Case Summary (G.R. No. 196171)
Petitioners and Respondents
- G.R. No. 196171: RCBC vs. BDO–EPCIB & others, challenging CA’s vacatur of Second Partial Award
- G.R. No. 199238: BDO vs. CA & RCBC, seeking injunctive relief against execution
Key Dates
- May 24, 2000: RCBC enters Share Purchase Agreement (SPA) for 67% of Bankard
- May 12, 2004: RCBC files ICC arbitration Request
- Sept 27, 2007: First Partial Award (liability phase)
- May 28, 2008: Second Partial Award (reimbursement of advances on costs)
- June 16, 2010: Final Award (damages and costs)
- Dec 23, 2010: CA vacates Second Partial Award (Decision)
- Feb 25, 2011: Makati RTC, Br. 65 vacates Final Award
- Sept 13, 2011: CA denies BDO’s application for a stay/TRO
- Dec 10, 2012: SC issues consolidated decision under the 1987 Constitution
Applicable Law
- 1987 Philippine Constitution (post-1990 decision)
- R.A. 876 (Arbitration Law), as amended by R.A. 9285 (Alternative Dispute Resolution Act)
- Special ADR Rules (A.M. 07-11-08-SC)
- ICC Rules of Arbitration (1998 version)
- UNCITRAL Model Law (domestic arbitration principles)
SPA, Dispute and Arbitration Clause
RCBC purchased 226.46 million Bankard shares for ₱1.786 billion. In May 2003 it alleged that sellers overstated assets, resulting in a ₱478 million overpayment, and invoked rescission and damages under SPA Section 5(g). Failing amicable settlement, RCBC commenced arbitration under SPA Section 10, which mandates ICC arbitration in Makati, in English, applying Philippine law, with final and binding awards and arbitrators empowered to allocate costs and attorney’s fees.
ICC Arbitration and Cost Advances Dispute
RCBC’s May 2004 Request charged breaches of accounting warranties and sought damages, interest, moral damages, costs and rescission. Respondents denied liability, raised time‐bar and laches defenses, and counterclaimed for arbitration costs. An ICC‐appointed tribunal (Kaplan, Kapunan, Barker) required a US$350,000 advance on costs, to be shared equally. RCBC paid its share; respondents refused, prompting ICC to threaten suspension under Article 30(4). Letters and procedural orders followed, including an offer to RCBC to substitute payments, and deferral of hearings. RCBC pressured for default declarations; ICC increased advances to US$450,000 and then US$580,000, which RCBC fully paid to avoid suspension.
First Partial Award and Confirmation
On liability, the tribunal’s Sept 27, 2007 Partial Award (2–1) held: RCBC’s claim not time-barred, no estoppel or laches, proved breaches of SPA Section 5(g) (overstatement via late fees and bucket accounting), but not entitled to rescission. Quantum and cost issues were reserved for further award. RCBC moved to confirm before Makati RTC Br. 148; respondents moved to vacate. The RTC confirmed; respondents’ reconsideration denied. The CA (G.R. 182248) and subsequently the SC affirmed confirmation in December 2008.
Second Partial Award on Costs and Partiality Allegation
Pursuant to the tribunal’s timetable for a partial award on advance costs, RCBC applied on February 7, 2008 for reimbursement of US$290,000 (respondents’ share) and deemed withdrawal of respondents’ counterclaim. Respondents opposed, arguing the tribunal lacked jurisdiction to issue such award under ICC Rules and TOR scope. Chairman Barker solicited further submissions and furnished parties with Matthew Secomb’s ICC Bulletin article advocating a contractual or provisional basis for tribunals to award reimbursement of advances. On May 28, 2008 the tribunal rendered the Second Partial Award ordering respondents to pay US$290,000 and deeming their counterclaim withdrawn.
Proceedings on Second Partial Award and CA Decision
Respondents moved to vacate and RCBC to confirm the Second Partial Award before Makati RTC Br. 148, which confirmed it in June 2009. The CA, however, reversed and set aside the RTC order, the award and related orders in December 2010, finding evident partiality. It held that Barker’s pre-judgment—interpreting RCBC’s letter as an application for a partial award, distributing Secomb’s article favoring RCBC, and subsequently issuing the award—created a reasonable impression of bias in violation of ICC Rule 15’s impartiality requirement.
Final Award and Parallel Petitions to Vacate/Confirm
The tribunal issued its Final Award (June 16, 2010) awarding RCBC ₱348.7 million damages, US$880,000 arbitration costs, expert and legal fees, and dismissing counterclaims and other claims. BDO filed an ad cautelam petition to vacate before RTC Br. 65; RCBC moved to confirm before Br. 148. Branch 65 vacated the Final Award in February 2011; Branch 148 confirmed it in November 2010 (later upheld against motions). The CA dismissed a petition against Br. 148 in June 2011.
Consolidated SC Petitions and Issues
G.R. No. 196171 (RCBC) challenged CA’s vacatur of the Second Partial Award, raising (1) failure to require clear and convincing proof of evident partiality and (2) improper disturbance of tribunal’s factual and legal findings. G.R. No. 199238 (BDO) attacked CA’s denial of injunctive relief agai
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Parties and Nature of the Case
- RCBC Capital Corporation (RCBC) and Banco de Oro Unibank, Inc. (BDO) are the primary disputants arising from a Share Purchase Agreement for 67% of Bankard, Inc.’s shares.
- Two consolidated petitions:
• G.R. No. 196171 – RCBC’s Rule 45 petition to reverse CA’s setting aside of Second Partial Award.
• G.R. No. 199238 – BDO’s Rule 65 petition for certiorari challenging CA’s denial of injunctive relief against writ of execution. - Underlying arbitration administered by ICC-ICA pursuant to Section 10 of the SPA.
Factual and Contractual Background
- May 24, 2000: RCBC buys 226,460,000 Bankard shares from EPCIB, George L. Go and individual shareholders for ₱1,786,769,400.
- January 2001: Deeds of sale executed after full payment.
- May 2003: RCBC alleges overpayment of P478 million due to overstated valuation and breaches of Section 5(g) warranties.
- Section 10 SPA: Disputes “finally settled by arbitration under ICC Rules, venue Makati City, English language, Philippine law.”
Arbitration Commencement and Claims
- May 12, 2004: RCBC’s Request for Arbitration claims:
• GAAP breaches causing P556 million overpayment.
• Seeks rescission, damages (₱573,132,110 or alternatively ₱809,796,082), interest, moral damages, attorney’s fees. - Respondents’ Answer:
• Assert time-bar under Section 5(h), laches, lack of detail under Section 7.
• Counterclaim for US$300,000 litigation costs, moral and exemplary damages. - Tribunal constituted: Kaplan by RCBC; Justice Kapunan by Respondents; Barker appointed Chairman.
Advance on Costs Dispute
- ICC-ICA fixes US$350,000 as advance cost; RCBC pays its share; Respondents refuse payment.
- Respondents apply for separate advances under Article 30(2) ICC Rules; ICC-ICA denies prematurity.
- ICC-ICA warns of suspension under Article 30(4) if unpaid; Chairman Barker rules:
• ICC Rules do not empower tribunal to compel payment or give relief against non-paying party.
• Only sanction is suspension and withdrawal of claims. - RCBC pays additional US$100,000 to avoid suspension; Respondents persist in refusal.
- December 2005: ICC raises advance cost to US$450,000; Respondents still refuse; RCBC again pays full amount by substitution.
First Partial Award (September 27, 2007)
- Majority finds:
• RCBC’s claim not time-barred; no estoppel or laches.
• Breaches of Section