Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION

G.R. No. !"#$ %une &' ##&
(SSOCI(TED )(N*' petitione+'
,s.
-ON. COURT OF (PPE(.S' -ON. M(RIN( .. )U/ON' as P+esi0in1 %u01e of RTC' 2ue3on Cit4' MM' )+. #' VISIT(CION SERR( F.ORES RTC'
2ue3on Cit4' MM' )+. #' M(. (SUNCION F.ORES' P-I.IPPINE COMMERCI(. INTERN(TION(. )(N*' F(R E(ST )(N* 5 TRUST CO.'
SECURIT6 )(N* 5 TRUST CO. an0 CIT6TRUST )(N*ING CORPOR(TION' +espon0ents.
Soluta' .eoni0as' Ma+ifos7ue' )alce' Santia1o 5 (1uila .a8 Office fo+ petitione+.
Recto+ .a8 Office fo+ +espon0ent Flo+es.
)al1os an0 Pe+e3 .a8 Office fo+ +espon0ent PCI).
Du9a+aos' O+acion' Pan1aniban 5 (ssociates fo+ +espon0ent FE)TC.
Cauton' )ana+es' Ca+pio' Ishi8ata an0 (ssociates fo+ +espon0ent S)TC.
Gon3a1a' Sone:a an0 Gale .a8 Offices fo+ +espon0ent Cit4t+ust.

*(PUN(N' %.;
This is a petition fo+ +e,ie8 on ce+tio+a+i see<in1 the +e,e+sal of the 0ecision of the Cou+t of (ppeals on No,e9be+ $' ##= affi+9in1 in toto the
O+0e+ of the Re1ional T+ial Cou+t of 2ue3on Cit4' )+anch # 0is9issin1 the petitione+>s thi+0?pa+t4 co9plaint a1ainst p+i,ate +espon0ent ban<s fo+
lac< of :u+is0iction.
F(CTS;
In a co9plaint fo+ Violation of the Ne1otiable Inst+u9ent .a8 an0 Da9a1es' plaintiffs see< the +eco,e+4 of the a9ount of P#!!'#@.A! 8hich
0efen0ant ban< = cha+1e0 a1ainst thei+ cu++ent account b4 ,i+tue of the siBteen CAD chec<s 0+a8n b4 the9 0espite the appa+ent alte+ations the+ein
8ith +espect to the na9e of the pa4ee' that is' the na9e Filipinas Shell 8as e+ase0 an0 substitute0 8ith E,e+ T+a0in1 an0 D). T+a0in1 b4 thei+
supe+,iso+ %e+e9ias Cab+e+a' 8ithout thei+ <no8le01e an0 consent.
Eith lea,e of cou+t' 0efen0ant ban< file0 a Thi+0?Pa+t4 Co9plaint a1ainst Philippine Co99e+cial Inte+national )an<' Fa+ East )an< 5 T+ust Co9pan4'
Secu+it4 )an< an0 T+ust Co9pan4 an0 Cit4t+ust )an<in1 Co+po+ation fo+ +ei9bu+se9ent' cont+ibution' in0e9nit4 f+o9 sai0 thi+0?pa+t4 0efen0ants fo+
bein1 the collectin1 ban<s of the sub:ect chec<s an0 b4 ,i+tue of thei+ ban< 1ua+antee fo+ all chec<s sent fo+ clea+in1 to the Philippine Clea+in1 -ouse
Co+po+ation CPC-CD' as p+o,i0e0 fo+ in Section "' CPC-CD' as p+o,i0e0 fo+ in Section "' PC-C Clea+in1 -ouse Rules an0 Re1ulations.
Philippine Co99e+cial Inte+national )an< alle1e0 that the sub:ect chec< 8as co9plete an0 +e1ula+ on its face an0 8as pai0 b4 it onl4 upon
p+esent9ent to the 0+a8ee ban< fo+ clea+in1 8ho' upon eBa9ination the+eof' foun0 the sa9e to be co9plete an0 +e1ula+ on its faceF that it 8as onl4
afte+ sai0 chec< 8as clea+e0 b4 thi+0?pa+t4 plaintiff fo+ pa49ent that it allo8e0 the pa4ee to 8ith0+a8 the p+ocee0s of the chec< f+o9 its accountF that
the cause of action of the thi+0?pa+t4 plaintiff is ba++e0 b4 estoppel an0Go+ laches fo+ its failu+e to +etu+n the chec< to it 8ithin the pe+io0 p+o,i0e0 fo+
un0e+ Clea+in1 -ouse Rules an0 Re1ulationsF that this Cou+t has no :u+is0iction o,e+ the suit as it an0 thi+0?pa+t4 plaintiff a+e 9e9be+s of the
Philippine Clea+in1 -ouse an0 boun0 b4 the Rules an0 Re1ulations the+eof p+o,i0in1 fo+ a+bit+ation.
( Motion To Dis9iss 8as file0 b4 Secu+it4 )an< an0 T+ust Co9pan4 on the 1+oun0s that thi+0?pa+t4 plaintiff faile0 to +eso+t to a+bit+ation as p+o,i0e0
fo+ in Section @A of the Clea+in1 -ouse Rules an0 Re1ulations of the Philippine Clea+in1 -ouse Co+po+ation' an0 that it 8as +elease0 f+o9 an4
liabilit4 8ith the acceptance b4 thi+0?pa+t4 plaintiff of the sub:ect chec<.
The t+ial cou+t 0is9isse0 the thi+0?pa+t4 co9plaint fo+ lac< of :u+is0iction citin1 Section @A of the Clea+in1 -ouse Rules an0 Re1ulations of the PC-C
p+o,i0in1 fo+ settle9ent of 0isputes an0 cont+o,e+sies in,ol,in1 an4 chec< o+ ite9 clea+e0 th+ou1h the bo04 8ith the PC-C. It +ule0 H citin1 the
1
(+bit+ation Rules of P+oce0u+e H that the 0ecision o+ a8a+0 of the PC-C th+ou1h its a+bit+ation co99itteeGa+bit+ato+ is appealable onl4 on 7uestions
of la8 to an4 of the Re1ional T+ial Cou+ts in the National Capital Re1ion 8he+e the hea0 office of an4 of the pa+ties is locate0. &
RU.ING;.
Ee fin0 no 9e+it in the petition.
The Clea+in1 -ouse Rules an0 Re1ulations on (+bit+ation of the Philippine Clea+in1 -ouse Co+po+ation a+e clea+l4 applicable to petitione+ an0
p+i,ate +espon0ents' thi+0 pa+t4 plaintiff an0 0efen0ants' +especti,el4' in the cou+t belo8. Petitione+ (ssociate0 )an<>s thi+0 pa+t4 co9plaint in the t+ial
cou+t 8as one fo+ +ei9bu+se9ent' cont+ibution an0 in0e9nit4 a1ainst the Philippine Co99e+cial an0 In0ust+ial )an< CPCI)D' the Fa+ East )an< an0
T+ust' Co. CFE)TCD' Secu+it4 )an< an0 T+ust Co. CS)TCD' an0 the Cit4T+ust )an<in1 Co+po+ation CCT)CD' in connection 8ith petitione+>s ha,in1
hono+e0 siBteen chec<s 8hich sai0 +espon0ent ban<s suppose0l4 en0o+se0 to the fo+9e+ fo+ collection in #$#. Un0e+ the +ules an0 +e1ulations of
the Philippine Clea+in1 -ouse Co+po+ation CPC-CD' the 9e+e act of pa+ticipation of the pa+ties conce+ne0 in its ope+ations in effect a9ounts to a
9anifestation of a1+ee9ent b4 the pa+ties to abi0e b4 its +ules an0 +e1ulations. " (s a conse7uence of such pa+ticipation' a pa+t4 cannot in,o<e the
:u+is0iction of the cou+ts o,e+ 0isputes an0 cont+o,e+sies 8hich fall un0e+ the PC-C Rules an0 Re1ulations 8ithout fi+st 1oin1 th+ou1h the a+bit+ation
p+ocesses lai0 out b4 the bo04. Since clai9s +elatin1 to the +e1ula+it4 of chec<s clea+e0 b4 ban<in1 institutions a+e a9on1 those clai9s 8hich shoul0
fi+st be sub9itte0 fo+ +esolution b4 the PC-C>s (+bit+ation Co99ittee' petitione+ (ssociate0 )an<' ha,in1 ,olunta+il4 boun0 itself to abi0e b4 such
+ules an0 +e1ulations' is estoppe0 f+o9 see<in1 +elief f+o9 the Re1ional T+ial Cou+t on the coattails of a p+i,ate clai9 an0 in the 1uise of a thi+0 pa+t4
co9plaint 8ithout fi+st ha,in1 obtaine0 a 0ecision a0,e+se to its clai9 f+o9 the sai0 bo04. It cannot b4pass the a+bit+ation p+ocess on the basis of its
a,e+9ent that its thi+0 pa+t4 co9plaint is ineBt+icabl4 lin<e0 to the o+i1inal co9plaint in the Re1ional T+ial Cou+t.
Un0e+ its (+ticles of Inco+po+ation' the PC-C p+o,i0es Ian effecti,e' con,enient' efficient' econo9ical an0 +ele,ant eBchan1e an0 facilitate se+,ice
li9ite0 to chec< p+ocessin1 an0 so+tin1 b4 8a4 of assistin1 9e9be+ ban<s' entities in clea+in1 chec<s an0 othe+ clea+in1 ite9s as 0efine0 an0
eBistin1 in futu+e Cent+al )an< of the Philippines Ci+cula+s' 9e9o+an0a' ci+cula+ lette+s +ules an0 +e1ulations an0 policies in pu+suance of Section
!" of R( =AJ.I Pu+suant to its function in,ol,in1 the clea+in1 of chec<s an0 othe+ clea+in1 ite9s' the PC-C has a0opte0 +ules an0 +e1ulations
0esi1ne0 to p+o,i0e 9e9be+ ban<s 8ith a p+oce0u+e 8he+eb4 0isputes in,ol,in1 the clea+ance of chec<s an0 othe+ ne1otiable inst+u9ents un0e+1o
a p+ocess of a+bit+ation p+io+ to sub9ission to the cou+ts belo8. This p+oce0u+e not onl4 ensu+es a unifo+9it4 of +ulin1s +elatin1 to factual 0isputes
in,ol,in1 chec<s an0 othe+ ne1otiable inst+u9ents but also p+o,i0es a 9echanis9 fo+ settlin1 9ino+ 0isputes a9on1 pa+ticipatin1 an0 9e9be+ ban<s
8hich 8oul0 othe+8ise 1o 0i+ectl4 to the t+ial cou+ts. Ehile the PC-C Rules an0 Re1ulations allo8 appeal to the Re1ional T+ial Cou+ts onl4 on
7uestions of la8' this 0oes not p+eclu0e ou+ lo8e+ cou+ts f+o9 0ealin1 8ith 7uestions of fact al+ea04 0eci0e0 b4 the PC-C a+bit+ation 8hen 8a++ante0
an0 app+op+iate.
In )anco 0e O+o Sa,in1s an0 Mo+t1a1e )an<s ,s. E7uitable )an<in1 Co+po+ation $ this Cou+t ha0 the occasion to +ule on the ,ali0it4 of these +ules
as 8ell as the :u+is0iction of the PC-C as a fo+u9 fo+ +esol,in1 0isputes an0 cont+o,e+sies in,ol,in1 chec<s an0 othe+ clea+in1 ite9s 8hen it hel0
that Ithe pa+ticipation of t8o ban<s. . . in the Clea+in1 Ope+ations of the PC-C C8asD a 9anifestation of its sub9ission to its :u+is0iction.I #
The applicable PC-C p+o,isions on the 7uestion of :u+is0iction p+o,i0e;
Sec. @ H (GREEMENT TO T-ESE RU.ES
It is the 1ene+al a1+ee9ent an0 un0e+stan0in1' that an4 pa+ticipant in the PC-C MICR clea+in1 ope+ations' b4 the 9e+e act of pa+ticipation' the+eb4
9anifests its a1+ee9ent to these Rules an0 Re1ulations' an0 its subse7uent a9en09ents.
BBB BBB BBB
Sec. @A H (R)ITR(TION
@A. (n4 0ispute o+ cont+o,e+s4 bet8een t8o o+ 9o+e clea+in1 pa+ticipants in,ol,in1 an4 chec<Gite9 clea+e0 th+u PC-C shall be sub9itte0 to
the (+bit+ation Co99ittee' upon 8+itten co9plaint of an4 in,ol,e0 pa+ticipant b4 filin1 the sa9e 8ith the PC-C se+,in1 the sa9e upon the othe+ pa+t4
o+ pa+ties' 8ho shall 8ithin fifteen CJD 0a4s afte+ +eceipt the+eof' file 8ith the (+bit+ation Co99ittee its 8+itten ans8e+ to such 8+itten co9plaint an0
also 8ithin the sa9e pe+io0 se+,e the sa9e upon the co9plainin1 pa+ticipant. This pe+io0 of fifteen CJD 0a4s 9a4 be eBten0e0 b4 the Co99ittee not
9o+e than once fo+ anothe+ pe+io0 of fifteen CJD 0a4s' but upon a1+ee9ent in 8+itin1 of the co9plainin1 pa+t4' sai0 eBtension 9a4 be fo+ such pe+io0
as the latte+ 9a4 a1+ee to.
Section @A.A is e,en 9o+e e9phatic;
@A.A The fact that a ban< pa+ticipates in the clea+in1 ope+ations of PC-C shall be 0ee9e0 its 8+itten an0 subsc+ibe0 consent to the bin0in1
effect of this a+bit+ation a1+ee9ent as if it ha0 0one so in acco+0ance 8ith Section & of the Republic (ct No. $"A othe+8ise <no8n as the (+bit+ation
.a8.
2
Thus' not onl4 0o the pa+ties 9anifest b4 9e+e pa+ticipation thei+ consent to these +ules' but such pa+ticipation is 0ee9e0 Cthei+D 8+itten an0
subsc+ibe0 consent to the bin0in1 effect of a+bit+ation a1+ee9ents un0e+ the PC-C +ules. Mo+eo,e+' a pa+ticipant sub:ect to the Clea+in1 -ouse
Rules an0 Re1ulations of the PC-C 9a4 1o on appeal to an4 of the Re1ional T+ial Cou+ts in the National Capital Re1ion 8he+e the hea0 office of
an4 of the pa+ties is locate0 onl4 afte+ a 0ecision o+ a8a+0 has been +en0e+e0 b4 the a+bit+ation co99ittee o+ a+bit+ato+ on 7uestions of la8. !
Clea+l4 the+efo+e' petitione+ (ssociate0 )an<' b4 its ,olunta+4 pa+ticipation an0 its consent to the a+bit+ation +ules cannot 1o 0i+ectl4 to the Re1ional
T+ial Cou+t 8hen it fin0s it con,enient to 0o so. The :u+is0iction of the PC-C un0e+ the +ules an0 +e1ulations is clea+' un0eniable an0 is pa+ticula+l4
applicable to all the pa+ties in the thi+0 pa+t4 co9plaint un0e+ thei+ obli1ation to fi+st see< +e0+ess of thei+ 0isputes an0 1+ie,ances 8ith the PC-C
befo+e 1oin1 to the t+ial cou+t.
IN VIEE OF T-E FOREGOING' the petition is DENIED fo+ lac< of 9e+it. Eith costs a1ainst petitione+.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
T-IRD DIVISION
G.R. No. ##!&= Septe9be+ =A' ##&
).OOMFIE.D (C(DEM6 (ND RODO.FO %. .(GER(' petitione+s'
,s.
T-E -ONOR().E COURT OF (PPE(.S' ).OOMFIE.D (C(DEM6 P(RENTS (DVISOR6 (SSOCI(TION' INC. C)(P((D' +ep+esente0 b4 its
Vice?P+esi0ent' Mena+0o )o+0eosF an0 The -on. S(.V(DOR P. DE GU/M(N' %R.' P+esi0in1 %u01e of the Re1ional T+ial Cou+t' National Capital
%u0icial Re1ion' )+anch &=' Ma<ati' Met+o Manila' +espon0ents.
Villa+an3a 5 C+u3 fo+ petitione+s.
San )uena,entu+a' Re4es' Mo+ale0a CS(REMD .a8 Offices fo+ p+i,ate +espon0ent.

VITUG' %.;
F(CTS;
This petition fo+ +e,ie8 on ce+tio+a+i see<s to +e,e+se the 0ecision of the Cou+t of (ppeals 0is9issin1' in C(?G.R. SP. No. =!$&A' the special ci,il
action fo+ ce+tio+a+i that has assaile0 a 8+it of p+eli9ina+4 in:unction issue0 b4 the cou+t a 7uo.
Ee a0opt' fo+ pu+poses of this +e,ie8' the case an0 factual settin1s +ecite0 b4 the appellate cou+t in its 0ecision. Ee 7uote;
The petition o+i1inate0 in a co9plaint fo+ in:unction file0 on
(p+il A' ##! b4 p+i,ate +espon0ent' the association of pa+ents an0 1ua+0ians of stu0ents en+olle0 in petitione+. One of the 0efen0ants in the sai0
case is petitione+ 8hich is a non?stoc<' non?p+ofit e0ucational institution. Ehat is bein1 0ispute0 befo+e +espon0ent cou+t is the inc+ease in tuition fee.
On the 0ate the co9plaint 8as file0' +espon0ent cou+t issue0 an o+0e+ en:oinin1 petitione+s an0 Sec+eta+4 Ca+iKo an0Go+ thei+ a1ents' +ep+esentati,es
o+ pe+sons actin1 in thei+ behalf f+o9 i9ple9entin1 thei+ afo+esai0 inc+ease in tuition fees' an0 not 8ithhol0in1 thei+ +elease of the +epo+t ca+0s an0Go+
othe+ pape+s necessa+4 fo+ the stu0ents 0esi+in1 to t+ansfe+ to othe+ schools until fu+the+ o+0e+s f+o9 +espon0ent cou+t.
The application fo+ in:unction 8as set fo+ hea+in1 on (p+il #' ##! at
=;!! p.9.
In the he+ein petition fo+ +e,ie8 on ce+tio+a+i befo+e this Cou+t' petitione+s fo+9ulate the sole issue of 8hethe+ o+ not the cou+t a 7uo has acte0 8ithin
its :u+is0iction in issuin1 the 7uestione0 o+0e+ an0' in the affi+9ati,e' 8hethe+ o+ not it has co99itte0 1+a,e abuse of 0isc+etion specificall4 in 1+antin1
p+i,ate +espon0entLs application fo+ a 8+it of p+eli9ina+4 in:unction.
RU.ING;
Ee see 9e+it in the petition.
3
The pe+tinent p+o,isions of Republic (ct No. A"=$' also co99onl4 <no8n as I(n (ct P+o,i0in1 Go,e+n9ent (ssistance to Stu0ents an0 Teache+s in
P+i,ate E0ucation' (n0 (pp+op+iatin1 Fun0s The+efo+'I p+o,i0e;
Sec. #. Fu+the+ (ssistance To Stu0ents in P+i,ate Colle1es an0 Uni,e+sities. H . . . .
CbD Fo+ stu0ents en+olle0 in schools cha+1in1 abo,e one thousan0 fi,e hun0+e0 pesos CP'J!!.!!D pe+ 4ea+ in tuition an0 othe+ fees 0u+in1 the
school 4ea+ #$$?#$# o+ such a9ount in subse7uent 4ea+s as 9a4 be 0ete+9ine0 f+o9 ti9e to ti9e b4 the State (ssistance Council' no assistance
fo+ tuition fees shall be 1+ante0 b4 the Go,e+n9ent; P+o,i0e0' ho8e,e+' That the schools conce+ne0 9a4 +aise thei+ tuition fees sub:ect to Section !
he+eof.
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Sec. !. Consultation. H In an4 p+opose0 inc+ease in the +ate of tuition fee' the+e shall be app+op+iate consultations con0ucte0 b4 the school
a09inist+ation 8ith the 0ul4 o+1ani3e0 pa+ents an0 teache+s associations an0 facult4 associations 8ith +espect to secon0a+4 schools' an0 8ith
stu0ents 1o,e+n9ents o+ councils' alu9ni an0 facult4 associations 8ith +espect to colle1es. Fo+ this pu+pose' au0ite0 financial state9ents shall be
9a0e a,ailable to autho+i3e0 +ep+esentati,es of these secto+s. E,e+4 effo+t shall be eBe+te0 to +econcile possible 0iffe+ences. In case of
0isa1+ee9ent' the alu9ni association of the school o+ an4 othe+ i9pa+tial bo04 of thei+ choosin1 shall act as a+bit+ato+.
P+i,ate +espon0ent file0 8ith the cou+t a 7uo an action' entitle0 IIn:unction 8ith P+eli9ina+4 P+ohibito+4 In:unction 8ith P+a4e+ fo+ Te9po+a+4
Rest+ainin1 O+0e+I C0oc<ete0 Ci,il Case No. #!?#"D' a1ainst petitione+s an0 the Sec+eta+4 of E0ucation' Cultu+e an0 Spo+ts CIDECSID see<in1 to
stop the i9ple9entation of the inc+ease in tuition fees b4 petitione+ school. P+i,ate +espon0ent asse+te0 that the inc+ease 8as a0opte0 8ithout the
p+io+ consultation +e7ui+e0 b4 la8 an0 that' in an4 case' the app+o,e0 inc+ease 8as eBo+bitant Cat =.==MD. Petitione+s' on thei+ pa+t' conten0e0 that
the pa+ties 0i0' in fact' hol0 consultations at 8hich the 8a1e inc+ease fo+ teache+s 9an0ate0 b4 Republic (ct A"=" an0 the +esultin1 inc+ease in
tuition fees allo8e0 b4 Republic (ct No. A"=$ 8e+e 0iscusse0 at len1th. The Solicito+ Gene+al' ans8e+in1 the co9plaint fo+ an0 in behalf of the
DECS Sec+eta+4' atteste0 to the app+o,al b4 DECS of a fift4 pe+cent CJ!MD tuition fee inc+ease fo+ the school 4ea+ #$#?##!.
In passin1' 8e also obse+,e that the pa+ties ha,e both +e9aine0 silent on the p+o,isions of Republic (ct No. A"=$ to the effect that in case of
0isa1+ee9ent on tuition fee inc+eases Cin this instance b4 he+ein p+i,ate pa+tiesD' the issue shoul0 be +esol,e0 th+ou1h a+bit+ation. (lthou1h the
9atte+ has not been +aise0 b4 the pa+ties' it is an aspect' ne,e+theless' in ou+ ,ie8' that coul0 ha,e 8ell been eBplo+e0 b4 the9 instea0 of
i99e0iatel4 in,o<in1' such as the4 appa+entl4 0i0' the a09inist+ati,e an0 :u0icial +elief to +esol,e the cont+o,e+s4.
(ll tol0' 8e hol0 that the cou+t a 7uo has been be+eft of :u+is0iction in ta<in1 co1ni3ance of p+i,ate +espon0entLs co9plaint. Ee see no +eal
:ustification' on the basis of the factual an0 case settin1s he+e obtainin1' to pe+9it a 0e,iation f+o9 the lon1 stan0in1 +ule that the issue of :u+is0iction
9a4 be +aise0 at an4 ti9e e,en on appeal.
E-EREFORE' confo+9abl4 8ith ou+ abo,e opinion' the instant petition is GR(NTED an0 the 7uestione0 o+0e+e0 of the cou+t a 7uo an0 the 0ecision
of the appellate cou+t a+e SET (SIDE. No costs.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN )(NC
G.R. No. .?=@@#! (p+il =&' #A"
MIND(N(O PORT.(ND CEMENT CORPOR(TION' petitione+?appellee'
,s.
McDONOUG- CONSTRUCTION COMP(N6 OF F.ORID(' +espon0ent?appellant.
Gon3alo E. Gon3ale3 fo+ +espon0ent?appellant.
(lbe+to ). Villa+a3a fo+ petitione+?appellee.
)ENG/ON' %.P. %.;
F(CTS;
4
On Feb+ua+4 @' #A' petitione+ Min0anao Po+tlan0 Ce9ent Co+po+ation an0 +espon0ent McDonou1h Const+uction Co9pan4 of Flo+i0a' U.S.(.'
eBecute0 a cont+act fo+ the const+uction b4 the +espon0ent fo+ the petitione+ of a 0+4 po+tlan0' ce9ent plant at Ili1an Cit4. In a sepa+ate cont+act'
Tu+nbull' Inc. H the Ien1inee+I +efe++e0 to in the const+uction cont+act H 8as en1a1e0 to 0esi1n an0 9ana1e the const+uction of the plant' supe+,ise
the const+uction' sche0ule 0eli,e+ies an0 the const+uction 8o+< as 8ell as chec< an0 ce+tif4 ill cont+acto+sL p+o1+ess an0 fiscal +e7uests fo+ pa49ent.
Diffe+ences late+ a+ose. Petitione+ clai9e0 f+o9 +espon0ent 0a9a1es in the a9ount of 9o+e than P='!!!'!!! alle1e0l4 occasione0 b4 the 0ela4 in
the p+o:ectLs co9pletion. Respon0ent in tu+n as<e0 fo+ 9o+e than P&J!'!!! f+o9 petitione+ fo+ alle1e0 losses 0ue to cost of eBt+a 8o+< an0 o,e+hea0
as of (p+il #A=. ( confe+ence 8as hel0 on about Ma4 =#' #A= bet8een petitione+ an0 Tu+nbull' Inc.' on one han0' an0 +espon0ent on the othe+' to
settle the 0iffe+ences afo+e9entione0' but no satisfacto+4 +esults 8e+e +eache0.N8phO.KPt
Petitione+ sent +espon0ent' on (u1ust $' #A=' an0 a1ain on Septe9be+ =&'#A=' 8+itten in,itations to a+bit+ate' in,o<in1 a p+o,ision in thei+ cont+act
+e1a+0in1 a+bit+ation of 0isputes.
Instea0 of ans8e+in1 sai0 in,itations' +espon0ent' on No,e9be+ &' #A=' 8ith Tu+nbull' Inc.Ls app+o,al' sub9itte0 to petitione+ fo+ pa49ent its final
state9ent of 8o+< acco9plishe0' as<in1 fo+ P&!@'"!! as unpai0 balance of the consi0e+ation of the cont+act.
Petitione+' on %anua+4 =#' #A@' file0 the p+esent action in the Cou+t of Fi+st Instance of Manila to co9pel +espon0ent to a+bit+ate 8ith it conce+nin1
alle1e0 0isputes a+isin1 f+o9 thei+ cont+act. It a,e++e0 inte+ alia that 0eletions an0 a00itions to the plans an0 specifications 8e+e a1+ee0 upon 0u+in1
the p+o1+ess of the const+uctionF that 0isa1+ee9ent a+ose bet8een the9 as to the cost of the a00itional o+ eBt+a 8o+< 0one' an0 +espon0entLs
0e,iation f+o9 so9e a1+ee0 specificationsF that petitione+ clai9s ha,in1 o,e+pai0 +espon0ent b4 P@@'$!.$F that petitione+ fu+the+ clai9s to ha,e
suffe+e0 0a9a1es 0ue to +espon0entLs 0ela4 in finishin1 the p+o:ectF that +espon0ent' on the othe+ han0' still clai9s an unpai0 balance of about
P&!@'"!!F that these 9atte+s fall un0e+ the 1ene+al a+bit+ation clause of thei+ cont+actF an0 that +espon0ent has faile0 to p+ocee0 to a+bit+ation
0espite se,e+al +e7uests the+efo+.
Respon0ent file0' on Feb+ua+4 =@' #A@' its ans8e+. It 0enie0 the alle1e0 eBistence of 0isa1+ee9ent bet8een the pa+ties. (n0 as special 0efense' it
alle1e0 that its clai9 fo+ P&!@'"!! 8as not 0ispute0 an0 that the +especti,e clai9s fo+ 0a9a1es shoul0 be +esol,e0 b4 Tu+nbull' Inc.' pu+suant to the
eBception in the a+bit+ation clause of the const+uction cont+act.
(fte+ stipulation of facts an0 sub9ission of 0ocu9enta+4 e,i0ence' the cou+t' on Ma4 @' #A&' +en0e+e0 its 0ecision fin0in1 that 0ispute o+
0isa1+ee9ent obtaine0 bet8een the pa+ties 8ith +espect to thei+ +i1hts an0 obli1ations un0e+ thei+ cont+act an0 that the sa9e shoul0 be sub9itte0 to
a+bit+ation pu+suant to pa+. @# of sai0 cont+act H the a+bit+ation clause H an0 to Republic (ct $"A H the (+bit+ation .a8. (n0 thus it o+0e+e0
petitione+ an0 +espon0ent to p+ocee0 to a+bit+ation in acco+0ance 8ith the te+9s of thei+ cont+act.
Not satisfie0 8ith the +ulin1' +espon0ent appeale0 the+ef+o9 to us to +aise the pu+el4 le1al 7uestion of 8hethe+ un0e+ these facts +espon0ent is 0ut4?
boun0 to sub9it to a+bit+ation.
RU.ING;
The p+o,ision of the cont+act on I(+bit+ation of Disa1+ee9entsI Cpa+. @#D sa4s;
@#. In the e,ent of 0isa1+ee9ent bet8een the O8ne+ an0 the Cont+acto+ in +espect of the +i1hts o+ obli1ations of eithe+ of the pa+ties he+eun0e+
eBcept the inte+p+etation of the plans an0 specifications an0 7uestions conce+nin1 the sufficienc4 of 9ate+ials' the ti9e' se7uence an0 9etho0 of
pe+fo+9in1 the 8o+<' 8hich 7uestions a+e to be finall4 0ete+9ine0 b4 the En1inee+' the4 shall sub9it the 9atte+ to a+bit+ation' the O8ne+ choosin1
one a+bit+ato+' the Cont+acto+ one' an0 the t8o so chosen shall select a thi+0. The 0ecision of such a+bit+ato+s o+ a 9a:o+it4 of the9 shall be 9a0e in
8+itin1 to both pa+ties an0 8hen so 9a0e shall be bin0in1 upon the pa+ties the+eto. CE9phasis supplie0D.
Respon0ent' he+ein appellant' conten0s fi+st' that the+e is no sho8in1 of 0isa1+ee9entF an0 secon0' that if the+e is' the sa9e falls un0e+ the
eBception' to be +esol,e0 b4 the en1inee+.
(s to the fi+st point' the fact of 0isa1+ee9ent has been 0ete+9ine0 b4 the cou+t belo8 upon the stipulation of facts an0 0ocu9enta+4 e,i0ence
sub9itte0. In this appeal in,ol,in1 pu+e 7uestions of la8' the abo,e fin0in1 shoul0 not be 0istu+be0. Fu+the+9o+e' the eBistence of 0isa1+ee9ent is
plainl4 sho8n in the +eco+0. Respon0ent a09its the eBistence of petitione+Ls clai9 but 0enies its 9e+it.& It li<e8ise a09its that petitione+ has +efuse0
to pa4 its clai9 fo+ the unpai0 balance of the p+ice of the cont+act.J Pa+a1+aph $ of the stipulation of facts sho8s the 0ispute of the pa+ties +e1a+0in1
thei+ 9utual clai9s an0 that sai0 0ispute +e9aine0 unsettle0;
The 0isputes in,ol,e0 he+e' on the othe+ han0' a+e on CD the p+ope+ co9putation of the total cont+act p+ice'A inclu0in1 the cost of a00itional o+ eBt+a
8o+<F" an0 C=D the liabilit4 fo+ alle1e0 0ela4 in co9pletin1 the p+o:ect an0 fo+ alle1e0 losses 0ue to chan1e in the plans an0 specifications.
Since the+e obtains he+ein a 8+itten p+o,ision fo+ a+bit+ation as 8ell as failu+e on +espon0entLs pa+t to co9pl4 the+e8ith' the cou+t a 7uo +i1htl4
o+0e+e0 the pa+ties to p+ocee0 to a+bit+ation in acco+0ance 8ith the te+9s of thei+ a1+ee9ent CSec. A' Republic (ct $"AD. Respon0entLs a+1u9ents
5
touchin1 upon the 9e+its of the 0ispute a+e i9p+ope+l4 +aise0 he+ein. The4 shoul0 be a00+esse0 to the a+bit+ato+s. This p+ocee0in1 is 9e+el4 a
su99a+4 +e9e04 to enfo+ce the a1+ee9ent to a+bit+ate. The 0ut4 of the cou+t in this case is not to +esol,e the 9e+its of the pa+tiesL clai9s but onl4 to
0ete+9ine if the4 shoul0 p+ocee0 to a+bit+ation o+ not. (n0 althou1h it has been +ule0 that a f+i,olous o+ patentl4 baseless clai9 shoul0 not be o+0e+e0
to a+bit+ation' it is also +eco1ni3e0 that the 9e+e fact that a 0efense eBists a1ainst a clai9 0oes not 9a<e it f+i,olous o+ baseless.#
Ehe+efo+e' the :u019ent appeale0 f+o9' o+0e+in1 the pa+ties to p+ocee0 to a+bit+ation acco+0in1 to the te+9s of thei+ a1+ee9ent' is he+eb4 affi+9e0'
8ith costs a1ainst appellant. So o+0e+e0.
Republic of the Philippines
SUPREME COURT
Manila
SPECI(. SECOND DIVISION
G.R. No. A#J" %anua+4 ==' =!!"
%ORGE GON/(.ES an0 P(NE. OF (R)ITR(TORS' Petitione+s'
,s.
C.IM(Q MINING .TD.' C.IM(Q?(RIMCO MINING CORP.' an0 (USTR(.(SI(N P-I.IPPINES MINING INC.' Respon0ents.
B????????????????????????????????????????????????????????????????????????????????? B
G.R. No. A"##& %anua+4 ==' =!!"
%ORGE GON/(.ES' Petitione+'
,s.
-ON. OSC(R ). PIMENTE.' in his capacit4 as PRESIDING %UDGE of )R. &$ of the REGION(. TRI(. COURT of M(*(TI CIT6' an0 C.IM(Q?
(RIMCO MINING CORPOR(TION' Respon0ents.
R E S O . U T I O N
TING(' %.;
F(CTS;
This is a consoli0ation of t8o petitions +oote0 in the sa9e 0ispute0 (00en0u9 Cont+act ente+e0 into b4 the pa+ties. In G.R. No. A#J"' the Cou+t in
its Decision of =$ Feb+ua+4 =!!J 0enie0 the Rule &J petition of petitione+ %o+1e Gon3ales CGon3alesD. It hel0 that the DENR Panel of (+bit+ato+s ha0
no :u+is0iction o,e+ the co9plaint fo+ the annul9ent of the (00en0u9 Cont+act on 1+oun0s of f+au0 an0 ,iolation of the Constitution an0 that the
action shoul0 ha,e been b+ou1ht befo+e the +e1ula+ cou+ts as it in,ol,e0 :u0icial issues. )oth pa+ties file0 sepa+ate 9otions fo+ +econsi0e+ation.
Gon3ales a,e+s in his Motion fo+ Reconsi0e+ation= that the Cou+t e++e0 in hol0in1 that the DENR Panel of (+bit+ato+s 8as be+eft of :u+is0iction'
+eite+atin1 its a+1u9ent that the case in,ol,es a 9inin1 0ispute that p+ope+l4 falls 8ithin the a9bit of the Panel>s autho+it4. Gon3ales a00s that the
Cou+t faile0 to +ule on othe+ issues he +aise0 +elatin1 to the sufficienc4 of his co9plaint befo+e the DENR Panel of (+bit+ato+s an0 the ti9eliness of its
filin1.
Respon0ents Cli9aB Minin1 .t0.' et al.' C+espon0entsD file0 thei+ Motion fo+ Pa+tial Reconsi0e+ation an0Go+ Cla+ification@ see<in1 +econsi0e+ation of
that pa+t of the Decision hol0in1 that the case shoul0 not be b+ou1ht fo+ a+bit+ation un0e+ Republic (ct CR.(.D No. $"A' also <no8n as the (+bit+ation
.a8.& Respon0ents' citin1 (9e+ican :u+isp+u0enceJ an0 the UNCITR(. Mo0el .a8'A a+1ue that the a+bit+ation clause in the (00en0u9 Cont+act
shoul0 be t+eate0 as an a1+ee9ent in0epen0ent of the othe+ te+9s of the cont+act' an0 that a clai9e0 +escission of the 9ain cont+act 0oes not a,oi0
the 0ut4 to a+bit+ate. Respon0ents a00 that Gon3ales>s a+1u9ent +elatin1 to the alle1e0 in,ali0it4 of the (00en0u9 Cont+act still has to be p+o,en
an0 a0:u0icate0 on in a p+ope+ p+ocee0in1F that is' an action sepa+ate f+o9 the 9otion to co9pel a+bit+ation. Pen0in1 :u019ent in such sepa+ate
action' the (00en0u9 Cont+act +e9ains ,ali0 an0 bin0in1 an0 so 0oes the a+bit+ation clause the+ein. Respon0ents a00 that the hol0in1 in the
Decision that Ithe case shoul0 not be b+ou1ht un0e+ the a9bit of the (+bit+ation .a8I appea+s to be p+e9ise0 on Gon3ales>s ha,in1 Ii9pu1nRe0S the
eBistence o+ ,ali0it4I of the a00en0u9 cont+act. If so' it suppose0l4 con,e4s the i0ea that Gon3ales>s unilate+al +epu0iation of the cont+act o+ 9e+e
alle1ation of its in,ali0it4 is all it ta<es to a,oi0 a+bit+ation. -ence' +espon0ents sub9it that the cou+t>s hol0in1 that Ithe case shoul0 not be b+ou1ht
un0e+ the a9bit of the (+bit+ation .a8I be un0e+stoo0 o+ cla+ifie0 as ope+ati,e onl4 8he+e the challen1e to the a+bit+ation a1+ee9ent has been
sustaine0 b4 final :u019ent.
Ee fi+st tac<le the 9o+e +ecent case 8hich is G.R. No. A"##&. It ste99e0 f+o9 the petition to co9pel a+bit+ation file0 b4 +espon0ent Cli9aB?(+i9co
befo+e the RTC of Ma<ati Cit4 on @ Ma+ch =!!! 8hile the co9plaint fo+ the nullification of the (00en0u9 Cont+act 8as pen0in1 befo+e the DENR
Panel of (+bit+ato+s. On =@ Ma+ch =!!!' Cli9aB?(+i9co ha0 sent Gon3ales a De9an0 fo+ (+bit+ation pu+suant to Clause #. of the (00en0u9
6
Cont+act an0 also in acco+0ance 8ith Sec. J of R.(. No. $"A. The petition fo+ a+bit+ation 8as subse7uentl4 file0 an0 Cli9aB?(+i9co sou1ht an o+0e+
to co9pel the pa+ties to a+bit+ate pu+suant to the sai0 a+bit+ation clause. The case' 0oc<ete0 as Ci,il Case No. !!?&&&' 8as initiall4 +affle0 to )+. @=
of the RTC of Ma<ati Cit4' 8ith %u01e -e+9inio I. )enito as P+esi0in1 %u01e. Respon0ent Cli9aB?(+i9co file0 on J (p+il =!!! a 9otion to set the
application to co9pel a+bit+ation fo+ hea+in1.
Gon3ales also cites Sec. =& of R.(. No. #=$J o+ the I(lte+nati,e Dispute Resolution (ct of =!!&;I
Sec. =&. Refe++al to (+bit+ation.H( cou+t befo+e 8hich an action is b+ou1ht in a 9atte+ 8hich is the sub:ect 9atte+ of an a+bit+ation a1+ee9ent shall' if
at least one pa+t4 so +e7uests not late+ than the p+e?t+ial confe+ence' o+ upon the +e7uest of both pa+ties the+eafte+' +efe+ the pa+ties to a+bit+ation
unless it fin0s that the a+bit+ation a1+ee9ent is null an0 ,oi0' inope+ati,e o+ incapable of bein1 pe+fo+9e0.
RU.ING;
The 1+oun0s Gon3ales in,o<es fo+ the +e,ocation of the (00en0u9 Cont+actHf+au0 an0 opp+ession in the eBecution the+eofHa+e also not 1+oun0s
fo+ the +e,ocation of the a+bit+ation clause in the Cont+act' Cli9aB?(+i9co notes. Such 1+oun0s 9a4 onl4 be +aise0 b4 8a4 of 0efense in the
a+bit+ation itself an0 cannot be use0 to f+ust+ate o+ 0ela4 the con0uct of a+bit+ation p+ocee0in1s. Instea0' these shoul0 be +aise0 in a sepa+ate action
fo+ +escission' it continues.
Cli9aB?(+i9co e9phasi3es that the su99a+4 p+ocee0in1 to co9pel a+bit+ation un0e+ Sec. A of R.(. No. $"A shoul0 not be confuse0 8ith the
p+oce0u+e in Sec. =& of R.(. No. #=$J. Sec. A of R.(. No. $"A +efe+s to an application to co9pel a+bit+ation 8he+e the cou+t>s autho+it4 is li9ite0 to
+esol,in1 the issue of 8hethe+ the+e is o+ the+e is no a1+ee9ent in 8+itin1 p+o,i0in1 fo+ a+bit+ation' 8hile Sec. =& of R.(. No. #=$J +efe+s to an
o+0ina+4 action 8hich co,e+s a 9atte+ that appea+s to be a+bit+able o+ sub:ect to a+bit+ation un0e+ the a+bit+ation a1+ee9ent. In the latte+ case' the
statute is clea+ that the cou+t' instea0 of t+4in1 the case' 9a4' on +e7uest of eithe+ o+ both pa+ties' +efe+ the pa+ties to a+bit+ation' unless it fin0s that
the a+bit+ation a1+ee9ent is null an0 ,oi0' inope+ati,e o+ incapable of bein1 pe+fo+9e0. (+bit+ation 9a4 e,en be o+0e+e0 in the sa9e suit b+ou1ht
upon a 9atte+ co,e+e0 b4 an a+bit+ation a1+ee9ent e,en 8ithout 8aitin1 fo+ the outco9e of the issue of the ,ali0it4 of the a+bit+ation a1+ee9ent. (+t.
$ of the UNCITR(. Mo0el .a8=& states that 8he+e a cou+t befo+e 8hich an action is b+ou1ht in a 9atte+ 8hich is sub:ect of an a+bit+ation a1+ee9ent
+efe+s the pa+ties to a+bit+ation' the a+bit+al p+ocee0in1s 9a4 p+ocee0 e,en 8hile the action is pen0in1.
Thus' the 9ain issue +aise0 in the Petition fo+ Ce+tio+a+i is 8hethe+ it 8as p+ope+ fo+ the RTC' in the p+ocee0in1 to co9pel a+bit+ation un0e+ R.(. No.
$"A' to o+0e+ the pa+ties to a+bit+ate e,en thou1h the 0efen0ant the+ein has +aise0 the t8in issues of ,ali0it4 an0 nullit4 of the (00en0u9 Cont+act
an0' conse7uentl4' of the a+bit+ation clause the+ein as 8ell. The +esolution of both Cli9aB?(+i9co>s Motion fo+ Pa+tial Reconsi0e+ation an0Go+
Cla+ification in G.R. No. A#J" an0 Gon3ales>s Petition fo+ Ce+tio+a+i in G.R. No. A"##& essentiall4 tu+ns on 8hethe+ the 7uestion of ,ali0it4 of the
(00en0u9 Cont+act bea+s upon the applicabilit4 o+ enfo+ceabilit4 of the a+bit+ation clause containe0 the+ein. The t8o pen0in1 9atte+s shall thus be
:ointl4 +esol,e0.
Ee a00+ess the Rule AJ petition in G.R. No. A"##& fi+st f+o9 the +e9e0ial la8 pe+specti,e. It 0ese+,es to be 0is9isse0 on p+oce0u+al 1+oun0s' as it
8as file0 in lieu of appeal 8hich is the p+esc+ibe0 +e9e04 an0 at that fa+ be4on0 the +e1le9enta+4 pe+io0. It is ele9enta+4 in +e9e0ial la8 that the
use of an e++oneous 9o0e of appeal is cause fo+ 0is9issal of the petition fo+ ce+tio+a+i an0 it has been +epeate0l4 st+esse0 that a petition fo+ ce+tio+a+i
is not a substitute fo+ a lost appeal. (s its natu+e' a petition fo+ ce+tio+a+i lies onl4 8he+e the+e is Ino appeal'I an0 Ino plain' spee04 an0 a0e7uate
+e9e04 in the o+0ina+4 cou+se of la8.I=J The (+bit+ation .a8 specificall4 p+o,i0es fo+ an appeal b4 ce+tio+a+i' i.e.' a petition fo+ +e,ie8 un0e+ ce+tio+a+i
un0e+ Rule &J of the Rules of Cou+t that +aises pu+e 7uestions of la8.=A The+e is no 9e+it to Gon3ales>s a+1u9ent that the use of the pe+9issi,e
te+9 I9a4I in Sec. =#' R.(. No. $"A in the filin1 of appeals 0oes not p+ohibit no+ 0iscount the filin1 of a petition fo+ ce+tio+a+i un0e+ Rule AJ.=" P+ope+
inte+p+etation of the afo+esai0 p+o,ision of la8 sho8s that the te+9 I9a4I +efe+s onl4 to the filin1 of an appeal' not to the 9o0e of +e,ie8 to be
e9plo4e0. In0ee0' the use of I9a4I 9e+el4 +eite+ates the p+inciple that the +i1ht to appeal is not pa+t of 0ue p+ocess of la8 but is a 9e+e statuto+4
p+i,ile1e to be eBe+cise0 onl4 in the 9anne+ an0 in acco+0ance 8ith la8.
The situation in ).F. Co+po+ation is not a,ailin1 in the p+esent petition. The 0is7uisition in ).F. Co+po+ation le0 to the conclusion that in o+0e+ that the
7uestion of :u+is0iction 9a4 be +esol,e0' the appellate cou+t ha0 to 0eal fi+st 8ith a 7uestion of la8 8hich coul0 be a00+esse0 in a ce+tio+a+i
p+ocee0in1. In the p+esent case' Gon3ales>s petition +aises a 7uestion of la8' but not a 7uestion of :u+is0iction. %u01e Pi9entel acte0 in acco+0ance
8ith the p+oce0u+e p+esc+ibe0 in R.(. No. $"A 8hen he o+0e+e0 Gon3ales to p+ocee0 8ith a+bit+ation an0 appointe0 a sole a+bit+ato+ afte+ 9a<in1 the
0ete+9ination that the+e 8as in0ee0 an a+bit+ation a1+ee9ent. It has been hel0 that as lon1 as a cou+t acts 8ithin its :u+is0iction an0 0oes not 1+a,el4
abuse its 0isc+etion in the eBe+cise the+eof' an4 suppose0 e++o+ co99itte0 b4 it 8ill a9ount to nothin1 9o+e than an e++o+ of :u019ent +e,ie8able b4
a ti9el4 appeal an0 not assailable b4 a special ci,il action of ce+tio+a+i.@= E,en if 8e o,e+loo< the e9plo49ent of the 8+on1 +e9e04 in the b+oa0e+
inte+ests of :ustice' the petition 8oul0 ne,e+theless be 0is9isse0 fo+ failu+e of Gon3ale3 to sho8 1+a,e abuse of 0isc+etion.
(+bit+ation' as an alte+nati,e 9o0e of settlin1 0isputes' has lon1 been +eco1ni3e0 an0 accepte0 in ou+ :u+is0iction. The Ci,il Co0e is eBplicit on the
9atte+.@@ R.(. No. $"A also eBp+essl4 autho+i3es a+bit+ation of 0o9estic 0isputes. Fo+ei1n a+bit+ation' as a s4ste9 of settlin1 co99e+cial 0isputes of
an inte+national cha+acte+' 8as li<e8ise +eco1ni3e0 8hen the Philippines a0he+e0 to the Unite0 Nations ICon,ention on the Reco1nition an0 the
Enfo+ce9ent of Fo+ei1n (+bit+al (8a+0s of #J$'I un0e+ the ! Ma4 #AJ Resolution No. " of the Philippine Senate' 1i,in1 +ecip+ocal +eco1nition
an0 allo8in1 enfo+ce9ent of inte+national a+bit+ation a1+ee9ents bet8een pa+ties of 0iffe+ent nationalities 8ithin a cont+actin1 state.@& The
7
enact9ent of R.(. No. #=$J on = (p+il =!!& fu+the+ institutionali3e0 the use of alte+nati,e 0ispute +esolution s4ste9s' inclu0in1 a+bit+ation' in the
settle9ent of 0isputes.
Disputes 0o not 1o to a+bit+ation unless an0 until the pa+ties ha,e a1+ee0 to abi0e b4 the a+bit+ato+>s 0ecision. Necessa+il4' a cont+act is +e7ui+e0 fo+
a+bit+ation to ta<e place an0 to be bin0in1. R.(. No. $"A +eco1ni3es the cont+actual natu+e of the a+bit+ation a1+ee9ent' thus;
Sec. =. Pe+sons an0 9atte+s sub:ect to a+bit+ation.HT8o o+ 9o+e pe+sons o+ pa+ties 9a4 sub9it to the a+bit+ation of one o+ 9o+e a+bit+ato+s an4
cont+o,e+s4 eBistin1' bet8een the9 at the ti9e of the sub9ission an0 8hich 9a4 be the sub:ect of an action' o+ the pa+ties to an4 cont+act 9a4 in
such cont+act a1+ee to settle b4 a+bit+ation a cont+o,e+s4 the+eafte+ a+isin1 bet8een the9. Such sub9ission o+ cont+act shall be ,ali0' enfo+ceable
an0 i++e,ocable' sa,e upon such 1+oun0s as eBist at la8 fo+ the +e,ocation of an4 cont+act.
Such sub9ission o+ cont+act 9a4 inclu0e 7uestion a+isin1 out of ,aluations' app+aisals o+ othe+ cont+o,e+sies 8hich 9a4 be collate+al' inci0ental'
p+ece0ent o+ subse7uent to an4 issue bet8een the pa+ties.
( cont+o,e+s4 cannot be a+bit+ate0 8he+e one of the pa+ties to the cont+o,e+s4 is an infant' o+ a pe+son :u0iciall4 0ecla+e0 to be inco9petent' unless
the app+op+iate cou+t ha,in1 :u+is0iction app+o,e a petition fo+ pe+9ission to sub9it such cont+o,e+s4 to a+bit+ation 9a0e b4 the 1ene+al 1ua+0ian o+
1ua+0ian a0 lite9 of the infant o+ of the inco9petent. RE9phasis a00e0.S
Thus' 8e hel0 in Manila Elect+ic Co. ,. Pasa4 T+anspo+tation Co.@J that a sub9ission to a+bit+ation is a cont+act. ( clause in a cont+act p+o,i0in1 that
all 9atte+s in 0ispute bet8een the pa+ties shall be +efe++e0 to a+bit+ation is a cont+act'@A an0 in Del Monte Co+po+ation?US( ,. Cou+t of (ppeals@"
that IRtShe p+o,ision to sub9it to a+bit+ation an4 0ispute a+isin1 the+ef+o9 an0 the +elationship of the pa+ties is pa+t of that cont+act an0 is itself a
cont+act. (s a +ule' cont+acts a+e +especte0 as the la8 bet8een the cont+actin1 pa+ties an0 p+o0uce effect as bet8een the9' thei+ assi1ns an0
hei+s.I@$
The special p+ocee0in1 un0e+ Sec. A of R.(. No. $"A +eco1ni3es the cont+actual natu+e of a+bit+ation clauses o+ a1+ee9ents. It p+o,i0es;
Sec. A. -ea+in1 b4 cou+t.H( pa+t4 a11+ie,e0 b4 the failu+e' ne1lect o+ +efusal of anothe+ to pe+fo+9 un0e+ an a1+ee9ent in 8+itin1 p+o,i0in1 fo+
a+bit+ation 9a4 petition the cou+t fo+ an o+0e+ 0i+ectin1 that such a+bit+ation p+ocee0 in the 9anne+ p+o,i0e0 fo+ in such a1+ee9ent. Fi,e 0a4s notice
in 8+itin1 of the hea+in1 of such application shall be se+,e0 eithe+ pe+sonall4 o+ b4 +e1iste+e0 9ail upon the pa+t4 in 0efault. The cou+t shall hea+ the
pa+ties' an0 upon bein1 satisfie0 that the 9a<in1 of the a1+ee9ent o+ such failu+e to co9pl4 the+e8ith is not in issue' shall 9a<e an o+0e+ 0i+ectin1
the pa+ties to p+ocee0 to a+bit+ation in acco+0ance 8ith the te+9s of the a1+ee9ent. If the 9a<in1 of the a1+ee9ent o+ 0efault be in issue the cou+t
shall p+ocee0 to su99a+il4 hea+ such issue. If the fin0in1 be that no a1+ee9ent in 8+itin1 p+o,i0in1 fo+ a+bit+ation 8as 9a0e' o+ that the+e is no
0efault in the p+ocee0in1 the+eun0e+' the p+ocee0in1 shall be 0is9isse0. If the fin0in1 be that a 8+itten p+o,ision fo+ a+bit+ation 8as 9a0e an0 the+e is
a 0efault in p+ocee0in1 the+eun0e+' an o+0e+ shall be 9a0e su99a+il4 0i+ectin1 the pa+ties to p+ocee0 8ith the a+bit+ation in acco+0ance 8ith the
te+9s the+eof.
The+e is +eason' the+efo+e' to +ule a1ainst Gon3ales 8hen he alle1es that %u01e Pi9entel acte0 8ith 1+a,e abuse of 0isc+etion in o+0e+in1 the pa+ties
to p+ocee0 8ith a+bit+ation. Gon3ales>s a+1u9ent that the (00en0u9 Cont+act is null an0 ,oi0 an0' the+efo+e the a+bit+ation clause the+ein is ,oi0 as
8ell' is not tenable. Fi+st' the p+ocee0in1 in a petition fo+ a+bit+ation un0e+ R.(. No. $"A is li9ite0 onl4 to the +esolution of the 7uestion of 8hethe+ the
a+bit+ation a1+ee9ent eBists. Secon0' the sepa+abilit4 of the a+bit+ation clause f+o9 the (00en0u9 Cont+act 9eans that ,ali0it4 o+ in,ali0it4 of the
(00en0u9 Cont+act 8ill not affect the enfo+ceabilit4 of the a1+ee9ent to a+bit+ate. Thus' Gon3ales>s petition fo+ ce+tio+a+i shoul0 be 0is9isse0.
This b+in1s us bac< to G.R. No. A#J". The a0:u0ication of the petition in G.R. No. A"##& effecti,el4 9o0ifies pa+t of the Decision 0ate0 =$
Feb+ua+4 =!!J in G.R. No. A#J". -ence' 8e no8 hol0 that the ,ali0it4 of the cont+act containin1 the a1+ee9ent to sub9it to a+bit+ation 0oes not
affect the applicabilit4 of the a+bit+ation clause itself. ( cont+a+4 +ulin1 8oul0 su11est that a pa+t4>s 9e+e +epu0iation of the 9ain cont+act is sufficient
to a,oi0 a+bit+ation. That is eBactl4 the situation that the sepa+abilit4 0oct+ine' as 8ell as :u+isp+u0ence appl4in1 it' see<s to a,oi0. Ee a00 that 8hen
it 8as 0ecla+e0 in G.R. No. A#J" that the case shoul0 not be b+ou1ht fo+ a+bit+ation' it shoul0 be cla+ifie0 that the case +efe++e0 to is the case
actuall4 file0 b4 Gon3ales befo+e the DENR Panel of (+bit+ato+s' 8hich 8as fo+ the nullification of the 9ain cont+act on the 1+oun0 of f+au0' as it ha0
al+ea04 been 0ete+9ine0 that the case shoul0 ha,e been b+ou1ht befo+e the +e1ula+ cou+ts in,ol,in1 as it 0i0 :u0icial issues.
The Motion fo+ Reconsi0e+ation of Gon3ales in G.R. No. A#J" shoul0 also be 0enie0. In the 9otion' Gon3ales +aises the sa9e 7uestion of
:u+is0iction' 9o+e pa+ticula+l4 that the co9plaint fo+ nullification of the (00en0u9 Cont+act pe+taine0 to the DENR Panel of (+bit+ato+s' not the +e1ula+
cou+ts. -e insists that the sub:ect of his co9plaint is a 9inin1 0ispute since it in,ol,es a 0ispute conce+nin1 +i1hts to 9inin1 a+eas' the Financial an0
Technical (ssistance (1+ee9ent CFT((D bet8een the pa+ties' an0 it also in,ol,es clai9o8ne+s. -e a00s that the Cou+t faile0 to +ule on othe+ issues
he +aise0' such as 8hethe+ he ha0 ce0e0 his clai9s o,e+ the 9ine+al 0eposits locate0 8ithin the (00en0u9 (+ea of InfluenceF 8hethe+ the co9plaint
file0 befo+e the DENR Panel of (+bit+ato+s alle1e0 ulti9ate facts of f+au0F an0 8hethe+ the action to 0ecla+e the nullit4 of the (00en0u9 Cont+act on
the 1+oun0 of f+au0 has p+esc+ibe0.a,,phi.net
8
E-EREFORE' the Petition fo+ Ce+tio+a+i in G.R. No. A"##& is DISMISSED. Such 0is9issal effecti,el4 +en0e+s supe+fluous fo+9al action on the
Motion fo+ Pa+tial Reconsi0e+ation an0Go+ Cla+ification file0 b4 Cli9aB Minin1 .t0.' et al. in G.R. No. A#J".
The Motion fo+ Reconsi0e+ation file0 b4 %o+1e Gon3ales in G.R. No. A#J" is DENIED EIT- FIN(.IT6.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION

G.R. No. &@=@ %ul4 =@' ##$
OI. (ND N(TUR(. G(S COMMISSION' petitione+'
,s.
COURT OF (PPE(.S an0 P(CIFIC CEMENT COMP(N6' INC.' +espon0ents.

M(RTINE/' %.;
F(CTS;
This p+ocee0in1 in,ol,es the enfo+ce9ent of a fo+ei1n :u019ent +en0e+e0 b4 the Ci,il %u01e of Deh+a Dun' In0ia in fa,o+ of the petitione+' OI. (ND
N(TUR(. G(S COMMISSION an0 a1ainst the p+i,ate +espon0ent' P(CIFIC CEMENT COMP(N6' INCORPOR(TED.
The petitione+ is a fo+ei1n co+po+ation o8ne0 an0 cont+olle0 b4 the Go,e+n9ent of In0ia 8hile the p+i,ate +espon0ent is a p+i,ate co+po+ation 0ul4
o+1ani3e0 an0 eBistin1 un0e+ the la8s of the Philippines. The p+esent conflict bet8een the petitione+ an0 the p+i,ate +espon0ent has its +oots in a
cont+act ente+e0 into b4 an0 bet8een both pa+ties on Feb+ua+4 =A' #$@ 8he+eb4 the p+i,ate +espon0ent un0e+too< to suppl4 the petitione+ FOUR
T-OUS(ND T-REE -UNDRED C&'@!!D 9et+ic tons of oil 8ell ce9ent. In consi0e+ation the+efo+' the petitione+ boun0 itself to pa4 the p+i,ate
+espon0ent the a9ount of FOUR -UNDRED SEVENT6?SEVEN T-OUS(ND T-REE -UNDRED U.S. DO..(RS CT&""'@!!.!!D b4 openin1 an
i++e,ocable' 0i,isible' an0 confi+9e0 lette+ of c+e0it in fa,o+ of the latte+. The oil 8ell ce9ent 8as loa0e0 on boa+0 the ship MV SURUT(N( N(V( at
the po+t of Su+i1ao Cit4' Philippines fo+ 0eli,e+4 at )o9ba4 an0 Calcutta' In0ia. -o8e,e+' 0ue to a 0ispute bet8een the shipo8ne+ an0 the p+i,ate
+espon0ent' the ca+1o 8as hel0 up in )an1<o< an0 0i0 not +each its point 0estination. Not8ithstan0in1 the fact that the p+i,ate +espon0ent ha0
al+ea04 +ecei,e0 pa49ent an0 0espite se,e+al 0e9an0s 9a0e b4 the petitione+' the p+i,ate +espon0ent faile0 to 0eli,e+ the oil 8ell ce9ent.
The+eafte+' ne1otiations ensue0 bet8een the pa+ties an0 the4 a1+ee0 that the p+i,ate +espon0ent 8ill +eplace the enti+e &'@!! 9et+ic tons of oil 8ell
ce9ent 8ith Class IGI ce9ent cost f+ee at the petitione+Ls 0esi1nate0 po+t. -o8e,e+' upon inspection' the Class IGI ce9ent 0i0 not confo+9 to the
petitione+Ls specifications. The petitione+ then info+9e0 the p+i,ate +espon0ent that it 8as +efe++in1 its clai9 to an a+bit+ato+ pu+suant to Clause A of
thei+ cont+act 8hich stipulates;
EBcept 8he+e othe+8ise p+o,i0e0 in the suppl4 o+0e+Gcont+act all 7uestions an0 0isputes' +elatin1 to the 9eanin1 of the specification 0esi1ns'
0+a8in1s an0 inst+uctions he+ein befo+e 9entione0 an0 as to 7ualit4 of 8o+<9anship of the ite9s o+0e+e0 o+ as to an4 othe+ 7uestion' clai9' +i1ht o+
thin1 8hatsoe,e+' in an4 8a4 a+isin1 out of o+ +elatin1 to the suppl4 o+0e+Gcont+act 0esi1n' 0+a8in1' specification' inst+uction o+ these con0itions o+
othe+8ise conce+nin1 the 9ate+ials o+ the eBecution o+ failu+e to eBecute the sa9e 0u+in1 stipulate0GeBten0e0 pe+io0 o+ afte+ the
co9pletionGaban0on9ent the+eof shall be +efe++e0 to the sole a+bit+ation of the pe+sons appointe0 b4 Me9be+ of the Co99ission at the ti9e of
0ispute. It 8ill be no ob:ection to an4 such appoint9ent that the a+bit+ato+ so appointe0 is a Co99ission e9plo4e+ CsicD that he ha0 to 0eal 8ith the
9atte+ to 8hich the suppl4 o+ cont+act +elates an0 that in the cou+se of his 0uties as Co99issionLs e9plo4ee he ha0 eBp+esse0 ,ie8s on all o+ an4 of
the 9atte+ in 0ispute o+ 0iffe+ence.
The a+bit+ato+ to 8ho9 the 9atte+ is o+i1inall4 +efe++e0 bein1 t+ansfe++e0 o+ ,acatin1 his office o+ bein1 unable to act fo+ an4 +eason the Me9be+ of
the Co99ission shall appoint anothe+ pe+son to act as a+bit+ato+ in acco+0ance 8ith the te+9s of the cont+actGsuppl4 o+0e+. Such pe+son shall be
entitle0 to p+ocee0 8ith +efe+ence f+o9 the sta1e at 8hich it 8as left b4 his p+e0ecesso+. Sub:ect as afo+esai0 the p+o,isions of the (+bit+ation (ct'
#&!' o+ an4 Statuto+4 9o0ification o+ +e?enact9ent the+e of an0 the +ules 9a0e the+e un0e+ an0 fo+ the ti9e bein1 in fo+ce shall appl4 to the
a+bit+ation p+ocee0in1s un0e+ this clause.
9
The a+bit+ato+ 9a4 8ith the consent of pa+ties enla+1e the ti9e' f+o9 ti9e to ti9e' to 9a<e an0 publish the a8a+0.
The ,enue fo+ a+bit+ation shall be at Deh+a 0un. U
On %ul4 =@' #$$' the chosen a+bit+ato+' one Sh+i N.N. Malhot+a' +esol,e0 the 0ispute in petitione+Ls fa,o+ settin1 fo+th the a+bit+al a8a+0 as follo8s;
NOE T-EREFORE afte+ consi0e+in1 all facts of the case' the e,i0ence' o+al an0 0ocu9enta+4s a00uce0 b4 the clai9ant an0 ca+efull4 eBa9inin1
the ,a+ious 8+itten state9ents' sub9issions' lette+s' teleBes' etc. sent b4 the +espon0ent' an0 the o+al a+1u9ents a00+esse0 b4 the counsel fo+ the
clai9ants' I' N.N. Malhot+a' Sole (+bit+ato+' appointe0 un0e+ clause A of the suppl4 o+0e+ 0ate0 =A.=.#$@' acco+0in1 to 8hich the pa+ties' i.e. MGS
Oil an0 Natu+al Gas Co99ission an0 the Pacific Ce9ent Co.' Inc. can +efe+ the 0ispute to the sole a+bit+ation un0e+ the p+o,ision of the (+bit+ation
(ct. #&!' 0o he+eb4 a8a+0 an0 0i+ect as follo8s; H
The Respon0ent 8ill pa4 the follo8in1 to the clai9ant; H
. (9ount +ecei,e0 b4 the Respon0ent
a1ainst the lette+ of c+e0it No. G#
0ate0 =$.=.#$@ US T &""'@!!.!!
=. Re?i9bu+se9ent of eBpen0itu+e incu++e0
b4 the clai9ant on the inspection tea9Ls
,isit to Philippines in (u1ust #$J US T @'$$.!!
@. ..C. Establish9ent cha+1es incu++e0
b4 the clai9ant US T '=J=.$=
&. .oss of inte+est suffe+e0 b4 clai9ant
f+o9 =.A.$@ to =@.".$$ US T &"'A#.#J
Total a9ount of a8a+0 US T $##'A!@.""
In a00ition to the abo,e' the +espon0ent 8oul0 also be liable to pa4 to the clai9ant the inte+est at the +ate of AM on the abo,e a9ount' 8ith effect
f+o9 =&.".#$$ up to the actual 0ate of pa49ent b4 the Respon0ent in full settle9ent of the clai9 as a8a+0e0 o+ the 0ate of the 0ec+ee' 8hiche,e+ is
ea+lie+.
I 0ete+9ine the cost at Rs. "!'!!!G? e7ui,alent to US TJ'!!! to8a+0s the eBpenses on (+bit+ation' le1al eBpenses' sta9ps 0ul4 incu++e0 b4 the
clai9ant. The cost 8ill be sha+e0 b4 the pa+ties in e7ual p+opo+tion.
P+onounce0 at Deh+a Dun to?0a4' the =@+0 of %ul4 #$$. =
To enable the petitione+ to eBecute the abo,e a8a+0 in its fa,o+' it file0 a Petition befo+e the Cou+t of the Ci,il %u01e in Deh+a Dun. In0ia Che+einafte+
+efe++e0 to as the fo+ei1n cou+t fo+ b+e,it4D' p+a4in1 that the 0ecision of the a+bit+ato+ be 9a0e Ithe Rule of Cou+tI in In0ia. The fo+ei1n cou+t issue0
notices to the p+i,ate +espon0ent fo+ filin1 ob:ections to the petition. The p+i,ate +espon0ent co9plie0 an0 sent its ob:ections 0ate0 %anua+4 A' #$#.
Subse7uentl4' the sai0 cou+t 0i+ecte0 the p+i,ate +espon0ent to pa4 the filin1 fees in o+0e+ that the latte+Ls ob:ections coul0 be 1i,en consi0e+ation.
Instea0 of pa4in1 the +e7ui+e0 filin1 fees' the p+i,ate +espon0ent sent the follo8in1 co99unication a00+esse0 to the Ci,il :u01e of Deh+a Dun;
The Ci,il %u01e
Deh+a Dun CU.P.D In0ia
Re; Misc. Case No. J of #$#
MGS Pacific Ce9ent Co.'
Inc. ,s. ONGC Case
10
Si+;
. Ee +ecei,e0 4ou+ lette+ 0ate0 =$ (p+il #$# onl4 last $ Ma4 #$#.
=. Please info+9 us ho8 9uch is the cou+t fee to be pai0. 6ou+ lette+ 0i0 not 9ention the a9ount to be pai0.
@. *in0l4 1i,e us J 0a4s f+o9 +eceipt of 4ou+ lette+ a0,isin1 us ho8 9uch to pa4 to co9pl4 8ith the sa9e.
Than< 4ou fo+ 4ou+ <in0 consi0e+ation.
Pacific Ce9ent Co.' Inc.
)4;
%ose Co+tes' %+.
P+esi0ent @
Eithout +espon0in1 to the abo,e co99unication' the fo+ei1n cou+t +efuse0 to a09it the p+i,ate +espon0entLs ob:ections fo+ failu+e to pa4 the +e7ui+e0
filin1 fees' an0 the+eafte+ issue0 an O+0e+ on Feb+ua+4 "' ##!' to 8it;
ORDER
Since ob:ections file0 b4 0efen0ant ha,e been +e:ecte0 th+ou1h Misc. Suit No. J on ".=.#!' the+efo+e' a8a+0 shoul0 be 9a0e Rule of the Cou+t.
ORDER
(8a+0 0ate0 =@.".$$' Pape+ No. @G)? is 9a0e Rule of the Cou+t. On the basis of con0itions of a8a+0 0ec+ee is passe0. (8a+0 Pape+ No. @G)? shall
be a pa+t of the 0ec+ee. The plaintiff shall also be entitle0 to 1et f+o9 0efen0ant CUST $##'A!@."" CUST Ei1ht .a<hs ninet4 nine thousan0 siB hun0+e0
an0 th+ee point se,ent4 se,en onl4D alon1 8ith #M inte+est pe+ annu9 till the last 0ate of +ealisation. &
Despite notice sent to the p+i,ate +espon0ent of the fo+e1oin1 o+0e+ an0 se,e+al 0e9an0s b4 the petitione+ fo+ co9pliance the+e8ith' the p+i,ate
+espon0ent +efuse0 to pa4 the a9ount a0:u01e0 b4 the fo+ei1n cou+t as o8in1 to the petitione+. (cco+0in1l4' the petitione+ file0 a co9plaint 8ith
)+anch @! of the Re1ional T+ial Cou+t CRTCD of Su+i1ao Cit4 fo+ the enfo+ce9ent of the afo+e9entione0 :u019ent of the fo+ei1n cou+t. The p+i,ate
+espon0ent 9o,e0 to 0is9iss the co9plaint on the follo8in1 1+oun0s; CD plaintiffs lac< of le1al capacit4 to sueF C=D lac< of cause of actionF an0 C@D
plaintiffs clai9 o+ 0e9an0 has been 8ai,e0' aban0one0' o+ othe+8ise eBtin1uishe0. The petitione+ file0 its opposition to the sai0 9otion to 0is9iss'
an0 the p+i,ate +espon0ent' its +e:oin0e+ the+eto. On %anua+4 @' ##=' the RTC issue0 an o+0e+ uphol0in1 the petitione+Ls le1al capacit4 to sue' albeit
0is9issin1 the co9plaint fo+ lac< of a ,ali0 cause of action. The RTC hel0 that the +ule p+ohibitin1 fo+ei1n co+po+ations t+ansactin1 business in the
Philippines 8ithout a license f+o9 9aintainin1 a suit in Philippine cou+ts a09its of an eBception' that is' 8hen the fo+ei1n co+po+ation is suin1 on an
isolate0 t+ansaction as in this case. J (nent the issue of the sufficienc4 of the petitione+Ls cause of action' ho8e,e+' the RTC foun0 the +efe++al of the
0ispute bet8een the pa+ties to the a+bit+ato+ un0e+ Clause A of thei+ cont+act e++oneous. (cco+0in1 to the RTC'
RaS pe+usal of the sho,e?7uote0 clause CClause AD +ea0il4 sho8s that the 9atte+ co,e+e0 b4 its te+9s is li9ite0 to I(.. 2UESTIONS (ND
DISPUTES' RE.(TING TO T-E ME(NING OF T-E SPECIFIC(TION' DESIGNS' DR(EINGS (ND INSTRUCTIONS -EREIN )EFORE
MENTIONED an0 as to the 2U(.IT6 OF EOR*M(NS-IP OF T-E ITEMS ORDERED o+ as to an4 othe+ 7uestions' clai9' +i1ht o+ thin1
8hatsoe,e+' but 7ualifie0 to IIN (N6 E(6 (RISING OR RE.(TING TO T-E SUPP.6 ORDERGCONTR(CT' DESIGN' DR(EING' SPECIFIC(TION'
etc.'I +epeatin1 the enu9e+ation in the openin1 sentence of the clause.
The cou+t is incline0 to 1o alon1 8ith the obse+,ation of the 0efen0ant that the b+each' consistin1 of the non?0eli,e+4 of the pu+chase0 9ate+ials'
shoul0 ha,e been p+ope+l4 liti1ate0 befo+e a cou+t of la8' pu+suant to Clause No. J of the Cont+actGSuppl4 O+0e+' he+ein 7uote0' to 8it;
I%URISDICTION
(ll 7uestions' 0isputes an0 0iffe+ences' a+isin1 un0e+ out of o+ in connection 8ith this suppl4 o+0e+' shall be sub:ect to the EQC.USIVE
%URISDICTION OF T-E COURT' 8ithin the local li9its of 8hose :u+is0iction an0 the place f+o9 8hich this suppl4 o+0e+ is situate0.I A
RU.ING;
11
The petitione+ then appeale0 to the +espon0ent Cou+t of (ppeals 8hich affi+9e0 the 0is9issal of the co9plaint. In its 0ecision' the appellate cou+t
concu++e0 8ith the RTCLs +ulin1 that the a+bit+ato+ 0i0 not ha,e :u+is0iction o,e+ the 0ispute bet8een the pa+ties' thus' the fo+ei1n cou+t coul0 not
,ali0l4 a0opt the a+bit+ato+Ls a8a+0. In a00ition' the appellate cou+t obse+,e0 that the full teBt of the :u019ent of the fo+ei1n cou+t contains the
0ispositi,e po+tion onl4 an0 in0icates no fin0in1s of fact an0 la8 as basis fo+ the a8a+0. -ence' the sai0 :u019ent cannot be enfo+ce0 b4 an4
Philippine cou+t as it 8oul0 ,iolate the constitutional p+o,ision that no 0ecision shall be +en0e+e0 b4 an4 cou+t 8ithout eBp+essin1 the+ein clea+l4 an0
0istinctl4 the facts an0 the la8 on 8hich it is base0. $ The appellate cou+t +ule0 fu+the+ that the 0is9issal of the p+i,ate +espon0entLs ob:ections fo+
non?pa49ent of the +e7ui+e0 le1al fees' 8ithout the fo+ei1n cou+t fi+st +epl4in1 to the p+i,ate +espon0entLs 7ue+4 as to the a9ount of le1al fees to be
pai0' constitute0 8ant of notice o+ ,iolation of 0ue p+ocess. .astl4' it pointe0 out that the a+bit+ation p+ocee0in1 8as 0efecti,e because the a+bit+ato+
8as appointe0 solel4 b4 the petitione+' an0 the fact that the a+bit+ato+ 8as a fo+9e+ e9plo4ee of the latte+ 1i,es +ise to a p+esu9e0 bias on his pa+t in
fa,o+ of the petitione+. #
The petitione+Ls inte+p+etation that Clause A is of such latitu0e as to conte9plate e,en the non?0eli,e+4 of the oil 8ell ce9ent 8oul0 in effect +en0e+
Clause J a 9e+e supe+fluit4. ( pe+usal of Clause A sho8s that the pa+ties 0i0 not inten0 a+bit+ation to be the sole 9eans of settlin1 0isputes. This is
9anifest f+o9 Clause A itself 8hich is p+efiBe0 8ith the p+o,iso' IEBcept 8he+e othe+8ise p+o,i0e0 in the suppl4 o+0e+Gcont+act . . .I' thus in0icatin1
that the :u+is0iction of the a+bit+ato+ is not all enco9passin1' an0 a09its of eBceptions as 9a4 be p+o,i0e0 else8he+e in the suppl4 o+0e+Gcont+act.
Ee belie,e that the co++ect inte+p+etation to 1i,e effect to both stipulations in the cont+act is fo+ Clause A to be confine0 to all clai9s o+ 0isputes
a+isin1 f+o9 o+ +elatin1 to the 0esi1n' 0+a8in1' inst+uctions' specifications o+ 7ualit4 of the 9ate+ials of the suppl4 o+0e+Gcont+act' an0 fo+ Clause J to
co,e+ all othe+ clai9s o+ 0isputes.
The petitione+ then asse,e+ates that 1+antin1' fo+ the sa<e of a+1u9ent' that the non?0eli,e+4 of the oil 8ell ce9ent is not a p+ope+ sub:ect fo+
a+bit+ation' the failu+e of the +eplace9ent ce9ent to confo+9 to the specifications of the cont+act is a 9atte+ clea+l4 fallin1 8ithin the a9bit of Clause
A. In this contention' 8e fin0 9e+it. Ehen the &'@!! 9et+ic tons of oil 8ell ce9ent 8e+e not 0eli,e+e0 to the petitione+' an a1+ee9ent 8as fo+1e0
bet8een the latte+ an0 the p+i,ate +espon0ent that Class IGI ce9ent 8oul0 be 0eli,e+e0 to the petitione+ as +eplace9ent. Upon inspection' ho8e,e+'
the +eplace9ent ce9ent 8as +e:ecte0 as it 0i0 not confo+9 to the specifications of the cont+act. Onl4 afte+ this latte+ ci+cu9stance 8as the 9atte+
b+ou1ht befo+e the a+bit+ato+. Un0oubte0l4' 8hat 8as +efe++e0 to a+bit+ation 8as no lon1e+ the 9e+e non?0eli,e+4 of the ca+1o at the fi+st instance but
also the failu+e of the +eplace9ent ca+1o to confo+9 to the specifications of the cont+act' a 9atte+ clea+l4 8ithin the co,e+a1e of Clause A.
The p+i,ate +espon0ent posits that it 8as un0e+ no le1al obli1ation to 9a<e +eplace9ent an0 that it un0e+too< the latte+ onl4 Iin the spi+it of libe+alit4
an0 to foste+ 1oo0 business +elationshipI. =! -ence' the un0e+ta<in1 to 0eli,e+ the +eplace9ent ce9ent an0 its subse7uent failu+e to confo+9 to
specifications a+e not an49o+e sub:ect of the suppl4 o+0e+Gcont+act o+ an4 of the p+o,isions the+eof. Ee 0isa1+ee.
(s pe+ Clause " of the suppl4 o+0e+Gcont+act' the p+i,ate +espon0ent un0e+too< to 0eli,e+ the &'@!! 9et+ic tons of oil 8ell ce9ent at I)OM)(6
CINDI(D =$ MT an0 C(.CUTT( =# MTI. = The failu+e of the p+i,ate +espon0ent to 0eli,e+ the ca+1o to the 0esi1nate0 places +e9ains
un0ispute0. .i<e8ise' the fact that the petitione+ ha0 al+ea04 pai0 fo+ the cost of the ce9ent is not conteste0 b4 the p+i,ate +espon0ent. The p+i,ate
+espon0ent clai9s' ho8e,e+' that it ne,e+ benefite0 f+o9 the t+ansaction as it 8as not able to +eco,e+ the ca+1o that 8as unloa0e0 at the po+t of
)an1<o<. == Fi+st of all' 8hethe+ o+ not the p+i,ate +espon0ent 8as able to +eco,e+ the ca+1o is i99ate+ial to its subsistin1 0ut4 to 9a<e 1oo0 its
p+o9ise to 0eli,e+ the ca+1o at the stipulate0 place of 0eli,e+4. Secon0l4' 8e fin0 it 0ifficult to belie,e this +ep+esentation. In its Me9o+an0u9 file0
befo+e this Cou+t' the p+i,ate +espon0ent asse+te0 that the Ci,il Cou+t of )an1<o< ha0 al+ea04 +ule0 that the non?0eli,e+4 of the ca+1o 8as 0ue solel4
to the fault of the ca++ie+. =@ It is' the+efo+e' but lo1ical to assu9e that the necessa+4 conse7uence of this fin0in1 is the e,entual +eco,e+4 b4 the
p+i,ate +espon0ent of the ca+1o o+ the ,alue the+eof. Ehat inspi+es c+e0ulit4 is not that the +eplace9ent 8as 0one in the spi+it of libe+alit4 but that it
8as un0e+ta<en p+ecisel4 because of the p+i,ate +espon0entLs +eco1nition of its 0ut4 to 0o so un0e+ the suppl4 o+0e+Gcont+act' Clause A of 8hich
+e9ains in fo+ce an0 effect until the full eBecution the+eof.
The p+i,ate +espon0ent be8ails the p+esu9e0 bias on the pa+t of the a+bit+ato+ 8ho 8as a fo+9e+ e9plo4ee of the petitione+. This point 0ese+,es
scant consi0e+ation in ,ie8 of the follo8in1 stipulation in the cont+act;
. . . . It 8ill be no ob:ection an4 such appoint9ent that the a+bit+ato+ so appointe0 is a Co99ission e9plo4e+ CsicD that he ha0 to 0eal 8ith the 9atte+
to 8hich the suppl4 o+ cont+act +elates an0 that in the cou+se of his 0uties as Co99issionLs e9plo4ee he ha0 eBp+esse0 ,ie8s on all o+ an4 of the
9atte+ in 0ispute o+ 0iffe+ence. @" CE9phasis supplie0.D
E-EREFORE' the instant petition is GR(NTED' an0 the assaile0 0ecision of the Cou+t of (ppeals sustainin1 the t+ial cou+tLs 0is9issal of the OI.
(ND N(TUR(. G(S COMMISSIONLs co9plaint in Ci,il Case No. &!!A befo+e )+anch @! of the RTC of Su+i1ao Cit4 is REVERSED' an0 anothe+ in
its stea0 is he+eb4 +en0e+e0 ORDERING p+i,ate +espon0ent P(CIFIC CEMENT COMP(N6' INC. to pa4 to petitione+ the a9ounts a0:u01e0 in the
fo+ei1n :u019ent sub:ect of sai0 case.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
12
SECOND DIVISION
G.R. No. =##A Ma+ch =A' =!!
M(GE..(N C(PIT(. M(N(GEMENT CORPOR(TION an0 M(GE..(N C(PIT(. -O.DINGS CORPOR(TION' petitione+s'
,s.
RO.(NDO M. /OS( an0 -ON. %OSE P. SO)ER(NO' %R.' in his capacit4 as P+esi0in1 %u01e of )+anch J$ of the Re1ional T+ial Cou+t of Cebu' "th
%u0icial Re1ion' +espon0ents.
)UEN(' %.;
F(CTS;
Un0e+ a 9ana1e9ent a1+ee9ent ente+e0 into on Ma+ch $' ##&' Ma1ellan Capital -ol0in1s Co+po+ation RMC-CS appointe0 Ma1ellan Capital
Mana1e9ent Co+po+ation RMCMCS as 9ana1e+ fo+ the ope+ation of its business an0 affai+s. Pu+suant the+eto' on the sa9e 9onth' MC-C' MCMC'
an0 p+i,ate +espon0ent Rolan0o M. /osa ente+e0 into an IE9plo49ent (1+ee9entI 0esi1natin1 /osa as P+esi0ent an0 Chief EBecuti,e Office+ of
MC-C.
Un0e+ the IE9plo49ent (1+ee9entI' the te+9 of +espon0ent /osaLs e9plo49ent shall be co?te+9inous 8ith the 9ana1e9ent a1+ee9ent' o+ until
Ma+ch ##A'= unless soone+ te+9inate0 pu+suant to the p+o,isions of the E9plo49ent (1+ee9ent.@ The 1+oun0s fo+ te+9ination of e9plo49ent a+e
also p+o,i0e0 in the E9plo49ent (1+ee9ent.
On Ma4 !' ##J' the 9a:o+it4 of MC-CLs )oa+0 of Di+ecto+s 0eci0e0 not to +e?elect +espon0ent /osa as P+esi0ent an0 Chief EBecuti,e Office+ of
MC-C on account of loss of t+ust an0 confi0ence& a+isin1 f+o9 alle1e0 ,iolation of the +esolution issue0 b4 MC-CLs boa+0 of 0i+ecto+s an0 of the
non?co9petition clause of the E9plo49ent (1+ee9ent.J Ne,e+theless' +espon0ent /osa 8as electe0 to a ne8 position as MC-CLs Vice?
Chai+9anGChai+9an fo+ Ne8 Ventu+es De,elop9ent.A
On Septe9be+ =A' ##J' +espon0ent /osa co99unicate0 his +esi1nation fo+ 1oo0 +eason f+o9 the position of Vice?Chai+9an un0e+ pa+a1+aph " of
the E9plo49ent (1+ee9ent on the 1+oun0 that sai0 position ha0 less +esponsibilit4 an0 scope than P+esi0ent an0 Chief EBecuti,e Office+. -e
0e9an0e0 that he be 1i,en te+9ination benefits as p+o,i0e0 fo+ in Section $ CcD CiD CiiD an0 CiiiD of the E9plo49ent (1+ee9ent."
In a lette+ 0ate0 Octobe+ =!' ##J' MC-C co99unicate0 its non?acceptance of +espon0ent /osaLs +esi1nation fo+ 1oo0 +eason' but instea0 info+9e0
hi9 that the E9plo49ent (1+ee9ent is te+9inate0 fo+ cause' effecti,e No,e9be+ #' ##J' in acco+0ance 8ith Section " CaD C,D of the sai0
a1+ee9ent' on account of his b+each of Section = the+eof. Respon0ent /osa 8as fu+the+ a0,ise0 that he shall ha,e no fu+the+ +i1hts un0e+ the sai0
(1+ee9ent o+ an4 clai9s a1ainst the Mana1e+ o+ the Co+po+ation eBcept the +i1ht to +ecei,e 8ithin thi+t4 C@!D 0a4s f+o9 No,e9be+ #' ##J' the
a9ounts state0 in Section $ CaD CiD CiiD of the (1+ee9ent.$
Disa1+eein1 8ith the position ta<en b4 petitione+s' +espon0ent /osa in,o<e0 the (+bit+ation Clause of the E9plo49ent (1+ee9ent' to 8it;
I=@. (+bit+ation. In the e,ent that an4 0ispute' cont+o,e+s4 o+ clai9 a+ises out of o+ un0e+ an4 p+o,isions of this (1+ee9ent' then the pa+ties
he+eto a1+ee to sub9it such 0ispute' cont+o,e+s4 o+ clai9 to a+bit+ation as set fo+th in this Section an0 the 0ete+9ination to be 9a0e in such
a+bit+ation shall be final an0 bin0in1. (+bit+ation shall be effecte0 b4 a panel of th+ee a+bit+ato+s. The Mana1e+' E9plo4ee an0 Co+po+ation shall
0esi1nate one CD a+bit+ato+ 8ho shall' in tu+n' no9inate an0 elect 8ho a9on1 the9 shall be the chai+9an of the co99ittee. (n4 such a+bit+ation'
inclu0in1 the +en0e+in1 of an a+bit+ation a8a+0' shall ta<e place in Met+o Manila. The a+bit+ato+s shall inte+p+et this (1+ee9ent in acco+0ance 8ith the
substanti,e la8s of the Republic of the Philippines. The a+bit+ato+s shall ha,e no po8e+ to a00 to' subt+act f+o9 o+ othe+8ise 9o0if4 the te+9s of
(1+ee9ent o+ to 1+ant in:uncti,e +elief of an4 natu+e. (n4 :u019ent upon the a8a+0 of the a+bit+ato+s 9a4 be ente+e0 in an4 cou+t ha,in1 :u+is0iction
the+eof' 8ith costs of the a+bit+ation to be bo+ne e7uall4 b4 the pa+ties' eBcept that each pa+t4 shall pa4 the fees an0 eBpenses of its o8n counsel in
the a+bit+ation.I
On No,e9be+ !' ##J' +espon0ent /osa 0esi1nate0 his b+othe+' (tt4. F+ancis /osa' as his +ep+esentati,e in the a+bit+ation panel# 8hile MC-C
0esi1nate0 (tt4. Ini1o S. Fo:as! an0 MCMC no9inate0 (tt4. En+i7ue I. 2uiason as thei+ +especti,e +ep+esentati,es in the a+bit+ation panel.
-o8e,e+' instea0 of sub9ittin1 the 0ispute to a+bit+ation' +espon0ent /osa' on (p+il "' ##A' file0 an action fo+ 0a9a1es a1ainst petitione+s befo+e
the Re1ional T+ial Cou+t of Cebu= to enfo+ce his benefits un0e+ the E9plo49ent (1+ee9ent.
On %ul4 @' ##A' petitione+s file0 a 9otion to 0is9iss@ a+1uin1 that CD the t+ial cou+t has no :u+is0iction o,e+ the instant case since +espon0ent
/osaLs clai9s shoul0 be +esol,e0 th+ou1h a+bit+ation pu+suant to Section =@ of the E9plo49ent (1+ee9ent 8ith petitione+sF an0 C=D the ,enue is
i9p+ope+l4 lai0 since +espon0ent /osa' li<e the petitione+s' is a +esi0ent of Pasi1 Cit4 an0 thus' the ,enue of this case' 1+antin1 8ithout a09ittin1 that
the +espon0ent has a cause of action a1ainst the petitione+s co1ni3able b4 the RTC' shoul0 be li9ite0 onl4 to RTC?Pasi1 Cit4.&
13
Mean8hile' +espon0ent /osa file0 an a9en0e0 co9plaint 0ate0 %ul4 J' ##A.
On (u1ust ' ##A' the RTC )+anch J$ of Cebu Cit4 issue0 an O+0e+ 0en4in1 petitione+s 9otion to 0is9iss upon the fin0in1s that CD the ,ali0it4 an0
le1alit4 of the a+bit+ation p+o,ision can onl4 be 0ete+9ine0 afte+ t+ial on the 9e+itsF an0 C=D the a9ount of 0a9a1es clai9e0' 8hich is o,e+
P!!'!!!.!!' falls 8ithin the :u+is0iction of the RTC.J Petitione+s file0 a 9otion fo+ +econsi0e+ation 8hich 8as 0enie0 b4 the RTC in an o+0e+ 0ate0
Septe9be+ J' ##A.A
In the inte+i9' on (u1ust ==' ##A' in co9pliance 8ith the ea+lie+ o+0e+ of the cou+t 0i+ectin1 petitione+s to file +esponsi,e plea0in1 to the a9en0e0
co9plaint' petitione+s file0 thei+ (ns8e+ (0 Cautela9 8ith counte+clai9 +eite+atin1 thei+ position that the 0ispute shoul0 be settle0 th+ou1h a+bit+ation
an0 the cou+t ha0 no :u+is0iction o,e+ the natu+e of the action."
ISSUES;
IEhethe+ o+ not the (+bit+ation Clause containe0 in Sec. =@ of the E9plo49ent (1+ee9ent is ,oi0 an0 of no effect; an0' if it is ,oi0 an0 of no effect'
8hethe+ o+ not the plaintiff is entitle0 to 0a9a1es in acco+0ance 8ith his co9plaint an0 the 0efen0ants in acco+0ance 8ith thei+ counte+clai9.
IIt is un0e+stoo0' that in the e,ent the a+bit+ation clause is ,ali0 an0 bin0in1 bet8een the pa+ties' the pa+ties shall sub9it thei+ +especti,e clai9 to the
(+bit+ation Co99ittee in acco+0ance 8ith the sai0 a+bit+ation clause' in 8hich e,ent' this case shall be 0ee9e0 0is9isse0.I$
RU.ING;
Ee +ule a1ainst the petitione+s.
It is e++o+ fo+ the petitione+s to clai9 that the case shoul0 fall un0e+ the :u+is0iction of the Secu+ities an0 EBchan1e Co99ission RSEC' fo+ b+e,it4S.
The cont+o,e+s4 0oes not in an48a4 in,ol,e the electionGappoint9ent of office+s of petitione+ MC-C' as clai9e0 b4 petitione+s in thei+ assi1n9ent of
e++o+s. Respon0ent /osaLs a9en0e0 co9plaint focuses hea,il4 on the ille1alit4 of the E9plo49ent (1+ee9entLs I(+bit+ation ClauseI initiall4 in,o<e0
b4 hi9 in see<in1 his te+9ination benefits un0e+ Section $ of the e9plo49ent cont+act. (n0 un0e+ Republic (ct No. $"A' othe+8ise <no8n as the
I(+bit+ation .a8'I it is the +e1ional t+ial cou+t 8hich eBe+cises :u+is0iction o,e+ 7uestions +elatin1 to a+bit+ation. Ee thus a0,e+t to the follo8in1
0iscussions 9a0e b4 the Cou+t of (ppeals' spea<in1 th+u %ustice Mine+,a P. Gon3a1a?Re4es'=J in C.(.?G.R. S.P. No. &@!J#' ,i3.
I(s +e1a+0s the fou+th assi1ne0 e++o+' asse+tin1 that :u+is0iction lies 8ith the SEC' 8hich is +aise0 fo+ the fi+st ti9e in this petition' suffice it to state
that the (9en0e0 Co9plaint s7ua+el4 put in issue the 7uestion 8hethe+ the (+bit+ation Clause is ,ali0 an0 effecti,e bet8een the pa+ties. (lthou1h the
cont+o,e+s4 8hich spa8ne0 the action conce+ns the ,ali0it4 of the te+9ination of the se+,ice of a co+po+ate office+' the issue on the ,ali0it4 an0
effecti,it4 of the a+bit+ation clause is 0ete+9inable b4 the +e1ula+ cou+ts' an0 0o not fall 8ithin the eBclusi,e an0 o+i1inal :u+is0iction of the SEC.
IThe 0ete+9ination an0 ,ali0it4 of the a1+ee9ent is not a 9atte+ int+insicall4 connecte0 8ith the +e1ulation an0 inte+nal affai+s of co+po+ations Csee
Pe+e4+a ,s. I(C' $ SCR( =&&F Sales ,s. SEC' A# SCR( =DF it is +athe+ an o+0ina+4 case to be 0eci0e0 in acco+0ance 8ith the 1ene+al la8s'
an0 0o not +e7ui+e an4 pa+ticula+ eBpe+tise o+ t+ainin1 to inte+p+et an0 appl4 CVi+a4 ,s. C(' # SCR( @!$D.I=A
Fu+the+9o+e' the 0ecision of the Cou+t of (ppeals in C(?G.R. SP No. &@!J# affi+9in1 the t+ial cou+tLs assu9ption of :u+is0iction o,e+ the case has
beco9e the Ila8 of the caseI 8hich no8 bin0s the petitione+s. The Ila8 of the caseI 0oct+ine has been 0efine0 as Ia te+9 applie0 to an establishe0
+ule that 8hen an appellate cou+t passes on a 7uestion an0 +e9an0s the cause to the lo8e+ cou+t fo+ fu+the+ p+ocee0in1s' the 7uestion the+e settle0
beco9es the la8 of the case upon subse7uent appeal.I=" To note' the C(Ls 0ecision in C(?G.R. SP No. &@!J# has al+ea04 attaine0 finalit4 as
e,i0ence0 b4 a Resolution of this Cou+t o+0e+in1 ent+4 of :u019ent of sai0 case' to 8it;
E,en if p+oce0u+al +ules a+e 0is+e1a+0e0' an0 a sc+utin4 of the 9e+its of the case is un0e+ta<en' this Cou+t fin0s the t+ial cou+tLs obse+,ations on 8h4
the co9position of the panel of a+bit+ato+s shoul0 be ,oi0e0' incisi,el4 co++ect so as to 9e+it ou+ app+o,al. Thus'
IF+o9 the 9e9o+an0a of both si0es' the Cou+t is of the ,ie8 that the 0efen0ants Rpetitione+S MCMC an0 MC-C +ep+esent the sa9e inte+est. The+e is
no 7ua++el that both 0efen0ants a+e enti+el4 t8o 0iffe+ent co+po+ations 8ith pe+sonalities 0istinct an0 sepa+ate f+o9 each othe+ an0 that a co+po+ation
has a pe+sonalit4 0istinct an0 sepa+ate f+o9 those pe+sons co9posin1 the co+po+ation as 8ell as f+o9 that of an4 othe+ le1al entit4 to 8hich it 9a4 be
+elate0.
I)ut as the 0efen0ants Rhe+ein petitione+S +ep+esent the sa9e inte+est' it coul0 ne,e+ be eBpecte0' in the a+bit+ation p+ocee0in1s' that the4 8oul0 not
p+otect an0 p+ese+,e thei+ o8n inte+est' 9uch less' 8oul0 both o+ eithe+ fa,o+ the inte+est of the plaintiff. The a+bit+ation la8' as all othe+ la8s' is
inten0e0 fo+ the 1oo0 an0 8elfa+e of e,e+4bo04. In fact' 8hat is bein1 challen1e0 b4 the plaintiff he+ein is not the la8 itself but the p+o,ision of the
E9plo49ent (1+ee9ent base0 on the sai0 la8' 8hich is the a+bit+ation clause but onl4 as +e1a+0s the co9position of the panel of a+bit+ato+s. The
a+bit+ation clause in 7uestion p+o,i0es' thus;
14
LIn the e,ent that an4 0ispute' cont+o,e+s4 o+ clai9 a+ise out of o+ un0e+ an4 p+o,isions of this (1+ee9ent' then the pa+ties he+eto a1+ee to sub9it
such 0ispute' cont+o,e+s4 o+ clai9 to a+bit+ation as set fo+th in this Section an0 the 0ete+9ination to be 9a0e in such a+bit+ation shall be final an0
bin0in1. (+bit+ation shall be effecte0 b4 a panel of th+ee a+bit+ato+s. The Mana1e+' E9plo4ee' an0 Co+po+ation shall 0esi1nate one CD a+bit+ato+ 8ho
shall' in tu+n' no9inate an0 elect as 8ho a9on1 the9 shall be the chai+9an of the co99ittee. (n4 such a+bit+ation' inclu0in1 the +en0e+in1 of an
a+bit+ation a8a+0' shall ta<e place in Met+o Manila. The a+bit+ato+s shall inte+p+et this (1+ee9ent in acco+0ance 8ith the substanti,e la8s of the
Republic of the Philippines. The a+bit+ato+s shall ha,e no po8e+ to a00 to' subt+act f+o9 o+ othe+8ise 9o0if4 the te+9s of this (1+ee9ent o+ to 1+ant
in:uncti,e +elief of an4 natu+e. (n4 :u019ent upon the a8a+0 of the a+bit+ato+s 9a4 be ente+e0 in an4 cou+t ha,in1 :u+is0iction the+eof' 8ith costs of
the a+bit+ation to be bo+ne e7uall4 b4 the pa+ties' eBcept that each pa+t4 shall pa4 the fees an0 eBpenses of its o8n counsel in the a+bit+ation.L
CE9phasis supplie0D.
IF+o9 the fo+e1oin1 a+bit+ation clause' it appea+s that the t8o C=D 0efen0ants Rpetitione+sS CMCMC an0 MC-CD ha,e one CD a+bit+ato+ each to
co9pose the panel of th+ee C@D a+bit+ato+s. (s the 0efen0ant MCMC is the Mana1e+ of 0efen0ant MC-C' its 0ecision o+ ,ote in the a+bit+ation
p+ocee0in1 8oul0 natu+all4 an0 ce+tainl4 be in fa,o+ of its e9plo4e+ an0 the 0efen0ant MC-C 8oul0 ha,e to p+otect an0 p+ese+,e its o8n inte+estF
hence' the t8o C=D ,otes of both 0efen0ants CMCMC an0 MC-CD 8oul0 ce+tainl4 be a1ainst the lone a+bit+ato+ fo+ the plaintiff Rhe+ein 0efen0antS.
-ence' appa+entl4' plaintiff R0efen0antS 8oul0 ne,e+ 1et o+ +ecei,e :ustice an0 fai+ness in the a+bit+ation p+ocee0in1s f+o9 the panel of a+bit+ato+s as
p+o,i0e0 in the afo+e7uote0 a+bit+ation clause. In fai+ness an0 :ustice to the plaintiff R0efen0antS' the t8o 0efen0ants CMCMC an0 MC-CD Rhe+ein
petitione+sS 8hich +ep+esent the sa9e inte+est shoul0 be consi0e+e0 as one an0 shoul0 be entitle0 to onl4 one a+bit+ato+ to +ep+esent the9 in the
a+bit+ation p+ocee0in1s. (cco+0in1l4' the a+bit+ation clause' insofa+ as the co9position of the panel of a+bit+ato+s is conce+ne0 shoul0 be 0ecla+e0
,oi0 an0 of no effect' because the la8 sa4s' I(n4 clause 1i,in1 one of the pa+ties po8e+ to choose 9o+e a+bit+ato+s than the othe+ is ,oi0 an0 of no
effectI C(+ticle =!&J' Ci,il Co0eD.
IThe 0ispute o+ cont+o,e+s4 bet8een the 0efen0ants CMCMC an0 MC-CD Rhe+ein petitione+sS an0 the plaintiff Rhe+ein 0efen0antS shoul0 be settle0 in
the a+bit+ation p+ocee0in1 in acco+0ance 8ith the E9plo49ent (1+ee9ent' but un0e+ the panel of th+ee C@D a+bit+ato+s' one CD a+bit+ato+ to +ep+esent
the plaintiff' one CD a+bit+ato+ to +ep+esent both 0efen0ants CMCMC an0 MC-CD Rhe+ein petitione+sS an0 the thi+0 a+bit+ato+ to be chosen b4 the
plaintiff R0efen0ant /osaS an0 0efen0ants Rpetitione+sS.
IBBB BBB BBBI@!
In this connection' petitione+sL atte9pt to put +espon0ent in estoppel in assailin1 the a+bit+ation clause 9ust be st+uc< 0o8n. Fo+ one' this issue of
estoppel' as li<e8ise note0 b4 the Cou+t of (ppeals' foun0 its 8a4 fo+ the fi+st ti9e onl4 on appeal. Eell?settle0 is the +ule that issues not +aise0
belo8 cannot be +esol,e0 on +e,ie8 in hi1he+ cou+ts.@ Secon0l4' e9plo49ent a1+ee9ents such as the one at ba+ a+e usuall4 cont+acts of a0hesion.
(n4 a9bi1uit4 in its p+o,isions is 1ene+all4 +esol,e0 a1ainst the pa+t4 8ho 0+afte0 the 0ocu9ent. Thus' in the +elati,el4 +ecent case of Phil.
Fe0e+ation of C+e0it Coope+ati,es' Inc. CPFCCID an0 F+. )ene0icto %a4o9a ,s. N.RC an0 Victo+ia (b+il'@= 8e ha0 the occasion to st+ess that I8he+e
a cont+act of e9plo49ent' bein1 a cont+act of a0hesion' is a9bi1uous' an4 a9bi1uit4 the+ein shoul0 be const+ue0 st+ictl4 a1ainst the pa+t4 8ho
p+epa+e0 it.I (n0' finall4' +espon0ent /osa ne,e+ sub9itte0 hi9self to a+bit+ation p+ocee0in1s Cas the+e 8as none 4etD befo+e be8ailin1 the
co9position of the panel of a+bit+ato+s. -e in fact' lost no ti9e in assailin1 the Ia+bit+ation clauseI upon +eali3in1 the ine7uities that 9a4 9a+ the
a+bit+ation p+ocee0in1s if the eBistin1 line?up of a+bit+ato+s +e9aine0 unchec<e0.
Ee nee0 onl4 to e9phasi3e in closin1 that a+bit+ation p+ocee0in1s a+e 0esi1ne0 to le,el the pla4in1 fiel0 a9on1 the pa+ties in pu+suit of a 9utuall4
acceptable solution to thei+ conflictin1 clai9s. (n4 a++an1e9ent o+ sche9e that 8oul0 1i,e un0ue a0,anta1e to a pa+t4 in the ne1otiatin1 table is
anathe9a to the ,e+4 pu+pose of a+bit+ation an0 shoul0' the+efo+e' be +esiste0.
E-EREFORE' p+e9ises consi0e+e0' the petition is he+eb4 DISMISSED an0 the 0ecision of the t+ial cou+t 0ate0 %ul4 $' ##" is (FFIRMED.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
T-IRD DIVISION

G.R. No. =!!J Ma+ch ="' ##$
)F CORPOR(TION' petitione+'
,s.
COURT OF (PPE(.S' S-(NGRI?.( PROPERTIES' INC.' RUFO ). CO.(6CO' (.FREDO C. R(MOS' M(QIMO G. .IC(UCO III an0 )EN%(MIN
C. R(MOS' +espon0ents.
15

ROMERO' %.;
F(CTS;
The basic issue in this petition fo+ +e,ie8 on ce+tio+a+i is 8hethe+ o+ not the cont+act fo+ the const+uction of the EDS( Pla3a bet8een petitione+ )F
Co+po+ation an0 +espon0ent Shan1+i?la P+ope+ties' Inc. e9bo0ies an a+bit+ation clause in case of 0isa1+ee9ent bet8een the pa+ties in the
i9ple9entation of cont+actual p+o,isions.
Petitione+ an0 +espon0ent Shan1+i?la P+ope+ties' Inc. CSPID ente+e0 into an a1+ee9ent 8he+eb4 the latte+ en1a1e0 the fo+9e+ to const+uct the 9ain
st+uctu+e of the IEDS( Pla3a P+o:ect'I a shoppin1 9all co9pleB in the Cit4 of Man0alu4on1. The const+uction 8o+< 8as in p+o1+ess 8hen SPI
0eci0e0 to eBpan0 the p+o:ect b4 en1a1in1 the se+,ices of petitione+ a1ain. Thus' the pa+ties ente+e0 into an a1+ee9ent fo+ the 9ain cont+act 8o+<s
afte+ 8hich const+uction 8o+< be1an.
-o8e,e+' petitione+ incu++e0 0ela4 in the const+uction 8o+< that SPI consi0e+e0 as Ise+ious an0 substantial.I On the othe+ han0' acco+0in1 to
petitione+' the const+uction 8o+<s Ip+o1+esse0 in faithful co9pliance 8ith the Fi+st (1+ee9ent until a fi+e b+o<e out on No,e9be+ @!' ##! 0a9a1in1
Phase II of the P+o:ect. = -ence' SPI p+opose0 the +e?ne1otiation of the a1+ee9ent bet8een the9.
Conse7uentl4' on Ma4 @!' ##' petitione+ an0 SPI ente+e0 into a 8+itten a1+ee9ent 0eno9inate0 as I(1+ee9ent fo+ the EBecution of )uil0e+Ls Eo+<
fo+ the EDS( Pla3a P+o:ect.I Sai0 a1+ee9ent 8oul0 co,e+ the const+uction 8o+< on sai0 p+o:ect as of Ma4 ' ## until its e,entual co9pletion.
(cco+0in1 to SPI' petitione+ Ifaile0 to co9plete the const+uction 8o+<s an0 aban0one0 the p+o:ect.I @ This +esulte0 in 0isa1+ee9ents bet8een the
pa+ties as +e1a+0s thei+ +especti,e liabilities un0e+ the cont+act. On %ul4 =' ##@' upon SPILs initiati,e' the pa+tiesL +especti,e +ep+esentati,es 9et in
confe+ence but the4 faile0 to co9e to an a1+ee9ent. &
)a+el4 t8o 0a4s late+ o+ on %ul4 &' ##@' petitione+ file0 8ith the Re1ional T+ial Cou+t of Pasi1 a co9plaint fo+ collection of the balance 0ue un0e+
the const+uction a1+ee9ent. Na9e0 0efen0ants the+ein 8e+e SPI an0 9e9be+s of its boa+0 of 0i+ecto+s na9el4' (lf+e0o C. Ra9os' Rufo ). Cala4co'
(ntonio ). Olbes' Ge+a+0o O. .anu3a' %+.' MaBi9o G. .icauco III an0 )en:a9in C. Ra9os.
On (u1ust @' ##@' SPI an0 its co?0efen0ants file0 a 9otion to suspen0 p+ocee0in1s instea0 of filin1 an ans8e+. The 9otion 8as ancho+e0 on
0efen0antsL alle1ation that the fo+9al t+a0e cont+act fo+ the const+uction of the p+o:ect p+o,i0e0 fo+ a clause +e7ui+in1 p+io+ +eso+t to a+bit+ation befo+e
:u0icial inte+,ention coul0 be in,o<e0 in an4 0ispute a+isin1 f+o9 the cont+act. The follo8in1 0a4' SPI sub9itte0 a cop4 of the con0itions of the
cont+act containin1 the a+bit+ation clause that it faile0 to appen0 to its 9otion to suspen0 p+ocee0in1s.
RU.ING;
This Cou+t notes' ho8e,e+' that the LCon0itions of Cont+actL +efe++e0 to' contains the follo8in1 p+o,isions;
@. Cont+act Docu9ent.
Th+ee copies of the Cont+act Docu9ents +efe++e0 to in the (+ticles of (1+ee9ent shall be si1ne0 b4 the pa+ties to the cont+act an0 0ist+ibute0 to the
O8ne+ an0 the Cont+acto+ fo+ thei+ safe <eepin1.I Ce9phasis supplie0D.
(n0 it is si1nificant to note fu+the+ that the sai0 ICon0itions of Cont+actI is not 0ul4 si1ne0 b4 the pa+ties on an4 pa1e the+eof H althou1h it bea+s the
initials of )FLs +ep+esentati,es C)a4ani F. Fe+nan0o an0 Re4nal0o M. 0e la C+u3D 8ithout the initials the+eon of an4 +ep+esentati,e of Shan1+i?.a
P+ope+ties' Inc.
Consi0e+in1 the insistence of the plaintiff that the sai0 Con0itions of Cont+act 8as not 0ul4 eBecute0 o+ si1ne0 b4 the pa+ties' an0 the failu+e of the
0efen0ants to sub9it an4 si1ne0 cop4 of the sai0 0ocu9ent' this Cou+t ente+tains se+ious 0oubt 8hethe+ o+ not the a+bit+ation clause foun0 in the
sai0 Con0itions of Cont+act is bin0in1 upon the pa+ties to the (+ticles of (1+ee9ent.I CE9phasis supplie0.D
RU.ING;
-ence' this petition befo+e this Cou+t. Petitione+ assi1ns the follo8in1 e++o+s;
In the sa9e ,ein' this Cou+t hol0s that the 7uestion of the eBistence of the a+bit+ation clause in the cont+act bet8een petitione+ an0 p+i,ate
+espon0ents is a le1al issue that 9ust be 0ete+9ine0 in this petition fo+ +e,ie8 on ce+tio+a+i.
16
In othe+ 8o+0s' petitione+ 0enies the eBistence of the a+bit+ation clause p+i9a+il4 on the 1+oun0 that the +ep+esentati,es of the cont+actin1
co+po+ations 0i0 not si1n the ICon0itions of Cont+actI that containe0 the sai0 clause. Its othe+ contentions' specificall4 that insinuatin1 f+au0 as
+e1a+0s the alle1e0 inse+tion of the a+bit+ation clause' a+e 7uestions of fact that shoul0 ha,e been th+eshe0 out belo8.
This Cou+t 9a4 as 8ell p+ocee0 to 0ete+9ine 8hethe+ the a+bit+ation clause 0oes eBist in the pa+tiesL cont+act. Republic (ct No. $"A p+o,i0es fo+ the
fo+9al +e7uisites of an a+bit+ation a1+ee9ent as follo8s;
Sec. &. Fo+9 of a+bit+ation a1+ee9ent. H ( cont+act to a+bit+ate a cont+o,e+s4 the+eafte+ a+isin1 bet8een the pa+ties' as 8ell as a sub9ission to
a+bit+ate an eBistin1 cont+o,e+s4' shall be in 8+itin1 an0 subsc+ibe0 b4 the pa+t4 sou1ht to be cha+1e0' o+ b4 his la8ful a1ent.
The 9a<in1 of a cont+act o+ sub9ission fo+ a+bit+ation 0esc+ibe0 in section t8o he+eof' p+o,i0in1 fo+ a+bit+ation of an4 cont+o,e+s4' shall be 0ee9e0 a
consent of the pa+ties of the p+o,ince o+ cit4 8he+e an4 of the pa+ties +esi0es' to enfo+ce such cont+act of sub9ission. CE9phasis supplie0.D.
The fo+9al +e7ui+e9ents of an a1+ee9ent to a+bit+ate a+e the+efo+e the follo8in1; CaD it 9ust be in 8+itin1 an0 CbD it 9ust be subsc+ibe0 b4 the pa+ties
o+ thei+ +ep+esentati,es. The+e is no 0en4in1 that the pa+ties ente+e0 into a 8+itten cont+act that 8as sub9itte0 in e,i0ence befo+e the lo8e+ cou+t. To
Isubsc+ibeI 9eans to 8+ite un0e+neath' as oneLs na9eF to si1n at the en0 of a 0ocu9ent. That 8o+0 9a4 so9eti9es be const+ue0 to 9ean to 1i,e
consent to o+ to attest. =
The Cou+t fin0s that' upon a sc+utin4 of the +eco+0s of this case' these +e7uisites 8e+e co9plie0 8ith in the cont+act in 7uestion. The (+ticles of
(1+ee9ent' 8hich inco+po+ates all the othe+ cont+acts an0 a1+ee9ents bet8een the pa+ties' 8as si1ne0 b4 +ep+esentati,es of both pa+ties an0 0ul4
nota+i3e0. The failu+e of the p+i,ate +espon0entLs +ep+esentati,e to initial the ICon0itions of Cont+actI 8oul0 the+efo+ not affect co9pliance 8ith the
fo+9al +e7ui+e9ents fo+ a+bit+ation a1+ee9ents because that pa+ticula+ po+tion of the co,enants bet8een the pa+ties 8as inclu0e0 b4 +efe+ence in the
(+ticles of (1+ee9ent.
Petitione+Ls contention that the+e 8as no a+bit+ation clause because the cont+act inco+po+atin1 sai0 p+o,ision is pa+t of a Iho01e?po01eI 0ocu9ent' is
the+efo+e untenable. ( cont+act nee0 not be containe0 in a sin1le 8+itin1. It 9a4 be collecte0 f+o9 se,e+al 0iffe+ent 8+itin1s 8hich 0o not conflict 8ith
each othe+ an0 8hich' 8hen connecte0' sho8 the pa+ties' sub:ect 9atte+' te+9s an0 consi0e+ation' as in cont+acts ente+e0 into b4 co++espon0ence.
@ ( cont+act 9a4 be enco9passe0 in se,e+al inst+u9ents e,en thou1h e,e+4 inst+u9ent is not si1ne0 b4 the pa+ties' since it is sufficient if the
unsi1ne0 inst+u9ents a+e clea+l4 i0entifie0 o+ +efe++e0 to an0 9a0e pa+t of the si1ne0 inst+u9ent o+ inst+u9ents. Si9ila+l4' a 8+itten a1+ee9ent of
8hich the+e a+e t8o copies' one si1ne0 b4 each of the pa+ties' is bin0in1 on both to the sa9e eBtent as thou1h the+e ha0 been onl4 one cop4 of the
a1+ee9ent an0 both ha0 si1ne0 it. &
The a+bit+ation clause p+o,i0es fo+ a I+easonable ti9eI 8ithin 8hich the pa+ties 9a4 a,ail of the +elief un0e+ that clause. IReasonablenessI is a
+elati,e te+9 an0 the 7uestion of 8hethe+ the ti9e 8ithin 8hich an act has to be 0one is +easonable 0epen0s on atten0ant ci+cu9stances. J This
Cou+t fin0s that un0e+ the ci+cu9stances obtainin1 in this case' a one?9onth pe+io0 f+o9 the ti9e the pa+ties hel0 a confe+ence on %ul4 =' ##@ until
p+i,ate +espon0ent SPI notifie0 petitione+ that it 8as in,o<in1 the a+bit+ation clause' is a +easonable ti9e. In0ee0' petitione+ 9a4 not be faulte0 fo+
+eso+tin1 to the cou+t to clai9 8hat 8as 0ue it un0e+ the cont+act. -o8e,e+' 8e fin0 its 0enial of the eBistence of the a+bit+ation clause as an atte9pt
to co,e+ up its 9isstep in hu++ie0l4 filin1 the co9plaint befo+e the lo8e+ cou+t.
In this connection' it bea+s st+essin1 that the lo8e+ cou+t has not lost its :u+is0iction o,e+ the case. Section " of Republic (ct No. $"A p+o,i0es that
p+ocee0in1s the+ein ha,e onl4 been sta4e0. (fte+ the special p+ocee0in1 of a+bit+ation A has been pu+sue0 an0 co9plete0' then the lo8e+ cou+t 9a4
confi+9 the a8a+0 " 9a0e b4 the a+bit+ato+.
It shoul0 be note0 that in this :u+is0iction' a+bit+ation has been hel0 ,ali0 an0 constitutional. E,en befo+e the app+o,al on %une #' #J@ of Republic
(ct No. $"A' this Cou+t has countenance0 the settle9ent of 0isputes th+ou1h a+bit+ation. $ Republic (ct No. $"A 8as a0opte0 to supple9ent the
Ne8 Ci,il Co0eLs p+o,isions on a+bit+ation. # Its potentials as one of the alte+nati,e 0ispute +esolution 9etho0s that a+e no8 +i1htfull4 ,aunte0 as
Ithe 8a,e of the futu+eI in inte+national +elations' is +eco1ni3e0 8o+l08i0e. To b+ush asi0e a cont+actual a1+ee9ent callin1 fo+ a+bit+ation in case of
0isa1+ee9ent bet8een the pa+ties 8oul0 the+efo+e be a step bac<8a+0.
E-EREFORE' the 7uestione0 Decision of the Cou+t of (ppeals is he+eb4 (FFIRMED an0 the petition fo+ ce+tio+a+i DENIED. This Decision is
i99e0iatel4 eBecuto+4. Costs a1ainst petitione+.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
17
G.R. No. &@J$ %anua+4 "' =!!$
*ORE( TEC-NO.OGIES CO.' .TD.' petitione+'
,s.
-ON. (.)ERTO (. .ERM(' in his capacit4 as P+esi0in1 %u01e of )+anch =JA of Re1ional T+ial Cou+t of Muntinlupa Cit4' an0 P(CIFIC GENER(.
STEE. M(NUF(CTURING CORPOR(TION' +espon0ents.
D E C I S I O N
VE.(SCO' %R.' %.;
F(CTS;
In ou+ :u+is0iction' the polic4 is to fa,o+ alte+nati,e 9etho0s of +esol,in1 0isputes' pa+ticula+l4 in ci,il an0 co99e+cial 0isputes. (+bit+ation alon1 8ith
9e0iation' conciliation' an0 ne1otiation' bein1 ineBpensi,e' spee04 an0 less hostile 9etho0s ha,e lon1 been fa,o+e0 b4 this Cou+t. The petition
befo+e us puts at issue an a+bit+ation clause in a cont+act 9utuall4 a1+ee0 upon b4 the pa+ties stipulatin1 that the4 8oul0 sub9it the9sel,es to
a+bit+ation in a fo+ei1n count+4. Re1+ettabl4' instea0 of hastenin1 the +esolution of thei+ 0ispute' the pa+ties 8ittin1l4 o+ un8ittin1l4 p+olon1e0 the
cont+o,e+s4.
Petitione+ *o+ea Technolo1ies Co.' .t0. C*OGIESD is a *o+ean co+po+ation 8hich is en1a1e0 in the suppl4 an0 installation of .i7uefie0 Pet+oleu9
Gas C.PGD C4lin0e+ 9anufactu+in1 plants' 8hile p+i,ate +espon0ent Pacific Gene+al Steel Manufactu+in1 Co+p. CPGSMCD is a 0o9estic co+po+ation.
On Ma+ch J' ##"' PGSMC an0 *OGIES eBecute0 a Cont+act 8he+eb4 *OGIES 8oul0 set up an .PG C4lin0e+ Manufactu+in1 Plant in Ca+9ona'
Ca,ite. The cont+act 8as eBecute0 in the Philippines. On (p+il "' ##"' the pa+ties eBecute0' in *o+ea' an (9en09ent fo+ Cont+act No. *.P?#"!@!
0ate0 Ma+ch J' ##"= a9en0in1 the te+9s of pa49ent. The cont+act an0 its a9en09ent stipulate0 that *OGIES 8ill ship the 9achine+4 an0 facilities
necessa+4 fo+ 9anufactu+in1 .PG c4lin0e+s fo+ 8hich PGSMC 8oul0 pa4 USD '==&'!!!. *OGIES 8oul0 install an0 initiate the ope+ation of the plant
fo+ 8hich PGSMC boun0 itself to pa4 USD @!A'!!! upon the plant>s p+o0uction of the ?<1. .PG c4lin0e+ sa9ples. Thus' the total cont+act p+ice
a9ounte0 to USD 'J@!'!!!.
On Octobe+ &' ##"' PGSMC ente+e0 into a Cont+act of .ease@ 8ith Eo+th P+ope+ties' Inc. CEo+thD fo+ use of Eo+th>s J'!"#?s7ua+e 9ete+ p+ope+t4
8ith a &'!@=?s7ua+e 9ete+ 8a+ehouse buil0in1 to house the .PG 9anufactu+in1 plant. The 9onthl4 +ental 8as PhP @=='JA! co99encin1 on %anua+4
' ##$ 8ith a !M annual inc+e9ent clause. Subse7uentl4' the 9achine+ies' e7uip9ent' an0 facilities fo+ the 9anufactu+e of .PG c4lin0e+s 8e+e
shippe0' 0eli,e+e0' an0 installe0 in the Ca+9ona plant. PGSMC pai0 *OGIES USD '==&'!!!.
On %une J' ##$' *OGIES 8+ote PGSMC info+9in1 the latte+ that PGSMC coul0 not unilate+all4 +escin0 thei+ cont+act no+ 0is9antle an0 t+ansfe+
the 9achine+ies an0 e7uip9ent on 9e+e i9a1ine0 ,iolations b4 *OGIES. It also insiste0 that thei+ 0isputes shoul0 be settle0 b4 a+bit+ation as a1+ee0
upon in (+ticle J' the a+bit+ation clause of thei+ cont+act.
On %une =@' ##$' PGSMC a1ain 8+ote *OGIES +eite+atin1 the contents of its %une ' ##$ lette+ th+eatenin1 that the 9achine+ies' e7uip9ent' an0
facilities installe0 in the plant 8oul0 be 0is9antle0 an0 t+ansfe++e0 on %ul4 &' ##$. Thus' on %ul4 ' ##$' *OGIES institute0 an (pplication fo+
(+bit+ation befo+e the *o+ean Co99e+cial (+bit+ation )oa+0 C*C()D in Seoul' *o+ea pu+suant to (+t. J of the Cont+act as a9en0e0.
On %ul4 @' ##$' *OGIES file0 a Co9plaint fo+ Specific Pe+fo+9ance' 0oc<ete0 as Ci,il Case No. #$?"$ a1ainst PGSMC befo+e the Muntinlupa
Cit4 Re1ional T+ial Cou+t CRTCD. The RTC 1+ante0 a te9po+a+4 +est+ainin1 o+0e+ CTROD on %ul4 &' ##$' 8hich 8as subse7uentl4 eBten0e0 until %ul4
==' ##$. In its co9plaint' *OGIES alle1e0 that PGSMC ha0 initiall4 a09itte0 that the chec<s that 8e+e stoppe0 8e+e not fun0e0 but late+ on
clai9e0 that it stoppe0 pa49ent of the chec<s fo+ the +eason that Ithei+ ,alue 8as not +ecei,e0I as the fo+9e+ alle1e0l4 b+eache0 thei+ cont+act b4
Ialte+in1 the 7uantit4 an0 lo8e+in1 the 7ualit4 of the 9achine+4 an0 e7uip9entI installe0 in the plant an0 faile0 to 9a<e the plant ope+ational althou1h
it ea+lie+ ce+tifie0 to the cont+a+4 as sho8n in a %anua+4 ==' ##$ Ce+tificate. .i<e8ise' *OGIES a,e++e0 that PGSMC ,iolate0 (+t. J of thei+
Cont+act' as a9en0e0' b4 unilate+all4 +escin0in1 the cont+act 8ithout +eso+tin1 to a+bit+ation. *OGIES also as<e0 that PGSMC be +est+aine0 f+o9
0is9antlin1 an0 t+ansfe++in1 the 9achine+4 an0 e7uip9ent installe0 in the plant 8hich the latte+ th+eatene0 to 0o on %ul4 &' ##$.
On %ul4 #' ##$' PGSMC file0 an opposition to the TRO a+1uin1 that *OGIES 8as not entitle0 to the TRO since (+t. J' the a+bit+ation clause' 8as
null an0 ,oi0 fo+ bein1 a1ainst public polic4 as it ousts the local cou+ts of :u+is0iction o,e+ the instant cont+o,e+s4.
On %ul4 =#' ##$' *OGIES file0 its Repl4 to (ns8e+ an0 (ns8e+ to Counte+clai9. *OGIES 0enie0 it ha0 alte+e0 the 7uantit4 an0 lo8e+e0 the
7ualit4 of the 9achine+4' e7uip9ent' an0 facilities it 0eli,e+e0 to the plant. It clai9e0 that it ha0 pe+fo+9e0 all the un0e+ta<in1s un0e+ the cont+act an0
ha0 al+ea04 p+o0uce0 ce+tifie0 sa9ples of .PG c4lin0e+s. It a,e++e0 that 8hate,e+ 8as unfinishe0 8as PGSMC>s fault since it faile0 to p+ocu+e +a8
9ate+ials 0ue to lac< of fun0s. *OGIES' +el4in1 on Chun1 Fu In0ust+ies CPhils.D' Inc. ,. Cou+t of (ppeals'= insiste0 that the a+bit+ation clause 8as
8ithout 7uestion ,ali0.
18
(fte+ *OGIES file0 a Supple9ental Me9o+an0u9 8ith Motion to Dis9iss@ ans8e+in1 PGSMC>s 9e9o+an0u9 of %ul4 ==' ##$ an0 see<in1
0is9issal of PGSMC>s counte+clai9s' *OGIES' on (u1ust &' ##$' file0 its Motion fo+ Reconsi0e+ation& of the %ul4 =@' ##$ O+0e+ 0en4in1 its
application fo+ an in:uncti,e 8+it clai9in1 that the cont+act 8as not 9e+el4 fo+ 9achine+4 an0 facilities 8o+th USD '==&'!!! but 8as fo+ the sale of an
I.PG 9anufactu+in1 plantI consistin1 of Isuppl4 of all the 9achine+4 an0 facilitiesI an0 It+ansfe+ of technolo14I fo+ a total cont+act p+ice of USD
'J@!'!!! such that the 0is9antlin1 an0 t+ansfe+ of the 9achine+4 an0 facilities 8oul0 +esult in the 0is9antlin1 an0 t+ansfe+ of the ,e+4 plant itself to
the 1+eat p+e:u0ice of *OGIES as the still unpai0 o8ne+Gselle+ of the plant. Mo+eo,e+' *OGIES points out that the a+bit+ation clause un0e+ (+t. J of
the Cont+act as a9en0e0 8as a ,ali0 a+bit+ation stipulation un0e+ (+t. =!&& of the Ci,il Co0e an0 as hel0 b4 this Cou+t in Chun1 Fu In0ust+ies
CPhils.D' Inc.J
In the 9eanti9e' PGSMC file0 a Motion fo+ Inspection of Thin1sA to 0ete+9ine 8hethe+ the+e 8as in0ee0 alte+ation of the 7uantit4 an0 lo8e+in1 of
7ualit4 of the 9achine+ies an0 e7uip9ent' an0 8hethe+ these 8e+e p+ope+l4 installe0. *OGIES oppose0 the 9otion positin1 that the 7ue+ies an0
issues +aise0 in the 9otion fo+ inspection fell un0e+ the co,e+a1e of the a+bit+ation clause in thei+ cont+act.
RU.ING;
b. DEC.(RING (S NU.. (ND VOID T-E (R)ITR(TION C.(USE IN (RTIC.E J OF T-E CONTR(CT )ETEEEN T-E P(RTIES FOR )EING
ICONTR(R6 TO PU).IC PO.IC6I (ND FOR OUSTING T-E COURTS OF %URISDICTIONF
The petition is pa+tl4 9e+ito+ious.
The Co+e Issue; (+ticle J of the Cont+act
Ee no8 1o to the co+e issue of the ,ali0it4 of (+t. J of the Cont+act' the a+bit+ation clause. It p+o,i0es;
(+ticle J. (+bit+ation.H(ll 0isputes' cont+o,e+sies' o+ 0iffe+ences 8hich 9a4 a+ise bet8een the pa+ties' out of o+ in +elation to o+ in connection 8ith
this Cont+act o+ fo+ the b+each the+eof' shall finall4 be settle0 b4 a+bit+ation in Seoul' *o+ea in acco+0ance 8ith the Co99e+cial (+bit+ation Rules of
the *o+ean Co99e+cial (+bit+ation )oa+0. The a8a+0 +en0e+e0 b4 the a+bit+ationCsD shall be final an0 bin0in1 upon both pa+ties conce+ne0.
CE9phasis supplie0.D
Petitione+ clai9s the RTC an0 the C( e++e0 in +ulin1 that the a+bit+ation clause is null an0 ,oi0.
Petitione+ is co++ect.
Establishe0 in this :u+is0iction is the +ule that the la8 of the place 8he+e the cont+act is 9a0e 1o,e+ns. .eB loci cont+actus. The cont+act in this case
8as pe+fecte0 he+e in the Philippines. The+efo+e' ou+ la8s ou1ht to 1o,e+n. Nonetheless' (+t. =!&& of the Ci,il Co0e sanctions the ,ali0it4 of 9utuall4
a1+ee0 a+bit+al clause o+ the finalit4 an0 bin0in1 effect of an a+bit+al a8a+0. (+t. =!&& p+o,i0es' I(n4 stipulation that the a+bit+ato+s> a8a+0 o+ 0ecision
shall be final' is ,ali0' 8ithout p+e:u0ice to (+ticles =!@$' =!@# an0 =!&!.I CE9phasis supplie0.D
(+ts. =!@$'@ =!@#'@= an0 =!&!@@ abo,ecite0 +efe+ to instances 8he+e a co9p+o9ise o+ an a+bit+al a8a+0' as applie0 to (+t. =!&& pu+suant to (+t.
=!&@'@& 9a4 be ,oi0e0' +escin0e0' o+ annulle0' but these 8oul0 not 0eni1+ate the finalit4 of the a+bit+al a8a+0.
The a+bit+ation clause 8as 9utuall4 an0 ,olunta+il4 a1+ee0 upon b4 the pa+ties. It has not been sho8n to be cont+a+4 to an4 la8' o+ a1ainst 9o+als'
1oo0 custo9s' public o+0e+' o+ public polic4. The+e has been no sho8in1 that the pa+ties ha,e not 0ealt 8ith each othe+ on e7ual footin1. Ee fin0 no
+eason 8h4 the a+bit+ation clause shoul0 not be +especte0 an0 co9plie0 8ith b4 both pa+ties. In Gon3ales ,. Cli9aB Minin1 .t0.'@J 8e hel0 that
sub9ission to a+bit+ation is a cont+act an0 that a clause in a cont+act p+o,i0in1 that all 9atte+s in 0ispute bet8een the pa+ties shall be +efe++e0 to
a+bit+ation is a cont+act.@A (1ain in Del Monte Co+po+ation?US( ,. Cou+t of (ppeals' 8e li<e8ise +ule0 that IRtShe p+o,ision to sub9it to a+bit+ation an4
0ispute a+isin1 the+ef+o9 an0 the +elationship of the pa+ties is pa+t of that cont+act an0 is itself a cont+act.I@"
(+bit+ation clause not cont+a+4 to public polic4
The a+bit+ation clause 8hich stipulates that the a+bit+ation 9ust be 0one in Seoul' *o+ea in acco+0ance 8ith the Co99e+cial (+bit+ation Rules of the
*C()' an0 that the a+bit+al a8a+0 is final an0 bin0in1' is not cont+a+4 to public polic4. This Cou+t has sanctione0 the ,ali0it4 of a+bit+ation clauses in a
catena of cases. In the #J" case of Eastboa+0 Na,i1ation .t0. ,. %uan 6s9ael an0 Co.' Inc.'@$ this Cou+t ha0 occasion to +ule that an a+bit+ation
clause to +esol,e 0iffe+ences an0 b+eaches of 9utuall4 a1+ee0 cont+actual te+9s is ,ali0. In )F Co+po+ation ,. Cou+t of (ppeals' 8e hel0 that IRiSn this
:u+is0iction' a+bit+ation has been hel0 ,ali0 an0 constitutional. E,en befo+e the app+o,al on %une #' #J@ of Republic (ct No. $"A' this Cou+t has
countenance0 the settle9ent of 0isputes th+ou1h a+bit+ation. Republic (ct No. $"A 8as a0opte0 to supple9ent the Ne8 Ci,il Co0e>s p+o,isions on
a+bit+ation.I@# (n0 in .M Po8e+ En1inee+in1 Co+po+ation ,. Capitol In0ust+ial Const+uction G+oups' Inc.' 8e 0ecla+e0 that;
)ein1 an ineBpensi,e' spee04 an0 a9icable 9etho0 of settlin1 0isputes' a+bit+ationVValon1 8ith 9e0iation' conciliation an0 ne1otiationVVis
encou+a1e0 b4 the Sup+e9e Cou+t. (si0e f+o9 unclo11in1 :u0icial 0oc<ets' a+bit+ation also hastens the +esolution of 0isputes' especiall4 of the
19
co99e+cial <in0. It is thus +e1a+0e0 as the I8a,e of the futu+eI in inte+national ci,il an0 co99e+cial 0isputes. )+ushin1 asi0e a cont+actual
a1+ee9ent callin1 fo+ a+bit+ation bet8een the pa+ties 8oul0 be a step bac<8a+0.
Consistent 8ith the abo,e?9entione0 polic4 of encou+a1in1 alte+nati,e 0ispute +esolution 9etho0s' cou+ts shoul0 libe+all4 const+ue a+bit+ation
clauses. P+o,i0e0 such clause is susceptible of an inte+p+etation that co,e+s the asse+te0 0ispute' an o+0e+ to a+bit+ate shoul0 be 1+ante0. (n4 0oubt
shoul0 be +esol,e0 in fa,o+ of a+bit+ation.&!
-a,in1 sai0 that the instant a+bit+ation clause is not a1ainst public polic4' 8e co9e to the 7uestion on 8hat 1o,e+ns an a+bit+ation clause specif4in1
that in case of an4 0ispute a+isin1 f+o9 the cont+act' an a+bit+al panel 8ill be constitute0 in a fo+ei1n count+4 an0 the a+bit+ation +ules of the fo+ei1n
count+4 8oul0 1o,e+n an0 its a8a+0 shall be final an0 bin0in1.
The losin1 pa+t4 8ho appeals f+o9 the :u019ent of the cou+t confi+9in1 an a+bit+al a8a+0 shall be +e7ui+e0 b4 the appellate cou+t to post a
counte+bon0 eBecute0 in fa,o+ of the p+e,ailin1 pa+t4 e7ual to the a9ount of the a8a+0 in acco+0ance 8ith the +ules to be p+o9ul1ate0 b4 the
Sup+e9e Cou+t.
The+eafte+' the C( 0ecision 9a4 fu+the+ be appeale0 o+ +e,ie8e0 befo+e this Cou+t th+ou1h a petition fo+ +e,ie8 un0e+ Rule &J of the Rules of Cou+t.
PGSMC has +e9e0ies to p+otect its inte+ests
Thus' base0 on the fo+e1oin1 featu+es of R( #=$J' PGSMC 9ust sub9it to the fo+ei1n a+bit+ation as it boun0 itself th+ou1h the sub:ect cont+act.
Ehile it 9a4 ha,e 9is1i,in1s on the fo+ei1n a+bit+ation 0one in *o+ea b4 the *C()' it has a,ailable +e9e0ies un0e+ R( #=$J. Its inte+ests a+e 0ul4
p+otecte0 b4 the la8 8hich +e7ui+es that the a+bit+al a8a+0 that 9a4 be +en0e+e0 b4 *C() 9ust be confi+9e0 he+e b4 the RTC befo+e it can be
enfo+ce0.
Eith ou+ 0is7uisition abo,e' petitione+ is co++ect in its contention that an a+bit+ation clause' stipulatin1 that the a+bit+al a8a+0 is final an0 bin0in1' 0oes
not oust ou+ cou+ts of :u+is0iction as the inte+national a+bit+al a8a+0' the a8a+0 of 8hich is not absolute an0 8ithout eBceptions' is still :u0iciall4
+e,ie8able un0e+ ce+tain con0itions p+o,i0e0 fo+ b4 the UNCITR(. Mo0el .a8 on IC( as applie0 an0 inco+po+ate0 in R( #=$J.
Finall4' it 9ust be note0 that the+e is nothin1 in the sub:ect Cont+act 8hich p+o,i0es that the pa+ties 9a4 0ispense 8ith the a+bit+ation clause.
Unilate+al +escission i9p+ope+ an0 ille1al
-a,in1 +ule0 that the a+bit+ation clause of the sub:ect cont+act is ,ali0 an0 bin0in1 on the pa+ties' an0 not cont+a+4 to public polic4F conse7uentl4'
bein1 boun0 to the cont+act of a+bit+ation' a pa+t4 9a4 not unilate+all4 +escin0 o+ te+9inate the cont+act fo+ 8hate,e+ cause 8ithout fi+st +eso+tin1 to
a+bit+ation.
Ehat this Cou+t hel0 in Uni,e+sit4 of the Philippines ,. De .os (n1eles&" an0 +eite+ate0 in succee0in1 cases'&$ that the act of t+eatin1 a cont+act as
+escin0e0 on account of inf+actions b4 the othe+ cont+actin1 pa+t4 is ,ali0 albeit p+o,isional as it can be :u0iciall4 assaile0' is not applicable to the
instant case on account of a ,ali0 stipulation on a+bit+ation. Ehe+e an a+bit+ation clause in a cont+act is a,ailin1' neithe+ of the pa+ties can unilate+all4
t+eat the cont+act as +escin0e0 since 8hate,e+ inf+actions o+ b+eaches b4 a pa+t4 o+ 0iffe+ences a+isin1 f+o9 the cont+act 9ust be b+ou1ht fi+st an0
+esol,e0 b4 a+bit+ation' an0 not th+ou1h an eBt+a:u0icial +escission o+ :u0icial action.
The issues a+isin1 f+o9 the cont+act bet8een PGSMC an0 *OGIES on 8hethe+ the e7uip9ent an0 9achine+ies 0eli,e+e0 an0 installe0 8e+e
p+ope+l4 installe0 an0 ope+ational in the plant in Ca+9ona' Ca,iteF the o8ne+ship of e7uip9ent an0 pa49ent of the cont+act p+iceF an0 8hethe+ the+e
8as substantial co9pliance b4 *OGIES in the p+o0uction of the sa9ples' 1i,en the alle1e0 fact that PGSMC coul0 not suppl4 the +a8 9ate+ials
+e7ui+e0 to p+o0uce the sa9ple .PG c4lin0e+s' a+e 9atte+s p+ope+ fo+ a+bit+ation. In0ee0' 8e note that on %ul4 ' ##$' *OGIES institute0 an
(pplication fo+ (+bit+ation befo+e the *C() in Seoul' *o+ea pu+suant to (+t. J of the Cont+act as a9en0e0. Thus' it is incu9bent upon PGSMC to
abi0e b4 its co99it9ent to a+bit+ate.
No p+onounce9ent as to costs.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN )(NC

20
G.R. No. =!@# Octobe+ A' ##J
.U/ON DEVE.OPMENT )(N*' petitione+'
,s.
(SSOCI(TION OF .U/ON DEVE.OPMENT )(N* EMP.O6EES an0 (TT6. ESTER S. G(RCI( in he+ capacit4 as VO.UNT(R6 (R)ITR(TOR'
+espon0ents.

ROMERO' %.;
F(CTS;
F+o9 a sub9ission a1+ee9ent of the .u3on De,elop9ent )an< C.D)D an0 the (ssociation of .u3on De,elop9ent )an< E9plo4ees C(.D)ED a+ose
an a+bit+ation case to +esol,e the follo8in1 issue;
Ehethe+ o+ not the co9pan4 has ,iolate0 the Collecti,e )a+1ainin1 (1+ee9ent p+o,ision an0 the Me9o+an0u9 of (1+ee9ent 0ate0 (p+il ##&' on
p+o9otion.
On Ma4 =&' ##J' 8ithout .D)Ls Position Pape+' the Volunta+4 (+bit+ato+ +en0e+e0 a 0ecision 0isposin1 as follo8s;
E-EREFORE' fin0in1 is he+eb4 9a0e that the )an< has not a0he+e0 to the Collecti,e )a+1ainin1 (1+ee9ent p+o,ision no+ the Me9o+an0u9 of
(1+ee9ent on p+o9otion.
-ence' this petition fo+ ce+tio+a+i an0 p+ohibition see<in1 to set asi0e the 0ecision of the Volunta+4 (+bit+ato+ an0 to p+ohibit he+ f+o9 enfo+cin1 the
sa9e.
RU.ING;
In labo+ la8 conteBt' a+bit+ation is the +efe+ence of a labo+ 0ispute to an i9pa+tial thi+0 pe+son fo+ 0ete+9ination on the basis of e,i0ence an0
a+1u9ents p+esente0 b4 such pa+ties 8ho ha,e boun0 the9sel,es to accept the 0ecision of the a+bit+ato+ as final an0 bin0in1.
(+bit+ation 9a4 be classifie0' on the basis of the obli1ation on 8hich it is base0' as eithe+ co9pulso+4 o+ ,olunta+4.
Co9pulso+4 a+bit+ation is a s4ste9 8he+eb4 the pa+ties to a 0ispute a+e co9pelle0 b4 the 1o,e+n9ent to fo+e1o thei+ +i1ht to st+i<e an0 a+e
co9pelle0 to accept the +esolution of thei+ 0ispute th+ou1h a+bit+ation b4 a thi+0 pa+t4. The essence of a+bit+ation +e9ains since a +esolution of a
0ispute is a++i,e0 at b4 +eso+t to a 0isinte+este0 thi+0 pa+t4 8hose 0ecision is final an0 bin0in1 on the pa+ties' but in co9pulso+4 a+bit+ation' such a
thi+0 pa+t4 is no+9all4 appointe0 b4 the 1o,e+n9ent.
Un0e+ ,olunta+4 a+bit+ation' on the othe+ han0' +efe++al of a 0ispute b4 the pa+ties is 9a0e' pu+suant to a ,olunta+4 a+bit+ation clause in thei+ collecti,e
a1+ee9ent' to an i9pa+tial thi+0 pe+son fo+ a final an0 bin0in1 +esolution. = I0eall4' a+bit+ation a8a+0s a+e suppose0 to be co9plie0 8ith b4 both
pa+ties 8ithout 0ela4' such that once an a8a+0 has been +en0e+e0 b4 an a+bit+ato+' nothin1 is left to be 0one b4 both pa+ties but to co9pl4 8ith the
sa9e. (fte+ all' the4 a+e p+esu9e0 to ha,e f+eel4 chosen a+bit+ation as the 9o0e of settle9ent fo+ that pa+ticula+ 0ispute. Pu+suant the+eto' the4 ha,e
chosen a 9utuall4 acceptable a+bit+ato+ 8ho shall hea+ an0 0eci0e thei+ case. (bo,e all' the4 ha,e 9utuall4 a1+ee0 to 0e boun0 b4 sai0 a+bit+ato+Ls
0ecision.
In the Philippine conteBt' the pa+ties to a Collecti,e )a+1ainin1 (1+ee9ent CC)(D a+e +e7ui+e0 to inclu0e the+ein p+o,isions fo+ a 9achine+4 fo+ the
+esolution of 1+ie,ances a+isin1 f+o9 the inte+p+etation o+ i9ple9entation of the C)( o+ co9pan4 pe+sonnel policies. @ Fo+ this pu+pose' pa+ties to a
C)( shall na9e an0 0esi1nate the+ein a ,olunta+4 a+bit+ato+ o+ a panel of a+bit+ato+s' o+ inclu0e a p+oce0u+e fo+ thei+ selection' p+efe+abl4 f+o9 those
acc+e0ite0 b4 the National Conciliation an0 Me0iation )oa+0 CNCM)D. (+ticle =A of the .abo+ Co0e acco+0in1l4 p+o,i0es fo+ eBclusi,e o+i1inal
:u+is0iction of such ,olunta+4 a+bit+ato+ o+ panel of a+bit+ato+s o,e+ CD the inte+p+etation o+ i9ple9entation of the C)( an0 C=D the inte+p+etation o+
enfo+ce9ent of co9pan4 pe+sonnel policies. (+ticle =A= autho+i3es the9' but onl4 upon a1+ee9ent of the pa+ties' to eBe+cise :u+is0iction o,e+ othe+
labo+ 0isputes.
On the othe+ han0' a labo+ a+bite+ un0e+ (+ticle =" of the .abo+ Co0e has :u+is0iction o,e+ the follo8in1 enu9e+ate0 cases;
. . . CaD EBcept as othe+8ise p+o,i0e0 un0e+ this Co0e the .abo+ (+bite+s shall ha,e o+i1inal an0 eBclusi,e :u+is0iction to hea+ an0 0eci0e' 8ithin thi+t4
C@!D calen0a+ 0a4s afte+ the sub9ission of the case b4 the pa+ties fo+ 0ecision 8ithout eBtension' e,en in the absence of steno1+aphic notes' the
follo8in1 cases in,ol,in1 all 8o+<e+s' 8hethe+ a1+icultu+al o+ non?a1+icultu+al;
21
. Unfai+ labo+ p+actice casesF
=. Te+9ination 0isputesF
@. If acco9panie0 8ith a clai9 fo+ +einstate9ent' those cases that 8o+<e+s 9a4 file in,ol,in1 8a1es' +ates of pa4' hou+s of 8o+< an0 othe+
te+9s an0 con0itions of e9plo49entF
&. Clai9s fo+ actual' 9o+al' eBe9pla+4 an0 othe+ fo+9s of 0a9a1es a+isin1 f+o9 the e9plo4e+?e9plo4ee +elationsF
J. Cases a+isin1 f+o9 an4 ,iolation of (+ticle =A& of this Co0e' inclu0in1 7uestions in,ol,in1 the le1alit4 of st+i<es an0 loc<outsF
A. EBcept clai9s fo+ E9plo4ees Co9pensation' Social Secu+it4' Me0ica+e an0 9ate+nit4 benefits' all othe+ clai9s' a+isin1 f+o9 e9plo4e+?
e9plo4ee +elations' inclu0in1 those of pe+sons in 0o9estic o+ househol0 se+,ice' in,ol,in1 an a9ount eBcee0in1 fi,e thousan0 pesos CPJ'!!!.!!D
+e1a+0less of 8hethe+ acco9panie0 8ith a clai9 fo+ +einstate9ent.
BBB BBB BBB
It 8ill thus be note0 that the :u+is0iction confe++e0 b4 la8 on a ,olunta+4 a+bit+ato+ o+ a panel of such a+bit+ato+s is 7uite li9ite0 co9pa+e0 to the
o+i1inal :u+is0iction of the labo+ a+bite+ an0 the appellate :u+is0iction of the National .abo+ Relations Co99ission CN.RCD fo+ that 9atte+. & The state
of ou+ p+esent la8 +elatin1 to ,olunta+4 a+bit+ation p+o,i0es that ICtDhe a8a+0 o+ 0ecision of the Volunta+4 (+bit+ato+ . . . shall be final an0 eBecuto+4
afte+ ten C!D calen0a+ 0a4s f+o9 +eceipt of the cop4 of the a8a+0 o+ 0ecision b4 the pa+ties'I J 8hile the IC0Decision' a8a+0s' o+ o+0e+s of the .abo+
(+bite+ a+e final an0 eBecuto+4 unless appeale0 to the Co99ission b4 an4 o+ both pa+ties 8ithin ten C!D calen0a+ 0a4s f+o9 +eceipt of such
0ecisions' a8a+0s' o+ o+0e+s.I A -ence' 8hile the+e is an eBp+ess 9o0e of appeal f+o9 the 0ecision of a labo+ a+bite+' Republic (ct No. A"J is silent
8ith +espect to an appeal f+o9 the 0ecision of a ,olunta+4 a+bit+ato+.
6et' past p+actice sho8s that a 0ecision o+ a8a+0 of a ,olunta+4 a+bit+ato+ is' 9o+e often than not' ele,ate0 to the Sup+e9e Cou+t itself on a petition
fo+ ce+tio+a+i' " in effect e7uatin1 the ,olunta+4 a+bit+ato+ 8ith the N.RC o+ the Cou+t of (ppeals. In the ,ie8 of the Cou+t' this is illo1ical an0 i9poses
an unnecessa+4 bu+0en upon it.
(ssu9in1 a+1uen0o that the ,olunta+4 a+bit+ato+ o+ the panel of ,olunta+4 a+bit+ato+s 9a4 not st+ictl4 be consi0e+e0 as a 7uasi?:u0icial a1enc4' boa+0
o+ co99ission' still both he an0 the panel a+e co9p+ehen0e0 8ithin the concept of a I7uasi?:u0icial inst+u9entalit4.I It 9a4 e,en be state0 that it 8as
to 9eet the ,e+4 situation p+esente0 b4 the 7uasi?:u0icial functions of the ,olunta+4 a+bit+ato+s he+e' as 8ell as the subse7uent a+bit+ato+Ga+bit+al
t+ibunal ope+atin1 un0e+ the Const+uction In0ust+4 (+bit+ation Co99ission' that the b+oa0e+ te+9 Iinst+u9entalitiesI 8as pu+posel4 inclu0e0 in the
abo,e?7uote0 p+o,ision.
(n Iinst+u9entalit4I is an4thin1 use0 as a 9eans o+ a1enc4. = Thus' the te+9s 1o,e+n9ental Ia1enc4I o+ Iinst+u9entalit4I a+e s4non49ous in the
sense that eithe+ of the9 is a 9eans b4 8hich a 1o,e+n9ent acts' o+ b4 8hich a ce+tain 1o,e+n9ent act o+ function is pe+fo+9e0. @ The 8o+0
Iinst+u9entalit4'I 8ith +espect to a state' conte9plates an autho+it4 to 8hich the state 0ele1ates 1o,e+n9ental po8e+ fo+ the pe+fo+9ance of a state
function. & (n in0i,i0ual pe+son' li<e an a09inist+ato+ o+ eBecuto+' is a :u0icial inst+u9entalit4 in the settlin1 of an estate' J in the sa9e 9anne+ that
a sub?a1ent appointe0 b4 a ban<+uptc4 cou+t is an inst+u9entalit4 of the cou+t' A an0 a t+ustee in ban<+uptc4 of a 0efunct co+po+ation is an
inst+u9entalit4 of the state. "
The ,olunta+4 a+bit+ato+ no less pe+fo+9s a state function pu+suant to a 1o,e+n9ental po8e+ 0ele1ate0 to hi9 un0e+ the p+o,isions the+efo+ in the
.abo+ Co0e an0 he falls' the+efo+e' 8ithin the conte9plation of the te+9 Iinst+u9entalit4I in the afo+e7uote0 Sec. # of ).P. =#. The fact that his
functions an0 po8e+s a+e p+o,i0e0 fo+ in the .abo+ Co0e 0oes not place hi9 8ithin the eBceptions to sai0 Sec. # since he is a 7uasi?:u0icial
inst+u9entalit4 as conte9plate0 the+ein. It 8ill be note0 that' althou1h the E9plo4ees Co9pensation Co99ission is also p+o,i0e0 fo+ in the .abo+
Co0e' Ci+cula+ No. ?#' 8hich is the fo+e+unne+ of the p+esent Re,ise0 (09inist+ati,e Ci+cula+ No. ?#J' lai0 0o8n the p+oce0u+e fo+ the
appealabilit4 of its 0ecisions to the Cou+t of (ppeals un0e+ the fo+e1oin1 +ationali3ation' an0 this 8as late+ a0opte0 b4 Republic (ct No. "#!= in
a9en0in1 Sec. # of ).P. =#.
( fo+tio+i' the 0ecision o+ a8a+0 of the ,olunta+4 a+bit+ato+ o+ panel of a+bit+ato+s shoul0 li<e8ise be appealable to the Cou+t of (ppeals' in line 8ith the
p+oce0u+e outline0 in Re,ise0 (09inist+ati,e Ci+cula+ No. ?#J' :ust li<e those of the 7uasi?:u0icial a1encies' boa+0s an0 co99issions enu9e+ate0
the+ein.
This 8oul0 be in fu+the+ance of' an0 consistent 8ith' the o+i1inal pu+pose of Ci+cula+ No. ?# to p+o,i0e a unifo+9 p+oce0u+e fo+ the appellate +e,ie8
of a0:u0ications of all 7uasi?:u0icial entities $ not eBp+essl4 eBcepte0 f+o9 the co,e+a1e of Sec. # of ).P. =# b4 eithe+ the Constitution o+ anothe+
statute. No+ 8ill it +un counte+ to the le1islati,e inten09ent that 0ecisions of the N.RC be +e,ie8able 0i+ectl4 b4 the Sup+e9e Cou+t since' p+ecisel4'
the cases 8ithin the a0:u0icati,e co9petence of the ,olunta+4 a+bit+ato+ a+e eBclu0e0 f+o9 the :u+is0iction of the N.RC o+ the labo+ a+bite+.
22
In the sa9e ,ein' it is 8o+th 9entionin1 that un0e+ Section == of Republic (ct No. $"A' also <no8n as the (+bit+ation .a8' a+bit+ation is 0ee9e0 a
special p+ocee0in1 of 8hich the cou+t specifie0 in the cont+act o+ sub9ission' o+ if none be specifie0' the Re1ional T+ial Cou+t fo+ the p+o,ince o+ cit4
in 8hich one of the pa+ties +esi0es o+ is 0oin1 business' o+ in 8hich the a+bit+ation is hel0' shall ha,e :u+is0iction. ( pa+t4 to the cont+o,e+s4 9a4' at
an4 ti9e 8ithin one CD 9onth afte+ an a8a+0 is 9a0e' appl4 to the cou+t ha,in1 :u+is0iction fo+ an o+0e+ confi+9in1 the a8a+0 an0 the cou+t 9ust
1+ant such o+0e+ unless the a8a+0 is ,acate0' 9o0ifie0 o+ co++ecte0. #
In effect' this e7uates the a8a+0 o+ 0ecision of the ,olunta+4 a+bit+ato+ 8ith that of the +e1ional t+ial cou+t. Conse7uentl4' in a petition fo+ ce+tio+a+i
f+o9 that a8a+0 o+ 0ecision' the Cou+t of (ppeals 9ust be 0ee9e0 to ha,e concu++ent :u+is0iction 8ith the Sup+e9e Cou+t. (s a 9atte+ of polic4' this
Cou+t shall hencefo+th +e9an0 to the Cou+t of (ppeals petitions of this natu+e fo+ p+ope+ 0isposition.
(CCORDING.6' the Cou+t +esol,e0 to REFER this case to the Cou+t of (ppeals.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
T-IRD DIVISION
G.R. No. !=$$ Dece9be+ "' ##=
TO6OT( MOTOR P-I.IPPINES CORPOR(TION' petitione+'
,s.
T-E COURT OF (PPE(.S' -ON. FERN(NDO V. GOROSPE' %R. an0 SUN V(..E6 M(NUF(CTURING 5 DEVE.OPMENT CORPOR(TION'
+espon0ents.

GUTIERRE/' %R.' %.;

F(CTS;
This case in,ol,es a boun0a+4 0ispute bet8een To4ota Moto+ Phil. Co+po+ation CTo4otaD an0 Sun Valle4 Manufactu+in1 an0 De,elop9ent Co+po+ation
CSun Valle4D.
)oth To4ota an0 Sun Valle4 a+e the +e1iste+e0 o8ne+s of t8o C=D a0:oinin1 pa+cels of lan0 situate0 in .a -ue+ta' Pa+aKa7ue' Met+o Manila 8hich the4
pu+chase0 f+o9 the (sset P+i,ati3ation T+ust C(PTD.
The p+ope+ties in 7uestion fo+9e+l4 belon1e0 to Delta Moto+s Co+po+ation CDMCD. The4 8e+e fo+eclose0 b4 the Philippine National )an< CPN)D an0
late+ t+ansfe++e0 to the national 1o,e+n9ent th+ou1h the (PT fo+ 0isposition.
(PT then p+ocee0e0 to classif4 the DMC p+ope+ties acco+0in1 to the eBistin1 i9p+o,e9ents' i.e.' buil0in1s' 0+i,e8a4s' pa+<in1 a+eas' pe+i9ete+
fence' 8alls an0 1ates an0 the lan0 on 8hich the i9p+o,e9ents stoo0. The enti+e DMC p+ope+t4 is calle0 GC III?Delta Moto+s Co+po+ation' 0i,i0e0
into Delta I' Delta II' an0 Delta III. Fu+the+ sub0i,isions fo+ the sepa+ate catalo1ues 8e+e 9a0e fo+ each 0i,ision e.1. Delta I into .ots ' = an0 @. (fte+
this classification' (PT pa+celle0 out an0 catalo1ue0 the p+ope+ties fo+ bi00in1 an0 sale.
Pa+t of the 0ul4 pa+celle0 Delta I p+ope+t4 C.ot =D 8as sol0 to To4ota th+ou1h public bi00in1 on Ma4 =' #$$ fo+ the a9ount of P#J'@$J'!!!.!!. (fte+
its pu+chase' To4ota const+ucte0 a conc+ete hollo8 bloc< CC-)D pe+i9ete+ fence a+oun0 its alle1e0 p+ope+t4.
On Octobe+ J' ##!' anothe+ pa+t of the pa+celle0 Delta I C.ot D co,e+in1 an a+ea of JJ'=@A s7ua+e 9ete+s 8as pu+chase0 b4 Sun Valle4 f+o9 (PT
fo+ the bi0 p+ice of P=&'@&#'"A".!!. Rel4in1 upon the title 0esc+iption of its p+ope+t4 an0 the su+,e4s it ha0 co99issione0' Sun Valle4 clai9e0 that
To4otaLs pe+i9ete+ fence o,e+laps Sun Valle4Ls p+ope+t4 alon1 co+ne+s to J b4 @== s7ua+e 9ete+s an0 co+ne+s # to b4 &! s7ua+e 9ete+s fo+ a
total of "=@ s7ua+e 9ete+s. CRollo' p. $&D
Ne1otiations bet8een the t8o C=D co+po+ations fo+ a possible settle9ent of the 0ispute bo11e0 0o8n. Cou+t battles ensue0' 1+oun0e0 on pu+el4
p+oce0u+al issues. In pu+suin1 the +esolution of the 0ispute' both To4ota an0 Sun Valle4 opte0 to file sepa+ate actions. Much of the co9plications that
a+ose an0 a+e no8 befo+e us can be t+ace0 to the t8o sepa+ate cases pu+sue0 b4 both pa+ties. The+e a+e othe+ cases a+isin1 f+o9 the sa9e 0ispute
but 8hich a+e not befo+e us.
23
On Octobe+ @!' ##' (PT file0 its ans8e+ 8ith affi+9ati,e 0efenses alle1in1 that the co9plaint 9ust be 0is9isse0 on the 1+oun0 that To4ota an0
(PT shoul0 fi+st ha,e +eso+te0 to a+bit+ation as p+o,i0e0 in To4otaLs 0ee0 of sale 8ith (PT. On Dece9be+ &' ##' To4ota file0 a 9otion alle1in1 that
Sun Valle4Ls lon1 th+eatene0 0est+uction an0 +e9o,al of To4otaLs 8alls an0 st+uctu+es 8e+e actuall4 bein1 i9ple9ente0 to 8hich %u01e Tensuan
issue0 anothe+ TRO en:oinin1 acts of 0est+uction an0 +e9o,al of the pe+i9ete+ 8alls an0 st+uctu+es on the conteste0 a+ea.
%u01e TensuanLs :u+is0iction to act consi0e+in1 the 0efense of p+e9atu+it4 of action fo+ failu+e to a+bit+ate the ,ali0it4 of the TRO issue0 on Dece9be+
&' ## an0 the o+0e+ 1+antin1 in:uncti,e +eliefs 8e+e challen1e0 in a petition fo+ ce+tio+a+i file0 8ith the Cou+t of (ppeals an0 0oc<ete0 as C(?G.R.
No. =A$@' assi1ne0 to the Secon0 C=n0D Di,ision.
RU.ING;
(ttention 9ust fi+st be b+ou1ht to the fact that the cont+act of sale eBecute0 bet8een (PT an0 To4ota p+o,i0es an a+bit+ation clause 8hich states that;
J. In case of 0isa1+ee9ent o+ conflict a+isin1 out of this Cont+act' the pa+ties he+eb4 un0e+ta<e to sub9it the 9atte+ fo+ 0ete+9ination b4 a
co99ittee of eBpe+ts' actin1 as a+bit+ato+s' the co9position of 8hich shall be as follo8s;
aD One 9e9be+ to be appointe0 b4 the VENDORF
bD One 9e9be+ to be appointe0 b4 the VENDEEF
cD One 9e9be+' 8ho shall be a la84e+' to be appointe0 b4 both of the afo+esai0 pa+tiesF
The 9e9be+s of the (+bit+ation Co99ittee shall be appointe0 not late+ than th+ee C@D 8o+<in1 0a4s f+o9 +eceipt of a 8+itten notice f+o9 eithe+ o+ both
pa+ties. The (+bit+ation Co99ittee shall con,ene not late+ than th+ee C@D 8ee<s afte+ all its 9e9be+s ha,e been appointe0 an0 p+ocee0 8ith the
a+bit+ation of the 0ispute 8ithin th+ee C@D calen0a+ 9onths counte0 the+ef+o9. )4 8+itten 9utual a1+ee9ent b4 the pa+ties he+eto' such ti9e li9it fo+
the a+bit+ation 9a4 be eBten0e0 fo+ anothe+ calen0a+ 9onth. The 0ecision of the (+bit+ation Co99ittee b4 9a:o+it4 ,ote of at least t8o C=D 9e9be+s
shall be final an0 bin0in1 upon both the VENDOR an0 the VENDEEF CRollo' pp. $A?$"D
The contention that the a+bit+ation clause has beco9e 0isfunctional because of the p+esence of thi+0 pa+ties is untenable.
To4ota file0 an action fo+ +efo+9ation of its cont+act 8ith (PT' the pu+pose of 8hich is to loo< into the +eal intentionsGa1+ee9ent of the pa+ties to the
cont+act an0 to 0ete+9ine if the+e 8as +eall4 a 9ista<e in the 0esi1nation of the boun0a+ies of the p+ope+t4 as alle1e0 b4 To4ota. Such 7uestions can
onl4 be ans8e+e0 b4 the pa+ties to the cont+act the9sel,es. This is a cont+o,e+s4 8hich clea+l4 a+ose f+o9 the cont+act ente+e0 into b4 (PT an0
To4ota. Inas9uch as this conce+ns 9o+e i9po+tantl4 the pa+ties (PT an0 To4ota the9sel,es' the a+bit+ation co99ittee is the+efo+e the p+ope+ an0
con,enient fo+u9 to settle the 9atte+ as clea+l4 p+o,i0e0 in the 0ee0 of sale.
-a,in1 been app+ise0 of the p+esence of the a+bit+ation clause in the 9otion to 0is9iss file0 b4 (PT' %u01e Tensuan shoul0 ha,e at least suspen0e0
the p+ocee0in1s an0 0i+ecte0 the pa+ties to settle thei+ 0ispute b4 a+bit+ation C)en1son ,. Chan' "$ SCR( @ R#""S' Sec. "' R( $"AD. %u01e
Tensuan shoul0 ha,e not ta<en co1ni3ance of the case.
In ,ie8 of all the fo+e1oin1' the petition is he+eb4 DISMISSED fo+ failu+e to sho8 +e,e+sible e++o+' 9uch less 1+a,e abuse of 0isc+etion' on the pa+t of
the +espon0ent cou+t.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. @J@A= Dece9be+ @' ###
-EIRS OF (UGUSTO .. S(.(S' %R.' na9el4; TERESIT( D. S(.(S fo+ he+self an0 as le1al 1ua+0ian of the 9ino+ F()RICE C6RI.. D. S(.(S'
M(. CRISTIN( S. .ES(C(' an0 *(RIN( TERES( D. S(.(S' petitione+s'
,s.
.(PER(. RE(.T6 CORPOR(TION' ROC*E(6 RE(. EST(TE CORPOR(TION' SOUT- RIDGE VI..(GE' INC.' M(-(R(MI DEVE.OPMENT
CORPOR(TION' Spouses T-E.M( D. ()R(%(NO an0 GREGORIO ()R(%(NO' OSC(R D(CI..O' Spouses VIRGINI( D. .(V( an0 RODE.
.(V(' EDU(RDO (. V(CUN(' F.OR(NTE DE .( CRU/' %ESUS VICENTE ). C(PE..(N' an0 the REGISTER OF DEEDS FOR .IP( CIT6'
+espon0ents.
DE .EON' %R.' %.;
F(CTS;
24
)efo+e us is a petition fo+ +e,ie8 on ce+tio+a+i of the O+0e+ of )+anch $J of the Re1ional T+ial Cou+t of .ipa Cit4 = 0is9issin1 petitione+sL co9plaint @
fo+ +escission of se,e+al sale t+ansactions in,ol,in1 lan0 o8ne0 b4 (u1usto .. Salas' %+.' thei+ p+e0ecesso+?in?inte+est' on the 1+oun0 that the4 faile0
to fi+st +eso+t to a+bit+ation.
Salas' %+. 8as the +e1iste+e0 o8ne+ of a ,ast t+act of lan0 in .ipa Cit4' )atan1as spannin1 '&$&'@J& s7ua+e 9ete+s.
On Ma4 J' #$"' he ente+e0 into an O8ne+?Cont+acto+ (1+ee9ent & Che+einafte+ +efe++e0 to as the (1+ee9entD 8ith +espon0ent .ape+al Realt4
Co+po+ation Che+einafte+ +efe++e0 to as .ape+al Realt4D to +en0e+ an0 p+o,i0e co9plete Cho+i3ontalD const+uction se+,ices on his lan0.
On Septe9be+ =@' #$$' Salas' %+. eBecute0 a Special Po8e+ of (tto+ne4 in fa,o+ of +espon0ent .ape+al Realt4 to eBe+cise 1ene+al cont+ol'
supe+,ision an0 9ana1e9ent of the sale of his lan0' fo+ cash o+ on install9ent basis.
On %une !' #$#' Salas' %+. left his ho9e in the 9o+nin1 fo+ a business t+ip to Nue,a Eci:a. -e ne,e+ +etu+ne0.
On (u1ust A' ##A' Te+esita Dia3 Salas file0 8ith the Re1ional T+ial Cou+t of Ma<ati Cit4 a ,e+ifie0 petition fo+ the 0ecla+ation of p+esu9pti,e 0eath of
he+ husban0' Salas' %+.' 8ho ha0 then been 9issin1 fo+ 9o+e than se,en C"D 4ea+s. It 8as 1+ante0 on Dece9be+ =' ##A. J
Meanti9e' +espon0ent .ape+al Realt4 sub0i,i0e0 the lan0 of Salas' %+. an0 sol0 sub0i,i0e0 po+tions the+eof to +espon0ents Roc<8a4 Real Estate
Co+po+ation an0 South Ri01e Villa1e' Inc. on Feb+ua+4 ==' ##!F to +espon0ent spouses (b+a:ano an0 .a,a an0 Osca+ Dacillo on %une ="' ##F
an0 to +espon0ents E0ua+0o Vacuna' Flo+ante 0e la C+u3 an0 %esus Vicente Capalan on %une &' ##A Call of 8ho9 a+e he+einafte+ +efe++e0 to as
+espon0ent lot bu4e+sD.
On Feb+ua+4 @' ##$' petitione+s as hei+s of Salas' %+. file0 in the Re1ional T+ial Cou+t of .ipa Cit4 a Co9plaint A fo+ 0ecla+ation of nullit4 of sale'
+econ,e4ance' cancellation of cont+act' accountin1 an0 0a9a1es a1ainst he+ein +espon0ents 8hich 8as 0oc<ete0 as Ci,il Case No. #$?!!&".
On (p+il =&' ##$' +espon0ent .ape+al Realt4 file0 a Motion to
Dis9iss " on the 1+oun0 that petitione+s faile0 to sub9it thei+ 1+ie,ance to a+bit+ation as +e7ui+e0 un0e+ (+ticle VI of the (1+ee9ent 8hich p+o,i0es;
(+t. VI. (R)ITR(TION.
(ll cases of 0ispute bet8een CONTR(CTOR an0 OENERLS +ep+esentati,e shall be +efe++e0 to the co99ittee +ep+esente0 b4;
a. One +ep+esentati,e of the OENERF
b. One +ep+esentati,e of the CONTR(CTORF
c. One +ep+esentati,e acceptable to both OENER an0 CONTR(CTOR. $
On Ma4 J' ##$' +espon0ent spouses (b+a:ano an0 .a,a an0 +espon0ent Dacillo file0 a %oint (ns8e+ 8ith Counte+clai9 an0 C+ossclai9 # p+a4in1
fo+ 0is9issal of petitione+sL Co9plaint fo+ the sa9e +eason.
On (u1ust #' ##$' the t+ial cou+t issue0 the he+ein assaile0 O+0e+ 0is9issin1 petitione+sL Co9plaint fo+ non?co9pliance 8ith the fo+e1oin1 a+bit+ation
clause.
-ence this petition.
RU.ING;
Nonetheless' 8e 1+ant the petition.
( sub9ission to a+bit+ation is a cont+act. A (s such' the (1+ee9ent' containin1 the stipulation on a+bit+ation' bin0s the pa+ties the+eto' as 8ell as
thei+ assi1ns an0 hei+s. " )ut onl4 the4. Petitione+s' as hei+s of Salas' %+.' an0 +espon0ent .ape+al Realt4 a+e ce+tainl4 boun0 b4 the (1+ee9ent. If
+espon0ent .ape+al Realt4 ha0 assi1ne0 its +i1hts un0e+ the (1+ee9ent to a thi+0 pa+t4' 9a<in1 the fo+9e+' the assi1no+' an0 the latte+' the assi1nee'
such assi1nee 8oul0 also be boun0 b4 the a+bit+ation p+o,ision since assi1n9ent in,ol,es such t+ansfe+ of +i1hts as to ,est in the assi1nee the
po8e+ to enfo+ce the9 to the sa9e eBtent as the assi1no+ coul0 ha,e enfo+ce0 the9 a1ainst the 0ebto+ $ o+ in this case' a1ainst the hei+s of the
o+i1inal pa+t4 to the (1+ee9ent. -o8e,e+' +espon0ents Roc<8a4 Real Estate Co+po+ation' South Ri01e Villa1e' Inc.' Maha+a9i De,elop9ent
Co+po+ation' spouses (b+a:ano' spouses .a,a' Osca+ Dacillo' E0ua+0o Vacuna' Flo+ante 0e la C+u3 an0 %esus Vicente Capellan a+e not assi1nees
of the +i1hts of +espon0ent .ape+al Realt4 un0e+ the (1+ee9ent to 0e,elop Salas' %+.Ls lan0 an0 sell the sa9e. The4 a+e' +athe+' bu4e+s of the lan0
that +espon0ent .ape+al Realt4 8as 1i,en the autho+it4 to 0e,elop an0 sell un0e+ the (1+ee9ent. (s such' the4 a+e not Iassi1nsI conte9plate0 in (+t.
@ of the Ne8 Ci,il Co0e 8hich p+o,i0es that Icont+acts ta<e effect onl4 bet8een the pa+ties' thei+ assi1ns an0 hei+sI.
25
Petitione+s clai9 that the4 suffe+e0 lesion of 9o+e than one?fou+th CG&D of the ,alue of Salas' %+.Ls lan0 8hen +espon0ent .ape+al Realt4 sub0i,i0e0 it
an0 sol0 po+tions the+eof to +espon0ent lot bu4e+s. Thus' the4 institute0 action # a1ainst both +espon0ent .ape+al Realt4 an0 +espon0ent lot bu4e+s
fo+ +escission of the sale t+ansactions an0 +econ,e4ance to the9 of the sub0i,i0e0 lots. The4 a+1ue that +escission' bein1 thei+ cause of action' falls
un0e+ the eBception clause in Sec. = of Republic (ct No. $"A 8hich p+o,i0es that Isuch sub9ission RtoS o+ cont+act Rof a+bit+ationS shall be ,ali0'
enfo+ceable an0 i++e,ocable' sa,e upon such 1+oun0s as eBist at la8 fo+ the +e,ocation of an4 cont+actI.
The petitione+sL contention is 8ithout 9e+it. Fo+ 8hile +escission' as a 1ene+al +ule' is an a+bit+able issue' =! the4 i9plea0e0 in the suit fo+ +escission
the +espon0ent lot bu4e+s 8ho a+e neithe+ pa+ties to the (1+ee9ent no+ the latte+Ls assi1ns o+ hei+s. Conse7uentl4' the +i1ht to a+bit+ate as p+o,i0e0 in
(+ticle VI of the (1+ee9ent 8as ne,e+ ,este0 in +espon0ent lot bu4e+s.
Respon0ent .ape+al Realt4' as a cont+actin1 pa+t4 to the (1+ee9ent' has the +i1ht to co9pel petitione+s to fi+st a+bit+ate befo+e see<in1 :u0icial +elief.
-o8e,e+' to split the p+ocee0in1s into a+bit+ation fo+ +espon0ent .ape+al Realt4 an0 t+ial fo+ the +espon0ent lot bu4e+s' o+ to hol0 t+ial in abe4ance
pen0in1 a+bit+ation bet8een petitione+s an0 +espon0ent .ape+al Realt4' 8oul0 in effect +esult in 9ultiplicit4 of suits' 0uplicitous p+oce0u+e an0
unnecessa+4 0ela4. On the othe+ han0' it 8oul0 be in the inte+est of :ustice if the t+ial cou+t hea+s the co9plaint a1ainst all he+ein +espon0ents an0
a0:u0icates petitione+sL +i1hts as a1ainst thei+s in a sin1le an0 co9plete p+ocee0in1.
E-EREFORE' the instant petition is he+eb4 GR(NTED. The O+0e+ 0ate0 (u1ust #' ##$ of )+anch $J of the Re1ional T+ial Cou+t of .ipa Cit4 is
he+eb4 NU..IFIED an0 SET (SIDE. Sai0 cou+t is he+eb4 o+0e+e0 to p+ocee0 8ith the hea+in1 of Ci,il Case No. #$?!!&".
Costs a1ainst p+i,ate +espon0ents.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. @AJ& Feb+ua+4 "' =!!
DE. MONTE CORPOR(TION?US(' P(U. E. DER)6' %R.' D(NIE. CO..INS an0 .UIS -ID(.GO' petitione+s'
,s.
COURT OF (PPE(.S' %UDGE )IENVENIDO .. RE6ES in his capacit4 as P+esi0in1 %u01e' RTC?)+. "&' Malabon' Met+o Manila' MONTE)UENO
M(R*ETING' INC.' .IONG .IONG C. S6 an0 S()ROS( FOODS' INC.' +espon0ents.
)E..OSI..O' %.;
F(CTS;
This Petition fo+ Re,ie8 on ce+tio+a+i assails the " %ul4 ##$ Decision of the Cou+t of (ppeals affi+9in1 the No,e9be+ ##" O+0e+= of the
Re1ional T+ial Cou+t 8hich 0enie0 petitione+sL Motion to Suspen0 P+ocee0in1s in Ci,il Case No. =A@"?MN. It also 7uestions the appellate cou+tLs
Resolution@ of @! Octobe+ ##$ 8hich 0enie0 petitione+sL Motion fo+ Reconsi0e+ation.
On %ul4 ##&' in a Dist+ibuto+ship (1+ee9ent' petitione+ Del Monte Co+po+ation?US( CDMC?US(D appointe0 p+i,ate +espon0ent Montebueno
Ma+<etin1' Inc. CMMID as the sole an0 eBclusi,e 0ist+ibuto+ of its Del Monte p+o0ucts in the Philippines fo+ a pe+io0 of fi,e CJD 4ea+s' +ene8able fo+ t8o
C=D consecuti,e fi,e CJD 4ea+ pe+io0s 8ith the consent of the pa+ties. The a1+ee9ent p+o,i0e0' a9on1 othe+s' fo+ an a+bit+ation clause 8hich states V
=. GOVERNING .(E (ND (R)ITR(TION&
This (1+ee9ent shall be 1o,e+ne0 b4 the la8s of the State of Califo+nia an0Go+' if applicable' the Unite0 States of (9e+ica. (ll 0isputes a+isin1 out of
o+ +elatin1 to this (1+ee9ent o+ the pa+tiesL +elationship' inclu0in1 the te+9ination the+eof' shall be +esol,e0 b4 a+bit+ation in the Cit4 of San
F+ancisco' State of Califo+nia' un0e+ the Rules of the (9e+ican (+bit+ation (ssociation. The a+bit+ation panel shall consist of th+ee 9e9be+s' one of
8ho9 shall be selecte0 b4 DMC?US(' one of 8ho9 shall be selecte0 b4 MMI' an0 thi+0 of 8ho9 shall be selecte0 b4 the othe+ t8o 9e9be+s an0
shall ha,e +ele,ant eBpe+ience in the in0ust+4 B B B B
26
In Octobe+ ##& the appoint9ent of p+i,ate +espon0ent MMI as the sole an0 eBclusi,e 0ist+ibuto+ of Del Monte p+o0ucts in the Philippines 8as
publishe0 in se,e+al ne8spape+s in the count+4. I99e0iatel4 afte+ its appoint9ent' p+i,ate +espon0ent MMI appointe0 Sab+osa Foo0s' Inc. CSFID' 8ith
the app+o,al of petitione+ DMC?US(' as MMILs 9a+<etin1 a+9 to concent+ate on its 9a+<etin1 an0 sellin1 function as 8ell as to 9ana1e its c+itical
+elationship 8ith the t+a0e.
On @ Octobe+ ##A p+i,ate +espon0ents MMI' SFI an0 MMILs Mana1in1 Di+ecto+ .ion1 .ion1 C. S4 C.I.6 S6D file0 a Co9plaintJ a1ainst petitione+s
DMC?US(' Paul E. De+b4' %+.'A Daniel Collins" an0 .uis -i0al1o'$ an0 De8e4 .t0.# befo+e the Re1ional T+ial Cou+t of Malabon' Met+o Manila.
P+i,ate +espon0ents p+e0icate0 thei+ co9plaint on the alle1e0 ,iolations b4 petitione+s of (+ts. =!'! = an0 =@= of the Ci,il Co0e. (cco+0in1 to
p+i,ate +espon0ents' DMC?US( p+o0ucts continue0 to be b+ou1ht into the count+4 b4 pa+allel i9po+te+s 0espite the appoint9ent of p+i,ate
+espon0ent MMI as the sole an0 eBclusi,e 0ist+ibuto+ of Del Monte p+o0ucts the+eb4 causin1 the9 1+eat e9ba++ass9ent an0 substantial 0a9a1e.
The4 alle1e0 that the p+o0ucts b+ou1ht into the count+4 b4 these i9po+te+s 8e+e a1e0' 0a9a1e0' fa<e o+ counte+feit' so that in Ma+ch ##J the4 ha0
to cause' afte+ p+io+ consultation 8ith (ntonio On1pin' Ma+<et Di+ecto+ fo+ Special Ma+<ets of Del Monte Philippines' Inc.' the publication of a
I8a+nin1 to the t+a0eI pai0 a0,e+tise9ent in lea0in1 ne8spape+s. Petitione+s DMC?US( an0 Paul E. De+b4' %+.' appa+entl4 upset 8ith the publication'
inst+ucte0 p+i,ate +espon0ent MMI to stop coo+0inatin1 8ith (ntonio On1pin an0 to co99unicate 0i+ectl4 instea0 8ith petitione+ DMC?US( th+ou1h
Paul E. De+b4' %+.
On = Octobe+ ##A petitione+s file0 a Motion to Suspen0 P+ocee0in1s@ in,o<in1 the a+bit+ation clause in thei+ (1+ee9ent 8ith p+i,ate
+espon0ents.W8phi.nXt
RU.ING;
-ence' this Petition fo+ Re,ie8.
The c+uB of the cont+o,e+s4 boils 0o8n to 8hethe+ the 0ispute bet8een the pa+ties 8a++ants an o+0e+ co9pellin1 the9 to sub9it to a+bit+ation.
( ca+eful eBa9ination of the instant case sho8s that the a+bit+ation clause in the Dist+ibuto+ship (1+ee9ent bet8een petitione+ DMC?US( an0 p+i,ate
+espon0ent MMI is ,ali0 an0 the 0ispute bet8een the pa+ties is a+bit+able. -o8e,e+' this Cou+t 9ust 0en4 the petition.
The (1+ee9ent bet8een petitione+ DMC?US( an0 p+i,ate +espon0ent MMI is a cont+act. The p+o,ision to sub9it to a+bit+ation an4 0ispute a+isin1
the+ef+o9 an0 the +elationship of the pa+ties is pa+t of that cont+act an0 is itself a cont+act. (s a +ule' cont+acts a+e +especte0 as the la8 bet8een the
cont+actin1 pa+ties an0 p+o0uce effect as bet8een the9' thei+ assi1ns an0 hei+s.=& Clea+l4' onl4 pa+ties to the (1+ee9ent' i.e.' petitione+s DMC?US(
an0 its Mana1in1 Di+ecto+ fo+ EBpo+t Sales Paul E. De+b4' %+.' an0 p+i,ate +espon0ents MMI an0 its Mana1in1 Di+ecto+ .I.6 S6 a+e boun0 b4 the
(1+ee9ent an0 its a+bit+ation clause as the4 a+e the onl4 si1nato+ies the+eto. Petitione+s Daniel Collins an0 .uis -i0al1o' an0 p+i,ate +espon0ent SFI'
not pa+ties to the (1+ee9ent an0 cannot e,en be consi0e+e0 assi1ns o+ hei+s of the pa+ties' a+e not boun0 b4 the (1+ee9ent an0 the a+bit+ation
clause the+ein. Conse7uentl4' +efe++al to a+bit+ation in the State of Califo+nia pu+suant to the a+bit+ation clause an0 the suspension of the p+ocee0in1s
in Ci,il Case No. =A@"?MN pen0in1 the +etu+n of the a+bit+al a8a+0 coul0 be calle0 fo+=J but onl4 as to petitione+s DMC?US( an0 Paul E. De+b4' %+.'
an0 p+i,ate +espon0ents MMI an0 .I.6 S6' an0 not as to the othe+ pa+ties in this case. This is consistent 8ith the +ecent case of -ei+s of (u1usto ..
Salas' %+. ,. .ape+al Realt4 Co+po+ation'=A 8hich supe+se0e0 that of To4ota Moto+ Philippines Co+p. ,. Cou+t of (ppeals.="
The ob:ect of a+bit+ation is to allo8 the eBpe0itious 0ete+9ination of a 0ispute.@ Clea+l4' the issue befo+e us coul0 not be spee0il4 an0 efficientl4
+esol,e0 in its enti+et4 if 8e allo8 si9ultaneous a+bit+ation p+ocee0in1s an0 t+ial' o+ suspension of t+ial pen0in1 a+bit+ation. (cco+0in1l4' the inte+est of
:ustice 8oul0 onl4 be se+,e0 if the t+ial cou+t hea+s an0 a0:u0icates the case in a sin1le an0 co9plete p+ocee0in1.@=
E-EREFORE' the petition is DENIED. The Decision of the Cou+t of (ppeals affi+9in1 the O+0e+ of the Re1ional T+ial Cou+t of Malabon' Met+o
Manila' in Ci,il Case No. =A@"?MN' 8hich 0enie0 petitione+sL Motion to Suspen0 P+ocee0in1s' is (FFIRMED. The Re1ional T+ial Cou+t conce+ne0 is
0i+ecte0 to p+ocee0 8ith the hea+in1 of Ci,il Case No. =A@"?MN 8ith 0ispatch. No costs.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. J&= No,e9be+ #' ###
-OME )(N*ERS S(VINGS (ND TRUST COMP(N6' petitione+'
,s.
COURT OF (PPE(.S an0 F(R E(ST )(N* 5 TRUST CO.' INC. +espon0ents.
27

)UEN(' %.;
F(CTS;
This appeal b4 ce+tio+a+i un0e+ Rule &J of the Rules of Cou+t see<s to annul an0 set asi0e the 0ecision of the Cou+t of (ppeals = 0ate0 %anua+4 ='
##& in C(?G.R. SP No. =#"=J' 0is9issin1 the petition fo+ ce+tio+a+i file0 b4 petitione+ to annul the t8o C=D o+0e+s issue0 b4 the Re1ional T+ial Cou+t
of Ma<ati @ in Ci,il Case No. #=?&J' the fi+st' 0ate0 (p+il @!' ##=' 0en4in1 petitione+Ls 9otion to 0is9iss an0 the secon0' 0ate0 Octobe+ ' ##=
0en4in1 petitione+Ls 9otion fo+ +econsi0e+ation the+eof.
The pe+tinent facts 9a4 be b+iefl4 state0 as follo8s; Victo+ Tancuan' one of the 0efen0ants in Ci,il Case No. #=?&J' issue0 -o9e )an<e+s Sa,in1s
an0 T+ust Co9pan4 C-)STCD chec< No. #@&#$ fo+ P=J'=J!'!!!.!! 8hile Eu1ene (++ies1a0o issue0 Fa+ East )an< an0 T+ust Co9pan4 CFE)TCD
chec< Nos. &A&=A&' &A&="= an0 &A&=" fo+ P$'A!!'!!!.!!' P$'J!!'!!!.!! an0 P$'!!'!!!.!!' +especti,el4' the th+ee chec<s a9ountin1 to
P=J'=!!'!!!.!!. Tancuan an0 (++ies1a0o eBchan1e0 each othe+Ls chec<s an0 0eposite0 the9 8ith thei+ +especti,e ban<s fo+ collection. Ehen
FE)TC p+esente0 TancuanLs -)STC chec< fo+ clea+in1' -)STC 0ishono+e0 it fo+ bein1 ID+a8n (1ainst Insufficient Fun0s.I On Octobe+ J' ##'
-)STC sent (++ies1a0oLs th+ee C@D FE)TC chec<s th+ou1h the Philippine Clea+in1 -ouse Co+po+ation CPC-CD to FE)TC but 8as +etu+ne0 on
Octobe+ $' ## as ID+a8n (1ainst Insufficient Fun0s.I -)STC +ecei,e0 the notice of 0ishono+ on Octobe+ =' ## but +efuse0 to accept the
chec<s an0 on Octobe+ ==' ##' +etu+ne0 the9 to FE)TC th+ou1h the PC-C fo+ the +eason I)e4on0 Re1le9enta+4 Pe+io0'I i9pl4in1 that -)STC
al+ea04 t+eate0 the th+ee C@D FE)TC chec<s as clea+e0 an0 allo8e0 the p+ocee0s the+eof to be 8ith0+a8n. & FE)TC 0e9an0e0 +ei9bu+se9ent fo+
the +etu+ne0 chec<s an0 in7ui+e0 f+o9 -)STC 8hethe+ it ha0 pe+9itte0 an4 8ith0+a8al of fun0s a1ainst the unfun0e0 chec<s an0 if so' on 8hat
0ate. -)STC' ho8e,e+' +efuse0 to 9a<e an4 +ei9bu+se9ent an0 to p+o,i0e FE)TC 8ith the nee0e0 info+9ation.
Thus' on Dece9be+ =' ##' FE)TC sub9itte0 the 0ispute fo+ a+bit+ation befo+e the PC-C (+bit+ation Co99ittee' J un0e+ the PC-CLs
Supple9enta+4 Rules on Re1ional Clea+in1 to 8hich FE)TC an0 -)STC a+e boun0 as pa+ticipants in the +e1ional clea+in1 ope+ations a09iniste+e0
b4 the PC-C. A
On %anua+4 "' ##=' 8hile the a+bit+ation p+ocee0in1 8as still pen0in1' FE)TC file0 an action fo+ su9 of 9one4 an0 0a9a1es 8ith p+eli9ina+4
attach9ent " a1ainst -)STC' Robe+t 6oun1' Victo+ Tancuan an0 Eu1ene (++ies1a0o 8ith the Re1ional T+ial Cou+t of Ma<ati' )+anch @@. ( 9otion to
0is9iss 8as file0 b4 -)STC clai9in1 that the co9plaint state0 no cause of action an0 acco+0in1l4 I. . . shoul0 be 0is9isse0 because it see<s to
enfo+ce an a+bit+al a8a+0 8hich as 4et 0oes not eBist.I $ The t+ial cou+t issue0 an o9nibus o+0e+ 0ate0 (p+il @!' ##= 0en4in1 the 9otion to 0is9iss
an0 an o+0e+ 0ate0 Octobe+ ' ##= 0en4in1 the 9otion fo+ +econsi0e+ation.
RU.ING;
In this petition' the lone issue p+esente0 fo+ the consi0e+ation of this Cou+t is;
E-ET-ER OR NOT PRIV(TE RESPONDENT E-IC- COMMENCED (N (R)ITR(TION PROCEEDING UNDER T-E (USPICES OF T-E
P-I.IPPINE C.E(RING -OUSE CORPOR(TION CPC-CD M(6 SU)SE2UENT.6 FI.E ( SEP(R(TE C(SE IN COURT OVER T-E S(ME
SU)%ECT M(TTER OF (R)ITR(TION DESPITE T-E PENDENC6 OF T-(T (R)ITR(TION' SIMP.6 TO O)T(IN T-E PROVISION(. REMED6
OF (TT(C-MENT (G(INST T-E )(N* T-E (DVERSE P(RT6 IN T-E (R)ITR(TION PROCEEDING. &=
Ee fin0 no 9e+it in the petition. Section & of Republic (ct $"A' othe+8ise <no8n as the (+bit+ation .a8' allo8s an4 pa+t4 to the a+bit+ation
p+ocee0in1 to petition the cou+t to ta<e 9easu+es to safe1ua+0 an0Go+ conse+,e an4 9atte+ 8hich is the sub:ect of the 0ispute in a+bit+ation' thus;
Sec. &. Subpoena an0 subpoena 0uces tecu9. H (+bit+ato+s shall ha,e the po8e+ to +e7ui+e an4 pe+son to atten0 a hea+in1 as a 8itness. The4
shall ha,e the po8e+ to subpoena 8itnesses an0 0ocu9ents 8hen the +ele,anc4 of the testi9on4 an0 the 9ate+ialit4 the+eof has been 0e9onst+ate0
to the a+bit+ato+s. (+bit+ato+s 9a4 also +e7ui+e the +eti+e9ent of an4 8itness 0u+in1 the testi9on4 of an4 othe+ 8itness. (ll of the a+bit+ato+s appointe0
in an4 cont+o,e+s4 9ust atten0 all the hea+in1s in that 9atte+ an0 hea+ all the alle1ations an0 p+oofs of the pa+tiesF but an a8a+0 b4 the 9a:o+it4 of
the9 is ,ali0 unless the concu++ence of all of the9 is eBp+essl4 +e7ui+e0 in the sub9ission o+ cont+act to a+bit+ate. The a+bit+ato+ o+ a+bit+ato+s shall
ha,e the po8e+ at an4 ti9e' befo+e +en0e+in1 the a8a+0' 8ithout p+e:u0ice to the +i1hts of an4 pa+t4 to petition the cou+t to ta<e 9easu+es to
safe1ua+0 an0Go+ conse+,e an4 9atte+ 8hich is the sub:ect of the 0ispute in a+bit+ation. Ce9phasis supplie0D
Petitione+Ls eBposition of the fo+e1oin1 p+o,ision 0ese+,es scant consi0e+ation. Section & si9pl4 1+ants an a+bit+ato+ the po8e+ to issue subpoena
an0 subpoena 0uces tecu9 at an4 ti9e befo+e +en0e+in1 the a8a+0. The eBe+cise of such po8e+ is 8ithout p+e:u0ice to the +i1ht of a pa+t4 to file a
petition in cou+t to safe1ua+0 an4 9atte+ 8hich is the sub:ect of the 0ispute in a+bit+ation. In the case at ba+' p+i,ate +espon0ent file0 an action fo+ a
su9 of 9one4 8ith p+a4e+ fo+ a 8+it of p+eli9ina+4 attach9ent. Un0oubte0l4' such action in,ol,e0 the sa9e sub:ect 9atte+ as that in a+bit+ation' i.e.'
the su9 of P=J'=!!'!!!.!! 8hich 8as alle1e0l4 0ep+i,e0 f+o9 p+i,ate +espon0ent in 8hat is <no8n in ban<in1 as a I<itin1 sche9e.I -o8e,e+' the
ci,il action 8as not a si9ple case of a 9one4 clai9 since p+i,ate +espon0ent has inclu0e0 a p+a4e+ fo+ a 8+it of p+eli9ina+4 attach9ent' 8hich is
sanctione0 b4 section & of the (+bit+ation .a8.
28
. . . . . .. Un0e+ the +ules an0 +e1ulations of the Philippine Clea+in1 -ouse Co+po+ation CPC-CD' the 9e+e act of pa+ticipation of the pa+ties conce+ne0
in its ope+ations in effect a9ounts to a 9anifestation of a1+ee9ent b4 the pa+ties to abi0e b4 its +ules an0 +e1ulations. (s a conse7uence of such
pa+ticipation' a pa+t4 cannot in,o<e the :u+is0iction of the cou+ts o,e+ 0isputes an0 cont+o,e+sies 8hich fall un0e+ the PC-C Rules an0 Re1ulations
8ithout fi+st 1oin1 th+ou1h the a+bit+ation p+ocesses lai0 out b4 the bo04. &" Ce9phasis supplie0D
(t this point' 8e e9phasi3e that a+bit+ation' as an alte+nati,e 9etho0 of 0ispute +esolution' is encou+a1e0 b4 this Cou+t. (si0e f+o9 unclo11in1
:u0icial 0oc<ets' it also hastens solutions especiall4 of co99e+cial 0isputes. J! The Cou+t loo<s 8ith fa,o+ upon such a9icable a++an1e9ent an0 8ill
onl4 inte+fe+e 8ith 1+eat +eluctance to anticipate o+ nullif4 the action of the a+bit+ato+. J
E-EREFORE' p+e9ises consi0e+e0' the petition is he+eb4 DISMISSED an0 the 0ecision of the cou+t a 7uo is (FFIRMED.
SO ORDERED.
29