NOTES:

1. LM Power Engineering Corporation vs. Capitol Industrial Construction Groups, Inc., G.R. No.
141833, March 26, 2003
- Issues:
a. Whether or not there exist[s] a controversy/dispute between petitioner and respondent
regarding the interpretation and implementation of the Sub-Contract Agreement dated
February 22, 1983 that requires prior recourse to voluntary arbitration;
b. whether or not the requirements provided in Article III [1] of CIAC Arbitration Rules
regarding request for arbitration ha[ve] been complied with[.]" 17
||| (LM Power Engineering Corp. v. Capitol Industrial Construction Groups Inc., G.R. No. 141833,
[March 26, 2003], 447 PHIL 705-717)

- Sypnosis

Petitioner LM Power Engineering Corporation and respondent Capitol Industrial Construction

Groups, Inc. entered into a subcontract agreement involving electrical work at the Third Port of
Zamboanga.

Due to petitioner's failure to complete the work on schedule, respondent took over some of
petitioner's work items. Thus, when petitioner completed its task under the contract, respondent
refused to pay petitioner's billings, and contested the billable accomplishments. The petitioner sued
the respondent for collection of sum of money with the RTC. The RTC subsequently ordered the
respondent to give full payment for the work completed by petitioner. The CA, however, reversed
the decision, and ordered the parties to present their dispute to arbitration in accordance with the
arbitral clause provided in their subcontract agreement.

The Supreme Court affirmed the CA decision, ruling: that any doubt should be resolved in
favor of arbitration because aside from unclogging judicial dockets, arbitration also hastens the
resolution of disputes; that the instant case involves technical discrepancies in the application of
their agreement that are better left to an arbitral body that has expertise in those areas; that under
Sec. 1 Art. III of the new Rules of Procedure, there is no more need to file a request with the
Construction Industry Arbitration Commission (CIAC) in order to vest it with jurisdiction to decide a
construction dispute. As long as the parties agree to submit to voluntary arbitration, regardless of
what forum they may choose, they may invoke the CIAC jurisdiction; that parties are expected to
abide by the arbitral clause in the agreement in good faith; and that since petitioner has already filed
a complaint with the RTC without prior recourse to arbitration, the proper procedure is to request
the suspension of such action as provided under RA 876 (the Arbitration Law) to enable the CIAC to
decide on the dispute.||| (LM Power Engineering Corp. v. Capitol Industrial Construction Groups Inc.,
G.R. No. 141833, [March 26, 2003], 447 PHIL 705-717)

- Doctrine/s
ID.; ID.; ID.; ID.; RESOLUTION OF TECHNICAL DISCREPANCIES ARE BETTER LEFT TO AN ARBITRAL BODY;
CASE AT BAR. — Clearly, the resolution of the dispute between the parties herein requires a referral to
the provisions of their Agreement. Within the scope of the arbitration clause are discrepancies as to the
amount of advances and billable accomplishments, the application of the provision on termination, and
the consequent set-off of expenses. A review of the factual allegations of the parties reveals that they
differ on the following questions: (1) Did a take-over/termination occur? (2) May the expenses incurred
by respondent in the take-over be set off against the amounts it owed petitioner? (3) How much were
the advances and billable accomplishments? The resolution of the foregoing issues lies in the
interpretation of the provisions of the Agreement. . . . The instant case involves technical discrepancies
that are better left to an arbitral body that has expertise in those areas.
ID.; ID.; ID.; CONSTRUCTION INDUSTRY ARBITRATION COMMISSION (CIAC); HAS JURISDICTION TO DECIDE
A CONSTRUCTION DISPUTE WHEN CONSTRUCTION CONTRACT HAS AN ARBITRAL CLAUSE; CASE AT BAR.
— Section 1 of Article II of the old Rules of Procedure Governing Construction Arbitration indeed
required the submission of a request for arbitration. . . On the other hand, Section 1 of Article III of
the new Rules of Procedure Governing Construction Arbitration has dispensed with this requirement and
recourse to the CIAC may now be availed of whenever a contract "contains a clause for the submission of
a future controversy to arbitration,". . . Clearly, there is no more need to file a request with the CIAC in
order to vest it with jurisdiction to decide a construction dispute.
ID.; ID.; ID.; PARTIES ARE EXPECTED TO ABIDE BY THE ARBITRAL CLAUSE IN GOOD FAITH; CASE AT BAR. —
The arbitral clause in the Agreement is a commitment on the part of the parties to submit to arbitration
the disputes covered therein. Because that clause is binding, they are expected to abide by it in good
faith. And because it covers the dispute between the parties in the present case, either of them may
compel the other to arbitrate. Since petitioner has already filed a Complaint with the RTC without prior
recourse to arbitration, the proper procedure to enable the CIAC to decide on the dispute is to request
the stay or suspension of such action, as provided under RA 876 [the Arbitration Law].

||| (LM Power Engineering Corp. v. Capitol Industrial Construction Groups Inc., G.R. No. 141833,
[March 26, 2003], 447 PHIL 705-717)

- Wave of the future

Being an inexpensive, speedy and amicable method of settling disputes, 24 arbitration — along with
mediation, conciliation and negotiation — is encouraged by the Supreme Court. Aside from unclogging
judicial dockets, arbitration also hastens the resolution of disputes, especially of the commercial
kind. 25 It is thus regarded as the "wave of the future" in international civil and commercial
disputes. 26 Brushing aside a contractual agreement calling for arbitration between the parties would be
a step backward. 27
Consistent with the above-mentioned policy of encouraging alternative dispute resolution
methods, courts should liberally construe arbitration clauses. Provided such clause is susceptible of an
interpretation that covers the asserted dispute, an order to arbitrate should be granted. 28 Any doubt
should be resolved in favor of arbitration. 29
||| (LM Power Engineering Corp. v. Capitol Industrial Construction Groups Inc., G.R. No. 141833, [March
26, 2003], 447 PHIL 705-717)
 - Old Rules of Procedure vs New

OLD: "SECTION 1.Submission to Arbitration — Any party to a construction contract wishing to have
recourse to arbitration by the Construction Industry Arbitration Commission (CIAC) shall submit its
Request for Arbitration in sufficient copies to the Secretariat of the CIAC; PROVIDED, that in the case of
government construction contracts, all administrative remedies available to the parties must have been
exhausted within 90 days from the time the dispute arose."||| (LM Power Engineering Corp. v. Capitol
Industrial Construction Groups Inc., G.R. No. 141833, [March 26, 2003], 447 PHIL 705-717)

NEW: "SECTION 1.Submission to CIAC Jurisdiction — An arbitration clause in a construction contract or a

submission to arbitration of a construction dispute shall be deemed an agreement to submit an existing
or future controversy to CIAC jurisdiction, notwithstanding the reference to a different arbitration
institution or arbitral body in such contract or submission. When a contract contains a clause for the
submission of a future controversy to arbitration, it is not necessary for the parties to enter into a
submission agreement before the claimant may invoke the jurisdiction of CIAC."||| (LM Power
Engineering Corp. v. Capitol Industrial Construction Groups Inc., G.R. No. 141833, [March 26, 2003], 447
PHIL 705-717)

- Ruling

Clearly, there is no more need to file a request with the CIAC in order to vest it with jurisdiction to decide
a construction dispute.
The arbitral clause in the Agreement is a commitment on the part of the parties to submit to arbitration
the disputes covered therein. Because that clause is binding, they are expected to abide by it in good
faith. 35 And because it covers the dispute between the parties in the present case, either of them may
compel the other to arbitrate. 36
Since petitioner has already filed a Complaint with the RTC without prior recourse to arbitration, the
proper procedure to enable the CIAC to decide on the dispute is to request the stay or suspension of
such action, as provided under RA 876 [the Arbitration Law]. 37
WHEREFORE, the Petition is DENIED and the assailed Decision AFFIRMED. Costs against
petitioner. cEISAD
SO ORDERED.
(LM Power Engineering Corp. v. Capitol Industrial Construction Groups Inc., G.R. No. 141833, [March
26, 2003], 447 PHIL 705-717)

2. China Chang Jiang Energy Corporation (Philippines) v. Rosal Infrastructure Builders, et al., G.R. No.
125706, September 30, 1996

- Issue

a. Jurisdiction of CIAC
- Jurisdiction of CIAC

Significantly, the 1988 CIAC rules of procedure before the CIAC which were applied by this
Court in Tesco had been duly amended by CIAC Resolution Nos. 2-91 and 3-93 to now read as
follows:
SECTION 1. Submission to CIAC Jurisdiction. — An arbitration clause in a
construction contract or a submission to arbitration of a construction dispute shall
be deemed an agreement to submit an existing or future controversy to CIAC
jurisdiction, notwithstanding the reference to a different arbitral institution or
arbitral body in such contract or submission. When a contract contains a clause for
the submission of a future controversy to arbitration, it is not necessary for the
parties to enter into a submission agreement before the claimant may invoke the
jurisdiction of the CIAC.
Petitioner submits that CIAC Resolution No. 3-93 is null and void insofar as it prohibits the
parties from submitting the dispute for arbitration to an arbitral body other than respondent CIAC
because, so it is contended, it goes beyond the basic law it seeks to implement, E.O. No. 1008 ( Rollo,
p. 26).
We do not agree.
A mere cursory reading of Section 1, Article III of the CIAC Rules, as amended by Resolution
No. 3-93 revels no restriction whatsoever on any party from submitting a dispute for arbitration to
an arbitral body other than the CIAC. On the contrary, the new rule, as amended, merely implements
the letter and the spirit of its enabling law, E.O. No. 1008, which vests jurisdiction upon the CIAC in
the following manner:
Section 4. Jurisdiction. — The CIAC shall have original and exclusive
jurisdiction over disputes arising from, or connected with contracts entered into by
parties involved in construction in the Philippines, whether the dispute arises before
or after the completion of the contract, or after the abandonment or breach thereof.
These disputes may involve government or private contracts. For the Board to
acquire jurisdiction, the parties to a dispute must agree to submit the same to
voluntary arbitration. . . . (Emphasis supplied.) ATICcS
What the law merely requires for a particular construction contract to fall within the
jurisdiction of CIAC is for the parties to agree to submit the same to voluntary arbitration.
||| (China Chang Jiang Energy Corp. (Philippines) v. Rosal Infrastructure Builders, G.R. No. 125706
(Notice), [September 30, 1996])

3. National Irrigation Administration v. Court of Appeals, 318 SCRA 255, November 17, 1999

- Sypnosis

In a competitive bidding held by petitioner National Irrigation Administration (NIA) in August

1978, Hydro Resources Contractors Corporation (HYDRO) was awarded Contract MPIC-2 for the
construction of the Magat River Multi-Purpose Project. HYDRO substantially completed the works under
the contract in 1982. HYDRO thereafter determined that it still had an account receivable from NIA
representing the dollar rate differential of the price escalation clause for the contract. After
unsuccessfully pursuing its case with NIA, HYDRO filed with the Construction Industry Arbitration
Commission (CIA) a Request for Adjudication of the aforesaid claim. After reaching an accord on the
issues to be considered by the arbitration panel, the parties scheduled the dates of hearings and of
simultaneous memoranda. Petitioner, however, filed a Motion to dismiss alleging lack of jurisdiction by
the CIAC over the dispute. Petitioner contended that there was no agreement with HYDRO to submit the
dispute to CIAC for arbitration considering that the construction contract was executed in 1978 and the
project completed in 1982, whereas the law creating the CIAC was signed only in 1983. CIAC ruled that it
has jurisdiction over the dispute pursuant to E.O. 1008 (Construction Industry Arbitration Law) and that
the hearing should proceed as scheduled. NIA filed an original action for certiorari seeking to annul the
orders of the CIAC for having been issued without or in excess of jurisdiction. The Court of Appeals, after
finding that there was no grave abuse of discretion on the part of the CIAC in issuing the aforesaid
orders, dismissed the petition. The appellate court likewise denied petitioner's motion for
reconsideration. Hence, the petition. TCIDSa
The Supreme Court dismissed the petition. The Court ruled that NIA's argument that CIAC had
no jurisdiction to arbitrate on a contract which preceded its existence was untenable. E.O. 1008 is clear
that the CIAC has jurisdiction over all disputes arising from or connected with construction contract
whether the dispute arises before or after the completion of the contract. The Court also stressed that
the jurisdiction of the CIAC is over the dispute, not the contract. The instant dispute having arisen when
CIAC was already constituted, the arbitral board was actually exercising current, not retroactive
jurisdiction
||| (National Irrigation Administration v. Court of Appeals, G.R. No. 129169, [November 17, 1999], 376
PHIL 362-376)

- Doctrine/s

ID.; ID.; ID.; ID.; THE JURISDICTION OF THE COMMISSION IS OVER THE DISPUTE, NOT THE CONTRACT;
THE INSTANT DISPUTE HAVING ARISEN WHEN THE COMMISSION WAS ALREADY CONSTITUTED, THE
ARBITRAL BOARD WAS ACTUALLY EXERCISING CURRENT, NOT RETROACTIVE, JURISDICTION. — NIA's
argument that CIAC had no jurisdiction to arbitrate on contract which preceded its existence is
untenable. E.O. 1008 is clear that the CIAC has jurisdiction over all disputes arising from or connected
with construction contract whether the dispute arises before or after the completion of the contract.
Thus, the date the parties entered into a contract and the date of completion of the same, even if these
occurred before the constitution of the CIAC, did not automatically divest the CIAC of jurisdiction as long
as the dispute submitted for arbitration arose after the constitution of the CIAC. Stated differently, the
jurisdiction of CIAC is over the dispute, not the contract; and the instant dispute having arisen when CIAC
was already constituted, the arbitral board was actually exercising current, not retroactive, jurisdiction.
As such, there is no need to pass upon the issue of whether E.O. No. 1008 is a substantive or procedural
statute.
ID.; ID.; ID.; ID; THE PARTIES ARE NOT PRECLUDED FROM ELECTING TO SUBMIT THEIR DISPUTE BEFORE
THE COMMISSION BECAUSE THIS RIGHT HAVE BEEN VESTED UPON EACH PARTY BY EXECUTIVE ORDER
NO. 1008. — Under the present CIAC Rules of Procedure, for a particular construction contract to fall
within the jurisdiction of CIAC, it is merely required that the parties agree to submit the same to
voluntary arbitration. Unlike in the original version of Section 1, as applied in theTesco case, the law as it
now stands does not provide that the parties should agree to submit disputes arising from their
agreement specifically to the CIAC for the latter to acquire jurisdiction over the same. Rather, it is plain
and clear that as long as the parties agree to submit to voluntary arbitration, regardless of what forum
they may choose, their agreement will fall within the jurisdiction of the CIAC, such that, even if they
specifically choose another forum, the parties will not be precluded from electing to submit their dispute
before the CIAC because this right has been vested upon each party by law, i.e., E.O. No. 1008. Moreover,
it is undeniable that NIA agreed to submit the dispute for arbitration to the CIAC. NIA through its counsel
actively participated in the arbitration proceedings by filing an answer with counterclaim, as well as its
compliance wherein it nominated arbitrators to the proposed panel, participating in the deliberations
on, and the formulation of, the Terms of Reference of the arbitration proceeding, and examining the
documents submitted by HYDRO after NIA asked for the originals of the said documents. ||| (National
Irrigation Administration v. Court of Appeals, G.R. No. 129169, [November 17, 1999], 376 PHIL 362-376)
-Issues
a. RESPONDENT CIAC HAS NO AUTHORITY OR JURISDICTION TO HEAR AND TRY THIS DISPUTE BETWEEN
THE HEREIN PARTIES AS E.O. NO. 1008 HAD NO RETROACTIVE EFFECT.
b. THE LEGAL DOCTRINE THAT JURISDICTION IS DETERMINED BY THE STATUTE IN FORCE AT THE TIME OF
THE COMMENCEMENT OF THE ACTION DOES NOT ONLY APPLY TO THE INSTANT CASE.
- Ruling
The CIAC has jurisdiction over the controversy. Executive Order No. 1008, otherwise known as
the "Construction Industry Arbitration Law" which was promulgated on 4 February 1985, vests upon
CIAC original and exclusive jurisdiction over disputes arising from, or connected with contracts entered
into by parties involved in construction in the Philippines, whether the dispute arises before or after the
completion of the contract, or after the abandonment or breach thereof. The disputes may involve
government or private contracts. For the Board to acquire jurisdiction, the parties to a dispute must
agree to submit the same to voluntary arbitration. 28
The complaint of HYDRO against NIA on the basis of the contract executed between them was
filed on 7 December 1994, during the effectivity of E.O. No. 1008. Hence, it is well within the jurisdiction
of CIAC. The jurisdiction of a court is determined by the law in force at the time of the commencement
of the action.||| (National Irrigation Administration v. Court of Appeals, G.R. No. 129169, [November 17,
1999], 376 PHIL 362-376)
- NIA also contended that the CIAC did not acquire jurisdiction over the dispute since it was only
HYDRO that requested for arbitration. It asserts that to acquire jurisdiction over a case, as
provided under E.O. 1008, the request for arbitration filed with CIAC should be made by both
parties, and hence the request by one party is not enough.
It is undisputed that the contracts between HYDRO and NIA contained an arbitration clause wherein they
agreed to submit to arbitration any dispute between them that may arise before or after the termination
of the agreement. Consequently, the claim of HYDRO having arisen from the contract is arbitrable. NIA's
reliance with the ruling on the case of Tesco Services Incorporated v. Vera, 30 is misplaced.

4. J Plus Asia Development Corporation vs. Utility Assurance Corporation, G.R. No. 1999650, June
26,2013
- FACTS
Petitioner J Plus Asia Development Corporation represented by its Chairman, Joo Han Lee, and Martin E.
Mabunay, doing business under the name and style of Seven Shades of Blue Trading and Services,
entered into a Construction Agreement 3 whereby the latter undertook to build the former's 72-room
condominium/hotel (Condotel Building 25) located at the Fairways & Bluewaters Golf & Resort in
Boracay Island, Malay, Aklan. The project, costing P42,000,000.00, was to be completed within one year
or 365 days reckoned from the first calendar day after signing of the Notice of Award and Notice to
Proceed and receipt of down payment (20% of contract price).
Mabunay commenced work at the project site on January 7, 2008. Petitioner paid up to the 7th monthly
progress billing sent by Mabunay. As of September 16, 2008, petitioner had paid the total amount of
P15,979,472.03 inclusive of the 20% down payment. However, as of said date, Mabunay had
accomplished only 27.5% of the project.
On November 19, 2008, petitioner terminated the contract and sent demand letters to Mabunay
and respondent surety. As its demands went unheeded, petitioner filed a Request for
Arbitration 10 before the Construction Industry Arbitration Commission (CIAC). Petitioner prayed that
Mabunay and respondent be ordered to pay the sums of P8,980,575.89 as liquidated damages and
P2,379,441.53 corresponding to the unrecouped down payment or overpayment petitioner made to
Mabunay. 11
In his Answer, 12 Mabunay claimed that the delay was caused by retrofitting and other revision
works ordered by Joo Han Lee. He asserted that he actually had until April 30, 2009 to finish the project
since the 365 days period of completion started only on May 2, 2008 after clearing the retrofitted old
structure. Hence, the termination of the contract by petitioner was premature and the filing of the
complaint against him was baseless, malicious and in bad faith. DTcASE
Respondent, on the other hand, filed a motion to dismiss on the ground that petitioner has no
cause of action and the complaint states no cause of action against it. The CIAC denied the motion to
dismiss. Respondent's motion for reconsideration was likewise denied||| (J Plus Asia Development Corp.
v. Utility Assurance Corp., G.R. No. 199650, [June 26, 2013], 712 PHIL 587-614)
- Issue/s
THE COURT OF APPEALS SERIOUSLY ERRED IN NOT HOLDING THAT THE ALTERNATIVE
DISPUTE RESOLUTION ACT AND THE SPECIAL RULES ON ALTERNATIVE DISPUTE
RESOLUTION HAVE STRIPPED THE COURT OF APPEALS OF JURISDICTION TO REVIEW
ARBITRAL AWARDS.

- Ruling
No.
We hold that R.A. No. 9285 did not confer on regional trial courts jurisdiction to review awards or
decisions of the CIAC in construction disputes. On the contrary, Section 40 thereof expressly declares
that confirmation by the RTC is not required, thus:
SEC. 40. Corifirmation of Award. — The confirmation of a domestic arbitral award shall be
governed by Section 23 of R.A. 876.
A domestic arbitral award when confirmed shall be enforced in the same manner as final and
executory decisions of the Regional Trial Court.
The confirmation of a domestic award shall be made by the regional trial court in accordance
with the Rules of Procedure to be promulgated by the Supreme Court.
A CIAC arbitral award need not be confirmed by the regional trial court to be executory as
provided under E.O. No. 1008. (Emphasis supplied.)

5. Koppel, Inc. (formerly known as KPL AIRCON, INC.) vs. Makati Rotary Club Foundation, Inc., G.R. No.
198075, September 4, 2013

- Issue
WON the lease 2005 contract is arbitrable
- Ruling
Yes. The arbitration clause of the 2005 contract stipulated an arbitration clause. Such stipulation
is clear and is comprehensive enough so as to include virtually any kind of conflict or dispute
that may arise from the 2005 lease contract including the one that presently besets petitioner
and respondent.

- Doctrine of separability
An arbitration agreement is considered as independent of the main contract. Being a separate
contract in itself, the arbitration agreement may thus be invoked regardless of the possible
nullity or invalidity of the main contract.

- Unlawful detainer
Since there is no legal impediment in 2005 lease contract, the Court find that the instant
unlawful detainer action was instituted in violation of such clause. There must be a stay of civil
action (sec. 7, RA 876)

6. Tuna Processing, Inc. vs. Philippine Kingford, Inc., G.R. No. 185582, February 29, 2012

- Issue
Can a foreign corporation not licensed to do business in the Philippines, but which collects
royalties from entities in the Philippines, sue here to enforce a foreign arbitral award?||| (Tuna
Processing, Inc. v. Philippine Kingford, Inc., G.R. No. 185582, [February 29, 2012], 683 PHIL 276-
294)

- FACTS
Kanemitsu Yamaoka, five Philippine tuna processors, and respondent Kingford entered into a
Memorandum of Agreement (MOA), which provided, among others, the establishment of Tuna
Processors, Inc. (TPI).
Due to a series of events, the licensees, including respondent Kingford, withdrew from petitioner
TPI and correspondingly reneged on their obligations. Petitioner submitted the dispute for
arbitration before the International Centre for Dispute Resolution in the State of California, USA
and won the case against respondent.
To enforce the award, petitioner TPI filed a Petition for Confirmation, Recognition, and
Enforcement of Foreign Arbitral Award before the RTC of Makati City.
The petition was dismissed on the ground that the petitioner lacked legal capacity to sue in the
Philippines.
Petitioner TPI now seeks to nullify the order of the trial court dismissing its Petition for
Confirmation, Recognition, and Enforcement of Foreign Arbitral Award.

- Ruling
Rule 13.1 of the Special Rules provides that [a]ny party to a foreign arbitration may petition the
court to recognize and enforce a foreign arbitral award. The contents of such petition are
enumerated in Rule 13.5. Capacity to sue is not included.
When a party enters into a contract containing a foreign arbitration clause and, as in this case, in
fact submits itself to arbitration, it becomes bound by the contract, by the arbitration and by the
result of arbitration, conceding thereby the capacity of the other party to enter into the contract,
participate in the arbitration and cause the implementation of the result.

7. Heirs of Augusto Salas JR vs Laperal Realty Corporation

- Sypnosis

Petitioners filed a complaint for rescission of several sale transactions involving land owned
by Augusto L. Salas, Jr., their predecessor-in-interest, claiming they suffered lesion of more than one-
fourth (1/4) of the value of Salas, Jr.'s land when respondent Laperal Realty subdivided it and sold
portions thereof to respondent lot buyers. The trial court dismissed the case because they failed to
resort to arbitration which was required in the original agreement entered into by and between Salas, Jr.
and Laperal Realty Corporation.
Petitioners, however, claimed that their causes of action did not emanate from the original
agreement, hence, their failure to arbitrate should not be a ground for dismissal of the case.
On appeal, the Supreme Court held that petitioners-heirs of Salas, Jr., and Laperal Realty are
certainly bound by the arbitration provision unlike respondent lot buyers who are neither parties to the
Agreement nor the latter's assigns or heirs. However, to hold trial in abeyance for respondent lot buyers
pending arbitration between petitioners and Laperal Realty would result in multiplicity of suits.
 The Supreme Court, therefore, granted the petition and ordered the trial court to proceed with
the hearing of the suit for rescission.
||| -Doctrine/s
ID.; ID.; ID.; BINDS PARTIES THERETO AS WELL AS THEIR ASSIGNS AND HEIRS; CASE AT BAR. — A
submission to arbitration is a contract. As such, the Agreement, containing the stipulation on arbitration,
binds the parties thereto, as well as their assigns and heirs. But only they. Petitioners, as heirs of Salas,
Jr., and respondent Laperal Realty are certainly bound by the Agreement. If respondent Laperal Realty
had assigned its rights under the Agreement to a third party, making the former, the assignor, and the
latter, the assignee, such assignee would also be bound by the arbitration provision since assignment
involves such transfer of rights as to vest in the assignee the power to enforce them to the same extent
as the assignor could have enforced them against the debtor or in this case, against the heirs of the
original party to the Agreement.
ID.; ID.; ID.; ID.; LOT BUYERS IN CASE AT BAR NOT BOUND BY CONTRACT. — However, respondents
Rockway Real Estate Corporation, South Ridge Village, Inc., Maharami Development Corporation,
spouses Abrajano, spouses Lava, Oscar Dacillo, Eduardo Vacuna, Florante de la Cruz and Jesus Vicente
Capellan are notassignees of the rights of respondent Laperal Realty under the Agreement to
develop Salas, Jr.'s land and sell the same. They are, rather, buyers of the land that respondent Laperal
Realty was given the authority to develop and sell under the Agreement. As such, they are not "assigns"
contemplated in Art. 1311 of the New Civil Code which provides that "contracts take effect only between
the parties, their assigns and heirs." For while rescission, as a general rule, is an arbitrable issue, they
impleaded in the suit for rescission the respondent lot buyers who are neither parties to the Agreement
nor the latter's assigns or heirs. Consequently, the right to arbitrate as provided in Article VI of the
Agreement was never vested in respondent lot buyers.
REMEDIAL LAW; ACTIONS; TRIAL COURT, IN INTEREST OF JUSTICE, SHOULD ADJUDICATE ALL ISSUES
RAISED IN A SINGLE AND COMPLETE PROCEEDING. — Respondent Laperal Realty, as a contracting party
to the Agreement, has the right to compel petitioners to first arbitrate before seeking judicial relief.
However, to split the proceedings into arbitration for respondent Laperal Realty and trial for the
respondent lot buyers, or to hold trial in abeyance pending arbitration between petitioners and
respondent Laperal Realty, would in effect result in multiplicity of suits, duplicitous procedure and
unnecessary delay. On the other hand, it would be in the interest of justice if the trial court hears the
complaint against all herein respondents and adjudicates petitioners' rights as against theirs in a single
and complete proceeding. (Heirs of Salas, Jr. v. Laperal Realty Corp., G.R. No. 135362, [December 13,
1999], 378 PHIL 369-376)

-Ruling
WHEREFORE, the instant petition is hereby GRANTED. The Order dated August 19, 1998 of
Branch 85 of the Regional Trial Court of Lipa City is hereby NULLIFIED and SET ASIDE. Said court is hereby
ordered to proceed with the hearing of Civil Case No. 98-0047.
Costs against private respondents.
||| (Heirs of Salas, Jr. v. Laperal Realty Corp., G.R. No. 135362, [December 13, 1999], 378 PHIL 369-376)