G.R. No.

196723 August 28, 2013 "validity, interpretation, enforceability, and followed by several correspondences between
ASIAN CONSTRUCTION AND DEVELOPMENT performance of the same shall be governed by the parties through 1999 to 2007 but no
CORPORATION, Petitioner, and construed in accordance with the law of the settlement was achieved.21
vs. State of New York, U.S.A. (New York State Law), The Proceedings Before the Arbitral Tribunal
SUMITOMO CORPORATION, Respondent. without regard to, or legal effect of, the conflicts On September 2, 2008, Asian Construction filed
x-----------------------x of law provisions thereof"11 and that any dispute, a complaint22 with the CIAC, docketed as CIAC
G.R. No. 196728 controversy or claim arising therefrom "shall be Case No. 28-2008, seeking payment for its
SUMITOMO CORPORATION, Petitioner, solely and finally settled by arbitration."12 alleged losses and reimbursements amounting to
vs. In May 1996, Sumitomo paid Asian Construction US$9,501,413.13, plus attorney’s fees in the
ASIAN CONSTRUCTION AND DEVELOPMENT the amount of US$2,997,300.00 as advance amount of ₱2,000,000.00.23 As a matter of
CORPORATION, Respondent. payment to be recovered in accordance with the course, an Arbitral Tribunal was constituted, with
DECISION terms of the Agreement. Later, an additional Alfredo F. Tadiar being designated as Chairman,
PERLAS-BERNABE, J.: advance payment of US$1,998,200.00 was made and Salvador P. Castro and Jesse B. Grove as
Before the Court are consolidated petitions for in October 1997.13 In all, Asian Construction Members.24
review on certiorari which assail separate received from Sumitomo the amount of For its part, Sumitomo filed a Motion to
issuances of the Court of Appeals (C A) in relation US$9,731,606.62, inclusive of the advance Dismiss,25 questioning the CIAC’s jurisdiction
to the partial and final awards rendered by the payments (before withholding tax of over the dispute on the ground that the arbitration
Construction Industry Arbitration Commission's US$97,308.44).14 should proceed in accordance with the
(CIAC) Arbitral Tribunal (Arbitral Tribunal) in On September 1, 1998, Sumitomo informed Commercial Arbitration Rules of Japan.26
CIAC Case No. 28-2008. Asian Construction that it was terminating the However, the aforesaid motion was denied.27 As
In particular, the petition in G.R. No. 1967231 filed Agreement effective September 5, 1998 due to such, Sumitomo filed an Answer,28 reiterating the
by Asian Construction and Development the following reasons: (a) Asian Construction’s CIAC’s alleged lack of jurisdiction and further
Corporation (Asian Construction) seeks to annul failure "to perform and complete the civil work for asserting that the claim was already time-barred.
and set aside the CA’s Resolutions dated July 23, Notice to Proceed issued construction areas It added that had Asian Construction discharged
20102 and April 18, 20113 in CA-G.R. SP No. within the duration of the Time Schedule in the its obligations under the Agreement to itemize
112127 which dismissed its appeal from the ‘Contract Specification of Civil and Architectural and justify its claims, the same could have been
Arbitral Tribunal’s Partial Award4 dated Works (Station No. 8 to Station No. 13) x x x’"; (b) amicably settled years ago. In this respect, it
December 15, 2009 (Partial Award) on the Asian Construction’s failure to "provide adequate made a counterclaim for the unutilized portion of
ground of forum shopping; while the petition in traffic management as required in the Scope of the advance payments, attorney’s fees and costs
G.R. No. 1967285 filed by Sumitomo Corporation Works pursuant to subparagraph 5.2.4 of the of litigation in the amount of at least
(Sumitomo) seeks to annul and set aside the Contract Specification of Civil and Architectural ₱10,000,000.00.29
CA’s Decision6 dated January 26, 2011 and Work"; and (c) Asian Construction’s failure to Subsequently, the parties signed a
Resolution7 dated April 29, 2011 in CA-G.R. SP "pay the suppliers of certain materials and TOR,30 stipulating the admitted facts and defining
No. 113828 which modified the Arbitral Tribunal’s equipment used in the construction of the Project the issues to be determined in the arbitration
Final Award8 dated March 17, 2010 (Final Award) in violation of paragraph 3.1.3, Article 3 of the proceedings.
by way of deleting the award of attorney’s fees in Agreement."15 In view of the foregoing, Sumitomo On December 15, 2009, the Arbitral Tribunal
Sumitomo’s favor. requested Asian Construction to "make the rendered the Partial Award31 which affirmed its
The Facts necessary arrangements for the proper turnover jurisdiction over the dispute but held that the
On March 15, 1996, Asian Construction entered of the Project x x x."16 Asian Construction, parties were bound by their Agreement that the
into a Civil Work Agreement9 (Agreement) with however, claimed that the accomplishments substantive New York State Law shall apply in the
Sumitomo for the construction of a portion of the under Progress Billing No. (PB) 01817 dated June resolution of the issues.32 It proceeded to dismiss
Light Rail Transit System along the Epifanio 10, 1998 and PB 01918 dated July 6, 1998, as well both the claims and counterclaims of the parties
Delos Santos Avenue, specifically, from Shaw as other various claims, were still left on the ground that these had already prescribed
Boulevard, Mandaluyong City to Taft Avenue, unpaid.19 Hence, on December 22, 1998, it sent under New York State Law’s six-year statute of
Pasay City for a total cost of US$19,982,000.00 Sumitomo a letter,20 demanding payment of the limitations33 and ruled that, in any case, were it to
(Project).10 The said Agreement provides that the total amount of US$6,371,530.89. This was resolve the same on the merits, "it would not
produce an affirmative recovery for the rata in the arbitration costs and, consequently, Meanwhile, the CA gave due course to Asian
claimant."34 directed Asian Construction to shoulder the same Construction’s Second CA Petition assailing the
Aggrieved, Asian Construction filed before the costs in full and reimburse Sumitomo the amount Final Award and rendered a Decision49 on
CA, on January 5, 2010, a Rule 43 Petition for of ₱849,532.45. However, it ordered Sumitomo to January 26, 2011, upholding the Arbitral
Review,35 docketed as CA-G.R. SP No. 112127 bear all the expenses related to the appointment Tribunal’s ruling except the award of attorney’s
(First CA Petition), seeking the reversal of the of the foreign arbitrator considering that such fees in favor of Sumitomo. The CA held that the
Partial Award. service was secured upon its own initiative and fact that Asian Construction initiated an action or
Meanwhile, notwithstanding its dismissal of the without the participation and consent of Asian refused to compromise its claims cannot be
claims and counterclaims, the Arbitral Tribunal Construction.44 considered unjustified or made in bad faith as to
further directed the parties to itemize their Dissatisfied with the Arbitral Tribunal’s ruling, entitle Sumitomo to the aforesaid award.
respective claims for costs and attorney’s fees Asian Construction filed another Rule 43 Petition Consequently, Sumitomo moved for
and to submit factual proof and legal bases for for Review45 before the CA, on May 3, 2010, reconsideration,50 asserting that Asian
their entitlement thereto.36 Pursuant to this docketed as CA-G.R. SP No. 113828 (Second Construction’s Second CA Petition should have
directive, Sumitomo submitted evidence to prove CA Petition), this time, to set aside the Final instead been dismissed in its entirety considering
the costs it had incurred and paid as a result of Award. In this light, it claimed gross negligence their Agreement that the Arbitral Tribunal’s
the arbitration proceedings.37 Asian Construction, and partiality on the part of the Arbitral Tribunal decisions and awards would be final and non-
on the other hand, did not present any statement and asserted, inter alia, that, apart from being a appealable. However, in a Resolution51 dated
or document to substantiate its claims but, non-arbitrable issue, an award of attorney’s fees April 29, 2011, the CA denied the motion for
instead, submitted an Opposition38 dated March would be premature since the prevailing party can reconsideration. Thus, Sumitomo’s petition
8, 2010 (opposition) to Sumitomo’s claim for only be determined when the case is decided with before the Court, docketed as G.R. No. 196728.
costs. The Arbitral Tribunal did not act upon the finality. Moreover, it maintained that both claims The Issues Before the Court
opposition because it was treated, in effect, as a of Asian Construction and the counterclaims of The essential issues for the Court’s resolution are
motion for reconsideration which was prohibited Sumitomo had already been dismissed for being as follows: (a) in G.R. No. 196723, whether or not
under the CIAC Revised Rules of Procedure time-barred.46 the CA erred in dismissing Asian Construction’s
Governing Construction Arbitration (CIAC The CA Ruling First CA Petition on the ground of forum
Revised Rules).39 On July 23, 2010, the CA rendered a shopping; and (b) in G.R. No. 196728, whether or
On March 17, 2010, the Arbitral Tribunal Resolution47 (July 23, 2010 Resolution), not the CA erred in reviewing and modifying the
rendered the Final Award40 which granted dismissing Asian Construction’s First CA Petition Final Award which Sumitomo insists to be final
Sumitomo’s claim for attorney’s fees in the against the Partial Award on the ground of forum- and unappealable.
amount of US$200,000.00. It held that while the shopping, after it was shown that: (a) the The Court’s Ruling
filing of the arbitration suit cannot be regarded as aforesaid petition was filed while the arbitration The petitions should be denied.
"clearly unfounded" because of the two progress case was still pending final resolution before the A. Dismissal of Asian
billings that were left unpaid, Asian Construction’s Arbitral Tribunal; and (b) Asian Construction’s Construction’s First CA
disregard of the Agreement to have the dispute opposition to Sumitomo’s claim for costs filed Petition; forum shopping.
resolved in accordance with New York State Law before the Arbitral Tribunal had, in fact, effectively Forum shopping is the act of a litigant who
had forced Sumitomo to incur attorney’s fees in sought for the same relief and stated the same repetitively availed of several judicial remedies in
order to defend its interest.41 It further noted that allegations as those in its First CA Petition. The different courts, simultaneously or successively,
if Asian Construction had accepted the settlement CA also noted Asian Construction’s premature all substantially founded on the same
offered by Sumitomo, then, the arbitration resort to a petition for review because what was transactions and the same essential facts and
proceedings would have even been sought to be nullified was not a final award, but circumstances, and all raising substantially the
aborted.42 On the other hand, a similar claim for only a partial one. The CA eventually denied same issues, either pending in or already
attorney’s fees made by Asian Construction was Asian Construction’s motion for reconsideration resolved adversely by some other court, to
denied by reason of the latter’s failure to submit, in a Resolution48 dated April 18, 2011. Hence, increase his chances of obtaining a favorable
as directed, proof of its entitlement thereto.43 As Asian Construction’s petition before the Court, decision if not in one court, then in another. More
to the matter of costs, the Arbitral Tribunal docketed as G.R. No. 196723. particularly, forum shopping can be committed in
declared Sumitomo relieved from sharing pro- three ways, namely: (a) by filing multiple cases
based on the same cause of action and with the the Partial Award in the same manner as its First Circular (RAC) No. 1-95,60 modified this rule,
same prayer, the previous case not having been CA Petition. It cannot, therefore, be doubted that directing that the appeals from the arbitral award
resolved yet (where the ground for dismissal is it treaded the course of forum shopping, of the CIAC be first brought to the CA on
litis pendentia); (b) by filing multiple cases based warranting the dismissal of the aforesaid petition. "questions of fact, law or mixed questions of fact
on the same cause of action and with the same In any case, the Court observes that the First CA and law." This amendment was eventually
prayer, the previous case having been finally Petition remains dismissible since the CIAC transposed into the present CIAC Revised Rules
resolved (where the ground for dismissal is res Revised Rules provides for the resort to the which direct that "a petition for review from a final
judicata); and (c) by filing multiple cases based remedy of a petition for review only against a final award may be taken by any of the parties within
on the same cause of action but with different arbitral award,55 and not a partial award, as in this fifteen (15) days from receipt thereof in
prayers (splitting of causes of action, where the case. accordance with the provisions of Rule 43 of the
ground for dismissal is also either litis pendentia In fine, the Court upholds the CA’s dismissal of Rules of Court."61 Notably, the current provision
or res judicata).52 Forum shopping is treated as Asian Construction’s petition in CA-G.R. SP No. is in harmony with the Court’s pronouncement
an act of malpractice and, in this accord, 112127 (First CA Petition) and based on this, that "despite statutory provisions making the
constitutes a ground for the summary dismissal of denies its petition in G.R. No. 196723. decisions of certain administrative agencies
the actions involved.53 To be sure, the rule B. Review and modification of the Final Award. ‘final,’ the Court still takes cognizance of petitions
against forum shopping seeks to prevent the Sumitomo Corporation faults the CA for reviewing showing want of jurisdiction, grave abuse of
vexation brought upon the courts and the litigants and modifying a final and non-appealable arbitral discretion, violation of due process, denial of
by a party who asks different courts to rule on the award and insists that the Asian Construction’s substantial justice or erroneous interpretation of
same or related causes and grant the same or Second CA Petition should have been, instead, the law" and that, in particular, "voluntary
substantially the same reliefs and in the process dismissed outright. It mainly argues that by arbitrators, by the nature of their functions, act in
creates the possibility of conflicting decisions entering into stipulations in the arbitration clause a quasi-judicial capacity, such that their decisions
being rendered by the different fora upon the – which provides that "the order or award of the are within the scope of judicial review."62
same issues.54 arbitrators will be the sole and exclusive remedy In this case, the Court finds that the CA correctly
In this case, the Court finds that the CA between the parties regarding any and all claims reviewed and modified the Arbitral Tribunal’s
committed no reversible error in dismissing Asian and counterclaims with respect to the matter of Final Award insofar as the award of attorney’s
Construction’s First CA Petition on the ground of the arbitrated dispute"56 and that "the order or fees in favor of Sumitomo is concerned since the
forum shopping since the relief sought (i.e., the award rendered in connection with an arbitration same arose from an erroneous interpretation of
reconsideration of the Partial Award) and the shall be final and binding upon the the law.1âwphi1
allegations stated therein are identical to its parties,"57 Asian Construction effectively waived To elucidate, jurisprudence dictates that in the
opposition to Sumitomo’s claim for costs filed any and all appeals from the Arbitral Tribunal’s absence of a governing stipulation, attorney’s
before the Arbitral Tribunal while CIAC Case No. decision or award. fees may be awarded only in case the plaintiff's
28-2008 was still pending. These circumstances Sumitomo’s argument is untenable. action or defendant's stand is so untenable as to
clearly square with the first kind of forum A brief exegesis on the development of the amount to gross and evident bad faith.63 This is
shopping which thereby impels the dismissal of procedural rules governing CIAC cases clearly embodied in Article 2208 of the Civil Code which
the First CA Petition on the ground of litis shows that a final award rendered by the Arbitral states:
pendentia. Tribunal is not absolutely insulated from judicial Article 2208. In the absence of stipulation,
On this score, it is apt to point out that Asian review. attorney's fees and expenses of litigation, other
Construction’s argument that it merely complied To begin, Executive Order No. (EO) than judicial costs, cannot be recovered, except:
with the directive of the Arbitral Tribunal cannot 1008,58 which vests upon the CIAC original and xxxx
be given any credence since it (as well as exclusive jurisdiction over disputes arising from, (5) Where the defendant acted in gross and
Sumitomo) was only directed to submit evidence or connected with, contracts entered into by evident bad faith in refusing to satisfy the
to prove the costs it had incurred and paid as a parties involved in construction in the Philippines, plaintiff's64 plainly valid, just and demandable
result of the arbitration proceedings. However, at plainly states that the arbitral award "shall be final claim;
variance with the tribunal’s directive, Asian and inappealable except on questions of law xxxx
Construction, in its opposition to Sumitomo’s which shall be appealable to the Court."59 Later, In this case, the parties agreed that reasonable
claim for costs, proceeded to seek the reversal of however, the Court, in Revised Administrative attorney’s fees shall be paid by the defaulting
party if it fails to perform any of its obligations
under the Agreement or by the party not
prevailing, if any dispute concerning the meaning
and interpretation thereto arises.65 However,
since the parties’ respective claims under the
Agreement had already prescribed pursuant to
New York State Law, considering as well that the
dispute was not regarding the meaning or
construction of any provision under the
Agreement,66 their stipulation on attorney’s fees
should remain inoperative. Therefore,
discounting the application of the foregoing
stipulation, the Court proceeds to examine the
matter under the lens of bad faith pursuant to the
above-discussed rules on attorney’s fees.
After a careful scrutiny of the records, the Court
observes that there was no gross and evident bad
faith on the part of Asian Construction in filing its
complaint against Sumitomo since it was merely
seeking payment of its unpaid works done
pursuant to the Agreement. Neither can its
subsequent refusal to accept Sumitomo’s offered
compromise be classified as a badge of bad faith
since it was within its right to either accept or
reject the same owing to its contractual
nature.67 Verily, absent any other just or equitable
reason to rule otherwise,68 these incidents are
clearly off-tangent with a finding of gross and
evident bad faith which altogether negates
Sumitomo’s entitlement to attorney’s fees.
Hence, finding the CA’s review of the Final Award
and its consequent deletion of the award of
attorney’s fees to be proper, the Court similarly
denies Sumitomo’s petition in G.R. No. 196728.
WHEREFORE, the petitions are DENIED. The
Resolutions dated July 23, 2010 and April 18,
2011 of the Court of Appeals in CA-G.R. SP No.
112127, as well as its Decision dated January 26,
2011 and Resolution dated April 29, 2011 in CA-
G.R. SP No. 113828 are hereby AFFIRMED.
SO ORDERED.