G.R. No. 256177. June 27, 2022.
PIONEER INSURANCE & SURETY CORPORATION, PETITIONER, VS. THE INSURANCE COMPANY, SUCCESSOR BY MERGER TO CLEARWATER INSURANCE COMPANY, RESPONDENT.
FACTS
Pioneer Insurance & Surety Corporation (Pioneer), a domestic corporation, and Clearwater Insurance Company (Clearwater), a foreign company, entered into a reinsurance agreement (SK 100 agreement) containing an arbitration clause requiring disputes to be submitted to a board of arbitration meeting in New York. Pioneer failed to pay Clearwater an outstanding balance. Clearwater initiated arbitration proceedings in New York. Pioneer did not participate in the hearing. The panel issued a Final Award ordering Pioneer to pay Clearwater $344,991.68. Pioneer failed to pay. Clearwater filed a Petition for confirmation, recognition, and enforcement of the arbitral award before the Regional Trial Court (RTC) of Makati. Pioneer opposed, arguing: (1) the Petition was insufficient in form for lack of a Secretary’s Certificate authorizing the legal counsel to sign the verification and certification against forum shopping; (2) the arbitral award was contrary to public policy as it did not clearly state the facts and law; (3) Clearwater’s claim had prescribed under the New York Civil Practice Law and Rules; and (4) Philippine courts lacked jurisdiction as the agreement required Clearwater to go to the US District Court. The RTC granted Clearwater’s Petition and confirmed the award. The Court of Appeals affirmed the RTC’s decision. Pioneer filed the present Petition for Review on Certiorari.
ISSUE
1. Whether Clearwater’s Petition before the RTC complied with the verification and certification against forum shopping requirements.
2. Whether the recognition and enforcement of the foreign arbitral award should be refused on the ground that it is contrary to public policy, particularly due to alleged prescription of the claim.
RULING
1. Yes, Clearwater substantially complied with the verification and certification requirements. The verification and certification against forum shopping were signed by Clearwater’s legal counsel, who was authorized through an affidavit executed by Clearwater’s senior vice president. The Supreme Court ruled that the affidavit was sufficient to confer authority under US law. The Court emphasized the policy of party autonomy and the pro-arbitration stance of the Alternative Dispute Resolution Act, noting that procedural rules should be liberally construed to achieve substantial justice.
2. No, the recognition and enforcement of the arbitral award cannot be refused on public policy grounds based on the alleged prescription of the claim. The Supreme Court held that the public policy defense under the New York Convention and the Special ADR Rules is limited to instances where the award violates the Philippines’ fundamental notions of morality and justice. The alleged prescription of Clearwater’s claim under New York law is a substantive issue that pertains to the merits of the dispute. The Court cannot review the merits of a foreign arbitral award. The proper recourse for Pioneer was to raise the issue of prescription before the arbitral tribunal in New York, which it did not do by choosing not to participate in the arbitration proceedings. The foreign arbitral award is presumed valid and enforceable. The Court affirmed the decisions of the RTC and the Court of Appeals confirming, recognizing, and enforcing the Final Award.
