Case Digest (G.R. No. 197530) Core Legal Reasoning Model
Core Legal Reasoning Model
Facts:
This case involves Aboitiz Equity Ventures, Inc. (AEV), the petitioner, versus Victor S. Chiongbian, Benjamin D. Gothong, and Carlos A. Gothong Lines, Inc. (CAGLI), the respondents. On January 8, 1996, three major shipping corporations — Aboitiz Shipping Corporation (ASC) owned by the Aboitiz family, Carlos A. Gothong Lines, Inc. (CAGLI) owned by the Gothong family, and William Lines, Inc. (WLI) owned by the Chiongbian family — entered into a merger agreement transferring their respective shipping assets to WLI in exchange for shares, consolidating under WLI known as WG&A, Inc. (WG&A). Section 11.06 of this Agreement mandated arbitration of disputes through a tribunal consisting of four arbitrators, appointed partly by the parties and partly jointly.
Annex SL-V to the agreement was a letter dated the same day signed by representatives of WLI and CAGLI, confirming WLI’s commitment to acquire certain inventories from CAGLI valued initially up to ₱400 million after a speci
Case Digest (G.R. No. 197530) Expanded Legal Reasoning Model
Expanded Legal Reasoning Model
Facts:
- Background and Parties Involved
- On January 8, 1996, Aboitiz Shipping Corporation (ASC), Carlos A. Gothong Lines, Inc. (CAGLI), and William Lines, Inc. (WLI) entered into a shareholders agreement (the Agreement), where ASC and CAGLI transferred their shipping assets to WLI in exchange for WLI shares. WLI was to operate the merged shipping businesses as WG&A, Inc. (WG&A). ASC is principally owned by the Aboitiz family; CAGLI by the Gothong family; and WLI by the Chiongbian family.
- Section 11.06 of the Agreement mandated that all disputes arising out of or in connection with the Agreement were to be resolved by arbitration through a tribunal of four arbitrators, with decisions final and binding and enforceable by the Cebu or Metro Manila courts.
- Annex SL-V and the Inventory Transaction
- Annex SL-V was a letter dated January 8, 1996 from WLI (represented by Victor S. Chiongbian) to CAGLI (represented by Bob D. Gothong and Benjamin D. Gothong) confirming WLI’s commitment to acquire certain CAGLI inventories valued up to P400 million, as determined after examination by SGV & Co.
- Annex SL-V specifically stated the acquisition was pursuant to the Agreement. It provided for timelines on value determination and payment in equal quarterly installments over two years starting March 31, 1996.
- Following Annex SL-V, inventories valued initially at P514 million, later adjusted to P558.89 million, were transferred from CAGLI to WLI. CAGLI was paid P400 million in cash plus WG&A shares valued at P38.5 million.
- In 2001, CAGLI demanded return or payment for excess inventories beyond P400 million. WG&A allegedly returned inventories worth P120.04 million, with delivery receipts signed by CAGLI attached as proof.
- Share Purchase and Escrow Agreements
- In 2002, the Chiongbian and Gothong families decided to sell their WG&A shares to the Aboitiz family. A share purchase agreement (SPA) was entered into between Aboitiz Equity Ventures, Inc. (AEV) and the respective shareholder groups. AEV purchased 61.27% of WG&A’s outstanding stock.
- Section 6.5 of the SPA provided that disputes relating to the SPA be settled by arbitration in Cebu City under Philippine Arbitration Law.
- Section 6.8 of the SPA terminated the 1996 Agreement except with respect to rights and obligations under Annex SL-V, which would survive until the applicable statute of limitations expired.
- An Escrow Agreement was also executed, entrusting ING Bank N.V.-Manila Branch with the custody of shares subject to the SPA. Section 14.7 provided for arbitration of any disputes arising from the Escrow Agreement.
- WG&A was subsequently renamed Aboitiz Transport Shipping Corporation (ATSC).
- Disputes and Litigation
- In 2008, CAGLI resumed demands for excess inventories despite prior payments and returns. Demand letters were sent to ATSC, AEV, and FCLC (a company related to respondent Chiongbian).
- AEV denied the demands claiming: (a) CAGLI already received the excess inventories; (b) AEV is a distinct legal personality separate from WLI/WG&A/ATSC; and (c) CAGLI’s claims were barred by prescription.
- CAGLI threatened arbitration unless proof of payment or return was furnished by March 31, 1996.
- In November 2008, CAGLI filed the first arbitration complaint (Civil Case No. CEB-34951) against Victor S. Chiongbian, ATSC, ASC, and AEV before Cebu City RTC Branch 20. AEV moved to dismiss for failure to state a cause of action and absence of arbitration agreement binding AEV.
- On December 4, 2009, RTC Branch 20 dismissed the complaint as to AEV, ruling no arbitration agreement bound AEV and CAGLI. CAGLI did not question this dismissal.
- Despite this, on September 1, 2010, CAGLI filed a second arbitration complaint (Civil Case No. CEB-37004) before RTC Branch 10 against AEV, Victor S. Chiongbian, and respondent Benjamin D. Gothong seeking the same claims.
- AEV moved to dismiss the second complaint on grounds of forum shopping, res judicata, litis pendentia, and failure to state a cause of action. RTC Branch 10 denied the motion on May 5, 2011, and also denied AEV’s motion for reconsideration on June 24, 2011.
- AEV filed the present petition for review on certiorari, praying that these orders be nullified and that the complaint be dismissed with prejudice.
Issues:
- Does the complaint in Civil Case No. CEB-37004 constitute forum shopping and/or is it barred by res judicata and/or litis pendentia?
- Is petitioner Aboitiz Equity Ventures, Inc. (AEV) bound by an arbitration agreement with Carlos A. Gothong Lines, Inc. (CAGLI) regarding CAGLI’s claims for alleged unreturned inventories under Annex SL-V?
- Did AEV avail of the correct remedy by filing a petition for review on certiorari under Rule 45 to assail the interlocutory orders?
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)