KEY WORK NO. 1: Successfully Enjoining Enforcement of Emergency Arbitration Order
Completion date: July 2023 for Emergency Arbitration (Main Case Ongoing)
The client’s lot was being leased by another local corporation that built a hotel thereon, which hotel was being managed by a foreign company. In relation to the Hotel Management Agreement, the client was made to execute a Deed of Guaranty in favor of the hotel manager. Due to a conflict between the hotel owner and manager, they failed to pay the client the rent due on its lot.
The client thus instituted an ejectment case against the hotel owner and manager. It also later on terminated the services of the hotel manager.
During the pendency of the ejectment case, the hotel manager instituted arbitration proceedings against the hotel owner and the Firm’s client before the SIAC, seeking, among others, its reinstatement as the hotel manager. The manager, in the said proceedings, sought the issuance of an emergency arbitration order prior to the institution of the arbitral tribunal. In response thereto, the Firm instituted an anti-arbitration suit.
Subsequently, an Emergency Arbitrator’s Order was issued, which the manager sought to enforce by filing a Petition for Interim Measures of Protection in the local courts.
Notably, at about the same time, a favorable decision was obtained and executed by the client in the ejectment case, allowing it to recover possession of its lot from the hotel owner and manager. The firm thus opposed the enforcement of the Emergency Arbitrator’s Order by claiming that allowing the same would be contrary to the country’s public policy against multiplicity of suits and litis pendentia and would only result in conflicting decisions. The Firm likewise argued that enforcing the Emergency Arbitrator’s Order would effectively overturn a final and already executed decision of a court of competent jurisdiction.
The Firm’s novel argument on public policy as a ground for opposing the enforcement of an emergency arbitrator’s order and its strategy in obtaining the very first anti-arbitration injunction in the country is a clear indication of its grasp of arbitration laws and its ability to craft innovative solutions for its clients’ concerns.
Nonetheless, ahead of the final resolution on the Petition for Interim Measures of Protection, the hotel manager abandoned such course of action and withdrew its prayer in the main case that they be reinstated as hotel manager. The Firm is also representing the client before the SIAC where the parties are yet to present their evidence.
KEY WORK NO. 2: Affirming a Foundation’s Right Over Properties that Significantly Appreciated in Value
Completion date: 31 May 2023
An international foundation based in the Philippines executed a Memorandum of Agreement, where it committed to sell five parcels of land to a real estate company for a total purchase price of around Php270 Million, with a down payment or reservation fee of Php10 Million. The execution of the Memorandum of Agreement was subject to certain conditions, which were not fulfilled during the stipulated closing period. As such, by its own terms, the Memorandum of Agreement expired without the sale being consummated.
The foundation manifested its intention to return the down payment or reservation fee of Php10 Million. However, the real estate company rejected the offer of the foundation, as it contended that there is still an existing obligation on the part of the foundation to sell the five parcels of land at the price of Php270 Million. Despite the lapse of several years since the expiration of the agreement, the real estate company insists on proceeding with the sale.
Due to the refusal of the foundation to proceed with the sale, the real estate company filed a notice of arbitration with the Philippine Dispute Resolution Center, Inc. (PDRCI), in accordance with the arbitration clause found in the Memorandum of Agreement.
At this point, the Firm was engaged by the foundation to protect its ownership over the five parcels of land, the market values of which have already appreciated to roughly Php780 Million. The Firm represented the foundation throughout the arbitration proceedings overseen by a sole arbitrator appointed by the PDRCI.
The Firm was able to establish during the evidentiary hearings that: (1) the contractual commitments in the memorandum of agreement were reciprocal in nature; (2) one of the conditions that the real estate company failed to fulfill was the tender of the full purchase price; (3) the foundation’s failure to provide a tax clearance was not a breach of the memorandum of agreement, but merely a failure to comply with a closing condition; (4) both parties had failed to fulfill their respective contractual conditions; and (5) that the real estate company is not entitled to enforce the Memorandum of Agreement, as it neglected to assert its supposed right within a reasonable time, resulting in delay that would unduly prejudice the foundation.
The Firm’s arguments made it clear that certain closing conditions should occur before the expiration of the closing period of the Memorandum of Agreement in order for the obligation to execute the sale can arise and bind the foundation. The Firm successfully secured a final award from the sole arbitrator, denying the claims of the real estate company and declaring the termination of the Memorandum of Agreement by operation of law.
KEY WORK NO. 3: Nullified the trial court’s recognition and enforcement of a foreign arbitral award for having been issued without jurisdiction
Completion date: Ongoing (main case)
A foreign corporation instituted arbitration proceedings abroad against a domestic mining corporation. Due to lack of proper notice, the domestic corporation was unable to participate in the arbitration proceedings. Relying only on the evidence of the foreign corporation, the sole arbitrator issued the arbitral award in its favor
The foreign corporation thereafter filed a petition for the recognition and enforcement of the foreign arbitral award in the Philippines. Despite non-compliance with the Special ADR Rules and lack of proper notice to the domestic corporation, the trial court gave due course to the petition. The domestic corporation was unable to participate in the proceedings until a Decision recognizing the foreign arbitral award had already been issued. The domestic corporation was only able to raise its arguments for the first time in a Motion for Reconsideration, which was denied.
At this point, the Firm was engaged by the domestic corporation for the protection of its rights against the immediate execution of the void arbitral award. In a Petition for Certiorari, assailing the jurisdiction of the trial court, the Firm argued that the trial court did not acquire jurisdiction over the case due to the foreign corporation’s failure to submit authentic copies of the arbitration agreement and arbitral award. This jurisdictional defect prevented the trial court from acquiring jurisdiction over the petition for recognition and enforcement, and determining whether the arbitral award should be recognized. Further, the Firm cited several instances whereby its client was deprived of due process in the trial court’s conduct of the proceedings.
The Firm successfully secured a temporary restraining order against the immediate execution of the foreign arbitral award in the amount of around PHP 400 million, and later obtained a favorable resolution whereby the appellate court declared the recognition and enforcement of the foreign arbitral award void for having been issued without jurisdiction.
KEY WORK NO. 4: Recovering Payments for Accepted Structure
Completion date: Ongoing
The Firm is prosecuting the claim of a client based on a Construction Agreement pending before the Construction Industry Arbitration Commission. Said Agreement involves an undertaking to construct a multi-purpose commercial building with a Contract Price of One Hundred Six Million Six Hundred Seventy-Eight Thousand Eight Hundred Eight Pesos and 3/100 cents (PhP106,678,808.03).
Upon completion of said project, the counterparty issued a Certificate of Final Acceptance, stating that the project had been completed to their satisfaction. Thus, the client requested for payment of all remaining payments due, including the four (4) Variation Orders in the amount of Fifty-Six Million Three Hundred Forty-Five Thousand Ninety Pesos and 51/100 cents (PhP 56,345,090.51). However, the counterparty refused to pay said amount by unjustly and baselessly claiming that the client was guilty of contractual delay and is liable for liquidated damages.
The parties recently finished presenting their evidence in this case. With the sheer amount of evidence proving counterparty’s liability, coupled with their admissions set forth in their submissions, there is a strong likelihood that the Firm can obtain a favorable judgment in this case.
KEY WORK NO. 5: Recovering Construction Costs for a Completed Project and Defending Against Claims related to the Covid-19 Pandemic
Completion date: Ongoing
The Firm is prosecuting the claim of a client based on a Design and Construction Agreement to design and construct a 33-storey building with a contract price of Two Billion Eighty-Seven Million Seven Hundred Seventy-One Thousand (PhP 2,087,771,000.00) in a Commercial District in Metro Manila.
Upon completion of 95.94% of the project, the client requested for payment of Progress Billing for PhP 2,770,471,750.32. However, the counterparty refused to pay said amount by unjustly claiming that the client failed to reach substantial completion of the project and that it is entitled to liquidated damages. Thus, the client was forced to file a claim for specific performance under the Construction Industry Arbitration Commission. The Firm continuously argues that the counterparty has already received the substantial part of the project in good tenantable condition, allowing tenants to use and occupy said spaces; thus, entitling the client to payment of the finished portion; and that the counterparty is only entitled to reduced penalties and/or liquidated damages since the delays were attributable to the latter.
In the same proceedings, the counterparty filed a permissive counterclaim involving another construction project valued at Four Billion Two Hundred Fifty Million Pesos (Php4,250,000,000.00) in a Commercial District in Metro Manila, which was delayed because of the COVID-19 pandemic. The Firm is also defending the client against the claims of the counterparty, seeking recovery of liquidated damages and costs to complete the project in the amount of One Billion Five Hundred Twenty-Seven Million and Two Hundred Seventy-Nine Thousand Pesos (Php1,527,279.41)
Using the Firm’ comprehensive approach, the client was able to present evidence that it was the counterparty who unduly terminated the contract after delaying its approval of the reasonable and legally mandated client’s request for extension of time to complete the project and to recover costs incurred in relation to the pandemic. The parties recently finished presenting their evidence on both construction projects.
KEY WORK NO. 6: Asserting due process as a ground to resist the enforcement of a foreign arbitral award
Completion date: Ongoing
Due process, a malleable concept anchored on fairness and equity is part and parcel of any litigation before any court or tribunal—local or foreign. When a foreign tribunal tolerates the violation of a party’s due process and renders a lopsided foreign arbitral award, the Philippine courts must step in.
The Firm assisted its client, an equipment rental company, in an arbitration case before the Singapore International Arbitration Center (SIAC). However, the foreign arbitral award was issued against the Firm’s client due to the tribunal’s uneven application of its procedural rules. While the arbitral tribunal granted several accommodations to the opposing party, the tribunal deprived the Firm’s client from availing of a simple procedural remedy which would have altered the results of the arbitration case.
The Firm is currently assisting its client in a petition to set aside the arbitral award filed in the High Court of Singapore. The Firm also filed a court action to refuse the enforcement of the foreign arbitral award in the Philippines due to violation of due process. While the petition was denied by the trial court, it is currently pending with the Court of Appeals. This may well be a future landmark case to serve as a reminder that due process is a non-negotiable in all types of proceedings in any venue, whether local or abroad.
KEY WORK NO. 7: Leading trainings and seminars on arbitration in the Philippines
Completion date: Ongoing
The Firm regularly leads and conducts trainings and webinars on legal matters, including the Enforcement of Foreign Arbitral Awards in the Philippines. Senior Partner Enrique V. Dela Cruz, Jr. was a lecturer in the Mandatory Continuing Legal Education (MCLE) program of the University of Sto. Tomas (UST) and the MCLE webinar organized by the Integrated Bar of the Philippines Cebu City Chapter on the Enforcement of Foreign Commercial Arbitration Awards. Among the training and seminars conducted by Senior Partner Enrique V. Dela Cruz, Jr. include: Conventus Law: Heart of the Matter podcast (March 16, 20, 23, 27 3023)—Overview of Philippines Arbitration Landscape (March 16 2023), Enforcement of Arbitration Awards in the Philippines (March 20, 2023), Technology and Arbitration in the Philippines (March 23, 2023) The Role of ADR in relation to FDI to the Philippines (March 27, 2023), ICAM – Philippine Construction Arbitration Conference 2023 (March 31, 2023); SIAC Manila Conference Panel discussion – “Corporate Disputes Best Practices” (May 25, 2023). He was also a commenter in the talks on “How to Engage the Services of a Construction Legal Counsel” and “What to do After Winning a CIAC Construction Case”, which featured Dr. Ernesto S. De Castro and Atty. Louie T. Ogsimer as speakers, respectively.
