impartial justice and declog universal principle of law that an injunction will not issue to restrain the
court dockets." 103 The most important feature of arbitration, and performance of an act already done. This is so for the simple reason that
indeed, the key to its success, is the public's confidence and trust in the nothing more can be done in reference thereto. A writ of injunction
integrity of the process. 104 For this reason, the law authorizes vacating becomes moot and academic after the act sought to be enjoined has
an arbitral award when there is evident partiality in the already been consummated. ADTCaI
arbitrators. aAcHCT WHEREFORE, premises considered, the petition in G.R. No.
Injunction Against Execution 199238 is DENIED. The Resolution dated September 13, 2011 of the
of Arbitral Award Court of Appeals in CA-G.R. SP No. 120888 is AFFIRMED.
Before an injunctive writ can be issued, it is essential that the The petition in G.R. No. 196171 is DENIED. The Decision dated
following requisites are present: (1) there must be a right inesse  or the December 23, 2010 of the Court of Appeals in CA-G.R. SP No. 113525
existence of a right to be protected; and (2) the act against which is hereby AFFIRMED.
injunction to be directed is a violation of such right. The  onus probandi  is SO ORDERED.
on movant to show that there exists a right to be protected, which is
directly threatened by the act sought to be enjoined. Further, there must
be a showing that the invasion of the right is material and substantial and
that there is an urgent and paramount necessity for the writ to prevent a
serious damage. 105
Rule 19.22 of the Special ADR Rules states:
Rule 19.22. Effect of appeal. — The appeal shall not stay
the award, judgment, final order or resolution sought to be
reviewed unless the Court of Appeals directs otherwise
upon such terms as it may deem just.