MANILA The Supreme Court (SC) has referred for arbitration a collection suit between local and global financial advisers over payment for services rendered in the liquidation of the National Home Mortgage Finance Corporation (NHMFC)'s PHP40-billion Unified Home Lending Program (UHLP) portfolio 16 years ago.
In a 24-page decision penned by Associate Justice Francis Jardeleza, the High Court turned down two petitions filed by financial consultant Dale Strickland against local firm Punongbayan & Araullo (PA) and global financial services firm Ernst & Young LLP (EYLLP).
"(T)he petitions are denied and the decisions of the Court of Appeals (CA) are affirmed," the SC said.
The CA's June 17, 2010 decision had ordered that EYLLP be dropped as a defendant and referred the dispute between Strickland and EYLLP for arbitration.
"While we do not preclude Strickland from pursuing all remedies available to him, we point out that the factual circumstances obtaining here,given that Strickland was then partner of the global company EYLLP, the Philippines is not automatically the law of the place of the performance of the contract nor is it the only factor to be considered in the ultimate choice-of-law final analysis,"the SC said in its ruling.
On March 26, 2002, NHMFC and PA (Punongbayan & Araullo) entered into a Financial Advisory Services Agreement (FASA) as exclusive financial advisor for the liquidation of the NHMFC's UHLP.
PA was then the Philippine member of global company EYLLP and was referred to at the time in correspondence as P&A Ernst and Young.
Strickland was a partner of EYLLP seconded to Ernst & Young Asia Pacific Financial Solutions (EYAPFS), and was named as a member of the engagement team in charge of due diligence and transaction support.
Based on the initial technical proposal, total fees for the engagement was USD2.25 million broken into a fixed fee of USD1.5 million for the due diligence portion and a success fee of USD750,000.
Two years later, the relationship between the parties soured after Strickland's resignation from Ernst and Young.
The parties entered into negotiations to define Strickland's possible continued participation in the UHLP Project.
The move is in response to NHMFC's concerns on the removal of Strickland from the UHLP Project and his replacement by Mark Grinis since NHMFC was intent on retaining Strickland's services despite his separation from EYLLP.
PA, NHMFC, and Strickland exchanged letters containing proposed amendments to cover the new engagement and Strickland's participation within the UHLP Project however no actual written and final agreement materialized.
Later, Strickland sued PA and Ernst and Young for compensation before a Makati court.
A subsequent CA ruling on the matter ordered the case be submitted to arbitration. (PNA)
Source: Philippine News Agency