You are on page 1of 2

ABS-CBN Broadcasting Corporation v. World Interactive Network Systems (WINS) Japan Co.

,
Ltd. (G.R. No. 169332)
11 February 2008

ABS-CBN Broadcasting Corporation (ABS-CBN), a domestic corporation, entered into a licensing
agreement (Agreement) with World Interactive Network Systems (WINS) Japan Co., Ltd. (WINS), a
foreign corporation licensed under the laws of Japan. Under the Agreement, ABS-CBN granted WINS an
exclusive license to distribute and sublicense the television service known as The Filipino Channel (TFC)
in Japan.

Arbitration proceedings were commenced by WINS after ABS-CBN threatened to terminate the Agreement
on the ground that WINS allegedly inserted, without authority, several episodes of WINS Weekly, a
weekly 35-minute community news program for Filipinos in Japan, into the TFC programming. The
arbitrator ruled in favor of WINS, finding that ABS-CBN had in fact given its approval for the airing of
WINS Weekly and that it threatened to terminate the Agreement merely as a strategy to re-negotiate for
higher fees.

WINS filed a petition for the confirmation of the award before the Philippine trial court.

ABS-CBN, on the other hand, questioned the arbitral award by filing with the Court of Appeals a petition
for review under Rule 43 of the Rules of Court (a mode of appeal to question errors of fact and/or law) or,
in the alternative, a petition for certiorari under Rule 65 (an original action based on grave abuse of
discretion amounting to lack or excess of jurisdiction).

The Court of Appeals dismissed ABS-CBNs petition for lack of jurisdiction, holding that it is the trial court
which has jurisdiction over questions relating to arbitration. The Court of Appeals held that the only
instance it can exercise jurisdiction over an arbitral award is an appeal from the trial court's decision
confirming, vacating or modifying the arbitral award.

On Appeal, the Supreme Court affirmed the Court of Appeals ruling but for a different reason. On the
procedural issue, the Supreme Court that ABS-CBN cannot simultaneously avail of the alternative
remedies under Rule 43 and Rule 65.

On the issue of the scope of judicial review, the Supreme Court disagreed with the Court of Appeals
position that an aggrieved party cannot seek recourse against an arbitral award directly with the Court of
Appeals.

According to the Supreme Court, a party aggrieved by an arbitral award has three (3) remedies, to wit:
(a) a petition in the proper trial court to issue an order to vacate the award under Republic Act No. 876
(which applies to domestic arbitration); (b) a petition for review with the Court of Appeals under Rule 43
of the Rules of Court on questions of fact, of law, or mixed questions of fact and law; and (c) a petition for
certiorari with the Court of Appeals under Rule 65 of the Rules of Court if the arbitrator acted without or in
excess of his jurisdiction or with grave abuse of discretion amounting to lack or excess of jurisdiction.

Section 24 of R.A. No. 876

The grounds to vacate under Section 24 are:


(a) The award was procured by corruption, fraud, or other undue means; or

(b) That there was evident partiality or corruption in the arbitrators or any of them; or
(c) That the arbitrators were guilty of misconduct in refusing to postpone the hearing upon sufficient
cause shown, or in refusing to hear evidence pertinent and material to the controversy; that one or more
of the arbitrators was disqualified to act as such under section nine hereof, and willfully refrained from
disclosing such disqualifications or of any other misbehavior by which the rights of any party have been
materially prejudiced; or
(d) That the arbitrators exceeded their powers, or so imperfectly executed them, that a mutual, final and
definite award upon the subject matter submitted to them was not made.

Rule 43

The Supreme Court noted that Rule 43 of the Rules of Court expressly applies to awards, judgments, final
orders or resolutions of quasi-judicial agencies, including voluntary arbitrators authorized by law.

Rule 65

As for the remedy under Rule 65, the Supreme Court stressed that it will not hesitate to review a
voluntary arbitrators award where there is a showing of grave abuse of authority or discretion amounting
to lack or excess of jurisdiction, and there is no appeal, nor any plain, speedy remedy in the course of law.

It should be noted that the Philippine Alternative Dispute Resolution Act of 2004 (ADR Law) adopted and
incorporated the provisions of the UNCITRAL Model Law on International Commercial Arbitration (Model
Law), which limits recourse against an international arbitral award only to the grounds specified under
Section 34 of the Model Law (e.g., incapacity of a party to the arbitration agreement or the invalidity of
the arbitration agreement under the applicable law). Neither the Model Law, nor the New York Convention
on the Recognition and Enforcement of Foreign Arbitral Awards, to which the Philippines acceded in 1967,
recognize the setting aside of international/foreign on the broader grounds of errors of law and/or fact or
grave abuse of discretion.

Notably, the ruling in ABS-CBN treated the case as a domestic arbitration even though one of the
parties, i.e., WINS, was a Japanese corporation and a substantial portion of the obligation, i.e., the
distribution and sublicensing of the The Filipino Channel, was performed in Japan. Perhaps this may be
explained by the fact that the arbitral award in this case was rendered prior to the enactment of the ADR
Law. It was only under the ADR Law that a distinction was made between domestic arbitration and
international arbitration. Under the ADR Law, international arbitration shall be governed by the Model
Law, while domestic arbitration shall be governed by R.A. No, 876. The ADR Law adopts the definition of
international arbitration under Article 1(3) of the Model Law. Domestic arbitration, on the other hand,
defines domestic arbitration as arbitration that is not international.

However, in Korea Technologies Co., Ltd., v. Hon. Alberto A. Lerma, et al. (G.R. No. 143581, 7 January
2008), the Supreme Court held that the ADR Law, being a procedural law, may be given retroactive
effective. Hence, there appears to be a conflict in this respect between ABS-CBN and Korea
Technologies. It is hoped that the ruling of the Supreme Court in ABS-CBN regarding the remedies
against a domestic arbitral award, especially Rule 43 (allowing appellate review on both questions of fact
and law), will not be applied to foreign arbitral awards.

You might also like