ALTERNATIVE DISPUTE RESOLUTION

FINAL EXAM
1st semester AY 2019-2020
Atty. Regina Patricia C. Rosales
INSTRUCTIONS:

1. This is a TAKE HOME EXAM. (I am giving you all 5 seconds to celebrate).

2. You have until 11:59 PM of 28 May 2019 to submit your outputs.
3. Your outputs must be typewritten and saved in both word and pdf format.
4. Submissions shall be done online. Email your answers to
RosalesTSU@gmail.com ON or BEFORE the deadline mentioned above.

LATE SUBMISSIONS WILL NOT BE ACCEPTED AND WILL

AUTOMATICALLY WARRANT A GRADE OF 5 FOR THE FINAL
EXAM.

5. Follow this format in saving your answers and sending them:

File Name: Last Name_First Name_ADR_FE_25May2019

Subject: Last Name_First Name_ADR_FE_25May2019

6. Answer essay questions clearly, and concisely.

7. Your answers should demonstrate your ability to analyze the facts, apply the
pertinent laws and jurisprudence, and arrive at sound and logical conclusions.
8. CITE YOUR BASIS. This is a TAKE HOME exam and you will have access
to your books, digests, reviewers and ever reliable Google. LEGAL BASIS
IS NOT OPTIONAL.
Bryan Joy Alhari Fernandez May 28, 2019
LLB II-A
Tarlac State University
School of Law

White King Corporation-China (WKCC) entered into a Distributorship Agreement

with Hot King, Inc. (HKI). HKI is a domestic corporation engaged in the business
of importing different food products and distributing the same to local grocery
chains. Its warehouse is located in Tondo, Manila beside its headquarters.

Under the Distributorship Agreement, HKI shall be the sole and exclusive distributor
of White King products (Double Choco Chip Hot Cake mix, easy bake white
chocolate macadamia cookies, wheat flour, white flour and Cupcake in a Mug) in
the Philippines.

The Agreement provided, among others, an arbitration clause which states:

This Agreement shall be governed by the laws of the Republic of the

Philippines. All disputes arising out of or relating to this Agreement or
the parties’ relationship including the termination thereof, shall be
resolved by arbitration in the City of Manila, under the rules stated in
Republic Act No. 876 otherwise known as “The Arbitration Law,”
Republic Act No. 9285 otherwise known as “the Alternative Dispute
Resolution Act of 2004,”and the Special ADR Rules issued by the
Supreme Court of the Philippines.

Several months after parties entered into the agreement, HKI discovered that WKCC
products continued to be brought into the country by other local importers despite
HKI’s appointment as sole and exclusive distributor in the Philippines. Moreover, it
discovered that several shipments from WKCC were damaged and or aged.

You are HKI’s counsel.

1. What course of action will you recommend? Explain your recommendation

and discuss the procedure (when, where and how) to be followed. Cite your
basis. (5pts.)

ANSWER:

I would recommend that we demand (or request) for an

arbitration proceeding. The demand presupposes that there exists an
arbitration agreement and the same must be enforced. This is because
the right of a party to demand arbitration from another arises from the
arbitration agreement itself. The demand to arbitration is considered
the claimant’s statement of claim. Hence, I would serve the demand for
 arbitration to White King Corporation-China (WKCC) in the City of
Manila as indicated in the contract and such demand shall be served in
person or by registered mail, and shall set forth the ultimate facts
involved in the dispute, the causes of action and relief demanded.

Section 5 of Republic Act No. 876 provides that “In the case of a
contract to arbitrate future controversies by the service by either party upon
the other of a demand for arbitration in accordance with the contract. Such
demand shall be set forth the nature of the controversy, the amount involved,
if any, and the relief sought, together with a true copy of the contract
providing for arbitration. The demand shall be served upon any party either
in person or by registered mail.”

2. HKI asks you to provide the board of directors a brief but complete outline
of what will happen from when you commence proceedings for your
recommended course of action until the end. Cite your source/basis when
applicable. (15pts.)

ANSWER:

I would tell the board of directors that since resort to arbitration

generally depends on the agreement of the parties, the same can only be
commenced by the demand of one party to the other to submit a
controversy to arbitration. On the other hand, in cases where there is no
arbitration clause in the contract, parties may execute a submission
agreement to arbitrate. The demand for arbitration in accordance with
the contract shall be served upon the other party.

Thereafter, parties will appoint the arbitrator/arbitral tribunal

based on the procedure agreed upon by them. Failing such agreement, in
arbitration with three arbitrators, each party shall appoint one
arbitrator, and the two chosen arbitrators shall appoint the third
arbitrator.

Generally, arbitration proceedings are administered by an arbitral

institution or entity, an example of which is the International Chamber
of Commerce (ICC). These arbitral institutions have a list of qualified
and competent arbitrators from which the parties shall choose the
arbitrators who will adjudicate their dispute. The arbitrator appointed
shall either accept or decline the appointment but must first disclose
circumstances likely to give rise to justifiable doubts as to his
impartiality or independence. An arbitrator may be challenged if
circumstances exist that give rise to justifiable doubts as to his
impartiality or independence, or if he does not possess qualifications
agreed to by the parties.
 After their appointment, the arbitrators shall set the time and
place for the hearing of the matter submitted to them and must cause
notice thereof to be given to the parties. Subject to any contrary
agreement by the parties, the Arbitral Tribunal shall decide whether to
hold oral hearings for the presentation of evidence or to conduct
proceedings on the basis of documents and other materials. Parties may
even agree to conduct an informal hearing which may be held at any
place. During the hearing, all statements, documents or other
information supplied to the Arbitral Tribunal by one party shall be
communicated to the other party.

The arbitrators shall be the sole judge of the materiality/relevancy

of the evidence offered and shall not be bound to conform to the rules on
evidence.

After the close of the hearing, the arbitral tribunal shall then
render an award. The award shall be made in writing and shall be signed
by the arbitrator or arbitrators. It shall state the reasons upon which it is
based and the date and place of arbitration. A copy of the award shall be
delivered to each party.

An arbitral award may be set aside by the court on limited

grounds provided under section 4.5.34.2 IRR-ADR Act. In case no
appeal is taken by a party to the courts to set aside the arbitral ward, the
same shall become final and executory.

Despite ongoing proceedings, HKI receives reports that WKCC products continued
to be shipped to the Philippines and delivered to other local importers for
distribution. Furthermore, WKCC stopped deliveries of its products to HKI resulting
in HKI’s failure to deliver the orders from several local grocery chains.

3. As lawyer for HKI, what will be your next course of action? Discuss the
applicable procedure (when, where and how). Cite your basis. (5pts.)

ANSWER:

I will ask for interim measures from the already constituted

Arbitral Tribunal. According to Section 28 of R.A 9285 After
constitution of the arbitral tribunal and during arbitral proceedings, a
request for an interim measure of protection or modification thereof,
may be made with the arbitral tribunal or to the extent that the tribunal
has no power to act or is unable to act effectively, the request may be
made with the Court. The reliefs that can be granted to HKI are to
compel WKCC to make deliveries to the former and stopped its
deliveries to other local importers. This will prevent irreparable loss or
injury to HKI.
Scenario A: HKI loses in the arbitration proceedings.
4. What are HKI’s remedies? (5pts.)

ANSWER:
The only remedy available to HKI against a final domestic arbitral
award is to file a petition to vacate or to modify/correct the award not
later than 30 days from the receipt of the award (rule 11.2, Special ADR
Rules). Unless a ground to vacate has been established, the RTC must
confirm the arbitral award as a matter of course.

5. Choose one and Discuss the applicable procedure (when, where and how).
Cite your basis. (5pts.)

ANSWER:

I would file petition to vacate award. The grounds for vacating a

domestic arbitral award under Section 24 of the Arbitration Law
contemplate the following scenarios:
(a) when the award is procured by corruption, fraud or other undue
means; or
(b) there was evident partiality or corruption in the arbitrators or any
of them; or

(c) the arbitrators were guilty of misconduct that materially prejudiced

the rights of any party; or

(d) 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.

The award may also be vacated if an arbitrator who was

disqualified to act willfully refrained from disclosing his disqualification
to the parties [Article 5.35 (iv), Implementing Rules and Regulations
(IRR) of the ADR Law].

Scenario B: HKI wins in the arbitration proceedings. However, WKCC refuses

to honor the arbitral award.

6. What is HKI’s remedy? Discuss the applicable procedure (when, where and
how). Cite your basis. (5pts.)

ANSWER:
In the event that WKCC refuses to pay or comply with the award,
HKI will have to seek assistance from the courts to enforce the award.
 HKI can petition the Regional Trial Court (RTC) to confirm an arbitral
award (rule 11.1, Special ADR Rules). After the award is judicially
confirmed, it can now be enforced like any final judgment issued by a
court.

7. How would you argue for your client’s cause? (5pts.)

ANSWER:
As the lawyer for the HKI, I will insist on the protection of the
rights of my client arising from the breached of contract committed by
WKCC against my client in relation to the exclusivity clause contained in
their Distributorship Agreement. Part of my argument will dwell on the
issue of collecting monetary damages, such as damages actually sustained
by my client due to breach of contract and also on the issue of exacting
exemplary damages to serve as a lesson and a warning to erring
companies and individuals in the business sector so that businessmen
should learn how to respect contractual obligations and agreements.
Moreover, as the lawyer of HKI, I will see to it that the Arbitral Award
be confirmed by a competent court so it can be enforced judicially
against WKCC.

8. Choose a scenario above (Scenario A or Scenario B) and Draft the

necessary/applicable pleading required to avail the remedy you chose.
Proper venue and jurisdiction must be shown in your pleading. Take note of
the requirements provided under the law and the Special ADR rules. You are
free to assume facts not expressly indicated in this questionnaire but be sure
to discuss them in your pleading. You, however, are NOT allowed to change
facts already provided. Arguments/Discussions must be done clearly but
concisely. You may choose to see sample pleadings online as guide. (25
point

ANSWER: Please see separate sheet.

9. Based on your choice in Question No. 6, HKI fails to get the remedy asked
for. What is your next course of action? Draft the necessary/applicable
pleading for your next step. Proper venue and jurisdiction must again be
demonstrated in your pleading. Take note of the requirements provided under
the law and the Special ADR rules. You are free to assume facts not
expressly indicated in this questionnaire but be sure to discuss them in your
pleading. You, however, are NOT allowed to change facts already provided.
Arguments/Discussions must be done clearly but concisely. You may choose
to see sample pleadings online as guide. (25 points)

ANSWER: Please see separate sheet.

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