G.R. No. 196171 - RCBC Capital Corp. vs. Banco de Oro Unibank, Inc.

RCBC Capital Corporation entered into a Share Purchase Agreement (SPA) dated May 24, 2000 to purchase 226,460,000 shares of Bankard, Inc. for P1,786,769,400.
Section 10 of the SPA provided for arbitration under the Rules of Conciliation and Arbitration of the International Chamber of Commerce in force at the time, with venue in Makati City, Philippines, application of Philippine law on substantive aspects, and an arbitral tribunal of three arbitrators.
After payment and transfer of shares, RCBC alleged in May 2003 that sellers overvalued Bankard's accounts and breached warranties under Section 5(g) of the SPA, claiming overpayment in excess of P478 million and later asserting overpayment of approximately P556 million.

RCBC filed a Request for Arbitration with the International Chamber of Commerce-International Court of Arbitration (ICC-ICA) on May 12, 2004 seeking rescission, damages, interest, moral damages, and attorneys’ fees; sellers (including Equitable-PCI Bank, later merged into Banco De Oro Unibank, Inc.) denied liability and filed counterclaims.
The Arbitration Tribunal consisted of Mr. Neil Kaplan (nominated by RCBC), Justice Santiago M. Kapunan (nominated by Respondents), and Sir Ian Barker appointed by the ICC-ICA as Chairman.
The ICC-ICA required advances on costs initially fixed at US$350,000, later increased to US$450,000 and then to US$580,000; RCBC paid its shares and, when Respondents refused to pay their shares, substituted and paid the additional amounts to avert suspension of proceedings.

Respondents sought separate advances on costs; the ICC-ICA denied the request and warned of suspension under Article 30(4) of the ICC Rules if advances remained unpaid.
The ICC-ICA suspended substantive hearings pending payment and invited the Tribunal to consider sanctions; the Tribunal stated it lacked power to order Respondents to pay advances but indicated applications could be considered on submissions and that unpaid counterclaims could be deemed withdrawn under Article 30(4).
RCBC repeatedly sought declaration of Respondents in default and reimbursement of substituted payments; Chairman Barker furnished the parties with an article by Matthew Secomb on awards dealing with advance on costs and invited further submissions.

On September 27, 2007 the Tribunal issued a First Partial Award on liability issues, finding breaches of clause 5(g) but denying rescission and reserving quantum and costs for further award.
On May 28, 2008 the Tribunal issued a Second Partial Award ordering Respondents to pay RCBC US$290,000 as reimbursement of advances and declaring Respondents’ counterclaim withdrawn.
Respondents filed a Motion to Vacate the Second Partial Award in the Makati RTC, Branch 148; RCBC filed a Motion to Confirm the Second Partial Award.
On June 24, 2009 the Makati RTC, Branch 148 confirmed the Second Partial Award and denied Respondents’ motion to vacate; Respondents appealed to the Court of Appeals (CA) under the Special ADR Rules.

The Tribunal issued a Final Award on June 16, 2010 awarding damages to RCBC (P348,736,920.29), arbitration costs and expenses (in U.S. dollars and pesos), party-and-party legal costs, and dismissing Respondents’ counterclaims.
Banco De Oro Unibank, Inc. filed a Petition to Vacate the Final Award ad cautelam in Makati RTC, Branch 65 (SP Proc. Case No. M-6995); RCBC filed a Motion to Confirm the Final Award in Branch 148 (SP Proc. Case No. M-6046).
Branch 148 confirmed the Final Award on November 10, 2010 subject to any correction/interpretation by the Arbitral Tribunal; Branch 65 later vacated the Final Award in a separate decision dated February 25, 2011.
Branch 148 issued an order on Au...(Subscriber-Only)

Whether the Second Partial Award may be vacated on the ground of evident partiality

Whether the record demonstrates *evident partiality* or bias by the Chairman of the Arbitral Tribunal in issuing the Second Partial Award, warranting vacatur under Section 24(b) of Republic Act No. 876 as applied and Rule 11.4(b) of the Special ADR Rules.
Whether Chairman Barker’s conduct in furnishing Matthew Secomb’s article to the parties, interpreting RCBC’s correspondences as applications for a partial award, and related acts constituted a reasonable impression of partiality such that a reasonable person would have to conclude that he favored RCBC.

Whether injunctive relief should have been granted to enjoin execution of the confirmed Final Award

Whether Banco De Oro Unibank, Inc. established a clear legal right and irreparable injury necessary for issuance of a stay order, temporary restraining order, or preliminary injunction against the Makati RTC’s writ of execution.
Whether execution pending appeal was improperly allowed by Branch 148 in violation of the Special ADR Rules and whether the actions taken in execution rendered injunctive relief moot by virtue of BDO’s payment ...(Subscriber-Only)