RAMCAR, Inc. v. GS Yuasa International, Ltd.

FIRST DIVISION

[G.R. No. 243415. January 25, 2023.]

RAMCAR, INC., AND ORIENTAL YUASA BATTERY CORPORATION, petitioners,vs.GS YUASA INTERNATIONAL, LTD., respondent.

NOTICE

Sirs/Mesdames :

Please take notice that the Court, First Division, issued a Resolution datedJanuary 25, 2023which reads as follows: HTcADC

"G.R. No. 243415 (RAMCAR, Inc., and Oriental Yuasa Battery Corporation, v. GS Yuasa International, Ltd.). — This Petition for Review on Certiorari (Petition) 1 dated 16 January 2019 under Rule 45 of the Rules of Court (Rules) seeks to reverse and set aside the Decision dated 6 August 2018 2 and the Resolution dated 28 November 2018 3 of the Court of Appeals (CA) in CA-G.R. SP No. 147086. The CA dismissed the Petition for Review purportedly filed by petitioners under Rule 43 of the Rules assailing the Final Award 4 dated 14 September 2016 (Final Award) of the Philippine Dispute Resolution Center, Inc. (PDRC) in Case No. 2015-014.

Antecedents

On 21 December 1989, petitioners RAMCAR, Inc. (RAMCAR), and Yuasa Battery Co. Ltd. (YBC), the predecessor-in-interest of respondent GS Yuasa International, Ltd. (GYIL), entered into a Joint Venture Agreement (JVA) where they agreed to form a Joint Venture Corporation named as Oriental Yuasa Battery Corporation (OYBC). 5

Pursuant to the JVA, OYBC, which is to be seventy percent (70%) owned by RAMCAR and thirty percent (30%) owned by YBC, will manufacture, assemble, market and export automatic, motorcycle and stationary/traction batteries in and from the Philippines with the use of technology, processes and formula of YBC, which YBC has agreed to supply and license to RAMCAR under a separate Technical Assistance Agreement (TAA) and RAMCAR has agreed in turn to sub-license to OYBC under a separate Sub-licensing Agreement. 6

The JVA also contains an arbitration clause which provides that "[i]f [a] dispute or disagreement cannot be settled amicably between the [p]arties, the same shall be submitted to arbitration in accordance with existing Philippine law." 7

Thus, on 29 March 1990, RAMCAR and YBC formed and organized OYBC in the Philippines, upon the approval of the Articles of Incorporation by the Securities and Exchange Commission. OYBC's primary purpose is to engage in, operate, conduct and maintain the business of manufacturing, assembling, importing, buying, selling, or otherwise dealing in at the wholesale of such goods as batteries and other batteries of similar nature, and any and all equipment, materials, supplies used or employed in or related to the manufacture of such finished products. 8

On 02 May 1994, OYBC and Yuasa Corporation (YC), the resulting corporation after YBC's change of corporate name, entered into a Technical Assistance Agreement (First TAA) pursuant to the JVA. 9 Among other things, the First TAA provides that YC agrees to grant OYBC rights and license to manufacture the batteries at RAMCAR's site or at OYBC's factory and sell within the territory by using YC's technical know-how and in accordance with YC's standards for the quality and performance of the batteries. YC also agreed to allow OYBC to use the trademark owned by YC. 10 The First TAA had a period of five years, which shall be extended on a year-to-year basis. 11 The First TAA also contains an arbitration clause, with similar language to that found in the JVA. 12

On 01 July 1995, OYBC and YC entered into another Technical Assistance Agreement (Second TAA), which also includes an arbitration clause. The pertinent provisions of the First TAA as discussed above are similarly found in the Second TAA. 13

On 07 July 2004, OYBC's Board of Directors called a special meeting of its members. In the special meeting, OYBC's President Jacob U. Tagorda, Jr., reported that the corporation was losing money, and that the continued operations of its battery manufacturing plant were no longer feasible. 14

RAMCAR and OYBC sent a Letter dated 16 July 2004 to GYIL stating the closure of OYBC. On GYIL's part, it claimed it sent several letters to RAMCAR and OYBC stating its proposal to discuss the liquidation of OYBC. 15

According to RAMCAR and OYBC, OYBC proceeded as planned, and shut down the manufacturing plant. The assembly or manufacture of "Yuasa" batteries was then outsourced to Philippine Battery, Inc. (PBI), as also allegedly intimated by OYBC to GYIL. On the other hand, GYIL alleged that the decision to convert OYBC to a marketing arm of PBI was unilateral and that OYBC marketed RAMCAR's Motolite and Oriental batteries, and not the "Yuasa" brand of battery. 16

This controversy gave rise to two arbitral proceedings before the PDRC between petitioners and respondent. The first arbitral proceeding was initiated by RAMCAR against GYIL and GS Yuasa Corporation (GYC) on 8 June 2011 praying that the arbitral tribunal declare GYC and GYIL in breach of the JVA and the corresponding TAAs, and order payment of damages. 17

After the proceedings, the Arbitral Tribunal, composed of then Dean Danilo L. Concepcion, retired Justice Santiago J. Ranada, and Atty. Victor P. Lazatin as chairperson, rendered an Amended Award dated 11 March 2014 (Amended Award), denying RAMCAR's claims. It also declared the JVA terminated as of September 2004 and the TAAs to have expired, and awarded GYIL damages, attorney's fees, and costs of arbitration. 18

Thus, RAMCAR and OYBC filed a Petition to Vacate and/or Correct Domestic Arbitral Award before the Regional Trial Court (RTC), Branch 157, Quezon City docketed as Spec. Proc. Case No. 12677 (PSG). The RTC, in a Decision dated 6 March 2015 (RTC Decision), granted said petition and vacated the Amended Award insofar as it found RAMCAR is not a real party-in-interest. The RTC remanded the case back to the Arbitral Tribunal for further proceedings. 19

GYIL filed a Motion for Reconsideration. However, without awaiting for its resolution, GYIL commenced a second round of arbitral proceedings, this time impleading OYBC as respondent. The assailed PDRC's Final Award was rendered in this second proceeding. 20 Insisting that PDRC's Amended Award did not dispose all matters in dispute, and that the RTC Decision left unresolved issues, GYIL pleaded in the second round of arbitration the following claims:

2. After hearing on the merits:

a. Declaring the termination of the subject JVA;

b. Declaring that OYBC should be dissolved and liquidated, and ordering OYBC, thru its Directors and Stockholders, to pass upon the pertinent resolution providing for its dissolution and liquidation;

c. Permanently restraining and/or enjoining RAMCAR and/or OYBC, or any related person under Article 24 of the JVA, including their agents and representatives, from doing or engaging in any of the following acts:

1. Producing or causing to produce 'GS', 'Yuasa' or 'GS Yuasa' brand of batteries; and,

2. Using or causing to use 'Yuasa' trademark/tradename on their battery products.

d. Ordering OYBC, thru its Directors and Stockholders, to pass the pertinent resolution amending OYBC's Articles of Incorporation by removing the word 'Yuasa' from its corporate name; and

e. Ordering RAMCAR and OYBC, jointly and solidarily [sic], to reimburse GYIL attorney's fees in the amount of at least PhP2,000,000.00. plus costs of arbitration and other related expenses. 21

RAMCAR and OYBC protested against the new Arbitral Tribunal's exercise of jurisdiction while GYIL's Motion for Reconsideration with the RTC is still pending. According to petitioners, the RTC Decision is not yet final and executory as of the commencement of the second arbitral proceeding. Since the RTC vacated the Amended Award and referred the case back to the Arbitral Tribunal for further proceedings, the second arbitration is premature and improper. 22

The new Arbitral Tribunal, composed of Simeon V. Marcelo as chairperson, and Victor C. Fernandez and Arthur P. Autea as members, rendered the Final Award, which decreed: DETACa

I. Upon the claims in favor o[f] claimant [GYIL]:

1. Deny the prayer for interim measure for protection of claimant GYIL;

2. The Joint Venture Agreement dated December 21, 1989 is hereby declared terminated;

3. Deny the prayer declaring that OYBC should be dissolved and liquidated, and ordering OYBC, thru its Directors and Stockholders, to pass pertinent resolution providing for its dissolution and liquidation;

4. Permanently restraining and/or enjoining respondents RAMCAR and/or OYBC, or any related person under Article 24 of the JVA, including their agents and representatives, from: (a) producing or causing to produce 'GS'[,] 'Yuasa' or 'GS Yuasa' brand of batteries; and (b) using or causing to use 'Yuasa' trademark/tradename on their battery products;

5. Deny the prayer ordering respondent OYBC, through its Directors and Stockholders, to pass the pertinent resolution, amending respondent OYBC's Articles of Incorporation to remove the word 'Yuasa' from its corporate name;

6. Deny the prayer ordering respondents RAMCAR and OYBC, jointly and solidarity (sic), to reimburse claimant GYIL attorney's fees in the amount of at least Two Million Pesos (PhP2,000,000.00), plus costs of arbitration and other related expenses; and

7. Order claimant GYIL to pay half of the total cost of arbitration. 23

From this Final Award, RAMCAR and OYBC filed a Petition under Rule 43 of the Rules before the CA on 07 November 2016. In sum, RAMCAR and OYBC theorized in their submissions that: a Rule 43 petition is available for the review of the assailed Final Award; the first and subsequent arbitral proceedings are domestic in nature; the second Arbitral Tribunal had no jurisdiction to proceed with the second arbitration in view of the pendency of Spec. Proc. Case No. 12677 (PSG) with the RTC, and the remand of the proceedings back to the first Arbitral Tribunal; there are no factual and legal bases for the termination of the JVA; the TAAs remained valid and effective in spite of their non-renewal with the Intellectual Property Office (IPO); and they are entitled to attorney's fees, reimbursement of costs of arbitration, and other related expenses. 24

On the other hand, GYIL averred that: the CA has no jurisdiction to review the subject Final Award; the second motion for extension of time to file the petition was filed before the period first requested, and thus the instant petition was filed out of time; the errors of fact and law alluded to in the petition are not proper in the allowable review under Republic Act No. (RA) 9285 25 or the Alternative Dispute Resolution Act of 2004 (ADR Law); the Arbitral Tribunal had jurisdiction to proceed with the second arbitration; and there are factual and legal bases for the termination of the JVA as RAMCAR committed substantial violations of the terms and conditions thereof and the TAAs. 26

Ruling of the CA

The CA, in its Decision dated 06 August 2018, 27 dismissed RAMCAR and OYBC's petition purportedly filed under Rule 43 for being improper, and its lack of jurisdiction to review the assailed Final Award. 28

As to the nature of the arbitration before the PDRC, especially the second arbitration, the CA clarified that the subject arbitral proceedings fall under the category of international commercial arbitration pursuant to Rule 2, Article 1.6, C (8) 29 of DOJ Department Circular No. 098-09 or the Implementing Rules and Regulations of the Alternative Dispute Resolution Act of 2004 because the parties' principal places of business are in different states. RAMCAR and OYBC have their principal places of business at Corner Scout Santiago and Marathon Streets, Diliman, Quezon City, Philippines, while GYIL's principal place of business is at No. 6-6, Josai-cho, Takatsuki-shi, Osaka, Japan. 30

The CA then ruled that RAMCAR and OYBC's petition under Rule 43 is a wrong remedy to assail the Final Award. Pursuant to Rule 12.5 of A.M. No. 07-11-08-SC or the Special Rules of Court on Alternative Dispute Resolution (Special ADR Rules), a petition for review under Rule 43 is prohibited: 31

RULE 12.5. Exclusive Recourse Against Arbitral Award. — Recourse to a court against an arbitral award shall be made only through a petition to set aside the arbitral award and on grounds prescribed by the law that governs international commercial arbitration. Any other recourse from the arbitral award, such as by appeal or petition for review or petition for certiorari or otherwise, shall be dismissed by the court.

The CA also said that it is not unmindful of this Court's statement in ABS-CBN Broadcasting Corp. v. World Interactive Network Systems Japan Co., Ltd., 32 which appears to recognize a petition for review under Rule 43 as an available remedy. However, the CA noted that the latter case of Fruehauf Electronics Philippines Corp. v. Technology Electronics Assembly and Management Pacific Corp., 33 qualified the aforementioned declaration in ABS-CBN Broadcasting Corp., 34 as merely an obiter. Instead, the exclusive remedies from arbitral awards are those provided for in Special ADR Rules. 35 Thus, the petition is dismissible for being an improper remedy. 36

More importantly, the CA said that it is bereft of jurisdiction to review the assailed Final Award pursuant to the ADR Law, which vests the sole and exclusive jurisdiction over petitions for recognition or setting aside of an arbitral award rendered in an international commercial arbitration conducted in the Philippines with the RTC and not with the CA. 37 It stated that this is true even assuming the subject arbitrations here are classified as domestic arbitration. 38

Thus, RAMCAR and OYBC filed a motion for reconsideration but was denied by the CA, in its Resolution dated 28 November 2018 39 for lack of merit. Consequently, RAMCAR and OYBC filed the present Petition.

Issue

The main issue for the resolution of this Court are whether or not the CA correctly dismissed RAMCAR and OYBC's petition under Rule 43 for being the improper remedy, and for lack of jurisdiction to review the assailed Final Award.

Ruling of the Court

The Petition has no merit.

At the outset, We emphasize that "[o]nly questions of law may be raised in a petition for review on certiorari. [. . .]" 40 Section 1, Rule 45 categorically states that a petition for review on certiorari shall raise only questions of law, which must be distinctly set forth. A question of law arises when there is doubt as to what the law is on a certain state of facts, while there is a question of fact when the doubt arises as to the truth or falsity of the alleged facts. For a question to be one of law, the same must not involve an examination of the probative value of the evidence presented by the litigants or any of them. The resolution of the issue must rest solely on what the law provides on the given set of circumstances. Once it is clear that the issue invites a review of the evidence presented, the question posed is one of fact. 41 Although jurisprudence has provided several exceptions to this rule, exceptions must be alleged, substantiated, and proved by the parties so this Court may evaluate and review the facts of the case. In any event, even in such cases, this Court retains full discretion on whether to review the factual findings of the CA. 42

Here, among the issues raised by the Petition was whether or not the JVA was validly terminated and this involves a question of fact because it necessarily requires a review of the evidence presented. 43 Significantly, Section 5, Rule 45 of the Rules of Court provides that the failure of the petitioner to comply with the requirements on the contents of the petition, which include the mandate to only raise questions of law, shall be sufficient ground for the dismissal thereof. 44

In any event, even if We consider the issues submitted by RAMCAR and OYBC, the Petition is still unmeritorious. We find no reversible error on the part of CA in dismissing RAMCAR and OYBC's petition purportedly filed under Rule 43 for being an improper remedy, and for CA's lack of jurisdiction to review the assailed Final Award.

Jurisdiction over subject matter is conferred by law, and not by mere consent of the parties. 45 Being conferred by law, the issue of jurisdiction over the subject matter may be raised at any stage of the proceedings, during trial or on appeal, and is not lost by waiver or by estoppel. 46 To determine whether a court has jurisdiction over the subject matter, the material allegations of the complaint or submission must be examined, along with the relief sought by the party, and the law in force at the time of its commencement. 47 In this case, judicial review of domestic arbitral awards, whether from a domestic arbitration or international commercial arbitration, is governed by the ADR Law, 48 which vests jurisdiction with the RTC, and not the CA. Section 41 provides:

SECTION 41. Vacation Award. — A party to a domestic arbitration may question the arbitral award with the appropriate Regional Trial Court in accordance with rules of procedure to be promulgated by the Supreme Court only on those grounds enumerated in Section 25 of Republic Act No. 876. Any other ground raised against a domestic arbitral award shall be disregarded by the Regional Trial Court.

In turn, Rule 12.3 of the Special ADR Rules, which took effect on 30 October 2009, states that:

RULE 12.3. Venue. — A petition to recognize and enforce or set aside an arbitral award may, at the option of the petitioner, be filed with the Regional Trial Court: (a) where arbitration proceedings were conducted; (b) where any of the assets to be attached or levied upon is located; (c) where the act to be enjoined will be or is being performed; (d) where any of the parties to arbitration resides or has its place of business; or (e) in the National Capital Judicial Region. 49 (Emphasis supplied)

The CA is also correct in ruling that the petitioners availed of the improper remedy when it filed a petition for review under Rule 43 to assail the Final Award. As a result, the Petition is dismissible. An arbitral award is not appealable via Rule 43 because: (1) there is no statutory basis for an appeal from the final award of arbitrators; (2) arbitrators are not quasi-judicial bodies; and (3) the Special ADR Rules specifically prohibit the filing of an appeal to question the merits of an arbitral award. 50 Specifically, Section 12.5 of the Special ADR Rules provides:

RULE 12.5. Exclusive Recourse Against Arbitral Award. — Recourse to a court against an arbitral award shall be made only through a petition to set aside the arbitral award and on grounds prescribed by the law that governs international commercial arbitration. Any other recourse from the arbitral award, such as by appeal or petition for review or petition for certiorari or otherwise, shall be dismissed by the court.51 (Emphasis supplied)

Given that the RTC, and not the CA, has jurisdiction to review the assailed Final Award and that the remedy is not a petition for review under Rule 43, We find no reversible error on the part of CA in dismissing RAMCAR and OYBC's petition.

WHEREFORE, premises considered, RAMCAR, Inc. and Oriental Yuasa Battery Corporation's Petition for Review on Certiorari dated 16 January 2019 is hereby DENIED. aScITE

SO ORDERED." Rosario, J., on official leave.

By authority of the Court:

(SGD.) LIBRADA C. BUENADivision Clerk of Court

By:

MARIA TERESA B. SIBULODeputy Division Clerk of Court

Footnotes

1.Rollo, pp. 9-95.

2.Id. at 102-117; penned by Associate Justice Gabriel T. Robeniol and concurred in by Associate Justices Edwin D. Sorongon and Zenaida T. Galapate-Laguilles.

3.Id. 119-120.

4.Id. at 1022-1138; signed by the Arbitral Tribunal composed of Simeon V. Marcelo as Chairperson and Victor C. Fernandez and Arthur P. Autea as Members.

5.Id. at 103, 1024-1026.

6.Id. at 1024.

7.Id. at 1026, 141-142; JVA, Article 12.

8.Id. at 103, 1026.

9.Id. at 103, 1027-1028.

10.Id. at 1027.

11.Id. at 1028.

12.Id. at 1027-1028.

13.Id. at 1027-1029.

14.Id. at 103.

15.Id. at 103-104.

16.Id. at 104.

17.Id.

18.Id.

19.Id. 105.

20.Id.

21.Id. at 106.

22.Id.

23.Id. at 107.

24.Id. at 108-109.

25. Entitled "AN ACT TO INSTITUTIONALIZE THE USE OF AN ALTERNATIVE DISPUTE RESOLUTION SYSTEM IN THE PHILIPPINES AND TO ESTABLISH THE OFFICE FOR ALTERNATIVE DISPUTE RESOLUTION, AND FOR OTHER PURPOSES." Approved on 02 April 2004.

26.Id. at 110.

27.Id. at 102-117.

28.Id. at 116.

29. ARTICLE 1.6. Definition of Terms. — For purposes of these Rules, the terms shall be defined as follows:

C. Terms Applicable to the Chapter on International Commercial Arbitration

xxx xxx xxx

8. International Arbitration means an arbitration where:

(a) the parties to an arbitration agreement have, at the time of the conclusion of that agreement, their places of business in different states x x x.

30.Rollo, p. 111.

31.Id. at 112.

32. 568 Phil. 282 (2008).

33. 800 Phil. 721 (2016).

34.Supra.

35. See Fruehauf Electronics Philippines Corporation. v. Technology Electronics Assembly and Management Pacific Corp., supra at 751-752.

36.Rollo, p. 114.

37.Id. at 114-115; See Sections 41, 42, 47 of the Alternative Dispute Resolution.

38.Id. at 116.

39.Id. at 119-120.

40. RULES OF COURT, Rule 45, Section 6; Pascual v. Burgos, 776 Phil. 167, 169 (2016).

41.Magdiwang Realty Corp. v. Manila Banking Corp., 694 Phil. 392, 404 (2012).

42.Supra note 38.

43. See Wyeth Philippines, Inc. v. Construction Industry Arbitration Commission, G.R. Nos. 220045-48, 22 June 2020.

44. RULES OF COURT, Rule 45, Section 1; Heirs of Racaza v. Spouses Abay-Abay, 687 Phil. 584, 591 (2012).

45.Lagundi v. Bautista, G.R. No. 207269, 26 July 2021.

46.Supra.

47.Supra.

48. Enacted in 2004.

49. SPECIAL ALTERNATIVE DISPUTE RULES, Section 12.3.

50.Supra note 32 at 289.

51. SPECIAL ALTERNATIVE DISPUTE RULES, Section 12.5.