Professional Documents
Culture Documents
As part of the SPA, the parties entered into an Escrow On October 28, 2010, AEV filed a motion to dismiss54
Agreement22 whereby ING Bank N.V.-Manila Branch the second complaint on the following grounds:55 (1)
was to take custody of the shares subject of the SPA.23 forum shopping; (2) failure to state a cause of action;
(3) res judicata; and (4) litis pendentia. The RTC in the
As a result of the SPA, AEV became a stockholder of
first two orders denied AEV’s motion to dismiss.
WG&A. Subsequently, WG&A was renamed Aboitiz
Transport Shipping Corporation ("ATSC").25 The RTC dismissed AEV’s claim that it was not a party to
the SPA, as "already touching on the merits of the
Petitioner AEV alleged that in2008, CAGLI resumed case"61 and therefore beyond its duty "to determine if
making demands despite having already received they should proceed to arbitration or not."
120.04 million worth of excess inventories. As alleged
by AEV, however, CAGLI subsequently resorted to a Aggrieved, AEV filed the present petition.64 It asserts
"shotgun approach"28 and directed its subsequent that it is not bound by an agreement to arbitrate with
demand letters to AEV29 as well as to FCLC30 (a CAGLI and that, even assuming that it may be required
company related to respondent Chiongbian). to arbitrate, it is being ordered to do so under terms
that are "manifestly contrary to the . . . agreements on
AEV responded to CAGLI’s demands through several which CAGLI based its demand for arbitration."66
letters. AEV rebuffed CAGLI's demands noting that it
was not a party to CAGLI's claim as it had a personality Issue: Whether or not Aboitiz Equity Ventures, Inc., is
distinct from WLI/WG&A/ATSC. bound by an agreement to arbitrate with Carlos A.
Gothong Lines, Inc., with respect to the latter’s claims
Its claims not having been satisfied, CAGLI filed on for unreturned inventories delivered to William Lines,
November 6, 2008 the first of two applications for
Inc./WG&A, Inc./Aboitiz Transport System Corporation
arbitration ("first complaint")41 against respondent
Chiongbian, ATSC, ASC, and petitioner AEV. Ruling:
The complaint in Civil Case valid, enforceable and irrevocable, save upon such
No. CEB-37004 constitutes grounds as exist at law for the revocation of any
forum shopping and is barred contract. . . . (Emphasis ours)
by res judicata
The foregoing provision speaks of two modes of
Even as the second complaint alleges that Benjamin D. arbitration: (a) an agreement to submit to arbitration
Gothong "is . . . suing in his personal capacity,"88 some future dispute, usually stipulated upon in a civil
Gothong failed to show any personal interest in the contract between the parties, and known as an
reliefs sought by the second complaint. Ultimately, agreement to submit to arbitration, and (b) an
what is at stake in the second complaint is the extent to agreement submitting an existing matter of difference
which CAGLI may compel AEV and Chiongbian to to arbitrators, termed the submission agreement.
arbitrate in order that CAGLI may then recover the Article XX of the milling contract is an agreement to
value of its alleged unreturned inventories. This claim submit to arbitration because it was made in
for recovery is pursuant to the agreement evinced in anticipation of a dispute that might arise between the
Annex SL-V. Annex SL-V was entered into by CAGLI and parties after the contract’s execution.
not by Benjamin D. Gothong. While it is true that
Benjamin D. Gothong, along with Bob D. Gothong, Except where a compulsory arbitration is provided by
signed Annex SL-V, he did so only in a representative, statute, the first step toward the settlement of a
and not in a personal, capacity. As such, Benjamin D. difference by arbitration is the entry by the parties into
a valid agreement to arbitrate.An agreement to
Gothong cannot claim any right that personally accrues
to him on account of Annex SL-V. From this, it follows arbitrate is a contract, the relation ofthe parties is
that Benjamin D. Gothong is not a real party in interest contractual, and the rights and liabilities of the parties
— "one who stands to be benefitted or injured by the are controlled by the law of contracts. In an agreement
judgment in the suit or the party entitled to the avails of for arbitration, the ordinary elements of a valid contract
the suit"89 — and that his inclusion in the second must appear, including an agreement toarbitrate some
specific thing, and an agreement to abide by the award,
complaint is an unnecessary superfluity.
either in express language or by implication.114
There is no agreement (Emphasis supplied)
binding AEV to arbitrate
with CAGLI on the latter’s
claims arising from Annex SL-V In this petition, not one of the parties — AEV, CAGLI,
For arbitration to be proper, it is imperative thatit be Victor S. Chiongbian, and Benjamin D. Gothong — has
grounded on an agreement between the parties. This alleged and/or shown that the controversy is properly
was adequately explained in Ormoc Sugarcane Planters’ the subject of "compulsory arbitration [as] provided by
statute."115 Thus, the propriety of compelling AEV to
Association,Inc. v. Court of Appeals:113
submit itself to arbitration must necessarilybe founded
Section 2 of R.A. No. 876 (the Arbitration Law) on contract.
pertinently provides:
Four (4) distinct contracts have been cited in the
Sec. 2. Persons and matterssubject to arbitration. – Two present petition:
or more persons or parties may submit to the
arbitration of one or more arbitrators any controversy 1. The January 8, 1996 Agreement in which ASC, CAGLI,
existing between them at the time of the submission and WLI merged their shipping enterprises, with WLI
and which may be the subject of an action, or the (subsequently renamed WG&A) as the surviving entity.
parties to any contract may in such contract agree to Section 11.06 of this Agreement provided for arbitration
settle by arbitration a controversy thereafter arising as the mechanism for settling all disputes arising out of
between them. Such submission or contract shall be or in connection with the Agreement.
2. Annex SL-V of the Agreement between CAGLI and Agreement; (2) WG&A, the name taken by WLI in the
WLI (and excluded ASC and any other Aboitiz-controlled wake of the Agreement; and (3) ATSC, the name taken
entity), and which confirmed WLI’s commitment to by WLI/WG&A inthe wake of the SPA. As such, it is now
acquire certain inventories, worth not more than 400 ATSC that is liable under Annex SL-V.
million, of CAGLI. Annex SL-V stated that the acquisition
was "pursuant to the Agreement."116 It did not contain Pursuant to the January 8, 1996 Agreement, the Aboitiz
an arbitration clause. group (via ASC) and the Gothong group (viaCAGLI)
became stockholders of WLI/WG&A, along with the
3. The September 23, 2003 Share Purchase Agreement Chiongbian group (which initially controlled WLI). This
or SPA in which AEV agreed to purchasethe Chiongbian continued until, pursuant to the SPA, the Gothong
and Gothong groups' shares in WG&A’s issued and group and the Chiongbian group transferred their
outstanding stock. Section 6.5 of the SPA provided for shares to AEV. With the SPA, AEV became a stockholder
arbitration as the mode of settling any dispute arising of WLI/WG&A, which was subsequently renamed ATSC.
from the SPA. Section 6.8 of the SPA further provided Nonetheless, AEV’s status as ATSC’s stockholder does
that the Agreement of January 8, 1996 shall be deemed not subject it to ATSC’s obligations
terminatedexcept its Annex SL-V.
It is basic that a corporation has a personality separate
4. The Escrow Agreement whereby ING Bank was to and distinct from that of its individual stockholders.
take custody of the shares subject of the SPA. Section Thus, a stockholder does not automatically assume the
14.7 of the Escrow Agreement provided that all disputes liabilities of the corporation of which he is a
arising from it shall be settled via arbitration. stockholder. As explained in Philippine National Bankv.
Hydro Resources Contractors Corporation:118
The obligation for WLI to acquire certain inventories of
CAGLI and which is the subject of the present petition A corporation is an artificial entity created by operation
was contained in Annex SL-V. It is therefore this of law. It possesses the right of succession and such
agreement which deserves foremost consideration. As powers, attributes, and properties expressly authorized
to this particular agreement, Annex SL-V is only by law or incident to its existence. It has a personality
between WLI and CAGLI. separate and distinct from that of its stockholders and
from that of other corporations to which it may be
Annex SL-V is only between WLI and CAGLI — it
connected. As a consequence of its status as a distinct
necessarily follows that none but WLI/WG&A/ATSC and legal entity and as a result of a conscious policy decision
CAGLI are bound by the terms of Annex SL-V. It is to promote capital formation, a corporation incurs its
elementary that contracts are characterized by relativity own liabilities and is legally responsible for payment of
or privity, that is, that "[c]ontracts take effect only its obligations. In other words, by virtue of the separate
between the parties, their assigns and heirs."117 As juridical personality ofa corporation, the corporate debt
such, one who is not a party to a contract may not seek or credit is not the debt or credit of the stockholder.
relief for such contract’s breach. Likewise, one who is
This protection from liability for shareholders is the
not a party to a contract may not be held liable for principle of limited liability.119
breach of any its terms.
AEV’s status as ATSC’s stockholder is, in and of itself,
While the principle of privity or relativity of contracts insufficient to make AEV liable for ATSC’s obligations.
acknowledges that contractual obligations are Moreover, the SPA does not contain any stipulation
transmissible to a party’s assigns and heirs, AEV is not which makes AEV assume ATSC’s obligations. It is true
WLI’s successor-in-interest. In the period relevant to that Section 6.8 of the SPA stipulates that the rights and
this petition, the transferee of the inventories obligations arising from Annex SL-V are not terminated.
transferred by CAGLI pursuant to Annex SL-V assumed But all that Section 6.8 does is recognize that the
three (3) names: (1) WLI, the original name of the entity obligations under Annex SL-V subsist despite the
that survived the merger under the January 8, 1996
termination of the January 8, 1996 Agreement. At no
point does the text of Section 6.8 support the position G.R. No. 195795
that AEV steps into the shoes of the obligor under
Annex SL-V and assumes its obligations. REPUBLIC OF THE PHILIPPINES, represented by the
PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT,
Neither does Section 6.5 of the SPAsuffice to compel Petitioner,
AEV to submit itself to arbitration. While it is true that vs.
Section 6.5 mandates arbitration as the mode for HON. SANDIGANBAYAN, PALM A VENUE REALTY and
settling disputes between the parties to the SPA, DEVELOPMENT CORPORATION and PALM AVENUE
Section 6.5 does not indiscriminately cover any and all HOLDING COMPANY, INC., Respondents.
disputes which may arise between the parties to the
SPA. Rather, Section 6.5 is limited to "dispute[s] arising
between the parties relating tothis Agreement [i.e., the Facts:
SPA]."122 To be labor the point, the obligation which is
subject of the present dispute pertains to Annex SL-V, Through a writ of sequestration the Presidential
not to the SPA. That the SPA, in Section 6.8, recognizes Commission on Good Government (PCGG) sequestered
the subsistence of Annex SL-V is merely a factual all the assets, properties, records, and documents of the
recognition. It does not create new obligations and does Palm Companies. Said sequestered assets included
not alter or modify the obligations spelled out in Annex 16,237,339 Benguet Corporation shares of stock,
SL-V. registered in the name of the Palm Companies. The
PCGG had relied on a letter from the Palm Companies’
AEV was drawn into the present controversy on account Attorney-in-Fact, Jose S. Sandejas, specifically
of its having entered into the SPA. This SPA made AEV a identifying Benjamin "Kokoy" Romualdez, a known
stockholder of WLI/WG&A/ATSC. Even then, AEV crony of former President Ferdinand E. Marcos, as the
retained a personality separate and distinct from beneficial owner of the Benguet Corporation shares in
WLI/WG&A/ATSC. The SPA did not render AEV the Palm Companies’ name.
personally liable for the obligations of the corporation
whose stocks it held. AEV was never a party to Annex The Republic, represented by the PCGG, filed a
SL-V. Rather than pertaining to AEV, Annex SL-V complaint with the Sandiganbayan but did not initially
pertained to a different entity: WLI (renamed WG&A implead the Palm Companies as defendants. However,
then renamed ATSC). AEV is, thus, not bound by Annex the Sandiganbayan issued a Resolution dated where it
SL-V. ordered said companies to be impleaded. The Court
subsequently affirmed this order to implead.
PALM AVENUE HOLDING CO., INC., and PALM A VENUE They filed a Motion for Reconsideration, but the same
REALTY AND DEVELOPMENT CORPORATION, was likewise denied. Hence, the Palm Companies filed
Petitioners, the petition in G.R. No. 173082.
vs. On September 22, 2006, the Palm Companies filed a
SANDIGANBAYAN 5TH Division, REPUBLIC OF THE Motion to Release Sequestered Funds with the
PHILIPPINES, represented by the PRESIDENTIAL Sandiganbayan. In a Resolution, the Sandiganbayan
COMMISSION ON GOOD GOVERNMENT (PCGG), granted said motion and ordered the release of the
Respondent. sequestered funds for the purchase of additional shares
in Benguet Corporation, and appointed a comptroller
x-----------------------x
for this purpose.
On August 5, 2008, the Palm Companies filed a Motion proceeding shall be commenced within six months from
to Order Payment of Interest on Balance of the the issuance thereof.
Sequestered Funds. Later, the Sandiganbayan granted
the Palm Companies’ motion to dismiss and dismissed The sequestration or freeze order is deemed
automatically lifted if no judicial action or proceeding is
the Republic’s complaint as to them. The
Sandiganbayan also granted the Palm Companies’ commenced as herein provided.11
Motion to Order Payment of Interest on Balance of the The aforesaid provision mandates the Republic to file
Sequestered Funds on October 28, 2009. the corresponding judicial action or proceedings within
Thereafter, the Palm Companies filed another motion to a six-month period (from its ratification on February 2,
order the PCGG to release all the companies’ shares of 1987)in order to maintain sequestration, non-
stock and funds in its custody. The Sandiganbayan then compliance with which would result in the automatic
issued its Resolution, granting the companies’ foregoing lifting of the sequestration order. The Court’s ruling in
Presidential Commission on Good Government v.
motion.
Sandiganbayan,12 which remains good law, reiterates
Upon denial of the Republic’s motion for the necessity of the Republic to actuallyimplead
reconsideration, it filed the petition in G.R. No. 195795. corporations as defendants in the complaint, out of
recognition for their distinct and separate personalities,
In G.R. No. 173082, the Palm Companies present this failure to do so would necessarily be denying such
lone issue to be resolved by the Court: entities their right to due process.13 Here, the writ of
[WHETHER OR NOT] RESPONDENT COURT ACTED WITH sequestration issued against the assets of the Palm
GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF Companies is not valid because the suit against
JURISDICTION IN DENYING PETITIONERS’ MOTION TO Benjamin Romualdez as shareholder in the Palm
LIFT THE WRIT OF SEQUESTRATION NOTWITHSTANDING Companies is not a suit against the latter. The Court has
THE FACT [THAT] SAID WRIT SHOULD BE DEEMED held, contrary to the assailed Sandiganbayan Resolution
AUTOMATICALLY LIFTED PURSUANT TO SECTION 26, that failure to implead these corporations as
ARTICLE XVIII OF THE 1987 CONSTITUTION FOR FAILURE defendants and merely annexing a list of such
TO IMPLEAD PETITIONERS WITHIN THE PERIOD OF SIX corporations to the complaints is a violation of their
(6) MONTHS PRESCRIBED IN THE SAID CONSTITUTION.9 right to due process for it would be, in effect,
disregarding their distinct and separate personality
without a hearing.14 Here, the Palm Companies were
merely mentioned as Item Nos. 47 and 48, Annex A of
Ruling:
the Complaint,as among the corporations where
Section 26, Article XVIII of the 1987 Constitution defendant Romualdez owns shares of stocks.
provides: Furthermore, while the writ of sequestration was
issued, the Palm Companies were impleaded in the case
xxxx only in 1997, or already a decade from the ratification
of the Constitution in 1987, way beyond the prescribed
A sequestration or freeze order shall be issued only
period.
upon showing of a prima facie case. The order and the
list of the sequestered or frozen properties shall The argument that the beneficial owner of these
forthwith be registered with the proper court. For corporations was, anyway, impleaded as party-
orders issued before the ratification of this Constitution, defendant can only be interpreted as a tacit admission
the corresponding judicial action or proceeding shall be of the failure to file the corresponding judicial action
filed within six months from its ratification. For those against said corporations pursuant to the constitutional
issued after such ratification, the judicial action or mandate.15 The sequestration order issued against the
Palm Companies is therefore deemed automatically
lifted due to the failure of the Republic to commence filed. Petitioner is the counsel for Ampatuan, Jr., the
the proper judicial action or to implead them therein principal accused in the murder cases.
within the period under the Constitution.16
In November 2010, Atty. Quinsayas, et al. filed a
Since the Republic did not originallyinclude the Palm disbarment complaint against petitioner. The
Companies, the Sandiganbayan issued a Resolution disbarment case is still pending.
ordering said companies to be impleaded, which was
affirmed by the Court. The Court declared in said case Petitioner alleged that GMA News TV internet website
that the Palm Companies are real parties-in-interest, posted an article, written by Dedace, entitled
because they still appear to be the registered owners of "Mangudadatu, others seek disbarment of Ampatuan
the remaining disputed shares. lawyer.”
ABS-CBN and Drilon filed a joint Comment. ABS-CBN It has further been stated that intent is a necessary
alleged that ABS-CBN News Channel, commonly known element in criminal contempt, and that no one can be
as ANC, is maintained and operated by Sarimanok punished for a criminal contempt unless the evidence
Network News (SNN) and not by ABS-CBN. SNN, which makes it clear that he intended to commit it. On the
produced the program "ANC Presents: Crying for contrary, there is authority indicating that since the
Justice: the Maguindanao Massacre," is a subsidiary of purpose of civil contempt proceedings is remedial, the
ABS-CBN but it has its own juridical personality although defendant’s intent in committing the contempt is
immaterial. Hence, good faith or the absence of intent
to violate the court’s order is not a defense in civil
contempt.13
ABS-CBN Corporation