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Jose Ysrael C. Cordova ADR Heirs of Agusto L. Salas, Jr. v. Laperal Realty Corp. Facts: Salas, Jr.

was the registered owner of a vast tract of land in Lipa City. He entered into an OwnerContractor Agreement with Laperal Realty Corporation to render and provide complete construction services on his land. Salas, Jr. executed an SPA in favor of Laperal Realty to exercise general control, supervision and management of the sale of his land, for cash or on installment basis. Later, Salas, Jr. left his home in the morning for a business trip to Nueva Ecija. He never returned. Teresita Diaz Salas filed with the Makati RTC a verified petition for the declaration of presumptive death of her husband, Salas, Jr., who had then been missing for more than seven (7) years. The petition was granted. Meantime, Laperal Realty subdivided the land of Salas, Jr. and sold subdivided portions thereof to the other respondents. Petitioners as heirs of Salas, Jr. filed in the RTC of Lipa City a Complaint for declaration of nullity of sale, reconveyance, cancellation of contract, accounting and damages against respondents. Laperal filed an MTD on the ground that petitioners failed to submit their grievance to arbitration as required under Article VI of the Agreement. The RTC dismissed the complaint for non-compliance with the foregoing arbitration clause. Issue: Whether or not the dismissal of the case was proper Ruling: No, in a catena of cases inspired by Justice Malcolm's provocative dissent in Vega v. San Carlos Milling Co., this Court has recognized arbitration agreements as valid, binding, enforceable and not contrary to public policy so much so that when there obtains a written provision for arbitration which is not complied with, the trial court should suspend the proceedings and order the parties to proceed to arbitration in accordance with the terms of their agreement. Arbitration is the "wave of the future" in dispute resolution. To brush aside a contractual agreement calling for arbitration in case of disagreement between parties would be a step backward. A submission to arbitration is a contract. As such, the Agreement, containing the stipulation on arbitration, binds the parties thereto, as well as their assigns and heirs. But only they. Petitioners, as heirs of Salas, Jr., and Laperal Realty are certainly bound by the Agreement. If Laperal had assigned its rights under the Agreement to a third party, making the former, the assignor, and the latter, the assignee, such assignee would also be bound by the arbitration provision since assignment involves such transfer of rights as to vest in the assignee the power to enforce them to the same extent as the assignor could have enforced them against the debtor 18 or in this case, against the heirs of the original party to the Agreement. However, Rockway Real Estate Corporation, South Ridge Village, Inc., Maharami Development Corporation, spouses Abrajano, spouses Lava, Oscar Dacillo, Eduardo Vacuna, Florante de la Cruz and Jesus Vicente Capellan are not assignees of the rights of Laperal under the Agreement to develop Salas, Jr.'s land and sell the same. They are, rather, buyers of the land that Laperal Realty was given the authority to develop and sell under the Agreement. As such, they are not "assigns" contemplated in Art. 1311 CC which provides that "contracts take effect only between the parties, their assigns and heirs". Petitioners claim that they suffered lesion of more than one-fourth (1/4) of the value of Salas, Jr.'s land when Laperal Realty subdivided it and sold portions thereof to respondent lot buyers. Thus, they instituted action against both Laperal Realty and respondent lot buyers for rescission of the sale transactions and reconveyance to them of the subdivided lots. They argue that rescission, being their cause of action, falls under the exception clause in Sec. 2 of RA 876 which provides that "such

Jose Ysrael C. Cordova ADR submission [to] or contract [of arbitration] shall be valid, enforceable and irrevocable, save upon such grounds as exist at law for the revocation of any contract". The petitioners' contention is without merit. For while rescission, as a general rule, is an arbitrable issue, they impleaded in the suit for rescission the respondent lot buyers who are neither parties to the Agreement nor the latter's assigns or heirs. Consequently, the right to arbitrate as provided in Article VI of the Agreement was never vested in respondent lot buyers. Laperal Realty, as a contracting party to the Agreement, has the right to compel petitioners to first arbitrate before seeking judicial relief. However, to split the proceedings into arbitration for Laperal Realty and trial for the respondent lot buyers, or to hold trial in abeyance pending arbitration between petitioners and Laperal Realty, would in effect result in multiplicity of suits, duplicitous procedure and unnecessary delay. On the other hand, it would be in the interest of justice if the trial court hears the complaint against all herein respondents and adjudicates petitioners' rights as against theirs in a single and complete proceeding.

BF Corporation v. CA

Facts: Petitioner and respondent Shangri-la Properties, Inc. entered into an agreement whereby the latter engaged the former to construct the main structure of the "EDSA Plaza Project," a shopping mall complex in Mandaluyong. Petitioner incurred delay in the construction work that SPI considered as "serious and substantial." On the other hand, according to petitioner, the construction works "progressed in faithful compliance with the First Agreement until a fire broke out damaging Phase I" of the Project. Hence, SPI proposed the re-negotiation of the agreement between them. Petitioner and SPI entered into a written agreement denominated as "Agreement for the Execution of Builder's Work for the EDSA Plaza Project." Said agreement would cover the construction work on said project as of May 1, 1991 until its eventual completion. According to SPI, petitioner "failed to complete the construction works and abandoned the project." This resulted in disagreements between the parties as regards their respective liabilities under the contract. Petitioner filed with the RTC of Pasig a complaint for collection of the balance due under the construction agreement. SPI and its co-defendants filed a motion to suspend proceedings instead of filing an answer. The motion was anchored on defendants' allegation that the formal trade contract for the construction of the project provided for a clause requiring prior resort to arbitration before judicial intervention could be invoked in any dispute arising from the contract. Petitioner opposed said motion claiming that there was no formal contract between the parties although they entered into an agreement defining their rights and obligations in undertaking the project. Thereafter, upon a finding that an arbitration clause indeed exists, the lower court denied the motion to suspend proceedings as the Conditions of Contract was not duly executed or signed by the parties, and the failure of the defendants to submit any signed copy of the said document,. The lower court then ruled that, assuming that the arbitration clause was valid and binding, still, it was "too late in the day for defendants to invoke arbitration. Considering the fact that under the supposed Arbitration Clause invoked by defendants, it is required that "Notice of the demand for arbitration of a dispute shall be filed in writing with the other party in no case later than the time of final payment which apparently, had elapsed because defendants have failed to file any written notice of any demand for arbitration during the said long period of one year and eight months. The CA annulled the orders of the RTC. Issue:

Jose Ysrael C. Cordova ADR Whether or not a petition for certiorari is proper Ruling: Yes, the rule that the special civil action of certiorari may not be invoked as a substitute for the remedy of appeal. The Court has likewise ruled that "certiorari will not be issued to cure errors in proceedings or correct erroneous conclusions of law or fact. As long as a court acts within its jurisdiction, any alleged errors committed in the exercise of its jurisdiction will amount to nothing more than errors of judgment which are reviewable by timely appeal and not by a special civil action of certiorari." The question of jurisdiction, which is a question of law depends on the determination of the existence of the arbitration clause, which is a question of fact. In the instant case, the lower court found that there exists an arbitration clause. However, it ruled that in contemplation of law, said arbitration clause does not exist. It is that mode of appeal taken by private respondents before the CA that is being questioned by the petitioners before this Court. But at the heart of said issue is the question of whether there exists an Arbitration Clause because if an Arbitration Clause does not exist, then private respondents took the wrong mode of appeal before the CA. For this Court to be able to resolve the question of whether private respondents took the proper mode of appeal, which, incidentally, is a question of law, then it has to answer the core issue of whether there exists an Arbitration Clause which, admittedly, is a question of fact. Moreover, where a rigid application of the rule that certiorari cannot be a substitute for appeal will result in a manifest failure or miscarriage of justice, the provisions of the Rules of Court which are technical rules may be relaxed. As we shall show hereunder, had the CA dismissed the petition for certiorari, the issue of whether or not an arbitration clause exists in the contract would not have been resolved in accordance with evidence extant in the record of the case. Consequently, this would have resulted in a judicial rejection of a contractual provision agreed by the parties to the contract. In the same vein, this Court holds that the question of the existence of the arbitration clause in the contract between petitioner and private respondents is a legal issue that must be determined in this petition for review on certiorari. Issue: Whether or not an arbitration clause exists Ruling: Petitioner denies the existence of the arbitration clause primarily on the ground that the representatives of the contracting corporations did not sign the "Conditions of Contract" that contained the said clause. Its other contentions, specifically that insinuating fraud as regards the alleged insertion of the arbitration clause, are questions of fact that should have been threshed out below. Court may as well proceed to determine whether the arbitration clause does exist in the parties' contract. Republic Act No. 876 provides for the formal requisites of an arbitration. The formal requirements of an agreement to arbitrate are therefore the following: (a) it must be in writing and (b) it must be subscribed by the parties or their representatives. There is no denying that the parties entered into a written contract that was submitted in evidence before the lower court. To "subscribe" means to write underneath, as one's name; to sign at the end of a document. That word may sometimes be construed to mean to give consent to or to attest. The Court finds that, upon a scrutiny of the records of this case, these requisites were complied with in the contract in question. The Articles of Agreement, which incorporates all the other contracts and agreements between the parties, was signed by representatives of both parties and duly notarized. The failure of the private respondent's representative to initial the "Conditions of Contract" would therefor not affect compliance with the formal requirements for arbitration agreements because that particular portion of the covenants between the parties was included by reference in the Articles of Agreement.

Jose Ysrael C. Cordova ADR Petitioner's contention that there was no arbitration clause because the contract incorporating said provision is part of a "hodge-podge" document, is therefore untenable. A contract need not be contained in a single writing. It may be collected from several different writings which do not conflict with each other and which, when connected, show the parties, subject matter, terms and consideration, as in contracts entered into by correspondence. 13 A contract may be encompassed in several instruments even though every instrument is not signed by the parties, since it is sufficient if the unsigned instruments are clearly identified or referred to and made part of the signed instrument or instruments. Similarly, a written agreement of which there are two copies, one signed by each of the parties, is binding on both to the same extent as though there had been only one copy of the agreement and both had signed it. The flaw in petitioner's contentions therefore lies in its having segmented the various components of the whole contract between the parties into several parts. This notwithstanding, petitioner ironically admits the execution of the Articles of Agreement. Notably, too, the lower court found that the said Articles of Agreement "also provides that the 'Contract Documents' therein listed 'shall be deemed an integral part of this Agreement,' and one of the said documents is the 'Conditions of Contract' which contains the Arbitration Clause.'" It is this Articles of Agreement that was duly signed by Rufo B. Colayco, president of private respondent SPI, and Bayani F. Fernando, president of petitioner corporation. The same agreement was duly subscribed before notary public Nilberto R. Briones. In other words, the subscription of the principal agreement effectively covered the other documents incorporated by reference therein. This Court likewise does not find that the CA erred in ruling that private respondents were not in default in invoking the provisions of the arbitration clause which states that "(t)he demand for arbitration shall be made within a reasonable time after the dispute has arisen and attempts to settle amicably had failed." Under the factual milieu, SPI should have paid its liabilities tinder the contract in accordance with its terms. However, misunderstandings appeared to have cropped up between the parties ostensibly brought about by either delay in the completion of the construction work or by force majeure or the fire that partially gutted the project. The almost two-year delay in paying its liabilities may not therefore be wholly ascribed to private respondent SPI. Besides, SPI's initiative in calling for a conference between the parties was a step towards the agreed resort to arbitration. However, petitioner posthaste filed the complaint before the lower court. Thus, while SPI's request for arbitration might appear an afterthought as it was made after it had filed the motion to suspend proceedings, it was because petitioner acted hastily in order to resolve the controversy through the courts. The arbitration clause provides for a "reasonable time" within which the parties may avail of the relief under that clause. "Reasonableness" is a relative term and the question of whether the time within which an act has to be done is reasonable depends on attendant circumstances. This Court finds that under the circumstances obtaining in this case, a one-month period from the time the parties held a conference on July 12, 1993 until private respondent SPI notified petitioner that it was invoking the arbitration clause, is a reasonable time. Indeed, petitioner may not be faulted for resorting to the court to claim what was due it under the contract. However, we find its denial of the existence of the arbitration clause as an attempt to cover up its misstep in hurriedly filing the complaint before the lower court. In this connection, it bears stressing that the lower court has not lost its jurisdiction over the case. Section 7 of RA 876 provides that proceedings therein have only been stayed. After the special proceeding of arbitration has been pursued and completed, then the lower court may confirm the award made by the arbitrator. It should be noted that in this jurisdiction, arbitration has been held valid and constitutional. Hi Precision Steel vs Lim Kim Steel Facts: Petitioner entered into a contract with private respondent under which the latter as Contractor was to complete a P21 M construction project owned by the former within a period of 153 days, i.e. from 8 May 1990 to 8 October 1990. The project completion date was first moved to 4 November 1990. On that date,

Jose Ysrael C. Cordova ADR however, only 75.8674% of the project was actually completed. Petitioner attributed this non-completion to Steel Builders which allegedly had frequently incurred delays during the original contract period and the extension period. Steel Builders insisted that the delays in the project were either excusable or due to Hi-Precision's own fault and issuance of change orders. The project was taken over on 7 November 1990, and eventually completed on February 1991, by Hi-Precision. Steel Builders filed a "Request for Adjudication" with CIAC. In its Complaint filed with the CIAC, Steel Builders sought payment of its unpaid progress buildings, alleged unearned profits and other receivables. Hi-Precision, upon the other hand, in its Answer and Amended Answer, claimed actual and liquidated damages, reimbursement of alleged additional costs it had incurred in order to complete the project and attorney's fees. The CIAC formed an Arbitral Tribunal with three (3) members. After the arbitration proceeding, the Arbitral Tribunal rendered a unanimous ordering petitioner to pay the Contractor the amount of P6,400,717.83 and all other claims of the parties against each other are deemed compensated and offset. Upon MR, the Arbitral Tribunal issued an Order which reduced the net amount due to contractor Steel Builders to P6,115,285.83. In its Award, the Arbitral Tribunal stated that it was guided by Articles 1169, 1192 and 2215 CC. With such guidance, the arbitrators concluded that (a) both parties were at fault, though the Tribunal could not point out which of the parties was the first infractor; and (b) the breaches by one party affected the discharge of the reciprocal obligations of the other party. With mutual fault as a principal premise, the Arbitral Tribunal denied (a) petitioner's claims for the additional costs allegedly incurred to complete the project; and (b) private respondent's claim for profit it had failed to earn because of petitioner's take over of the project. Petitioner now asks this Court to set aside the Award, contending basically that it was Steel Builders who had defaulted on its contractual undertakings and so could not be the injured party and should not be allowed to recover any losses it may have incurred in the project. Petitioner insists it is still entitled to damages, and claims that the Arbitral Tribunal committed grave abuse of discretion when it allowed certain claims by Steel Builders and offset them against claims of Hi-Precision. Issue: Whether or not the CIAC should be impleaded Ruling: No, the Arbitral Tribunal has not been impleaded as a respondent in the Petition at bar. The CIAC has indeed been impleaded; however, the Arbitral Award was not rendered by the CIAC, but rather by the Arbitral Tribunal. Moreover, under Section 20 of EO 1008, it is the Arbitral Tribunal, or the single Arbitrator, with the concurrence of the CIAC, which issues the writ of execution requiring any sheriff or other proper officer to execute the award. The Arbitral Tribunal which rendered the Award sought to be reviewed and set aside, should be impleaded even though the defense of its Award would presumably have to be carried by the prevailing party. Petitioner Hi-Precision apparently seeks review of both under Rule 45 and Rule 65 of the Rules of Court. We do not find it necessary to rule which of the two: a petition for review under Rule 45 or a petition for certiorari under Rule 65 is necessary under Executive Order No. 1008, as amended; this issue was, in any case, not squarely raised by either party and has not been properly and adequately litigated. Issue: Whether or not petitioner is entitled to relief Ruling: No, Hi-Precision may be seen to be making two (2) basic arguments: (a) Petitioner asks this Court to correct legal errors committed by the Arbitral Tribunal, which at the same time constitute grave abuse of discretion amounting to lack of jurisdiction on the part of the Arbitral Tribunal; and

Jose Ysrael C. Cordova ADR (b) Should the supposed errors petitioner asks us to correct be characterized as errors of fact, such factual errors should nonetheless be reviewed because there was "grave abuse of discretion" in the misapprehension of facts on the part of the Arbitral Tribunal. EO 1008, as amended, provides, in its Section 19, as follows: Sec. 19. Finality of Awards. The arbitral award shall be binding upon the parties. It shall be final and inappealable except on questions of law which shall be appealable to the Supreme Court. Section 19 makes it crystal clear that questions of fact cannot be raised in proceedings before the Supreme Court which is not a trier of facts in respect of an arbitral award rendered under the aegis of the CIAC. Consideration of the animating purpose of voluntary arbitration in general, and arbitration under the aegis of the CIAC in particular, requires us to apply rigorously the above principle embodied in Section 19 that the Arbitral Tribunal's findings of fact shall be final and inappealable. Voluntary arbitration involves the reference of a dispute to an impartial body, the members of which are chosen by the parties themselves, which parties freely consent in advance to abide by the arbitral award issued after proceedings where both parties had the opportunity to be heard. The basic objective is to provide a speedy and inexpensive method of settling disputes by allowing the parties to avoid the formalities, delay, expense and aggravation which commonly accompany ordinary litigation, especially litigation which goes through the entire hierarchy of courts. EO1008 created an arbitration facility to which the construction industry in the Philippines can have recourse. The EO was enacted to encourage the early and expeditious settlement of disputes in the construction industry, a public policy the implementation of which is necessary and important for the realization of national development goals. Aware of the objective of voluntary arbitration in the labor field, in the construction industry, and in any other area for that matter, the Court will not assist one or the other or even both parties in any effort to subvert or defeat that objective for their private purposes. The Court will not review the factual findings of an arbitral tribunal upon the artful allegation that such body had "misapprehended the facts" and will not pass upon issues which are, at bottom, issues of fact, no matter how cleverly disguised they might be as "legal questions." The parties here had recourse to arbitration and chose the arbitrators themselves; they must have had confidence in such arbitrators. The Court will not, therefore, permit the parties to relitigate before it the issues of facts previously presented and argued before the Arbitral Tribunal, save only where a very clear showing is made that, in reaching its factual conclusions, the Arbitral Tribunal committed an error so egregious and hurtful to one party as to constitute a grave abuse of discretion resulting in lack or loss of jurisdiction. Prototypical examples would be factual conclusions of the Tribunal which resulted in deprivation of one or the other party of a fair opportunity to present its position before the Arbitral Tribunal, and an award obtained through fraud or the corruption of arbitrators. Any other, more relaxed, rule would result in setting at naught the basic objective of a voluntary arbitration and would reduce arbitration to a largely inutile institution. Examination of the Petition at bar reveals that it is essentially an attempt to re-assert and re-litigate before this Court the detailed or itemized factual claims made before the Arbitral Tribunal under a general averment that the Arbitral Tribunal had "misapprehended the facts" submitted to it. In the present Petition, too, Hi-Precision claims that the Arbitral Tribunal had committed grave abuse of discretion amounting to lack of jurisdiction in reaching its factual and legal conclusions. The first "legal issue" submitted by the Petition is the claimed misapplication by the Arbitral Tribunal of the first and second paragraphs of Article 1911 CC. Hi-Precision contends energetically that it is the injured party and that Steel Builders was the obligor who did not comply with what was incumbent upon it, such that Steel Builders was the party in default and the entity guilty of negligence and delay. As the injured party, Hi-Precision maintains that it may choose between the fulfillment or rescission of the obligation in accordance with Article 1191, and is entitled to damages in either case. Thus, Hi-Precision continues, when the contractor Steel Builders defaulted on the 153rd day of the original contract period, Hi-Precision opted for specific performance and gave Steel Builders a 30-day extension period with which to complete the project. What petitioner Hi-Precision, in its above argument, disregards is that the determination of whether HiPrecision or Steel Builders was the "injured party" is not to be resolved by an application of Article 1191. That determination is eminently a question of fact, for it requires ascertainment and identification of which the two (2) contending parties had first failed to comply with what is incumbent upon it. In other

Jose Ysrael C. Cordova ADR words, the supposed misapplication of Article 1191, while ostensibly a "legal issue," is ultimately a question of fact, i.e., the determination of the existence or non-existence of a fact or set of facts in respect of which Article 1191 may be properly applied. Thus, to ask this Court to correct a claimed misapplication or non-application of Article 1191 is to compel this Court to determine which of the two (2) contending parties was the "injured party" or the "first infractor." As noted earlier, the Arbitral Tribunal after the prolonged arbitration proceeding, was unable to make that factual determination and instead concluded that both parties had committed breaches of their respective obligations. We will not review, and much less reverse, that basic factual finding of the Arbitral Tribunal. A second "legal issue" sought to be raised by petitioner Hi-Precision relates to the supposed failure of the Arbitral Tribunal to apply the doctrines of estoppel and waiver as against Steel Builders. The Arbitral Tribunal, after declaring that the parties were mutually at fault, proceeded to enumerate the faults of each of the parties. One of the faults attributed to petitioner Hi-Precision is that it had failed to give the contractor Steel Builders the required 15-day notice for termination of the contract. This was clearly a finding of fact on the part of the Tribunal, supported by the circumstance that per the record, petitioner had offered no proof that it had complied with such 15-day notice required under Article 28.01 of the General Conditions of Contract forming part of the Contract Documents. Petitioner Hi-Precision's argument is that a written Agreement dated 16 November 1990 with Steel Builders concerning the take over of the project by Hi-Precision, constituted waiver on the part of the latter of its right to a 15-day notice of contract termination. Whether or not that Agreement dated 16 November 1990 (a document not submitted to this Court) is properly characterized as constituting waiver on the part of Steel Builders, may be conceded to be prima facie a question of law; but, if it is, and assuming arguendo that the Arbitral Tribunal had erred in resolving it, that error clearly did not constitute a grave abuse of discretion resulting in lack or loss of jurisdiction on the part of the Tribunal. A third "legal issue" posed by Hi-Precision relates to the supposed failure on the part of the Arbitral Tribunal "to uphold the supremacy of 'the law between the parties' and enforce it against private respondent [Steel Builders]." The "law between that parties" here involved is the "Technical Specifications" forming part of the Contract Documents. Hi-Precision asserts that the Arbitral Tribunal did not uphold the "law between the parties," but instead substituted the same with "its [own] absurd inference and 'opinion' on mud." Here again, petitioner is merely disguising a factual question as a "legal issue," since petitioner is in reality asking this Court to review the physical operations relating, e.g., to site preparation carried out by the contractor Steel Builders and to determine whether such operations were in accordance with the Technical Specifications of the project. The Arbitral Tribunal resolved HiPrecision's claim by finding that Steel Builders had complied substantially with the Technical Specifications. This Court will not pretend that it has the technical and engineering capability to review the resolution of that factual issue by the Arbitral Tribunal. Finally, the Petition asks this Court to "review serious errors in the findings of fact of the [Arbitral Tribunal]." In this section of its Petition, Hi-Precision asks us to examine each item of its own claims which the Arbitral Tribunal had rejected in its Award, and each claim of the contractor Steel Builders which the Tribunal had granted. In respect of each item of the owner's claims and each item of the contractor's claims, Hi-Precision sets out its arguments, to all appearances the same arguments it had raised before the Tribunal. As summarized in the Arbitral Award, Contractor's Claims were as follows: We consider that in asking this Court to go over each individual claim submitted by it and each individual countering claim submitted by Steel Builders to the Arbitral Tribunal, petitioner Hi-Precision is asking this Court to pass upon claims which are either clearly and directly factual in nature or require previous determination of factual issues. This upon the one hand. Upon the other hand, the Court considers that petitioner Hi-Precision has failed to show any serious errors of law amounting to grave abuse of discretion resulting in lack of jurisdiction on the part of the Arbitral Tribunal, in either the methods employed or the results reached by the Arbitral Tribunal, in disposing of the detailed claims of the respective parties. Home Bankers Saving and Trust Company vs. CA

Jose Ysrael C. Cordova ADR

Facts: This appeal by certiorari under Rule 45 of the Rules of Court seeks to annul and set aside the decision of the Court of Appeals. Victor Tancuan, one of the defendants in Civil Case No. 92-145, 0issued Home Bankers Savings and Trust Company (HBSTC) check No. 193498 for P25,250,000.00 while Eugene Arriesgado issued Far East Bank and Trust Company (FEBTC) check Nos. 464264, 464272 and 464271 for P8,600,000.00, P8,500,000.00 and P8,100,000.00, respectively, the three checks amounting to P25,200,000.00. Tancuan and Arriesgado exchanged each other's checks and deposited them with their respective banks for collection. When FEBTC presented Tancuan's HBSTC check for clearing, HBSTC dishonored it for being "Drawn Against Insufficient Funds." On October 15, 1991, HBSTC sent Arriesgado's three (3) FEBTC checks through the Philippine Clearing House Corporation (PCHC) to FEBTC but was returned on October 18, 1991 as "Drawn Against Insufficient Funds." HBSTC received the notice of dishonor on October 21, 1991 but refused to accept the checks and on October 22, 1991, returned them to FEBTC through the PCHC for the reason "Beyond Reglementary Period," implying that HBSTC already treated the three (3) FEBTC checks as cleared and allowed the proceeds thereof to be withdrawn. FEBTC demanded reimbursement for the returned checks and inquired from HBSTC whether it had permitted any withdrawal of funds against the unfunded checks and if so, on what date. HBSTC, however, refused to make any reimbursement and to provide FEBTC with the needed information. Thus, on December 12, 1991, FEBTC submitted the dispute for arbitration before the PCHC Arbitration Committee, under the PCHC's Supplementary Rules on Regional Clearing to which FEBTC and HBSTC are bound as participants in the regional clearing operations administered by the PCHC. On January 17, 1992, while the arbitration proceedings was still pending, FEBTC filed an action for sum of money and damages with preliminary attachment against HBSTC, Robert Young, Victor Tancuan and Eugene Arriesgado with the Regional Trial Court of Makati, Branch 133. A motion to dismiss was filed by HBSTC claiming that the complaint stated no cause of action and accordingly should be dismissed because it seeks to enforce an arbitral award which as yet does not exist. The trial court issued an omnibus order dated April 30, 1992 denying the motion to dismiss and an order dated October 1, 1992 denying the motion for reconsideration. On December 16, 1992, HBSTC filed a petition for certiorari with the respondent Court of Appeals contending that the trial court acted with grave abuse of discretion amounting to lack of jurisdiction in denying the motion to dismiss filed by HBSTC. In a Decision dated January 21, 1994, the respondent court dismissed the petition for lack of merit and held that "FEBTC can reiterate its cause of action before the courts which it had already raised in the arbitration case. Issue: May the participants in the regional clearing operations of the PCHC may bypass the arbitration process Ruling: No. Participants in the regional clearing operations of the Philippine Clearing House Corporation cannot bypass the arbitration process laid out by the body and seek relief directly from the courts. In the case at bar, undeniably, private respondent has initiated arbitration proceedings as required by the PCHC rules and regulations, and pending arbitration has sought relief from the trial court for measures to safeguard and/or conserve the subject of the dispute under arbitration, as sanctioned by section 14 of the Arbitration Law, and otherwise not shown to be contrary to the PCHC rules and regulations. LM POWER ENGINEERING CORP. V. CAPITOL INDUSTRIAL CONST. GROUPS., INC. Facts:

Jose Ysrael C. Cordova ADR This is a petition for review on Certiorari under Rule 45 of the Rules of Court, seeking to set aside the January 28, 2000 Decision of the Court of Appeals On February 22, 1983. Petitioner LM Power Engineering Corporation and Respondent Capitol Industrial Construction Groups Inc. entered into a Subcontract Agreement involving electrical work at the Third Port of Zamboanga. On April 25, 1985, respondent took over some of the work contracted to petitioner. Allegedly, the latter had failed to finish it because of its inability to procure materials. Upon completing its task under the Contract, petitioner billed respondent in the amount of P6,711,813.90. Contesting the accuracy of the amount of advances and billable accomplishments listed by the former, the latter refused to pay. Respondent also took refuge in the termination clause of the Agreement. That clause allowed it to set off the cost of the work that petitioner had failed to undertake -- due to termination or take-over -- against the amount it owed the latter. Because of the dispute, petitioner filed with the Regional Trial Court (RTC) of Makati (Branch 141) a Complaint for the collection of the amount representing the alleged balance due it under the Subcontract. Instead of submitting an Answer, respondent filed a Motion to Dismiss, alleging that the Complaint was premature, because there was no prior recourse to arbitration. In its Order dated September 15, 1987, the RTC denied the Motion on the ground that the dispute did not involve the interpretation or the implementation of the Agreement and was, therefore, not covered by the arbitral clause. After trial on the merits, the RTC ruled that the take-over of some work items by respondent was not equivalent to a termination, but a mere modification, of the Subcontract. The latter was ordered to give full payment for the work completed by petitioner. On appeal, the CA reversed the RTC and ordered the referral of the case to arbitration. Issue: Whether or not the dispute is arbitrable? Is there a need a prior request for arbitration? Ruling: The petition was denied. The dispute arose from the parties incongruent positions on whether certain provisions of their Agreement could be applied to the facts. The instant case involves technical discrepancies that are better left to an arbitral body that has expertise in those areas. In any event, the inclusion of an arbitration clause in a contract does not ipso facto divest the courts of jurisdiction to pass upon the findings of arbitral bodies, because the awards are still judicially reviewable under certain conditions. Being an inexpensive, speedy and amicable method of settling disputes, arbitration -- along with mediation, conciliation and negotiation -- is encouraged by the Supreme Court. Aside from unclogging judicial dockets, arbitration also hastens the resolution of disputes, especially of the commercial kind. There is no more need to file a request with the CIAC in order to vest it with jurisdiction to decide a construction dispute. The arbitral clause in the Agreement is a commitment on the part of the parties to submit to arbitration the disputes covered therein. Because that clause is binding, they are expected to abide by it in good faith. And because it covers the dispute between the parties in the present case, either of them may compel the other to arbitrate. RCBC v. MAGWIN Facts: On 4 March 1999 petitioner Rizal Commercial Banking Corporation (RCBC) filed a complaint for recovery of a sum of money with prayer for a writ of preliminary attachment against respondents Magwin Marketing Corporation, Nelson Tiu, Benito Sy and Anderson Uy. On 26 April 1999, the trial court issued a writ of attachment. On 4 June 1999 the writ was returned partially satisfied since only a parcel of land purportedly owned by defendant Benito Sy was attached. In the meantime, summons was served on each of the defendants, respondents herein, who filed their respective answers, except for defendant Gabriel Cheng who was dropped without prejudice as party-defendant as his whereabouts could not be

Jose Ysrael C. Cordova ADR located. On 21 September 1999 petitioner moved for an alias writ of attachment which on 18 January 2000 the court a quo denied. Petitioner did not cause the case to be set for pre-trial. For about six (6) months thereafter, discussions between petitioner and respondents Magwin Marketing Corporation, Nelson Tiu, Benito Sy and Anderson Uy, as parties in Civil Case No. 99-518, were undertaken to restructure the indebtedness of respondent Magwin Marketing Corporation. On 9 May 2000 petitioner approved a debt payment scheme for the corporation which on 15 May 2000 was communicated to the latter by means of a letter dated 10 May 2000 for the conformity of its officers, i.e., respondent Nelson Tiu as President/General Manager of Magwin Marketing Corporation and respondent Benito Sy as Director thereof. Only respondent Nelson Tiu affixed his signature on the letter to signify his agreement to the terms and conditions of the restructuring. On 20 July 2000 the RTC of Makati City, on its own initiative, issued an Order dismissing without prejudice Civil Case No. 99-518 for failure of petitioner as plaintiff therein to prosecute its action for an unreasonable length of time x x x. On 31 July 2000 petitioner moved for reconsideration of the Order by informing the trial court of respondents unremitting desire to settle the case amicably through a loan restructuring program. On 22 August 2000 petitioner notified the trial court of the acquiescence thereto of respondent Nelson Tiu as an officer of Magwin Marketing Corporation and defendant in the civil case. On 8 September 2000 the court a quo issued an Order reconsidering the dismissal without prejudice of Civil Case No. 99-518 Acting on plaintiffs Motion for Reconsideration of the Order dated 20 July 2000 dismissing this case for failure to prosecute, it appearing that there was already conformity to the restructuring of defendants indebtedness with plaintiff by defendant Nelson Tiu, President of defendant corporation per Manifestation and Motion filed by plaintiff on 22 August 2000, there being probability of settlement among the parties, as prayed for, the Order dated 20 July 2000 is hereby set aside. Plaintiff is directed to submit the compromise agreement within 15 days from receipt hereof. Failure on the part of plaintiff to submit the said agreement shall cause the imposition of payment of the required docket fees for re-filing of this case. On 27 July 2000 petitioner filed in Civil Case No. 99-518 a Manifestation and Motion to Set Case for PreTrial Conference alleging that [t]o date, only defendant Nelson Tiu had affixed his signature on the May 10, 2000 letter which informed the defendants that plaintiff [herein petitioner] already approved defendant Magwin Marketing Corporations request for restructuring of its loan obligations to plaintiff but subject to the terms and conditions specified in said letter. This motion was followed on 5 October 2000 by petitionersSupplemental Motion to Plaintiffs Manifestation and Motion to Set Case for Pre-Trial Conference affirming that petitioner could not submit a compromise agreement because only defendant Nelson Tiu had affixed his signature on the May 10, 2000 letter x x x. Respondent Anderson Uy opposed the foregoing submissions of petitioner while respondents Magwin Marketing Corporation, Nelson Tiu and Benito Sy neither contested nor supported them. Issue: Whether the dismissal without prejudice for failure to prosecute was unconditionally reconsidered, reversed, and set aside to reinstate the civil case and have it ready for pre-trial are matters which should have been clarified and resolved in the first instance by the court a quo. Ruling: Complaint was for recovery of sum of money with prayer for a writ of preliminary attachment. Petitioner did not cause the case to be set for pre-trial. A complaint may be dismissed due to plaintiff's fault: if he fails to appear during a scheduled trial, especially on the date for the presentation of his evidence in chief, or when so required at the pre-trial; if he neglects to prosecute his action for an unreasonable length of time; or

Jose Ysrael C. Cordova ADR if he does not comply with the rules or any order of the court. None of these was obtaining in the civil case. In fine, petitioner cannot be said to have lost interest in fighting the civil case to the end. a court may dismiss a case on the ground of non prosequitur bu the real test of the judicial exercise of such power is whether under the circumstances, plaintiff is chargeable with want of fitting assiduousness in not acting on his complaint with reasonable promptitude. Metro Construction, Inc. v. Chatham Properties Inc. Facts: Respondent Chatham Properties, Inc. (CHATHAM) and petitioner Metro Construction, Inc. (MCI) entered into a contract for the construction of a multi-storey building known as the Chatham House located at the corner of Herrera and Valero Streets, Salcedo Village, Makati City, Metro Manila. In April 1998, MCI sought to collect from CHATHAM a sum of money for unpaid progress billings and other charges and instituted a request for adjudication of its claims with the CIAC. The case was docketed as CIAC Case No. 10-98. The arbitral tribunal was composed of Joven B. Joaquin as Chairman, and Beda G. Fajardo and Loreto C. Aquino as members.The preliminary conference before the CIAC started in June 1998 and was concluded a month after with the signing of the Terms of Reference (TOR) of the Case. The hearings immediately started with the presentation of MCI's witnesses, namely: Ms. Ma. Suzette S. Nucum, Chief Accountant; Ms. Isabela Redito, Office Engineer; Mr. John Romulo, Field Manager; and Dr. John Y. Lai, President. CHATHAM's witnesses were: Engr. Ruperto Kapunan III, Managing Director of RK Development and Construction Co., Inc. (RKDCCI), which was the Construction Manager firm hired by CHATHAM to oversee the construction work of the Chatham House; Engr. Alex Bautista, Area Manager of RKDCCI; Mr. Avelino M. Mercado, CHATHAM's Project Manager; and Engr. Jose T. Infante.Judgment was rendered in favor of the Claimant [MCI] directing Respondent [CHATHAM] to pay Claimant Impugning the decision of the CIAC, CHATHAM instituted a petition for review with the Court of Appeals Issue: Whether under existing law and rules the Court of Appeals can also review findings of facts of the Construction Industry Arbitration Commission. Ruling: EO. No. 1008 vest upon the CIAC original and exclusive jurisdiction over disputes arising from, or connected with, contracts entered into by parties involved in construction in the Philippines, whether the dispute arises before or after the completion of the contract, or after the abandonment or breach thereof. By express provision of Section 19 thereof, the arbitral award of the CIAC is final and unappealable, except on questions of law, which are appealable to the Supreme Court. But under Circular No. 1-91, appeals from the arbitral awards of the CIAC may be brought to the Court of Appeals, and not to the Supreme Court alone. The grounds for the appeal are likewise broadened to include appeals on questions of facts and appeals involving mixed questions of fact and law. The jurisdiction of the Court of Appeals over appeals from final orders or decisions of the CIAC is further fortified by the amendments to B.P. Blg. 129, as introduced by RA. No. 7902. With the amendments, the Court of Appeals is vested with appellate jurisdiction over all final judgments, decisions, resolutions, orders or awards of Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards or commissions, except "those within the appellate jurisdiction of the Supreme Court in accordance with the Constitution, the Labor Code of the Philippines under Presidential Decree No. 442, as amended, the provisions of this Act, and of subparagraph (1) of the third paragraph and subparagraph (4) of the fourth paragraph of Section 17 of the Judiciary Act of 1948."

Jose Ysrael C. Cordova ADR PHILROCK INC. V. CONSTRUCTION INDUSTRY ARBITRATION COMMISSION Facts: On September 14, 1992, the Cid spouses, herein private respondents, filed a Complaint for damages against Philrock and seven of its officers and engineers with the Regional Trial Court of Quezon City, Branch 82.On December 7, 1993, the initial trial date, the trial court issued an Order dismissing the case and referring the same to the CIAC because the Cid spouses and Philrock had filed an Agreement to Arbitrate with the CIAC. Thereafter, preliminary conferences were held among the parties and their appointed arbitrators. At these conferences, disagreements arose as to whether moral and exemplary damages and tort should be included as an issue along with breach of contract, and whether the seven officers and engineers of Philrock who are not parties to the Agreement to Arbitrate should be included in the arbitration proceedings. No common ground could be reached by the parties, hence, on April 2, 1994, both the Cid spouses and Philrock requested that the case be remanded to the trial court. On April 13, 1994, the CIAC issued an Order stating,the Arbitral Tribunal hereby formally dismisses the above-captioned case for referral to Branch 82 of the Regional Trial Court, Quezon City where it first originated.The Cid spouses then filed with said Branch of the Regional Trial Court of Quezon City a Motion To Set Case for Hearing which motion was opposed by Philrock.On June 13, 1995, the trial court declared that it no longer had jurisdiction over the case and ordered the records of the case to be remanded anew to the CIAC for arbitral proceedings.Pursuant to the aforementioned Order of the Regional Trial Court of Quezon City, the CIAC resumed conducting preliminary conferences. On August 21, 1995, herein petitioner Philrock requested to suspend the proceedings until the court clarified its ruling in the Order dated June 13, 1995. Philrock argued that said Order was based on a mistaken premise that 'the proceedings in the CIAC fell through because of the refusal of petitioner Philrock to include the issue of damages therein,' whereas the true reason for the withdrawal of the case from the CIAC was due to Philrock's opposition to the inclusion of its seven officers and engineers, who did not give their consent to arbitration, as party defendants. On the other hand, private respondent Nelia Cid manifested that she was willing to exclude the seven officers and engineers of Philrock as parties to the case so as to facilitate or expedite the proceedings. With such manifestation from the Cid spouses, the Arbitral Tribunal denied Philrock's request for the suspension of the proceedings. Philrock's counsel agreed to the continuation of the proceedings but reserved the right to file a pleading elucidating the position he had raised regarding the Court's Order dated June 13, 1995. The parties then proceeded to finalize, approve and sign the Terms of Reference. Philrock's counsel and representative, Atty. Pericles C. Consunji affixed his signature to said Terms of Reference which stated that 'the parties agree that their differences be settled by an Arbitral Tribunal.On September 12, 1995, petitioner Philrock filed its Motion to Dismiss, alleging therein that the CIAC had lost jurisdiction to hear the arbitration case due to the parties' withdrawal of their consent to arbitrate. The motion was denied by CIAC per Order dated September 22, 1995. On November 8, public respondent ordered the parties to appear before it on November 28, 1995 for the continuation of the arbitral proceedings, and on February 7, 1996, public respondent directed petitioner Philrock to set two hearing dates in the month of February to present its evidence and to pay all fees assessed by it, otherwise Philrock would be deemed to have waived its right to present evidence.Hence, petitioner instituted the petition for certiorari but while said petition was pending, the CIAC rendered its Decision dated September 24, 1996 in favor of the Claimant, directing Respondent to pay Claimant. The CA upheld the jurisdiction of the CIAC over the dispute between petitioner and private respondent Issue: Whether or not the CIAC could take jurisdiction over the case of Respondent Cid spouses against Petitioner Philrock after the case had been dismissed by both the RTC and the CIAC. Ruling: Section 4 of Executive Order 1008 expressly vests in the CIAC original and exclusive jurisdiction over disputes arising from or connected with construction contracts entered into by parties that have agreed to submit their dispute to voluntary arbitration.It is undisputed that the parties submitted themselves to the jurisdiction of the Commission by virtue of their Agreement to Arbitrate dated November 24,

Jose Ysrael C. Cordova ADR 1993. Signatories to the Agreement were Atty. Ismael J. Andres and Perry Y. Uy (president of Philippine Rock Products, Inc.) for petitioner, and Nelia G. Cid and Atty. Esteban A. Bautista for respondent spouses. With regard to the exclusion of the seven engineers of petitioners in the arbitration case. This withdrawal became the basis for the April 13, 1994 CIAC Order dismissing the arbitration case and referring the dispute back to the RTC. Consequently, the CIAC was divested of its jurisdiction to hear and decide the case according to the petitioner. But this contention is untenable. First, private respondents removed the obstacle to the continuation of the arbitration, precisely by withdrawing their objection to the exclusion of the seven engineers. Second, petitioner continued participating in the arbitration even after the CIAC Order had been issued. It even concluded and signed the Terms of Reference on August 21, 1995, in which the parties stipulated the circumstances leading to the dispute; summarized their respective positions, issues, and claims; and identified the composition of the tribunal of arbitrators. The document clearly confirms both parties intention and agreement to submit the dispute to voluntary arbitration. In view of this fact, we fail to see how the CIAC could have been divested of its jurisdiction. Finally, as pointed out by the solicitor general, petitioner maneuvered to avoid the RTCs final resolution of the dispute by arguing that the regular court also lost jurisdiction after the arbitral tribunals April 13, 1994 Order referring the case back to the RTC. In so doing, petitioner conceded and estopped itself from further questioning the jurisdiction of the CIAC. The Court will not countenance the effort of any party to subvert or defeat the objective of voluntary arbitration for its own private motives. After submitting itself to arbitration proceedings and actively participating therein, petitioner is estopped from assailing the jurisdiction of the CIAC, merely because the latter rendered an adverse decision. SEALAND SERVICE INC. V. CA Facts: On April 29, 1991, petitioner Sea-Land Services, Inc. and private respondent A.P. Moller/Maersk Line (hereinafter referred to as "AMML"), both carriers of cargo in containerships as well as common carriers, entered into a contract entitled, "Co-operation in the Pacific" (hereinafter referred to as the "Agreement"), a vessel sharing agreement whereby they mutually agreed to purchase, share and exchange needed space for cargo in their respective containerships. Under the Agreement, they could be, depending on the occasion, either a principal carrier (with a negotiable bill of lading or other contract of carriage with respect to cargo) or a containership operator (owner, operator or charterer of containership on which the cargo is carried).During the lifetime of the said Agreement, or on 18 May 1991, Florex International, Inc. (hereinafter referred to as "Florex") delivered to private respondent AMML cargo of various foodstuffs, with Oakland, California as port of discharge and San Francisco as place of delivery. The corresponding Bill of Lading No. MAEU MNL110263 was issued to Florex by respondent AMML. Pursuant to the Agreement, respondent AMML loaded the subject cargo on MS Sealand Pacer, a vessel owned by petitioner. Under this arrangement, therefore, respondent AMML was the principal carrier while petitioner was the containership operator.The consignee refused to pay for the cargo, alleging that delivery thereof was delayed. Thus, on June 26, 1992, Florex filed a complaint against respondent Maersk-Tabacalera Shipping Agency (Filipinas), Inc. for reimbursement of the value of the cargo and other charges. According to Florex, the cargo was received by the consignee only on June 28, 1991, since it was discharged in Long Beach, California, instead of in Oakland, California on June 5, 1991 as stipulated.Respondent AMML filed its Answer alleging that even on the assumption that Florex was entitled to reimbursement, it was petitioner who should be liable. Accordingly, respondent AMML filed a Third Party Complaint against petitioner on November 10, 1992, averring that whatever damages sustained by Florex were caused by petitioner, which actually received and transported Florexs cargo on its vessels and unloaded them.On January 1, 1993, petitioner filed a Motion to Dismiss the Third Party Complainton the ground of failure to state a cause of action and lack of jurisdiction, the amount of damages not having been specified therein. Petitioner also prayed either for dismissal or suspension of the Third Party Complaint on the ground that there exists an arbitration agreement between it and respondent AMML. On September 27, 1993, the lower court issued an Order denying petitioners Motion

Jose Ysrael C. Cordova ADR to Dismiss. Petitioners Motion for Reconsideration was likewise denied by the lower court in its August 22, 1994 Order.Undaunted, petitioner filed a petition for certiorariwith the Court of Appeals on November 23, 1994. Meanwhile, petitioner also filed its Answer to the Third Party Complaint in the trial court. On September 29, 1995, respondent Court of Appeals rendered the assailed Decision dismissing the petition for certiorari. With the denial of its Motion for Reconsideration, petitioner filed the instant petition for review. Issue: Whether or not the trial court and the Court of Appeals erred in denying petitioners prayer for arbitration. Ruling: The petition was granted. When the text of a contract is explicit and leaves no doubt as to its intention, the court may not read into it any other intention that would contradict its plain import. Arbitration being the mode of settlement between the parties expressly provided for by their Agreement, the Third Party Complaint should have been dismissed. The Court has previously held that arbitration is one of the alternative methods of dispute resolution that is now rightfully vaunted as "the wave of the future" in international relations, and is recognized worldwide. To brush aside a contractual agreement calling for arbitration in case of disagreement between the parties would therefore be a step backward. Magellan Capital Mgt. Corp. v. Zosa Facts: Under a management agreement, Magellan Capital Holdings Corporation [MCHC] appointed Magellan Capital Management Corporation [MCMC] as manager for the operation of its business and affairs. MCMC, and M. Zosa entered into an "Employment Agreement" designating Zosa as President and CEO of MCHC. Under the "Employment Agreement", the term of Zosa's employment shall be co-terminous with the management agreement, unless sooner terminated pursuant to the provisions of the Employment Agreement. The grounds for termination of employment are also provided in the Employment Agreement. The majority of MCHC's Board of Directors decided not to re-elect Zosa as President and CEO of MCHC on account of loss of trust and confidence arising from alleged violation of the resolution issued by MCHC's board of directors and of the non-competition clause of the Employment Agreement. Nevertheless, Zosa was elected to a new position as MCHC's Vice-Chairman/Chairman for New Ventures Development. Zosa communicated his resignation from the position of Vice-Chairman under paragraph 7 of the Employment Agreement on the ground that said position had less responsibility and scope than President and CEO. He demanded that he be given termination benefits. MCHC did not accept the resignation but instead informed him that the Employment Agreement is being terminated on acountr of breach thereof. Zosa invoked the Arbitration Clause of the Employment Agreement. He designated his brother, Atty. Francis Zosa as his representative in the arbitration panel. MCHC designated Atty. Inigo S. Fojas and MCMC nominated Atty. Enrique I. Quiason as their representatives l. However, instead of submitting the dispute to arbitration, Zosa filed an action for damages against petitioners before the RTC of Cebu to enforce his benefits under the Employment Agreement. Petitioners filed an MTD. The RTC denied the MTD on the ground that (1) the validity and legality of the arbitration provision can only be determined after trial on the merits; and (2) the amount of damages claimed, which is over P100,000.00, falls within the jurisdiction of the RTC. The RTC issued a pre-trial order designating only one issue: WON the Arbitration Clause was void. Petitioners filed a Motion Ad Cautelam for the clarification of the pretrial order, as well as another on the validity of the clause. The RTC denied.

Jose Ysrael C. Cordova ADR Petitioners filed a petition for certiorari and prohibition before the CA. The CA gave due course to the petition. Petitioners filed a motions for partial reconsideration of the CA decision praying (1) for the dismissal of the case in the trial court, on the ground of lack of jurisdiction, and (2) that the parties be directed to submit their dispute to arbitration in accordance with the Employment Agreement dated March 1994. The CA denied the motion for partial reconsideration for lack of merit. The RTC later declared the arbitration clause as partially void and of no effect insofar as it concerns the composition of the panel of arbitrators. Issue: WON the SEC has jurisdiction over the case Ruling: No, the controversy does not in anyway involve the election/appointment of officers of petitioner MCHC, as claimed by petitioners in their assignment of errors. Zosa's amended complaint focuses heavily on the illegality of the Employment Agreement's "Arbitration Clause" initially invoked by him in seeking his termination benefits under Section 8 of the employment contract. And under RA 876, it is the regional trial court which exercises jurisdiction over questions relating to arbitration. "The determination and validity of the agreement is not a matter intrinsically connected with the regulation and internal affairs of corporations; it is rather an ordinary case to be decided in accordance with the general laws, and do not require any particular expertise or training to interpret and apply. Furthermore, the decision of the CA affirming the trial court's assumption of jurisdiction over the case has become the "law of the case" which now binds the petitioners. The "law of the case" doctrine has been defined as "a term applied to an established rule that when an appellate court passes on a question and remands the cause to the lower court for further proceedings, the question there settled becomes the law of the case upon subsequent appeal." Issue: Whether or not the composition of arbitrators is valid Ruling: The Court finds the trial court's observations on why the composition of the panel of arbitrators should be voided, incisively correct so as to merit our approval. Thus, "From the memoranda of both sides, the Court is of the view that the defendants [petitioner] MCMC and MCHC represent the same interest. There is no quarrel that both defendants are entirely two different corporations with personalities distinct and separate from each other and that a corporation has a personality distinct and separate from those persons composing the corporation as well as from that of any other legal entity to which it may be related. "But as the defendants [herein petitioner] represent the same interest, it could never be expected, in the arbitration proceedings, that they would not protect and preserve their own interest, much less, would both or either favor the interest of the plaintiff. The arbitration law, as all other laws, is intended for the good and welfare of everybody. In fact, what is being challenged by the plaintiff herein is not the law itself but the provision of the Employment Agreement based on the said law, which is the arbitration clause but only as regards the composition of the panel of arbitrators. "From the arbitration clause, it appears that the two (2) defendants [petitioners] (MCMC and MCHC) have one (1) arbitrator each to compose the panel of three (3) arbitrators. As the defendant MCMC is the Manager of defendant MCHC, its decision or vote in the arbitration proceeding would naturally and

Jose Ysrael C. Cordova ADR certainly be in favor of its employer and the defendant MCHC would have to protect and preserve its own interest; hence, the two (2) votes of both defendants (MCMC and MCHC) would certainly be against the lone arbitrator for the plaintiff [herein defendant]. Hence, apparently, plaintiff [defendant] would never get or receive justice and fairness in the arbitration proceedings from the panel of arbitrators as provided in the aforequoted arbitration clause. In fairness and justice to the plaintiff [defendant], the two defendants (MCMC and MCHC) [herein petitioners] which represent the same interest should be considered as one and should be entitled to only one arbitrator to represent them in the arbitration proceedings. Accordingly, the arbitration clause, insofar as the composition of the panel of arbitrators is concerned should be declared void and of no effect, because the law says, "Any clause giving one of the parties power to choose more arbitrators than the other is void and of no effect" (Article 2045, Civil Code). "The dispute or controversy between the defendants (MCMC and MCHC) [herein petitioners] and the plaintiff [herein defendant] should be settled in the arbitration proceeding in accordance with the Employment Agreement, but under the panel of three (3) arbitrators, one (1) arbitrator to represent the plaintiff, one (1) arbitrator to represent both defendants (MCMC and MCHC) [herein petitioners] and the third arbitrator to be chosen by the plaintiff [defendant Zosa] and defendants [petitioners]. In this connection, petitioners' attempt to put respondent in estoppel in assailing the arbitration clause must be struck down. For one, this issue of estoppel, as likewise noted by the CA, found its way for the first time only on appeal. Well-settled is the rule that issues not raised below cannot be resolved on review in higher courts. Secondly, employment agreements such as the one at bar are usually contracts of adhesion. Any ambiguity in its provisions is generally resolved against the party who drafted the document. Thus, in the relatively recent case of Phil. Federation of Credit Cooperatives, Inc. (PFCCI) and Fr. Benedicto Jayoma vs. NLRC and Victoria Abril, we had the occasion to stress that "where a contract of employment, being a contract of adhesion, is ambiguous, any ambiguity therein should be construed strictly against the party who prepared it." And, finally, Zosa never submitted himself to arbitration proceedings (as there was none yet) before bewailing the composition of the panel of arbitrators. He in fact, lost no time in assailing the "arbitration clause" upon realizing the inequities that may mar the arbitration proceedings if the existing line-up of arbitrators remained unchecked. Arbitration proceedings are designed to level the playing field among the parties in pursuit of a mutually acceptable solution to their conflicting claims. Any arrangement or scheme that would give undue advantage to a party in the negotiating table is anathema to the very purpose of arbitration and should, therefore, be resisted. Del Monte Corp. USA v. CA Facts: In a Distributorship Agreement, petitioner appointed Montebueno Marketing, Inc. (MMI) as the sole and exclusive distributor of its Del Monte products in the Philippines for a period of 5 years, renewable for 2 consecutive 5 year periods with the consent of the parties. The agreement provided for an arbitration clause. The appointment of MMI was published in several newspapers in the country. MMI appointed Sabrosa Foods, Inc. (SFI), with the approval of petitioner, as MMI's marketing arm to concentrate on its marketing and selling function as well as to manage its critical relationship with the trade. MMI, SFI and MMI's Managing Director Liong Liong C. Sy filed a Complaint against petitioners before the RTC of Malabon for violations of Arts. 20, 21 and 23 CC. DMC-USA products continued to be brought into the country by parallel importers despite the appointment of MMI as the sole and exclusive distributor of Del Monte products thereby causing them great embarrassment and substantial damage. They alleged that the products brought into the country by these importers were aged, damaged, fake or counterfeit,

Jose Ysrael C. Cordova ADR so that they had to cause the publication of a "warning to the trade" paid advertisement in leading newspapers. Private respondents averred that petitioners knowingly and surreptitiously continued to deal with the former in bad faith by involving disinterested third parties and by proposing solutions which were entirely out of their control. Private respondents claimed that they had exhausted all possible avenues for an amicable resolution and settlement of their grievances. Petitioners filed a Motion to Suspend Proceedings invoking the arbitration clause in their Agreement with private respondents. The trial court deferred consideration of the motion as the grounds alleged therein did not constitute the suspension of the proceedings considering that the action was for damages with prayer for the issuance of Writ of Preliminary Attachment and not on the Distributorship Agreement. Later, the Motion to Suspend Proceedings was denied by the trial court on the ground that it "will not serve the ends of justice and to allow said suspension will only delay the determination of the issues, frustrate the quest of the parties for a judicious determination of their respective claims, and/or deprive and delay their rights to seek redress." The CA affirmed and ruled that the alleged damaging acts recited in the Complaint, constituting petitioners' causes of action, required the interpretation of Art. 21 CC and that in determining whether petitioners had violated it "would require a full blown trial" making arbitration "out of the question." Issue: Whether or not the dispute warrants an order compelling them to submit to arbitration. Ruling: Petitioners contend that the subject matter of private respondents' causes of action arises out of or relates to the Agreement between petitioners and private respondents. Thus, considering that the arbitration clause of the Agreement provides that all disputes arising out of or relating to the Agreement or the parties' relationship, including the termination thereof, shall be resolved by arbitration, they insist on the suspension of the proceedings in Civil Case No. 2637-MN as mandated by Sec. 7 of RA 876. Private respondents claim, on the other hand, that their causes of action are rooted in Arts. 20, 21 and 23 of the CC the determination of which demands a full blown trial, as correctly held by the CA. Moreover, they claim that the issues before the trial court were not joined so that the Honorable Judge was not given the opportunity to satisfy himself that the issue involved in the case was referable to arbitration. They submit that, apparently, petitioners filed a motion to suspend proceedings instead of sending a written demand to private respondents to arbitrate because petitioners were not sure whether the case could be a subject of arbitration. They maintain that had petitioners done so and private respondents failed to answer the demand, petitioners could have filed with the trial court their demand for arbitration that would warrant a determination by the judge whether to refer the case to arbitration. Accordingly, private respondents assert that arbitration is out of the question. Private respondents further contend that the arbitration clause centers more on venue rather than on arbitration. There is no doubt that arbitration is valid and constitutional in our jurisdiction. Even before the enactment of RA 876, this Court has countenanced the settlement of disputes through arbitration. Unless the agreement is such as absolutely to close the doors of the courts against the parties, which agreement would be void, the courts will look with favor upon such amicable arrangement and will only interfere with great reluctance to anticipate or nullify the action of the arbitrator. Moreover, as RA 876 expressly authorizes arbitration of domestic disputes, foreign arbitration as a system of settling commercial disputes was likewise recognized when the Philippines adhered to the United Nations "Convention on the Recognition and the Enforcement of Foreign Arbitral Awards of 1958" under the 10 May 1965 Resolution No. 71 of the Senate, giving reciprocal recognition and allowing enforcement of international arbitration agreements between parties of different nationalities within a contracting state.

Jose Ysrael C. Cordova ADR A careful examination of the instant case shows that the arbitration clause in the Distributorship Agreement between petitioner DMC-USA and private respondent MMI is valid and the dispute between the parties is arbitrable. However, this Court must deny the petition. The Agreement between petitioner DMC-USA and private respondent MMI is a contract. The provision to submit to arbitration any dispute arising therefrom and the relationship of the parties is part of that contract and is itself a contract. As a rule, contracts are respected as the law between the contracting parties and produce effect as between them, their assigns and heirs. Clearly, only parties to the Agreement, i.e., petitioners DMC-USA and its Managing Director for Export Sales Paul E. Derby, Jr., and private respondents MMI and its Managing Director LILY SY are bound by the Agreement and its arbitration clause as they are the only signatories thereto. Petitioners Daniel Collins and Luis Hidalgo, and private respondent SFI, not parties to the Agreement and cannot even be considered assigns or heirs of the parties, are not bound by the Agreement and the arbitration clause therein. Consequently, referral to arbitration in the State of California pursuant to the arbitration clause and the suspension of the proceedings in Civil Case No. 2637-MN pending the return of the arbitral award could be called for but only as to petitioners DMC-USA and Paul E. Derby, Jr., and private respondents MMI and LILY SY, and not as to the other parties in this case. This is consistent with the recent case of Heirs of Augusto L. Salas, Jr. v. Laperal Realty Corporation, which superseded that of Toyota Motor Philippines Corp. v. Court of Appeals. In Toyota, the Court ruled that "[t]he contention that the arbitration clause has become dysfunctional because of the presence of third parties is untenable" ratiocinating that "[c]ontracts are respected as the law between the contracting parties" and that "[a]s such, the parties are thereby expected to abide with good faith in their contractual commitments." However, in Salas, Jr., only parties to the Agreement, their assigns or heirs have the right to arbitrate or could be compelled to arbitrate. The Court went further by declaring that in recognizing the right of the contracting parties to arbitrate or to compel arbitration, the splitting of the proceedings to arbitration as to some of the parties on one hand and trial for the others on the other hand, or the suspension of trial pending arbitration between some of the parties, should not be allowed as it would, in effect, result in multiplicity of suits, duplicitous procedure and unnecessary delay. The object of arbitration is to allow the expeditious determination of a dispute. Clearly, the issue before us could not be speedily and efficiently resolved in its entirety if we allow simultaneous arbitration proceedings and trial, or suspension of trial pending arbitration. Accordingly, the interest of justice would only be served if the trial court hears and adjudicates the case in a single and complete proceeding.

Chavez v. CA Facts: In October 1994, petitioner Teodoro Chavez and respondent Jacinto Trillana entered into a contract of lease whereby the former leased to the latter his fishpond at Sitio Pariahan, Taliptip, Bulacan, Bulacan, for a term of six (6) years commencing from October 23, 1994 to October 23, 2000. The rental for the whole term was two million two hundred forty thousand (P2,240,000.00) pesos, of which one million (P1,000,000.00) pesos was to be paid upon signing of the contract. In August 1996, a powerful typhoon hit the country which damaged the subject fishpond. Respondent did not immediately undertake the necessary repairs as the water level was still high. Three (3) weeks later, respondent was informed by a barangay councilor that major repairs were being undertaken in the fishpond with the use of a crane. Respondent found out that the repairs were at the instance of petitioner who had grown impatient with his delay in commencing the work. In September 1996, respondent filed a complaint before the Office of the Barangay Captain of Taliptip, Bulacan, Bulacan. He complained about the unauthorized repairs undertaken by petitioner, the ouster of his personnel from the leased premises and its unlawful taking by petitioner despite their valid and subsisting lease contract. After conciliation proceedings, an agreement was reached. Alleging non-

Jose Ysrael C. Cordova ADR compliance by petitioner with their lease contract and the foregoing Kasunduan, respondent filed a complaint on February 7, 1997 against petitioner before the RTC of Valenzuela City, docketed as Civil Case No. 5139-V-97. Respondent prayed that the following amounts be awarded him, viz.: (a) P300,000.00 as reimbursement for rentals of the leased premises corresponding to the unexpired portion of the lease contract; (b) P500,000.00 as unrealized profits; (c) P200,000.00 as moral damages; (d) P200,000.00 as exemplary damages; and, (e) P100,000.00 as attorneys fees plus P1,000.00 for each court appearance of respondents counsel. Petitioner filed his answer but failed to submit the required pretrial brief and to attend the pretrial conference. On October 21, 1997, respondent was allowed to present his evidence ex-parte before the Acting Branch Clerk of court On the basis thereof, a decision was rendered on December 15, 1997 in favor of respondent of Court. Petitioner appealed to the Court of Appeals which modified the decision of the trial court by deleting the award of P500,000.00 for unrealized profits for lack of basis, and by reducing the award for attorneys fees to P50,000.00. Petitioners motion for reconsideration was denied. Hence, this petition for review. Petitioner contends that the Court of Appeals erred in ruling that the RTC of Valenzuela City had jurisdiction over the action filed by respondent considering that the subject matter thereof, his alleged violation of the lease contract with respondent, was already amicably settled before the Office of the Barangay Captain of Taliptip, Bulacan, Bulacan

Issue: Whether or not the amicable settlement reached after barangay conciliation proceedings has the force and effect of a final judgment of a court Ruling: Yes, Revised Katarungang Pambarangay Law provides that an amicable settlement reached after barangay conciliation proceedings has the force and effect of a final judgment of a court if not repudiated or a petition to nullify the same is filed before the proper city or municipal court within ten (10) days from its date. It further provides that the settlement may be enforced by execution by the lupong tagapamayapa within six (6) months from its date, or by action in the appropriate city or municipal court, if beyond the six-month period. This special provision follows the general precept enunciated in Article 2037 of the Civil Code, A compromise has upon the parties the effect and authority of res judicata; but there shall be no execution except in compliance with a judicial compromise.Thus, we have held that a compromise agreement which is not contrary to law, public order, public policy, morals or good customs is a valid contract which is the law between the parties themselves. It has upon them the effect and authority of res judicata even if not judicially approved, and cannot be lightly set aside or disturbed except for vices of consent and forgery.