Rcbc vs BDO

May 24, 2004 RCBC entered into a Share Purchase Agreement

with Equitable Bank
George L. go and the individual shareholders, of bankcard for the
sale to RCBC 226, 460 shares of Bankcard which is 67% of the
latters capital stock.
After completing payment of contract price 1,786,769, 400 the
corresponding deeds of sale over the subject
The dispute between the parties arose sometime in May 2003
when RCBC informe EPCID and the other selling shareholders of
an overpayment of the subject shared
Claiming there was an overstatement of valuation of accounts to
478M and that the sellers violated their warranty under Sec5 of
the SPA
Rcbc charged bankard that there has been overpayment of 556M
Because of the violation of the sellers representation and
warranties under the SPA the RCBC sought its recissian as well
payment of damages of 573, 132,110, legal interest on purchase
price until actual restituition moral damages and litigation and
attys fees with alternative prayer of demand fo 809,796, 082
Million
EPCIB denied RCBCs allegation, that RCBCs claim is one for
overpayment or price reduction uder section5(h) of SPA
RCBC failed to file its claim within reasonable time.
RCBS is not entitled to alternative prayer for damages because of
laches
counterclaim

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Litigation - Philippines
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Supreme Court considers partiality of arbitrator in providing article
April 23 2013

Introduction
Decision
Comment
Introduction
In RCBC Capital Corporation v Banco de Oro Unibank Inc (GR 196171,
December 10 2012) the respondent refused to pay its share of the
advance on arbitration costs, as fixed by the International Chamber of
Commerce (ICC) International Court of Arbitration. The respondent claimed
that the amount of the claim was substantially higher more than 40 times
than the total amount of the counterclaims. The court instructed the
arbitration tribunal to suspend its work unless the parties paid the balance
of the advance within 15 days. In view of the respondent's ongoing refusal
to pay its share, the claimant was compelled to pay all advance costs and
sought to declare the respondent in default, with no right to participate in
the proceedings.
Decision
In a letter to the parties, the chairman wrote that the tribunal had no power
under ICC rules to order the respondent to pay the advance costs sought
by the ICC or to give the claimant relief. It may have been possible for the
claimant, in the course of the arbitral hearing, to make submissions based
on the failure of the respondent to pay its share. Relief, if any, would need
to be determined by the tribunal after hearing submissions from the
respondent.
The majority of the tribunal rendered a first partial award, which reserved a
resolution on costs to a further or final award.
In another letter, the claimant reiterated its plea that the respondent be
declared in default and the counterclaims deemed withdrawn. In response,
the chairman ruled that the tribunal had no jurisdiction to declare that the
respondent had no right to participate in the proceedings. Article 36(4) of
the ICC rules applies only to counterclaims. The tribunal interpreted the
claimant's letter as an application to the tribunal for the issuance of a
partial award against the respondent in respect of its failure to pay. The
claimant confirmed the tribunal's interpretation.
In the ensuing hearing, the chairman advised the parties as follows:
"1. The Tribunal acknowledges the Respondent's response to the
Claimant's application for a Partial Award, based on the Respondent's
failure to pay its share of the costs, as requested by the ICC.
2. The Tribunal notes that neither party has referred to an article by
Mat[t]hew Secomb on this very subject which appears in the ICC
Bulletin Vol. 14 No.1 (Spring 2003). To assist both sides and to
ensure that the Tribunal does not consider material on which the
parties have not been given an opportunity to address, I attach a

copy of this article, which also contains reference to other scholarly

works on the subject.
3. The Tribunal will give each party seven days within which to submit
further written comments as a consequence of being alerted to the
above authorities."
The parties submitted their comments with the claimant contending that
based on Secomb's article, whether the contractual or provisional
measures approach was applied, the tribunal was vested with jurisdiction
and authority to render an award with respect to the reimbursement of
costs paid by the non-defaulting party.
The respondent, on the other hand, maintained that the claimant's
application for reimbursement of costs had no basis under the ICC rules.
According to the respondent, the matter of costs for arbitration is between
the ICC and the parties, not the tribunal and the parties. An arbitration
tribunal can issue decisions only on those costs not fixed by the ICC.
The respondent also argued that a party's reimbursement for payments of
the defaulting party's share depends on the final arbitral award where the
party liable for costs would be determined. The tribunal then rendered a
second partial award requiring the respondent to pay the claimant the
costs it advanced and to consider the respondent's counterclaim
withdrawn.
Thereafter, the claimant filed a motion in court to confirm the second partial
award, while the respondent filed a motion to vacate the second partial
award. The court confirmed the second partial award and denied the
respondent's motion to vacate the same.
Acting on a petition for certiorari, the Court of Appeals reversed the order
of the lower court and set aside the second partial award.
On petition for review, the Supreme Court upheld the Court of Appeals'
ruling that in treating the letter of the claimant as an application for a partial
award and in furnishing the parties with a copy of Secomb's article - which
favoured the claimant by advancing its cause - the chairman acted with
partiality. The Supreme Court adopted the reasonable impression of
partiality standard and held that the act of furnishing the parties with
Secomb's article, considering the attendant circumstances, was indicative
of partiality such that a reasonable individual would have to conclude that it
was favouring the claimant. Even before the issuance of the second partial
award for the reimbursement of the advance on costs paid by the claimant,
the chairman exhibited strong inclination to grant such relief,
notwithstanding his earlier categorical ruling that the tribunal had no power
under ICC rules to order the respondent to pay the advance on costs
sought by the ICC or to give the claimant any relief against respondent's
refusal to pay.
Secomb's article, "Awards and Orders Dealing with the Advance on Costs

in ICC Arbitration: Theoretical Questions and Practical Problems", states:

"As we can see, the Rules have certain mechanisms to deal with
defaulting parties. Occasionally, however, parties have sought to use other
methods to tackle the problem of a party refusing to pay its part of the
advance on costs. These have included seeking an order or award from
the arbitral tribunal condemning the defaulting party to pay its share of the
advance on costs. Such applications are the subject of this article."
According to the Supreme Court, by furnishing both parties with a copy of
the article (although purportedly done to assist both parties), the chairman
provided the claimant with supporting legal arguments. This bolstered the
impression that the chairman was pre-disposed to grant relief to the
claimant. The court found the chairman's act clearly violated Article 15 of
the ICC rules and declared that "in all cases, the Arbitration Tribunal shall
act fairly and in partiality and ensure that each party has a reasonable
opportunity to present its case".
Comment
In furnishing both parties with a copy of an article, and in providing both
parties the opportunity to submit their comments, the chairman did not act
with partiality nor did he pre-judge the issue. It is quite common, even in
litigation, for a judge to call the attention of both parties to certain rules or
decisions which the parties may have omitted in argument, and to ask
them to comment on their applicability or pertinence in the resolution of an
issue. Such action by itself does not amount to partiality or pre-judgment.
Indeed, the tribunal may have furnished the article in an effort to guide the
parties, shorten proceedings and conduct the arbitration in an expeditious
manner. After the issuance of the second partial award (but before the
Supreme Court issued its resolution), the same tribunal rendered a final
award in favour of the claimant. After the court confirmed and ordered
enforcement of the final award, both the Court of Appeals and the
Supreme Court refused to stay or enjoin its enforcement.
For further information on this topic please contact Eduardo de los Angeles
at Romulo Mabanta Buenaventura Sayoc & De Los Angeles by telephone
(+63 2 848 0114), fax (+63 2 815 3172) or email