PHILIPPINES Trends and Developments Contributed by: Ricardo Ma P. G. Ongkiko, John Christian Joy A. Regalado and Ma Patricia B. Paz-Jacoba, SyCip Salazar Hernandez & Gatmaitan
and assembling batteries when they engaged in the same business. Ramcar thereafter sought to vacate and/or correct the arbitral award by filing an action before the regional trial court (RTC), a first-level court in the Philippines. The RTC vacated the award, finding that Ramcar was a real party-in-interest and that the determination of whether OYBC had ceased its battery manufactur - ing business was not included in the Amended Terms of Reference (ATOR) that governed the arbitration. The Court of Appeals (CA) affirmed the RTC ruling, prompting GYC and GYIL to elevate the case to the Philippine Supreme Court. Given the distinct applicable rules governing the review of domestic arbitral awards and international commercial arbitral awards, the Philippine Supreme Court first determined that the case involved an inter - national commercial arbitration because the places of business of the parties were located in different states – the Philippines and Japan. The Supreme Court then explained that the Special ADR Rules explicitly state that an arbitral award shall be final and binding, but also authorise courts to vacate or set aside an arbi - tral award on limited grounds, which, in the case of international commercial arbitration, are enumerated in Article 34 of the Model Law and reproduced in Rule 12.4 of the Special ADR Rules. The Philippine Supreme Court ruled that the RTC and the CA correctly set aside the arbitral tribunal’s finding on the alleged cessation of OYBC’s battery manufac - turing business, as such matter was not included in the ATOR. The Supreme Court explained that this is a recognised ground for setting aside an international arbitral award under Rule 12.4 (a)(iii) of the Special ADR Rules. However, the Supreme Court ruled that the RTC and the CA should not have vacated the arbitral tribunal’s finding on Ramcar’s standing as a real party-in-interest. The Special ADR Rules prohibit a review of an arbitral award merely on the ground that it contains errors of fact, of law, or of fact and law. Ramcar’s standing, being a question of fact, is outside the scope of the court’s power to review an arbitral award.
The Philippine Supreme Court emphasised that courts cannot substitute their judgment for that of the arbitral tribunal, as doing so would weaken alternative dis - pute resolution mechanisms and allow losing parties to forum-shop for a more favourable ruling from the court, thereby eroding the obligatory force of arbi - tration agreements ( Fruehauf Electronics Philippines Corp v Technology Electronics Assembly and Man- agement Pacific Corp , GR No 204197, 23 November 2016). Global medical center in practice Roxaco - Asia Roxaco - Asia involved construction agreements between Roxaco-Asia Hospitality Corporation (“Roxa - co”) and Gulf Canary Construction and Development, Inc (“Gulf Canary”) for the construction of a 12-sto - rey hotel. The agreements required Gulf Canary to complete construction by 31 March 2015, unless an extension was authorised and approved in writing by Roxaco. When the construction was not completed on 31 March 2015, Roxaco and Gulf Canary agreed to engage a subcontractor to share in the works being performed by Gulf Canary in order to expedite the construction. Still, Gulf Canary was not able to com - plete the construction. As such, Roxaco called on Gulf Canary’s performance bond, terminated the construc - tion agreements, and filed a complaint against Gulf Canary before the CIAC. The CIAC Arbitral Tribunal ruled in favour of Roxaco, finding that (i) there was no valid extension of the com - pletion date; (ii) Gulf Canary was liable for liquidated damages for its delay; and (iii) Roxaco validly termi - nated the construction contracts. Gulf Canary chal - lenged the CIAC Arbitral Tribunal’s ruling on these three points before the CA. In its ruling, the CA held that it could review the arbi - tral award because the issues raised by Gulf Canary involved questions of law. It further reasoned that, even assuming the issues were factual, judicial review was warranted because the arbitral tribunal had exceeded its powers, or so imperfectly executed them, that a mutual, final, and definite award was not made. The CA then found that the parties agreed to an extended completion date, citing several documents, including meeting minutes and letters between the
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