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Sec. 7 - Record of Pre-Trial

G.R. No. 73077 December 29, 1995
ESCOLASTICA MONTESCLAROS SON, and HEIRS OF
ANASTACIO SON, petitioners, vs.
CARMELINO SON, TEOFISTA SON, PRIMITIVO SON,
CIPRIANA SON, ANATALIA SON, LAREANO SON,
GERARDA SON and THE HONORABLE INTERMEDIATE
APPELLATE COURT, respondents.

Facts:
Private respondents are the heirs of Pedro Son, who
during his lifetime, inherited a parcel of land from his
parents.

Upon discovery that a portion of it was being
occupied by the petitioners, heirs of Anastacio Son,
his brother, private respondents demanded the
return of said land to their possession, but the
petitioners refused and claimed that a deed of
absolute sale was allegedly executed by Pedro Son
in November 1957 in their favor. Consequently, the
private respondents filed a complaint with CFI
for annulment of Deed of Absolute Sale dated 5
November 1957 on grounds of forgery and for
recovery of real property.

During the pre-trial conference, the parties agreed to
limit the issue to the validity or invalidity of the
aforementioned deed of absolute sale.

The trial court rendered a decision declaring the
1957 Deed of Absolute Sale as null and void.

The petitioners filed a motion for reconsideration
insisting that by virtue of an earlier Deed of Sale
with Right of Repurchase, dated 17 December
1951, wherein Pedro Son allegedly sold to
petitioners of the land he inherited but with a right
to repurchase within 1 year, petitioners acquired
ownership thereof for failure of Pedro Son to redeem
the same within the period stipulated.

The trial court reversed its earlier decision and
dismissed the complaint.

After the denial of their motion for reconsideration,
the private respondents appealed to the CA.
The CA reversed the trial courts order holding that
the delimitation of issues at a pre-trial conference
bars the consideration of other questions on appeal,
considering that the validity of the 1951 Deed of Sale
discussed in their MR had already been waived by
them. It further held that defendants (petitioners)
failure to disclose this defense is contrary to the
purpose and spirit of the pre-trial procedure.
Defendants are bound by the delimitation of the
issues contained in the trial courts' order issued on
the very day the pre-trial conference was held. Such
order controls the subsequent course of action,
unless modified before trial to prevent manifest
injustice. In this case, modification of the pre-trial
order was never sought at the instance of any party.

The CA however upheld the trial courts ruling that
the 1957 Deed of Sale was simulated, forged and
therefore null and void. Hence, the present petition

Issue:
Whether or not the parties are bound by the
delimitation of issues in the Pre-Trial Order

Ruling:
NO, the rules are not applied with rigidity. To prevent
manifest injustice, some exceptions are admitted.

The case at bar falls under this particular exception.
Private respondents' failure to raise any objection:
(a) when petitioners presented in evidence the 1951
Deed of Sale with Right to Repurchase;

(b) when
petitioners' counsel vigorously cross-examined
respondent Teofista Son Arcipe on the
aforementioned deed;

and (c) when Anastacio Son
testified on said document,

constitutes an implied
assent on the part of respondents to depart from the
issue contained in the pre-trial order.

Private respondents' implied consent to try the issue
was further demonstrated by their own counsel's
extensive cross-examination of petitioners' witness
Anastacio Son regarding both the 1951 Deed of Sale
with Right to Repurchase and the 1957 Deed of
Absolute Sale.


Private respondents cannot claim that they were not
adequately prepared to meet petitioners' defense.
They were simply not "caught in surprise." On the
other hand, they had every opportunity to present
rebuttal or counter-evidence on the issue.

Petition granted. CA reversed and set aside. RTC
judgment reinstated.
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Alternative Dispute Resolution (ADR)
R.A. No. 9285; A.M. No. 01-10-5-SC
- Special Rules of Court on ADR
(A.M. 07-11-08-SC)

G.R. NO. 152471 August 18, 2006
FIESTA WORLD MALL CORP., Petitioner, vs.
LINBERG PHILIPPINES, INC., Respondent.

Facts:
The petitioner is the owner and operator of the
Fiesta World Mall in Lipa City; while respondent is a
corporation that builds and operates power plants.

Petitioner and respondent executed a build-own-
operate agreement, entitled Contract Agreement for
Power Supply Services, 3.8 MW Base Local Load
Power Plant (the contract). Under this contract, the
respondent will construct, at its own cost, and
operate as owner a power plant, and to supply
petitioner power/electricity at its shopping mall in
Lipa City. Petitioner on the other hand, will pay
respondent energy fees, which is based on the
actual KWH generated by the plant. As the power
plant became operational, the respondent started
billing the petitioner. However, the petitioner
questioned the amount which totaled to more than
P15M, and refused to pay despite respondents
repeated demands.

Respondent filed with RTC-Pasig a Complaint for
Sum of Money against petitioner. In its Answer with
Compulsory Counterclaim, petitioner specifically
denied the allegations in the complaint, claiming that
respondent failed to fulfill its obligations under the
Contract by failing to supply all its power/fuel needs.
It further alleged that respondents filing of the
complaint is premature and should be dismissed
on the ground of non-compliance with the
provisions of the Contract on Disputes, to wit:

7.4 Disputes

If FIESTA WORLD disputes the amount
specified by any invoice, it shall pay the
undisputed amount on or before such
date(s), and the disputed amount shall be
resolved by arbitration of three (3) persons,
one (1) by mutual choice, while the other two (2)
to be each chosen by the parties themselves,
within fourteen (14) days after the due date for
such invoice and all or any part of the disputed
amount paid to LINBERG shall be paid together
with interest pursuant to Article XXV from the
due date of the invoice. It is agreed, however,
that both parties must resolve the disputes
within thirty (30) days, otherwise any delay in
payment resulting to loss to LINBERG when
converted to $US as a result of depreciation of
the Pesos shall be for the account of FIESTA
WORLD. Corollarily, in case of erroneous
billings, however, LINBERG shall be liable to
pay FIESTA WORLD for the cost of such
deterioration, plus interest computed pursuant to
Art. XXV from the date FIESTA WORLD paid for
the erroneous billing. (Underscoring supplied)

Thereafter, petitioner filed a Motion to Set Case for
Preliminary Hearing on the ground that the
respondent violated the arbitration clause provided
in the Contract.

The respondent opposed the motion contending
that:

17.2 Amicable Settlement:

The parties hereto agree that in the event there
is any dispute or difference between them
arising out of this Agreement or in the
interpretation of any of the provisions hereto,
they shall endeavor to meet together in an effort
to resolve such dispute by discussion between
them but failing such resolution the Chief
Executives of LINBERG and FIESTA WORLD
shall meet to resolve such dispute or difference
and the joint decision of such shall be binding
upon the parties hereto, and in the event that a
settlement of any such dispute or difference is
not reached, then the provisions of Article XXI
shall apply. (Art. XXI refers to jurisdiction of
RTC-Pasig)

The trial court denied the motion for lack of merit as
well as its MR.

The petitioner elevated the matter to CA but to no
avail. (petition dismissed; MR denied).

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Hence, the instant petition for review

Issue:
Whether or not the filing with the trial court of
respondents complaint is premature

Ruling:
YES. Paragraph 7.4 of the Contract mandates that
should the petitioner dispute any amount of energy
fees in the invoice and billings made by respondent,
the same "shall be resolved by arbitration of three
(3) persons, one (1) by mutual choice, while the
other two (2) to be each chosen by the parties
themselves." The parties, in incorporating such
agreement in their Contract, expressly intended that
the said matter in dispute must first be resolved by
an arbitration panel before it reaches the court. They
made such arbitration mandatory.

It is clear from the records that petitioner disputed
the amount of energy fees demanded by
respondent. However, respondent, without prior
recourse to arbitration as required in the Contract,
filed directly with the trial court its complaint, thus
violating the arbitration clause in the Contract.

It bears stressing that such arbitration agreement is
the law between the parties. Since that agreement is
binding between them, they are expected to abide
by it in good faith. And because it covers the dispute
between them in the present case, either of them
may compel the other to arbitrate. Thus, it is well
within petitioners right to demand recourse to
arbitration.

In this connection, since respondent has already
filed a complaint with the trial court without prior
recourse to arbitration, the proper procedure to
enable an arbitration panel to resolve the parties
dispute pursuant to their Contract is for the trial court
to stay the proceedings. After the arbitration
proceeding has been pursued and completed, then
the trial court may confirm the award made by the
arbitration panel.

In sum, we hold that the Court of Appeals erred in
disregarding the arbitration clause in the parties
Contract.

Petition granted. Parties are ordered to submit
their controversy to arbitration panel.
MODES OF DISCOVERY

Rule 23 DEPOSITIONS PENDING ACTION
Sec. 4 Use of deposition

G.R. No. 108229 August 24, 1993
DASMARIAS GARMENTS, INC., petitioner,
vs. HON. RUBEN T. REYES, Judge, Regional
Trial Court, Manila, Branch 50, and AMERICAN
PRESIDENT LINES, LTD., respondents.

Facts:
Respondent APL sued petitioner Dasmarinas before
the RTC-Manila to recover the sum of US$53,228.45
plus 25% as for attorneys fee and litigation
expenses.

In its Answer, Dasmarinas specifically denied any
liability to APL and set up compulsory counterclaims
against it.

A trial was then scheduled wherein APL presented
its first witness whose testimony was completed.
The case was reset for reception of the testimony of
the two (2) more witnesses in APLs behalf.

During the scheduled hearing, instead of presenting
its witnesses, APL filed a motion praying that it
intended to take the depositions of H. Lee and
Yeong Fang Yeh in Taipei, Taiwan and prayed that
for this purpose, a "commission or letters rogatory
be issued addressed to the consul, vice-consul or
consular agent of the Republic of the Philippines in
Taipei . . . " Five (5) days later APL filed an
amended motion stating that since the Philippine
Government has no consulate office in Taiwan in
view of its "one China policy," there being in lieu
thereof an office set up by the President "presently
occupied by Director Joaquin Roces which is the
Asia Exchange Center, Inc.," it was necessary
and it therefore prayed "that commission or letters
rogatory be issued addressed to Director Joaquin
Roces, Executive Director, Asian Executive
Exchange Center, Inc., Room 901, 112 Chunghsiao,
E. Road, Section 1, Taipe, Republic of China, to
hear and take the oral deposition of the aforenamed
persons . . . ."

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The motion was opposed by Dasmarias. It
contended that (a) the motion was "fatally defective
in that it does not seek . . . that a foreign court
examine a person within its jurisdiction;" (b)
issuance of letters rogatory was unnecessary
because the witnesses "can be examined before the
Philippine Court;" and (c) the Rules of Court
"expressly require that the testimony of a witness
must be taken orally in open court and not by
deposition."

Extensive argument on the matter thereafter
followed, through various pleadings filed by the
parties, in the course of which APL submitted to the
Trial Court (a) the letter received by its counsel from
Director Joaquin R. Roces of the Asian Exchange
Center, Inc., dated November 20, 1989, advising
that "this Office can only take deposition upon
previous authority from the Department of Foreign
Affairs," this being "in consonance with the Supreme
Court Administrative Order requiring courts or
judicial bodies to course their requests through the
Department of Foreign Affairs;" and (b) a letter sent
by "fax" to the same counsel by a law firm in Taipei,
Lin & Associates Maritime Law Office, transmitting
information inter alia of the mode by which, under
the "ROC Civil Procedure Code," "a copy or an
abridged copy" of documents on file with a Taiwan
Court may be obtained.

The trial court issued an order granting the motion to
take testimonies of APLs Taiwanese witnesses by
deposition (upon written interrogatories) and that the
AEC thru Dir. Roces is hereby commissioned to
take down the deposition. Said order was coursed
thru DFA pursuant to SC Circular.

Dasmarinas sought reconsideration on the following
grounds: : (1) authority of the Asian Exchange
Center, Inc. (AECI) to take depositions has not been
established, it not being one of those so authorized
by the Rules of Court to take depositions in a foreign
state; (2) AECI's articles of incorporation show that it
is not vested with any such authority; (3) to permit
deposition-taking by commission without the
authority of the foreign state in which deposition is
taken constitutes infringement of judicial sovereignty;
and (4) depositions by written interrogatories have
inherent limitations and are not suitable to matters
dependent on the credibility of witnesses; oral
testimony in open court remains the "most
satisfactory method of investigation of facts'" and
"'affords the greatest protection to the rights and
liberties of citizens."

Said motion was denied by the trial court due to late
filing (filed out of time) and being a mere rehash of
arguments already passed upon. In the same order,
APL was directed to take the necessary steps to
implement the order authorizing the deposition-
taking.

Dasmarinas instituted a special civil action of
certiorari in the CA to nullify the orders. The CA
restrained enforcement of the orders and maintained
the status quo (current situation) to prevent the
infliction of irreparable damage and injury upon the
petitioner.

After due proceedings, the CA rendered judgment
denying the petition and upholding the orders of TC.
MR having been denied, hence, the present
recourse.

Issue:
Whether or not depositions may be used without the
deponent being actually called to the witness stand
by the proponent

Ruling:
YES. These exceptional situations are governed by
Sec. 4, Rule 24 of the Rules of Court, which
provides, to wit:

Sec. 4. Use of depositions. At the trial or
upon the hearing of a motion of an interlocutory
proceeding, any part or all of a deposition, so far
as admissible under the rules of evidence, may
be used against any party who was present or
represented at the taking of the deposition or
who had due notice thereof, in accordance with
any of the following provisions:

(a) Any deposition may be used by any party for
the purpose of contradicting or impeaching
the testimony of deponent as a witness;
(b) The deposition of a party or of any one who
at the time of taking the deposition was an
officer, director, or managing agent of a
public or private corporation, partnership, or
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association which is a party may be used by
an adverse party for any purpose;
(c) The deposition of a witness, whether or not
a party, may be used by any party for any
purpose if the court finds: (1) that the
witness is dead; or (2) that the witness if out
of the province and at a greater distance
than fifty (50) kilometers from the place of
trial or hearing, or is out of the Philippines,
unless it appears that his absence was
procured by the party offering the
deposition; or (3) that the witness is unable
to attend to testify because of age, sickness,
infirmity, or imprisonment; or (4) that the
party offering the deposition has been
unable to procure the attendance of the
witness by subpoena; or (5) upon
application and notice, that such exceptional
circumstances exist as to make it desirable,
in the interest of justice and with due regard
to the importance of presenting the
testimony of witnesses orally in open court,
to allow the deposition to be used;
(d) If only part of a deposition is offered in
evidence by a party, the adverse party may
require him to introduce all of it which is
relevant to the part introduced, and any
party may introduce any other parts.

It is apparent then that the deposition of any person
may be taken wherever he may be, in the
Philippines or abroad. If the party or witness is in the
Philippines, his deposition "shall be taken before any
judge, municipal or notary public" (Sec. 10, Rule 24,
Rules of Court). If in a foreign state or country, the
deposition "shall be taken: (a) on notice before a
secretary or embassy or legation, consul general,
consul, vice-consul, or consular agent of the
Republic of the Philippines, or (b) before such
person or officer as may be appointed by
commission or under letters rogatory" (Sec. 11, Rule
24).

Leave of court is not necessary where the deposition
is to be taken before "a secretary or embassy or
legation, consul general, consul, vice-consul, or
consular agent of the Republic of the Philippines,"
and the defendant's answer has already been
served (Sec. 1 Rule 24). After answer, whether the
deposition-taking is to be accomplished within the
Philippines or outside, the law does not authorize or
contemplate any intervention by the court in the
process, all that is required being that "reasonable
notice" be given "in writing to every other party to the
action . . . (stating) the time and place for taking the
deposition and the name and address of each
person to be examined, if known, and if the name is
not known, a general description sufficient to identify
him or the particular class or group to which he
belongs. . . . " (Sec. 15, Rule 24). The court
intervenes in the process only if a party moves (1) to
"enlarge or shorten the time" stated in the notice
(id.), or (2) "upon notice and for good cause shown,"
to prevent the deposition-taking, or impose
conditions therefor, e.g., that "certain matters shall
not be inquired into" or that the taking be "held with
no one present except the parties to the action and
their officers or counsel," etc. (Sec. 16, Rule 24), or
(3) to terminate the process on motion and upon a
showing that "it is being conducted in bad faith or in
such manner as unreasonably to annoy, embarrass,
or oppress the deponent or party" (Sec 18, Rule 24).

Where the deposition is to be taken in a foreign
country where the Philippines has no "secretary or
embassy or legation, consul general, consul, vice-
consul, or consular agent," then obviously it may be
taken only "before such person or officer as may be
appointed by commission or under letters rogatory.

Petition dismissed.