(1) HEIRS OF AUGUSTO L. SALAS, JR. vs.

LAPERAL REALTY CORPORATION

not complied with, the trial court should suspend the proceedings and order the

G.R. No. 135362

parties to proceed to arbitration in accordance with the terms of their agreement.

December 13, 1999

However it would be in the interest of justice if the trial court hears the complaint

(320 SCRA 610)

against all herein respondents and adjudicates petitioners rights as against theirs in a
singles and complete proceeding.

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

The petition is granted the trial court must proceed with the hearing of the case.

(2) BF CORPORATION vs. COURT OF APPEALS

G.R. No. 120105

Instead of appealing, SPI brought the issue to the Court of Appeals through Certiorari,

March 27, 1998

and the Court of Appeals found out that the arbitration clause in the agreement which

(288 SCRA 267)

was duly executed by the parties in accordance with law must be followed.

FACTS: BF Corporation and Shangri-la Properties (SPI) entered into an agreement

ISSUE: (1) Whether or not an arbitration clause exist between the parties.

whereby the latter engaged the services of the former to build the EDSA Plaza

(2) Whether or not the arbitration clause has already prescribed.

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

HELD: (1) Even if the remedy of appeal is available, the action of SPI to bring the

contract works which includes the phase I, II and car park of the EDSA Plaza.

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

However, BF Corporation incurred delay in the construction that SPI considered as

which of the arbitration or the trial court has jurisdiction over the dispute.

Serious and substantial. BF Corporation alleged that the delay was cause by a fire
in the location of the project.

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

Consequently, SPI and BF Corporation entered into a written agreement denominated

agreement to arbitrate are present (a) it must be in writing; (b) it must be subscribed

as Agreement for the Execution of Builders Work for the EDSA Plaza Project. The

by the parties or their representatives. The Articles of Agreement, which incorporate

said agreement would cover the construction work until its eventual completion.

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

BF Corporation however, failed to complete the construction works and abandoned

Conditions of Contract would therefore not affect compliance with the formal

the project according to SPI which resulted disagreements between the parties. BF

requirements for arbitration agreements because that particular portion of the

Corporation then filed a complaint for collection of the balance due the construction

covenants between the parties was included by reference in the Articles of

agreement. SPI on the other hand filed a motion to suspend proceeding instead of

Agreement.

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

(2) The Supreme Court finds that under the circumstances obtaining in this case a

intervention could be invoked in any dispute arising from the contract.

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

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.

the case unto arbitration has not prescribed.

only a question of fact. The Supreme Court in a long line of cases is not a trier of
(3) 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

facts; hence, the decision of the CIAC is binding and enforceable.

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
(4) HOME BANKERS SAVINGS AND TRUST COMPANY vs. COURT OF APPEALS

safeguard and/or conserve any matter which is the subject of the dispute in

G.R. No. 115412

arbitration. It simply grants an arbitrator the power to issue subpoena and subpoena

November 19, 1999

duces tecum at any time before rendering the award. The exercise of such power is

(318 SCRA 558)

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

FACTS: A certain Victor Tancuan issued Home Bankers Savings and Trust Company

respondent filed an action for a sum of money with prayer for a writ of preliminary

(HBSTC) check for P25, 250,000.00 while a certain Eugene Arriesgado issued Far

attachment. Undoubtedly, such action involved the same subject matter as that in

East Bank and Trust Company (FEBTC) three checks amounting to P25, 200,000.00.

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

Tancuan and Arriesgado exchanged each other's checks and deposited them with

action was not a simple case of a money claim since private respondent has included

their respective banks for collection. When FEBTC presented Tancuan's HBSTC

a prayer for a writ of preliminary attachment, which is sanctioned by section 14 of the

check for clearing, HBSTC dishonored it for being "Drawn against Insufficient Funds."

Arbitration Law.

HBSTC sent Arriesgado's three FEBTC checks through the Philippine Clearing House
Corporation (PCHC) to FEBTC but was returned as "Drawn Against Insufficient

Participants in the regional clearing operations of the Philippine Clearing House

Funds." HBSTC received the notice of dishonor but refused to accept the checks and

Corporation cannot bypass the arbitration process laid out by the body and seek relief

returned them to FEBTC through the PCHC for the reason "Beyond Reglementary

directly from the courts. In the case at bar, undeniably, private respondent has

Period," implying that HBSTC already treated the three (3) FEBTC checks as cleared

initiated arbitration proceedings as required by the PCHC rules and regulations, and

and allowed the proceeds thereof to be withdrawn. FEBTC demanded reimbursement

pending arbitration has sought relief from the trial court for measures to safeguard

for the returned checks and inquired from HBSTC whether it had permitted any

and/or conserve the subject of the dispute under arbitration, as sanctioned by section

withdrawal of funds against the unfunded checks and if so, on what date. HBSTC,

14 (which allows the party to file a petition in the proper court in order to take

however, refused to make any reimbursement and to provide FEBTC with the needed

measures to safeguard and/or conserve any matter which is the subject of the dispute

information.

in arbitration) of the Arbitration Law, and otherwise not shown to be contrary to the
PCHC rules and regulations.

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: The Petition is unmeritorious. Petitioner claims that there is no conflict

regarding the interpretation or the implementation of the Agreement. Thus, without
(5) LM POWER ENGINEERING vs. CAPITOL INDUSTRIAL CONSTRUCTION

having to resort to prior arbitration, it is entitled to collect the value of the services it

GROUPS

rendered through an ordinary action for the collection of a sum of money from

G.R. No. 141833

respondent. On the other hand, the latter contends that there is a need for prior

March 26, 2003

arbitration as provided in the Agreement. This is because there are some disparities

(399 SCRA 562)

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

FACTS: Petitioner and Respondent entered into a "Subcontract Agreement" involving

respondent in its take-over of petitioners work.

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.

Supreme Court ruled in favor of the respondent. Essentially, the dispute arose from

Upon completing its task under the Contract, petitioner billed respondent in the

the parties congruent positions on whether certain provisions of their Agreement

amount of P6, 711, 813.90. Contesting the accuracy of the amount of advances and

could be applied to the facts. The instant case involves technical discrepancies that

billable accomplishments listed by the former, the latter refused to pay. Respondent

are better left to an arbitral body that has expertise in those areas.

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

The Subcontract Agreement contained an arbitral clause which clearly indicates that

or take-over -- against the amount it owed the latter.

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

Petitioner filed a Complaint for the collection of the amount representing the alleged

the amount of advances and billable accomplishments, the application of the

balance due it under the Subcontract. Instead of submitting an Answer, respondent

provision on termination, and the consequent set-off of expenses.

filed a Motion to Dismiss, alleging that the Complaint was premature, because there
was no prior recourse to arbitration.

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,

RTC denied the Motion on the ground that the dispute did not involve the

they are expected to abide by it in good faith. And because it covers the dispute

interpretation or the implementation of the Agreement and was, therefore, not covered

between the parties in the present case, either of them may compel the other to

by the arbitral clause. After trial on the merits, the RTC ruled that the take-over of

arbitrate.

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.

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
(6) RIZAL COMMERCIAL BANKING CORPORATION vs. MAGWIN MARKETING

pre-trial. The trial court denied the notice of appeal and the CA affirmed it.

CORPORATION

ISSUE: Whether or not failure to compromise warrants procedural sanction.

G.R. No. 152878

May 5, 2003

HELD: A compromise agreement or amicable settlement is a remedy strongly

(402 SCRA 592)

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

FACTS: Petitioner RCBC filed a complaint for recovery of a sum of money with prayer

jettison the case.

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

This Court's ruling is pursuant to the case of Goldloop Properties, Inc. v. Court of

attachment. However, the writ was returned partially satisfied since only a parcel of

Appeals, where it was held that the trial court cannot dismiss a complaint for failure of

land purportedly owned by defendant Benito Sy was attached. In the meantime,

the parties to submit a compromise agreement.

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

final and unappealable, except on questions of law, which are appealable to the
Supreme Court.
(7) METRO CONSTRUCTION, INC. vs. CHATHAM PROPERTIES, INC.

The Court of Appeals shall have the power to try cases and conduct hearings, receive

G.R. No. 141897

evidence and perform any and all acts necessary to resolve factual issues raised in

September 24, 2001

cases falling within its original and appellate jurisdiction, including the power to grant
and conduct new trials or further proceedings.

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 takeover 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

untenable because first, private respondents removed the obstacle to the continuation
of the arbitration, precisely by withdrawing their objection to the exclusion of the
(8)

PHILROCK,

INC.

vs.

CONSTRUCTION

INDUSTRY

ARBITRATION

seven engineers. Second, petitioner continued participating in the arbitration even

COMMISSION

after the CIAC Order had been issued. It even concluded and signed the Terms of

G.R. No. 132848-49

Reference in which the parties stipulated the circumstances leading to the dispute;

June 26, 2001

summarized their respective positions, issues, and claims; and identified the
composition of the tribunal of arbitrators. The document clearly confirms both parties

FACTS: Private respondent Cid spouses filed a complaint for damages against

intention and agreement to submit the dispute to voluntary arbitration. In view of this

Philrock and its officers. At the initial trial date, both parties agreed to refer the matter

fact, we fail to see how the CIAC could have been divested of its jurisdiction.

to the Construction Industry Arbitration Commission (CIAC). A preliminary conference

was held among the parties and their appointed arbitrators. At these conferences,

The Court will not countenance the effort of any party to subvert or defeat the

disagreements arose as to whether moral and exemplary damages and tort should be

objective of voluntary arbitration for its own private motives. After submitting itself to

included as an issue along with breach of contract, and whether the seven officers

arbitration proceedings and actively participating therein, petitioner is estopped from

and engineers of Philrock who are not parties to the Agreement to Arbitrate should be

assailing the jurisdiction of the CIAC, merely because the latter rendered an adverse

included in the arbitration proceedings. No common ground could be reached by the

decision.

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

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
(9) SEA-LAND SERVICE, INC. vs. COURT OF APPEALS, A.P. MOLLER/ MAERSK

to state a cause of action and lack of jurisdiction. Petitioner also prayed either for

LINE

dismissal or suspension of the Third Party Complaint on the ground that there exists

G.R. No. 126212

an arbitration agreement between it and respondent AMML. The lower court issued

March 2, 2000

an

Order

denying

petitioner's

Motion

to

Dismiss.

Petitioner's

Motion

for

Reconsideration was likewise denied.

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,

Undaunted, petitioner filed a petition for certiorari with the Court of Appeals.

entered into a contract entitled, "Co-operation in the Pacific" (Agreement), a vessel

Meanwhile, petitioner also filed its Answer to the Third Party Complaint in the trial

sharing agreement whereby they mutually agreed to purchase, share and exchange

court. Court of Appeals rendered the assailed Decision dismissing the petition for

needed space for cargo in their respective containerships. Under the Agreement, they

certiorari.

could be, depending on the occasion, either a principal carrier or a containership

operator.

ISSUE: Whether or not the Court of Appeals erred in denying petitioner's prayer for
arbitration.

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

HELD: Court of Appeals erred in denying petitioner's prayer for arbitration.

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,

For respondent Court of Appeals to say that the terms of the contract do not require

respondent AMML loaded the subject cargo on MS Sealand Pacer, a vessel owned by

arbitration as a condition precedent to judicial action is erroneous. In the light of the

petitioner. Under this arrangement, therefore, respondent AMML was the principal

Agreement clauses, it is clear that arbitration is the mode provided by which

carrier while petitioner was the containership operator.

respondent AMML as Principal Carrier can seek damages and/or indemnity from
petitioner, as 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

As the Principal Carrier with which Florex directly dealt with, AMML can and should be

Agency (Filipinas), Inc. for reimbursement of the value of the cargo and other

held accountable by Florex in the event that it has a valid claim against the former.

charges. According to Florex, the cargo was received by the consignee only on June

Pursuant to the Agreement, AMML, when faced with such a suit "shall use all

28, 1991, since it was discharged in Long Beach, California, instead of in Oakland,

reasonable endeavours to defend" itself or "settle such suits for as low a figure as

California on June 5, 1991 as stipulated.

reasonably possible". In turn, respondent AMML can seek damages and/or indemnity
from petitioner as Containership Operator for whatever final judgment may be

AMML in its Answer alleges that even on the assumption that Florex was entitled to

adjudged against it under the Complaint of Florex. The crucial point is that collection

reimbursement; it was petitioner who should be liable. Accordingly, respondent AMML

of said damages and/or indemnity from petitioner should be by arbitration.

filed a Third Party Complaint against petitioner, averring that whatever damages

Thus, when the text of a contract is explicit and leaves no doubt as to its intention, the

designated his brother, Atty. Francis Zosa, as his representative in the arbitration

court may not read into it any other intention that would contradict its plain import.

panel while MCHC designated Atty. Inigo S. Fojas and MCMC nominated Atty.

Arbitration being the mode of settlement between the parties expressly provided for

Enrique I. Quiason as their respective representatives in the arbitration panel.

by their Agreement, the Third Party Complaint should have been dismissed.

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.

(10) MAGELLAN CAPITAL MANAGEMENT CORPORATION vs. ROLANDO M.

ISSUE: Whether or not the Arbitration Clause is valid and effective.

ZOSA
G.R. No. 129916

HELD: The Arbitration clause is invalid only in so far as the composition of panel of

March 26, 2001

arbitrators is concern.

FACTS: Under the Management Agreement, Magellan Capital Holdings (MCHC)

The Court is of the view that the petitioner MCMC and MCHC represent the same

appointed Magellan Capital Management Corporation (MCMC) as manager for the

interest. There is no quarrel that both defendants are entirely two different

operation of its business and affairs. Subsequently, MCMC appointed respondent

corporations with personalities distinct and separate from each other. But as the

Zosa as President under the Employment Agreement which shall cease if the

petitioners represent the same interest, it could never be expected, in the arbitration

management agreement between MCHC and MCMC ceases unless terminated

proceedings, that they would not protect and preserve their own interest, much less,

pursuant to the Employment Agreement.

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

Majority of MCHC's Board of Directors decided not to re-elect respondent Zosa as

challenged by the plaintiff herein is not the law itself but the provision of the

President and Chief Executive Officer of MCHC on account of loss of trust and

Employment Agreement based on the said law, which is the arbitration clause but

confidence arising from alleged violation of the resolution issued by MCHC's board of

only as regards the composition of the panel of arbitrators.

directors and of the non-competition clause of the Employment Agreement.

Nevertheless, respondent Zosa was elected to a new position as MCHC's Vice-

It appears that the two (2) petitioners have one (1) arbitrator each to compose the

Chairman/Chairman for New Ventures Development. Later on Zosa filed his

panel of three (3) arbitrators. As the defendant MCMC is the Manager of defendant

resignation to the company on the ground that said position had less responsibility

MCHC, its decision or vote in the arbitration proceeding would naturally and certainly

and scope than President and Chief Executive Officer. He demanded that he be given

be in favor of its employer and the defendant MCHC would have to protect and

termination benefits as provided for in the Employment Agreement.

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

MCHC did not accept respondent Zosa's resignation for good reason, but instead

would never get or receive justice and fairness in the arbitration proceedings from the

informed him that the Employment Agreement is terminated for cause, in accordance

panel of arbitrators. In fairness and justice to the both petitioners which represent the

with the said agreement. Respondent Zosa was further advised that he shall have no

same interest should be considered as one and should be entitled to only one

further rights under the said Agreement or any claims against the Manager or the

arbitrator to represent them in the arbitration proceedings.

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

Accordingly, the arbitration clause, insofar as the composition of the panel of

invoked the Arbitration Clause of the Employment Agreement. respondent Zosa

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

they had exhausted all possible avenues for an amicable resolution and settlement of

other is void and of no effect" (Article 2045, Civil Code).

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

(11) DEL MONTE CORPORATION USA vs. COURT OF APPEALS

and unauthorized shipments of Del Monte-USA products to the Philippine Duty Free

G.R. No. 136154

Area and Economic zone; that the bad faith, fraudulent acts and willful negligence of

February 7, 2001

petitioners, motivated by their determination to squeeze private respondents out of

the outstanding and ongoing Distributorship Agreement in favor of another party, had

FACTS: A Distributorship Agreement was entered into by petitioner Del Monte

placed private respondent on tenterhooks since then; and, that the shrewd and subtle

Corporation-USA (DMC-USA) and private respondent Montebueno Marketing, Inc.

manner with which petitioners concocted imaginary violations by private respondent

(MMI) whereby the latter was appointed as the sole and exclusive distributor of Del

MMI of the Distributorship Agreement in order to justify the untimely termination

Monte products of the former in the Philippines. The agreement provides for an

thereof was a subterfuge. For the foregoing, private respondents claimed, among

arbitration clause. Subsequently, private respondent MMI appointed Sabrosa Foods,

other reliefs, the payment of actual damages, exemplary damages, attorney's fees

Inc. (SFI), with the approval of petitioner DMC-USA, as MMI's marketing arm to

and litigation expenses.

concentrate on its marketing and selling function as well as to manage its critical
relationship with the trade.

Petitioners filed a Motion to Suspend Proceedings invoking the arbitration clause in

their Agreement with private respondents. Trial Court denied petitioners motion. Court

Respondents MMI and SFI filed a Complaint against petitioners DMC-USA. Private

of Appeals affirmed the Trial Courts decision.

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

ISSUE: Whether or not the dispute between the parties warrants an order compelling

products continued to be brought into the country by parallel importers despite the

them to submit to arbitration.

appointment of private respondent MMI as the sole and exclusive distributor of Del
Monte products thereby causing them great embarrassment and substantial damage.

HELD: Petitioners contend that the subject matter of private respondents' causes of

They alleged that the products brought into the country by these importers were aged,

action arises out of the Agreement between petitioners and private respondents.

damaged, fake or counterfeit, so that they had to cause, after prior consultation the

Thus, considering that the arbitration clause of the Agreement provides that all

publication of a "warning to the trade" paid advertisement in leading newspapers.

disputes arising out of or relating to the Agreement or the parties' relationship,

Petitioners apparently upset with the publication, instructed private respondent MMI to

including the termination thereof, shall be resolved by arbitration. Private respondents

stop coordinating with Antonio Ongpin and to communicate directly instead with

claim, on the other hand, that their causes of action are rooted in Arts. 20, 21 and 23

petitioner DMC-USA through Paul E. Derby, Jr.

of the Civil Code, the determination of which demands a full blown trial, as correctly
held by the Court of Appeals.

Private respondents further averred that petitioners knowingly continued to deal with
the former in bad faith by involving disinterested third parties and by proposing

A careful examination of the instant case shows that the arbitration clause in the

solutions which were entirely out of their control. Private respondents claimed that

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

(12) FRANCISCO I. CHAVEZ vs. COURT OF APPEALS

multiplicity of suits, duplicitous procedure and unnecessary delay.

G.R. No. 125813 February 6, 2007

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

FACTS: An Information for Libel was filed before the RTC of Manila against private

allow simultaneous arbitration proceedings and trial, or suspension of trial pending

respondents Baskinas and Manapat, with petitioner Francisco Chavez as the

arbitration. Accordingly, the interest of justice would only be served if the trial court

complainant.

hears and adjudicates the case in a single and complete proceeding.

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:

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"

1. Whether the offended party is a public official or a private person, the criminal

is "generic and within the general context of the term 'print' in so far as the latter term

action may be filed in the Court of First Instance of the province or city where the

is utilized to refer to the physical act of producing the publication." Where the law

libelous article is printed and first published.

does not distinguish, we should not distinguish.

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

Indeed, if we hold that the Information at hand sufficiently vests jurisdiction in Manila

commission of the offense.

courts since the publication is in general circulation in Manila, there would be no

3. If the offended party is a public officer whose office is in Manila at the time of the

impediment to the filing of the libel action in other locations where Smart File is in

commission of the offense, the action may be filed in the Court of First Instance of

general circulation.

Manila.
4. If the offended party is a public officer holding office outside of Manila, the action

If this disquisition impresses an unduly formalistic reading of the Information at hand,

may be filed in the Court of First Instance of the province or city where he held office

it should be reiterated that the flaws in the Information strike at the very heart of the

at the time of the commission of the offense.

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

The Information states that the libelous articles were published in Smart File, and not

must have been committed or any one of its essential ingredients took place within

that they were published in Manila. The place "Manila" is in turn employed to situate

the territorial jurisdiction of the court. Article 360 states, in as unequivocal a manner

where Smart File was in general circulation, and not where the libel was published or

as possible, that the criminal and civil action for libel shall be filed with the court of the

first printed. The fact that Smart File was in general circulation in Manila does not

province or city "where the libelous article is printed and first published, or where any

necessarily establish that it was published and first printed in Manila, in the same way

of the offended parties actually resides at the time of the commission of the offense."

that while leading national dailies such as the Philippine Daily Inquirer or the

If the Information for libel does not establish with particularity any of these two venue

Philippine Star are in general circulation in Cebu, it does not mean that these

requirements, the trial court would have no jurisdiction to hear the criminal case.

newspapers are published and first printed in Cebu.