Arbit Magellan

SUPREME COURT REPORTS ANNOTATED VOLUME 355
11/21/14, 4:29 PM
VOL. 355, MARCH 26, 2001
157
Magellan Capital Management Corporation vs. Zosa

*
G.R. No. 129916. March 26, 2001.
MAGELLAN CAPITAL MANAGEMENT CORPORATION

and MAGELLAN CAPITAL HOLDINGS CORPORATION,
petitioners, vs. ROLANDO M. ZOSA and HON. JOSE P.
SOBERANO, JR., in his capacity as Presiding Judge of
Branch 58 of the Regional Trial Court of Cebu, 7th Judicial
Region, Respondents.
Arbitration; Courts; Jurisdiction; Under Republic Act No. 876,
otherwise known as the Arbitration Law, it is the regional trial
court which exercises jurisdiction over questions relating to
arbitration.It is error for the petitioners to claim that the case
should fall under the jurisdiction of the Securities and Exchange
Commission [SEC, for brevity]. The controversy does not in anyway
involve the election/appointment of officers of petitioner MCHC, as
claimed by petitioners in their assignment of errors. Respondent
Zosas amended complaint focuses heavily on the illegality of the
Employment Agreements Arbitration Clause initially invoked by
him in seeking his termination benefits under Section 8 of the
employment contract. And under Republic Act No. 876, otherwise
known as the Arbitration Law, it is the regional trial court which
exercises jurisdiction over questions relating to arbitration.
Actions; Judgments; Law of the Case Doctrine; Words and
Phrases; The law of the case doctrine has been defined as a term
applied to an established rule that when an appellate court passes
on a question and remands the cause to the lower court for further
proceedings, the question there settled becomes the law of the case
upon subsequent appeal.The decision of the Court of Appeals in
CA-G.R. SP No. 43059 affirming the
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_______________
*
SECOND DIVISION.
158
158
SUPREME COURT REPORTS ANNOTATED

trial courts assumption of jurisdiction over the case has become the
law of the case which now binds the petitioners. The law of the
case doctrine has been defined as a term applied to an established
rule that when an appellate court passes on a question and
remands the cause to the lower court for further proceedings, the
question there settled becomes the law of the case upon subsequent
appeal. To note, the CAs decision in CA-G.R. SP No. 43059 has
already attained finality as evidenced by a Resolution of this Court
ordering entry of judgment of said case.
Same; Appeals; Petition for Review; The jurisdiction of the
Supreme Court in a petition for review on certiorari under Rule 45 of
the Revised Rules of Court is limited to reviewing only errors of law,
not of fact, unless the factual findings complained of are devoid of
support by the evidence on record, or the assailed judgment is based
on misapprehension of facts.Equally unavailing for the petitioners
is the review by this Court, via the instant petition, of the factual
findings made by the trial court that the composition of the panel of
arbitrators would, in all probability, work injustice to respondent
Zosa. We have repeatedly stressed that the jurisdiction of this Court
in a petition for review on certiorari under Rule 45 of the Revised
Rules of Court is limited to reviewing only errors of law, not of fact,
unless the factual findings complained of are devoid of support by
the evidence on record, or the assailed judgment is based on
misapprehension of facts.
Same; Same; Pleadings and Practice; Issues not raised below
cannot be resolved on review in higher courts.In this connection,
petitioners attempt to put respondent in estoppel in assailing the
arbitration clause must be struck down. For one, this issue of
estoppel, as likewise noted by the Court of Appeals, found its way
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for the first time only on appeal. Well-settled is the rule that issues
not raised below cannot be resolved on review in higher courts.
Contracts; Employment Agreements; Contracts of Adhesion;
Employment agreements are usually contracts of adhesion, and any
ambiguity in its provisions is generally resolved against the party
who drafted the document.Employment agreements such as the
one at bar are usually contracts of adhesion. Any ambiguity in its
provisions is generally resolved against the party who drafted the
document. Thus, in the relatively recent case of Phil. Federation of
Credit Cooperatives, Inc. (PFCCI) and Fr. Benedicto Jayoma vs.
NLRC and Victoria Abril, we had the occasion to stress that where
a contract of employment, being a contract of adhesion, is
ambiguous, any ambiguity therein should be construed strictly
against the party who prepared it.
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Arbitration; Arbitration proceedings are designed to level the
playing field among the parties in pursuit of a mutually acceptable
solution to their conflicting claims, and any arrangement or scheme
that would give undue advantage to a party in the negotiating table
is anathema to the very purpose of arbitration and should, therefore,
be resisted.We need only to emphasize in closing that arbitration
proceedings are designed to level the playing field among the
parties in pursuit of a mutually acceptable solution to their
conflicting claims. Any arrangement or scheme that would give
undue advantage to a party in the negotiating table is anathema to
the very purpose of arbitration and should, therefore, be resisted.
PETITION for review on certiorari of a decision of the

Regional Trial Court of Cebu City, Br. 58.
The facts are stated in the opinion of the Court.
Marifel G. Gaerlan and Carpio, Villaraza & Cruz for
petitioners.
Francis M. Zosa for respondents.
BUENA, J.:
Under a management agreement entered into on March
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18, 1994, Magellan Capital Holdings Corporation [MCHC]

appointed Magellan Capital Management Corporation
[MCMC]
as manager for the operation of its business and
1
affairs. Pursuant thereto, on the same month, MCHC,
MCMC, and private respondent Rolando M. Zosa entered
into an Employment Agreement designating Zosa as
President and Chief Executive Officer of MCHC.
Under the Employment Agreement, the term of
respondent Zosas employment shall be co-terminous
with
2
the management agreement, or until March 1996, unless
sooner terminated pursuant
to the provisions of the
3
Employment Agreement, The grounds
_______________
1
Section 1 of Amended and Restated Management Agreement, Annex
B, Rollo, p. 74.
par. 2 of the Pre-Trial Order dated October 21, 1996, Annex BB,
Rollo, p. 241.
3
Annex C of Petition, Rollo, pp. 89-101; 217-229.

160
160

for termination of employment are also provided in the
Employment Agreement.
On May 10, 1995, the majority of MCHCs Board of
Directors decided not to re-elect respondent Zosa as
President and Chief Executive Officer
of MCHC on account
4
of loss of trust and confidence arising from alleged
violation of the resolution issued by MCHCs board of
directors and of the 5non-competition clause of the
Employment Agreement. Nevertheless, respondent Zosa
was elected to a new position as MCHCs 6 ViceChairman/Chairman for New Ventures Development.
On September 26, 1995, respondent Zosa communicated
his resignation for good reason from the position of ViceChairman under paragraph 7 of the Employment
Agreement on the ground that said position had less
responsibility and scope than President and Chief
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Executive Officer. He demanded that he be given

termination benefits as provided for in7 Section 8 (c) (i) (ii)
and (iii) of the Employment Agreement.
In a letter dated October 20, 1995, MCHC
communicated its non-acceptance of respondent Zosas
resignation for good reason, but instead informed him that
the Employment Agreement is terminated for cause,
effective November 19, 1995, in accordance with Section 7
(a) (v) of the said agreement, on account of his breach of
Section 12 thereof. Respondent Zosa was further advised
that he shall have no further rights under the said
Agreement or any claims against the Manager or the
Corporation except the right to receive within thirty (30)
days from November 19, 1995, the
amounts stated in
8
Section 8 (a) (i) (ii) of the Agreement.
Disagreeing with the position taken by petitioners,
respondent Zosa invoked the Arbitration Clause of the
Employment Agreement, to wit:
_______________
4
par. 5 of Petitioners Memorandum, Rollo, p. 560.
par. 5.1-6.4, ibid., Rollo, pp. 560-562.
par. 4, ibid., Rollo, p. 559.
par. 6-7, Amended Complaint, Rollo, pp. 173-174; p. 562.
Annex O of Petition, Rollo, p. 130.

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23. Arbitration. In the event that any dispute, controversy or claim
arises out of or under any provisions of this Agreement, then the
parties hereto agree to submit such dispute, controversy or claim to
arbitration as set forth in this Section and the determination to be
made in such arbitration shall be final and binding. Arbitration
shall be effected by a panel of three arbitrators. The Manager,
Employee and Corporation shall designate one (1) arbitrator who
shall, in turn, nominate and elect who among them shall be the
chairman of the committee. Any such arbitration, including the
rendering of an arbitration award, shall take place in Metro Manila.
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The arbitrators shall interpret this Agreement in accordance with

the substantive laws of the Republic of the Philippines. The
arbitrators shall have no power to add to, subtract from or
otherwise modify the terms of Agreement or to grant injunctive
relief of any nature. Any judgment upon the award of the
arbitrators may be entered in any court having jurisdiction thereof,
with costs of the arbitration to be borne equally by the parties,
except that each party shall pay the fees and expenses of its own
counsel in the arbitration.
On November 10, 1995, respondent Zosa designated his

brother, Atty. Francis
Zosa, as his representative in the
9
arbitration
panel while MCHC designated Atty. Inigo11 S.
10
Fojas and MCMC nominated Atty. Enrique I. Quiason as
their respective representatives in the arbitration panel.
However, instead of submitting the dispute to arbitration,
respondent Zosa, on April 17, 1996, filed an action for
damages against12 petitioners before the Regional Trial
Court of Cebu
to enforce his benefits under the
Employment Agreement.
13
On July 3, 1996, petitioners filed a motion to dismiss
arguing that (1) the trial court has no jurisdiction over the
instant case since respondent Zosas claims should be
resolved through arbitration pursuant to Section 23 of the
Employment Agreement with petitioners; and (2) the venue
is improperly laid since respondent Zosa, like the
petitioners, is a resident of Pasig City and thus, the venue
of this case, granting without admitting that the
respondent
_______________
9
Annex P of Petition, Rollo, p. 131.
10
Annex R of Petition, Rollo, p. 133
11
Annex Q of Petition, Rollo, p. 132.
12
Annex BB, Rollo, p. 241.
13
Annex S, Rollo, pp. 134-145.

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162

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has a cause of action against the petitioners cognizable

by
14
the RTC, should be limited only to RTC-Pasig City.
Meanwhile, respondent Zosa filed an amended
complaint dated July 5, 1996.
On August 1, 1996, the RTC Branch 58 of Cebu City
issued an Order denying petitioners motion to dismiss
upon the findings that (1) the validity and legality of the
arbitration provision can only be determined after trial on
the merits; and (2) the amount of damages claimed, which
is over
P100,000.00, falls within the jurisdiction of the
15
RTC. Petitioners filed a motion for reconsideration which
was denied
by the RTC in an order dated September 5,
16
1996.
In the interim, on August 22, 1996, in compliance with
the earlier order of the court directing petitioners to file
responsive pleading to the amended complaint, petitioners
filed their Answer Ad Cautelam with counterclaim
reiterating their position that the dispute should be settled
through arbitration and17the court had no jurisdiction over
the nature of the action.
On October 21, 1996, the trial court issued its pre-trial
order declaring the pre-trial stage terminated and setting
the case for hearing. The order states:
ISSUES:
The Court will only resolve one issue in so far as this case is
concerned, to wit:
Whether or not the Arbitration Clause contained in Sec. 23 of
the Employment Agreement is void and of no effect: and, if it is void
and of no effect, whether or not the plaintiff is entitled to damages
in accordance with his complaint and the defendants in accordance
with their counter-claim.
It is understood, that in the event the arbitration clause is valid
and binding between the parties, the parties shall submit their
respective
______________
14
Annex U, Rollo, p. 179.
15
Annex X, Rollo, pp. 185-186.
16
Annex AA, Rollo, p. 240,
17
Par. 9, Petitioners Memorandum, Rollo, p. 566.
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claim to the Arbitration Committee in accordance with the said
arbitration clause, in which event, this case shall be deemed
18
dismissed.
On November 18, 1996, petitioners filed their Motion Ad

Cautelam for the Correction, Addition and Clarification
of
19
the Pre-trial Order dated November 15 1996, which was
20
denied by the court in an order dated November 28, 1996.
Thereafter, petitioners MCMC and MCHC filed a Motion
Ad Cautelam for the parties to file their Memoranda to
support their respective stand on the issue of the validity of
the arbitration clause contained in the Employment
Agreement. In an order dated December 13, 1996, the trial
court denied the motion of petitioners MCMC and MCHC.
On January 17, 1997, petitioners MCMC and MCHC
filed a petition for certiorari and prohibition under Rule 65
of the Rules of Court with the Court of Appeals,
questioning the trial court orders dated August
1, 1996,
21
September 5, 1996, and December 13, 1996.
_______________
18
Pre-trial Order, Annex BB, Rollo, pp. 241-243.
19
Annex CC, Rollo, pp. 248; 566-567.
20
Annex DD, Rollo, p. 252.
21
The issues submitted to the Court of Appeals are as follows:

I.
RESPONDENT COURT ACTED WITH GRAVE ABUSE OF DISCRETION

AMOUNTING TO LACK OF JURISDICTION WHEN IT ISSUED THE
QUESTIONED ORDERS DATED 1 AUGUST 1996 (ANNEX A), 05
SEPTEMBER 1996 (ANNEX B) AND 13 DECEMBER 1996 (ANNEX C)
WHICH DEFERRED THE RESOLUTION OF THE ISSUE REGARDING THE
VALIDITY OF THE ARBITRATION CLAUSE IN THE EMPLOYMENT
AGREEMENT UNTIL AFTER TRIAL ON THE MERITS.
II.
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AMOUNTING TO LACK OF JURISDICTION WHEN IT FAILED TO RULE
THAT
THE
ARBITRATION
CLAUSE
UNDER
THE
EMPLOYMENT
AGREEMENT IS VALID AND BINDING ON THE PARTIES THERETO.
164
164

On March 21, 1997, the Court of Appeals rendered a
decision, giving due course to the petition, the decretal
portion of which reads:
WHEREFORE, the petition is GIVEN DUE COURSE. The
respondent court is directed to resolve the issue on the validity or
effectivity of the arbitration clause in the Employment Agreement,
and to suspend further proceedings in the trial on the merits until
the said issue is re_______________
III.
RESPONDENT
COURT
ALTED
WITHOUT
OR
IN
EXCESS
OF
JURISDICTION WHEN IT TOOK COGNIZANCE OF RESPONDENT ZOSAS

AMENDED
COMPLAINT
INSTEAD
OF
REFERRING
THE
SAME
IMMEDIATELY TO ARBITRATION PURSUANT TO THE EMPLOYMENT

AGREEMENT BETWEEN PETITIONERS AND RESPONDENT ZOSA.
IV.
IN ANY EVENT, RESPONDENT COURT ACTED AND IS CONTINUING
TO ACT WITHOUT JURISDICTION IN HEARING THE CASE BELOW,
CONSIDERING THAT IT HAS NO JURISDICTION OVER THE NATURE OF
THE ACTION OR SUIT SINCE CONTROVERSIES IN THE ELECTION OR
APPOINTMENT OF OFFICERS OR MANAGERS OF A CORPORATION,
SUCH AS THE ACTION BROUGHT BY RESPONDENT ZOSA, FALL
WITHIN THE ORIGINAL AND EXCLUSIVE JURISDICTION OF THE
SECURITIES AND EXCHANGE COMMISSION.
V.
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AMOUNTING TO LACK OF JURISDICTION WHEN IT REFUSED TO

DISMISS THE ACTION BELOW FOR IMPROPER VENUE.
VI.
AMOUNTING TO LACK OF JURISDICTION WHEN IT FAILED TO
DISMISS THE AMENDED COMPLAINT FOR LACK OF THE REQUISITE
CERTIFICATION OF NON-FORUM SHOPPING.
Court of Appeals Decision, pp. 5-6; Rollo, pp. 316-317.

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165

solved. The questioned orders are set aside insofar as they
contravene this Courts resolution of the issues raised as herein
pronounced.
The petitioner is required to remit to this Court the sum of
P81.80 for cost within five (5) days from notice.
22
SO ORDERED.
Petitioners filed a motion for partial reconsideration of the

CA decision praying (1) for the dismissal of the case in the
trial court, on the ground of lack of jurisdiction, and (2)
that the parties be directed to submit their dispute to
arbitration in accordance with the Employment Agreement
dated March 1994. The CA, in a resolution promulgated on
June 20, 1997, denied the motion for partial
reconsideration for lack of merit.
In compliance with the CA decision, the trial court, on
July 18, 1997, rendered a decision declaring the
arbitration clause in the Employment Agreement partially
void and of no effect. The dispositive portion of the decision
reads:
WHEREFORE, premises considered, judgment is hereby rendered
partially declaring the arbitration clause of the Employment
Agreement void and of no effect, only insofar as it concerns the
composition of the panel of arbitrators, and directing the parties to
proceed to arbitration in accordance with the Employment
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Agreement under the panel of three (3) arbitrators, one for the
plaintiff, one for the defendants, and the third to be chosen by both
the plaintiff and defendants. The other terms, conditions and
23
stipulations in the arbitration clause remain in force and effect.
In view of the trial courts decision, petitioners filed this

petition for review on certiorari, under Rule 45 of the Rules
of Court, assigning the following errors for the Courts
resolution:
I. The trial court gravely erred when it ruled that the
arbitration
clause
under
the
employment
agreement is partially void and of no effect,
considering that:
_______________
22
Ibid., pp. 329-330.
23
Annex A, RTC Decision, pp. 72-73.

166
166

A. The arbitration clause in the employment
agreement dated March 1994 between respondent
Zosa and defendants MCHC and MCMC is valid
and binding upon the parties thereto.
B. In view of the fact that there are three parties to
the employment agreement, it is but proper that
each party be represented in the arbitration panel.
C. The trial court grievously erred in its conclusion
that petitioners MCMC and MCHC represent the
same interest.
D. Respondent Zosa is estopped from questioning the
validity of the arbitration clause, including the
right of petitioner MCMC to nominate its own
arbitrator, which he himself has invoked.
II. In any event, the trial court acted without
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jurisdiction in hearing the case below, considering

that it has no jurisdiction over the nature of the
action or suit since controversies in the election or
appointment of officers or managers of a
corporation, such as the action brought by
respondent Zosa, fall within the original and
exclusive jurisdiction of the Securities and
Exchange Commission.
III, Contrary to respondent Zosas allegation, the issue
of the trial courts jurisdiction over the case below
has not yet been resolved with finality considering
that petitioners have expressly reserved their right
to raise said issue in the instant petition. Moreover,
the principle of the law of the case is not applicable
in the instant case.
IV. Contrary
to
respondent
Zosas
allegation,
petitioners MCMC and MCHC are not guilty of
forum shopping.
V. Contrary to respondent Zosas allegation, the
instant petition for review
involves only questions
24
of law and not of fact.
We rule against the petitioners.
It is error for the petitioners to claim that the case
should fall under the jurisdiction of the Securities and
Exchange Commission [SEC, for brevity]. The controversy
does not in anyway involve the election/appointment of
officers of petitioner MCHC, as claimed by petitioners in
their assignment of errors. Respondent Zosas amended
complaint focuses heavily on the illegality of the
Employment Agreements Arbitration Clause initially
invoked by him
_______________
24
Rollo, pp. 571-573.

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167

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in seeking his termination benefits under Section 8 of the

employment contract. And under Republic Act No. 876,
otherwise known as the Arbitration Law, it is the regional
trial court which exercises jurisdiction over questions
relating to arbitration. We thus advert to the following
discussions made by the Court of Appeals,
speaking thru
25
Justice Minerva P. Gonzaga-Reyes, in CA.-G.R. S.P. No.
43059, viz.:
As regards the fourth assigned error, asserting that jurisdiction
lies with the SEC, which is raised for the first time in this petition,
suffice it to state that the Amended Complaint squarely put in issue
the question whether the Arbitration Clause is valid and effective
between the parties. Although the controversy which spawned the
action concerns the validity of the termination of the service of a
corporate officer, the issue on the validity and effectivity of the
arbitration clause is determinable by the regular courts, and do not
fall within the exclusive and original jurisdiction of the SEC.
The determination and validity of the agreement is not a matter
intrinsically connected with the regulation and internal affairs of
corporations (see Pereyra vs. IAC, 181 SCRA 244; Sales vs. SEC,
169 SCRA 121); it is rather an ordinary case to be decided in
accordance with the general laws, and do not require any particular
expertise or training to interpret and apply (Viray vs. CA, 191
26
SCRA 308).
Furthermore, the decision of the Court of Appeals in CA-GR. SP No. 43059 affirming the trial courts assumption of
jurisdiction over the case has become the law of the case
which now binds the petitioners. The law of the case
doctrine has been defined as a term applied to an
established rule that when an appellate court passes on a
question and remands the cause to the lower court for
further proceedings, the question there settled
becomes the
27
law of the case upon subsequent appeal. To note, the CAs
decision in CA-G.R. SP No. 43059 has already attained
finality as evidenced by a Resolution of this Court ordering
entry of judgment of said case, to wit:
_______________
25
Now Associate Justice of this Court.
26
Court of Appeals Decision, p. 16; Rollo, p. 321.
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27
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Loevillo C. Agustin vs. Court of Appeals and Filinvest Finance
Corporation, 271 SCRA 457 [1997].

168
168

ENTRY OF JUDGMENT
This is to certify that on September 8, 1997 a decision/resolution
rendered in the above-entitled case was filed in this Office, the
dispositive part of which reads as follows:
G.R. No. 129615 (Magellan Capital Management Corporation, et al. vs.
Court of Appeals, Rolando Zosa, et al.).Considering the petitioners
manifestation dated August 11, 1997 and withdrawal of intention to file
petition for review on certiorari, the Court Resolved to DECLARE THIS
CASE TERMINATED and DIRECT the Clerk of Court to INFORM the
parties that the judgment sought to be reviewed has become final and
executory, no appeal therefore having been timely perfected.
and that the same has, on September 17, 1997, become final and
executory and is hereby recorded in the Book of Entries of
28
Judgments.
Petitioners, therefore, are barred from challenging anew,

through another remedial measure and in any other forum,
the authority of the regional trial court to resolve the
validity of the arbitration clause, lest they be truly guilty of
forum-shopping which the courts consistently consider as a
contumacious
practice
that
derails
the
orderly
administration of justice.
Equally unavailing for the petitioners is the review by
this Court, via the instant petition, of the factual findings
made by the trial court that the composition of the panel of
arbitrators would, in all probability, work injustice to
respondent Zosa. We have repeatedly stressed that the
jurisdiction of this Court in a petition for review on
certiorari under Rule 45 of the Revised Rules of Court is
limited to reviewing only errors of law, not of fact, unless
the factual findings complained of are devoid of support by
the evidence on record, or the assailed judgment is based
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29
on misapprehension of facts.
Even if procedural rules are disregarded, and a scrutiny
of the merits of the case is undertaken, this Court finds the
trial courts observations on why the composition of the
panel of arbitrators
_______________
28
Rollo, p. 350.
29
Congregation of the Religious of the Virgin Mary vs. CA, 291 SCRA
385 [1998].
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169

should be voided, incisively correct so as to merit our
approval. Thus,
From the memoranda of both sides, the Court is of the view that
the defendants [petitioner] MCMC and MCHC represent the same
interest. There is no quarrel that both defendants are entirely two
different corporations with personalities distinct and separate from
each other and that a corporation has a personality distinct and
separate from those persons composing the corporation as well as
from that of any other legal entity to which it may be related.
But as the defendants [herein petitioner] represent the same
interest, it could never be expected, in the arbitration proceedings,
that they would not protect and preserve their own interest, much
less, would both or either favor the interest of the plaintiff. The
arbitration law, as all other laws, is intended for the good and
welfare of everybody. In fact, what is being challenged by the
plaintiff herein is not the law itself but the provision of the
Employment Agreement based on the said law, which is the
arbitration clause but only as regards the composition of the panel
of arbitrators. The arbitration clause in question provides, thus:
In the event that any dispute, controversy or claim arise out of or under
any provisions of this Agreement, then the parties hereto agree to submit
such dispute, controversy or claim to arbitration as set forth in this
Section and the determination to be made in such arbitration shall be
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final and binding. Arbitration shall be effected by a panel of three

arbitrators. The Manager, Employee, and Corporation shall designate one
(1) arbitrator who shall, in turn, nominate and elect as who among them
shall be the chairman of the committee. Any such arbitration, including
the rendering of an arbitration award, shall take place in Metro Manila.
The arbitrators shall interpret this Agreement in accordance with the
substantive laws of the Republic of the Philippines. The arbitrators shall
have no power to add to, subtract from or otherwise modify the terms of
this Agreement or to grant injunctive relief of any nature. Any judgment
upon the award of the arbitrators may be entered in any court having
jurisdiction thereof, with costs of the arbitration to be borne equally by
the parties, except that each party shall pay the fees and expenses of its
own counsel in the arbitration. (Emphasis supplied)
From the foregoing arbitration clause, it appears that the two

(2) defendants [petitioners] (MCMC and MCHC) have one (1)
arbitrator each to compose the panel of three (3) arbitrators. As the
defendant MCMC is the Manager of defendant MCHC, its decision
or vote in the arbitration
170
170

proceeding would naturally and certainly be in favor of its employer
and the defendant MCHC would have to protect and preserve its
own interest; hence, the two (2) votes of both defendants (MCMC
and MCHC) would certainly be against the lone arbitrator for the
plaintiff [herein defendant]. Hence, apparently, plaintiff [defendant]
would never gpt or receive justice and fairness in the arbitration
proceedings from the panel of arbitrators as provided in the
aforequoted arbitration clause. In fairness and justice to the
plaintiff [defendant], the two defendants (MCMC and MCHC)
[herein petitioners] which represent the same interest should be
considered as one and should be entitled to only one arbitrator to
represent them in the arbitration proceedings. Accordingly, the
arbitration clause, insofar as the composition of the panel of
arbitrators is concerned should be declared void and of no effect,
because the law says, Any clause giving one of the parties power to
choose more arbitrators than the other is void and of no effect
(Article 2045, Civil Code).
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The dispute or controversy between the defendants (MCMC and

MCHC) [herein petitioners] and the plaintiff [herein defendant]
should be settled in the arbitration proceeding in accordance with
the Employment Agreement, but under the panel of three (3)
arbitrators, one (1) arbitrator to represent the plaintiff, one (1)
arbitrator to represent both defendants (MCMC and MCHC)
[herein petitioners] and the third arbitrator to be chosen by the
plaintiff [defendant Zosa] and defendants [petitioners].
30
x x x
xxx
x x x
In this connection, petitioners attempt to put respondent in

estoppel in assailing the arbitration clause must be struck
down. For one, this issue of estoppel, as likewise noted by
the Court of Appeals, found its way for the first time only
on appeal. Well-settled is the rule that issues not raised
31
below cannot be resolved on review in higher courts.
Secondly, employment agreements such as the one at bar
are usually contracts of adhesion. Any ambiguity in its
provisions is generally resolved against the party who
drafted the document. Thus, in the relatively recent case of
Phil Federation of Credit Cooperatives, Inc. (PFCCI)32and
Fr. Benedicto Jayoma vs. NLRC and Victoria Abril, we
had the occasion to stress that
_______________
30
Rollo, pp. 71-72.
31
Casolita, Sr. vs. Court of Appeals, 275 SCRA 257 [1997]; Manalili vs.
Court of Appeals, 280 SCRA 400 [1997].

32
G.R. No. 121071, December 11, 1998, 300 SCRA 72.

171
VOL. 355, MARCH 26, 2001
171

where a contract of employment, being a contract of
adhesion, is ambiguous, any ambiguity therein should be
construed strictly against the party who prepared it. And,
finally, respondent Zosa submitted himself to arbitration
proceedings (as there was none yet) before bewailing the
composition of the panel of arbitrators. He in fact, lost no
Page 17 of 19
11/21/14, 4:29 PM
time in assailing the arbitration clause upon realizing the

inequities that may mar the arbitration proceedings if the
existing line-up of arbitrators remained unchecked.
We need only to emphasize in closing that arbitration
proceedings are designed to level the playing field among
the parties in pursuit of a mutually acceptable solution to
their conflicting claims. Any arrangement or scheme that
would give undue advantage to a party in the negotiating
table is anathema to the very purpose of arbitration and
should, therefore, be resisted.
WHEREFORE, premises considered, the petition is
hereby DISMISSED and the decision of the trial court
dated July 18, 1997 is AFFIRMED.
SO ORDERED.
Bellosillo (Chairman), Mendoza and De Leon, Jr.,
JJ., concur.
Quisumbing, J., On leave.
Petition dismissed, judgment affirmed,
Notes.Interpretation by the arbitrators which was a
faithful application of the provisions of the Agreement did
not have the effect of creating a new contract. (Adamson vs.
Court of Appeals, 232 SCRA 602 [1994])
A voluntary arbitrator commits grave abuse of discretion
in finding that an employee did not commit gross
negligence in the performance of her duty where the
evidence shows otherwise. (Citibank, N.A. vs. Gatchalian,
240 SCRA 212 [1995])
Absent an express stipulation in the CBA, the phrase
all disputes should be construed as limited to the areas of
conflict traditionally within the jurisdiction of Voluntary
Arbitrators, i.e., dis putes relating to contractinterpretation, contract-implementation,
172
172

People vs. Medenilla
or interpretation or enforcement of company personnel

Page 18 of 19
11/21/14, 4:29 PM
policiesillegal termination disputes do not fall within any

of these categories, within a special class of disputes that
are generally within the exclusive original jurisdiction of
Labor Arbiters by express provision of law. (Vivero vs.
Court of Appeals, 344 SCRA 268 [2000])
o0o
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SUPREME COURT REPORTS ANNOTATED VOLUME 355

VOL. 355, MARCH 26, 2001

Magellan Capital Management Corporation vs. Zosa

G.R. No. 129916. March 26, 2001.

MAGELLAN CAPITAL MANAGEMENT CORPORATION

SUPREME COURT REPORTS ANNOTATED VOLUME 355

SUPREME COURT REPORTS ANNOTATED

SUPREME COURT REPORTS ANNOTATED VOLUME 355

VOL. 355, MARCH 26, 2001

Magellan Capital Management Corporation vs. Zosa

PETITION for review on certiorari of a decision of the

SUPREME COURT REPORTS ANNOTATED VOLUME 355

18, 1994, Magellan Capital Holdings Corporation [MCHC]

Section 1 of Amended and Restated Management Agreement, Annex

Annex C of Petition, Rollo, pp. 89-101; 217-229.

SUPREME COURT REPORTS ANNOTATED

Magellan Capital Management Corporation vs. Zosa

SUPREME COURT REPORTS ANNOTATED VOLUME 355

Executive Officer. He demanded that he be given

par. 5 of Petitioners Memorandum, Rollo, p. 560.

par. 5.1-6.4, ibid., Rollo, pp. 560-562.

par. 4, ibid., Rollo, p. 559.

par. 6-7, Amended Complaint, Rollo, pp. 173-174; p. 562.

Annex O of Petition, Rollo, p. 130.

VOL. 355, MARCH 26, 2001

Magellan Capital Management Corporation vs. Zosa

SUPREME COURT REPORTS ANNOTATED VOLUME 355

The arbitrators shall interpret this Agreement in accordance with

On November 10, 1995, respondent Zosa designated his

Annex P of Petition, Rollo, p. 131.

Annex R of Petition, Rollo, p. 133

Annex Q of Petition, Rollo, p. 132.

Annex BB, Rollo, p. 241.

Annex S, Rollo, pp. 134-145.

SUPREME COURT REPORTS ANNOTATED

Magellan Capital Management Corporation vs. Zosa

SUPREME COURT REPORTS ANNOTATED VOLUME 355

has a cause of action against the petitioners cognizable

Annex U, Rollo, p. 179.

Annex X, Rollo, pp. 185-186.

Annex AA, Rollo, p. 240,

Par. 9, Petitioners Memorandum, Rollo, p. 566.

SUPREME COURT REPORTS ANNOTATED VOLUME 355

VOL. 355, MARCH 26, 2001

Magellan Capital Management Corporation vs. Zosa

On November 18, 1996, petitioners filed their Motion Ad

Pre-trial Order, Annex BB, Rollo, pp. 241-243.

Annex CC, Rollo, pp. 248; 566-567.

Annex DD, Rollo, p. 252.

The issues submitted to the Court of Appeals are as follows:

RESPONDENT COURT ACTED WITH GRAVE ABUSE OF DISCRETION

SUPREME COURT REPORTS ANNOTATED VOLUME 355

RESPONDENT COURT ACTED WITH GRAVE ABUSE OF DISCRETION

AGREEMENT IS VALID AND BINDING ON THE PARTIES THERETO.

SUPREME COURT REPORTS ANNOTATED

Magellan Capital Management Corporation vs. Zosa

JURISDICTION WHEN IT TOOK COGNIZANCE OF RESPONDENT ZOSAS

IMMEDIATELY TO ARBITRATION PURSUANT TO THE EMPLOYMENT

SUPREME COURT REPORTS ANNOTATED VOLUME 355

AMOUNTING TO LACK OF JURISDICTION WHEN IT REFUSED TO

Court of Appeals Decision, pp. 5-6; Rollo, pp. 316-317.

VOL. 355, MARCH 26, 2001

Magellan Capital Management Corporation vs. Zosa

Petitioners filed a motion for partial reconsideration of the