Luzon Hydro Corp. v. Baybay

SPECIAL FORMER FOURTH DIVISION [CA-G.R. SP No. 94318. November 29, 2006.] LUZON HYDRO CORPORATION , petitioner , vs. HON. ROMMEL O. BAYBAY, in his capacity as Presiding Judge of the Regional Trial Court of Makati City, Branch 132 and TRANSFIELD PHILIPPINES, INC. , respondents . D E C I S I O N TOLENTINO, A.G. , J p : This is a Petition For Certiorari With Urgent Application For Temporary Restraining Order and Writ of Preliminary Injunction 1 seeking the nullification of the order 2 of the Regional Trial Court of Makati City, Branch 132 dated April 28, 2006, denying the petitioner's Motion For Preliminary Hearing on Affirmative Defenses. 3 The facts of the case as borne by the records are as follows: The instant case stemmed from a Petition for Application for Confirmation/Recognition and Enforcement of a Foreign Arbitral Award of the International Chamber of Commerce International Court of Arbitration in Case 11264/TE/MW, entitled "Transfield Philippines, Inc. v. Luzon Hydro Corporation" 4 filed by the private respondent (TPI, for brevity) against the petitioner. The case was filed with the Regional Trial Court (RTC) of Makati City, Branch 132 on March 6, 2006 and was docketed as Special Proceedings No. M-6232. On April 25, 2006, the petitioner filed its Answer 5 to the petition and a Motion For Preliminary Hearing on Affirmative Defenses, 6 anchored on the following grounds, thus: " 1. Rule 16, section 6 of the Rules of Court (the "Rule") provides that a defendant may move for the dismissal of a complaint (on any of the grounds for dismissal enumerated in Rule 16, section 1 of the Rules) based on the affirmative defenses pleaded in its answer. Rule 16, section 6, which applies to special proceedings, 7 provides: prcd SEC. 6. Pleading grounds as affirmative defense. If no motion to dismiss has been filed, any of the grounds for dismissal provided for in this Rule may be pleaded as an affirmative defense in the answer and, in the discretion of the court, a preliminary hearing may be had thereon as if a motion to dismiss had been filed. The dismissal of the complaint under this section shall be without prejudice to the prosecution in the same or separate action of a counterclaim pleaded in the answer. (emphasis supplied) 2. LHC has pleaded the following grounds for dismissal as affirmative defenses in its Answer : 8 a. forum shopping; 9 b. litis pendentia; 10 c. non-payment of the correct amount of docketing/filing fees, which deprives the Honorable Court of jurisdiction over the subject matter of the Petition; 11 cCaSHA d. waiver, abandonment or extinguishment of the TPI claim for enforcement. 12 3. In view of the foregoing, and considering that the resolution of the affirmative defenses above-stated could very likely result in the abbreviation of this case and the de-clogging of the Honorable Court's docket, LHC respectfully prays for [a] a preliminary hearing on these affirmative defenses and, thereafter, [b] the dismissal of the Petition on these grounds." On April 28, 2006, the public respondent issued the assailed order. The full text of the said order is reproduced as follows, to wit: "ORDER When called for initial trial, petitioner thru Atty. Ogsimer, was directed to present jurisdictional facts, and Exhibits "A" to "H" and submarkings were all admitted without objection on the part of the respondent into evidence. Petitioner thereafter presented Mr. Peter Megens in support of the petition. However, his testimony was dispensed with upon the admission of the respondent of the documentary exhibits which Mr. Megens was supposed to identify. Petitioner then formally offered its evidence, and Exhibits "A" to "H" were all admitted over the objection of the respondent. In order to comply with the rules on Special Proceedings and without objection on the part of both parties, respondent's Answer filed last 25 April 2006 will be treated as an opposition. This being a special proceedings which does not allow for a motion for preliminary hearing on affirmative defenses, said motion is hereby ordered denied , and respondent need not file a motion for reconsideration. Meanwhile, let the reception of respondent's evidence be set for 19 May and 02 June 2006, both at 8:30 in the morning. SO ORDERED." Aggrieved, the petitioner elevated the April 28, 2006 order of the court a quo , through the instant Petition for Certiorari. No motion for reconsideration has been filed by the petitioner of the April 28, 2006 questioned order in view of the ruling of the court a quo that the petitioner need not file a motion for reconsideration. HAICTD Thus, the present petition is filed sans any motion for reconsideration of the petitioner. In our Resolution 13 dated May 17, 2006, we issued a temporary restraining order in order not to render the petition moot and academic. In the same Resolution, we likewise directed the respondents to file their Comment on the petition. In compliance thereto, the private respondent filed its Comment (With Urgent Motion To Lift Temporary Restraining Order) on May 23, 2006, 14 and on June 2, 2006, the petitioner filed its Reply 15 thereto. Finding the petitioner's arguments in support of its application for the issuance of a writ of preliminary injunction to be meritorious, this Court issued a Resolution granting the issuance of the same upon posting of a bond in the amount of One Million Pesos (Php1,000,000.00). On October 20, 2006, 16 the petitioner and the private respondent, filed by personal service and registered mail, respectively, their memoranda in compliance with our July 10, 2006 Resolution. 17 This Court has reviewed the arguments of the parties as contained in their respective written submissions, and finds it unnecessary to reproduce at length each party's arguments. In essence, the petitioner claims that Sp. Proc. No. M-6232 should be dismissed not only on the grounds sanctioned by the Revised Rules of Court, but also because the arbitral award that respondent TPI seeks to enforce is null and void, having been rendered contrary to public policy. Respondent TPI counters that the instant petition should be dismissed for the following reasons: (1) Respondent judge acted within its discretion in denying the petitioner's motion for preliminary hearing on affirmative defenses; (2) The issue sought to be resolved in the instant petition has been rendered moot; and (3) Respondent judge has not yet ruled on the merits of the defenses invoked by the petitioner in Special Proceedings No. M-6232. Moreover, private respondent TPI presented the alternative position that it would no longer oppose petitioner's prayer to conduct a preliminary hearing on its affirmative defenses in Sp. Proc. No. M-6232 so as not to delay the proceedings any further, even if it believes that the respondent judge did not commit any grave abuse of discretion in issuing the assailed order of April 28, 2006. The suit filed by respondent TPI with the court a quo and docketed as Sp. Proc. No. M-6232 for the confirmation, recognition, and enforcement of a foreign arbitral award, is properly classified as a special proceeding as it is a suit to establish the rights of the parties and the awards made by a foreign arbitral tribunal. aHIEcS Section 42 of Republic Act No. 9285 otherwise known as the "Alternative Dispute Resolution Act of 2004" provides that the proceeding to recognize and enforce foreign arbitral awards shall be in accordance with rules of procedure to be promulgated by the Supreme Court, to wit: "SEC. 42. Application of the New York Convention. The New York Convention shall govern the recognition and enforcement of arbitral awards covered by said Convention. The recognition and enforcement of such arbitral awards shall be filed with the Regional Trial Court in accordance with the rules of procedure to be promulgated by the Supreme Court. Said procedural rules shall provide that the party relying on the award or applying for its enforcement shall file with the court the original or authenticated copy of the award and the arbitration agreement. If the award or agreement is not made in any of the official languages, the party shall supply a duly certified translation thereof into any of such languages." However, since no rules of procedure have yet been promulgated by the Honorable Supreme Court for the enforcement through special proceedings of foreign arbitral awards, the rules in ordinary civil actions shall, as far as practicable, apply. Accordingly, petitioner's motion for preliminary hearing before the court a quo was procedurally correct. We now deal with the merits of the grounds for dismissal cited by the petitioner in its motion for preliminary hearing in Sp. Proc. M-6232. After a careful and painstaking consideration of the parties' respective positions, this Court is convinced that forum-shopping is indeed apparent from the record. Forum-shopping is essentially the filing of repetitious suits in different courts. This unethical practice has been condemned by the Supreme Court in Minister of Natural Resources, et al. vs. Heirs of Orval Hughes, et. al. , 18 as a reprehensible manipulation of court processes and proceedings. The Supreme Court ruled that: "There is forum-shopping whenever, as a result of an adverse opinion in one forum, a party seeks a favorable opinion (other than by appeal or certiorari) in another. The principle applies not only with respect to suits filed in the courts but also in connection with litigations commenced in the courts while an administrative proceeding is pending, as in this case, in order to defeat administrative processes and in anticipation of an unfavorable administrative ruling and a favorable court ruling. This is specially so, as in this case, where the court in which the second suit was brought, has no jurisdiction." AcICTS For purposes of determining whether forum-shopping exists in two or more cases, the Supreme Court in Buan vs. Lopez, 19 held that forum-shopping exists where the elements of litis pendentia are present or where a final judgment in one case will amount to res judicata in the other. "There thus exists between the action before this Court and RTC Case No. 86-36563 identity of parties, or at least such parties as represent the same interests in both actions, as well as identity of rights asserted and relief prayed for, the relief being founded on the same facts, and the identity on the two preceding particulars is such that any judgment rendered in the other action, will, regardless of which party is successful, amount to res judicata in the action under consideration: all the requisites, in fine, of auter action pendant. " xxx xxx xxx "As already observed, there is between the action at bar and RTC Case No. 86-36563, an identity as regards parties, or interests represented, rights asserted and relief sought, as well as basis thereof, to a degree sufficient to give rise to the ground for dismissal known as auter action pendant or lis pendens. That same identity puts into operation the sanction or twin dismissals just mentioned. The application of this sanction will prevent any further delay in the settlement of the controversy which might ensue from attempts to seek reconsideration of or to appeal from the Order of the Regional Trial Court in Civil Case No. 86-36563 promulgated on July 15, 1986, which dismissed the petition upon grounds which appear persuasive." Applying the above legal principles to respondent TPI's actions, this Court notes that in Civil Case No. 04-332 pending with Branch 56 of the Regional Trial Court of Makati City and in Sp. Proc. No. M-6232 pending in the court a quo , there exists an identity of parties or interests represented, an identity of rights or causes and more importantly, an identity of reliefs sought, i.e. with respect to the claim of US$17.9 Million. The parties involved in both cases are the same. Respondent TPI does not deny that the claim of US$17.9 Million was the subject of both Civil Case No. 04-332 and Sp. Proc. No. M-6232. Moreover, the relief sought in both cases is for the enforcement of the foreign arbitral award and the eventual collection of the said claim. It is noteworthy that respondent TPI had initially attempted to substitute the final award for the US$17.9 Million claim in Civil Case No. 04-332 pending with Branch 56 of the Regional Trial Court of Makati City, which attempt, however, was denied being contrary to the rules governing supplemental pleadings. By maintaining Civil Case No. 04-332 for the recovery of the US$17.9 Million and initiating the second suit, Sp. No. M-6232, which is an action to enforce the same money claim of US$17.9 Million, respondent TPI indubitably committed forum-shopping. HDacIT When respondent TPI filed a Motion to Dismiss in Civil Case No. 04-332 pending with Branch 56 asking that its petition for confirmation, recognition, and enforcement of the Third Partial Award for recovery of the US$17.9 Million be dismissed, respondent TPI acknowledged by its own action that the third partial award was actually included and is a principal part of the Final Award which is sought to be enforced in Sp. Proc. No. M-6232. Respondent TPI's attempt to have its petition in Civil Case No. 04-332 dismissed cannot undo the forum-shopping that it had committed when it asked two different courts of co-equal jurisdiction, i.e. , Branch 56 and Branch 132 of Makati City, to enforce its claim of US$17.9 Million. Ultimately, what is truly important to consider in determining whether forum-shopping exists or not is the vexation caused the courts and parties-litigants by a party who asks different courts and/or administrative agencies to rule on the same or related causes and/or to grant the same or substantially the same reliefs, in the process creating the possibility of conflicting decisions being rendered by the different for a upon the same issue. 20 If the court in Civil Case No. 04-332 denied the confirmation and enforcement of the third partial award containing the award of US$17.9 Million, said decision would have constituted res judicata in Sp. Proc. No. M-6232 to the extent of US$17.9 Million. To avoid this risk, respondent TPI later decided to have Civil Case No. 04-332 dismissed on its own motion. This Court cannot tolerate such an afterthought to be used as a tactical advantage. Respondent TPI has committed forum shopping and should therefore bear the consequences of its action. Under Revised Circular No. 28-91 of the Supreme Court, forum-shopping will result in sanctions, i.e., (a) summary dismissal of the multiple petitions; and (b) direct contempt of court. The rule against forum-shopping is further strengthened by the issuance of Supreme Court Administrative Circular No. 04-94. Said Circular formally established the rule that the deliberate filing of multiple complaints to obtain favorable action constitutes forum-shopping and shall be a ground for summary dismissal thereof. Conformably therewith, the dismissal of Sp. Proc. No. M-6232 is an appropriate sanction considering that Civil Case No. 04-332 had already been dismissed with prejudice. The case of Gochan vs. Gochan, 21 aptly supports the arguments of the petitioner. In the said case, it was explained that: "True, the trial court has the discretion to conduct a preliminary hearing on affirmative defenses. In the case at bar, however, the trial court committed a grave abuse of its discretion when it denied the motion for preliminary hearing. As we have discussed above, some of these defenses, which petitioners invoked as grounds for the dismissal of the action, appeared to be indubitable, contrary to the pronouncement of the trial court. Indeed, the abuse of discretion it committed amounted to an evasion of positive duty or virtual refusal to perform a duty enjoined by law, or to act at all in contemplation of law, which would have warranted the extraordinary writ of certiorari. Hence, the Court of Appeals erred when it dismissed the petition for certiorari filed by the petitioners." EcIDaA Since forum-shopping was clearly committed by respondent TPI, the public respondent gravely abused his discretion in denying petitioner's Motion for Preliminary Hearing on Affirmative Defenses. In jurisprudence, "grave abuse of discretion" implies such "capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction. The abuse of discretion must be patent and gross as to amount to an evasion of positive duty or virtual refusal to perform a duty enjoined by law, or to act at all in contemplation of law, as where the power is exercised in an arbitrary and despotic manner by reason of passion and hostility. " 22 The other case cited in the Petition, i.e., California and Hawaiian Sugar Company vs. Pioneer Insurance and Surety Corporation, 23 further lends credence to petitioner's arguments. The Supreme Court explained that: " Denial of the Motion for Preliminary Hearing Was a Grave Abuse of Discretion The more crucial question that we must settle here is whether the trial court committed grave abuse of discretion when it denied petitioner's Motion for a Preliminary Hearing on their affirmative defense of lack of cause of action. Undeniably, a preliminary hearing is not mandatory, but subject to the discretion of the trial court. In the light of the circumstances in this case, though, we find that the lower court committed grave abuse of discretion in refusing to grant the Motion. xxx xxx xxx . . . Indeed, it committed grave abuse of discretion when it denied a preliminary hearing on a simple issue of fact that could have possibly settled the entire case. Verily, where a preliminary hearing appears to suffice, there is no reason to go on to trial. One reason why dockets of trial courts are clogged is the unreasonable refusal to use a process or procedure, like a motion to dismiss, which is designed to abbreviate the resolution of a case." As to petitioner's allegation of non-payment of filing fees by respondent TPI, this Court cannot as yet render a ruling thereon since this Court's ruling in CA-G.R. Sp No. 88257 (Sixth Division) is the subject of review by the Honorable Supreme Court. The petitioner asserts that while the arbitration remained pending wherein respondent TPI prosecuted its claim for the recovery of the US$17.9 Million, it filed a case with Branch 56 of the Regional Trial Court of Makati City supposedly to collect the same sum from the petitioner. Respondent TPI's action was claimed to be in violation of the parties' arbitration agreement 24 which states that all disputes arising out of or in connection with the turnkey contract shall be submitted for arbitration. The petitioner submits that, as a result of respondent TPI's above-described breach of their arbitration agreement, the petitioner ceased to be bound by the arbitration agreement, and is as a consequence not bound by the awards rendered. The petitioner theorizes that respondent TPI's institution of the Branch 56 case in parallel with the ICC arbitration, was a clear breach and repudiation of its duty to have its claims resolved only by arbitration, and thereby released the petitioner from the reciprocal obligation to be bound by the same arbitration or by any award therein. cCaIET It must be noted, however, that the parallel case filed by respondent TPI was one for recognition and enforcement of the Third Partial Award. Respondent TPI filed it essentially to enforce said award which was rendered by the arbitral tribunal. Since the arbitral tribunal has no power to enforce or execute its awards, enforcement and execution of the awards are filed with the Regional Trial Courts. 25 The filing of a case for recognition and enforcement of an award is part of the process of arbitration. This Court is also mindful of the resolution of the Honorable Supreme Court in G.R. No. 146717, a case involving the same parties herein but relating to different issues. In the said case, the Honorable Supreme Court held that respondent TPI's act of filing a suit for recognition and enforcement of the Third Partial Award was part of the arbitration process since the arbitral tribunals have no power to execute their awards. Nevertheless, the Honorable Supreme Court ruled that the Third Partial Award cannot be enforced by a writ of execution because the action for enforcement was precipitately filed. The Supreme Court made the following findings: "The fact that the ICC Arbitral Tribunal included the proceeds of the securities [in its "final award"] shows that it intended to make a final determination/award as to the said issue only in the Final Award and not in the previous partial awards. This supports LHC's position that when the Third Partial Award was released and [the Branch 56 case] was filed, TPI was not yet authorized to seek the issuance of a writ of execution since the quantification of the amounts due to TPI had not yet been settled by the ICC Arbitral Tribunal . Notwithstanding the fact that the amount of the proceeds drawn on the securities was not disputed the application for the enforcement of the Third Partial Award [in the Branch 56 case] was precipitately filed. To repeat, the declarations made in the Third Partial Award do not constitute orders of the payment of money. 26 [Emphasis supplied] Although dismissal of the case in the court a quo is clearly warranted based on the indubitable grounds, as discussed, this Court cannot ignore an even more substantive issue which begs resolution by an impartial court the issue whether or not the arbitral award should be vacated for being in violation of public policy. It behooves this Court to rule upon the main controversy because the public respondent has lost his ability to render an impartial judgment given his obvious bias, as explained below. EIcTAD The Honorable Supreme Court in explaining the accepted rule of procedure to settle controversies in a single proceeding has ruled: "We shall act on said petition, considering that the lone issue raised is one of law. It is already an accepted rule of procedure for us to strive to settle the entire controversy in a single proceeding, leaving no root or branch to bear the seeds of future litigation. If, based on the records, the pleadings, and other evidence, the dispute can be resolved by us, we will do so to serve the ends of justice, instead of remanding the case to the lower court for further proceedings. " 27 If substantial justice is to be rendered by this Court, then, it must do what the Supreme Court has done, which is, to leave no root or branch to bear the seeds of future litigation. This Court finds that the manner by which the public respondent has issued the assailed order, demonstrates his obvious bias and prejudgment of the main case against the petitioner. The proceedings conducted by the public respondent on petitioner's Motion for Preliminary Hearing support this contention, as borne out by the relevant portions of the said proceedings quoted below. During the hearing on April 28, 2006, the petitioner's counsel, Atty. San Juan, raised valid and legitimate jurisdictional issues which the public respondent refused to act upon. His refusal pave the way for private respondent TPI to present its evidence: "ATTY. SAN JUAN: . . . Your Honor. . we will request the Court to make a ruling on the jurisdictional issues before we proceed with the case because if the Court upholds that it has no jurisdiction[,] among others because the filing fees were not paid, it will be improper for us to proceed with the rest of the case. COURT: So on that point i will deny that prayer. I think we should do it in one go. We can set it for factual and the legal later on. After you rested (sic) and then we will have the motion and all that." 28 Public respondent judge heard the petitioner's arguments on the grounds for dismissal, 29 and then disregarded them, and proceeded to hear the private respondent's "jurisdictional facts", 30 thereby effectively denying or rejecting those grounds for dismissal. cSCTEH He reiterated this at the end of the hearing, by which time he had already received the private respondent's "evidence", by expressly denying the petitioner's motion on its preliminary defenses. The public respondent went further by declaring in open court that "respondent [Petitioner herein] need not file a motion for reconsideration." 31 During the same proceedings, the public respondent continued to display his partiality towards the private respondent,: "ATTY. SAN JUAN: We filed a motion for preliminary hearing on affirmative defenses. COURT: You want me to act on that now. Essentially, its a motion to dismiss which you filed. . . HAICET xxx xxx xxx COURT: I will deny it. ATTY. SAN JUAN: If that will be the situation, may we request for three months on the factual issues? xxx xxx xxx COURT: I ordered already for the reception of respondent's evidence. You can get a copy of today's order. If you want to go up, you know, it will be ready by May 3. You want a written denial of the motion to set for hearing, I am denying it and you can get a copy of it. I will set [the case] for reception of respondent's evidence on May 19 and June 2." 32 [Emphasis supplied] So it is clear that what the public respondent intended to do, and did in fact do, was to deny the petitioner's motion for preliminary hearing which he himself described as "essentially. . a motion to dismiss." i.e., "as. . . a motion to dismiss," deny it. The public respondent's denial of what he himself considered to be "essentially. . a motion to dismiss." could not be anything but a denial of the grounds of dismissal therein raised. In addition, his denial of that motion, and his resolving to hear the merits of the proceedings, despite having been informed that private respondent had not paid the requisite filing fees of about P21 Million on its claim of about US$24 Million, confirms and demonstrates that he overruled petitioner's objection to enable the private respondent to proceed with its case. The public respondent violated the settled rule that the court could not exercise jurisdiction in any case where the requisite filing fees are not paid. The manner by which the public respondent Judge ruled on the petitioner's dismissal grounds reveals his resolve to unduly hasten the proceedings on the merits to favor the private respondent. DaAISH Later on during the same proceedings, when the private respondent finished with its first witness, the petitioner's counsel declined to cross-examine and instead resumed argument on the jurisdictional issue on non-payment of filing fees. He then asked directly what the public respondent proposed to do with the pending motion on the petitioner's dismissal grounds. 33 The public respondent then said, "I don't know whether this is proper for special proceeding", and simply asked the petitioner [private respondent herein] to proceed with its offer of exhibits. 34 When the private respondent missed to make a proper offer, the petitioner's counsel again raised the matter of its "preliminary motion." 35 Thus: "ATTY. SAN JUAN: Excuse me, Your Honor, that is the problem [with continuing TPI's offer] because we have a preliminary motion. COURT: I know, let's presume this is a civil action, assuming. . . xxx xxx xxx COURT: And then you ask for preliminary hearing on affirmative defenses. That will be totally discretionary upon the Court whether to grant hearing or not. I have not granted such a hearing, never. Now, if this were a civil case, and then you have a preliminary hearing on affirmative defenses is (sic) usually denied. I would rather you argue when i set it for reception of respondent's evidence. That is how i intend to proceed with this case. So, after he makes a proper formal offer of evidence. . . I will set [the case] for reception of respondent's evidence" . . . 36 The public respondent's actions clearly betray a lack of independence and impartiality. If the case in the court a quo were to proceed, the petitioner would be denied a fair trial. EIcSDC Thus, while it is the judgment of this Court that the petition in the court a quo be dismissed, this Court shall nevertheless make a ruling on the main case particularly since the grounds for such a ruling are clearly apparent on the face of the arbitral award, the pleadings, and the records submitted to this Court by both parties. After a painstaking review of the records of the case, this Court rules that Sp. Proc. No. M-6232 cannot, and should not, prosper because the arbitral award is null and void for manifestly disregarding Philippine law and for being contrary to public policy. This Court recognizes that the Philippines is a signatory to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards. As a general rule, the courts are aware of the encouragement given to the parties to resort to arbitration as a mode of dispute resolution. As such, foreign arbitral awards issued in accordance with the rules of the UN convention are entitled to great respect and recognition by the international community. However, this Court recognizes that there are exceptions to this rule. Compelling reasons exist to justify the action to be taken by this Court in regard to the validity of the arbitral award subject of the instant case. Section 24 of Republic Act No. 9285 "Alternative Dispute Resolution Act of 2004" Section 45 of the Alternative Dispute Resolution Act of 2004 "A party to a foreign arbitration proceeding may oppose an application for recognition and enforcement of the arbitral award in accordance with the procedural rules to be promulgated by the Supreme Court only those grounds enumerated under Article V of the New York Convention." Article V, Section 2 (b) of the New York Convention states the grounds to support the refusal of the recognition and enforcement of an arbitral award. "2. Recognition and enforcement of an arbitral award may also be refused if the competent authority in the country where recognition and enforcement is sought finds that: AcSEHT (a) The subject matter of the difference is not capable of settlement by arbitration under the law of that country; or (b) The recognition or enforcement of the award would be contrary to public policy of that country." In the case of Asset Privatization Trust vs. Court of Appeals , 37 the Honorable Supreme Court explained, in setting aside an arbitral award: "As a rule, the award of an arbitrator cannot be set aside for mere errors of judgment either as to the law or as to the facts. [The Hartbridge, 62 F2d (1932)] Courts are without power to amend or overrule merely because of disagreement with matters of law or facts determined by the arbitrators. [James Richardson & Sons v. W.E. Hedger Transp. Corp., 98 F. 2d 55 (1938)] They will not review the findings of law and fact contained in an award, and will not undertake to substitute their judgment for that of the arbitrators, since any other rule would make an award the commencement, not the end, of litigation. [General Construction Co. v. Hering Realty Co., 201 F. Supp. 487 (1962)] Errors of law and fact, or an erroneous decision of matters submitted to the judgment of the arbitrators, are insufficient to invalidate an award fairly and honestly made. [Coleman Company v. International Union, Local 63, Textile Workers Union v. Cheney Brothers, 109 A. 2d. 240 (1954) Judicial review of an arbitration is, thus, more limited than judicial review of a trial. [Bernhardt v. Polygraphic Co., 100 L. ed. 199 (1956)]. Nonetheless, the arbitrators' award is not absolute and without exceptions. The arbitrators cannot resolve issues beyond the scope of the submission agreement. The parties to such an agreement are bound by the arbitrators award only to the extent and in the manner prescribed by the contract and only if the award is rendered in conformity thereto. [Art. 2038, Civil Code] Thus, Sections 24 and 25 of the Arbitration Law provide grounds for vacating, rescinding or modifying an arbitration award. Where the conditions described in Articles 2038, 2039, and 2040 of the Civil Code applicable to compromises and arbitration are attendant, the arbitration award may also be annulled. xxx xxx xxx Finally, it should be stressed that while a court is precluded from overturning an award for errors in the determination of factual issues, nevertheless, if an examination of the record reveals no support whatever for the arbitrators determinations, their award must be vacated. [Storer Broadcasting v. American Federation of Tel., 600 F. 2d 168 (1953)] In the same manner, an award must be vacated if it was made in "manifest disregard of the law. [See Wilko v. Swan, 346 U.S. 427, 74 S. Ct., 182, 98 L. ed. 168 (1953)]" HDacIT The particular instance where judicial interference in the arbitral process is recognized is where an arbitration award provides for a relief that is contrary to public policy or is in manifest disregard of the law. The Final Award must not be given effect because to do so would result in supplanting our own laws and public policies with a judgment that is based on foreign law despite the clear obligation of the arbitral tribunal to apply Philippine law in resolving the commercial dispute between the petitioner and the respondent TPI. The said dispute arose from a Turnkey Contract between the said parties wherein they categorically stipulated that it shall be governed by Philippine law. In effe ct, the petitioner suffered damages twice first, it failed to recover liquidated damages for TPI's delay because it was compelled to grant an extension of time to the completion date and then, it was made to pay acceleration costs despite the fact that the original completion date has already been moved to a later date. TPI, on the other hand, recovered twice by not having to pay liquidated damages and being paid the costs to minimize delay which is TPI's responsibility. The extension of time that was granted to TPI already compensated TPI for its delays and TPI should not be entitled to more. A recovery by a party under one remedy necessarily bars recovery under the other. This, in essence, is the rationale for the proscription in our law against double jeopardy for the same act or omission which, obviously, stems from the fundamental rule against enrichment. 38 Another glaring example of the arbitral tribunal's manifest disregard of Philippine law apparent on the face of the records of the case is its finding on pages 446-469 of the Third Partial Award that the construction of the lined tunnel by TPI was not completed in accordance with prudent utility practices and international engineering standards which was a clear requirement under the Turnkey Contract. But notwithstanding such finding of fault against TPI (or in culpa under the Civil Code of the Philippines), the arbitral tribunal nevertheless penalized the petitioner by ordering it to return to TPI the proceeds of the performance securities drawn by the petitioner under the Turnkey Contract. The relevant provisions of the Turnkey Contract are categorical in stating that such performance securities are intended to secure the proper performance of TPI of its obligations thereunder. In the event that TPI is at fault, as it was in this case, the petitioner may then validly draw on such securities, as it did. CEHcSI If the arbitral tribunal's indisputable finding of fact is that TPI was at fault because it failed to perform its contractual obligation to construct the lined tunnel in accordance with prudent utility practices and international engineering standards, it should have concluded that the petitioner had validly drawn on the performance securities. It is, therefore, absurd and unconscionable for the arbitral tribunal to nonetheless order in its Final Award that the petitioner return all the proceeds of the performance securities it has validly drawn. Then the arbitral tribunal made matters worse by declaring the petitioner liable to pay TPI, despite the latter's own fault as shown above, for all the arbitration costs and litigation expenses, including attorney's fees arising from the suit. Clearly, the arbitral tribunal blatantly disregards Philippine law by effectively showing TPI to be unjustly enriched and to inequitably profit at the expense of the petitioner. Anent the Final Award, 39 the arbitral tribunal as earlier mentioned adjudges the petitioner liable to respondent TPI for legal and arbitration costs of about $12 Million, in gross violation of Philippine law and public policy, there being no finding that the petitioner litigated in bad faith against respondent TPI. It was mentioned that the petitioner was, in fact, awarded $11.8 Million of its own counterclaims for respondent TPI misperformance under the Turnkey Contract, showing it had basis and reason to litigate with respondent TPI. Instead of applying Philippine law as required under clause 1.4.1 of the Turnkey Contract, the arbitrators applied the principle of "costs follows the event." Based on this principle, apparently, the tribunal determines who is the successful party in terms of net amount awarded after the set-off of all awards granted. The tribunal then imposes on the losing party the costs incurred by the successful party. The petitioner points out that the Final Award penalizes the petitioner with the obligation to pay the respondent TPI its arbitration costs and litigation expenses on the simple logic that the arbitrators' award on respondent TPI's claims had a net excess over their award on the petitioner's counterclaims. The petitioner submits that the award is null and void as a matter of law and Philippine public policy with respect to the grant to respondent TPI of its arbitration costs and litigation expenses since it is a settled public policy of the Philippines that, in the absence of bad faith, a litigant cannot be penalized for the exercise of his right to litigate. acHTIC The petitioner's arguments are meritorious. A perusal of the Final Award, first on page 29 thereof, shows that the arbitral tribunal recognizes the principle of "costs follow the event." The Final Award provides: "109. TPI submitted that costs should follow the event and the event was, in effect, a positive award of damages in its favour. TPI submitted that the claims and counterclaims should not be segregated and that under Philippine law any damages awarded in respect of LHC's counterclaims concerning defective work would set-off against TPI's claims of monies owing it. TPI said: '15. Accordingly, the Tribunal must determine which is the successful party for the purposes of applying the principle costs follow the event. TPI submits that the appropriate course is to set-off LHC's defects claim, and the agreed or determined in favour of TPI and find the net amount. Even excluding any interest entitlement, the net flow of moneys to TPI is in the order of USD 12 Million. TPI must be considered to be the successful party and, accordingly, LHC should be ordered to pay TPI's costs pursuant to the principle that costs follow the event, in the absence of any special circumstances.' This principle, however, is not recognized or accepted in Philippine law. On page 34, paragraph 118 of the Final Award, the arbitral tribunal clearly adopted this principle when it ruled: "In the exercise of its discretion the Tribunal concludes that LHC [Petitioner herein] should pay the direct costs of this arbitration. TPI had to commence this arbitration in order to achieve the net flow of funds in its favour. Had the counterclaim over topped the claim the Tribunal would have taken a different view." The arbitral tribunal gravely abused its discretion when it casually disregarded substantive Philippine law in favor of an alien principle of "costs follow the event." The award is null and void as a matter of law and Philippine public policy with respect to the grant to respondent TPI of its arbitration costs and litigation expenses; this part of the award amounts to US$10,817.898. It is a well-settled public policy of the Philippines that, in the absence of bad faith, a litigant cannot be penalized for the exercise of his right to litigate, and the arbitrators did not and could not have found petitioner to have acted in bad faith in resisting the claims of the private respondent, and in presenting its own claims in the arbitration which the arbitration in fact upheld. AICTcE Attorney's fees cannot be recovered as part of damages because of the policy that no premium should be placed on the right to litigate. 40 No premium shall be placed on the right to litigate and not every winning party is entitled to an automatic grant of attorney's fees. The party must show that he falls under one of the instances enumerated under Article 2208 of the Civil Code of the Philippines. As held in Solid Homes, Inc. vs. Court of Appeals , 41 "Article 2208 of the Civil Code allows attorney's fees to be awarded by a court when its claimant is compelled to litigate with third persons or to incur expenses to protect his interest by reason of an unjustified act or omission of the party from whom it is sought. While judicial discretion is here extant, an award thereof demands, nevertheless, a factual, legal or equitable justification. The matter cannot and should not be left to speculation and conjecture." 42 Based on the foregoing findings and pursuant to Article V, Section 2 (b) of the New York Convention , this Court finds that the enforcement and recognition of the Final Award would be contrary to the laws and public policies of this country. This Court therefore rules that the said award be vacated. It must be stressed in no uncertain terms that parties who enter into an arbitration agreement are bound by the provisions contained therein. In effect, the parties repose their trust and confidence in the arbitration tribunal, as they would in a court, to fairly and faithfully enforce their contractual stipulations as the law between such parties. However, when an arbitral tribunal, grossly fails in its task to resolve disputes between parties in accordance with their agreements consistent with Philippine law and public policy, as the arbitral tribunal has glaringly done in this case and as apparent on the face of its Final Award and its other awards, the Court cannot abdicate on its supreme responsibility to serve the ends of justice. More so in this instant case when the lower court called upon to enforce the Final Award acts with obvious bias and manifest partiality, this Court is constrained to step in to prevent a miscarriage of justice and to avoid multiplicity of suits or circuitous appeals. Otherwise, this Court will be remiss in its paramount duty and solemn obligation to uphold Philippine law and public policy. WHEREFORE, the petition for certiorari is GRANTED. The assailed order of the court a quo dated April 28, 2006 is hereby NULLIFIED and SET ASIDE for having been issued by the public respondent with grave abuse of discretion. Sp. Proc. No. M-6232, entitled " Transfield Philippines, Inc. vs. Luzon Hydro Corporation " is DISMISSED WITH PREJUDICE, and the Final Award sought to be enforced therein is hereby declared NULL and VOID and UNEFORCEABLE for being contrary to Philippine law and public policy. SCcHIE SO ORDERED. Alio-Hormachuelos and Lanzanas, * JJ., concur. Footnotes 1. Rollo, pp. 2-20. 2. Rollo, p. 21. 3. Rollo, pp. 90-93. 4. Rollo, pp. 23-31. 5. Rollo, pp. 34-49. 6. Rollo, pp. 90-93. DIETHS 7. Rule 72, Sec. 2 of the Rules provides that "[i]n the absence of special provisions, the rules provided for in the ordinary actions [such as Rule 16, Sec. 6] shall be, as far as practicable, applicable in special proceedings." 8. LHC's Answer pleads other reasons for the dismissal of the Petition, albeit as affirmative allegations rather than as affirmative defenses. Furthermore, those "other reasons" are not among the "grounds for dismissal provided for in. . . Rule [16]". That is why LHC is not asking for a preliminary hearing on those reasons. 9. See Answer, par. 7. 10. See id. , par. 8. 11. See id. , par. 9. 12. See id. , par. 10. 13. Rollo, pp. 210-211. 14. Rollo, pp. 326-337. 15. Rollo, pp. 350-370. 16. Rollo, pp. 768-791. CaHcET 17. Rollo, p. 521. 18. 155 SCRA 566. 19. 145 SCRA 34. 20. Golangco vs. Court of Appeals, 283 SCRA 493. 21. 372 SCRA 256. 22. People vs. Chavez, 358 SCRA 810. 23. 346 SCRA 214. 25. Section 42 of Republic Act No. 9285. 26. May 19, 2006 Resolution in G.R. No. 146717, Annex 1 of TPI's Manifestation dated June 13, 2006, p. 13. STADIH 27. San Luis vs. Court of Appeals, G.R. No. 142649, September 13, 2001, 365 SCRA 279. 28. TSN, 29 April 2006, Annex 1 of respondent TPI's Manifestation and Opposition dated May 16, 2006, at 75. 29. See TSN, April 28, 2006, Annex 1 of Respondent TPI's Manifestation and Opposition dated May 16, 2006, pp. 11 to 21, 29. 30. Ibid, at p. 22. 31. Ibid, p. 89. 32. TSN, April 28, 2006, Annex 1 of respondent TPI's Manifestation and Opposition dated May 16, 2006, pp. 80-81, 85. 33. Ibid, p. 30. 34. Ibid, p. 31. 35. Ibid, p. 34. 36. TSN, supra, Annex 1 of Respondent TPI's Manifestation and Opposition dated May 16, 2006, pp. 34-36. 37. 300 SCRA 579. DEIHAa 38. Joseph vs. Bautista, G.R. No. 41423, February 23, 1989. 39. pp. 1-45; Rollo, pp. 158-205. 40. Philtranco Service Enterprises, Inc. vs. Court of Appeals, 273 SCRA 562 [1997]; Morales vs. Court of Appeals, 274 SCRA 282 [1997]. 41. 235 SCRA 299, 303-304, August 12, 1994. 42. Mirasol vs. De la Cruz, 84 SCRA 337; Stronghold Insurance Company, Inc. vs. Court of Appeals, 173 SCRA 619. * Vice Justice Santiago Javier Ranada who has retired from the service.