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Vega v. San Carlos Milling Co.

Ltd, 51 Phil 908 (1924) Petitioners: Teodoro Vega Respondent: San Carlos Milling Co., Ltd. Facts:

Defendant-appellant contends that Sec. 23 of the Mills covenant and Sec. 14 of the Planters covenant , as such stipulations on arbitration are valid, and constitute a condition precedent, to which the plaintiff should have resorted before applying to the courts, as he prematurely did.3
whom shall be chosen by the Mill and two by the Planters, who in case of inability to agree shall select a fifth arbitrator , and to respect and abide by the decision of said arbitrators, or any three of them, as the case may be." "14 (Planters covenant). That they (the PlantersParties of the second part) will submit any and all differences that may arise between the parties of the first part and the parties of the second part to the decision of arbitrators, two of whom shall be chosen by the said parties of the first part and two by the said party of the second part, who in case of inability to agree, shall select a fifth arbitrator, and will respect and abide by the decision of said arbitrators, or any three of them, as the case may be." 4 Said RECIPROCAL COVENANT No. 7, reads: "7. Subject to the provisions as to arbitration, hereinbefore appearing, it is mutually agreed that the courts of the City of Iloilo shall have jurisdiction of any and all judicial proceedings that may arise out of the contractual relations herein between the party of the first and the parties of the second part."

This, more so, if these two provisions are read with the reciprocal covnenant in Sec. 7 of the Mills covenant.4 It is an admitted fact that the differences which later arose between the parties, and which are the subject of the present litigation have not been submitted to arbitration provided for in the above quoted clauses. Plaintiff filed an action for the recovery of 32,959 kilos of centrifugal sugar, or its value, P6,252, plus the payment of P500 damages and the costs. The lower court decided in favor of the plaintiff. Issue: WON the lower court erred in having held itself with jurisdiction to take cognizance of and render judgment in the cause Held: NO. Ratio: 1) The defendant is right in contending that clause 23 of the Mill's covenant and clause 14 of the Planter's Covenant on arbitration are valid, but they are not for that reason a bar to judicial action , in view of the way they are expressed: "An agreement to submit to arbitration, not consummated by an award, is no bar to a suit at law or in equity concerning the subject matter submitted. And the rule applies both in respect of agreements to submit existing differences and agreements to submit differences which may arise in the future ." (5 C. J., 42.) And in view of the terms in which the said covenants on arbitration are expressed, it cannot be held that in agreeing on this point, the parties proposed to establish the arbitration as a condition precedent to judicial action, because these clauses quoted do not create such a condition either expressly or by necessary inference. "Submission as Condition Precedent to Suit. Clauses in insurance and other contracts providing for arbitration in case of disagreement are very dissimilar, and the question whether submission to arbitration is a condition precedent to a suit upon the contract depends upon the language employed in each particular stipulation . Where by the same agreement which creates the liability, the ascertainment of certain facts by arbitrators is expressly made a condition precedent to a right of action thereon, suit cannot be brought until the award is made. But the courts generally will not construe an arbitration clause as ousting them of their jurisdiction unless such construction is inevitable, and consequently when the arbitration clause is not made a condition precedent by express words or necessary implication, it will be construed as merely collateral to the liability clause, and so no bar to an action in the courts without an award." (2 R. C. L., 362, 363.) 2) Neither does the reciprocal covenant No. 7 of the Mills covenant expressly or impliedly establish the arbitration as a condition precedent. The expression "subject to the provisions as to arbitration, hereinbefore appearing" does not declare such to be a condition precedent. This phrase does not read "subject to the arbitration," but "subject to the provisions as to arbitration hereinbefore appearing." And, which are these "provisions as to arbitration hereinbefore appearing?" Undoubtedly clauses 23 and 14 quoted above, which do not make arbitration a condition precedent. Disposition. Affirmed.
Separate Opinions AVANCEA, J., concurring:

1) Inasmuch as clause 23 of the Mill's Covenants, and clause 14 of the Planter's Covenants provide that the parties should respect and abide by the decision of the arbitrators, they bar judicial intervention and consequently are null and void in accordance with the ruling of this court in the case of Wahl and Wahl vs. Donaldson, Sims & Co. (2 Phil., 301). 2) Clause 7 of the Mutual Covenants, naming the Court of First Instance of Iloilo as the one with jurisdiction to try such cases as might arise from the parties' contractual relations, by the very fact that it was made subject to the arbitration clauses previously mentioned, does not render such arbitration merely a condition precedent to judicial action, nor does it change its scope , as clearly indicated by its wording and the intention of the parties. Said clause 7 was doubtless added in case it became necessary to resort to the courts for the purpose of compelling the parties to accept the arbitrators' decision in accordance with the contract, and not in order to submit anew to the courts what had already been decided by the arbitrators , whose decision the contracting parties had bound themselves to abide by and respect

California & Hawaiian Sugar Co. v. Pioneer Insurance & Surety Corp., 346 SCRA 214 (2000) Petitioners: California Hawaiian Sugar Company, Pacific Gulf Marine Inc and CF Sharp and Co Respondent: Pioneer Insurance and Surety Corporation Facts: On November 27, 1990, the vessel MV SUGAR ISLANDER arrived at the port of Manila carrying a cargo of soybean meal in bulk consigned to several consignees, one of which was the Metro Manila Feed Millers Association. Discharging of cargo from vessel to barges commenced. From the barges, the cargo was allegedly offloaded, rebagged and reloaded on consignees delivery trucks. Respondent, however, claims that when the cargo was weighed on a licensed truck scale a shortage of 255.051 metric tons valued at P1,621,171.16 was discovered. The shipment was insured with Pioneer against all risk in the amount of P19,976,404.00. Due to the alleged refusal of petitioners to settle their respective liabilities, respondent, as insurer, paid the consignee Metro Manila Feed Millers Association. Pioneer filed a complaint for damages against petitioners. Petitioners filed a Motion to Dismiss the complaint on the ground that respondents claim is premature, the same being arbitrable. The RTC ordered to defer the hearing of the MTD and directed petitioners to file their Answer. Petitioners filed their answer with counterclaim and crossclaim alleging that Pioneer did not comply with the arbitration clause. Petitioners filed a Motion to Defer Pre-Trial and Motion to Set for Preliminary Hearing the Affirmative Defense of Lack of Cause of Action for Failure to comply with Arbitration Clause, respectively. The RTC denied. The CA affirmed. It ruled that petitioner cannot set the case for preliminary hearing as an MTD was filed. Also, the arbitration clause in the charter party did not bind Pioneer. The right of Pioneer to file a upon the charter party, nor does it grow out of any privity contract. It accrues simply upon payment. Citing Pan Malayan Insurance Corporation v. CA, the CA ruled that the right of respondent insurance company as subrogee was not based on the charter party or any other contract ; rather, it accrued upon the payment of the insurance claim by private respondent to the insured consignee. Issue: WON the arbitration clause was binding upon Pioneer Held: YES Ratio: The CA erred when it held that the arbitration clause was not binding on Pioneer. There was nothing in Pan Malayan, however, that prohibited the applicability of the arbitration clause to the subrogee. That case merely discussed, inter alia, the accrual of the right of subrogation and the legal basis therefor . This issue is completely different from that of the consequences of such subrogation; that is, the rights that the insurer acquires from the insured upon payment of the indemnity. (Pan Malayan: The right of subrogation is not dependent upon, nor does it grow out of, any privity of contract or upon written assignment of claim. It accrues simply upon payment of the insurance claim by the insurer.) As to the preliminary hearing: True, Section 6, Rule 16 specifically provides that a preliminary hearing on the affirmative defenses may be allowed only when no motion to dismiss has been filed. Section 6, however, must be viewed in the light of Section 3 which requires courts to resolve a motion to dismiss and prohibits them from deferring its resolution on the ground of indubitability. Section 6 disallows a preliminary hearing of affirmative defenses once a motion to dismiss has been filed because such defense should have already been resolved. In the present case, however, the trial court did not categorically resolve petitioners Motion to Dismiss, but merely def erred resolution thereof Bloomfield Academy v. CA, 237 SCRA 43 (1994) Petitioners: Bloomfield Academy and Rodolfo Lagera Respondents: CA, Bloomfield Academy Parents Advisory Association Inc, et al Facts:

The petition originated in a complaint for injunction filed on April 6, 1990 by private respondent, the association of parents and guardians of students enrolled in petitioner. One of the defendants in the case is petitioner which is a nonstock, non-profit educational institution. What is being disputed before the court is the increase in tuition fee. The petitioners contend that the increase is essential due to the increase of the minimum wage under RA 6727. Private respondents alleged that the 21.22% increase was made without prior consultation with the parents required by law and that, in any case, the approved increase was exorbitant (at 21.22%). They sent a letter to the DECS Secretary complaining that the tuition fee increase was without valid basis already, after both parties agreed on 50% of the increase which was implemented and paid by the students during the school year with the clear understanding that the other 50% is waived by the defendant. Petitioners, on their part, contended that the parties did, in fact, hold consultations at which the wage increase for teachers mandated by RA6727 and the resulting increase in tuition fees allowed by RA 6728 were discussed at length. The DECS however affirmed the tuition fee increase. The court issued an order enjoining petitioners and Secretary Cario and/or their agents, representatives or persons acting in their behalf from implementing the increase in tuition fees, and not withholding their release of the report cards and/or other papers necessary for the students desiring to transfer to other schools until further orders from the court. The application for injunction was set for hearing on April 19, 1990 at 2:00 p.m. Answer to the complaint was filed by petitioners on April 19, 1990. On the same date, the court conducted the first hearing on the application for a writ of preliminary injunction which hearing was followed by settings on April 25, 26 and 27, 1990. The court thereafter issued an order granting the writ of preliminary injunction . On certiorai, the CA affirmed and ruled that the grant or denial of an injunction rests upon the sound discretion of the court. Issue: WON the court erred in granting the injunction Held: Ratio: The pertinent provisions RA 6728, also commonly known as "An Act Providing Government Assistance to Students and Teachers in Private Education, And Appropriating Funds Therefor," provide: Sec. 9. Further Assistance To Students in Private Colleges and Universities. . . . . (b) For students enrolled in schools charging above one thousand five hundred pesos (P1,500.00) per year in tuition and other fees during the school year 1988-1989 or such amount in subsequent years as may be determined from time to time by the State Assistance Council, no assistance for tuition fees shall be granted by the Government: Provided, however, That the schools concerned may raise their tuition fees subject to Section 10 hereof. xxx xxx xxx Sec. 10. Consultation. In any proposed increase in the rate of tuition fee, there shall be appropriate consultations conducted by the school administration with the duly organized parents and teachers associations and faculty associations with respect to secondary schools, and with students governments or councils, alumni and faculty associations with respect to colleges. For this purpose, audited financial statements shall be made available to authorized representatives of these sectors. Every effort shall be exerted to reconcile possible differences. In case of disagreement, the alumni association of the school or any other impartial body of their choosing shall act as arbitrator. xxx xxx xxx Sec. 14. Program Administration/Rules and Regulations. The State Assistance Council shall be responsible for policy guidance and direction, monitoring and evaluation of new and existing programs, and the promulgation of rules and regulations, while the Department of Education, Culture and Sports shall be responsible for the day to day administration and program implementation. Likewise, it may engage the services and support of any qualified government or private entity for its implementation. The judicial action initiated by private respondent before the court appears to us to be an inappropriate recourse. It remains undisputed that the DECS Secretary has, in fact, taken cognizance of the case for the tuition fee increase and has accordingly acted thereon. We can only assume that in so doing the DECS Secretary has duly passed upon the relevant legal and factual issues dealing on the propriety of the matter. In the decision process, the DECS Secretary has verily acted in a quasi-judicial capacity. The remedy from that decision is an appeal. Conformably with BP 129, the exclusive appellate jurisdiction to question that administrative action lies with the CA, not with the court a quo. If we were to consider, upon the other hand, the case for injunction filed with the court a quo to be a ordinary action solely against herein petitioner (with DECS being then deemed to be merely a nominal party), it would have meant the court's taking cognizance over the case in disregard of the doctrine of primary jurisdiction. Neither can we treat the case as a special civil action for certiorari or prohibition as the complaint filed by private respondent with the court a quo, contains no allegation of lack, or grave abuse in the exercise, of jurisdiction on the part of DECS nor has there been any finding made to that effect by either the court a quo or the appellate court that could warrant the extraordinary remedy. A special civil action, either for certiorari or prohibition, can be grounded only on either lack of jurisdiction or grave abuse of discretion.

In passing, we also observe that the parties have both remained silent on the provisions of Republic Act No. 6728 to the effect that in case of disagreement on tuition fee increases (in this instance by herein private parties), the issue should be resolved through arbitration. Although the matter has not been raised by the parties, it is an aspect, nevertheless, in our view, that could have well been explored by them instead of immediately invoking, such as they apparently did, the administrative and judicial relief to resolve the controversy . All told, we hold that the court a quo has been bereft of jurisdiction in taking cognizance of private respondent's complaint. We see no real justification, on the basis of the factual and case settings here obtaining, to permit a deviation from the long standing rule that the issue of jurisdiction may be raised at any time even on appeal. Associated Bank v. CA, 233 SCRA 137 (1994) Petitioner: Associated Bank Respondents: CA,Visitacion Flores, Asuncion Flores PCIB, Far East Bank, Security Bank and Citytrust Bank Facts: In a complaint for Violation of the NIL and Damages, Visitacion and Asuncion Flores seek the recovery of the amount of P900,913.60 which petitioner charged against their current account by virtue of the 16 checks drawn by them despite the apparent alterations therein with respect to the

name of the payee, that is, the name Filipinas Shell was erased and substituted with Ever Trading and DBL Trading by their supervisor Jeremias Cabrera, without their knowledge and consent. Petitioner claimed that the subject checks appeared to have been regularly issued and free from any irregularity which would excite or arouse any suspicion or warrant their dishonor when the same were negotiated and honored by it. Petitioner filed a TPC against PCIB, Far East Bank and City Trust for reimbursement, contribution, indemnity for being the collecting banks of the subject checks and by virtue of their bank guarantee for all checks sent for clearing to the Philippine Clearing House Corporation (PCHC), as provided for in Section 17, (PCHC), as provided for in Section 17, PCHC Clearing House Rules and Regulations. Citytrust and PCIB claimed that the checks were complete and regular on their face. A Motion To Dismiss was filed by Security Bank on the grounds that petitioner failed to resort to arbitration as provided for in Section 36 of the Clearing House Rules and Regulations of the Philippine Clearing House Corporation . Petitioner maintains that this Court has jurisdiction over the suit as the provisions of the Clearing House Rules and Regulations are applicable only if the suit or action is between participating member banks , whereas the Floreses are private persons and the third-party complaint between participating member banks is only a consequence of the original action initiated by the plaintiffs. The trial court dismissed the TPC for lack of jurisdiction citing Section 36 of the Clearing House Rules and Regulations of the PCHC providing for settlement of disputes and controversies involving any check or item cleared through the body with the PCHC. It ruled citing the Arbitration Rules of Procedure that the decision or award of the PCHC through its arbitration committee/arbitrator is appealable only on questions of law to any of the Regional Trial Courts in the National Capital Region where the head office of any of the parties is located. The CA affirmed Issue: WON the case should be dismissed for failure to arbitrate Held: Yes Ratio: The Clearing House Rules and Regulations on Arbitration of the Philippine Clearing House Corporation are clearly applicable to petitioner and private respondents. Petitioners third party complaint in the trial court was one for reimbursement, contribution and indemnity against PCIB, FarEast, Security Bank, and CityTrust, in connection with petitioners having honored sixteen checks which said banks supposedly endorsed to the former for collection in 1989. Under the rules and regulations of the PCHC, the mere act of participation of the parties concerned in its operations in effect amounts to a manifestation of agreement by the parties to abide by its rules and regulations . As a consequence of such participation, a party cannot invoke the jurisdiction of the courts over disputes and controversies which fall under the PCHC Rules and Regulations without first going through the arbitration processes laid out by the body. Since claims relating to the regularity of checks cleared by banking institutions are among those claims which should first be submitted for resolution by the PCHCs Arbitration Committee, petitioner, having voluntarily bound itself to abide by such rules and regulations, is estopped from seeking relief from the RTC on the coattails of a private claim and in the guise of a third party complaint without first having obtained a decision adverse to its claim from the said body. It cannot bypass the arbitration process on the basis of its averment that its third party complaint is inextricably linked to the original complaint in the RTC. Pursuant to PCHCs function involving the clearing of checks and other clearing items, the PCHC has adopted rules and regulations designed to provide member banks with a procedure whereby disputes involving the clearance of checks and other negotiable instruments undergo a process of arbitration prior to submission to the courts below. This procedure (1) ensures a uniformity of rulings relating to factual disputes involving checks and other negotiable instruments (2) provides a mechanism for settling minor disputes among participating and member banks which would otherwise go directly to the trial courts. While the PCHC Rules and Regulations allow appeal to the Regional Trial Courts only on questions of law , this does not preclude our lower courts from dealing with questions of fact already decided by the PCHC arbitration when warranted and appropriate.

In Banco de Oro Savings and Mortgage Banks vs. Equitable Banking Corporation this Court had the occasion to rule on the validity of these rules as well as the jurisdiction of the PCHC as a forum for resolving disputes and controversies involving checks and other clearing items when it held that "the participation of two banks. . . in the Clearing Operations of the PCHC (was) a manifestation of its submission to its jurisdiction." Under the PCHC Rules and Regulations,7not only do the parties manifest by mere participation their consent to these rules, but such participation is deemed (their) written and subscribed consent to the binding effect of arbitration agreements under the PCHC rules . Moreover, a participant subject to the Clearing House Rules and Regulations of the PCHC may go on appeal to any of the Regional Trial Courts in the National Capital Region where the head office of any of the parties is located only after a decision or award has been rendered by the arbitration committee or arbitrator on questions of law.
7 The

applicable PCHC provisions on the question of jurisdiction provide: 1) Sec. 3 AGREEMENT TO THESE RULES It is the general agreement and understanding, that any participant in the PCHC MICR clearing operations, by the mere act of participation, thereby manifests its agreement to these Rules and Regulations, and its subsequent amendments. 2) Sec. 36 ARBITRATION a) 36.1 Any dispute or controversy between two or more clearing participants involving any check/item cleared thru PCHC shall be submitted to the Arbitration Committee, upon written complaint of any involved participant by filing the same with the PCHC serving the same upon the other party or parties, who shall within fifteen (15) days after receipt thereof, file with the Arbitration Committee its written answer to such written complaint and also within the same period serve the same upon the complaining participant. This period of fifteen (15) days may be extended by the Committee not more than once for another period of fifteen (15) days, but upon agreement in writing of the complaining party, said extension may be for such period as the latter may agree to. b) Section 36.6 is even more emphatic: 36.6 The fact that a bank participates in the clearing operations of PCHC shall be deemed its written and subscribed consent to the binding effect of this arbitration agreement as if it had done so in accordance with Section 4 of the Republic Act No. 876 otherwise known as the Arbitration Law.

Clearly therefore, petitioner, by its voluntary participation and its consent to the arbitration rules cannot go directly to the RTC when it finds it convenient to do so . The jurisdiction of the PCHC under the rules and regulations is clear, undeniable and is particularly applicable to all the parties in the third party complaint under their obligation to first seek redress of their disputes and grievances with the PCHC before going to the trial court. Finally, the contention that the third party complaint should not have been dismissed for being a necessary and inseparable offshoot of the main case over which the court a quo had already exercised jurisdiction misses the fundamental point about such pleading. A third party complaint is a mere procedural device which under the Rules of Court is allowed only with the courts pe rmission. It is an action "actually independent of, separate and distinct from the plaintiffs complaint " (s)uch that, were it not for the Rules of Court, it would be necessary to file the action separately from the original complaint by the defendant against the third party Mindanao Portland Cement Corporation v. McDonough Construction Co. of Florida, 90 SCRA 808 (1967) Petitioner appellee: Mindanao Portland Cement Corporation Respondent appellant: McDonough Construction Facts: Petitioner and respondent McDonough executed a contract for the construction by the respondent for the petitioner of a dry portland, cement plant at Iligan City. In a separate contract, Turnbull, Inc. the "engineer" was engaged to design and manage the construction of the plant, supervise the construction, schedule deliveries and the construction work as well as check and certify ill contractors' progress and fiscal requests for payment. Alterations in the plans and specifications were subsequently made during the progress of the construction. Due to this and to other causes deemed sufficient by Turnbull, Inc., extensions of time for the termination of the project, initially agreed to be finished on December 17, 1961, were granted. Respondent finally completed the project on October 22, 1962. Differences later arose.

Petitioner claimed from respondent damages in the amount of more than P2,000,000 allegedly occasioned by the delay in the project's completion. Respondent in turn asked for more than P450,000 from petitioner for alleged losses due to cost of extra work and overhead as of April 1962. A conference was held between petitioner and Turnbull, Inc., on one hand, and respondent on the other, to settle the differences, but no satisfactory results were reached. Petitioner sent respondent written invitations to arbitrate, invoking a provision in their contract regarding arbitration of disputes. Instead of answering said invitations, respondent, with Turnbull's approval, submitted to petitioner for payment its final statement of work accomplished, asking for P403,700 as unpaid balance of the consideration of the contract. Petitioner filed the present action in the CFI of Manila to compel respondent to arbitrate with it concerning alleged disputes arising from their contract.5 It averred inter alia that deletions and additions to the plans and specifications were agreed upon during the progress of the construction; that disagreement arose between them as to the cost of the additional or extra work done, and respondent's deviation from some overpaid respondent by P33,810.81; that petitioner further claims to have suffered damages due to respondent's delay in finishing the project; that respondent, on the other hand, still claims an unpaid balance of about P403,700; that these matters fall under the general arbitration clause of their contract; and that respondent has failed to proceed to arbitration despite several requests therefor. The court ruled that the matter should be submitted to arbitration. Issue: WON the dispute should be submitted to arbitration Respondent, contends that: 1) There is no showing of disagreement; and 2) If there is, the same falls under the exception, to be resolved by the engineer. Held: Ratio: 1) As to the first point, the fact of disagreement has been determined by the court below upon the stipulation of facts and documentary evidence submitted. In this appeal involving pure questions of law, the above finding should not be disturbed. Furthermore, the existence of disagreement is plainly shown in the record. Respondent admits the existence of petitioner's claim but denies its merit. It likewise admits that petitioner has refused to pay its claim for the unpaid balance of the price of the contract. Paragraph 86of the stipulation of facts shows the dispute of the parties regarding their mutual claims and that said dispute remained unsettled. 2) Regarding the second point, the parties agreed by way of exception that disagreements with respect to the following matters shall be finally resolved by the engineer, instead of being submitted to arbitration: (1) The interpretation of plans and specifications; (2) sufficiency of materials; and (3) the time, sequence and method of performing the work. The disputes involved here, on the other hand, are on (1) the proper computation of the total contract price, including the cost of additional or extra work; and (2) the liability for alleged delay in completing the project and for alleged losses due to change in the plans and specifications. a) Now from the contract itself We can determine the scope of the exceptions aforementioned . Thus, pars. 19 to 22 of its General Conditions deal with the subject "Interpretation of Plans and Specifications". And thereunder, the engineer is empowered to correct all discrepancies, errors or omissions in the plans and specifications; to explain all doubts that may arise thereon; and to furnish further plans and specifications as may be required. No mention is made therein as to the cost of the project; this matter is covered by the engineering contract, under which Turnbull, Inc.'s function is limited to making estimates of costs only. "Sufficiency of materials" and "method of performing the work" under the second and third exceptions above-mentioned are treated in pars. 2 to 6 of the General Conditions under the heading "QUALITY OF WORKS AND MATERIALS". Turnbull, Inc., is therein empowered to determine the land fitness of the several kinds of work and materials furnished and to reject or condemn many of them which, in its opinions, does not fully conform to the terms of the contrac t. In the present case, the dispute is not as to the quality of the materials or of the kind of work done.

"Time" and "Sequence of Work" are covered by pars. 9 to 17 of the General Conditions under the heading "SCHEDULING." Neither would the disputes fall under these exceptions. Turnbull, Inc.'s power here is to schedule the deliveries and construction work and expedite the same so that the project can be finished on time. It is also authorized, under par. 15, to determine whether any eventuality is sufficient enough to warrant in extension of time and if so, to determine the period of such extension. The delay envisioned here is one that occurs during the progress of the work which disturbs the pre-scheduling plan, thus necessitating an extension of the over-all deadline precisely to prevent respondent from going beyond the same. Turnbull, Inc.'s function goes no further than to calculate and fix the period of extension. But the delay petitioner alleged is different; it is delay beyond the last date of extension fixed by Turnbull, Inc. Clearly, the question of liability therefor, is not embraced in the exception. To none of the exceptions then do the disagreements in question belong, the rule of arbitration therefore applies. The parties in fact also stipulated in their contract, under "EXTRA WORK", that the cost of extra work to be paid shall be subject to negotiations. This negates the proposition that Turnbull, Inc.'s cost estimates appearing in Addenda 2, 3 and 7 are final and conclusive. b) The reason, moreover, for the exceptions interpretation of plans and specifications; sufficiency of materials; sequence, time and method of performing the work is the need to decide these matters immediately, since the progress of the work would await their determination . The same is not true as to matters relating to the liability for delay in the project's completion; these are questions that the engineer does not have to resolve before the project can go on . Consequently, We view that it is not included in the exceptions, as indeed the related provisions of their agreement indicate. Since there obtains herein a written provision for arbitration as well as failure on respondent's part to comply therewith, the court a quo rightly ordered the parties to proceed to arbitration in accordance with the terms of their agreement (Sec. 6, Republic Act 876). Respondent's arguments touching upon the merits of the dispute are improperly raised herein. They should be addressed to the arbitrators. This proceeding is merely a summary remedy to enforce the agreement to arbitrate. The duty of the court in this case is not to resolve the merits of the parties' claims but only to determine if they should proceed to arbitration or not. And although it has been ruled that a frivolous or patently baseless claim should not be ordered to arbitration, it is also recognized that the mere fact that a defense exists against a claim does not make it frivolous or baseless.