G.R. No. 216600 November 21, 2016
FEDERAL EXPRESS CORPORATION and RHICKE S. JENNINGS, Petitioners, vs. AIRFREIGHT 2100, INC. and ALBERTO D. LINA, Respondents.
FACTS
Petitioners Federal Express Corporation (FedEx) and its Managing Director Rhicke S. Jennings were engaged in arbitration proceedings with respondent Airfreight 2100, Inc. (Air21) before the Philippine Dispute Resolution Center (PDRC) to settle commercial disputes arising from their Global Service Program contracts. During the arbitration, Jennings, as a witness, testified that two other companies, Merit International, Inc. and Ace Logistics, Inc., which had previously opposed FedEx’s freight forwarding license, were proxies of Air21 or its associated Lina Group. Respondent Alberto D. Lina subsequently filed a criminal complaint for grave slander against Jennings before the Office of the City Prosecutor, using Jennings’ arbitration testimony and related witness statements as basis for the complaint.
FedEx and Jennings then filed a Petition for Issuance of a Confidentiality/Protective Order before the Regional Trial Court (RTC), arguing that all information from the arbitration was confidential under the Alternative Dispute Resolution (ADR) Act. The RTC dismissed the petition, ruling the statements were unrelated to the arbitration’s subject matter (monetary claims) and that confidentiality rules cannot shield a crime. The Court of Appeals affirmed, holding that only statements relative to the arbitration subject are confidential.
ISSUE
Whether Jennings’ statements during the arbitration proceedings are confidential information protected from disclosure in the slander case.
RULING
Yes. The Supreme Court reversed the lower courts and granted the protective order. The legal logic rests on the broad confidentiality mandate of the ADR Act (R.A. No. 9285) and its Implementing Rules and Regulations (IRR). The law fosters arbitration as a private dispute resolution mechanism by ensuring confidentiality, which encourages frank discussions and protects sensitive commercial information. The IRR explicitly defines confidential information to include any information “relative to the subject of arbitration” obtained in the proceeding, which encompasses pleadings, motions, witness statements, and reports.
The Court clarified that the test for confidentiality is not a strict “relevance to the arbitral issue” test, but whether the information is “relative to” or connected with the arbitration subject. Jennings’ testimony explaining the background of the parties’ contractual relationship—including the loss of FedEx’s license and the alleged proxy companies—is intrinsically connected to the context and genesis of the very GSP contracts under arbitration. Therefore, it falls within the ambit of protected information. The Court emphasized that allowing such arbitration testimony to be used in ancillary judicial proceedings would undermine the ADR system’s integrity. The slander complaint’s merits are a separate matter to be determined in the proper forum, but the evidence sourced from the arbitration retains its confidential character.