CASES DIGEST

Alternative Dispute Resolution (ADR)

Submitted by: Jalim G. Gania

June 29, 2013

HEIRS OF AUGUSTO L. SALAS, JR. vs. LAPERAL REALTY CORPORATION G.R. No. 135362 December 13, 1999 (320 SCRA 610) FACTS: Petitioner Salas Jr. and Respondent Laperal Realty Corporation entered into an agreement for the latter to develop and provide complete construction services on formers land. Petitioner executed a special power of attorney in favor of Respondent Corporation to exercise general control, supervision and management of the sale of his land. On June 10, 1989 Petitioner left his home for a business trip in Nueva Ecija but never returned again. Petitioners wife filed a petition for presumptive death of her husband after seven years of absence. The trial court granted her petition. On the otherhand, Respondent Corporation already subdivided the property owned by Salas Jr. to different lot buyers. The heirs of Salas Jr. filed in the RTC of Lipa City a Complaint for nullity of sale, reconveyance, cancellation of contract and damages against Laperal Realty Corporation and lot buyers. Laperal Realty Corporation filed a motion to dismiss on the ground that the heirs of Salas Jr. failed to submit their grievance to arbitration as stated in the agreement executed by Salas Jr. and Laperal Realty Corporation. The lot buyers also filed a motion to dismiss based on the same ground. ISSUE: (1) Whether or not the arbitration clause in the agreement between Salas Jr. and Laperal Realty binds the heirs of the former. (2) Whether or not the trial court must dismiss the case or must hear the case simultaneously. HELD: (1) 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 respondent Laperal Realty Corporation are certainly bound by the agreement. (2) The arbitration agreement is valid, binding and enforceable and not contrary to public policy so much so 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. However 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 singles and complete proceeding. The petition is granted the trial court must proceed with the hearing of the case.

BF CORPORATION vs. COURT OF APPEALS G.R. No. 120105 March 27, 1998 (288 SCRA 267) FACTS: BF Corporation and Shangri-la Properties (SPI) entered into an agreement whereby the latter engaged the services of the former to build the EDSA Plaza Project. While the project is on-going, SPI decided to expand the project by engaging the services of BF Corporation again. The parties entered into an agreement for main contract works which includes the phase I, II and car park of the EDSA Plaza. However, BF Corporation incurred delay in the construction that SPI considered as Serious and substantial. BF Corporation alleged that the delay was cause by a fire in the location of the project. Consequently, SPI and BF Corporation entered into a written agreement denominated as Agreement for the Execution of Builders Work for the EDSA Plaza Project. The said agreement would cover the construction work until its eventual completion. BF Corporation however, failed to complete the construction works and abandoned the project according to SPI which resulted disagreements between the parties. BF Corporation then filed a complaint for collection of the balance due the construction agreement. SPI on the other hand filed a motion to suspend proceeding instead of filing of an answer. According to SPI 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. BF Corporation alleged that there was no formal contract between the parties although they entered into an agreement defining their rights and obligations in undertaking the project. The trial courts dismiss the contention of the SPI on the ground that even if the arbitration clause exists in the said agreement, the same provides that the Articles of Agreement shall be signed by the parties to the contract and even if it was signed into a contract it has already prescribed. Instead of appealing, SPI brought the issue to the Court of Appeals through Certiorari, and the Court of Appeals found out that the arbitration clause in the agreement which was duly executed by the parties in accordance with law must be followed. ISSUE: (1) Whether or not an arbitration clause exist between the parties. (2) Whether or not the arbitration clause has already prescribed. HELD: (1) Even if the remedy of appeal is available, the action of SPI to bring the issue to the Court of Appeals through a certiorari was not a violation of the law on procedure on the

ground that the issue in the case at bar is a matter of finding out which of the arbitration or the trial court has jurisdiction over the dispute. The Court of Appeals is correct in ordering that the arbitration clause in the Agreement must be followed on the ground that all the formal requisites of an agreement to arbitrate are present (a) it must be in writing; (b) it must be subscribed by the parties or their representatives. The Articles of Agreement, which incorporate all the other contracts and agreements between the parties, was signed by the representative of both parties and duly notarized. The failure of the SPI to initial the Conditions of Contract would therefore 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. (2) The Supreme 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 if a reasonable time, hence the action to file the case unto arbitration has not prescribed.

HI-PRECISION STEEL CENTER, INC vs. LIM KIM STEEL BUILDERS, INC. G.R. No. 110434 December 13, 1993 (228 SCRA 397) FACTS: Petitioner Hi-Precision Steel Center Inc. entered into a contract with Respondent Lim Kim Steel Builders for the latter to complete a P21 Million construction project owned by the former for a period of 153 days. On the last day of the construction of the project, respondent only accomplished 75.8674% of the project. The respondent alleged that it was the fault of the petitioner because of issuance of change orders. On the other hand petitioner alleged that it was due to the fault of the respondent because it incurred delays. Respondent filed a Request for Adjudication with public respondent Construction Industry Adjudication Commission (CIAC). Respondent sought for the payment of the unpaid progress buildings, unearned profits and other receivables. Petitioner on the other hand claimed actual and liquidated damages including attorneys fees. CIAC formed Arbitral Tribunal composed of three members. And they come up with a decision in favor of the Respondent. Petitioner filed a petition to the Supreme Court that sought to reverse the decision of the CIAC for it committed grave abused of discretion in not properly implementing paragraph 1 and 2 of Article 1191 of the Civil Code, in not applying the doctrine of estoppels and failure of the arbitral tribunal to uphold the supremacy of the law between the parties and enforce it against private respondent. ISSUE: Whether or not the Arbitral Tribunal Committed grave abused of discretion. HELD: Section 19 of Executive Order 1008 as amended provides that The Arbitral award shall be binding upon the parties. It shall be final and inappealable except on QUESTION OF LAW which shall be appealable to the Supreme Court. The allegations raised by the Hi Precision Steel Center, Inc. are all question of facts. The Petitioner make it appear that the issues involve are questions of law but in truth it is only a question of fact. The Supreme Court in a long line of cases is not a trier of facts; hence, the decision of the CIAC is binding and enforceable.

HOME BANKERS SAVINGS AND TRUST COMPANY vs. COURT OF APPEALS G.R. No. 115412 November 19, 1999 (318 SCRA 558) FACTS: A certain Victor Tancuan issued Home Bankers Savings and Trust Company (HBSTC) check for P25, 250,000.00 while a certain Eugene Arriesgado issued Far East Bank and Trust Company (FEBTC) 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." HBSTC sent Arriesgado's three FEBTC checks through the Philippine Clearing House Corporation (PCHC) to FEBTC but was returned as "Drawn Against Insufficient Funds." HBSTC received the notice of dishonor but refused to accept the checks and 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. FEBTC submitted the dispute for arbitration as provided by the rules of PCHC where HSBTC also participated. Pending such arbitration proceeding, FEBTC filed with the RTC of Makati an action for sum of money and damages with preliminary attachment against HSBTC. HSBTC sought for the dismissal of such action on the ground that there is a pending arbitration proceeding involving the same issue. ISSUE: Whether or not private respondent may subsequently file a separate case in court over the same subject matter of arbitration, simply to obtain the provisional remedy of attachment against the petitioner. HELD: Section 14 of Republic Act 876, otherwise known as the Arbitration Law, allows any party to the arbitration proceeding to petition the court to take measures to safeguard and/or conserve any matter which is the subject of the dispute in arbitration. It simply grants an arbitrator the power to issue subpoena and subpoena duces tecum at any time before rendering the award. The exercise of such power is without prejudice to the right of a party to file a petition in court to safeguard any matter which is the subject of the dispute in arbitration. In the case at bar, private respondent filed an action for a sum of money with prayer for a writ of preliminary attachment. Undoubtedly, such action involved the same subject matter as that in arbitration, i.e., the sum of P25, 200,000.00 which was allegedly deprived from private respondent in what is known in banking as a "kiting scheme." However, the civil action was not a simple case of a money claim since private respondent has included a prayer for a writ of preliminary attachment, which is sanctioned by section 14 of the Arbitration Law.

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 (which allows the party to file a petition in the proper court in order to take measures to safeguard and/or conserve any matter which is the subject of the dispute in arbitration) of the Arbitration Law, and otherwise not shown to be contrary to the PCHC rules and regulations.

LM POWER ENGINEERING vs. CAPITOL INDUSTRIAL CONSTRUCTION GROUPS G.R. No. 141833 March 26, 2003 (399 SCRA 562) FACTS: Petitioner and Respondent entered into a "Subcontract Agreement" involving electrical work at the Third Port of Zamboanga. Respondent took over some of the work contracted to petitioner due to the alleged failure of the latter to finish the job. 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. Petitioner filed 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. 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 there exist a controversy/dispute between petitioner and respondent regarding the interpretation and implementation of the Sub-Contract Agreement that requires prior recourse to voluntary arbitration. HELD: The Petition is unmeritorious. Petitioner claims that there is no conflict regarding the interpretation or the implementation of the Agreement. Thus, without having to resort to prior arbitration, it is entitled to collect the value of the services it rendered through an ordinary action for the collection of a sum of money from respondent. On the other hand, the latter contends that there is a need for prior arbitration as provided in the Agreement. This is because there are some disparities between the parties positions regarding the extent of the work done, the amount of advances and billable accomplishments, and the set off of expenses incurred by respondent in its take-over of petitioners work. Supreme Court ruled in favor of the respondent. Essentially, the dispute arose from the parties congruent 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.

The Subcontract Agreement contained an arbitral clause which clearly indicates that the resolution of the dispute between the parties requires a referral to the provisions of their Agreement. Within the scope of the arbitration clause are discrepancies as to the amount of advances and billable accomplishments, the application of the provision on termination, and the consequent set-off of expenses. 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.

RIZAL COMMERCIAL CORPORATION G.R. No. 152878 May 5, 2003 (402 SCRA 592)

BANKING

CORPORATION

vs.

MAGWIN

MARKETING

FACTS: Petitioner 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. The trial court issued a writ of attachment. However, 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 located. Subsequently, petitioner moved for an alias writ of attachment which the court a quo denied. Petitioner did not cause the case to be set for pre-trial. Discussions between petitioner and respondents were undertaken to restructure the indebtedness of respondent. Petitioner approved a debt payment scheme for the corporation which was communicated to the latter by means of a letter for the conformity of its officers and respondent. Only respondent Nelson Tiu affixed his signature on the letter to signify his agreement to the terms and conditions of the restructuring. The trial court on its own initiative, issued an Order dismissing without prejudice the case for failure to prosecute its action for an unreasonable length of time. 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. The court a quo approved the petitioners motion for reconsideration. Petitioner filed a Manifestation and Motion to Set Case for Pre-Trial Conference alleging that only defendant Nelson Tiu had affixed his signature on the letter which informed the defendants that petitioner already approved defendant Magwin Marketing Corporations request for restructuring of its loan obligations. Respondent Anderson Uy opposed the foregoing submissions of petitioner while respondents Magwin Marketing Corporation, Nelson Tiu and Benito Sy neither contested nor supported them. The trial court denied petitioner's motion to calendar the Case for pre-trial. The trial court denied the notice of appeal and the CA affirmed it. ISSUE: Whether or not failure to compromise warrants procedural sanction. HELD: A compromise agreement or amicable settlement is a remedy strongly encouraged under our jurisdiction. However, the failure to consummate one does not warrant any procedural sanction, much less provide an authority for the court to jettison the case. This Court's ruling is pursuant to the case of Goldloop Properties, Inc. v. Court of Appeals, where it was held that the trial court cannot dismiss a complaint for failure of the parties to submit a compromise agreement.

METRO CONSTRUCTION, INC. vs. CHATHAM PROPERTIES, INC. G.R. No. 141897 September 24, 2001 FACTS: Respondent Chatham Properties and petitioner Metro Construction (MCI) entered into a contract for the construction of a multi-storey building known as the Chatham House. Petitioner sought to collect from respondent a sum of money for unpaid progress billings and other charges and instituted a request for adjudication of its claims with the CIAC. The CIAC holds that the provision of the contract insofar as the Overall Schedule is concerned cannot justifiably be applied in the instant case in view of the implied take-over of the Chatham House project by respondent. Accordingly, the Tribunal finds no necessity to resolve whether or not MCI completed and/or delivered the project within the approved completion period. In fact, Mr. Mercado testified that it was Chatam who ultimately completed the project, with assistance of the construction managers. On appeal, the Court of Appeals simplified the assigned errors into one core issue, namely, the "propriety" of the CIAC's factual findings and conclusions. In upholding the decision of the CIAC, the Court of Appeals confirmed the jurisprudential principle that absent any showing of arbitrariness, the CIAC's findings as an administrative agency and quasi judicial body should not only be accorded great respect but also given the stamp of finality. Hence, this petition. ISSUE: Whether or not the Court of Appeals can review findings of facts of the Construction Industry Arbitration Commission (CIAC). HELD: The Supreme Court ruled that 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. The Court of Appeals shall have the power to try cases and conduct hearings, receive evidence and perform any and all acts necessary to resolve factual issues raised in cases falling within its original and appellate jurisdiction, including the power to grant and conduct new trials or further proceedings.

PHILROCK, INC. vs. CONSTRUCTION INDUSTRY ARBITRATION COMMISSION G.R. No. 132848-49 June 26, 2001 FACTS: Private respondent Cid spouses filed a complaint for damages against Philrock and its officers. At the initial trial date, both parties agreed to refer the matter to the Construction Industry Arbitration Commission (CIAC). A preliminary conference was 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, both the Cid spouses and Philrock requested that the case be remanded to the trial court. The Court ordered that it no longer had jurisdiction over the case and remanded the same to CIAC for arbitral proceeding. The parties proceeded to finalize, approve and sign the Terms of Reference which stated that the parties agree that their differences be settled by an Arbitral Tribunal. Thereafter, the petitioner filed a Motion to dismiss alleging that the CIAC has lost jurisdiction over the case. ISSUE: Whether or not the Construction Industry Arbitration Commission (CIAC) has jurisdiction over the case. HELD: The petition has no merit. 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 Petitioners contention is untenable because 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 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. 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.

SEA-LAND SERVICE, INC. vs. COURT OF APPEALS, A.P. MOLLER/ MAERSK LINE G.R. No. 126212 March 2, 2000 FACTS: Petitioner Sea-Land Services and private respondent A.P. Moller/ Maersk Line (AMML), both carriers of cargo in containerships as well as common carriers, entered into a contract entitled, "Co-operation in the Pacific" (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 or a containership operator. During the lifetime of the said Agreement, Florex International, Inc. (Florex) delivered to 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. Consignee refused to pay for the cargo, alleging that delivery thereof was delayed. Thus, 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. AMML in its Answer alleges 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, averring that whatever damages sustained by Florex were caused by petitioner, which actually received and transported Florex's cargo on its vessels and unloaded them. Petitioner filed a Motion to Dismiss the Third Party Complaint on the ground of failure to state a cause of action and lack of jurisdiction. 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. The lower court issued an Order denying petitioner's Motion to Dismiss. Petitioner's Motion for Reconsideration was likewise denied. Undaunted, petitioner filed a petition for certiorari with the Court of Appeals. Meanwhile, petitioner also filed its Answer to the Third Party Complaint in the trial court. Court of Appeals rendered the assailed Decision dismissing the petition for certiorari. ISSUE: Whether or not the Court of Appeals erred in denying petitioner's prayer for arbitration. HELD: Court of Appeals erred in denying petitioner's prayer for arbitration.

For respondent Court of Appeals to say that the terms of the contract do not require arbitration as a condition precedent to judicial action is erroneous. In the light of the Agreement clauses, it is clear that arbitration is the mode provided by which respondent AMML as Principal Carrier can seek damages and/or indemnity from petitioner, as Containership Operator. As the Principal Carrier with which Florex directly dealt with, AMML can and should be held accountable by Florex in the event that it has a valid claim against the former. Pursuant to the Agreement, AMML, when faced with such a suit "shall use all reasonable endeavours to defend" itself or "settle such suits for as low a figure as reasonably possible". In turn, respondent AMML can seek damages and/or indemnity from petitioner as Containership Operator for whatever final judgment may be adjudged against it under the Complaint of Florex. The crucial point is that collection of said damages and/or indemnity from petitioner should be by arbitration. Thus, 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.

MAGELLAN CAPITAL MANAGEMENT CORPORATION vs. ROLANDO M. ZOSA G.R. No. 129916 March 26, 2001 FACTS: Under the Management Agreement, Magellan Capital Holdings (MCHC) appointed Magellan Capital Management Corporation (MCMC) as manager for the operation of its business and affairs. Subsequently, MCMC appointed respondent Zosa as President under the Employment Agreement which shall cease if the management agreement between MCHC and MCMC ceases unless terminated pursuant to the Employment Agreement. Majority of MCHC's Board of Directors decided not to re-elect respondent Zosa as President and Chief Executive Officer 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 noncompetition clause of the Employment Agreement. Nevertheless, respondent Zosa was elected to a new position as MCHC's Vice-Chairman/Chairman for New Ventures Development. Later on Zosa filed his resignation to the company on the ground that said position had less responsibility and scope than President and Chief Executive Officer. He demanded that he be given termination benefits as provided for in the Employment Agreement. MCHC did not accept respondent Zosa's resignation for good reason, but instead informed him that the Employment Agreement is terminated for cause, in accordance with the said agreement. Respondent Zosa was further advised that he shall have no further rights under the said Agreement or any claims against the Manager or the Corporation except the right to receive within thirty (30) days the amounts stated in the Agreement. Disagreeing with the position taken by petitioners, respondent Zosa invoked the Arbitration Clause of the Employment Agreement. respondent Zosa designated his brother, Atty. Francis Zosa, as his representative in the arbitration panel while MCHC designated Atty. Inigo S. Fojas and MCMC nominated Atty. Enrique I. Quiason as their respective representatives in the arbitration panel. However, instead of submitting the dispute to arbitration, respondent Zosa, filed an action for damages against petitioners before the Regional Trial Court of Cebu to enforce his benefits under the Employment Agreement. ISSUE: Whether or not the Arbitration Clause is valid and effective. HELD: The Arbitration clause is invalid only in so far as the composition of panel of arbitrators is concern. The Court is of the view that the 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. But as the petitioners 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. It appears that the two (2) petitioners 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 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 petitioners would certainly be against the lone arbitrator for the respondent. Hence, apparently, respondent would never get or receive justice and fairness in the arbitration proceedings from the panel of arbitrators. In fairness and justice to the both 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).

DEL MONTE CORPORATION USA vs. COURT OF APPEALS G.R. No. 136154 February 7, 2001 FACTS: A Distributorship Agreement was entered into by petitioner Del Monte CorporationUSA (DMC-USA) and private respondent Montebueno Marketing, Inc. (MMI) whereby the latter was appointed as the sole and exclusive distributor of Del Monte products of the former in the Philippines. The agreement provides for an arbitration clause. Subsequently, private respondent MMI appointed Sabrosa Foods, Inc. (SFI), with the approval of petitioner DMCUSA, as MMI's marketing arm to concentrate on its marketing and selling function as well as to manage its critical relationship with the trade. Respondents MMI and SFI filed a Complaint against petitioners DMC-USA. Private respondents predicated their complaint on the alleged violations by petitioners of Arts. 20, 21 and 23 of the Civil Code. According to private respondents, DMC-USA products continued to be brought into the country by parallel importers despite the appointment of private respondent 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, so that they had to cause, after prior consultation the publication of a "warning to the trade" paid advertisement in leading newspapers. Petitioners apparently upset with the publication, instructed private respondent MMI to stop coordinating with Antonio Ongpin and to communicate directly instead with petitioner DMC-USA through Paul E. Derby, Jr. Private respondents further averred that petitioners knowingly 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; that as a result of the fraud, bad faith, malice and wanton attitude of petitioners, they should be held responsible for all the actual expenses incurred by private respondents in the delayed shipment of orders which resulted in the extra handling thereof, the actual expenses and cost of money for the unused Letters of Credit and the substantial opportunity losses due to created out-of-stock situations and unauthorized shipments of Del Monte-USA products to the Philippine Duty Free Area and Economic zone; that the bad faith, fraudulent acts and willful negligence of petitioners, motivated by their determination to squeeze private respondents out of the outstanding and ongoing Distributorship Agreement in favor of another party, had placed private respondent on tenterhooks since then; and, that the shrewd and subtle manner with which petitioners concocted imaginary violations by private respondent MMI of the Distributorship Agreement in order to justify the untimely termination thereof was a subterfuge. For the foregoing, private respondents claimed, among other reliefs, the payment of actual damages, exemplary damages, attorney's fees and litigation expenses.

Petitioners filed a Motion to Suspend Proceedings invoking the arbitration clause in their Agreement with private respondents. Trial Court denied petitioners motion. Court of Appeals affirmed the Trial Courts decision. ISSUE: Whether or not the dispute between the parties warrants an order compelling them to submit to arbitration. HELD: Petitioners contend that the subject matter of private respondents' causes of action arises out of 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. Private respondents claim, on the other hand, that their causes of action are rooted in Arts. 20, 21 and 23 of the Civil Code, the determination of which demands a full blown trial, as correctly held by the Court of Appeals. 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. 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.

FRANCISCO I. CHAVEZ vs. COURT OF APPEALS G.R. No. 125813 February 6, 2007

FACTS: An Information for Libel was filed before the RTC of Manila against private respondents Baskinas and Manapat, with petitioner Francisco Chavez as the complainant. Private respondents moved to quash the Information and the warrants of arrest which was denied by the RTC. Private respondents then filed a Petition for Certiorari with the CA, which was granted holding that the fact that the Information against private respondents states that the libelous matter was "caused to be published in Smart File, a magazine of general circulation in Manila." CA held that the Information failed to allege where the written defamation was "printed and first published," an allegation sine qua non "if the circumstances as to where the libel was printed and first published is used as the basis of the venue of the publication." The Information, it was noted, did not indicate that the libelous articles were printed or first published in Manila, or that petitioner resided in Manila at the time of the publication of the articles. The CA further observed that even during the preliminary investigation, private respondents had already interposed that Smart File was actually printed and first published in the City of Makati, and that the address of the publisher Animal Farms Publication as indicated in the editorial page of the publication itself was a post office box with the Makati Central Post Office. ISSUE: Does the subject information sufficiently vest jurisdiction in the Manila trial courts to hear the libel charge, in consonance with Article 360 of the Revised Penal Code? HELD: NO. The rules on venue in article 360 may be restated thus: 1. Whether the offended party is a public official or a private person, the criminal action may be filed in the Court of First Instance of the province or city where the libelous article is printed and first published. 2. If the offended party is a private individual, the criminal action may also be filed in the Court of First Instance of the province where he actually resided at the time of the commission of the offense. 3. If the offended party is a public officer whose office is in Manila at the time of the commission of the offense, the action may be filed in the Court of First Instance of Manila. 4. If the offended party is a public officer holding office outside of Manila, the action may be filed in the Court of First Instance of the province or city where he held office at the time of the commission of the offense. The Information states that the libelous articles were published in Smart File, and not that they were published in Manila. The place "Manila" is in turn employed to situate where Smart File was in general circulation, and not where the libel was published or first printed. The fact that Smart File was in general circulation in Manila does not necessarily establish that it was

published and first printed in Manila, in the same way that while leading national dailies such as the Philippine Daily Inquirer or the Philippine Star are in general circulation in Cebu, it does not mean that these newspapers are published and first printed in Cebu. Petitioner does submit that there is no need to employ the clause "printed and first published" in indicating where the crime of libel was committed, as the term "publish" is "generic and within the general context of the term 'print' in so far as the latter term is utilized to refer to the physical act of producing the publication." Where the law does not distinguish, we should not distinguish. Indeed, if we hold that the Information at hand sufficiently vests jurisdiction in Manila courts since the publication is in general circulation in Manila, there would be no impediment to the filing of the libel action in other locations where Smart File is in general circulation. If this disquisition impresses an unduly formalistic reading of the Information at hand, it should be reiterated that the flaws in the Information strike at the very heart of the jurisdiction of the Manila RTC. It is settled that jurisdiction of a court over a criminal case is determined by the allegations of the complaint or information, and the offense must have been committed or any one of its essential ingredients took place within the territorial jurisdiction of the court. Article 360 states, in as unequivocal a manner as possible, that the criminal and civil action for libel shall be filed with the court of the province or city "where the libelous article is printed and first published, or where any of the offended parties actually resides at the time of the commission of the offense." If the Information for libel does not establish with particularity any of these two venue requirements, the trial court would have no jurisdiction to hear the criminal case.