Transfield Philippines Inc. Vs Lyzon Hydro Corp
Transfield Philippines Inc. Vs Lyzon Hydro Corp
Transfield Philippines Inc. Vs Lyzon Hydro Corp
15
neutrality as a forum and allows the parties to select and shape the 5 Rollo, pp. 1289-1293.
procedures and costs of dispute resolution. On the other hand, ICA 6 ANZ Bank’s Motion to be Excused, Id., at p. 1220; Security Bank’s
procedures are often informal and not laden with legal rights. R. H.
Motion to be Excused, Temporary Rollo.
FOLSOM, M. W. GORDON, J. A. SPANOGLE, JR., INTERNATIONAL
7 Motion for Leave to Set Case for Oral Argument, Id., at pp. 1747-
BUSINESS TRANSACTIONS, pp. 1113-1114 (2nd ed., 1 year published).
1751.
4 The award purportedly held that LHC wrongfully drew on the
securities; and that TPI is entitled to the return of the said sums, 18
liquidated damages, and liquidation costs.
18 SUPREME COURT REPORTS ANNOTATED that any judgment rendered in the other action will,
Transfield Philippines, Inc. vs. Luzon Hydro Corporation regardless of which party is successful,14 amount to res
judicata in the action under consideration.
There is no identity of causes of action between and
filed on 2 September 2005, with LHC arguing that the
among the arbitration case, the instant petition, and Civil
respective memoranda of the parties are sufficient for the
8 Case No. 04-332.
Court to resolve the issue of forum shopping. On 28
The arbitration case, ICC Case No. 11264 TE/MW, is an
October9 2005, TPI filed its Manifestation and Reiterative
arbitral proceeding commenced pursuant to the Turnkey
Motion to set the case for oral argument, where it
Contract between TPI and LHC, to determine the primary
manifested that the International Chamber of Commerce
issue of whether the delays in the construction of the
(ICC) arbitral tribunal had issued its Final Award ordering
project were excused delays, which would consequently
LHC to pay TPI US$24,533,730.00 (including the
render valid TPI’s claims for extension of time to finish the
US$17,977,815.00 proceeds of the two standby letters of
project. Together with the primary issue to be settled in the
credit). TPI also submitted a copy thereof with a
10 arbitration case is the equally important question of
Supplemental Petition to the Regional Trial Court (RTC), 11 monetary awards to the aggrieved party.
seeking recognition and enforcement of the said award.
On the other hand, Civil Case No. 00-1312, the
The essence of forum shopping is the filing of multiple
precursor of the instant petition, was filed to enjoin LHC
suits involving the same parties for the same cause of
from calling on the securities and respondent banks from
action, either simultaneously or successively,12 for the
transferring or paying the securities in case LHC calls on
purpose of obtaining a favorable judgment. Forum
them. However, in view of the fact that LHC collected the
shopping has likewise been defined as the act of a party
proceeds, TPI, in its appeal and petition for review asked
against whom an adverse judgment has been rendered in
that the same be returned and placed in escrow pending
one forum, seeking and possibly getting a favorable opinion
the resolution of the disputes before the ICC arbitral
in another forum, other than by appeal or the special civil 15
tribunal.
action of certiorari, or the institution of two or more actions
While the ICC case thus calls for a thorough review of
or proceedings grounded on the same cause on the
the facts which led to the delay in the construction of the
supposition that one13 or the other court would make a
project, as well as the attendant responsibilities of the
favorable disposition.
parties therein, in contrast, the present petition puts in
Thus, for forum shopping to exist, there must be (a)
issue the propriety of drawing on the letters of credit
identity of parties, or at least such parties as represent the
during the pendency of the arbitral case, and of course,
same interests in both actions; (b) identity of rights
absent a final determination by the ICC Arbitral tribunal.
asserted and relief prayed for, the relief being founded on
Moreover, as pointed out by TPI, it
the same facts; and (c) the identity of the two preceding
particulars is such
_______________
_______________ 14 Korea Exchange Bank v. Hon. Rogelio C. Gonzales, et al., G.R. Nos.
142286-87, 15 April 2005, 456 SCRA 224, 243, citing Benedicto v. Court of
8 Opposition, Id., at pp. 1757-1760.
Appeals, G.R. No. 125359, 4 September 2001, 364 SCRA 334.
9 Id., at pp. 1763-1767.
15 Rollo, p. 1270.
10 Id., at pp. 1823-1829.
11 TPI also submitted a copy of the Award, Id., at pp. 1768-1818. 20
12 Mondragon Leisure and Resorts Corporation v. United Coconut
Planters Bank, G.R. No. 154187, 14 April 2004, 427 SCRA 585, 590.
20 SUPREME COURT REPORTS ANNOTATED
13 Roxas v. Court of Appeals, G.R. No. 139337, 15 August 2001, 363
SCRA 207, 217. Transfield Philippines, Inc. vs. Luzon Hydro Corporation
19
did not pray for the return of the proceeds of the letters of
credit. What it asked instead is that the said moneys be
VOL. 490, MAY 19, 2006 19 placed in escrow until the final resolution of the arbitral
case. Meanwhile, in Civil Case No. 04-332, TPI no longer
Transfield Philippines, Inc. vs. Luzon Hydro Corporation
seeks the issuance of a provisional relief, but rather the
The Court agrees with TPI that it would be ineffectual to They shall have the power to subpoena witnesses and documents when
ask the ICC to issue writs of preliminary injunction against the relevancy of the testimony and the materiality thereof has been
Security Bank and ANZ Bank since these banks are not demonstrated to the arbitrators. Arbitrators may also require the
parties to the arbitration case, and that the ICC Arbitral retirement of any witness during the testimony of any other witness. All of
tribunal would not even be able to compel LHC to obey any the arbitrators appointed in any controversy must attend all the hearings
16
writ of preliminary injunction issued from its end. Civil in that matter and hear all the allegations and proofs of the parties; but
Case No. 04-322, on the other hand, logically involves TPI an award by the majority of them is valid unless the concurrence of all of
and LHC only, they being the parties to the arbitration them is expressly required in the submission or contract to arbitrate. The
agreement whose partial award is sought to be enforced. arbitrator or arbitrators shall have the power at any time, before
As a fundamental point, the pendency of arbitral rendering the award, without prejudice to the rights of any party to
proceedings does not foreclose resort to the courts for petition the court to take measures to safeguard and/or conserve any
provisional reliefs. The Rules of the ICC, which governs the matter which is the subject of the dispute in arbitration. (Emphasis
2. That the corresponding writ of execution to enforce amounts which will be included in the Final Award and
Question 31 of the said Third Partial Award, be will be taken into account in determining
25
the actual
issued, also in accordance with law. amount payable to the prevailing party. R.A. No. 9825
3. That TPI be granted such other relief as may be provides that international commercial arbitrations shall
deemed just and equitable, and allowed, in be governed shall be governed by the Model Law on
21
accordance with law.” International Commercial Arbitration (“Model Law”)
adopted by the United Nations 26 Commission on
22
The pertinent portion of the Third Partial Award relied International Trade Law (UNCITRAL). The UNCITRAL
upon by TPI were the answers to Questions 10 to 26, to wit: Model Law provides:
“Question Did TPI [LHC] wrongfully draw upon the ARTICLE 35. Recognition and enforcement
30 security?
(1) An arbitral award, irrespective of the country in which it
Yes was made, shall be recognized as binding and, upon
“Question Is TPI entitled to have returned to it any sum application in writing to the competent court, shall be
31 wrongfully taken by LHC for liquidated enforced subject to the provisions of this article and of
damages? article 36.
Yes (2) The party relying on an award or applying for its
enforcement shall supply the duly authenticated original
“Question Is TPI entitled to any acceleration costs? TPI is
award or a duly certified copy thereof, and the original
32 entitled to the reasonable costs TPI incurred
arbitration agreement
after Typhoon Zeb as a result of LHC’s
23
5
February 1999 Notice to Correct.
_______________
fact, Paragraph 2142, which is the final paragraph of the 6.2 Declarations
Third Partial Award, reads: 168. The Tribunal makes the following declarations:
xxx
2142. All other issues, including any 28
issues as to quantum and 3. LHC is liable to repay TPI the face value of the securities
costs, are reserved to a future award. drawn down by it, namely, $17,977,815. It is not liable for any
29 further damages claimed by TPI in respect of the drawdown of the
Meanwhile, the tribunal issued its Fifth Partial Award on
securities.
30 March 2005. It contains, among others, a declaration 32
x x x.
that while LHC wrongfully drew on the securities, the
drawing was made in good faith, under the mistaken Finally, on 9 August 2005, the ICC Arbitral tribunal issued
assumption that the contractor, TPI, was in default. Thus, its Final Award, in essence awarding US$24,533,730.00,
the tribunal ruled that while the amount drawn must be
returned, TPI is not entitled to any damages or interests
_______________
due to LHC’s drawing on
30 Id., at pp. 1703-1705.
_______________ 31 Id., at p. 1741.
32 Id., at pp. 1741-1742.
27 Convention on the Recognition and Enforcement of Foreign Arbitral
Awards, signed at New York on 10 June 1958, and ratified by the 26
Philippines under Senate Resolution No. 71.
28 Rollo, p. 663.
26 SUPREME COURT REPORTS ANNOTATED
29 Id., at pp. 1685-1703.
Transfield Philippines, Inc. vs. Luzon Hydro Corporation
.
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