EQUITABLE PCI BANKING CORPORATION vs.

RCBC CAPITAL
CORPORATION
G.R. No. 182248 December 18, 2008

This Petition for Review on Certiorari under Rule 45 seeks the reversal of the January 8,
2008 and March 17, 2008 Orders of the Regional Trial Court (RTC), Branch 148 in Makati
City in SP Proc. Case No. 6046, entitled In the Matter of ICC Arbitration Ref. No.
13290/MS/JB/JEM Between RCBC Capital Corporation, (Claimant), and Equitable PCI Banking
Corporation, Inc. et al., (Respondents). The assailed January 8, 2008 Order confirmed the
Partial Award dated September 27, 2007] rendered by the International Chamber of
Commerce-International Court of Arbitration (ICC-ICA) in Case No. 13290/MS/JB/JEM,
entitled RCBC Capital Corporation (Philippines) v. Equitable PCI Bank, Inc. & Others
(Philippines). The March 17, 2008 Order denied petitioners motion for reconsideration of
the January 8, 2008 Order.
The Facts:

Petitioners Equitable PCI Bank, Inc. (EPCIB) and the individual shareholders of
Bankard, Inc., as sellers, and respondent RCBC Capital Corporation (RCBC), as buyer,
executed a Share Purchase Agreement5 (SPA) for the purchase of petitioners interests in
Bankard, representing 226,460,000 shares, for the price of PhP 1,786,769,400. To expedite
the purchase, RCBC agreed to dispense with the conduct of a due diligence audit on the
financial status of Bankard. RCBC deposited the stipulated downpayment amount in an
escrow account after which it was given full management and operational control of
Bankard. June 2, 2000 is also considered by the parties as the Closing Date referred to in
the SPA. Sometime in September 2000, RCBC had Bankards accounts audited, creating
for the purpose an audit team and the conclusion was that the warranty, as contained in
Section 5(h) of the SPA (simply Sec. 5[h] hereinafter), was correct. RCBC paid the balance
of the contract price.

The corresponding deeds of sale for the shares in question were executed in
January 2001. Thereafter RCBC informed petitioners of its having overpaid the purchase
price of the subject shares, claiming that there was an overstatement of valuation of
accounts amounting to PhP 478 million, resulting in the overpayment of over PhP 616
million. Thus, RCBC claimed that petitioners violated their warranty, as sellers,
embodied in Sec. 5(g) of the SPA (Sec. 5[g] hereinafter). RCBC, in accordance with Sec. 10
of the SPA, filed a Request for Arbitration dated May 12, 2004 with the ICC-ICA. In the
request, RCBC charged Bankard with deviating from, contravening and not following
generally accepted accounting principles and practices in maintaining their books.
Arbitration in the ICC-ICA proceeded after the formation of the arbitration tribunal. After
drawn out proceedings with each party alleging deviation and non-compliance by the
other with arbitration rules, the tribunal, rendered a Partial Award.

Issue: WON there is manifest disregard of the law by the ICC-ICA

Held:

The petition must be denied. This is a procedural miscue for petitioners who
erroneously bypassed the Court of Appeals (CA) in pursuit of its appeal. While this
procedural gaffe has not been raised by RCBC, still we would be remiss in not pointing
out the proper mode of appeal from a decision of the RTC confirming, vacating, setting
aside, modifying, or correcting an arbitral award.

Rule 45 is not the remedy available to petitioners as the proper mode of appeal
assailing the decision of the RTC confirming as arbitral award is an appeal before the CA
pursuant to Sec. 46 of Republic Act No. (RA) 9285, otherwise known as the Alternative
Dispute Resolution Act of 2004.
 This law was already effective at the time the arbitral proceedings were
commenced by RCBC through a request for arbitration filed before the ICC-ICA on May
12, 2004. A party asking for the vacation of an arbitral award must show that any of the
grounds for vacating, rescinding, or modifying an award are present or that the arbitral
award was made in manifest disregard of the law. Otherwise, the Court is duty-bound to
uphold an arbitral award.

The instant petition dwells on the alleged manifest disregard of the law by the
ICC-ICA. When faced with questions of law, an arbitration panel does not act in manifest
disregard of the law unless (1) the applicable legal principle is clearly defined and not
subject to reasonable debate; and (2) the arbitrators refused to heed that legal principle.
Thus, to justify the vacation of an arbitral award on account of "manifest disregard of the
law," the arbiters findings must clearly and unequivocally violate an established legal
precedent. Anything less would not suffice. A review of petitioners arguments would,
however, show that their arguments are bereft of merit. Thus, the Partial Award cannot
be vacated. RCBCs Claim Is Not Time-Barred. The Court upholds the conclusion of the
tribunal and rules that the claim of RCBC under Sec. 5(g) is not time-barred.

The well-settled rule is that administrative agencies exercising quasi-judicial

powers shall not be fettered by the rigid technicalities of procedure, albeit they are, at all
times required, to adhere to the basic concepts of fair play. The right to cross-examine is
not an indispensable aspect of due process. RCBC Is Not Estopped from Questioning the
Financial Condition of Bankard. The findings of the ICC-ICA in the Partial Award are
well-supported in law and grounded on facts. The Partial Award must be upheld. The
member of the three-person arbitration panel was selected by petitioners, while another
was respondents choice. The respective interests of the parties, therefore, are very much
safeguarded in the arbitration proceedings. Any suggestion, therefore, on the partiality
of the arbitration tribunal has to be dismissed.
BOLEYLEY vs. VILLANUEVA and SURLA

G.R. No. 128734 September 14, 1999

The case before the Court is a special civil action for certiorari assailing the orders of the
Regional Trial Court, Branch 7, Baguio City that granted private respondent's motion to
dismiss the complaint below on the ground that petitioner did not refer the action to the
barangay lupon for conciliation or settlement before filing the case in court, as prescribed
in the Revised Katarungan Pambarangay Law.

Facts:

On August 7, 1996, petitioner Angel L. Boleyley filed with the Regional Trial
Court, Baguio City, a complaint against private respondent for collection of a sum of
money. Private respondent Albert S. Surla filed with the trial court a motion to dismiss
the complaint on the ground that petitioner did not comply with the Revised Katarungan
Pambarangay Law requiring as a condition for the filing of a complaint in court referral
of the matter to the barangay lupon chairman or the pangkat, for conciliation or
settlement. Petitioner filed an opposition to motion to dismiss on the ground that private
respondent was not a resident of Baguio City so that the dispute involving the parties
was not within the authority of the lupon to bring together for conciliation or
settlement. The trial court issued an order dismissing the case for being premature, for
not having been referred to the barangay lupon. Petitioner filed with the trial court a
motion for reconsideration on the ground that private respondent could not invoke the
Katarungan Pambarangay Law because he was not a resident of Baguio City. The trial
court resolved to deny the motion for reconsideration for lack of merit, notice of which
denial was received by petitioner on March 4, 1997.
Issue:

Whether or not petitioner was bound to refer the dispute to the barangay lupon or
pangkat for conciliation or settlement before he could file an action for collection with the
Regional Trial Court.
Held:

No. It is a basic rule of procedure that "jurisdiction of the court over the subject
matter of the action is determined by the allegations of the complaint, irrespective of
whether or not the plaintiff is entitled to recover upon all or some of the claims asserted
therein. The jurisdiction of the court cannot be made to depend upon the defenses set up
in the answer or upon the motion to dismiss, for otherwise, the question of jurisdiction
would almost entirely depend upon the defendant. From the complaint filed, it is obvious
that the parties do not reside in the same city or municipality, and hence, the dispute is
exempted from the requirement of referral to the barangay lupon or pangkat for
conciliation or settlement prior to filing with the court. Consequently, we rule that there
is no need of prior referral of the dispute to the barangay lupon or pangkat in the absence
of showing in the complaint itself that the parties reside in the same city or municipality.
In thus dismissing the complaint for insufficiency of cause of action or pre-maturity, the
trial court committed grave abuse of discretion amounting to lack or excess of
jurisdiction, entitling petitioner to the relief prayed for.

The Court orders the trial court to forthwith deny private respondent's motion to
dismiss, and proceed to the disposition of the case with all deliberate dispatch.