FIESTA WORLD MALL CORPORATION v. LINBERG PHILIPPINES PUROMINES, INC., petitioner, vs.
PUROMINES, INC., petitioner, vs. COURT OF APPEAL and PHILIPP BROTHERS ISSUE: WON there is a need for the prior arbitration before filing of the complaint with
GR NO. 152471
Facts: Fiesta World Mall Corporation, petitioner, owns and operates Fiesta World Mall
located at Barangay Maraouy, Lipa City; while Linberg Philippines, Inc., respondent, is
a corporation that builds and operates power plants. On January 19, 2000, respondent
filed with the Regional Trial Court (RTC), Branch 267, Pasig City, a Complaint for Sum
of Money against petitioner. The complaint alleges that on November 12, 1997,
petitioner and respondent executed a... build-own-operate agreement, entitled
"Contract Agreement for Power Supply Services, 3.8 MW Base Load Power Plant”
Under this Contract, 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" to be computed
in accordance with the Seventh Schedule of the Contract. In November 1997, the
power plant became operational and started supplying power/electricity to
petitioner's shopping mall in Lipa City. In December 1997,... respondent started billing
petitioner. As of May 21, 1999, petitioner's unpaid obligation amounted to
P15,241,747.58, exclusive of interest. However, petitioner questioned the said
amount and refused to pay despite respondent's repeated demands. 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. While both parties had discussions on the
questioned billings, however, "there were no earnest efforts to resolve the
differences in accordance with the arbitration clause provided for in the Contract."
Finally, as a special affirmative defense in its answer, petitioner alleged that
respondent's filing of the complaint is premature and should be dismissed on the
ground of non-compliance with paragraph 7.4 of the Contract which provides:
This was opposed by respondent, claiming that paragraph 7.4 of the Contract on
arbitration is not the provision applicable to this case; and that since the parties failed
to settle their dispute, then respondent may resort to court action
This was opposed by respondent, claiming that paragraph 7.4 of the Contract on
arbitration is not the provision applicable to this case; and that since the parties failed
to settle their dispute, then respondent may resort to court action pursuant to
paragraph 17.2 of the same
Contract which provides:
17.2 Amicable Settlement... trial court denied petitioner's motion for lack of merit.
Petitioner then filed a Motion for Reconsideration but it was denied
Dissatisfied, petitioner elevated the matter to the Court of Appeals via a Petition for
Certiorari,... the appellate court rendered its Decision dismissing the petition and
affirming the challenged Orders of the trial... court. Petitioner's Motion for
Reconsideration of the above Decision was likewise denied by the appellate court in
its Resolution. Hence, the instant Petition for Review on Certiorari. That should
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."
Issues: Whether the filing with the trial court of respondent's complaint is premature
Ruling: 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 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.[8] Thus, it is well within petitioner's right to
demand recourse to arbitration. Moreover, we note that the computation of the
energy fees disputed by petitioner also involves technical matters that are better left
to an arbitration panel who has expertise in those areas. Alternative dispute
resolution methods or ADRs like arbitration, mediation, negotiation and conciliation
are encouraged by this Court. After the arbitration proceeding has been pursued and
completed, then the trial court may confirm the award made by the arbitration panel.
The contention that the arbitration clause has become dysfunctional because of the
OCEANIC, INC., respondents.
G.R. No. 91228. March 22, 1993
Facts: Puromines, Inc. and Makati Agro Trading, Inc. entered into a contract with
private respondents Philipp Brothers Oceanic, Inc. for the sale of prilled Urea in bulk.
The Sales Contract provided, among others an arbitration clause which states, thus:
"9. Arbitration - Any disputes arising under this contract shall be settled by arbitration
in London in accordance with the Arbitration Act 1950 and any statutory amendment
or modification thereof. XXXX"
The shipment covered by 3 bills of lading was loaded on MV Liliana Dimitrova with
Philipp Brothers as charterer of said vessel. When the shipment covered by Bill of
Lading 1 and 3 were discharged in Manila, it was found to be in bad order and
condition, caked, hardened and lumpy, discoloured and contaminated with rust and
dirt.
Puromines filed a complaint with the Trial Court for breach of contract of carriage
against Maritime, as ship-agent and Philipp Brothers, as charterer. Philipp filed a
motion to dismiss on the ground that Petitioner should comply with the arbitration
clause in the sales contract. Puromines opposed contending that the sales contract
does not include contract of carriage, therefore, the latter is not covered by the
agreement on arbitration.
Issue: Whether or not the arbitration clause in the sales contract covers claims for
violations of contract of carriage.
Held: Yes. The sales contract is comprehensive enough to include claims for damages
arising from carriage and delivery of the goods. Puromines derives its right to the
cargo from the bill of lading which is the contract of affreightment together with the
sales contract. Consequently, it is bound by the provisions and terms of the said bill
of lading and of the arbitration clause incorporated in the sales contract.
Responsibility to third persons for goods shipped on board a vessel follows the vessel's
possession and employment. Assuming the cause of action is based on contract of
carriage, it must be first determined what kind of charter party had with the ship
owner to determine liability. If it is a contract of affreightment, the charterer is not
liable as possession is still with owner. If it is a charter of demise or bareboat, then the
charterer is liable as it is considered the owner and therefore would be liable for
damage or loss.
In any case, whether the liability of respondent should be based on the same contract
or that of the bill of lading, the parties are nevertheless obligated to respect the
arbitration provisions on the sales contract and/or the bill of lading. Petitioner being
a signatory and party to the sales contract cannot escape from his obligation under
the arbitration clause as stated therein.
Arbitration has been held valid and constitutional. The rule now is that unless the
agreement is such as absolutely to close the doors of the courts against the parties,
which agreement would be void, the courts will look with favor upon such amicable
arrangements and will only interfere with great reluctance to anticipate or nullify the
action of the arbitrator.
WHEREFORE, petition is hereby DISMISSED and decision of the court a quo is
AFFIRMED.
LM POWER vs. CAPITOL INDUSTRIAL
GR No. 141833
Facts: This is a Petition for Review on Certiorari filed by the petitioner LM Power
against Respondent Capitol Industrial seeking to set aside the decision of CA.
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 the inability of the petitioner to procure
materials, Capitol Industial took over some of the work contracted to the former. After
the completion of the contract, petitioner billed respondent in the amount of P6,
711,813.90 but the respondent refused to pay. Petitioner filed with the RTC of Makati
a Complaint for the collection of the amount representing the alleged balance due it
under the subcontract. Respondent filed a Motion to Dismiss, alleging that the
Complaint was premature, due to the absence of prior recourse to arbitration. RTC
denied the Motion on the ground that the dispute did not involve the interpretation
or the implementation of the Agreement and was not covered by the arbitral clause
and ruled in favor of the petitioner.
Respondent appealed to the CA, the latter reversed the decision of the RTC and
ordered the referral of the case to arbitration.
Hence, this Petition.
the court.
HELD: AFFIRMATIVE. SC ruled that in the case at hand it involves technical
discrepancies that are better left to an arbitral body that has expertise in the subject
matter. Moreover, the agreement between the parties contains arbitral clause that
“any dispute or conflict as regards to interpretation and implementation of this
agreement which cannot be settled between respondent and petitioner amicably
shall be settled by means of arbitration”. 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.
With respect to the disputes on the take-over/termination and the expenses incurred
by respondent in the take-over, the SC ruled that the agreement provides specific
provisions that any delay, expenses and any other acts in violation to such agreement,
the respondent can terminate and can set off the amount it incurred in the completion
of the contract.
SC tackled also that there’s no need for the prior request for arbitration by the parties
with the Construction Industry Arbitration Commission (CIAC) in order for it to acquire
jurisdiction. Because pursuant to Section 1 of Article III of the new Rules of Procedure
Governing Construction Arbitration, 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. Furthermore, 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.
Since a complaint with the RTC has been filed without prior recourse to arbitration,
under RA 876 (Arbitration Law) the proper procedure is to request the stay or
suspension of such action in order to settle the dispute with the CIAC.
Toyota Motor Philippines Corporation v. CA (G.R. No. 102881)
Facts: This case involves a boundary dispute between petitioner Toyota Motor Phil.
Corporation (Toyota) and private respondent Sun Valley Manufacturing and
Development Corporation (Sun Valley). Both Toyota and Sun Valley are the registered
owners of two (2) adjoining parcels of land which they purchased from the Asset
Privatization Trust (APT). The properties in question formerly belonged to Delta
Motors Corporation (DMC) which were foreclosed by the Philippine National Bank
(PNB) and later transferred to the national government through the APT for
disposition. APT then proceeded to classify the DMC properties, called the GC III-Delta
Motors Corporation, and divided into Delta I, Delta II, and Delta III. Further
subdivisions for the separate catalogues were made for each division e.g. Delta I into
Lots 1, 2 and 3. After this classification, APT parcelled out and catalogued the
properties for bidding and sale.
Part of the duly parcelled Delta I property (Lot 2) was sold to Toyota through public
bidding. After its purchase, Toyota constructed a concrete hollow block (CHB)
perimeter fence around its alleged property. Another part of the parcelled Delta I (Lot
1) was purchased by Sun Valley from APT. Petitioner then filed a case against APT for
the reformation of the Deed of Sale executed between them alleging that the
instrument failed to reflect the true intention of the parties as the title failed to
include 723 square meters strip of land. On the other hand, Sun Valley, filed a case for
recovery of possession of the disputed 723 square meters relying upon the title
description of its property and the surveys it has commissioned. Through legal
maneuverings, the parties have succeeded in muddling up the vital issues of the case
and getting the lower courts embroiled in numerous appeals over technicalities.
Hence, the three appellate decisions/resolutions before the Court for review and
conflicting orders issued by lower courts as a result of the separate cases filed by the
parties.
Issue: Whether or not Judge Tensuan had jurisdiction to take cognizance of the case
for reformation of instrument.
Ruling: Attention must first be brought to the fact that the contract of sale executed
between APT and Toyota provides an arbitration clause which states that:
In case of disagreement or conflict arising out of this Contract, the parties hereby
undertake to submit the matter for determination by a committee of experts, acting
as arbitrators, the composition of which shall be as follows: a) One member to be
appointed by the VENDOR; b) One member to be appointed by the VENDEE; c) One
member, who shall be a lawyer, to be appointed by both of the aforesaid parties;
presence of third parties is untenable.
Toyota filed an action for reformation of its contract with APT, the purpose of which
is to look into the real intentions/agreement of the parties to the contract and to
determine if there was really a mistake in the designation of the boundaries of the
property as alleged by Toyota. Such questions can only be answered by the parties to
the contract themselves. This is a controversy which clearly arose from the contract
entered into by APT and Toyota. Inasmuch as this concerns more importantly the
parties APT and Toyota themselves, the arbitration committee is therefore the proper
and convenient forum to settle the matter as clearly provided in the deed of sale.
Having been apprised of the presence of the arbitration clause in the motion to
dismiss filed by APT, Judge Tensuan should have at least suspended the proceedings
and directed the parties to settle their dispute by arbitration. Judge Tensuan should
have not taken cognizance of the case.
In view of all the foregoing, the petition is hereby dismissed for failure to show
reversible error, much less grave abuse of discretion, on the part of the respondent
court.
HEIRS OF AUGUSTO L. SALAS, JR vs, LAPERAL REALTY CORPORATION
[G.R. NO. 135362. December 13, 1999]
FACTS: Petitioner Salas Jr. and Respondent Laperal Realty Corporation entered into
anagreement for the latter to develop and provide complete construction services on
formers land. Petitioner executed a special power of attorney in favor of Respondent
Corporation to exercise general control, supervision and management of the sale of
his land. On June 10,1989 Petitioner left his home for a business trip in Nueva Ecija
but never returned again. Petitioner’s wife filed a petition for presumptive
death of her husband after seven years of absence. The trial court granted her
petition. On the other hand, Respondent Corporation already subdivided the property
owned by Salas Jr. to different lot buyers. The heirs of Salas Jr. filed in the RTC of Lipa
City a Complaint for nullity of sale, reconveyance, cancellation of contract and
damages against Laperal Realty Corporation and lot buyers. Laperal Realty
Corporation filed a motion to dismiss on the ground that the heirs of Salas Jr. failed to
submit their grievance to arbitration as stated in the agreement executed by Salas Jr.
and Laperal Realty Corporation. The lot buyers also filed a motion to dismiss based on
the same ground.
ISSUE:
1) Whether or not the arbitration clause in theagreement between Salas Jr.
andLaperal Realtybinds the heirs of the former.
(2) Whether or notthe trial court must dismiss the case or musthear the
casesimultaneously.
HELD:
(1) 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
Corporation are certainly bound by the agreement.
(2) The arbitration agreement is valid, binding and enforceable and not contrary to
public policy so much so when there obtains a written provision for arbitration which
is not complied with, the trial court should suspend the proceedings and order the
parties to proceed to arbitration in accordance with the terms of their agreement.
However it would bein the interest of justice if the trial court hears the complaint
against all herein respondents and adjudicates petitioners rights as against theirs in a
singles and complete proceeding. The petition is granted the trial court must proceed
with the hearing of the case.