Case Digest (G.R. No. 229956)
Facts:
Dr. Benjamin D. Adapon, for himself and on behalf of the Computerized Imaging Institute, Inc. v. Medical Doctors, Inc., G.R. No. 229956, June 14, 2021, the Supreme Court Third Division, Leonen, J., writing for the Court.Petitioners are Dr. Benjamin D. Adapon (for himself and on behalf of Computerized Imaging Institute, Inc. or CII) and respondent is Medical Doctors, Inc. (MDI), owner/operator of Makati Medical Center. In 1978 the parties established CII (then Computed Tomography Center, Inc.) with MDI holding 60% and Dr. Adapon 40%; Dr. Adapon operated CII’s tomography services. In 1988 MDI and Dr. Adapon signed a Letter of Intent (LOI) that included a non‑compete clause and an arbitration clause (Section 11) providing that disputes “arising out of this Letter of Intent” be submitted to a three‑person arbitral panel and that the parties “abide by the ruling of the panel of arbitrators.”
After years of cooperation, MDI acquired its own CT and MRI equipment (first in 1997/1998; later 2011–2012). Dr. Adapon alleged these purchases violated the LOI’s non‑compete clause, caused loss to CII and to him personally, and sought injunctive relief and damages in a complaint filed April 25, 2011. The Makati RTC (Special Commercial Court, Branch 149) denied the TRO, suspended the case, and ordered arbitration under the LOI. MDI voluntarily submitted to arbitration before the Philippine Dispute Resolution Center, Inc.
A three‑member arbitral tribunal (former Chief Justice Reynato S. Puno as chair, retired Justice Dante O. Tinga dissenting, and Atty. Jose A. Grapilon) issued a Final Award on May 8, 2015 finding the non‑compete clause binding, that MDI violated it in bad faith, and awarding compensatory, moral, exemplary damages and attorney’s fees (including PhP 71,349,157.45 actual/compensatory damages to Dr. Adapon). The tribunal limited recovery for events from 1998–2009 by prescription but allowed recovery for violations after 2009.
MDI filed a petition to vacate the award in the RTC, arguing among other grounds that (a) the LOI/arbitration clause was not binding; (b) prescription barred the claims; (c) the arbitral tribunal exceeded its powers; and (d) the RTC lacked jurisdiction to refer the matter to arbitration. The RTC denied the petition and confirmed the award in a February 19, 2016 Resolution; reconsideration was denied June 21, 2016.
On appeal, the Court of Appeals (Thirteenth Division) reversed and vacated the Final Award in a February 15, 2017 Decision, holding inter alia that the LOI was a mere expression of...(Subscriber-Only)
Issues:
- Did petitioners forfeit review by this Court by not moving for reconsideration before the Court of Appeals?
- Did the Court of Appeals correctly vacate the arbitral award on the ground that the Letter of Intent (and its arbitration clause) was not a binding agreement?
- Did the Court of Appeals correctly vacate the award on the ground that petitioners’ claims were barred by prescription?
- Did the Court of Appeals correctly vacate the award on the ground that the Regional Trial Court lacked jurisdiction and therefore could not refer the dispute to arbitration?
- Did the Court of Appeals correctly vacate the award on the ground that the arbitra...(Subscriber-Only)
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)