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Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION

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

*(PUN(N' %.;
This is a petition fo+ +e,ie8 on ce+tio+a+i see<in1 the +e,e+sal of the 0ecision of the Cou+t of (ppeals on No,e9be+ $' ##= affi+9in1 in toto the
O+0e+ of the Re1ional T+ial Cou+t of 2ue3on Cit4' )+anch # 0is9issin1 the petitione+>s thi+0?pa+t4 co9plaint a1ainst p+i,ate +espon0ent ban<s fo+
lac< of :u+is0iction.
The facts of the case' as foun0 b4 both the t+ial cou+t an0 the Cou+t of (ppeals a+e un0ispute0;
In a co9plaint fo+ Violation of the Ne1otiable Inst+u9ent .a8 an0 Da9a1es' plaintiffs see< the +eco,e+4 of the a9ount of P#!!'#@.A! 8hich
0efen0ant ban< = cha+1e0 a1ainst thei+ cu++ent account b4 ,i+tue of the siBteen CAD chec<s 0+a8n b4 the9 0espite the appa+ent alte+ations the+ein
8ith +espect to the na9e of the pa4ee' that is' the na9e Filipinas Shell 8as e+ase0 an0 substitute0 8ith E,e+ T+a0in1 an0 D). T+a0in1 b4 thei+
supe+,iso+ %e+e9ias Cab+e+a' 8ithout thei+ <no8le01e an0 consent.
(ns8e+in1 the co9plaint' 0efen0ant ban< clai9e0 that the sub:ect chec<s appea+e0 to ha,e been +e1ula+l4 issue0 an0 f+ee f+o9 an4 i++e1ula+it4
8hich 8oul0 eBcite o+ a+ouse an4 suspicion o+ 8a++ant thei+ 0ishono+ 8hen the sa9e 8e+e ne1otiate0 an0 hono+e0 b4 itE that it obse+,e0 an0
eBe+cise0 the +e7ui+e0 0ili1ence' ca+e an0 the p+esc+ibe0 stan0a+0 ,e+ification p+oce0u+es befo+e finall4 acceptin1 an0 hono+in1 the sub:ect chec<s
an0 that the p+oBi9ate cause of plaintiffs> loss' if an4' 8as thei+ o8n laBit4' ne1li1ence an0 lac< of cont+ol' 0ue ca+e an0 0ili1ence in the con0uct of
thei+ business affai+s.
Fith lea,e of cou+t' 0efen0ant ban< file0 a Thi+0?Pa+t4 Co9plaint a1ainst Philippine Co99e+cial Inte+national )an<' Fa+ East )an< 5 T+ust Co9pan4'
Secu+it4 )an< an0 T+ust Co9pan4 an0 Cit4t+ust )an<in1 Co+po+ation fo+ +ei9bu+se9ent' cont+ibution' in0e9nit4 f+o9 sai0 thi+0?pa+t4 0efen0ants fo+
bein1 the collectin1 ban<s of the sub:ect chec<s an0 b4 ,i+tue of thei+ ban< 1ua+antee fo+ all chec<s sent fo+ clea+in1 to the Philippine Clea+in1 -ouse
Co+po+ation CPC-CD' as p+o,i0e0 fo+ in Section "' CPC-CD' as p+o,i0e0 fo+ in Section "' PC-C Clea+in1 -ouse Rules an0 Re1ulations.
In its (ns8e+ to the Thi+0?Pa+t4 Co9plaint' Cit4t+ust )an<in1 Co+po+ation a,e++e0 that the sub:ect chec<s appea+e0 to be co9plete an0 +e1ula+ on
thei+ face 8ith no in0ication that an o+i1inal pa4ee>s na9e 8as e+ase0 an0 supe+i9pose0 8ith anothe+E that plaintiffs> fault an0 ne1li1ence in failin1 to
eBa9ine thei+ 9onthl4 ban< state9ents' to1ethe+ 8ith the +etu+ne0 chec<s an0 thei+ o8n chec< stubs' put the9 un0e+ estoppel an0 cannot +eco,e+
the p+ocee0s of the chec<s a1ainst it' an innocent thi+0?pa+t4' an0 plaintiff 9ust suffe+ the loss as thei+ ne1li1ence 8as the p+oBi9ate cause the+eofE
an0 that thi+0 pa+t4 plaintiff is ba++e0 f+o9 +eco,e+in1 f+o9 it base on the p+o,isions of Sections =! an0 = of the Philippine Clea+in1 Rules an0
Re1ulations.
1
Philippine Co99e+cial Inte+national )an< alle1e0 that the sub:ect chec< 8as co9plete an0 +e1ula+ on its face an0 8as pai0 b4 it onl4 upon
p+esent9ent to the 0+a8ee ban< fo+ clea+in1 8ho' upon eBa9ination the+eof' foun0 the sa9e to be co9plete an0 +e1ula+ on its faceE that it 8as onl4
afte+ sai0 chec< 8as clea+e0 b4 thi+0?pa+t4 plaintiff fo+ pa49ent that it allo8e0 the pa4ee to 8ith0+a8 the p+ocee0s of the chec< f+o9 its accountE that
the cause of action of the thi+0?pa+t4 plaintiff is ba++e0 b4 estoppel an0Go+ laches fo+ its failu+e to +etu+n the chec< to it 8ithin the pe+io0 p+o,i0e0 fo+
un0e+ Clea+in1 -ouse Rules an0 Re1ulationsE that this Cou+t has no :u+is0iction o,e+ the suit as it an0 thi+0?pa+t4 plaintiff a+e 9e9be+s of the
Philippine Clea+in1 -ouse an0 boun0 b4 the Rules an0 Re1ulations the+eof p+o,i0in1 fo+ a+bit+ation.
( Motion To Dis9iss 8as file0 b4 Secu+it4 )an< an0 T+ust Co9pan4 on the 1+oun0s that thi+0?pa+t4 plaintiff faile0 to +eso+t to a+bit+ation as p+o,i0e0
fo+ in Section @A of the Clea+in1 -ouse Rules an0 Re1ulations of the Philippine Clea+in1 -ouse Co+po+ation' an0 that it 8as +elease0 f+o9 an4
liabilit4 8ith the acceptance b4 thi+0?pa+t4 plaintiff of the sub:ect chec<.
The +eco+0 0oes not sho8 of an4 (ns8e+ to the Thi+0?Pa+t4 Co9plaint ha,in1 been file0 b4 Fa+ East )an< 5 T+ust Co9pan4' althou1h a HRepl4 To
FE)TC (ns8e+H 8as file0 b4 thi+0?pa+t4 plaintiff.
On the othe+ han0' thi+0?pa+t4 plaintiff 9aintains that this Cou+t has :u+is0iction o,e+ the suit as the p+o,isions of the Clea+in1 -ouse Rules an0
Re1ulations a+e applicable onl4 if the suit o+ action is bet8een pa+ticipatin1 9e9be+ ban<s' 8he+eas the plaintiffs a+e p+i,ate pe+sons an0 the thi+0?
pa+t4 co9plaint bet8een pa+ticipatin1 9e9be+ ban<s is onl4 a conse7uence of the o+i1inal action initiate0 b4 the plaintiffs. @
The t+ial cou+t 0is9isse0 the thi+0?pa+t4 co9plaint fo+ lac< of :u+is0iction citin1 Section @A of the Clea+in1 -ouse Rules an0 Re1ulations of the PC-C
p+o,i0in1 fo+ settle9ent of 0isputes an0 cont+o,e+sies in,ol,in1 an4 chec< o+ ite9 clea+e0 th+ou1h the bo04 8ith the PC-C. It +ule0 I citin1 the
(+bit+ation Rules of P+oce0u+e I that the 0ecision o+ a8a+0 of the PC-C th+ou1h its a+bit+ation co99itteeGa+bit+ato+ is appealable onl4 on 7uestions
of la8 to an4 of the Re1ional T+ial Cou+ts in the National Capital Re1ion 8he+e the hea0 office of an4 of the pa+ties is locate0. &
On the plaintiffs> contention that :u+is0iction ,ests 8ith the cou+t onl4 if the suit o+ action is bet8een pa+ticipatin1 9e9be+ ban<s 8ithout the
in,ol,e9ent of p+i,ate pa+ties the t+ial cou+t hel0;
The thi+0?pa+t4 co9plaint conce+nin1 a 0ispute o+ cont+o,e+s4 a9on1 clea+in1 pa+ticipants in,ol,in1 the sub:ect chec<s clea+e0 th+ou1h PC-C is
actuall4 in0epen0ent of' sepa+ate an0 0istinct f+o9 the plaintiff>s co9plaint. . . .
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(s the plaintiffs a+e not pa+ties to the thi+0 pa+t4 co9plaint' the p+o,isions of the clea+in1 house +ules an0 +e1ulations on a+bit+ation a+e' the+efo+e'
applicable to Thi+0?Pa+t4 plaintiff an0 thi+0 pa+t4 0efen0ant. Conse7uentl4 this cou+t has no :u+is0iction o,e+ the thi+0 pa+t4 co9plaint. J
(fte+ the t+ial cou+t 0enie0 plaintiffs Motion fo+ Reconsi0e+ation' A petitione+ appeale0 to the Cou+t of (ppeals 8hich p+o9ul1ate0 the challen1e0
0ecision on No,e9be+ $' ##= 0is9issin1 the petition fo+ lac< of 9e+it.
Un0aunte0' petitione+ is no8 befo+e this Cou+t see<in1 a +e,ie8 of +espon0ent cou+t>s 0ecision on a lone assi1n9ent of e++o+;
RESPONDENT COURT OF (PPE(.S ERRED IN -O.DING T-(T PETITIONER DR(FEE )(N*>S T-IRD P(RT6 COMP.(INT (G(INST
PRIV(TE RESPONDENT CO..ECTING )(N*S F(.. FIT-IN T-E %URISDICTION OF T-E PC-C (ND NOT T-E REGU.(R COURT.
Fe fin0 no 9e+it in the petition.
The Clea+in1 -ouse Rules an0 Re1ulations on (+bit+ation of the Philippine Clea+in1 -ouse Co+po+ation a+e clea+l4 applicable to petitione+ an0
p+i,ate +espon0ents' thi+0 pa+t4 plaintiff an0 0efen0ants' +especti,el4' in the cou+t belo8. Petitione+ (ssociate0 )an<>s thi+0 pa+t4 co9plaint in the t+ial
cou+t 8as one fo+ +ei9bu+se9ent' cont+ibution an0 in0e9nit4 a1ainst the Philippine Co99e+cial an0 In0ust+ial )an< CPCI)D' the Fa+ East )an< an0
T+ust' Co. CFE)TCD' Secu+it4 )an< an0 T+ust Co. CS)TCD' an0 the Cit4T+ust )an<in1 Co+po+ation CCT)CD' in connection 8ith petitione+>s ha,in1
hono+e0 siBteen chec<s 8hich sai0 +espon0ent ban<s suppose0l4 en0o+se0 to the fo+9e+ fo+ collection in #$#. Un0e+ the +ules an0 +e1ulations of
the Philippine Clea+in1 -ouse Co+po+ation CPC-CD' the 9e+e act of pa+ticipation of the pa+ties conce+ne0 in its ope+ations in effect a9ounts to a
9anifestation of a1+ee9ent b4 the pa+ties to abi0e b4 its +ules an0 +e1ulations. " (s a conse7uence of such pa+ticipation' a pa+t4 cannot in,o<e the
:u+is0iction of the cou+ts o,e+ 0isputes an0 cont+o,e+sies 8hich fall un0e+ the PC-C Rules an0 Re1ulations 8ithout fi+st 1oin1 th+ou1h the a+bit+ation
p+ocesses lai0 out b4 the bo04. Since clai9s +elatin1 to the +e1ula+it4 of chec<s clea+e0 b4 ban<in1 institutions a+e a9on1 those clai9s 8hich shoul0
fi+st be sub9itte0 fo+ +esolution b4 the PC-C>s (+bit+ation Co99ittee' petitione+ (ssociate0 )an<' ha,in1 ,olunta+il4 boun0 itself to abi0e b4 such
+ules an0 +e1ulations' is estoppe0 f+o9 see<in1 +elief f+o9 the Re1ional T+ial Cou+t on the coattails of a p+i,ate clai9 an0 in the 1uise of a thi+0 pa+t4
co9plaint 8ithout fi+st ha,in1 obtaine0 a 0ecision a0,e+se to its clai9 f+o9 the sai0 bo04. It cannot b4pass the a+bit+ation p+ocess on the basis of its
a,e+9ent that its thi+0 pa+t4 co9plaint is ineBt+icabl4 lin<e0 to the o+i1inal co9plaint in the Re1ional T+ial Cou+t.
2
Un0e+ its (+ticles of Inco+po+ation' the PC-C p+o,i0es Han effecti,e' con,enient' efficient' econo9ical an0 +ele,ant eBchan1e an0 facilitate se+,ice
li9ite0 to chec< p+ocessin1 an0 so+tin1 b4 8a4 of assistin1 9e9be+ ban<s' entities in clea+in1 chec<s an0 othe+ clea+in1 ite9s as 0efine0 an0
eBistin1 in futu+e Cent+al )an< of the Philippines Ci+cula+s' 9e9o+an0a' ci+cula+ lette+s +ules an0 +e1ulations an0 policies in pu+suance of Section
!" of R( =AJ.H Pu+suant to its function in,ol,in1 the clea+in1 of chec<s an0 othe+ clea+in1 ite9s' the PC-C has a0opte0 +ules an0 +e1ulations
0esi1ne0 to p+o,i0e 9e9be+ ban<s 8ith a p+oce0u+e 8he+eb4 0isputes in,ol,in1 the clea+ance of chec<s an0 othe+ ne1otiable inst+u9ents un0e+1o
a p+ocess of a+bit+ation p+io+ to sub9ission to the cou+ts belo8. This p+oce0u+e not onl4 ensu+es a unifo+9it4 of +ulin1s +elatin1 to factual 0isputes
in,ol,in1 chec<s an0 othe+ ne1otiable inst+u9ents but also p+o,i0es a 9echanis9 fo+ settlin1 9ino+ 0isputes a9on1 pa+ticipatin1 an0 9e9be+ ban<s
8hich 8oul0 othe+8ise 1o 0i+ectl4 to the t+ial cou+ts. Fhile the PC-C Rules an0 Re1ulations allo8 appeal to the Re1ional T+ial Cou+ts onl4 on
7uestions of la8' this 0oes not p+eclu0e ou+ lo8e+ cou+ts f+o9 0ealin1 8ith 7uestions of fact al+ea04 0eci0e0 b4 the PC-C a+bit+ation 8hen 8a++ante0
an0 app+op+iate.
In )anco 0e O+o Sa,in1s an0 Mo+t1a1e )an<s ,s. E7uitable )an<in1 Co+po+ation $ this Cou+t ha0 the occasion to +ule on the ,ali0it4 of these +ules
as 8ell as the :u+is0iction of the PC-C as a fo+u9 fo+ +esol,in1 0isputes an0 cont+o,e+sies in,ol,in1 chec<s an0 othe+ clea+in1 ite9s 8hen it hel0
that Hthe pa+ticipation of t8o ban<s. . . in the Clea+in1 Ope+ations of the PC-C C8asD a 9anifestation of its sub9ission to its :u+is0iction.H #
The applicable PC-C p+o,isions on the 7uestion of :u+is0iction p+o,i0e;
Sec. @ I (GREEMENT TO T-ESE RU.ES
It is the 1ene+al a1+ee9ent an0 un0e+stan0in1' that an4 pa+ticipant in the PC-C MICR clea+in1 ope+ations' b4 the 9e+e act of pa+ticipation' the+eb4
9anifests its a1+ee9ent to these Rules an0 Re1ulations' an0 its subse7uent a9en09ents.
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Sec. @A I (R)ITR(TION
@A. (n4 0ispute o+ cont+o,e+s4 bet8een t8o o+ 9o+e clea+in1 pa+ticipants in,ol,in1 an4 chec<Gite9 clea+e0 th+u PC-C shall be sub9itte0 to
the (+bit+ation Co99ittee' upon 8+itten co9plaint of an4 in,ol,e0 pa+ticipant b4 filin1 the sa9e 8ith the PC-C se+,in1 the sa9e upon the othe+ pa+t4
o+ pa+ties' 8ho shall 8ithin fifteen CJD 0a4s afte+ +eceipt the+eof' file 8ith the (+bit+ation Co99ittee its 8+itten ans8e+ to such 8+itten co9plaint an0
also 8ithin the sa9e pe+io0 se+,e the sa9e upon the co9plainin1 pa+ticipant. This pe+io0 of fifteen CJD 0a4s 9a4 be eBten0e0 b4 the Co99ittee not
9o+e than once fo+ anothe+ pe+io0 of fifteen CJD 0a4s' but upon a1+ee9ent in 8+itin1 of the co9plainin1 pa+t4' sai0 eBtension 9a4 be fo+ such pe+io0
as the latte+ 9a4 a1+ee to.
Section @A.A is e,en 9o+e e9phatic;
@A.A The fact that a ban< pa+ticipates in the clea+in1 ope+ations of PC-C shall be 0ee9e0 its 8+itten an0 subsc+ibe0 consent to the bin0in1
effect of this a+bit+ation a1+ee9ent as if it ha0 0one so in acco+0ance 8ith Section & of the Republic (ct No. $"A othe+8ise <no8n as the (+bit+ation
.a8.
Thus' not onl4 0o the pa+ties 9anifest b4 9e+e pa+ticipation thei+ consent to these +ules' but such pa+ticipation is 0ee9e0 Cthei+D 8+itten an0
subsc+ibe0 consent to the bin0in1 effect of a+bit+ation a1+ee9ents un0e+ the PC-C +ules. Mo+eo,e+' a pa+ticipant sub:ect to the Clea+in1 -ouse
Rules an0 Re1ulations of the PC-C 9a4 1o on appeal to an4 of the Re1ional T+ial Cou+ts in the National Capital Re1ion 8he+e the hea0 office of
an4 of the pa+ties is locate0 onl4 afte+ a 0ecision o+ a8a+0 has been +en0e+e0 b4 the a+bit+ation co99ittee o+ a+bit+ato+ on 7uestions of la8. !
Clea+l4 the+efo+e' petitione+ (ssociate0 )an<' b4 its ,olunta+4 pa+ticipation an0 its consent to the a+bit+ation +ules cannot 1o 0i+ectl4 to the Re1ional
T+ial Cou+t 8hen it fin0s it con,enient to 0o so. The :u+is0iction of the PC-C un0e+ the +ules an0 +e1ulations is clea+' un0eniable an0 is pa+ticula+l4
applicable to all the pa+ties in the thi+0 pa+t4 co9plaint un0e+ thei+ obli1ation to fi+st see< +e0+ess of thei+ 0isputes an0 1+ie,ances 8ith the PC-C
befo+e 1oin1 to the t+ial cou+t.
Finall4' the contention that the thi+0 pa+t4 co9plaint shoul0 not ha,e been 0is9isse0 fo+ bein1 a necessa+4 an0 insepa+able offshoot of the 9ain case
o,e+ 8hich the cou+t a 7uo ha0 al+ea04 eBe+cise0 :u+is0iction 9isses the fun0a9ental point about such plea0in1. ( thi+0 pa+t4 co9plaint is a 9e+e
p+oce0u+al 0e,ice 8hich un0e+ the Rules of Cou+t is allo8e0 onl4 8ith the cou+t>s pe+9ission. It is an action Hactuall4 in0epen0ent of' sepa+ate an0
0istinct f+o9 the plaintiffs> co9plaintH CsDuch that' 8e+e it not fo+ the Rules of Cou+t' it 8oul0 be necessa+4 to file the action sepa+atel4 f+o9 the
o+i1inal co9plaint b4 the 0efen0ant a1ainst the thi+0 pa+t4.
IN VIEF OF T-E FOREGOING' the petition is DENIED fo+ lac< of 9e+it. Fith costs a1ainst petitione+.
SO ORDERED.
3
Republic of the Philippines
SUPREME COURT
Manila
T-IRD DIVISION
G.R. No. ##!&= Septe9be+ =A' ##&
).OOMFIE.D (C(DEM6 (ND RODO.FO %. .(GER(' petitione+s'
,s.
T-E -ONOR().E COURT OF (PPE(.S' ).OOMFIE.D (C(DEM6 P(RENTS (DVISOR6 (SSOCI(TION' INC. C)(P((D' +ep+esente0 b4 its
Vice?P+esi0ent' Mena+0o )o+0eosE an0 The -on. S(.V(DOR P. DE GU/M(N' %R.' P+esi0in1 %u01e of the Re1ional T+ial Cou+t' National Capital
%u0icial Re1ion' )+anch &=' Ma<ati' Met+o Manila' +espon0ents.
Villa+an3a 5 C+u3 fo+ petitione+s.
San )uena,entu+a' Re4es' Mo+ale0a CS(REMD .a8 Offices fo+ p+i,ate +espon0ent.

VITUG' %.;
This petition fo+ +e,ie8 on ce+tio+a+i see<s to +e,e+se the 0ecision of the Cou+t of (ppeals 0is9issin1' in C(?G.R. SP. No. =!$&A' the special ci,il
action fo+ ce+tio+a+i that has assaile0 a 8+it of p+eli9ina+4 in:unction issue0 b4 the cou+t a 7uo.
Fe a0opt' fo+ pu+poses of this +e,ie8' the case an0 factual settin1s +ecite0 b4 the appellate cou+t in its 0ecision. Fe 7uote;
The petition o+i1inate0 in a co9plaint fo+ in:unction file0 on
(p+il A' ##! b4 p+i,ate +espon0ent' the association of pa+ents an0 1ua+0ians of stu0ents en+olle0 in petitione+. One of the 0efen0ants in the sai0
case is petitione+ 8hich is a non?stoc<' non?p+ofit e0ucational institution. Fhat is bein1 0ispute0 befo+e +espon0ent cou+t is the inc+ease in tuition fee.
Mo+e pa+ticula+l4' the co9plaint alle1e0' a9on1 othe+ thin1s' that;
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&. On the p+eteBt that the ope+ation' 9uch 9o+e the su+,i,al of 0efen0ant e0ucational institution is in 0an1e+ 0ue to the 9an0ato+4 inc+ease of
the 9ini9u9 8a1e un0e+ R.(. A"="' 8hich the fo+9e+ is to co9pl4' the 0efen0ant Co+po+ation 0eci0e0 to inc+ease its afo+esai0 tuition fees un0e+ the
follo8in1 +ates;
FROM TO INCRE(SE IN
P K
G+a0e I PA'@J P"'&$J P'@J! ==.!!
G+a0e II A'@J "'&$J '@J! ==.!!
G+a0e III A'=@J "'A"J '@J! =.@&
G+a0e IV A'=@J "'A"J '@J! =.@&
G+a0e V A'@$! "'"@! '@J! =.A
G+a0e VI A'@$! "'""! '@J! =."#
-S st 4ea+ A'"!! $'!J! '@J! =!.J
-S =n0 4ea+ A'"!! $'!J! '@J! =!.J
III III III III
4
(,e+a1e A'@$J "'"&! '@JJ =.==
LLLLLL LLLLLL LLLLLL LLLLLL
J. The a9ount of the inc+ease constitutes a 8hoppin1 =.==K a,e+a1e inc+ease of the $#?#! tuition fees an0 that the sai0 inc+ease 8as
9a0e 8ithout p+io+ consultation to the pa+ents 8hich is a +e7ui+e9ent befo+e an4 such inc+ease shoul0 be 9a0e effecti,eE
A. The afo+esai0 inc+eases 8as not app+o,e0 an0 ,i1o+ousl4 ob:ecte0 to b4 the plaintiff as containe0 in its lette+s to 0efen0ant Ro0olfo %.
.a1e+a . . . -ono+able Isi0+o Ca+iMo in his capacit4 as the Sec+eta+4 of E0ucation' Cultu+e an0 Spo+ts . . . These t8o lette+s b+ou1ht to the attention of
the 0efen0ants that the tuition fees p+esentl4 bein1 cha+1e0 b4 0efen0ants )loo9fiel0 (ca0e94 a+e al+ea04 a9on1 the hi1hest in the co99unit4'
e,en if co9pa+e0 to Dela Salle (4ala an0 Eli3abeth Seton 8hich ha,e 9uch bette+ school an0 lib+a+4 facilities than the 0efen0ant' an0 that the
p+opose0 inc+ease is not onl4 unti9el4 but 1+ossl4 inapp+op+iate' an0' 8o+se' 8ithout an4 ,ali0 basis al+ea04' afte+ both pa+ties a1+ee0 on J!K of the
inc+ease 8hich 8as i9ple9ente0 an0 pai0 b4 the stu0ents 0u+in1 the school 4ea+ 8ith the clea+ un0e+stan0in1 that the othe+ J!K is 8ai,e0 b4 the
0efen0antE
". In spite of the clea+ sha+in1 b4 the plaintiff th+ou1h the afo+esai0 lette+s of the 1+oss inapp+op+iateness of the afo+esai0 p+oposal inc+ease in
tuition fees' 0efen0ants -ono+able Isi0+o Ca+iMo' blin0l4 app+o,e0 such p+oposal in its lette+ a00+esse0 to 0efen0ant Ro0olfo S. .a1e+a 0ate0 Ma+ch
="' ##! . . .E
$. Subse7uentl4 plaintiff +ecei,e0 f+o9 the 0efen0ant )loo9fiel0 (ca0e94 th+ou1h 0efen0ant Ro0olfo S. .a1e+a a
lette+ . . . 0e9an0in1 full pa49ent of the app+o,e0 tuition fee inc+ease on o+ befo+e (p+il A' ##! in blatant isolation of the a1+ee9ent 8ith the plaintiff
that onl4 J!K of the inc+ease 8ill be collecte0. (s a 9atte+ of fact' the plaintiff has al+ea04 pai0 the sai0 J!K of the inc+easeE
#. The i9ple9entation of the afo+esai0 app+o,al to inc+ease tuition fees' if not +etaine0 b4 this -ono+able Cou+t' 8oul0 8o+< in:ustice to the
he+ein plaintiff . . . 8hile inco+po+ato+s <eep hu1e p+ofits' b4 siphonin1 the9 to anothe+ co+po+ation' Ru0lin Inte+national' Inc. 8hile the4 also o8ne0
an0 is no8 as<in1 fo+ inc+ease in the +entals of the buil0in1s +et+oacti,el4 fo+ th+ee C@D 4ea+s.
On the 0ate the co9plaint 8as file0' +espon0ent cou+t issue0 an o+0e+ en:oinin1 petitione+s an0 Sec+eta+4 Ca+iMo an0Go+ thei+ a1ents' +ep+esentati,es
o+ pe+sons actin1 in thei+ behalf f+o9 i9ple9entin1 thei+ afo+esai0 inc+ease in tuition fees' an0 not 8ithhol0in1 thei+ +elease of the +epo+t ca+0s an0Go+
othe+ pape+s necessa+4 fo+ the stu0ents 0esi+in1 to t+ansfe+ to othe+ schools until fu+the+ o+0e+s f+o9 +espon0ent cou+t.
The application fo+ in:unction 8as set fo+ hea+in1 on (p+il #' ##! at
=;!! p.9.
(ns8e+ to the co9plaint 8as file0 b4 petitione+s on (p+il #' ##!. On the sa9e 0ate' +espon0ent cou+t con0ucte0 the fi+st hea+in1 on the application
fo+ a 8+it of p+eli9ina+4 in:unction 8hich hea+in1 8as follo8e0 b4 settin1s on (p+il =J' =A an0 ="' ##!.
(fte+ petitione+s sub9itte0 thei+ co9plete set of eBhibits an0 9e9o+an0u9 in opposition to the application fo+ a 8+it of p+eli9ina+4 in:unction'
+espon0ent cou+t issue0 the 0ispute0 o+0e+ . . .
The o+0e+ of the cou+t a 7uo' 0ate0 @! (p+il ##!' +efe++e0 to b4 the appellate cou+t +ea0;
F-EREFORE' let a 8+it of p+eli9ina+4 in:unction be issue0 o+0e+in1 the 0efen0ants' thei+ a1ents' thei+ +ep+esentati,es' an0 all pe+sons actin1 un0e+
the9 f+o9 collectin1 the secon0 PA"J.!! f+o9 the en+ollees' li9itin1 the9sel,es onl4 to the fi+st PA"J.!! an0Go+ f+o9 8ithhol0in1 o+ +efusin1 the
+elease of the +epo+t ca+0s an0 othe+ pape+s necessa+4 fo+ stu0ents t+ansfe++in1 to othe+ school' until fu+the+ o+0e+ f+o9 this cou+t' upon the postin1
b4 the plaintiff of a bon0 in the su9 of P=!!'!!!.!! con0itione0 to the pa49ent in fa,o+ of the 0efen0ants of 8hate,e+ 0a9a1es the4 9a4 suffe+ b4
,i+tue of this in:unction shoul0 it appea+ that the plaintiff is not entitle0 the+eto. =
In hol0in1 to be 8ithout 9e+it the petition fo+ ce+tio+a+i att+ibutin1 to the cou+t a 7uo 1+a,e abuse of 0isc+etion in the issuance of the afo+e7uote0
o+0e+' the appellate cou+t +atiocinate0 thusl4;
It is a 8ell establishe0 +ule that the 1+ant o+ 0enial of an in:unction +ests upon the soun0 0isc+etion of the cou+t' in the eBe+cise of 8hich appellate
cou+ts 8ill not inte+fe+e eBcept on a case of a clea+ abuse C)elisle In,est9ent an0 Finance Co.' Inc. F. State In,est9ent -ouseE Ro0olfo ,s. (lfonso'
"A Phil. ==JD. (n0 to :ustif4 the issuance of a 8+it of ce+tio+a+i it 9ust be sho8n that the abuse of 0isc+etion 8as 1+a,e an0 patent an0 that the
0isc+etion 8as eBe+cise0 a+bit+a+il4 o+ 0espoticall4 CSo+iano' et al.' ,s. (tien3a' et al.' " SCR( =$&D.
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5
Ri1htl4 o+ 8+on1l4' +espon0ent :u01eNs conclusion' 8hich se+,e0 as basis in issuin1 the 7uestione0 8+it' 8as +eache0 onl4 afte+ consi0e+in1 the facts
ba+e0 in the cou+se of the hea+in1. In othe+ 8o+0s' +espon0ent :u01e 8as 9e+el4 eBe+cisin1 his :u019ent. E++o+s of :u019ent a+e not 8ithin the
p+o,ince of a special ci,il action fo+ ce+tio+a+i CPu+efoo0s Co+po+ation ,s. N.RC' "& SCR( &JD.
One thin1 8e notice0 about this petition is that the issues +aise0 a+e factual in,ol,in1 as the4 0o e++o+s of :u019ent on the pa+t of +espon0ent :u01e.
In,a+iabl4' 8e encounte+ the follo8in1 a+1u9ents;
. . . public +espon0ent %u01e 0e Gu39an appea+s to ha,e been 9islea0 b4 the p+i,ate +espon0ent )(P((Ns clai9 that petitione+ )loo9fiel0 (ca0e94
0i0 not con0uct the +e7uisite consultation befo+e i9ple9entin1 the tuition fee inc+ease.
. . . public +espon0ent %u01e 0e Gu39an appea+s to ha,e been 9islea0 b4 the p+i,ate +espon0entNs unt+uthful clai9.
It 9ust e9phaticall4 be +eite+ate0' since so often it is o,e+loo<e0' the special ci,il action fo+ ce+tio+a+i is a +e9e04 0esi1ne0 fo+ the co++ection of e++o+s
of :u+is0iction an0 not e++o+s of :u019ent. Conse7uentl4' an e++o+ of :u+is0iction is not cont+o,e+tible th+ou1h the o+i1inal ci,il action of ce+tio+a+i
CPu+efoo0s Co+po+ation ,s. N.RC' " SCR( &$D.
(nent the alle1ation that +espon0ent :u01e 0is+e1a+0e0 the fact that the p+i,ate +espon0ent faile0 to eBhaust a,ailable a09inist+ati,e +e9e0ies in
assailin1 the 0ecision of the Depa+t9ent of E0ucation Cultu+e an0 Spo+ts app+o,in1 the tuition fee inc+ease suffice it to state that the p+inciple
+e7ui+in1 the p+e,ious eBhaustion of a09inist+ati,e +e9e0ies is not applicable 8hen the +espon0ent is a 0epa+t9ent sec+eta+4 8hose act as an alte+?
e1o of the P+esi0ent bea+s the i9plie0 o+ assu9e0 app+o,al of the latte+ C(ni9os ,s. Phil. Vete+ans (ffai+s Office' "& SCR( =&.D. @
In the he+ein petition fo+ +e,ie8 on ce+tio+a+i befo+e this Cou+t' petitione+s fo+9ulate the sole issue of 8hethe+ o+ not the cou+t a 7uo has acte0 8ithin
its :u+is0iction in issuin1 the 7uestione0 o+0e+ an0' in the affi+9ati,e' 8hethe+ o+ not it has co99itte0 1+a,e abuse of 0isc+etion specificall4 in 1+antin1
p+i,ate +espon0entNs application fo+ a 8+it of p+eli9ina+4 in:unction.
Fe see 9e+it in the petition.
The pe+tinent p+o,isions of Republic (ct No. A"=$' also co99onl4 <no8n as H(n (ct P+o,i0in1 Go,e+n9ent (ssistance to Stu0ents an0 Teache+s in
P+i,ate E0ucation' (n0 (pp+op+iatin1 Fun0s The+efo+'H p+o,i0e;
Sec. #. Fu+the+ (ssistance To Stu0ents in P+i,ate Colle1es an0 Uni,e+sities. I . . . .
CbD Fo+ stu0ents en+olle0 in schools cha+1in1 abo,e one thousan0 fi,e hun0+e0 pesos CP'J!!.!!D pe+ 4ea+ in tuition an0 othe+ fees 0u+in1 the
school 4ea+ #$$?#$# o+ such a9ount in subse7uent 4ea+s as 9a4 be 0ete+9ine0 f+o9 ti9e to ti9e b4 the State (ssistance Council' no assistance
fo+ tuition fees shall be 1+ante0 b4 the Go,e+n9ent; P+o,i0e0' ho8e,e+' That the schools conce+ne0 9a4 +aise thei+ tuition fees sub:ect to Section !
he+eof.
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Sec. !. Consultation. I In an4 p+opose0 inc+ease in the +ate of tuition fee' the+e shall be app+op+iate consultations con0ucte0 b4 the school
a09inist+ation 8ith the 0ul4 o+1ani3e0 pa+ents an0 teache+s associations an0 facult4 associations 8ith +espect to secon0a+4 schools' an0 8ith
stu0ents 1o,e+n9ents o+ councils' alu9ni an0 facult4 associations 8ith +espect to colle1es. Fo+ this pu+pose' au0ite0 financial state9ents shall be
9a0e a,ailable to autho+i3e0 +ep+esentati,es of these secto+s. E,e+4 effo+t shall be eBe+te0 to +econcile possible 0iffe+ences. In case of
0isa1+ee9ent' the alu9ni association of the school o+ an4 othe+ i9pa+tial bo04 of thei+ choosin1 shall act as a+bit+ato+.
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Sec. &. P+o1+a9 (09inist+ationGRules an0 Re1ulations. I The State (ssistance Council shall be +esponsible fo+ polic4 1ui0ance an0 0i+ection'
9onito+in1 an0 e,aluation of ne8 an0 eBistin1 p+o1+a9s' an0 the p+o9ul1ation of +ules an0 +e1ulations' 8hile the Depa+t9ent of E0ucation' Cultu+e
an0 Spo+ts shall be +esponsible fo+ the 0a4 to 0a4 a09inist+ation an0 p+o1+a9 i9ple9entation. .i<e8ise' it 9a4 en1a1e the se+,ices an0 suppo+t of
an4 7ualifie0 1o,e+n9ent o+ p+i,ate entit4 fo+ its i9ple9entation. CE9phasis supplie0.D
P+i,ate +espon0ent file0 8ith the cou+t a 7uo an action' entitle0 HIn:unction 8ith P+eli9ina+4 P+ohibito+4 In:unction 8ith P+a4e+ fo+ Te9po+a+4
Rest+ainin1 O+0e+H C0oc<ete0 Ci,il Case No. #!?#"D' a1ainst petitione+s an0 the Sec+eta+4 of E0ucation' Cultu+e an0 Spo+ts CHDECSHD see<in1 to
stop the i9ple9entation of the inc+ease in tuition fees b4 petitione+ school. P+i,ate +espon0ent asse+te0 that the inc+ease 8as a0opte0 8ithout the
p+io+
consultation +e7ui+e0 b4 la8 an0 that' in an4 case' the app+o,e0 inc+ease 8as eBo+bitant Cat =.==KD. Petitione+s' on thei+ pa+t' conten0e0 that the
pa+ties 0i0' in fact' hol0 consultations at 8hich the 8a1e inc+ease fo+ teache+s 9an0ate0 b4 Republic (ct A"=" an0 the +esultin1 inc+ease in tuition
fees allo8e0 b4 Republic (ct No. A"=$ 8e+e 0iscusse0 at len1th. The Solicito+ Gene+al' ans8e+in1 the co9plaint fo+ an0 in behalf of the DECS
Sec+eta+4' atteste0 to the app+o,al b4 DECS of a fift4 pe+cent CJ!KD tuition fee inc+ease fo+ the school 4ea+ #$#?##!.
6
The :u0icial action initiate0 b4 p+i,ate +espon0ent befo+e the cou+t a 7uo appea+s to us to be an inapp+op+iate +ecou+se. It +e9ains un0ispute0 that
the DECS Sec+eta+4 has' in fact' ta<en co1ni3ance of the case fo+ the tuition fee inc+ease an0 has acco+0in1l4 acte0 the+eon. Fe can onl4 assu9e
that in so 0oin1 the DECS Sec+eta+4 has 0ul4 passe0 upon the +ele,ant le1al an0 factual issues 0ealin1 on the p+op+iet4 of the 9atte+. In the 0ecision
p+ocess' the DECS Sec+eta+4 has ,e+il4 acte0 in a 7uasi?:u0icial capacit4. The +e9e04 f+o9 that 0ecision is an appeal. Confo+9abl4 8ith )atas
Pa9bansa )l1. =#' the eBclusi,e appellate :u+is0iction to 7uestion that a09inist+ati,e action lies 8ith the Cou+t of (ppeals' not 8ith the cou+t a 7uo.
If 8e 8e+e to consi0e+' upon the othe+ han0' the case fo+ in:unction file0 8ith the cou+t a 7uo to be a o+0ina+4 action solel4 a1ainst he+ein petitione+
C8ith DECS bein1 then 0ee9e0 to be 9e+el4 a no9inal pa+t4D' it 8oul0 ha,e 9eant the cou+tNs ta<in1 co1ni3ance o,e+ the case in 0is+e1a+0 of the
0oct+ine of p+i9a+4 :u+is0iction. &
Neithe+ can 8e t+eat the case as a special ci,il action fo+ ce+tio+a+i o+ p+ohibition as the co9plaint file0 b4 p+i,ate +espon0ent 8ith the cou+t a 7uo'
contains no alle1ation of lac<' o+ 1+a,e abuse in the eBe+cise' of :u+is0iction on the pa+t of DECS no+ has the+e been an4 fin0in1 9a0e to that effect
b4 eithe+ the cou+t a 7uo o+ the appellate cou+t that coul0 8a++ant the eBt+ao+0ina+4 +e9e04. ( special ci,il action' eithe+ fo+ ce+tio+a+i o+ p+ohibition'
can be 1+oun0e0 onl4 on eithe+ lac< of :u+is0iction o+ 1+a,e abuse of 0isc+etion. J
In passin1' 8e also obse+,e that the pa+ties ha,e both +e9aine0 silent on the p+o,isions of Republic (ct No. A"=$ to the effect that in case of
0isa1+ee9ent on tuition fee inc+eases Cin this instance b4 he+ein p+i,ate pa+tiesD' the issue shoul0 be +esol,e0 th+ou1h a+bit+ation. (lthou1h the
9atte+ has not been +aise0 b4 the pa+ties' it is an aspect' ne,e+theless' in ou+ ,ie8' that coul0 ha,e 8ell been eBplo+e0 b4 the9 instea0 of
i99e0iatel4 in,o<in1' such as the4 appa+entl4 0i0' the a09inist+ati,e an0 :u0icial +elief to +esol,e the cont+o,e+s4.
(ll tol0' 8e hol0 that the cou+t a 7uo has been be+eft of :u+is0iction in ta<in1 co1ni3ance of p+i,ate +espon0entNs co9plaint. Fe see no +eal
:ustification' on the basis of the factual an0 case settin1s he+e obtainin1' to pe+9it a 0e,iation f+o9 the lon1 stan0in1 +ule that the issue of :u+is0iction
9a4 be +aise0 at an4 ti9e e,en on appeal.
F-EREFORE' confo+9abl4 8ith ou+ abo,e opinion' the instant petition is GR(NTED an0 the 7uestione0 o+0e+e0 of the cou+t a 7uo an0 the 0ecision
of the appellate cou+t a+e SET (SIDE. No costs.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN )(NC
G.R. No. .?=@@#! (p+il =&' #A"
MIND(N(O PORT.(ND CEMENT CORPOR(TION' petitione+?appellee'
,s.
McDONOUG- CONSTRUCTION COMP(N6 OF F.ORID(' +espon0ent?appellant.
Gon3alo F. Gon3ale3 fo+ +espon0ent?appellant.
(lbe+to ). Villa+a3a fo+ petitione+?appellee.
)ENG/ON' %.P. %.;
On Feb+ua+4 @' #A' petitione+ Min0anao Po+tlan0 Ce9ent Co+po+ation an0 +espon0ent McDonou1h Const+uction Co9pan4 of Flo+i0a' U.S.(.'
eBecute0 a cont+act fo+ the const+uction b4 the +espon0ent fo+ the petitione+ of a 0+4 po+tlan0' ce9ent plant at Ili1an Cit4. In a sepa+ate cont+act'
Tu+nbull' Inc. I the Hen1inee+H +efe++e0 to in the const+uction cont+act I 8as en1a1e0 to 0esi1n an0 9ana1e the const+uction of the plant' supe+,ise
the const+uction' sche0ule 0eli,e+ies an0 the const+uction 8o+< as 8ell as chec< an0 ce+tif4 ill cont+acto+sN p+o1+ess an0 fiscal +e7uests fo+ pa49ent.
(lte+ations in the plans an0 specifications 8e+e subse7uentl4 9a0e 0u+in1 the p+o1+ess of the const+uction as set fo+th in (00en0a = to $ the+eto.
Due to this an0 to othe+ causes 0ee9e0 sufficient b4 Tu+nbull' Inc.' eBtensions of ti9e fo+ the te+9ination of the p+o:ect' initiall4 a1+ee0 to be finishe0
on Dece9be+ "' #A' 8e+e 1+ante0.=
Respon0ent finall4 co9plete0 the p+o:ect on Octobe+ ==' #A=' eBcept as to 0eli,e+4 of ce+tain spa+e pa+ts fo+ +eplace9ents an0 installations of
floo0la9psE an0 on No,e9be+ &' #A=' these latte+ ite9s 8e+e co9plie0 8ith. (s to the (00en0a in the plans an0 specifications' (00en0a =' @ an0
" 8e+e not si1ne0 b4 petitione+ althou1h the sa9e 8e+e fo+8a+0e0 to it' afte+ ha,in1 been si1ne0 b4 +espon0entE these a+e still in its possession.
(00en0a &' J an0 A 8e+e si1ne0 b4 petitione+ an0 +espon0ent.@
7
Diffe+ences late+ a+ose. Petitione+ clai9e0 f+o9 +espon0ent 0a9a1es in the a9ount of 9o+e than P='!!!'!!! alle1e0l4 occasione0 b4 the 0ela4 in
the p+o:ectNs co9pletion. Respon0ent in tu+n as<e0 fo+ 9o+e than P&J!'!!! f+o9 petitione+ fo+ alle1e0 losses 0ue to cost of eBt+a 8o+< an0 o,e+hea0
as of (p+il #A=. ( confe+ence 8as hel0 on about Ma4 =#' #A= bet8een petitione+ an0 Tu+nbull' Inc.' on one han0' an0 +espon0ent on the othe+' to
settle the 0iffe+ences afo+e9entione0' but no satisfacto+4 +esults 8e+e +eache0.O8phP.MQt
Petitione+ sent +espon0ent' on (u1ust $' #A=' an0 a1ain on Septe9be+ =&'#A=' 8+itten in,itations to a+bit+ate' in,o<in1 a p+o,ision in thei+ cont+act
+e1a+0in1 a+bit+ation of 0isputes.
Instea0 of ans8e+in1 sai0 in,itations' +espon0ent' on No,e9be+ &' #A=' 8ith Tu+nbull' Inc.Ns app+o,al' sub9itte0 to petitione+ fo+ pa49ent its final
state9ent of 8o+< acco9plishe0' as<in1 fo+ P&!@'"!! as unpai0 balance of the consi0e+ation of the cont+act.
Petitione+' on %anua+4 =#' #A@' file0 the p+esent action in the Cou+t of Fi+st Instance of Manila to co9pel +espon0ent to a+bit+ate 8ith it conce+nin1
alle1e0 0isputes a+isin1 f+o9 thei+ cont+act. It a,e++e0 inte+ alia that 0eletions an0 a00itions to the plans an0 specifications 8e+e a1+ee0 upon 0u+in1
the p+o1+ess of the const+uctionE that 0isa1+ee9ent a+ose bet8een the9 as to the cost of the a00itional o+ eBt+a 8o+< 0one' an0 +espon0entNs
0e,iation f+o9 so9e a1+ee0 specificationsE that petitione+ clai9s ha,in1 o,e+pai0 +espon0ent b4 P@@'$!.$E that petitione+ fu+the+ clai9s to ha,e
suffe+e0 0a9a1es 0ue to +espon0entNs 0ela4 in finishin1 the p+o:ectE that +espon0ent' on the othe+ han0' still clai9s an unpai0 balance of about
P&!@'"!!E that these 9atte+s fall un0e+ the 1ene+al a+bit+ation clause of thei+ cont+actE an0 that +espon0ent has faile0 to p+ocee0 to a+bit+ation
0espite se,e+al +e7uests the+efo+.
Respon0ent file0' on Feb+ua+4 =@' #A@' its ans8e+. It 0enie0 the alle1e0 eBistence of 0isa1+ee9ent bet8een the pa+ties. (n0 as special 0efense' it
alle1e0 that its clai9 fo+ P&!@'"!! 8as not 0ispute0 an0 that the +especti,e clai9s fo+ 0a9a1es shoul0 be +esol,e0 b4 Tu+nbull' Inc.' pu+suant to the
eBception in the a+bit+ation clause of the const+uction cont+act.
(fte+ stipulation of facts an0 sub9ission of 0ocu9enta+4 e,i0ence' the cou+t' on Ma4 @' #A&' +en0e+e0 its 0ecision fin0in1 that 0ispute o+
0isa1+ee9ent obtaine0 bet8een the pa+ties 8ith +espect to thei+ +i1hts an0 obli1ations un0e+ thei+ cont+act an0 that the sa9e shoul0 be sub9itte0 to
a+bit+ation pu+suant to pa+. @# of sai0 cont+act I the a+bit+ation clause I an0 to Republic (ct $"A I the (+bit+ation .a8. (n0 thus it o+0e+e0
petitione+ an0 +espon0ent to p+ocee0 to a+bit+ation in acco+0ance 8ith the te+9s of thei+ cont+act.
Not satisfie0 8ith the +ulin1' +espon0ent appeale0 the+ef+o9 to Us to +aise the pu+el4 le1al 7uestion of 8hethe+ un0e+ these facts +espon0ent is 0ut4?
boun0 to sub9it to a+bit+ation.
The p+o,ision of the cont+act on H(+bit+ation of Disa1+ee9entsH Cpa+. @#D sa4s;
@#. In the e,ent of 0isa1+ee9ent bet8een the O8ne+ an0 the Cont+acto+ in +espect of the +i1hts o+ obli1ations of eithe+ of the pa+ties he+eun0e+
eBcept the inte+p+etation of the plans an0 specifications an0 7uestions conce+nin1 the sufficienc4 of 9ate+ials' the ti9e' se7uence an0 9etho0 of
pe+fo+9in1 the 8o+<' 8hich 7uestions a+e to be finall4 0ete+9ine0 b4 the En1inee+' the4 shall sub9it the 9atte+ to a+bit+ation' the O8ne+ choosin1
one a+bit+ato+' the Cont+acto+ one' an0 the t8o so chosen shall select a thi+0. The 0ecision of such a+bit+ato+s o+ a 9a:o+it4 of the9 shall be 9a0e in
8+itin1 to both pa+ties an0 8hen so 9a0e shall be bin0in1 upon the pa+ties the+eto. CE9phasis supplie0D.
Respon0ent' he+ein appellant' conten0s fi+st' that the+e is no sho8in1 of 0isa1+ee9entE an0 secon0' that if the+e is' the sa9e falls un0e+ the
eBception' to be +esol,e0 b4 the en1inee+.
(s to the fi+st point' the fact of 0isa1+ee9ent has been 0ete+9ine0 b4 the cou+t belo8 upon the stipulation of facts an0 0ocu9enta+4 e,i0ence
sub9itte0. In this appeal in,ol,in1 pu+e 7uestions of la8' the abo,e fin0in1 shoul0 not be 0istu+be0. Fu+the+9o+e' the eBistence of 0isa1+ee9ent is
plainl4 sho8n in the +eco+0. Respon0ent a09its the eBistence of petitione+Ns clai9 but 0enies its 9e+it.& It li<e8ise a09its that petitione+ has +efuse0
to pa4 its clai9 fo+ the unpai0 balance of the p+ice of the cont+act.J Pa+a1+aph $ of the stipulation of facts sho8s the 0ispute of the pa+ties +e1a+0in1
thei+ 9utual clai9s an0 that sai0 0ispute +e9aine0 unsettle0;
$. That on o+ about Ma4 =#' #A=' a confe+ence 8as hel0 bet8een petitione+ an0 Tu+nbill' Inc.' on the one han0' an0 +espon0ent' on the othe+' to
settle thei+ 0iffe+ences in,ol,in1 the clai9 fo+ 0a9a1es of petitione+ in the a9ount of 9o+e than P='!!!'!!!' occasione0 b4 the 0ela4 in the
co9pletion of the p+o:ect' an0 the clai9 of +espon0ent fo+ losses 0ue to the cost of eBt+a plant an0 o,e+hea0 in the a9ount of 9o+e than P&J!'!!!'
I as of (p+il' #A=' but no satisfacto+4 +esults 8e+e +eache0E CE9phasis supplie0D.
Re1a+0in1 the secon0 point' the pa+ties a1+ee0 b4 8a4 of eBception that 0isa1+ee9ents 8ith +espect to the follo8in1 9atte+s shall be finall4 +esol,e0
b4 the en1inee+' instea0 of bein1 sub9itte0 to a+bit+ation; CD The inte+p+etation of plans an0 specificationsE C=D sufficienc4 of 9ate+ialsE an0 C@D the
ti9e' se7uence an0 9etho0 of pe+fo+9in1 the 8o+<.
The 0isputes in,ol,e0 he+e' on the othe+ han0' a+e on CD the p+ope+ co9putation of the total cont+act p+ice'A inclu0in1 the cost of a00itional o+ eBt+a
8o+<E" an0 C=D the liabilit4 fo+ alle1e0 0ela4 in co9pletin1 the p+o:ect an0 fo+ alle1e0 losses 0ue to chan1e in the plans an0 specifications.
8
No8 f+o9 the cont+act itself Fe can 0ete+9ine the scope of the eBceptions afo+e9entione0. Thus' pa+s. # to == of its Gene+al Con0itions 0eal 8ith
the sub:ect HInte+p+etation of Plans an0 SpecificationsH. (n0 the+eun0e+' the en1inee+ is e9po8e+e0 to co++ect all 0isc+epancies' e++o+s o+ o9issions
in the plans an0 specificationsE to eBplain all 0oubts that 9a4 a+ise the+eonE an0 to fu+nish fu+the+ plans an0 specifications as 9a4 be +e7ui+e0. No
9ention is 9a0e the+ein as to the cost of the p+o:ectE this 9atte+ is co,e+e0 b4 the en1inee+in1 cont+act' un0e+ 8hich Tu+nbull' Inc.Ns function is
li9ite0 to 9a<in1 esti9ates of costs onl4.
HSufficienc4 of 9ate+ialsH an0 H9etho0 of pe+fo+9in1 the 8o+<H I un0e+ the secon0 an0 thi+0 eBceptions abo,e?9entione0 I a+e t+eate0 in pa+s. =
to A of the Gene+al Con0itions un0e+ the hea0in1 H2U(.IT6 OF FOR*S (ND M(TERI(.SH. Tu+nbull' Inc.' is the+ein e9po8e+e0 to 0ete+9ine the
lan0 fitness of the se,e+al <in0s of 8o+< an0 9ate+ials fu+nishe0 an0 to +e:ect o+ con0e9n 9an4 of the9 8hich' in its opinions' 0oes not full4 confo+9
to the te+9s of the cont+act. In the p+esent case' the 0ispute is not as to the 7ualit4 of the 9ate+ials o+ of the <in0 of 8o+< 0one.
HTi9eH an0 HSe7uence of Fo+<H a+e co,e+e0 b4 pa+s. # to " of the Gene+al Con0itions un0e+ the hea0in1 HSC-EDU.ING.H Neithe+ 8oul0 the
0isputes fall un0e+ these eBceptions. Tu+nbull' Inc.Ns po8e+ he+e is to sche0ule the 0eli,e+ies an0 const+uction 8o+< an0 eBpe0ite the sa9e so that
the p+o:ect can be finishe0 on ti9e. It is also autho+i3e0' un0e+ pa+. J' to 0ete+9ine 8hethe+ an4 e,entualit4 is sufficient enou1h to 8a++ant in
eBtension of ti9e an0 if so' to 0ete+9ine the pe+io0 of such eBtension. The 0ela4 en,isione0 he+e is one that occu+s 0u+in1 the p+o1+ess of the 8o+<
8hich 0istu+bs the p+e?sche0ulin1 plan' thus necessitatin1 an eBtension of the o,e+?all 0ea0line p+ecisel4 to p+e,ent +espon0ent f+o9 1oin1 be4on0
the sa9e. Tu+nbull' Inc.Ns function 1oes no fu+the+ than to calculate an0 fiB the pe+io0 of eBtension. )ut the 0ela4 petitione+ alle1e0 is 0iffe+entE it is
0ela4 be4on0 the last 0ate of eBtension fiBe0 b4 Tu+nbull' Inc. Clea+l4' the 7uestion of liabilit4 the+efo+' is not e9b+ace0 in the eBception.
To none of the eBceptions then 0o the 0isa1+ee9ents in 7uestion belon1' the +ule of a+bit+ation the+efo+e applies. The pa+ties in fact also stipulate0 in
thei+ cont+act' un0e+ HERTR( FOR*H' that the cost of eBt+a 8o+< to be pai0 shall be sub:ect to ne1otiations.$ This ne1ates the p+oposition that
Tu+nbull' Inc.Ns cost esti9ates appea+in1 in (00en0a =' @ an0 " a+e final an0 conclusi,e.
The +eason' 9o+eo,e+' fo+ the eBceptions I inte+p+etation of plans an0 specificationsE sufficienc4 of 9ate+ialsE se7uence' ti9e an0 9etho0 of
pe+fo+9in1 the 8o+< I is the nee0 to 0eci0e these 9atte+s i99e0iatel4' since the p+o1+ess of the 8o+< 8oul0 a8ait thei+ 0ete+9ination. The sa9e is
not t+ue as to 9atte+s +elatin1 to the liabilit4 fo+ 0ela4 in the p+o:ectNs co9pletionE these a+e 7uestions that the en1inee+ 0oes not ha,e to +esol,e
befo+e the p+o:ect can 1o on. Conse7uentl4' Fe ,ie8 that it is not inclu0e0 in the eBceptions' as in0ee0 the +elate0 p+o,isions of thei+ a1+ee9ent
in0icate.
Since the+e obtains he+ein a 8+itten p+o,ision fo+ a+bit+ation as 8ell as failu+e on +espon0entNs pa+t to co9pl4 the+e8ith' the cou+t a 7uo +i1htl4
o+0e+e0 the pa+ties to p+ocee0 to a+bit+ation in acco+0ance 8ith the te+9s of thei+ a1+ee9ent CSec. A' Republic (ct $"AD. Respon0entNs a+1u9ents
touchin1 upon the 9e+its of the 0ispute a+e i9p+ope+l4 +aise0 he+ein. The4 shoul0 be a00+esse0 to the a+bit+ato+s. This p+ocee0in1 is 9e+el4 a
su99a+4 +e9e04 to enfo+ce the a1+ee9ent to a+bit+ate. The 0ut4 of the cou+t in this case is not to +esol,e the 9e+its of the pa+tiesN clai9s but onl4 to
0ete+9ine if the4 shoul0 p+ocee0 to a+bit+ation o+ not. (n0 althou1h it has been +ule0 that a f+i,olous o+ patentl4 baseless clai9 shoul0 not be o+0e+e0
to a+bit+ation' it is also +eco1ni3e0 that the 9e+e fact that a 0efense eBists a1ainst a clai9 0oes not 9a<e it f+i,olous o+ baseless.#
Fhe+efo+e' the :u019ent appeale0 f+o9' o+0e+in1 the pa+ties to p+ocee0 to a+bit+ation acco+0in1 to the te+9s of thei+ a1+ee9ent' is he+eb4 affi+9e0'
8ith costs a1ainst appellant. So o+0e+e0.
Republic of the Philippines
SUPREME COURT
Manila
SPECI(. SECOND DIVISION
G.R. No. A#J" %anua+4 ==' =!!"
%ORGE GON/(.ES an0 P(NE. OF (R)ITR(TORS' Petitione+s'
,s.
C.IM(R MINING .TD.' C.IM(R?(RIMCO MINING CORP.' an0 (USTR(.(SI(N P-I.IPPINES MINING INC.' Respon0ents.
B????????????????????????????????????????????????????????????????????????????????? B
G.R. No. A"##& %anua+4 ==' =!!"
%ORGE GON/(.ES' Petitione+'
,s.
-ON. OSC(R ). PIMENTE.' in his capacit4 as PRESIDING %UDGE of )R. &$ of the REGION(. TRI(. COURT of M(*(TI CIT6' an0 C.IM(R?
(RIMCO MINING CORPOR(TION' Respon0ents.
9
R E S O . U T I O N
TING(' %.;
This is a consoli0ation of t8o petitions +oote0 in the sa9e 0ispute0 (00en0u9 Cont+act ente+e0 into b4 the pa+ties. In G.R. No. A#J"' the Cou+t in
its Decision of =$ Feb+ua+4 =!!J 0enie0 the Rule &J petition of petitione+ %o+1e Gon3ales CGon3alesD. It hel0 that the DENR Panel of (+bit+ato+s ha0
no :u+is0iction o,e+ the co9plaint fo+ the annul9ent of the (00en0u9 Cont+act on 1+oun0s of f+au0 an0 ,iolation of the Constitution an0 that the
action shoul0 ha,e been b+ou1ht befo+e the +e1ula+ cou+ts as it in,ol,e0 :u0icial issues. )oth pa+ties file0 sepa+ate 9otions fo+ +econsi0e+ation.
Gon3ales a,e+s in his Motion fo+ Reconsi0e+ation= that the Cou+t e++e0 in hol0in1 that the DENR Panel of (+bit+ato+s 8as be+eft of :u+is0iction'
+eite+atin1 its a+1u9ent that the case in,ol,es a 9inin1 0ispute that p+ope+l4 falls 8ithin the a9bit of the Panel>s autho+it4. Gon3ales a00s that the
Cou+t faile0 to +ule on othe+ issues he +aise0 +elatin1 to the sufficienc4 of his co9plaint befo+e the DENR Panel of (+bit+ato+s an0 the ti9eliness of its
filin1.
Respon0ents Cli9aB Minin1 .t0.' et al.' C+espon0entsD file0 thei+ Motion fo+ Pa+tial Reconsi0e+ation an0Go+ Cla+ification@ see<in1 +econsi0e+ation of
that pa+t of the Decision hol0in1 that the case shoul0 not be b+ou1ht fo+ a+bit+ation un0e+ Republic (ct CR.(.D No. $"A' also <no8n as the (+bit+ation
.a8.& Respon0ents' citin1 (9e+ican :u+isp+u0enceJ an0 the UNCITR(. Mo0el .a8'A a+1ue that the a+bit+ation clause in the (00en0u9 Cont+act
shoul0 be t+eate0 as an a1+ee9ent in0epen0ent of the othe+ te+9s of the cont+act' an0 that a clai9e0 +escission of the 9ain cont+act 0oes not a,oi0
the 0ut4 to a+bit+ate. Respon0ents a00 that Gon3ales>s a+1u9ent +elatin1 to the alle1e0 in,ali0it4 of the (00en0u9 Cont+act still has to be p+o,en
an0 a0:u0icate0 on in a p+ope+ p+ocee0in1E that is' an action sepa+ate f+o9 the 9otion to co9pel a+bit+ation. Pen0in1 :u019ent in such sepa+ate
action' the (00en0u9 Cont+act +e9ains ,ali0 an0 bin0in1 an0 so 0oes the a+bit+ation clause the+ein. Respon0ents a00 that the hol0in1 in the
Decision that Hthe case shoul0 not be b+ou1ht un0e+ the a9bit of the (+bit+ation .a8H appea+s to be p+e9ise0 on Gon3ales>s ha,in1 Hi9pu1nSe0T the
eBistence o+ ,ali0it4H of the a00en0u9 cont+act. If so' it suppose0l4 con,e4s the i0ea that Gon3ales>s unilate+al +epu0iation of the cont+act o+ 9e+e
alle1ation of its in,ali0it4 is all it ta<es to a,oi0 a+bit+ation. -ence' +espon0ents sub9it that the cou+t>s hol0in1 that Hthe case shoul0 not be b+ou1ht
un0e+ the a9bit of the (+bit+ation .a8H be un0e+stoo0 o+ cla+ifie0 as ope+ati,e onl4 8he+e the challen1e to the a+bit+ation a1+ee9ent has been
sustaine0 b4 final :u019ent.
)oth pa+ties 8e+e +e7ui+e0 to file thei+ +especti,e co99ents to the othe+ pa+t4>s 9otion fo+ +econsi0e+ationGcla+ification." Respon0ents file0 thei+
Co99ent on " (u1ust =!!J'$ 8hile Gon3ales file0 his onl4 on =J %ul4 =!!A.#
On the othe+ han0' G.R. No. A"##& is a Rule AJ petition file0 on A Ma4 =!!J' o+ 8hile the 9otions fo+ +econsi0e+ation in G.R. No. A#J"! 8e+e
pen0in1' 8he+ein Gon3ales challen1e0 the o+0e+s of the Re1ional T+ial Cou+t CRTCD +e7ui+in1 hi9 to p+ocee0 8ith the a+bit+ation p+ocee0in1s as
sou1ht b4 Cli9aB?(+i9co Minin1 Co+po+ation CCli9aB?(+i9coD.
On J %une =!!A' the t8o cases' G.R. Nos. A#J" an0 A"##&' 8e+e consoli0ate0 upon the +eco99en0ation of the (ssistant Di,ision Cle+< of Cou+t
since the cases a+e +oote0 in the sa9e (00en0u9 Cont+act.
Fe fi+st tac<le the 9o+e +ecent case 8hich is G.R. No. A"##&. It ste99e0 f+o9 the petition to co9pel a+bit+ation file0 b4 +espon0ent Cli9aB?(+i9co
befo+e the RTC of Ma<ati Cit4 on @ Ma+ch =!!! 8hile the co9plaint fo+ the nullification of the (00en0u9 Cont+act 8as pen0in1 befo+e the DENR
Panel of (+bit+ato+s. On =@ Ma+ch =!!!' Cli9aB?(+i9co ha0 sent Gon3ales a De9an0 fo+ (+bit+ation pu+suant to Clause #. of the (00en0u9
Cont+act an0 also in acco+0ance 8ith Sec. J of R.(. No. $"A. The petition fo+ a+bit+ation 8as subse7uentl4 file0 an0 Cli9aB?(+i9co sou1ht an o+0e+
to co9pel the pa+ties to a+bit+ate pu+suant to the sai0 a+bit+ation clause. The case' 0oc<ete0 as Ci,il Case No. !!?&&&' 8as initiall4 +affle0 to )+. @=
of the RTC of Ma<ati Cit4' 8ith %u01e -e+9inio I. )enito as P+esi0in1 %u01e. Respon0ent Cli9aB?(+i9co file0 on J (p+il =!!! a 9otion to set the
application to co9pel a+bit+ation fo+ hea+in1.
On & (p+il =!!!' Gon3ales file0 a 9otion to 0is9iss 8hich he ho8e,e+ faile0 to set fo+ hea+in1. On J Ma4 =!!!' he file0 an (ns8e+ 8ith
Counte+clai9'= 7uestionin1 the ,ali0it4 of the (00en0u9 Cont+act containin1 the a+bit+ation clause. Gon3ales alle1e0 that the (00en0u9 Cont+act
containin1 the a+bit+ation clause is ,oi0 in ,ie8 of Cli9aB?(+i9co>s acts of f+au0' opp+ession an0 ,iolation of the Constitution. Thus' the a+bit+ation
clause' Clause #.' containe0 in the (00en0u9 Cont+act is also null an0 ,oi0 ab initio an0 le1all4 ineBistent.a8phi.net
On $ Ma4 =!!!' the RTC issue0 an o+0e+ 0ecla+in1 Gon3ales>s 9otion to 0is9iss 9oot an0 aca0e9ic in ,ie8 of the filin1 of his (ns8e+ 8ith
Counte+clai9.@
On @ Ma4 =!!!' Gon3ales as<e0 the RTC to set the case fo+ p+e?t+ial.& This the RTC 0enie0 on A %une =!!!' hol0in1 that the petition fo+
a+bit+ation is a special p+ocee0in1 that is su99a+4 in natu+e.J -o8e,e+' on " %ul4 =!!!' the RTC 1+ante0 Gon3ales>s 9otion fo+ +econsi0e+ation of
the A %une =!!! O+0e+ an0 set the case fo+ p+e?t+ial on ! (u1ust =!!!' it bein1 of the ,ie8 that Gon3ales ha0 +aise0 in his ans8e+ the issue of the
9a<in1 of the a+bit+ation a1+ee9ent.A
Cli9aB?(+i9co then file0 a 9otion to +esol,e its pen0in1 9otion to co9pel a+bit+ation. The RTC 0enie0 the sa9e in its =& %ul4 =!!! o+0e+.
10
On =$ %ul4 =!!!' Cli9aB?(+i9co file0 a Motion to Inhibit %u01e -e+9inio I. )enito fo+ Hnot possessin1 the col0 neut+alit4 of an i9pa+tial :u01e.H" On
J (u1ust =!!!' %u01e )enito issue0 an O+0e+ 1+antin1 the Motion to Inhibit an0 o+0e+e0 the +e?+afflin1 of the petition fo+ a+bit+ation.$ The case 8as
+affle0 to the sala of public +espon0ent %u01e Osca+ ). Pi9entel of )+anch &$.
On =@ (u1ust =!!!' Cli9aB?(+i9co file0 a 9otion fo+ +econsi0e+ation of the =& %ul4 =!!! O+0e+.# Cli9aB?(+i9co a+1ue0 that R.(. No. $"A 0oes not
autho+i3e a p+e?t+ial o+ t+ial fo+ a 9otion to co9pel a+bit+ation but 0i+ects the cou+t to hea+ the 9otion su99a+il4 an0 +esol,e it 8ithin ten 0a4s f+o9
hea+in1. %u01e Pi9entel 1+ante0 the 9otion an0 0i+ecte0 the pa+ties to a+bit+ation. On @ Feb+ua+4 =!!' %u01e Pi9entel issue0 the fi+st assaile0
o+0e+ +e7ui+in1 Gon3ales to p+ocee0 8ith a+bit+ation p+ocee0in1s an0 appointin1 +eti+e0 C( %ustice %o+1e Co7uia as sole a+bit+ato+.=!
Gon3ales 9o,e0 fo+ +econsi0e+ation on =! Ma+ch =!! but this 8as 0enie0 in the O+0e+ 0ate0 " Ma+ch =!!J.=
Gon3ales thus file0 the Rule AJ petition assailin1 the O+0e+s 0ate0 @ Feb+ua+4 =!! an0 " Ma+ch =!!J of %u01e Pi9entel. Gon3ales conten0s that
public +espon0ent %u01e Pi9entel acte0 8ith 1+a,e abuse of 0isc+etion in i99e0iatel4 o+0e+in1 the pa+ties to p+ocee0 8ith a+bit+ation 0espite the
p+ope+' ,ali0' an0 ti9el4 +aise0 a+1u9ent in his (ns8e+ 8ith Counte+clai9 that the (00en0u9 Cont+act' containin1 the a+bit+ation clause' is null an0
,oi0. Gon3ales has also sou1ht a te9po+a+4 +est+ainin1 o+0e+ to p+e,ent the enfo+ce9ent of the assaile0 o+0e+s 0i+ectin1 the pa+ties to a+bit+ate' an0
to 0i+ect %u01e Pi9entel to hol0 a p+e?t+ial confe+ence an0 the necessa+4 hea+in1s on the 0ete+9ination of the nullit4 of the (00en0u9 Cont+act.
In suppo+t of his a+1u9ent' Gon3ales in,o<es Sec. A of R.(. No. $"A;
Sec. A. -ea+in1 b4 cou+t.I( pa+t4 a11+ie,e0 b4 the failu+e' ne1lect o+ +efusal of anothe+ to pe+fo+9 un0e+ an a1+ee9ent in 8+itin1 p+o,i0in1 fo+
a+bit+ation 9a4 petition the cou+t fo+ an o+0e+ 0i+ectin1 that such a+bit+ation p+ocee0 in the 9anne+ p+o,i0e0 fo+ in such a1+ee9ent. Fi,e 0a4s notice
in 8+itin1 of the hea+in1 of such application shall be se+,e0 eithe+ pe+sonall4 o+ b4 +e1iste+e0 9ail upon the pa+t4 in 0efault. The cou+t shall hea+ the
pa+ties' an0 upon bein1 satisfie0 that the 9a<in1 of the a1+ee9ent o+ such failu+e to co9pl4 the+e8ith is not in issue' shall 9a<e an o+0e+ 0i+ectin1
the pa+ties to p+ocee0 to a+bit+ation in acco+0ance 8ith the te+9s of the a1+ee9ent. If the 9a<in1 of the a1+ee9ent o+ 0efault be in issue the cou+t
shall p+ocee0 to su99a+il4 hea+ such issue. If the fin0in1 be that no a1+ee9ent in 8+itin1 p+o,i0in1 fo+ a+bit+ation 8as 9a0e' o+ that the+e is no
0efault in the p+ocee0in1 the+eun0e+' the p+ocee0in1 shall be 0is9isse0. If the fin0in1 be that a 8+itten p+o,ision fo+ a+bit+ation 8as 9a0e an0 the+e is
a 0efault in p+ocee0in1 the+eun0e+' an o+0e+ shall be 9a0e su99a+il4 0i+ectin1 the pa+ties to p+ocee0 8ith the a+bit+ation in acco+0ance 8ith the
te+9s the+eof.
The cou+t shall 0eci0e all 9otions' petitions o+ applications file0 un0e+ the p+o,isions of this (ct' 8ithin ten C!D 0a4s afte+ such 9otions' petitions' o+
applications ha,e been hea+0 b4 it.
Gon3ales also cites Sec. =& of R.(. No. #=$J o+ the H(lte+nati,e Dispute Resolution (ct of =!!&;H
Sec. =&. Refe++al to (+bit+ation.I( cou+t befo+e 8hich an action is b+ou1ht in a 9atte+ 8hich is the sub:ect 9atte+ of an a+bit+ation a1+ee9ent shall' if
at least one pa+t4 so +e7uests not late+ than the p+e?t+ial confe+ence' o+ upon the +e7uest of both pa+ties the+eafte+' +efe+ the pa+ties to a+bit+ation
unless it fin0s that the a+bit+ation a1+ee9ent is null an0 ,oi0' inope+ati,e o+ incapable of bein1 pe+fo+9e0.
(cco+0in1 to Gon3ales' the abo,e?7uote0 p+o,isions of la8 outline the p+oce0u+e to be follo8e0 in petitions to co9pel a+bit+ation' 8hich the RTC 0i0
not follo8. Thus' +efe++al of the pa+ties to a+bit+ation b4 %u01e Pi9entel 0espite the ti9el4 an0 p+ope+l4 +aise0 issue of nullit4 of the (00en0u9
Cont+act 8as 9isplace0 an0 8ithout le1al basis. )oth R.(. No. $"A an0 R.(. No. #=$J 9an0ate that an4 issue as to the nullit4' inope+ati,eness' o+
incapabilit4 of pe+fo+9ance of the a+bit+ation clauseGa1+ee9ent +aise0 b4 one of the pa+ties to the alle1e0 a+bit+ation a1+ee9ent 9ust be 0ete+9ine0
b4 the cou+t p+io+ to +efe++in1 the9 to a+bit+ation. The4 +e7ui+e that the t+ial cou+t fi+st 0ete+9ine o+ +esol,e the issue of nullit4' an0 the+e is no othe+
,enue fo+ this 0ete+9ination othe+ than a p+e?t+ial an0 hea+in1 on the issue b4 the t+ial cou+t 8hich has :u+is0iction o,e+ the case. Gon3ales a00s that
the assaile0 @ Feb+ua+4 =!! O+0e+ also ,iolate0 his +i1ht to p+oce0u+al 0ue p+ocess 8hen the t+ial cou+t e++oneousl4 +ule0 on the eBistence of the
a+bit+ation a1+ee9ent 0espite the absence of a hea+in1 fo+ the p+esentation of e,i0ence on the nullit4 of the (00en0u9 Cont+act.
Respon0ent Cli9aB?(+i9co' on the othe+ han0' assails the 9o0e of +e,ie8 a,aile0 of b4 Gon3ales. Cli9aB?(+i9co cites Sec. =# of R.(. No. $"A;
Sec. =#. (ppeals.I(n appeal 9a4 be ta<en f+o9 an o+0e+ 9a0e in a p+ocee0in1 un0e+ this (ct' o+ f+o9 a :u019ent ente+e0 upon an a8a+0 th+ou1h
ce+tio+a+i p+ocee0in1s' but such appeals shall be li9ite0 to 7uestions of la8. The p+ocee0in1s upon such an appeal' inclu0in1 the :u019ent the+eon
shall be 1o,e+ne0 b4 the Rules of Cou+t in so fa+ as the4 a+e applicable.
Cli9aB?(+i9co 9entions that the special ci,il action fo+ ce+tio+a+i e9plo4e0 b4 Gon3ales is a,ailable onl4 8he+e the+e is no appeal o+ an4 plain'
spee04' an0 a0e7uate +e9e04 in the o+0ina+4 cou+se of la8 a1ainst the challen1e0 o+0e+s o+ acts. Cli9aB?(+i9co then points out that R.(. No. $"A
p+o,i0es fo+ an appeal f+o9 such o+0e+s' 8hich' un0e+ the Rules of Cou+t' 9ust be file0 8ithin J 0a4s f+o9 notice of the final o+0e+ o+ +esolution
appeale0 f+o9 o+ of the 0enial of the 9otion fo+ +econsi0e+ation file0 in 0ue ti9e. Gon3ales has not 0enie0 that the +ele,ant J?0a4 pe+io0 fo+ an
appeal ha0 elapse0 lon1 befo+e he file0 this petition fo+ ce+tio+a+i. -e cannot use the special ci,il action of ce+tio+a+i as a +e9e04 fo+ a lost appeal.
11
Cli9aB?(+i9co a00s that an application to co9pel a+bit+ation un0e+ Sec. A of R.(. No. $"A confe+s on the t+ial cou+t onl4 a li9ite0 an0 special
:u+is0iction' i.e.' a :u+is0iction solel4 to 0ete+9ine CaD 8hethe+ o+ not the pa+ties ha,e a 8+itten cont+act to a+bit+ate' an0 CbD if the 0efen0ant has faile0
to co9pl4 8ith that cont+act. Respon0ent cites .a Na,al D+u1 Co+po+ation ,. Cou+t of (ppeals'== 8hich hol0s that in a p+ocee0in1 to co9pel
a+bit+ation' HStThe a+bit+ation la8 eBplicitl4 confines the cou+t>s autho+it4 onl4 to pass upon the issue of 8hethe+ the+e is o+ the+e is no a1+ee9ent in
8+itin1 p+o,i0in1 fo+ a+bit+ation'H an0 HSiTn the affi+9ati,e' the statute o+0ains that the cou+t shall issue an o+0e+ Usu99a+il4 0i+ectin1 the pa+ties to
p+ocee0 8ith the a+bit+ation in acco+0ance 8ith the te+9s the+eof.>H=@ Cli9aB?(+i9co a+1ues that R.(. No. $"A 1i,es no +oo9 fo+ an4 othe+ issue to
be 0ealt 8ith in such a p+ocee0in1' an0 that the cou+t p+esente0 8ith an application to co9pel a+bit+ation 9a4 o+0e+ a+bit+ation o+ 0is9iss the sa9e'
0epen0in1 solel4 on its fin0in1 as to those t8o li9ite0 issues. If eithe+ of these 9atte+s is 0ispute0' the cou+t is +e7ui+e0 to con0uct a su99a+4
hea+in1 on it. Gon3ales>s p+oposition cont+a0icts both the t+ial cou+t>s li9ite0 :u+is0iction an0 the su99a+4 natu+e of the p+ocee0in1 itself.
Cli9aB?(+i9co fu+the+ notes that Gon3ales>s attac< on o+ +epu0iation of the (00en0u9 Cont+act also is not a 1+oun0 to 0en4 effect to the a+bit+ation
clause in the Cont+act. The a+bit+ation a1+ee9ent is sepa+ate an0 se,e+able f+o9 the cont+act e,i0encin1 the pa+ties> co99e+cial o+ econo9ic
t+ansaction' it st+esses. -ence' the alle1e0 0efect o+ failu+e of the 9ain cont+act is not a 1+oun0 to 0en4 enfo+ce9ent of the pa+ties> a+bit+ation
a1+ee9ent. E,en the pa+t4 8ho has +epu0iate0 the 9ain cont+act is not p+e,ente0 f+o9 enfo+cin1 its a+bit+ation p+o,ision. R.(. No. $"A itself t+eats
the a+bit+ation clause o+ a1+ee9ent as a cont+act sepa+ate f+o9 the co99e+cial' econo9ic o+ othe+ t+ansaction to be a+bit+ate0. The statute' in
pa+ticula+ pa+a1+aph of Sec. = the+eof' consi0e+s the a+bit+ation stipulation an in0epen0ent cont+act in its o8n +i1ht 8hose enfo+ce9ent 9a4 be
p+e,ente0 onl4 on 1+oun0s 8hich le1all4 9a<e the a+bit+ation a1+ee9ent itself +e,ocable' thus;
Sec. =. Pe+sons an0 9atte+s sub:ect to a+bit+ation.IT8o o+ 9o+e pe+sons o+ pa+ties 9a4 sub9it to the a+bit+ation of one o+ 9o+e a+bit+ato+s an4
cont+o,e+s4 eBistin1' bet8een the9 at the ti9e of the sub9ission an0 8hich 9a4 be the sub:ect of an action' o+ the pa+ties to an4 cont+act 9a4 in
such cont+act a1+ee to settle b4 a+bit+ation a cont+o,e+s4 the+eafte+ a+isin1 bet8een the9. Such sub9ission o+ cont+act shall be ,ali0' enfo+ceable
an0 i++e,ocable' sa,e upon such 1+oun0s as eBist at la8 fo+ the +e,ocation of an4 cont+act.
B B B B
The 1+oun0s Gon3ales in,o<es fo+ the +e,ocation of the (00en0u9 Cont+actIf+au0 an0 opp+ession in the eBecution the+eofIa+e also not 1+oun0s
fo+ the +e,ocation of the a+bit+ation clause in the Cont+act' Cli9aB?(+i9co notes. Such 1+oun0s 9a4 onl4 be +aise0 b4 8a4 of 0efense in the
a+bit+ation itself an0 cannot be use0 to f+ust+ate o+ 0ela4 the con0uct of a+bit+ation p+ocee0in1s. Instea0' these shoul0 be +aise0 in a sepa+ate action
fo+ +escission' it continues.
Cli9aB?(+i9co e9phasi3es that the su99a+4 p+ocee0in1 to co9pel a+bit+ation un0e+ Sec. A of R.(. No. $"A shoul0 not be confuse0 8ith the
p+oce0u+e in Sec. =& of R.(. No. #=$J. Sec. A of R.(. No. $"A +efe+s to an application to co9pel a+bit+ation 8he+e the cou+t>s autho+it4 is li9ite0 to
+esol,in1 the issue of 8hethe+ the+e is o+ the+e is no a1+ee9ent in 8+itin1 p+o,i0in1 fo+ a+bit+ation' 8hile Sec. =& of R.(. No. #=$J +efe+s to an
o+0ina+4 action 8hich co,e+s a 9atte+ that appea+s to be a+bit+able o+ sub:ect to a+bit+ation un0e+ the a+bit+ation a1+ee9ent. In the latte+ case' the
statute is clea+ that the cou+t' instea0 of t+4in1 the case' 9a4' on +e7uest of eithe+ o+ both pa+ties' +efe+ the pa+ties to a+bit+ation' unless it fin0s that
the a+bit+ation a1+ee9ent is null an0 ,oi0' inope+ati,e o+ incapable of bein1 pe+fo+9e0. (+bit+ation 9a4 e,en be o+0e+e0 in the sa9e suit b+ou1ht
upon a 9atte+ co,e+e0 b4 an a+bit+ation a1+ee9ent e,en 8ithout 8aitin1 fo+ the outco9e of the issue of the ,ali0it4 of the a+bit+ation a1+ee9ent. (+t.
$ of the UNCITR(. Mo0el .a8=& states that 8he+e a cou+t befo+e 8hich an action is b+ou1ht in a 9atte+ 8hich is sub:ect of an a+bit+ation a1+ee9ent
+efe+s the pa+ties to a+bit+ation' the a+bit+al p+ocee0in1s 9a4 p+ocee0 e,en 8hile the action is pen0in1.
Thus' the 9ain issue +aise0 in the Petition fo+ Ce+tio+a+i is 8hethe+ it 8as p+ope+ fo+ the RTC' in the p+ocee0in1 to co9pel a+bit+ation un0e+ R.(. No.
$"A' to o+0e+ the pa+ties to a+bit+ate e,en thou1h the 0efen0ant the+ein has +aise0 the t8in issues of ,ali0it4 an0 nullit4 of the (00en0u9 Cont+act
an0' conse7uentl4' of the a+bit+ation clause the+ein as 8ell. The +esolution of both Cli9aB?(+i9co>s Motion fo+ Pa+tial Reconsi0e+ation an0Go+
Cla+ification in G.R. No. A#J" an0 Gon3ales>s Petition fo+ Ce+tio+a+i in G.R. No. A"##& essentiall4 tu+ns on 8hethe+ the 7uestion of ,ali0it4 of the
(00en0u9 Cont+act bea+s upon the applicabilit4 o+ enfo+ceabilit4 of the a+bit+ation clause containe0 the+ein. The t8o pen0in1 9atte+s shall thus be
:ointl4 +esol,e0.
Fe a00+ess the Rule AJ petition in G.R. No. A"##& fi+st f+o9 the +e9e0ial la8 pe+specti,e. It 0ese+,es to be 0is9isse0 on p+oce0u+al 1+oun0s' as it
8as file0 in lieu of appeal 8hich is the p+esc+ibe0 +e9e04 an0 at that fa+ be4on0 the +e1le9enta+4 pe+io0. It is ele9enta+4 in +e9e0ial la8 that the
use of an e++oneous 9o0e of appeal is cause fo+ 0is9issal of the petition fo+ ce+tio+a+i an0 it has been +epeate0l4 st+esse0 that a petition fo+ ce+tio+a+i
is not a substitute fo+ a lost appeal. (s its natu+e' a petition fo+ ce+tio+a+i lies onl4 8he+e the+e is Hno appeal'H an0 Hno plain' spee04 an0 a0e7uate
+e9e04 in the o+0ina+4 cou+se of la8.H=J The (+bit+ation .a8 specificall4 p+o,i0es fo+ an appeal b4 ce+tio+a+i' i.e.' a petition fo+ +e,ie8 un0e+ ce+tio+a+i
un0e+ Rule &J of the Rules of Cou+t that +aises pu+e 7uestions of la8.=A The+e is no 9e+it to Gon3ales>s a+1u9ent that the use of the pe+9issi,e
te+9 H9a4H in Sec. =#' R.(. No. $"A in the filin1 of appeals 0oes not p+ohibit no+ 0iscount the filin1 of a petition fo+ ce+tio+a+i un0e+ Rule AJ.=" P+ope+
inte+p+etation of the afo+esai0 p+o,ision of la8 sho8s that the te+9 H9a4H +efe+s onl4 to the filin1 of an appeal' not to the 9o0e of +e,ie8 to be
e9plo4e0. In0ee0' the use of H9a4H 9e+el4 +eite+ates the p+inciple that the +i1ht to appeal is not pa+t of 0ue p+ocess of la8 but is a 9e+e statuto+4
p+i,ile1e to be eBe+cise0 onl4 in the 9anne+ an0 in acco+0ance 8ith la8.
Neithe+ can )F Co+po+ation ,. Cou+t of (ppeals=$ cite0 b4 Gon3ales suppo+t his theo+4. Gon3ales a+1ues that sai0 case +eco1ni3e0 an0 allo8e0 a
petition fo+ ce+tio+a+i un0e+ Rule AJ Happealin1 the o+0e+ of the Re1ional T+ial Cou+t 0is+e1a+0in1 the a+bit+ation a1+ee9ent as an acceptable
12
+e9e04.H=# The )F Co+po+ation case ha0 its o+i1ins in a co9plaint fo+ collection of su9 of 9one4 file0 b4 the+ein petitione+ )F Co+po+ation a1ainst
Shan1+i?la P+ope+ties' Inc. CSPID. SPI 9o,e0 to suspen0 the p+ocee0in1s alle1in1 that the const+uction a1+ee9ent o+ the (+ticles of (1+ee9ent
bet8een the pa+ties containe0 a clause +e7ui+in1 p+io+ +eso+t to a+bit+ation befo+e :u0icial inte+,ention. The t+ial cou+t foun0 that an a+bit+ation clause
8as inco+po+ate0 in the Con0itions of Cont+act appen0e0 to an0 0ee9e0 an inte1+al pa+t of the (+ticles of (1+ee9ent. Still' the t+ial cou+t 0enie0 the
9otion to suspen0 p+ocee0in1s upon a fin0in1 that the Con0itions of Cont+act 8e+e not 0ul4 eBecute0 an0 si1ne0 b4 the pa+ties. The t+ial cou+t also
foun0 that SPI ha0 faile0 to file an4 8+itten notice of 0e9an0 fo+ a+bit+ation 8ithin the pe+io0 specifie0 in the a+bit+ation clause. The t+ial cou+t 0enie0
SPINs 9otion fo+ +econsi0e+ation an0 o+0e+e0 it to file its +esponsi,e plea0in1. Instea0 of filin1 an ans8e+' SPI file0 a petition fo+ ce+tio+a+i un0e+ Rule
AJ' 8hich the Cou+t of (ppeals' fa,o+abl4 acte0 upon. In a petition fo+ +e,ie8 befo+e this Cou+t' )F Co+po+ation alle1e0' a9on1 othe+s' that the Cou+t
of (ppeals shoul0 ha,e 0is9isse0 the petition fo+ ce+tio+a+i since the o+0e+ of the t+ial cou+t 0en4in1 the 9otion to suspen0 p+ocee0in1s His a
+esolution of an inci0ent on the 9e+itsH an0 upon the continuation of the p+ocee0in1s' the t+ial cou+t 8oul0 e,entuall4 +en0e+ a 0ecision on the 9e+its'
8hich 0ecision coul0 then be ele,ate0 to a hi1he+ cou+t Hin an o+0ina+4 appeal.H@!
The Cou+t 0i0 not uphol0 )F Co+po+ation>s a+1u9ent. The issue +aise0 befo+e the Cou+t 8as 8hethe+ SPI ha0 ta<en the p+ope+ 9o0e of appeal
befo+e the Cou+t of (ppeals. The 7uestion befo+e the Cou+t of (ppeals 8as 8hethe+ the t+ial cou+t ha0 p+e9atu+el4 assu9e0 :u+is0iction o,e+ the
cont+o,e+s4. The 7uestion of :u+is0iction in tu+n 0epen0e0 on the 7uestion of eBistence of the a+bit+ation clause 8hich is one of fact. Fhile on its face
the 7uestion of eBistence of the a+bit+ation clause is a 7uestion of fact that is not p+ope+ in a petition fo+ ce+tio+a+i' 4et since the 0ete+9ination of the
7uestion obli1e0 the Cou+t of (ppeals as it 0i0 to inte+p+et the cont+act 0ocu9ents in acco+0ance 8ith R.(. No. $"A an0 eBistin1 :u+isp+u0ence' the
7uestion is li<e8ise a 7uestion of la8 8hich 9a4 be p+ope+l4 ta<en co1ni3ance of in a petition fo+ ce+tio+a+i un0e+ Rule AJ' so the Cou+t hel0.@
The situation in ).F. Co+po+ation is not a,ailin1 in the p+esent petition. The 0is7uisition in ).F. Co+po+ation le0 to the conclusion that in o+0e+ that the
7uestion of :u+is0iction 9a4 be +esol,e0' the appellate cou+t ha0 to 0eal fi+st 8ith a 7uestion of la8 8hich coul0 be a00+esse0 in a ce+tio+a+i
p+ocee0in1. In the p+esent case' Gon3ales>s petition +aises a 7uestion of la8' but not a 7uestion of :u+is0iction. %u01e Pi9entel acte0 in acco+0ance
8ith the p+oce0u+e p+esc+ibe0 in R.(. No. $"A 8hen he o+0e+e0 Gon3ales to p+ocee0 8ith a+bit+ation an0 appointe0 a sole a+bit+ato+ afte+ 9a<in1 the
0ete+9ination that the+e 8as in0ee0 an a+bit+ation a1+ee9ent. It has been hel0 that as lon1 as a cou+t acts 8ithin its :u+is0iction an0 0oes not 1+a,el4
abuse its 0isc+etion in the eBe+cise the+eof' an4 suppose0 e++o+ co99itte0 b4 it 8ill a9ount to nothin1 9o+e than an e++o+ of :u019ent +e,ie8able b4
a ti9el4 appeal an0 not assailable b4 a special ci,il action of ce+tio+a+i.@= E,en if 8e o,e+loo< the e9plo49ent of the 8+on1 +e9e04 in the b+oa0e+
inte+ests of :ustice' the petition 8oul0 ne,e+theless be 0is9isse0 fo+ failu+e of Gon3ale3 to sho8 1+a,e abuse of 0isc+etion.
(+bit+ation' as an alte+nati,e 9o0e of settlin1 0isputes' has lon1 been +eco1ni3e0 an0 accepte0 in ou+ :u+is0iction. The Ci,il Co0e is eBplicit on the
9atte+.@@ R.(. No. $"A also eBp+essl4 autho+i3es a+bit+ation of 0o9estic 0isputes. Fo+ei1n a+bit+ation' as a s4ste9 of settlin1 co99e+cial 0isputes of
an inte+national cha+acte+' 8as li<e8ise +eco1ni3e0 8hen the Philippines a0he+e0 to the Unite0 Nations HCon,ention on the Reco1nition an0 the
Enfo+ce9ent of Fo+ei1n (+bit+al (8a+0s of #J$'H un0e+ the ! Ma4 #AJ Resolution No. " of the Philippine Senate' 1i,in1 +ecip+ocal +eco1nition
an0 allo8in1 enfo+ce9ent of inte+national a+bit+ation a1+ee9ents bet8een pa+ties of 0iffe+ent nationalities 8ithin a cont+actin1 state.@& The
enact9ent of R.(. No. #=$J on = (p+il =!!& fu+the+ institutionali3e0 the use of alte+nati,e 0ispute +esolution s4ste9s' inclu0in1 a+bit+ation' in the
settle9ent of 0isputes.
Disputes 0o not 1o to a+bit+ation unless an0 until the pa+ties ha,e a1+ee0 to abi0e b4 the a+bit+ato+>s 0ecision. Necessa+il4' a cont+act is +e7ui+e0 fo+
a+bit+ation to ta<e place an0 to be bin0in1. R.(. No. $"A +eco1ni3es the cont+actual natu+e of the a+bit+ation a1+ee9ent' thus;
Sec. =. Pe+sons an0 9atte+s sub:ect to a+bit+ation.IT8o o+ 9o+e pe+sons o+ pa+ties 9a4 sub9it to the a+bit+ation of one o+ 9o+e a+bit+ato+s an4
cont+o,e+s4 eBistin1' bet8een the9 at the ti9e of the sub9ission an0 8hich 9a4 be the sub:ect of an action' o+ the pa+ties to an4 cont+act 9a4 in
such cont+act a1+ee to settle b4 a+bit+ation a cont+o,e+s4 the+eafte+ a+isin1 bet8een the9. Such sub9ission o+ cont+act shall be ,ali0' enfo+ceable
an0 i++e,ocable' sa,e upon such 1+oun0s as eBist at la8 fo+ the +e,ocation of an4 cont+act.
Such sub9ission o+ cont+act 9a4 inclu0e 7uestion a+isin1 out of ,aluations' app+aisals o+ othe+ cont+o,e+sies 8hich 9a4 be collate+al' inci0ental'
p+ece0ent o+ subse7uent to an4 issue bet8een the pa+ties.
( cont+o,e+s4 cannot be a+bit+ate0 8he+e one of the pa+ties to the cont+o,e+s4 is an infant' o+ a pe+son :u0iciall4 0ecla+e0 to be inco9petent' unless
the app+op+iate cou+t ha,in1 :u+is0iction app+o,e a petition fo+ pe+9ission to sub9it such cont+o,e+s4 to a+bit+ation 9a0e b4 the 1ene+al 1ua+0ian o+
1ua+0ian a0 lite9 of the infant o+ of the inco9petent. SE9phasis a00e0.T
Thus' 8e hel0 in Manila Elect+ic Co. ,. Pasa4 T+anspo+tation Co.@J that a sub9ission to a+bit+ation is a cont+act. ( clause in a cont+act p+o,i0in1 that
all 9atte+s in 0ispute bet8een the pa+ties shall be +efe++e0 to a+bit+ation is a cont+act'@A an0 in Del Monte Co+po+ation?US( ,. Cou+t of (ppeals@"
that HStThe p+o,ision to sub9it to a+bit+ation an4 0ispute a+isin1 the+ef+o9 an0 the +elationship of the pa+ties is pa+t of that cont+act an0 is itself a
cont+act. (s a +ule' cont+acts a+e +especte0 as the la8 bet8een the cont+actin1 pa+ties an0 p+o0uce effect as bet8een the9' thei+ assi1ns an0
hei+s.H@$
The special p+ocee0in1 un0e+ Sec. A of R.(. No. $"A +eco1ni3es the cont+actual natu+e of a+bit+ation clauses o+ a1+ee9ents. It p+o,i0es;
13
Sec. A. -ea+in1 b4 cou+t.I( pa+t4 a11+ie,e0 b4 the failu+e' ne1lect o+ +efusal of anothe+ to pe+fo+9 un0e+ an a1+ee9ent in 8+itin1 p+o,i0in1 fo+
a+bit+ation 9a4 petition the cou+t fo+ an o+0e+ 0i+ectin1 that such a+bit+ation p+ocee0 in the 9anne+ p+o,i0e0 fo+ in such a1+ee9ent. Fi,e 0a4s notice
in 8+itin1 of the hea+in1 of such application shall be se+,e0 eithe+ pe+sonall4 o+ b4 +e1iste+e0 9ail upon the pa+t4 in 0efault. The cou+t shall hea+ the
pa+ties' an0 upon bein1 satisfie0 that the 9a<in1 of the a1+ee9ent o+ such failu+e to co9pl4 the+e8ith is not in issue' shall 9a<e an o+0e+ 0i+ectin1
the pa+ties to p+ocee0 to a+bit+ation in acco+0ance 8ith the te+9s of the a1+ee9ent. If the 9a<in1 of the a1+ee9ent o+ 0efault be in issue the cou+t
shall p+ocee0 to su99a+il4 hea+ such issue. If the fin0in1 be that no a1+ee9ent in 8+itin1 p+o,i0in1 fo+ a+bit+ation 8as 9a0e' o+ that the+e is no
0efault in the p+ocee0in1 the+eun0e+' the p+ocee0in1 shall be 0is9isse0. If the fin0in1 be that a 8+itten p+o,ision fo+ a+bit+ation 8as 9a0e an0 the+e is
a 0efault in p+ocee0in1 the+eun0e+' an o+0e+ shall be 9a0e su99a+il4 0i+ectin1 the pa+ties to p+ocee0 8ith the a+bit+ation in acco+0ance 8ith the
te+9s the+eof.
The cou+t shall 0eci0e all 9otions' petitions o+ applications file0 un0e+ the p+o,isions of this (ct' 8ithin ten 0a4s afte+ such 9otions' petitions' o+
applications ha,e been hea+0 b4 it. SE9phasis a00e0.T
This special p+ocee0in1 is the p+oce0u+al 9echanis9 fo+ the enfo+ce9ent of the cont+act to a+bit+ate. The :u+is0iction of the cou+ts in +elation to Sec.
A of R.(. No. $"A as 8ell as the natu+e of the p+ocee0in1s the+ein 8as eBpoun0e0 upon in .a Na,al D+u1 Co+po+ation ,. Cou+t of (ppeals.@# The+e it
8as hel0 that R.(. No. $"A eBplicitl4 confines the cou+tNs autho+it4 onl4 to the 0ete+9ination of 8hethe+ o+ not the+e is an a1+ee9ent in 8+itin1
p+o,i0in1 fo+ a+bit+ation. In the affi+9ati,e' the statute o+0ains that the cou+t shall issue an o+0e+ Hsu99a+il4 0i+ectin1 the pa+ties to p+ocee0 8ith the
a+bit+ation in acco+0ance 8ith the te+9s the+eof.H If the cou+t' upon the othe+ han0' fin0s that no such a1+ee9ent eBists' Hthe p+ocee0in1 shall be
0is9isse0.H&! The cite0 case also st+esse0 that the p+ocee0in1s a+e su99a+4 in natu+e.& The sa9e th+ust 8as 9a0e in the ea+lie+ case of
Min0anao Po+tlan0 Ce9ent Co+p. ,. McDonou1h Const+uction Co. of Flo+i0a&= 8hich hel0' thus;
Since the+e obtains he+ein a 8+itten p+o,ision fo+ a+bit+ation as 8ell as failu+e on +espon0entNs pa+t to co9pl4 the+e8ith' the cou+t a 7uo +i1htl4
o+0e+e0 the pa+ties to p+ocee0 to a+bit+ation in acco+0ance 8ith the te+9s of thei+ a1+ee9ent CSec. A' Republic (ct $"AD. Respon0entNs a+1u9ents
touchin1 upon the 9e+its of the 0ispute a+e i9p+ope+l4 +aise0 he+ein. The4 shoul0 be a00+esse0 to the a+bit+ato+s. This p+ocee0in1 is 9e+el4 a
su99a+4 +e9e04 to enfo+ce the a1+ee9ent to a+bit+ate. The 0ut4 of the cou+t in this case is not to +esol,e the 9e+its of the pa+tiesN clai9s but onl4 to
0ete+9ine if the4 shoul0 p+ocee0 to a+bit+ation o+ not. B B B B&@
I9plicit in the su99a+4 natu+e of the :u0icial p+ocee0in1s is the sepa+able o+ in0epen0ent cha+acte+ of the a+bit+ation clause o+ a1+ee9ent. This 8as
hi1hli1hte0 in the cases of Manila Elect+ic Co. ,. Pasa4 T+ans. Co.&& an0 Del Monte Co+po+ation?US( ,. Cou+t of (ppeals.&J
The 0oct+ine of sepa+abilit4' o+ se,e+abilit4 as othe+ 8+ite+s call it' enunciates that an a+bit+ation a1+ee9ent is in0epen0ent of the 9ain cont+act. The
a+bit+ation a1+ee9ent is to be t+eate0 as a sepa+ate a1+ee9ent an0 the a+bit+ation a1+ee9ent 0oes not auto9aticall4 te+9inate 8hen the cont+act of
8hich it is pa+t co9es to an en0.&A
The sepa+abilit4 of the a+bit+ation a1+ee9ent is especiall4 si1nificant to the 0ete+9ination of 8hethe+ the in,ali0it4 of the 9ain cont+act also nullifies
the a+bit+ation clause. In0ee0' the 0oct+ine 0enotes that the in,ali0it4 of the 9ain cont+act' also +efe++e0 to as the Hcontaine+H cont+act' 0oes not affect
the ,ali0it4 of the a+bit+ation a1+ee9ent. I++especti,e of the fact that the 9ain cont+act is in,ali0' the a+bit+ation clauseGa1+ee9ent still +e9ains ,ali0
an0 enfo+ceable.&"
The sepa+abilit4 of the a+bit+ation clause is confi+9e0 in (+t. ACD of the UNCITR(. Mo0el .a8 an0 (+t. =C=D of the UNCITR(. (+bit+ation Rules.&$
The sepa+abilit4 0oct+ine 8as 08elt upon at len1th in the U.S. case of P+i9a Paint Co+p. ,. Floo0 5 Con<lin Manufactu+in1 Co.&# In that case' P+i9a
Paint an0 Floo0 an0 Con<lin CF 5 CD ente+e0 into a consultin1 a1+ee9ent 8he+eb4 F 5 C un0e+too< to act as consultant to P+i9a Paint fo+ siB 4ea+s'
sol0 to P+i9a Paint a list of its custo9e+s an0 p+o9ise0 not to sell paint to these custo9e+s 0u+in1 the sa9e pe+io0. The consultin1 a1+ee9ent
containe0 an a+bit+ation clause. P+i9a Paint 0i0 not 9a<e pa49ents as p+o,i0e0 in the consultin1 a1+ee9ent' conten0in1 that F 5 C ha0 f+au0ulentl4
9is+ep+esente0 that it 8as sol,ent an0 able fo+ pe+fo+9 its cont+act 8hen in fact it 8as not an0 ha0 e,en inten0e0 to file fo+ ban<+uptc4 afte+
eBecutin1 the consultanc4 a1+ee9ent. Thus' F 5 C se+,e0 P+i9a Paint 8ith a notice of intention to a+bit+ate. P+i9a Paint sue0 in cou+t fo+ +escission
of the consultin1 a1+ee9ent on the 1+oun0 of f+au0ulent 9is+ep+esentation an0 as<e0 fo+ the issuance of an o+0e+ en:oinin1 F 5 C f+o9 p+ocee0in1
8ith a+bit+ation. F 5 C 9o,e0 to sta4 the suit pen0in1 a+bit+ation. The t+ial cou+t 1+ante0 F 5 C>s 9otion' an0 the U.S. Sup+e9e Cou+t affi+9e0.
The U.S. Sup+e9e Cou+t 0i0 not a00+ess P+i9a Paint>s a+1u9ent that it ha0 been f+au0ulentl4 in0uce0 b4 F 5 C to si1n the consultin1 a1+ee9ent
an0 hel0 that no cou+t shoul0 a00+ess this a+1u9ent. Rel4in1 on Sec. & of the Fe0e+al (+bit+ation (ctI8hich p+o,i0es that Hif a pa+t4 Sclai9s to beT
a11+ie,e0 b4 the alle1e0 failu+e B B B of anothe+ to a+bit+ate B B B' StThe cou+t shall hea+ the pa+ties' an0 upon bein1 satisfie0 that the 9a<in1 of the
a1+ee9ent fo+ a+bit+ation o+ the failu+e to co9pl4 the+e8ith is not in issue' the cou+t shall 9a<e an o+0e+ 0i+ectin1 the pa+ties to p+ocee0 to a+bit+ation
B B B. If the 9a<in1 of the a+bit+ation a1+ee9ent o+ the failu+e' ne1lect' o+ +efusal to pe+fo+9 the sa9e be in issue' the cou+t shall p+ocee0 su99a+il4
to the t+ial the+eofHIthe U.S. -i1h Cou+t hel0 that the cou+t shoul0 not o+0e+ the pa+ties to a+bit+ate if the 9a<in1 of the a+bit+ation a1+ee9ent is in
issue. The pa+ties shoul0 be o+0e+e0 to a+bit+ation if' an0 onl4 if' the4 ha,e cont+acte0 to sub9it to a+bit+ation. P+i9a Paint 8as not entitle0 to t+ial on
the 7uestion of 8hethe+ an a+bit+ation a1+ee9ent 8as 9a0e because its alle1ations of f+au0ulent in0uce9ent 8e+e not 0i+ecte0 to the a+bit+ation
clause itself' but onl4 to the consultin1 a1+ee9ent 8hich containe0 the a+bit+ation a1+ee9ent.J! P+i9a Paint hel0 that Ha+bit+ation clauses a+e
14
Usepa+able> f+o9 the cont+acts in 8hich the4 a+e e9be00e0' an0 that 8he+e no clai9 is 9a0e that f+au0 8as 0i+ecte0 to the a+bit+ation clause itself' a
b+oa0 a+bit+ation clause 8ill be hel0 to enco9pass a+bit+ation of the clai9 that the cont+act itself 8as in0uce0 b4 f+au0.HJ
The+e is +eason' the+efo+e' to +ule a1ainst Gon3ales 8hen he alle1es that %u01e Pi9entel acte0 8ith 1+a,e abuse of 0isc+etion in o+0e+in1 the pa+ties
to p+ocee0 8ith a+bit+ation. Gon3ales>s a+1u9ent that the (00en0u9 Cont+act is null an0 ,oi0 an0' the+efo+e the a+bit+ation clause the+ein is ,oi0 as
8ell' is not tenable. Fi+st' the p+ocee0in1 in a petition fo+ a+bit+ation un0e+ R.(. No. $"A is li9ite0 onl4 to the +esolution of the 7uestion of 8hethe+ the
a+bit+ation a1+ee9ent eBists. Secon0' the sepa+abilit4 of the a+bit+ation clause f+o9 the (00en0u9 Cont+act 9eans that ,ali0it4 o+ in,ali0it4 of the
(00en0u9 Cont+act 8ill not affect the enfo+ceabilit4 of the a1+ee9ent to a+bit+ate. Thus' Gon3ales>s petition fo+ ce+tio+a+i shoul0 be 0is9isse0.
This b+in1s us bac< to G.R. No. A#J". The a0:u0ication of the petition in G.R. No. A"##& effecti,el4 9o0ifies pa+t of the Decision 0ate0 =$
Feb+ua+4 =!!J in G.R. No. A#J". -ence' 8e no8 hol0 that the ,ali0it4 of the cont+act containin1 the a1+ee9ent to sub9it to a+bit+ation 0oes not
affect the applicabilit4 of the a+bit+ation clause itself. ( cont+a+4 +ulin1 8oul0 su11est that a pa+t4>s 9e+e +epu0iation of the 9ain cont+act is sufficient
to a,oi0 a+bit+ation. That is eBactl4 the situation that the sepa+abilit4 0oct+ine' as 8ell as :u+isp+u0ence appl4in1 it' see<s to a,oi0. Fe a00 that 8hen
it 8as 0ecla+e0 in G.R. No. A#J" that the case shoul0 not be b+ou1ht fo+ a+bit+ation' it shoul0 be cla+ifie0 that the case +efe++e0 to is the case
actuall4 file0 b4 Gon3ales befo+e the DENR Panel of (+bit+ato+s' 8hich 8as fo+ the nullification of the 9ain cont+act on the 1+oun0 of f+au0' as it ha0
al+ea04 been 0ete+9ine0 that the case shoul0 ha,e been b+ou1ht befo+e the +e1ula+ cou+ts in,ol,in1 as it 0i0 :u0icial issues.
The Motion fo+ Reconsi0e+ation of Gon3ales in G.R. No. A#J" shoul0 also be 0enie0. In the 9otion' Gon3ales +aises the sa9e 7uestion of
:u+is0iction' 9o+e pa+ticula+l4 that the co9plaint fo+ nullification of the (00en0u9 Cont+act pe+taine0 to the DENR Panel of (+bit+ato+s' not the +e1ula+
cou+ts. -e insists that the sub:ect of his co9plaint is a 9inin1 0ispute since it in,ol,es a 0ispute conce+nin1 +i1hts to 9inin1 a+eas' the Financial an0
Technical (ssistance (1+ee9ent CFT((D bet8een the pa+ties' an0 it also in,ol,es clai9o8ne+s. -e a00s that the Cou+t faile0 to +ule on othe+ issues
he +aise0' such as 8hethe+ he ha0 ce0e0 his clai9s o,e+ the 9ine+al 0eposits locate0 8ithin the (00en0u9 (+ea of InfluenceE 8hethe+ the co9plaint
file0 befo+e the DENR Panel of (+bit+ato+s alle1e0 ulti9ate facts of f+au0E an0 8hethe+ the action to 0ecla+e the nullit4 of the (00en0u9 Cont+act on
the 1+oun0 of f+au0 has p+esc+ibe0.a,,phi.net
These a+e the sa9e issues that Gon3ales +aise0 in his Rule &J petition in G.R. No. A#J" 8hich 8e+e +esol,e0 a1ainst hi9 in the Decision of =$
Feb+ua+4 =!!J. Gon3ales 0oes not +aise an4 ne8 a+1u9ent that 8oul0 s8a4 the Cou+t e,en a bit to alte+ its hol0in1 that the co9plaint file0 befo+e
the DENR Panel of (+bit+ato+s in,ol,es :u0icial issues 8hich shoul0 p+ope+l4 be +esol,e0 b4 the +e1ula+ cou+ts. -e alle1e0 f+au0 o+ 9is+ep+esentation
in the eBecution of the (00en0u9 Cont+act 8hich is a 1+oun0 fo+ the annul9ent of a ,oi0able cont+act. Clea+l4' such alle1ations entail le1al 7uestions
8hich a+e 8ithin the :u+is0iction of the cou+ts.
The 7uestion of 8hethe+ Gon3ales ha0 ce0e0 his clai9s o,e+ the 9ine+al 0eposits in the (00en0u9 (+ea of Influence is a factual 7uestion 8hich is
not p+ope+ fo+ 0ete+9ination befo+e this Cou+t. (t all e,ents' 9o+eo,e+' the 7uestion is i++ele,ant to the issue of :u+is0iction of the DENR Panel of
(+bit+ato+s. It shoul0 be pointe0 out that the DENR Panel of (+bit+ato+s 9a0e a factual fin0in1 in its O+0e+ 0ate0 $ Octobe+ =!!' 8hich it +eite+ate0
in its O+0e+ 0ate0 =J %une =!!=' that Gon3ales ha0' Hth+ou1h the ,a+ious a1+ee9ents' assi1ne0 his inte+est o,e+ the 9ine+al clai9s all in fa,o+ of
SCli9aB?(+i9coTH as 8ell as that 8ithout the co9plainant SGon3alesT assi1nin1 his inte+est o,e+ the 9ine+al clai9s in fa,o+ of SCli9aB?(+i9coT' the+e
8oul0 be no FT(( to spea< of.HJ= This fin0in1 8as affi+9e0 b4 the Cou+t of (ppeals in its Decision 0ate0 @! %ul4 =!!@ +esol,in1 the petition fo+
ce+tio+a+i file0 b4 Cli9aB?(+i9co in +e1a+0 to the $ Octobe+ =!! O+0e+ of the DENR Panel.J@
The Cou+t of (ppeals li<e8ise foun0 that Gon3ales>s co9plaint alle1e0 f+au0 but 0i0 not p+o,i0e an4 pa+ticula+s to substantiate it. The co9plaint
+epeate0l4 9entione0 f+au0' opp+ession' ,iolation of the Constitution an0 si9ila+ conclusions but no8he+e 0i0 it 1i,e an4 ulti9ate facts o+ pa+ticula+s
+elati,e to the alle1ations.J&
Sec. J' Rule $ of the Rules of Cou+t specificall4 p+o,i0es that in all a,e+9ents of f+au0' the ci+cu9stances constitutin1 f+au0 9ust be state0 8ith
pa+ticula+it4. This is to enable the opposin1 pa+t4 to cont+o,e+t the pa+ticula+ facts alle1e0l4 constitutin1 the sa9e. Pe+usal of the co9plaint in0ee0
sho8s that it faile0 to state 8ith pa+ticula+it4 the ulti9ate facts an0 ci+cu9stances constitutin1 the alle1e0 f+au0. It 0oes not state 8hat pa+ticula+s
about Cli9aB?(+i9co>s financial o+ technical capabilit4 8e+e 9is+ep+esente0' o+ ho8 the 9is+ep+esentation 8as 0one. Inco+po+ate0 in the bo04 of the
co9plaint a+e ,e+bati9 +ep+o0uctions of the cont+acts' co++espon0ence an0 1o,e+n9ent issuances that +epo+te0l4 eBplain the alle1ations of f+au0
an0 9is+ep+esentation' but these a+e' at best' e,i0entia+4 9atte+s that shoul0 not be inclu0e0 in the plea0in1.
(s to the issue of p+esc+iption' Gon3ales>s clai9s of f+au0 an0 9is+ep+esentation atten0in1 the eBecution of the (00en0u9 Cont+act a+e 1+oun0s fo+
the annul9ent of a ,oi0able cont+act un0e+ the Ci,il Co0e.JJ Un0e+ (+t. @# of the Co0e' an action fo+ annul9ent shall be b+ou1ht 8ithin fou+ 4ea+s'
in the case of f+au0' be1innin1 f+o9 the ti9e of the 0isco,e+4 of the sa9e. -o8e,e+' the ti9e of the 0isco,e+4 of the alle1e0 f+au0 is not clea+ f+o9
the alle1ations of Gon3ales>s co9plaint. That bein1 the situation couple0 8ith the fact that this Cou+t is not a t+ie+ of facts' an4 +ulin1 on the issue of
p+esc+iption 8oul0 be uncalle0 fo+ o+ e,en unnecessa+4.
F-EREFORE' the Petition fo+ Ce+tio+a+i in G.R. No. A"##& is DISMISSED. Such 0is9issal effecti,el4 +en0e+s supe+fluous fo+9al action on the
Motion fo+ Pa+tial Reconsi0e+ation an0Go+ Cla+ification file0 b4 Cli9aB Minin1 .t0.' et al. in G.R. No. A#J".
The Motion fo+ Reconsi0e+ation file0 b4 %o+1e Gon3ales in G.R. No. A#J" is DENIED FIT- FIN(.IT6.
15
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION

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

M(RTINE/' %.;
This p+ocee0in1 in,ol,es the enfo+ce9ent of a fo+ei1n :u019ent +en0e+e0 b4 the Ci,il %u01e of Deh+a Dun' In0ia in fa,o+ of the petitione+' OI. (ND
N(TUR(. G(S COMMISSION an0 a1ainst the p+i,ate +espon0ent' P(CIFIC CEMENT COMP(N6' INCORPOR(TED.
The petitione+ is a fo+ei1n co+po+ation o8ne0 an0 cont+olle0 b4 the Go,e+n9ent of In0ia 8hile the p+i,ate +espon0ent is a p+i,ate co+po+ation 0ul4
o+1ani3e0 an0 eBistin1 un0e+ the la8s of the Philippines. The p+esent conflict bet8een the petitione+ an0 the p+i,ate +espon0ent has its +oots in a
cont+act ente+e0 into b4 an0 bet8een both pa+ties on Feb+ua+4 =A' #$@ 8he+eb4 the p+i,ate +espon0ent un0e+too< to suppl4 the petitione+ FOUR
T-OUS(ND T-REE -UNDRED C&'@!!D 9et+ic tons of oil 8ell ce9ent. In consi0e+ation the+efo+' the petitione+ boun0 itself to pa4 the p+i,ate
+espon0ent the a9ount of FOUR -UNDRED SEVENT6?SEVEN T-OUS(ND T-REE -UNDRED U.S. DO..(RS CV&""'@!!.!!D b4 openin1 an
i++e,ocable' 0i,isible' an0 confi+9e0 lette+ of c+e0it in fa,o+ of the latte+. The oil 8ell ce9ent 8as loa0e0 on boa+0 the ship MV SURUT(N( N(V( at
the po+t of Su+i1ao Cit4' Philippines fo+ 0eli,e+4 at )o9ba4 an0 Calcutta' In0ia. -o8e,e+' 0ue to a 0ispute bet8een the shipo8ne+ an0 the p+i,ate
+espon0ent' the ca+1o 8as hel0 up in )an1<o< an0 0i0 not +each its point 0estination. Not8ithstan0in1 the fact that the p+i,ate +espon0ent ha0
al+ea04 +ecei,e0 pa49ent an0 0espite se,e+al 0e9an0s 9a0e b4 the petitione+' the p+i,ate +espon0ent faile0 to 0eli,e+ the oil 8ell ce9ent.
The+eafte+' ne1otiations ensue0 bet8een the pa+ties an0 the4 a1+ee0 that the p+i,ate +espon0ent 8ill +eplace the enti+e &'@!! 9et+ic tons of oil 8ell
ce9ent 8ith Class HGH ce9ent cost f+ee at the petitione+Ns 0esi1nate0 po+t. -o8e,e+' upon inspection' the Class HGH ce9ent 0i0 not confo+9 to the
petitione+Ns specifications. The petitione+ then info+9e0 the p+i,ate +espon0ent that it 8as +efe++in1 its clai9 to an a+bit+ato+ pu+suant to Clause A of
thei+ cont+act 8hich stipulates;
EBcept 8he+e othe+8ise p+o,i0e0 in the suppl4 o+0e+Gcont+act all 7uestions an0 0isputes' +elatin1 to the 9eanin1 of the specification 0esi1ns'
0+a8in1s an0 inst+uctions he+ein befo+e 9entione0 an0 as to 7ualit4 of 8o+<9anship of the ite9s o+0e+e0 o+ as to an4 othe+ 7uestion' clai9' +i1ht o+
thin1 8hatsoe,e+' in an4 8a4 a+isin1 out of o+ +elatin1 to the suppl4 o+0e+Gcont+act 0esi1n' 0+a8in1' specification' inst+uction o+ these con0itions o+
othe+8ise conce+nin1 the 9ate+ials o+ the eBecution o+ failu+e to eBecute the sa9e 0u+in1 stipulate0GeBten0e0 pe+io0 o+ afte+ the
co9pletionGaban0on9ent the+eof shall be +efe++e0 to the sole a+bit+ation of the pe+sons appointe0 b4 Me9be+ of the Co99ission at the ti9e of
0ispute. It 8ill be no ob:ection to an4 such appoint9ent that the a+bit+ato+ so appointe0 is a Co99ission e9plo4e+ CsicD that he ha0 to 0eal 8ith the
9atte+ to 8hich the suppl4 o+ cont+act +elates an0 that in the cou+se of his 0uties as Co99issionNs e9plo4ee he ha0 eBp+esse0 ,ie8s on all o+ an4 of
the 9atte+ in 0ispute o+ 0iffe+ence.
The a+bit+ato+ to 8ho9 the 9atte+ is o+i1inall4 +efe++e0 bein1 t+ansfe++e0 o+ ,acatin1 his office o+ bein1 unable to act fo+ an4 +eason the Me9be+ of
the Co99ission shall appoint anothe+ pe+son to act as a+bit+ato+ in acco+0ance 8ith the te+9s of the cont+actGsuppl4 o+0e+. Such pe+son shall be
entitle0 to p+ocee0 8ith +efe+ence f+o9 the sta1e at 8hich it 8as left b4 his p+e0ecesso+. Sub:ect as afo+esai0 the p+o,isions of the (+bit+ation (ct'
#&!' o+ an4 Statuto+4 9o0ification o+ +e?enact9ent the+e of an0 the +ules 9a0e the+e un0e+ an0 fo+ the ti9e bein1 in fo+ce shall appl4 to the
a+bit+ation p+ocee0in1s un0e+ this clause.
The a+bit+ato+ 9a4 8ith the consent of pa+ties enla+1e the ti9e' f+o9 ti9e to ti9e' to 9a<e an0 publish the a8a+0.
The ,enue fo+ a+bit+ation shall be at Deh+a 0un. W
On %ul4 =@' #$$' the chosen a+bit+ato+' one Sh+i N.N. Malhot+a' +esol,e0 the 0ispute in petitione+Ns fa,o+ settin1 fo+th the a+bit+al a8a+0 as follo8s;
16
NOF T-EREFORE afte+ consi0e+in1 all facts of the case' the e,i0ence' o+al an0 0ocu9enta+4s a00uce0 b4 the clai9ant an0 ca+efull4 eBa9inin1
the ,a+ious 8+itten state9ents' sub9issions' lette+s' teleBes' etc. sent b4 the +espon0ent' an0 the o+al a+1u9ents a00+esse0 b4 the counsel fo+ the
clai9ants' I' N.N. Malhot+a' Sole (+bit+ato+' appointe0 un0e+ clause A of the suppl4 o+0e+ 0ate0 =A.=.#$@' acco+0in1 to 8hich the pa+ties' i.e. MGS
Oil an0 Natu+al Gas Co99ission an0 the Pacific Ce9ent Co.' Inc. can +efe+ the 0ispute to the sole a+bit+ation un0e+ the p+o,ision of the (+bit+ation
(ct. #&!' 0o he+eb4 a8a+0 an0 0i+ect as follo8s; I
The Respon0ent 8ill pa4 the follo8in1 to the clai9ant; I
. (9ount +ecei,e0 b4 the Respon0ent
a1ainst the lette+ of c+e0it No. G#
0ate0 =$.=.#$@ US V &""'@!!.!!
=. Re?i9bu+se9ent of eBpen0itu+e incu++e0
b4 the clai9ant on the inspection tea9Ns
,isit to Philippines in (u1ust #$J US V @'$$.!!
@. ..C. Establish9ent cha+1es incu++e0
b4 the clai9ant US V '=J=.$=
&. .oss of inte+est suffe+e0 b4 clai9ant
f+o9 =.A.$@ to =@.".$$ US V &"'A#.#J
Total a9ount of a8a+0 US V $##'A!@.""
In a00ition to the abo,e' the +espon0ent 8oul0 also be liable to pa4 to the clai9ant the inte+est at the +ate of AK on the abo,e a9ount' 8ith effect
f+o9 =&.".#$$ up to the actual 0ate of pa49ent b4 the Respon0ent in full settle9ent of the clai9 as a8a+0e0 o+ the 0ate of the 0ec+ee' 8hiche,e+ is
ea+lie+.
I 0ete+9ine the cost at Rs. "!'!!!G? e7ui,alent to US VJ'!!! to8a+0s the eBpenses on (+bit+ation' le1al eBpenses' sta9ps 0ul4 incu++e0 b4 the
clai9ant. The cost 8ill be sha+e0 b4 the pa+ties in e7ual p+opo+tion.
P+onounce0 at Deh+a Dun to?0a4' the =@+0 of %ul4 #$$. =
To enable the petitione+ to eBecute the abo,e a8a+0 in its fa,o+' it file0 a Petition befo+e the Cou+t of the Ci,il %u01e in Deh+a Dun. In0ia Che+einafte+
+efe++e0 to as the fo+ei1n cou+t fo+ b+e,it4D' p+a4in1 that the 0ecision of the a+bit+ato+ be 9a0e Hthe Rule of Cou+tH in In0ia. The fo+ei1n cou+t issue0
notices to the p+i,ate +espon0ent fo+ filin1 ob:ections to the petition. The p+i,ate +espon0ent co9plie0 an0 sent its ob:ections 0ate0 %anua+4 A' #$#.
Subse7uentl4' the sai0 cou+t 0i+ecte0 the p+i,ate +espon0ent to pa4 the filin1 fees in o+0e+ that the latte+Ns ob:ections coul0 be 1i,en consi0e+ation.
Instea0 of pa4in1 the +e7ui+e0 filin1 fees' the p+i,ate +espon0ent sent the follo8in1 co99unication a00+esse0 to the Ci,il :u01e of Deh+a Dun;
The Ci,il %u01e
Deh+a Dun CU.P.D In0ia
Re; Misc. Case No. J of #$#
MGS Pacific Ce9ent Co.'
Inc. ,s. ONGC Case
Si+;
. Fe +ecei,e0 4ou+ lette+ 0ate0 =$ (p+il #$# onl4 last $ Ma4 #$#.
17
=. Please info+9 us ho8 9uch is the cou+t fee to be pai0. 6ou+ lette+ 0i0 not 9ention the a9ount to be pai0.
@. *in0l4 1i,e us J 0a4s f+o9 +eceipt of 4ou+ lette+ a0,isin1 us ho8 9uch to pa4 to co9pl4 8ith the sa9e.
Than< 4ou fo+ 4ou+ <in0 consi0e+ation.
Pacific Ce9ent Co.' Inc.
)4;
%ose Co+tes' %+.
P+esi0ent @
Fithout +espon0in1 to the abo,e co99unication' the fo+ei1n cou+t +efuse0 to a09it the p+i,ate +espon0entNs ob:ections fo+ failu+e to pa4 the +e7ui+e0
filin1 fees' an0 the+eafte+ issue0 an O+0e+ on Feb+ua+4 "' ##!' to 8it;
ORDER
Since ob:ections file0 b4 0efen0ant ha,e been +e:ecte0 th+ou1h Misc. Suit No. J on ".=.#!' the+efo+e' a8a+0 shoul0 be 9a0e Rule of the Cou+t.
ORDER
(8a+0 0ate0 =@.".$$' Pape+ No. @G)? is 9a0e Rule of the Cou+t. On the basis of con0itions of a8a+0 0ec+ee is passe0. (8a+0 Pape+ No. @G)? shall
be a pa+t of the 0ec+ee. The plaintiff shall also be entitle0 to 1et f+o9 0efen0ant CUSV $##'A!@."" CUSV Ei1ht .a<hs ninet4 nine thousan0 siB hun0+e0
an0 th+ee point se,ent4 se,en onl4D alon1 8ith #K inte+est pe+ annu9 till the last 0ate of +ealisation. &
Despite notice sent to the p+i,ate +espon0ent of the fo+e1oin1 o+0e+ an0 se,e+al 0e9an0s b4 the petitione+ fo+ co9pliance the+e8ith' the p+i,ate
+espon0ent +efuse0 to pa4 the a9ount a0:u01e0 b4 the fo+ei1n cou+t as o8in1 to the petitione+. (cco+0in1l4' the petitione+ file0 a co9plaint 8ith
)+anch @! of the Re1ional T+ial Cou+t CRTCD of Su+i1ao Cit4 fo+ the enfo+ce9ent of the afo+e9entione0 :u019ent of the fo+ei1n cou+t. The p+i,ate
+espon0ent 9o,e0 to 0is9iss the co9plaint on the follo8in1 1+oun0s; CD plaintiffs lac< of le1al capacit4 to sueE C=D lac< of cause of actionE an0 C@D
plaintiffs clai9 o+ 0e9an0 has been 8ai,e0' aban0one0' o+ othe+8ise eBtin1uishe0. The petitione+ file0 its opposition to the sai0 9otion to 0is9iss'
an0 the p+i,ate +espon0ent' its +e:oin0e+ the+eto. On %anua+4 @' ##=' the RTC issue0 an o+0e+ uphol0in1 the petitione+Ns le1al capacit4 to sue' albeit
0is9issin1 the co9plaint fo+ lac< of a ,ali0 cause of action. The RTC hel0 that the +ule p+ohibitin1 fo+ei1n co+po+ations t+ansactin1 business in the
Philippines 8ithout a license f+o9 9aintainin1 a suit in Philippine cou+ts a09its of an eBception' that is' 8hen the fo+ei1n co+po+ation is suin1 on an
isolate0 t+ansaction as in this case. J (nent the issue of the sufficienc4 of the petitione+Ns cause of action' ho8e,e+' the RTC foun0 the +efe++al of the
0ispute bet8een the pa+ties to the a+bit+ato+ un0e+ Clause A of thei+ cont+act e++oneous. (cco+0in1 to the RTC'
SaT pe+usal of the sho,e?7uote0 clause CClause AD +ea0il4 sho8s that the 9atte+ co,e+e0 b4 its te+9s is li9ite0 to H(.. 2UESTIONS (ND
DISPUTES' RE.(TING TO T-E ME(NING OF T-E SPECIFIC(TION' DESIGNS' DR(FINGS (ND INSTRUCTIONS -EREIN )EFORE
MENTIONED an0 as to the 2U(.IT6 OF FOR*M(NS-IP OF T-E ITEMS ORDERED o+ as to an4 othe+ 7uestions' clai9' +i1ht o+ thin1
8hatsoe,e+' but 7ualifie0 to HIN (N6 F(6 (RISING OR RE.(TING TO T-E SUPP.6 ORDERGCONTR(CT' DESIGN' DR(FING' SPECIFIC(TION'
etc.'H +epeatin1 the enu9e+ation in the openin1 sentence of the clause.
The cou+t is incline0 to 1o alon1 8ith the obse+,ation of the 0efen0ant that the b+each' consistin1 of the non?0eli,e+4 of the pu+chase0 9ate+ials'
shoul0 ha,e been p+ope+l4 liti1ate0 befo+e a cou+t of la8' pu+suant to Clause No. J of the Cont+actGSuppl4 O+0e+' he+ein 7uote0' to 8it;
H%URISDICTION
(ll 7uestions' 0isputes an0 0iffe+ences' a+isin1 un0e+ out of o+ in connection 8ith this suppl4 o+0e+' shall be sub:ect to the ERC.USIVE
%URISDICTION OF T-E COURT' 8ithin the local li9its of 8hose :u+is0iction an0 the place f+o9 8hich this suppl4 o+0e+ is situate0.H A
The RTC cha+acte+i3e0 the e++oneous sub9ission of the 0ispute to the a+bit+ato+ as a H9ista<e of la8 o+ fact a9ountin1 to 8ant of :u+is0ictionH.
Conse7uentl4' the p+ocee0in1s ha0 befo+e the a+bit+ato+ 8e+e null an0 ,oi0 an0 the fo+ei1n cou+t ha0 the+efo+e' a0opte0 no le1al a8a+0 8hich coul0
be the sou+ce of an enfo+ceable +i1ht. "
The petitione+ then appeale0 to the +espon0ent Cou+t of (ppeals 8hich affi+9e0 the 0is9issal of the co9plaint. In its 0ecision' the appellate cou+t
concu++e0 8ith the RTCNs +ulin1 that the a+bit+ato+ 0i0 not ha,e :u+is0iction o,e+ the 0ispute bet8een the pa+ties' thus' the fo+ei1n cou+t coul0 not
,ali0l4 a0opt the a+bit+ato+Ns a8a+0. In a00ition' the appellate cou+t obse+,e0 that the full teBt of the :u019ent of the fo+ei1n cou+t contains the
0ispositi,e po+tion onl4 an0 in0icates no fin0in1s of fact an0 la8 as basis fo+ the a8a+0. -ence' the sai0 :u019ent cannot be enfo+ce0 b4 an4
18
Philippine cou+t as it 8oul0 ,iolate the constitutional p+o,ision that no 0ecision shall be +en0e+e0 b4 an4 cou+t 8ithout eBp+essin1 the+ein clea+l4 an0
0istinctl4 the facts an0 the la8 on 8hich it is base0. $ The appellate cou+t +ule0 fu+the+ that the 0is9issal of the p+i,ate +espon0entNs ob:ections fo+
non?pa49ent of the +e7ui+e0 le1al fees' 8ithout the fo+ei1n cou+t fi+st +epl4in1 to the p+i,ate +espon0entNs 7ue+4 as to the a9ount of le1al fees to be
pai0' constitute0 8ant of notice o+ ,iolation of 0ue p+ocess. .astl4' it pointe0 out that the a+bit+ation p+ocee0in1 8as 0efecti,e because the a+bit+ato+
8as appointe0 solel4 b4 the petitione+' an0 the fact that the a+bit+ato+ 8as a fo+9e+ e9plo4ee of the latte+ 1i,es +ise to a p+esu9e0 bias on his pa+t in
fa,o+ of the petitione+. #
( subse7uent 9otion fo+ +econsi0e+ation b4 the petitione+ of the appellate cou+tNs 0ecision 8as 0enie0' thus' this petition fo+ +e,ie8 on ce+tio+a+i citin1
the follo8in1 as 1+oun0s in suppo+t the+eof;
RESPONDENT COURT OF (PPE(.S GR(VE.6 ERRED IN (FFIRMING T-E .OFER COURTNS ORDER OF DISMISS(. SINCE;
(. T-E NON?DE.IVER6 OF T-E C(RGO F(S ( M(TTER PROPER.6 COGNI/().E )6 T-E PROVISIONS OF C.(USE A OF T-E
CONTR(CTE
). T-E %UDGMENT OF T-E CIVI. COURT OF DE-R(DUN' INDI( F(S (N (FFIRM(TION OF T-E F(CTU(. (ND .EG(. FINDINGS OF
T-E (R)ITR(TOR (ND T-EREFORE ENFORCE().E IN T-IS %URISDICTIONE
C. EVIDENCE MUST )E RECEIVED TO REPE. T-E EFFECT OF ( PRESUMPTIVE RIG-T UNDER ( FOREIGN %UDGMENT. !
The th+eshol0 issue is 8hethe+ o+ not the a+bit+ato+ ha0 :u+is0iction o,e+ the 0ispute bet8een the petitione+ an0 the p+i,ate +espon0ent un0e+ Clause
A of the cont+act. To +eite+ate' Clause A p+o,i0es as follo8s;
EBcept 8he+e othe+8ise p+o,i0e0 in the suppl4 o+0e+Gcont+act all 7uestions an0 0isputes' +elatin1 to the 9eanin1 of the specification 0esi1ns'
0+a8in1s an0 inst+uctions he+ein befo+e 9entione0 an0 as to 7ualit4 of 8o+<9anship of the ite9s o+0e+e0 o+ as to an4 othe+ 7uestion' clai9' +i1ht o+
thin1 8hatsoe,e+' in an4 8a4 a+isin1 out of o+ +elatin1 to the suppl4 o+0e+Gcont+act 0esi1n' 0+a8in1' specification' inst+uction o+ these con0itions o+
othe+8ise conce+nin1 the 9ate+ials o+ the eBecution o+ failu+e to eBecute the sa9e 0u+in1 stipulate0GeBten0e0 pe+io0 o+ afte+ the
co9pletionGaban0on9ent the+eof shall be +efe++e0 to the sole a+bit+ation of the pe+sons appointe0 b4 Me9be+ of the Co99ission at the ti9e of
0ispute. It 8ill be no ob:ection to an4 such appoint9ent that the a+bit+ato+ so appointe0 is a Co99ission e9plo4e+ CsicD that he ha0 to 0eal 8ith the
9atte+ to 8hich the suppl4 o+ cont+act +elates an0 that in the cou+se of his 0uties as Co99issionNs e9plo4ee he ha0 eBp+esse0 ,ie8s on all o+ an4 of
the 9atte+ in 0ispute o+ 0iffe+ence.
The 0ispute bet8een the pa+ties ha0 its o+i1in in the non?0eli,e+4 of the &'@!! 9et+ic tons of oil 8ell ce9ent to the petitione+. The p+i9a+4 7uestion
that 9a4 be pose0' the+efo+e' is 8hethe+ o+ not the non?0eli,e+4 of the sai0 ca+1o is a p+ope+ sub:ect fo+ a+bit+ation un0e+ the abo,e?7uote0 Clause
A. The petitione+ conten0s that the sa9e 8as a 9atte+ 8ithin the pu+,ie8 of Clause A' pa+ticula+l4 the ph+ase' H. . . o+ as to an4 othe+ 7uestions'
clai9' +i1ht o+ thin1 8hatsoe,e+' in an4 8a4 a+isin1 o+ +elatin1 to the suppl4 o+0e+Gcont+act' 0esi1n' 0+a8in1' specification' inst+uction . . .H. = It is
a+1ue0 that the fo+e1oin1 ph+ase allo8s consi0e+able latitu0e so as to inclu0e non?0eli,e+4 of the ca+1o 8hich 8as a Hclai9' +i1ht o+ thin1 +elatin1 to
the suppl4 o+0e+Gcont+actH. The contention is be+eft of 9e+it. Fi+st of all' the petitione+ has 9is7uote0 the sai0 ph+ase' sh+e80l4 inse+tin1 a co99a
bet8een the 8o+0s Hsuppl4 o+0e+Gcont+actH an0 H0esi1nH 8he+e none actuall4 eBists. (n accu+ate +ep+o0uction of the ph+ase +ea0s' H. . . o+ as to an4
othe+ 7uestion' clai9' +i1ht o+ thin1 8hatsoe,e+' in an4 8a4 a+isin1 out of o+ +elatin1 to the suppl4 o+0e+Gcont+act 0esi1n' 0+a8in1' specification'
inst+uction o+ these con0itions . . .H. The absence of a co99a bet8een the 8o+0s Hsuppl4 o+0e+Gcont+actH an0 H0esi1nH in0icates that the fo+9e+
cannot be ta<en sepa+atel4 but shoul0 be ,ie8e0 in con:unction 8ith the 8o+0s H0esi1n' 0+a8in1' specification' inst+uction o+ these con0itionsH. It is
thus clea+ that to fall 8ithin the pu+,ie8 of this ph+ase' the Hclai9' +i1ht o+ thin1 8hatsoe,e+H 9ust a+ise out of o+ +elate to the 0esi1n' 0+a8in1'
specification' o+ inst+uction of the suppl4 o+0e+Gcont+act. The petitione+ also insists that the non?0eli,e+4 of the ca+1o is not onl4 co,e+e0 b4 the
fo+e1oin1 ph+ase but also b4 the ph+ase' H. . . o+ othe+8ise conce+nin1 the 9ate+ials o+ the eBecution o+ failu+e to eBecute the sa9e 0u+in1 the
stipulate0GeBten0e0 pe+io0 o+ afte+ co9pletionGaban0on9ent the+eof . . .H.
The 0oct+ine of noscitu+ a sociis' althou1h a +ule in the const+uction of statutes' is e7uall4 applicable in the asce+tain9ent of the 9eanin1 an0 scope
of ,a1ue cont+actual stipulations' such as the afo+e9entione0 ph+ase. (cco+0in1 to the 9aBi9 noscitu+ a sociis' 8he+e a pa+ticula+ 8o+0 o+ ph+ase is
a9bi1uous in itself o+ is e7uall4 susceptible of ,a+ious 9eanin1s' its co++ect const+uction 9a4 be 9a0e clea+ an0 specific b4 consi0e+in1 the
co9pan4 of the 8o+0s in 8hich it is foun0 o+ 8ith 8hich it is associate0' o+ state0 0iffe+entl4' its obscu+it4 o+ 0oubt 9a4 be +e,ie8e0 b4 +efe+ence to
associate0 8o+0s. @ ( close eBa9ination of Clause A +e,eals that it co,e+s th+ee 9atte+s 8hich 9a4 be sub9itte0 to a+bit+ation na9el4'
CD all 7uestions an0 0isputes' +elatin1 to the 9eanin1 of the specification 0esi1ns' 0+a8in1s an0 inst+uctions he+ein befo+e 9entione0 an0 as
to 7ualit4 of 8o+<9anship of the ite9s o+0e+e0E o+
C=D an4 othe+ 7uestion' clai9' +i1ht o+ thin1 8hatsoe,e+' in an4 8a4 a+isin1 out of o+ +elatin1 to the suppl4 o+0e+Gcont+act 0esi1n' 0+a8in1'
specification' inst+uction o+ these con0itionsE o+
19
C@D othe+8ise conce+nin1 the 9ate+ials o+ the eBecution o+ failu+e to eBecute the sa9e 0u+in1 stipulate0GeBten0e0 pe+io0 o+ afte+ the
co9pletionGaban0on9ent the+eof.
The fi+st an0 secon0 cate1o+ies un9ista<abl4 +efe+ to 7uestions an0 0isputes +elatin1 to the 0esi1n' 0+a8in1' inst+uctions' specifications o+ 7ualit4 of
the 9ate+ials of the suppl4Go+0e+ cont+act. In the thi+0 cate1o+4' the clause' HeBecution o+ failu+e to eBecute the sa9eH' 9a4 be +ea0 as HeBecution o+
failu+e to eBecute the suppl4 o+0e+Gcont+actH. )ut in acco+0ance 8ith the 0oct+ine of noscitu+ a sociis' this +efe+ence to the suppl4 o+0e+Gcont+act 9ust
be const+ue0 in the li1ht of the p+ece0in1 8o+0s 8ith 8hich it is associate0' 9eanin1 to sa4' as bein1 li9ite0 onl4 to the 0esi1n' 0+a8in1' inst+uctions'
specifications o+ 7ualit4 of the 9ate+ials of the suppl4 o+0e+Gcont+act. The non?0eli,e+4 of the oil 8ell ce9ent is 0efinitel4 not in the natu+e of a 0ispute
a+isin1 f+o9 the failu+e to eBecute the suppl4 o+0e+Gcont+act 0esi1n' 0+a8in1' inst+uctions' specifications o+ 7ualit4 of the 9ate+ials. That Clause A
shoul0 pe+tain onl4 to 9atte+s in,ol,in1 the technical aspects of the cont+act is but a lo1ical infe+ence consi0e+in1 that the un0e+l4in1 pu+pose of a
+efe++al to a+bit+ation is fo+ such technical 9atte+s to be 0elibe+ate0 upon b4 a pe+son possesse0 8ith the +e7ui+e0 s<ill an0 eBpe+tise 8hich 9a4 be
othe+8ise absent in the +e1ula+ cou+ts.
This Cou+t a1+ees 8ith the appellate cou+t in its +ulin1 that the non?0eli,e+4 of the oil 8ell ce9ent is a 9atte+ p+ope+l4 co1ni3able b4 the +e1ula+ cou+ts
as stipulate0 b4 the pa+ties in Clause J of thei+ cont+act;
(ll 7uestions' 0isputes an0 0iffe+ences' a+isin1 un0e+ out of o+ in connection 8ith this suppl4 o+0e+' shall be sub:ect to the eBclusi,e :u+is0iction of the
cou+t' 8ithin the local li9its of 8hose :u+is0iction an0 the place f+o9 8hich this suppl4 o+0e+ is situate0. &
The follo8in1 fun0a9ental p+inciples in the inte+p+etation of cont+acts an0 othe+ inst+u9ents se+,e0 as ou+ 1ui0e in a++i,in1 at the fo+e1oin1
conclusion;
(+t. @"@.If so9e stipulation of an4 cont+act shoul0 a09it of se,e+al 9eanin1s' it shall be un0e+stoo0 as bea+in1 that i9po+t 8hich is 9ost a0e7uate
to +en0e+ it effectual. J
(+t. @"&.The ,a+ious stipulations of a cont+act shall be inte+p+ete0 to1ethe+' att+ibutin1 the 0oubtful ones that sense 8hich 9a4 +esult f+o9 all of
the9 ta<en :ointl4. A
Sec. . Inst+u9ent const+ue0 so as to 1i,e effect to all p+o,isions. In the const+uction of an inst+u9ent' 8he+e the+e a+e se,e+al p+o,isions o+
pa+ticula+s' such a const+uction is' if possible' to be a0opte0 as 8ill 1i,e effect to all. "
Thus' this Cou+t has hel0 that as in statutes' the p+o,isions of a cont+act shoul0 not be +ea0 in isolation f+o9 the +est of the inst+u9ent but' on the
cont+a+4' inte+p+ete0 in the li1ht of the othe+ +elate0 p+o,isions. $ The 8hole an0 e,e+4 pa+t of a cont+act 9ust be consi0e+e0 in fiBin1 the 9eanin1 of
an4 of its ha+9onious 8hole. E7uall4 applicable is the canon of const+uction that in inte+p+etin1 a statute Co+ a cont+act as in this caseD' ca+e shoul0
be ta<en that e,e+4 pa+t the+eof be 1i,en effect' on the theo+4 that it 8as enacte0 as an inte1+ate0 9easu+e an0 not as a ho01e?po01e of conflictin1
p+o,isions. The +ule is that a const+uction that 8oul0 +en0e+ a p+o,ision inope+ati,e shoul0 be a,oi0e0E instea0' appa+entl4 inconsistent p+o,isions
shoul0 be +econcile0 8hene,e+ possible as pa+ts of a coo+0inate0 an0 ha+9onious 8hole. #
The petitione+Ns inte+p+etation that Clause A is of such latitu0e as to conte9plate e,en the non?0eli,e+4 of the oil 8ell ce9ent 8oul0 in effect +en0e+
Clause J a 9e+e supe+fluit4. ( pe+usal of Clause A sho8s that the pa+ties 0i0 not inten0 a+bit+ation to be the sole 9eans of settlin1 0isputes. This is
9anifest f+o9 Clause A itself 8hich is p+efiBe0 8ith the p+o,iso' HEBcept 8he+e othe+8ise p+o,i0e0 in the suppl4 o+0e+Gcont+act . . .H' thus in0icatin1
that the :u+is0iction of the a+bit+ato+ is not all enco9passin1' an0 a09its of eBceptions as 9a4 be p+o,i0e0 else8he+e in the suppl4 o+0e+Gcont+act.
Fe belie,e that the co++ect inte+p+etation to 1i,e effect to both stipulations in the cont+act is fo+ Clause A to be confine0 to all clai9s o+ 0isputes
a+isin1 f+o9 o+ +elatin1 to the 0esi1n' 0+a8in1' inst+uctions' specifications o+ 7ualit4 of the 9ate+ials of the suppl4 o+0e+Gcont+act' an0 fo+ Clause J to
co,e+ all othe+ clai9s o+ 0isputes.
The petitione+ then asse,e+ates that 1+antin1' fo+ the sa<e of a+1u9ent' that the non?0eli,e+4 of the oil 8ell ce9ent is not a p+ope+ sub:ect fo+
a+bit+ation' the failu+e of the +eplace9ent ce9ent to confo+9 to the specifications of the cont+act is a 9atte+ clea+l4 fallin1 8ithin the a9bit of Clause
A. In this contention' 8e fin0 9e+it. Fhen the &'@!! 9et+ic tons of oil 8ell ce9ent 8e+e not 0eli,e+e0 to the petitione+' an a1+ee9ent 8as fo+1e0
bet8een the latte+ an0 the p+i,ate +espon0ent that Class HGH ce9ent 8oul0 be 0eli,e+e0 to the petitione+ as +eplace9ent. Upon inspection' ho8e,e+'
the +eplace9ent ce9ent 8as +e:ecte0 as it 0i0 not confo+9 to the specifications of the cont+act. Onl4 afte+ this latte+ ci+cu9stance 8as the 9atte+
b+ou1ht befo+e the a+bit+ato+. Un0oubte0l4' 8hat 8as +efe++e0 to a+bit+ation 8as no lon1e+ the 9e+e non?0eli,e+4 of the ca+1o at the fi+st instance but
also the failu+e of the +eplace9ent ca+1o to confo+9 to the specifications of the cont+act' a 9atte+ clea+l4 8ithin the co,e+a1e of Clause A.
The p+i,ate +espon0ent posits that it 8as un0e+ no le1al obli1ation to 9a<e +eplace9ent an0 that it un0e+too< the latte+ onl4 Hin the spi+it of libe+alit4
an0 to foste+ 1oo0 business +elationshipH. =! -ence' the un0e+ta<in1 to 0eli,e+ the +eplace9ent ce9ent an0 its subse7uent failu+e to confo+9 to
specifications a+e not an49o+e sub:ect of the suppl4 o+0e+Gcont+act o+ an4 of the p+o,isions the+eof. Fe 0isa1+ee.
(s pe+ Clause " of the suppl4 o+0e+Gcont+act' the p+i,ate +espon0ent un0e+too< to 0eli,e+ the &'@!! 9et+ic tons of oil 8ell ce9ent at H)OM)(6
CINDI(D =$ MT an0 C(.CUTT( =# MTH. = The failu+e of the p+i,ate +espon0ent to 0eli,e+ the ca+1o to the 0esi1nate0 places +e9ains
20
un0ispute0. .i<e8ise' the fact that the petitione+ ha0 al+ea04 pai0 fo+ the cost of the ce9ent is not conteste0 b4 the p+i,ate +espon0ent. The p+i,ate
+espon0ent clai9s' ho8e,e+' that it ne,e+ benefite0 f+o9 the t+ansaction as it 8as not able to +eco,e+ the ca+1o that 8as unloa0e0 at the po+t of
)an1<o<. == Fi+st of all' 8hethe+ o+ not the p+i,ate +espon0ent 8as able to +eco,e+ the ca+1o is i99ate+ial to its subsistin1 0ut4 to 9a<e 1oo0 its
p+o9ise to 0eli,e+ the ca+1o at the stipulate0 place of 0eli,e+4. Secon0l4' 8e fin0 it 0ifficult to belie,e this +ep+esentation. In its Me9o+an0u9 file0
befo+e this Cou+t' the p+i,ate +espon0ent asse+te0 that the Ci,il Cou+t of )an1<o< ha0 al+ea04 +ule0 that the non?0eli,e+4 of the ca+1o 8as 0ue solel4
to the fault of the ca++ie+. =@ It is' the+efo+e' but lo1ical to assu9e that the necessa+4 conse7uence of this fin0in1 is the e,entual +eco,e+4 b4 the
p+i,ate +espon0ent of the ca+1o o+ the ,alue the+eof. Fhat inspi+es c+e0ulit4 is not that the +eplace9ent 8as 0one in the spi+it of libe+alit4 but that it
8as un0e+ta<en p+ecisel4 because of the p+i,ate +espon0entNs +eco1nition of its 0ut4 to 0o so un0e+ the suppl4 o+0e+Gcont+act' Clause A of 8hich
+e9ains in fo+ce an0 effect until the full eBecution the+eof.
Fe no8 1o to the issue of 8hethe+ o+ not the :u019ent of the fo+ei1n cou+t is enfo+ceable in this :u+is0iction in ,ie8 of the p+i,ate +espon0entNs
alle1ation that it is be+eft of an4 state9ent of facts an0 la8 upon 8hich the a8a+0 in fa,o+ of the petitione+ 8as base0. The pe+tinent po+tion of the
:u019ent of the fo+ei1n cou+t +ea0s;
ORDER
(8a+0 0ate0 =@.".$$' Pape+ No. @G)? is 9a0e Rule of the Cou+t. On the basis of con0itions of a8a+0 0ec+ee is passe0. (8a+0 Pape+ No. @G)? shall
be a pa+t of the 0ec+ee. The plaintiff shall also be entitle0 to 1et f+o9 0efen0ant CUSV $##'A!@."" CUSV Ei1ht .a<hs ninet4 nine thousan0 siB hun0+e0
an0 th+ee point se,ent4 se,en onl4D alon1 8ith #K inte+est pe+ annu9 till the last 0ate of +ealisation. =&
(s specifie0 in the o+0e+ of the Ci,il %u01e of Deh+a Dun' H(8a+0 Pape+ No. @G)? shall be a pa+t of the 0ec+eeH. This is a cate1o+ical 0ecla+ation that
the fo+ei1n cou+t a0opte0 the fin0in1s of facts an0 la8 of the a+bit+ato+ as containe0 in the latte+Ns (8a+0 Pape+. (8a+0 Pape+ No. @G)?' contains an
eBhausti,e 0iscussion of the +especti,e clai9s an0 0efenses of the pa+ties' an0 the a+bit+ato+Ns e,aluation of the sa9e. Inas9uch as the fo+e1oin1 is
0ee9e0 to ha,e been inco+po+ate0 into the fo+ei1n cou+tNs :u019ent the appellate cou+t 8as in e++o+ 8hen it 0esc+ibe0 the latte+ to be a Hsi9plistic
0ecision containin1 lite+all4' onl4 the 0ispositi,e po+tionH. =J
The constitutional 9an0ate that no 0ecision shall be +en0e+e0 b4 an4 cou+t 8ithout eBp+essin1 the+ein 0ea+l4 an0 0istinctl4 the facts an0 the la8 on
8hich it is base0 0oes not p+eclu0e the ,ali0it4 of H9e9o+an0u9 0ecisionsH 8hich a0opt b4 +efe+ence the fin0in1s of fact an0 conclusions of la8
containe0 in the 0ecisions of infe+io+ t+ibunals. In F+ancisco ,. Pe+9s<ul' =A this Cou+t hel0 that the follo8in1 9e9o+an0u9 0ecision of the Re1ional
T+ial Cou+t of Ma<ati 0i0 not t+ans1+ess the +e7ui+e9ents of Section &' (+ticle VIII of the Constitution;
MEMOR(NDUM DECISION
(fte+ a ca+eful pe+usal' e,aluation an0 stu04 of the +eco+0s of this case' this Cou+t he+eb4 a0opts b4 +efe+ence the fin0in1s of fact an0 conclusions of
la8 containe0 in the 0ecision of the Met+opolitan T+ial Cou+t of Ma<ati' Met+o Manila' )+anch A@ an0 fin0s that the+e is no co1ent +eason to 0istu+b
the sa9e.
F-EREFORE' :u019ent appeale0 f+o9 is he+eb4 affi+9e0 in toto. =" CE9phasis supplie0.D
This Cou+t ha0 occasion to 9a<e a si9ila+ p+onounce9ent in the ea+lie+ case of Ro9e+o ,. Cou+t of (ppeals' =$ 8he+e the assaile0 0ecision of the
Cou+t of (ppeals a0opte0 the fin0in1s an0 0isposition of the Cou+t of (1+a+ian Relations in this 8ise;
Fe ha,e' the+efo+e' ca+efull4 +e,ie8e0 the e,i0ence an0 9a0e a +e?assess9ent of the sa9e' an0 Fe a+e pe+sua0e0' na4 co9pelle0' to affi+9 the
co++ectness of the t+ial cou+tNs factual fin0in1s an0 the soun0ness of its conclusion. Fo+ :u0icial con,enience an0 eBpe0ienc4' the+efo+e' Fe he+eb4
a0opt b4 8a4 of +efe+ence' the fin0in1s of facts an0 conclusions of the cou+t a 7uo sp+ea0 in its 0ecision' as inte1+al pa+t of this Ou+ 0ecision. =#
CE9phasis supplie0D
-ence' e,en in this :u+is0iction' inco+po+ation b4 +efe+ence is allo8e0 if onl4 to a,oi0 the cu9be+so9e +ep+o0uction of the 0ecision of the lo8e+
cou+ts' o+ po+tions the+eof' in the 0ecision of the hi1he+ cou+t. @! This is pa+ticula+l4 t+ue 8hen the 0ecision sou1ht to be inco+po+ate0 is a len1th4 an0
tho+ou1h 0iscussion of the facts an0 conclusions a++i,e0 at' as in this case' 8he+e (8a+0 Pape+ No. @G)? consists of ei1hteen C$D sin1le space0
pa1es.
Fu+the+9o+e' the +eco1nition to be acco+0e0 a fo+ei1n :u019ent is not necessa+il4 affecte0 b4 the fact that the p+oce0u+e in the cou+ts of the count+4
in 8hich such :u019ent 8as +en0e+e0 0iffe+s f+o9 that of the cou+ts of the count+4 in 8hich the :u019ent is +elie0 on. @ This Cou+t has hel0 that
9atte+s of +e9e04 an0 p+oce0u+e a+e 1o,e+ne0 b4 the leB fo+i o+ the inte+nal la8 of the fo+u9. @= Thus' if un0e+ the p+oce0u+al +ules of the Ci,il Cou+t
of Deh+a Dun' In0ia' a ,ali0 :u019ent 9a4 be +en0e+e0 b4 a0optin1 the a+bit+ato+Ns fin0in1s' then the sa9e 9ust be acco+0e0 +espect. In the sa9e
,ein' if the p+oce0u+e in the fo+ei1n cou+t 9an0ates that an O+0e+ of the Cou+t beco9es final an0 eBecuto+4 upon failu+e to pa4 the necessa+4 0oc<et
fees' then the cou+ts in this :u+is0iction cannot in,ali0ate the o+0e+ of the fo+ei1n cou+t si9pl4 because ou+ +ules p+o,i0e othe+8ise.
21
The p+i,ate +espon0ent clai9s that its +i1ht to 0ue p+ocess ha0 been blatantl4 ,iolate0' fi+st b4 +eason of the fact that the fo+ei1n cou+t ne,e+
ans8e+e0 its 7ue+ies as to the a9ount of 0oc<et fees to be pai0 then +efuse0 to a09it its ob:ections fo+ failu+e to pa4 the sa9e' an0 secon0' because
of the p+esu9e0 bias on the pa+t of the a+bit+ato+ 8ho 8as a fo+9e+ e9plo4ee of the petitione+.
Ti9e an0 a1ain this Cou+t has hel0 that the essence of 0ue p+ocess is to be foun0 in the +easonable oppo+tunit4 to be hea+0 an0 sub9it an4
e,i0ence one 9a4 ha,e in suppo+t of oneNs 0efense @@ o+ state0 othe+8ise' 8hat is +epu1nant to 0ue p+ocess is the 0enial of oppo+tunit4 to be hea+0.
@& Thus' the+e is no ,iolation of 0ue p+ocess e,en if no hea+in1 8as con0ucte0' 8he+e the pa+t4 8as 1i,en a chance to eBplain his si0e of the
cont+o,e+s4 an0 he 8ai,e0 his +i1ht to 0o so. @J
In the instant case' the p+i,ate +espon0ent 0oes not 0en4 the fact that it 8as notifie0 b4 the fo+ei1n cou+t to file its ob:ections to the petition' an0
subse7uentl4' to pa4 le1al fees in o+0e+ fo+ its ob:ections to be 1i,en consi0e+ation. Instea0 of pa4in1 the le1al fees' ho8e,e+' the p+i,ate +espon0ent
sent a co99unication to the fo+ei1n cou+t in7ui+in1 about the co++ect a9ount of fees to be pai0. On the p+eteBt that it 8as 4et a8aitin1 the fo+ei1n
cou+tNs +epl4' al9ost a 4ea+ passe0 8ithout the p+i,ate +espon0ent pa4in1 the le1al fees. Thus' on Feb+ua+4 =' ##!' the fo+ei1n cou+t +e:ecte0 the
ob:ections of the p+i,ate +espon0ent an0 p+ocee0e0 to a0:u0icate upon the petitione+Ns clai9s. Fe cannot subsc+ibe to the p+i,ate +espon0entNs clai9
that the fo+ei1n cou+t ,iolate0 its +i1ht to 0ue p+ocess 8hen it faile0 to +epl4 to its 7ue+ies no+ 8hen the latte+ +e:ecte0 its ob:ections fo+ a clea+l4
9e+ito+ious 1+oun0. The p+i,ate +espon0ent 8as affo+0e0 sufficient oppo+tunit4 to be hea+0. It 8as not incu9bent upon the fo+ei1n cou+t to +epl4 to
the p+i,ate +espon0entNs 8+itten co99unication. On the cont+a+4' a 1enuine conce+n fo+ its cause shoul0 ha,e p+o9pte0 the p+i,ate +espon0ent to
asce+tain 8ith all 0ue 0ili1ence the co++ect a9ount of le1al fees to be pai0. The p+i,ate +espon0ent 0i0 not act 8ith p+u0ence an0 0ili1ence thus its
plea that the4 8e+e not acco+0e0 the +i1ht to p+oce0u+al 0ue p+ocess cannot elicit eithe+ app+o,al o+ s49path4 f+o9 this Cou+t. @A
The p+i,ate +espon0ent be8ails the p+esu9e0 bias on the pa+t of the a+bit+ato+ 8ho 8as a fo+9e+ e9plo4ee of the petitione+. This point 0ese+,es
scant consi0e+ation in ,ie8 of the follo8in1 stipulation in the cont+act;
. . . . It 8ill be no ob:ection an4 such appoint9ent that the a+bit+ato+ so appointe0 is a Co99ission e9plo4e+ CsicD that he ha0 to 0eal 8ith the 9atte+
to 8hich the suppl4 o+ cont+act +elates an0 that in the cou+se of his 0uties as Co99issionNs e9plo4ee he ha0 eBp+esse0 ,ie8s on all o+ an4 of the
9atte+ in 0ispute o+ 0iffe+ence. @" CE9phasis supplie0.D
Finall4' 8e +eite+ate he+eun0e+ ou+ p+onounce9ent in the case of No+th8est O+ient (i+lines' Inc. ,. Cou+t of (ppeals @$ that;
( fo+ei1n :u019ent is p+esu9e0 to be ,ali0 an0 bin0in1 in the count+4 f+o9 8hich it co9es' until the cont+a+4 is sho8n. It is also p+ope+ to p+esu9e
the +e1ula+it4 of the p+ocee0in1s an0 the 1i,in1 of 0ue notice the+ein.
Un0e+ Section J!' Rule @# of the Rules of Cou+t' a :u019ent in an action in pe+sona9 of a t+ibunal of a fo+ei1n count+4 ha,in1 :u+is0iction to
p+onounce the sa9e is p+esu9pti,e e,i0ence of a +i1ht as bet8een the pa+ties an0 thei+ successo+s?in?inte+est b4 a subse7uent title. The :u019ent
9a4' ho8e,e+' be assaile0 b4 e,i0ence of 8ant of :u+is0iction' 8ant of notice to the pa+t4' collusion' f+au0' o+ clea+ 9ista<e of la8 o+ fact. (lso' un0e+
Section @ of Rule @' a cou+t' 8hethe+ of the Philippines o+ else8he+e' en:o4s the p+esu9ption that it 8as actin1 in the la8ful eBe+cise of :u+is0iction
an0 has +e1ula+l4 pe+fo+9e0 its official 0ut4. @#
Conse7uentl4' the pa+t4 attac<in1 a fo+ei1n :u019ent' the p+i,ate +espon0ent he+ein' ha0 the bu+0en of o,e+co9in1 the p+esu9ption of its ,ali0it4
8hich it faile0 to 0o in the instant case.
The fo+ei1n :u019ent bein1 ,ali0' the+e is nothin1 else left to be 0one than to o+0e+ its enfo+ce9ent' 0espite the fact that the petitione+ 9e+el4 p+a4s
fo+ the +e9an0 of the case to the RTC fo+ fu+the+ p+ocee0in1s. (s this Cou+t has +ule0 on the ,ali0it4 an0 enfo+ceabilit4 of the sai0 fo+ei1n :u019ent
in this :u+is0iction' fu+the+ p+ocee0in1s in the RTC fo+ the +eception of e,i0ence to p+o,e othe+8ise a+e no lon1e+ necessa+4.
F-EREFORE' the instant petition is GR(NTED' an0 the assaile0 0ecision of the Cou+t of (ppeals sustainin1 the t+ial cou+tNs 0is9issal of the OI.
(ND N(TUR(. G(S COMMISSIONNs co9plaint in Ci,il Case No. &!!A befo+e )+anch @! of the RTC of Su+i1ao Cit4 is REVERSED' an0 anothe+ in
its stea0 is he+eb4 +en0e+e0 ORDERING p+i,ate +espon0ent P(CIFIC CEMENT COMP(N6' INC. to pa4 to petitione+ the a9ounts a0:u01e0 in the
fo+ei1n :u019ent sub:ect of sai0 case.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. =##A Ma+ch =A' =!!
22
M(GE..(N C(PIT(. M(N(GEMENT CORPOR(TION an0 M(GE..(N C(PIT(. -O.DINGS CORPOR(TION' petitione+s'
,s.
RO.(NDO M. /OS( an0 -ON. %OSE P. SO)ER(NO' %R.' in his capacit4 as P+esi0in1 %u01e of )+anch J$ of the Re1ional T+ial Cou+t of Cebu' "th
%u0icial Re1ion' +espon0ents.
)UEN(' %.;
Un0e+ a 9ana1e9ent a1+ee9ent ente+e0 into on Ma+ch $' ##&' Ma1ellan Capital -ol0in1s Co+po+ation SMC-CT appointe0 Ma1ellan Capital
Mana1e9ent Co+po+ation SMCMCT as 9ana1e+ fo+ the ope+ation of its business an0 affai+s. Pu+suant the+eto' on the sa9e 9onth' MC-C' MCMC'
an0 p+i,ate +espon0ent Rolan0o M. /osa ente+e0 into an HE9plo49ent (1+ee9entH 0esi1natin1 /osa as P+esi0ent an0 Chief EBecuti,e Office+ of
MC-C.
Un0e+ the HE9plo49ent (1+ee9entH' the te+9 of +espon0ent /osaNs e9plo49ent shall be co?te+9inous 8ith the 9ana1e9ent a1+ee9ent' o+ until
Ma+ch ##A'= unless soone+ te+9inate0 pu+suant to the p+o,isions of the E9plo49ent (1+ee9ent.@ The 1+oun0s fo+ te+9ination of e9plo49ent a+e
also p+o,i0e0 in the E9plo49ent (1+ee9ent.
On Ma4 !' ##J' the 9a:o+it4 of MC-CNs )oa+0 of Di+ecto+s 0eci0e0 not to +e?elect +espon0ent /osa as P+esi0ent an0 Chief EBecuti,e Office+ of
MC-C on account of loss of t+ust an0 confi0ence& a+isin1 f+o9 alle1e0 ,iolation of the +esolution issue0 b4 MC-CNs boa+0 of 0i+ecto+s an0 of the
non?co9petition clause of the E9plo49ent (1+ee9ent.J Ne,e+theless' +espon0ent /osa 8as electe0 to a ne8 position as MC-CNs Vice?
Chai+9anGChai+9an fo+ Ne8 Ventu+es De,elop9ent.A
On Septe9be+ =A' ##J' +espon0ent /osa co99unicate0 his +esi1nation fo+ 1oo0 +eason f+o9 the position of Vice?Chai+9an un0e+ pa+a1+aph " of
the E9plo49ent (1+ee9ent on the 1+oun0 that sai0 position ha0 less +esponsibilit4 an0 scope than P+esi0ent an0 Chief EBecuti,e Office+. -e
0e9an0e0 that he be 1i,en te+9ination benefits as p+o,i0e0 fo+ in Section $ CcD CiD CiiD an0 CiiiD of the E9plo49ent (1+ee9ent."
In a lette+ 0ate0 Octobe+ =!' ##J' MC-C co99unicate0 its non?acceptance of +espon0ent /osaNs +esi1nation fo+ 1oo0 +eason' but instea0 info+9e0
hi9 that the E9plo49ent (1+ee9ent is te+9inate0 fo+ cause' effecti,e No,e9be+ #' ##J' in acco+0ance 8ith Section " CaD C,D of the sai0
a1+ee9ent' on account of his b+each of Section = the+eof. Respon0ent /osa 8as fu+the+ a0,ise0 that he shall ha,e no fu+the+ +i1hts un0e+ the sai0
(1+ee9ent o+ an4 clai9s a1ainst the Mana1e+ o+ the Co+po+ation eBcept the +i1ht to +ecei,e 8ithin thi+t4 C@!D 0a4s f+o9 No,e9be+ #' ##J' the
a9ounts state0 in Section $ CaD CiD CiiD of the (1+ee9ent.$
Disa1+eein1 8ith the position ta<en b4 petitione+s' +espon0ent /osa in,o<e0 the (+bit+ation Clause of the E9plo49ent (1+ee9ent' to 8it;
H=@. (+bit+ation. In the e,ent that an4 0ispute' cont+o,e+s4 o+ clai9 a+ises out of o+ un0e+ an4 p+o,isions of this (1+ee9ent' then the pa+ties
he+eto a1+ee to sub9it such 0ispute' cont+o,e+s4 o+ clai9 to a+bit+ation as set fo+th in this Section an0 the 0ete+9ination to be 9a0e in such
a+bit+ation shall be final an0 bin0in1. (+bit+ation shall be effecte0 b4 a panel of th+ee a+bit+ato+s. The Mana1e+' E9plo4ee an0 Co+po+ation shall
0esi1nate one CD a+bit+ato+ 8ho shall' in tu+n' no9inate an0 elect 8ho a9on1 the9 shall be the chai+9an of the co99ittee. (n4 such a+bit+ation'
inclu0in1 the +en0e+in1 of an a+bit+ation a8a+0' shall ta<e place in Met+o Manila. The a+bit+ato+s shall inte+p+et this (1+ee9ent in acco+0ance 8ith the
substanti,e la8s of the Republic of the Philippines. The a+bit+ato+s shall ha,e no po8e+ to a00 to' subt+act f+o9 o+ othe+8ise 9o0if4 the te+9s of
(1+ee9ent o+ to 1+ant in:uncti,e +elief of an4 natu+e. (n4 :u019ent upon the a8a+0 of the a+bit+ato+s 9a4 be ente+e0 in an4 cou+t ha,in1 :u+is0iction
the+eof' 8ith costs of the a+bit+ation to be bo+ne e7uall4 b4 the pa+ties' eBcept that each pa+t4 shall pa4 the fees an0 eBpenses of its o8n counsel in
the a+bit+ation.H
On No,e9be+ !' ##J' +espon0ent /osa 0esi1nate0 his b+othe+' (tt4. F+ancis /osa' as his +ep+esentati,e in the a+bit+ation panel# 8hile MC-C
0esi1nate0 (tt4. Ini1o S. Fo:as! an0 MCMC no9inate0 (tt4. En+i7ue I. 2uiason as thei+ +especti,e +ep+esentati,es in the a+bit+ation panel.
-o8e,e+' instea0 of sub9ittin1 the 0ispute to a+bit+ation' +espon0ent /osa' on (p+il "' ##A' file0 an action fo+ 0a9a1es a1ainst petitione+s befo+e
the Re1ional T+ial Cou+t of Cebu= to enfo+ce his benefits un0e+ the E9plo49ent (1+ee9ent.
On %ul4 @' ##A' petitione+s file0 a 9otion to 0is9iss@ a+1uin1 that CD the t+ial cou+t has no :u+is0iction o,e+ the instant case since +espon0ent
/osaNs clai9s shoul0 be +esol,e0 th+ou1h a+bit+ation pu+suant to Section =@ of the E9plo49ent (1+ee9ent 8ith petitione+sE an0 C=D the ,enue is
i9p+ope+l4 lai0 since +espon0ent /osa' li<e the petitione+s' is a +esi0ent of Pasi1 Cit4 an0 thus' the ,enue of this case' 1+antin1 8ithout a09ittin1 that
the +espon0ent has a cause of action a1ainst the petitione+s co1ni3able b4 the RTC' shoul0 be li9ite0 onl4 to RTC?Pasi1 Cit4.&
Mean8hile' +espon0ent /osa file0 an a9en0e0 co9plaint 0ate0 %ul4 J' ##A.
On (u1ust ' ##A' the RTC )+anch J$ of Cebu Cit4 issue0 an O+0e+ 0en4in1 petitione+s 9otion to 0is9iss upon the fin0in1s that CD the ,ali0it4 an0
le1alit4 of the a+bit+ation p+o,ision can onl4 be 0ete+9ine0 afte+ t+ial on the 9e+itsE an0 C=D the a9ount of 0a9a1es clai9e0' 8hich is o,e+
P!!'!!!.!!' falls 8ithin the :u+is0iction of the RTC.J Petitione+s file0 a 9otion fo+ +econsi0e+ation 8hich 8as 0enie0 b4 the RTC in an o+0e+ 0ate0
Septe9be+ J' ##A.A
23
In the inte+i9' on (u1ust ==' ##A' in co9pliance 8ith the ea+lie+ o+0e+ of the cou+t 0i+ectin1 petitione+s to file +esponsi,e plea0in1 to the a9en0e0
co9plaint' petitione+s file0 thei+ (ns8e+ (0 Cautela9 8ith counte+clai9 +eite+atin1 thei+ position that the 0ispute shoul0 be settle0 th+ou1h a+bit+ation
an0 the cou+t ha0 no :u+is0iction o,e+ the natu+e of the action."
On Octobe+ =' ##A' the t+ial cou+t issue0 its p+e?t+ial o+0e+ 0ecla+in1 the p+e?t+ial sta1e te+9inate0 an0 settin1 the case fo+ hea+in1. The o+0e+
states;
HISSUES;
HThe Cou+t 8ill onl4 +esol,e one issue in so fa+ as this case is conce+ne0' to 8it;
HFhethe+ o+ not the (+bit+ation Clause containe0 in Sec. =@ of the E9plo49ent (1+ee9ent is ,oi0 an0 of no effect; an0' if it is ,oi0 an0 of no effect'
8hethe+ o+ not the plaintiff is entitle0 to 0a9a1es in acco+0ance 8ith his co9plaint an0 the 0efen0ants in acco+0ance 8ith thei+ counte+clai9.
HIt is un0e+stoo0' that in the e,ent the a+bit+ation clause is ,ali0 an0 bin0in1 bet8een the pa+ties' the pa+ties shall sub9it thei+ +especti,e clai9 to the
(+bit+ation Co99ittee in acco+0ance 8ith the sai0 a+bit+ation clause' in 8hich e,ent' this case shall be 0ee9e0 0is9isse0.H$
On No,e9be+ $' ##A' petitione+s file0 thei+ Motion (0 Cautela9 fo+ the Co++ection' (00ition an0 Cla+ification of the P+e?t+ial O+0e+ 0ate0 No,e9be+
J' ##A'# 8hich 8as 0enie0 b4 the cou+t in an o+0e+ 0ate0 No,e9be+ =$' ##A.=!
The+eafte+' petitione+s MCMC an0 MC-C file0 a Motion (0 Cautela9 fo+ the pa+ties to file thei+ Me9o+an0a to suppo+t thei+ +especti,e stan0 on the
issue of the ,ali0it4 of the Ha+bit+ation clauseH containe0 in the E9plo49ent (1+ee9ent. In an o+0e+ 0ate0 Dece9be+ @' ##A' the t+ial cou+t 0enie0
the 9otion of petitione+s MCMC an0 MC-C.
On %anua+4 "' ##"' petitione+s MCMC an0 MC-C file0 a petition fo+ ce+tio+a+i an0 p+ohibition un0e+ Rule AJ of the Rules of Cou+t 8ith the Cou+t of
(ppeals' 7uestionin1 the t+ial cou+t o+0e+s 0ate0 (u1ust ' ##A' Septe9be+ J' ##A' an0 Dece9be+ @' ##A.=
On Ma+ch =' ##"' the Cou+t of (ppeals +en0e+e0 a 0ecision' 1i,in1 0ue cou+se to the petition' the 0ec+etal po+tion of 8hich +ea0s;
HF-EREFORE' the petition is GIVEN DUE COURSE. The +espon0ent cou+t is 0i+ecte0 to +esol,e the issue on the ,ali0it4 o+ effecti,it4 of the
a+bit+ation clause in the E9plo49ent (1+ee9ent' an0 to suspen0 fu+the+ p+ocee0in1s in the t+ial on the 9e+its until the sai0 issue is +esol,e0. The
7uestione0 o+0e+s a+e set asi0e insofa+ as the4 cont+a,ene this Cou+tNs +esolution of the issues +aise0 as he+ein p+onounce0.
HThe petitione+ is +e7ui+e0 to +e9it to this Cou+t the su9 of P$.$! fo+ cost 8ithin fi,e CJD 0a4s f+o9 notice.
HSO ORDERED.H==
Petitione+s file0 a 9otions fo+ pa+tial +econsi0e+ation of the C( 0ecision p+a4in1 CD fo+ the 0is9issal of the case in the t+ial cou+t' on the 1+oun0 of
lac< of :u+is0iction' an0 C=D that the pa+ties be 0i+ecte0 to sub9it thei+ 0ispute to a+bit+ation in acco+0ance 8ith the E9plo49ent (1+ee9ent 0ate0
Ma+ch ##&. The C(' in a +esolution p+o9ul1ate0 on %une =!' ##"' 0enie0 the 9otion fo+ pa+tial +econsi0e+ation fo+ lac< of 9e+it.
In co9pliance 8ith the C( 0ecision' the t+ial cou+t' on %ul4 $' ##"' +en0e+e0 a 0ecision 0ecla+in1 the Ha+bit+ation clauseH in the E9plo49ent
(1+ee9ent pa+tiall4 ,oi0 an0 of no effect. The 0ispositi,e po+tion of the 0ecision +ea0s;
HF-EREFORE' p+e9ises consi0e+e0' :u019ent is he+eb4 +en0e+e0 pa+tiall4 0ecla+in1 the a+bit+ation clause of the E9plo49ent (1+ee9ent ,oi0 an0
of no effect' onl4 insofa+ as it conce+ns the co9position of the panel of a+bit+ato+s' an0 0i+ectin1 the pa+ties to p+ocee0 to a+bit+ation in acco+0ance
8ith the E9plo49ent (1+ee9ent un0e+ the panel of th+ee C@D a+bit+ato+s' one fo+ the plaintiff' one fo+ the 0efen0ants' an0 the thi+0 to be chosen b4
both the plaintiff an0 0efen0ants. The othe+ te+9s' con0itions an0 stipulations in the a+bit+ation clause +e9ain in fo+ce an0 effect.H=@
In ,ie8 of the t+ial cou+tNs 0ecision' petitione+s file0 this petition fo+ +e,ie8 on ce+tio+a+i' un0e+ Rule &J of the Rules of Cou+t' assi1nin1 the follo8in1
e++o+s fo+ the Cou+tNs +esolution;
HI. The t+ial cou+t 1+a,el4 e++e0 8hen it +ule0 that the a+bit+ation clause un0e+ the e9plo49ent a1+ee9ent is pa+tiall4 ,oi0 an0 of no effect'
consi0e+in1 that;
H(. The a+bit+ation clause in the e9plo49ent a1+ee9ent 0ate0 Ma+ch ##& bet8een +espon0ent /osa an0 0efen0ants MC-C an0 MCMC is
,ali0 an0 bin0in1 upon the pa+ties the+eto.
24
H). In ,ie8 of the fact that the+e a+e th+ee pa+ties to the e9plo49ent a1+ee9ent' it is but p+ope+ that each pa+t4 be +ep+esente0 in the
a+bit+ation panel.
HC. The t+ial cou+t 1+ie,ousl4 e++e0 in its conclusion that petitione+s MCMC an0 MC-C +ep+esent the sa9e inte+est.
HD. Respon0ent /osa is estoppe0 f+o9 7uestionin1 the ,ali0it4 of the a+bit+ation clause' inclu0in1 the +i1ht of petitione+ MCMC to no9inate its
o8n a+bit+ato+' 8hich he hi9self has in,o<e0.
HII. In an4 e,ent' the t+ial cou+t acte0 8ithout :u+is0iction in hea+in1 the case belo8' consi0e+in1 that it has no :u+is0iction o,e+ the natu+e of the
action o+ suit since cont+o,e+sies in the election o+ appoint9ent of office+s o+ 9ana1e+s of a co+po+ation' such as the action b+ou1ht b4 +espon0ent
/osa' fall 8ithin the o+i1inal an0 eBclusi,e :u+is0iction of the Secu+ities an0 EBchan1e Co99ission.
HIII. Cont+a+4 to +espon0ent /osaNs alle1ation' the issue of the t+ial cou+tNs :u+is0iction o,e+ the case belo8 has not 4et been +esol,e0 8ith
finalit4 consi0e+in1 that petitione+s ha,e eBp+essl4 +ese+,e0 thei+ +i1ht to +aise sai0 issue in the instant petition. Mo+eo,e+' the p+inciple of the la8 of
the case is not applicable in the instant case.
HIV. Cont+a+4 to +espon0ent /osaNs alle1ation' petitione+s MCMC an0 MC-C a+e not 1uilt4 of fo+u9 shoppin1.
HV. Cont+a+4 to +espon0ent /osaNs alle1ation' the instant petition fo+ +e,ie8 in,ol,es onl4 7uestions of la8 an0 not of fact.H=&
Fe +ule a1ainst the petitione+s.
It is e++o+ fo+ the petitione+s to clai9 that the case shoul0 fall un0e+ the :u+is0iction of the Secu+ities an0 EBchan1e Co99ission SSEC' fo+ b+e,it4T.
The cont+o,e+s4 0oes not in an48a4 in,ol,e the electionGappoint9ent of office+s of petitione+ MC-C' as clai9e0 b4 petitione+s in thei+ assi1n9ent of
e++o+s. Respon0ent /osaNs a9en0e0 co9plaint focuses hea,il4 on the ille1alit4 of the E9plo49ent (1+ee9entNs H(+bit+ation ClauseH initiall4 in,o<e0
b4 hi9 in see<in1 his te+9ination benefits un0e+ Section $ of the e9plo49ent cont+act. (n0 un0e+ Republic (ct No. $"A' othe+8ise <no8n as the
H(+bit+ation .a8'H it is the +e1ional t+ial cou+t 8hich eBe+cises :u+is0iction o,e+ 7uestions +elatin1 to a+bit+ation. Fe thus a0,e+t to the follo8in1
0iscussions 9a0e b4 the Cou+t of (ppeals' spea<in1 th+u %ustice Mine+,a P. Gon3a1a?Re4es'=J in C.(.?G.R. S.P. No. &@!J#' ,i3.
H(s +e1a+0s the fou+th assi1ne0 e++o+' asse+tin1 that :u+is0iction lies 8ith the SEC' 8hich is +aise0 fo+ the fi+st ti9e in this petition' suffice it to state
that the (9en0e0 Co9plaint s7ua+el4 put in issue the 7uestion 8hethe+ the (+bit+ation Clause is ,ali0 an0 effecti,e bet8een the pa+ties. (lthou1h the
cont+o,e+s4 8hich spa8ne0 the action conce+ns the ,ali0it4 of the te+9ination of the se+,ice of a co+po+ate office+' the issue on the ,ali0it4 an0
effecti,it4 of the a+bit+ation clause is 0ete+9inable b4 the +e1ula+ cou+ts' an0 0o not fall 8ithin the eBclusi,e an0 o+i1inal :u+is0iction of the SEC.
HThe 0ete+9ination an0 ,ali0it4 of the a1+ee9ent is not a 9atte+ int+insicall4 connecte0 8ith the +e1ulation an0 inte+nal affai+s of co+po+ations Csee
Pe+e4+a ,s. I(C' $ SCR( =&&E Sales ,s. SEC' A# SCR( =DE it is +athe+ an o+0ina+4 case to be 0eci0e0 in acco+0ance 8ith the 1ene+al la8s'
an0 0o not +e7ui+e an4 pa+ticula+ eBpe+tise o+ t+ainin1 to inte+p+et an0 appl4 CVi+a4 ,s. C(' # SCR( @!$D.H=A
Fu+the+9o+e' the 0ecision of the Cou+t of (ppeals in C(?G.R. SP No. &@!J# affi+9in1 the t+ial cou+tNs assu9ption of :u+is0iction o,e+ the case has
beco9e the Hla8 of the caseH 8hich no8 bin0s the petitione+s. The Hla8 of the caseH 0oct+ine has been 0efine0 as Ha te+9 applie0 to an establishe0
+ule that 8hen an appellate cou+t passes on a 7uestion an0 +e9an0s the cause to the lo8e+ cou+t fo+ fu+the+ p+ocee0in1s' the 7uestion the+e settle0
beco9es the la8 of the case upon subse7uent appeal.H=" To note' the C(Ns 0ecision in C(?G.R. SP No. &@!J# has al+ea04 attaine0 finalit4 as
e,i0ence0 b4 a Resolution of this Cou+t o+0e+in1 ent+4 of :u019ent of sai0 case' to 8it;
HENTR6 OF %UDGMENT
This is to ce+tif4 that on Septe9be+ $' ##" a 0ecisionG+esolution +en0e+e0 in the abo,e?entitle0 case 8as file0 in this Office' the 0ispositi,e pa+t of
8hich +ea0s as follo8s;
NG.R. No. =#AJ. CMa1ellan Capital Mana1e9ent Co+po+ation' et al. ,s. Cou+t of (ppeals' Rolan0o /osa' et al.D. Consi0e+in1 the petitione+Ns
9anifestation 0ate0 (u1ust ' ##" an0 8ith0+a8al of intention to file petition fo+ +e,ie8 on ce+tio+a+i' the Cou+t Resol,e0 to DEC.(RE T-IS C(SE
TERMIN(TED an0 DIRECT the Cle+< of Cou+t to INFORM the pa+ties that the :u019ent sou1ht to be +e,ie8e0 has beco9e final an0 eBecuto+4' no
appeal the+efo+e ha,in1 been ti9el4 pe+fecte0.N
an0 that the sa9e has' on Septe9be+ "' ##"' beco9e final an0 eBecuto+4 an0 is he+eb4 +eco+0e0 in the )oo< of Ent+ies of %u019ents.H=$
Petitione+s' the+efo+e' a+e ba++e0 f+o9 challen1in1 ane8' th+ou1h anothe+ +e9e0ial 9easu+e an0 in an4 othe+ fo+u9' the autho+it4 of the +e1ional t+ial
cou+t to +esol,e the ,ali0it4 of the a+bit+ation clause' lest the4 be t+ul4 1uilt4 of fo+u9?shoppin1 8hich the cou+ts consistentl4 consi0e+ as a
contu9acious p+actice that 0e+ails the o+0e+l4 a09inist+ation of :ustice.
25
E7uall4 una,ailin1 fo+ the petitione+s is the +e,ie8 b4 this Cou+t' ,ia the instant petition' of the factual fin0in1s 9a0e b4 the t+ial cou+t that the
co9position of the panel of a+bit+ato+s 8oul0' in all p+obabilit4' 8o+< in:ustice to +espon0ent /osa. Fe ha,e +epeate0l4 st+esse0 that the :u+is0iction of
this Cou+t in a petition fo+ +e,ie8 on ce+tio+a+i un0e+ Rule &J of the Re,ise0 Rules of Cou+t is li9ite0 to +e,ie8in1 onl4 e++o+s of la8' not of fact' unless
the factual fin0in1s co9plaine0 of a+e 0e,oi0 of suppo+t b4 the e,i0ence on +eco+0' o+ the assaile0 :u019ent is base0 on 9isapp+ehension of
facts.=#
E,en if p+oce0u+al +ules a+e 0is+e1a+0e0' an0 a sc+utin4 of the 9e+its of the case is un0e+ta<en' this Cou+t fin0s the t+ial cou+tNs obse+,ations on 8h4
the co9position of the panel of a+bit+ato+s shoul0 be ,oi0e0' incisi,el4 co++ect so as to 9e+it ou+ app+o,al. Thus'
HF+o9 the 9e9o+an0a of both si0es' the Cou+t is of the ,ie8 that the 0efen0ants Spetitione+T MCMC an0 MC-C +ep+esent the sa9e inte+est. The+e is
no 7ua++el that both 0efen0ants a+e enti+el4 t8o 0iffe+ent co+po+ations 8ith pe+sonalities 0istinct an0 sepa+ate f+o9 each othe+ an0 that a co+po+ation
has a pe+sonalit4 0istinct an0 sepa+ate f+o9 those pe+sons co9posin1 the co+po+ation as 8ell as f+o9 that of an4 othe+ le1al entit4 to 8hich it 9a4 be
+elate0.
H)ut as the 0efen0ants She+ein petitione+T +ep+esent the sa9e inte+est' it coul0 ne,e+ be eBpecte0' in the a+bit+ation p+ocee0in1s' that the4 8oul0 not
p+otect an0 p+ese+,e thei+ o8n inte+est' 9uch less' 8oul0 both o+ eithe+ fa,o+ the inte+est of the plaintiff. The a+bit+ation la8' as all othe+ la8s' is
inten0e0 fo+ the 1oo0 an0 8elfa+e of e,e+4bo04. In fact' 8hat is bein1 challen1e0 b4 the plaintiff he+ein is not the la8 itself but the p+o,ision of the
E9plo49ent (1+ee9ent base0 on the sai0 la8' 8hich is the a+bit+ation clause but onl4 as +e1a+0s the co9position of the panel of a+bit+ato+s. The
a+bit+ation clause in 7uestion p+o,i0es' thus;
NIn the e,ent that an4 0ispute' cont+o,e+s4 o+ clai9 a+ise out of o+ un0e+ an4 p+o,isions of this (1+ee9ent' then the pa+ties he+eto a1+ee to sub9it
such 0ispute' cont+o,e+s4 o+ clai9 to a+bit+ation as set fo+th in this Section an0 the 0ete+9ination to be 9a0e in such a+bit+ation shall be final an0
bin0in1. (+bit+ation shall be effecte0 b4 a panel of th+ee a+bit+ato+s. The Mana1e+' E9plo4ee' an0 Co+po+ation shall 0esi1nate one CD a+bit+ato+ 8ho
shall' in tu+n' no9inate an0 elect as 8ho a9on1 the9 shall be the chai+9an of the co99ittee. (n4 such a+bit+ation' inclu0in1 the +en0e+in1 of an
a+bit+ation a8a+0' shall ta<e place in Met+o Manila. The a+bit+ato+s shall inte+p+et this (1+ee9ent in acco+0ance 8ith the substanti,e la8s of the
Republic of the Philippines. The a+bit+ato+s shall ha,e no po8e+ to a00 to' subt+act f+o9 o+ othe+8ise 9o0if4 the te+9s of this (1+ee9ent o+ to 1+ant
in:uncti,e +elief of an4 natu+e. (n4 :u019ent upon the a8a+0 of the a+bit+ato+s 9a4 be ente+e0 in an4 cou+t ha,in1 :u+is0iction the+eof' 8ith costs of
the a+bit+ation to be bo+ne e7uall4 b4 the pa+ties' eBcept that each pa+t4 shall pa4 the fees an0 eBpenses of its o8n counsel in the a+bit+ation.N
CE9phasis supplie0D.
HF+o9 the fo+e1oin1 a+bit+ation clause' it appea+s that the t8o C=D 0efen0ants Spetitione+sT CMCMC an0 MC-CD ha,e one CD a+bit+ato+ each to
co9pose the panel of th+ee C@D a+bit+ato+s. (s the 0efen0ant MCMC is the Mana1e+ of 0efen0ant MC-C' its 0ecision o+ ,ote in the a+bit+ation
p+ocee0in1 8oul0 natu+all4 an0 ce+tainl4 be in fa,o+ of its e9plo4e+ an0 the 0efen0ant MC-C 8oul0 ha,e to p+otect an0 p+ese+,e its o8n inte+estE
hence' the t8o C=D ,otes of both 0efen0ants CMCMC an0 MC-CD 8oul0 ce+tainl4 be a1ainst the lone a+bit+ato+ fo+ the plaintiff She+ein 0efen0antT.
-ence' appa+entl4' plaintiff S0efen0antT 8oul0 ne,e+ 1et o+ +ecei,e :ustice an0 fai+ness in the a+bit+ation p+ocee0in1s f+o9 the panel of a+bit+ato+s as
p+o,i0e0 in the afo+e7uote0 a+bit+ation clause. In fai+ness an0 :ustice to the plaintiff S0efen0antT' the t8o 0efen0ants CMCMC an0 MC-CD She+ein
petitione+sT 8hich +ep+esent the sa9e inte+est shoul0 be consi0e+e0 as one an0 shoul0 be entitle0 to onl4 one a+bit+ato+ to +ep+esent the9 in the
a+bit+ation p+ocee0in1s. (cco+0in1l4' the a+bit+ation clause' insofa+ as the co9position of the panel of a+bit+ato+s is conce+ne0 shoul0 be 0ecla+e0
,oi0 an0 of no effect' because the la8 sa4s' H(n4 clause 1i,in1 one of the pa+ties po8e+ to choose 9o+e a+bit+ato+s than the othe+ is ,oi0 an0 of no
effectH C(+ticle =!&J' Ci,il Co0eD.
HThe 0ispute o+ cont+o,e+s4 bet8een the 0efen0ants CMCMC an0 MC-CD She+ein petitione+sT an0 the plaintiff She+ein 0efen0antT shoul0 be settle0 in
the a+bit+ation p+ocee0in1 in acco+0ance 8ith the E9plo49ent (1+ee9ent' but un0e+ the panel of th+ee C@D a+bit+ato+s' one CD a+bit+ato+ to +ep+esent
the plaintiff' one CD a+bit+ato+ to +ep+esent both 0efen0ants CMCMC an0 MC-CD She+ein petitione+sT an0 the thi+0 a+bit+ato+ to be chosen b4 the
plaintiff S0efen0ant /osaT an0 0efen0ants Spetitione+sT.
HBBB BBB BBBH@!
In this connection' petitione+sN atte9pt to put +espon0ent in estoppel in assailin1 the a+bit+ation clause 9ust be st+uc< 0o8n. Fo+ one' this issue of
estoppel' as li<e8ise note0 b4 the Cou+t of (ppeals' foun0 its 8a4 fo+ the fi+st ti9e onl4 on appeal. Fell?settle0 is the +ule that issues not +aise0
belo8 cannot be +esol,e0 on +e,ie8 in hi1he+ cou+ts.@ Secon0l4' e9plo49ent a1+ee9ents such as the one at ba+ a+e usuall4 cont+acts of a0hesion.
(n4 a9bi1uit4 in its p+o,isions is 1ene+all4 +esol,e0 a1ainst the pa+t4 8ho 0+afte0 the 0ocu9ent. Thus' in the +elati,el4 +ecent case of Phil.
Fe0e+ation of C+e0it Coope+ati,es' Inc. CPFCCID an0 F+. )ene0icto %a4o9a ,s. N.RC an0 Victo+ia (b+il'@= 8e ha0 the occasion to st+ess that H8he+e
a cont+act of e9plo49ent' bein1 a cont+act of a0hesion' is a9bi1uous' an4 a9bi1uit4 the+ein shoul0 be const+ue0 st+ictl4 a1ainst the pa+t4 8ho
p+epa+e0 it.H (n0' finall4' +espon0ent /osa ne,e+ sub9itte0 hi9self to a+bit+ation p+ocee0in1s Cas the+e 8as none 4etD befo+e be8ailin1 the
co9position of the panel of a+bit+ato+s. -e in fact' lost no ti9e in assailin1 the Ha+bit+ation clauseH upon +eali3in1 the ine7uities that 9a4 9a+ the
a+bit+ation p+ocee0in1s if the eBistin1 line?up of a+bit+ato+s +e9aine0 unchec<e0.
26
Fe nee0 onl4 to e9phasi3e in closin1 that a+bit+ation p+ocee0in1s a+e 0esi1ne0 to le,el the pla4in1 fiel0 a9on1 the pa+ties in pu+suit of a 9utuall4
acceptable solution to thei+ conflictin1 clai9s. (n4 a++an1e9ent o+ sche9e that 8oul0 1i,e un0ue a0,anta1e to a pa+t4 in the ne1otiatin1 table is
anathe9a to the ,e+4 pu+pose of a+bit+ation an0 shoul0' the+efo+e' be +esiste0.
F-EREFORE' p+e9ises consi0e+e0' the petition is he+eb4 DISMISSED an0 the 0ecision of the t+ial cou+t 0ate0 %ul4 $' ##" is (FFIRMED.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
T-IRD DIVISION

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

ROMERO' %.;
The basic issue in this petition fo+ +e,ie8 on ce+tio+a+i is 8hethe+ o+ not the cont+act fo+ the const+uction of the EDS( Pla3a bet8een petitione+ )F
Co+po+ation an0 +espon0ent Shan1+i?la P+ope+ties' Inc. e9bo0ies an a+bit+ation clause in case of 0isa1+ee9ent bet8een the pa+ties in the
i9ple9entation of cont+actual p+o,isions.
Petitione+ an0 +espon0ent Shan1+i?la P+ope+ties' Inc. CSPID ente+e0 into an a1+ee9ent 8he+eb4 the latte+ en1a1e0 the fo+9e+ to const+uct the 9ain
st+uctu+e of the HEDS( Pla3a P+o:ect'H a shoppin1 9all co9pleB in the Cit4 of Man0alu4on1. The const+uction 8o+< 8as in p+o1+ess 8hen SPI
0eci0e0 to eBpan0 the p+o:ect b4 en1a1in1 the se+,ices of petitione+ a1ain. Thus' the pa+ties ente+e0 into an a1+ee9ent fo+ the 9ain cont+act 8o+<s
afte+ 8hich const+uction 8o+< be1an.
-o8e,e+' petitione+ incu++e0 0ela4 in the const+uction 8o+< that SPI consi0e+e0 as Hse+ious an0 substantial.H On the othe+ han0' acco+0in1 to
petitione+' the const+uction 8o+<s Hp+o1+esse0 in faithful co9pliance 8ith the Fi+st (1+ee9ent until a fi+e b+o<e out on No,e9be+ @!' ##! 0a9a1in1
Phase IH of the P+o:ect. = -ence' SPI p+opose0 the +e?ne1otiation of the a1+ee9ent bet8een the9.
Conse7uentl4' on Ma4 @!' ##' petitione+ an0 SPI ente+e0 into a 8+itten a1+ee9ent 0eno9inate0 as H(1+ee9ent fo+ the EBecution of )uil0e+Ns Fo+<
fo+ the EDS( Pla3a P+o:ect.H Sai0 a1+ee9ent 8oul0 co,e+ the const+uction 8o+< on sai0 p+o:ect as of Ma4 ' ## until its e,entual co9pletion.
(cco+0in1 to SPI' petitione+ Hfaile0 to co9plete the const+uction 8o+<s an0 aban0one0 the p+o:ect.H @ This +esulte0 in 0isa1+ee9ents bet8een the
pa+ties as +e1a+0s thei+ +especti,e liabilities un0e+ the cont+act. On %ul4 =' ##@' upon SPINs initiati,e' the pa+tiesN +especti,e +ep+esentati,es 9et in
confe+ence but the4 faile0 to co9e to an a1+ee9ent. &
)a+el4 t8o 0a4s late+ o+ on %ul4 &' ##@' petitione+ file0 8ith the Re1ional T+ial Cou+t of Pasi1 a co9plaint fo+ collection of the balance 0ue un0e+
the const+uction a1+ee9ent. Na9e0 0efen0ants the+ein 8e+e SPI an0 9e9be+s of its boa+0 of 0i+ecto+s na9el4' (lf+e0o C. Ra9os' Rufo ). Cala4co'
(ntonio ). Olbes' Ge+a+0o O. .anu3a' %+.' MaBi9o G. .icauco III an0 )en:a9in C. Ra9os.
On (u1ust @' ##@' SPI an0 its co?0efen0ants file0 a 9otion to suspen0 p+ocee0in1s instea0 of filin1 an ans8e+. The 9otion 8as ancho+e0 on
0efen0antsN alle1ation that the fo+9al t+a0e cont+act fo+ the const+uction of the p+o:ect p+o,i0e0 fo+ a clause +e7ui+in1 p+io+ +eso+t to a+bit+ation befo+e
:u0icial inte+,ention coul0 be in,o<e0 in an4 0ispute a+isin1 f+o9 the cont+act. The follo8in1 0a4' SPI sub9itte0 a cop4 of the con0itions of the
cont+act containin1 the a+bit+ation clause that it faile0 to appen0 to its 9otion to suspen0 p+ocee0in1s.
Petitione+ oppose0 sai0 9otion clai9in1 that the+e 8as no fo+9al cont+act bet8een the pa+ties althou1h the4 ente+e0 into an a1+ee9ent 0efinin1 thei+
+i1hts an0 obli1ations in un0e+ta<in1 the p+o:ect. It e9phasi3e0 that the a1+ee9ent 0i0 not p+o,i0e fo+ a+bit+ation an0 the+efo+e the cou+t coul0 not be
0ep+i,e0 of :u+is0iction confe++e0 b4 la8 b4 the 9e+e alle1ation of the eBistence of an a+bit+ation clause in the a1+ee9ent bet8een the pa+ties.
27
In +epl4 to sai0 opposition' SPI insiste0 that the+e 8as such an a+bit+ation clause in the eBistin1 cont+act bet8een petitione+ an0 SPI. It alle1e0 that
suspension of p+ocee0in1s 8oul0 not necessa+il4 0ep+i,e the cou+t of its :u+is0iction o,e+ the case an0 that a+bit+ation 8oul0 eBpe0ite +athe+ than
0ela4 the settle9ent of the pa+tiesN +especti,e clai9s a1ainst each othe+.
In a +e:oin0e+ to SPINs +epl4' petitione+ +eite+ate0 that the+e 8as no a+bit+ation clause in the cont+act bet8een the pa+ties. It a,e++e0 that 1+antin1 that
such a clause in0ee0 fo+9e0 pa+t of the cont+act' suspension of the p+ocee0in1s 8as no lon1e+ p+ope+. It a00e0 that 0efen0ants shoul0 be 0ecla+e0
in 0efault fo+ failu+e to file thei+ ans8e+ 8ithin the +e1le9enta+4 pe+io0.
In its su+?+e:oin0e+' SPI pointe0 out the si1nificance of petitione+Ns a09ission of the 0ue eBecution of the H(+ticles of (1+ee9ent.H Thus' on pa1e DGA
the+eof' the si1natu+es of Rufo ). Cola4co' SPI p+esi0ent' an0 )a4ani Fe+nan0o' p+esi0ent of petitione+ appea+' 8hile pa1e DG" sho8s that the
a1+ee9ent is a public 0ocu9ent 0ul4 nota+i3e0 on No,e9be+ J' ## b4 Nota+4 Public Nilbe+to R. )+iones as 0ocu9ent No. @&J' pa1e "!' boo<
No. .RR' Se+ies of ## of his nota+ial +e1iste+. J
The+eafte+' upon a fin0in1 that an a+bit+ation clause in0ee0 eBists' the lo8e+ cou+t A 0enie0 the 9otion to suspen0 p+ocee0in1s' thus;
It appea+s f+o9 the sai0 0ocu9ent that in the lette+?a1+ee9ent 0ate0 Ma4 @!' ## C(nneB C' Co9plaintD' plaintiff )F an0 0efen0ant Shan1+i?.a
P+ope+ties' Inc. a1+ee0 upon the te+9s an0 con0itions of the )uil0e+s Fo+< fo+ the EDS( Pla3a P+o:ect CPhases I' II an0 Ca+pa+<D' sub:ect to the
eBecution b4 the pa+ties of a fo+9al t+a0e cont+act. Defen0ants ha,e sub9itte0 a cop4 of the alle1e0 t+a0e cont+act' 8hich is entitle0 HCont+act
Docu9ents Fo+ )uil0e+Ns Fo+< T+a0e Cont+acto+H 0ate0 ! Ma4 ##' pa1e = of 8hich is entitle0 HContents of Cont+act Docu9entsH 8ith a list of the
0ocu9ents the+ein containe0' an0 Section ( the+eof consists of the abo,e9entione0 .ette+?(1+ee9ent 0ate0 Ma4 @!' ##. Section C of the sai0
Cont+act Docu9ents is entitle0 H(+ticles of (1+ee9ent an0 Con0itions of Cont+actH 8hich' pe+ its In0eB' consists of Pa+t ( C(+ticles of (1+ee9entD an0
) CCon0itions of Cont+actD. The sai0 (+ticles of (1+ee9ent appea+s to ha,e been 0ul4 si1ne0 b4 P+esi0ent Rufo ). Cola4co of Shan1+i?.a P+ope+ties'
Inc. an0 P+esi0ent )a4ani F. Fe+nan0o of )F an0 thei+ 8itnesses' an0 8as the+eafte+ ac<no8le01e0 befo+e Nota+4 Public Nilbe+to R. )+iones of
Ma<ati' Met+o Manila on No,e9be+ J' ##. The sai0 (+ticles of (1+ee9ent also p+o,i0es that the HCont+act Docu9entsH the+ein liste0 Hshall be
0ee9e0 an inte1+al pa+t of this (1+ee9entH' an0 one of the sai0 0ocu9ents is the HCon0itions of Cont+actH 8hich contains the (+bit+ation Clause
+elie0 upon b4 the 0efen0ants in thei+ Motion to Suspen0 P+ocee0in1s.
This Cou+t notes' ho8e,e+' that the NCon0itions of Cont+actN +efe++e0 to' contains the follo8in1 p+o,isions;
@. Cont+act Docu9ent.
Th+ee copies of the Cont+act Docu9ents +efe++e0 to in the (+ticles of (1+ee9ent shall be si1ne0 b4 the pa+ties to the cont+act an0 0ist+ibute0 to the
O8ne+ an0 the Cont+acto+ fo+ thei+ safe <eepin1.H Ce9phasis supplie0D.
(n0 it is si1nificant to note fu+the+ that the sai0 HCon0itions of Cont+actH is not 0ul4 si1ne0 b4 the pa+ties on an4 pa1e the+eof I althou1h it bea+s the
initials of )FNs +ep+esentati,es C)a4ani F. Fe+nan0o an0 Re4nal0o M. 0e la C+u3D 8ithout the initials the+eon of an4 +ep+esentati,e of Shan1+i?.a
P+ope+ties' Inc.
Consi0e+in1 the insistence of the plaintiff that the sai0 Con0itions of Cont+act 8as not 0ul4 eBecute0 o+ si1ne0 b4 the pa+ties' an0 the failu+e of the
0efen0ants to sub9it an4 si1ne0 cop4 of the sai0 0ocu9ent' this Cou+t ente+tains se+ious 0oubt 8hethe+ o+ not the a+bit+ation clause foun0 in the
sai0 Con0itions of Cont+act is bin0in1 upon the pa+ties to the (+ticles of (1+ee9ent.H CE9phasis supplie0.D
The lo8e+ cou+t then +ule0 that' assu9in1 that the a+bit+ation clause 8as ,ali0 an0 bin0in1' still' it 8as Htoo late in the 0a4 fo+ 0efen0ants to in,o<e
a+bit+ation.H It 7uote0 the follo8in1 p+o,ision of the a+bit+ation clause;
Notice of the 0e9an0 fo+ a+bit+ation of a 0ispute shall be file0 in 8+itin1 8ith the othe+ pa+t4 to the cont+act an0 a cop4 file0 8ith the P+o:ect Mana1e+.
The 0e9an0 fo+ a+bit+ation shall be 9a0e 8ithin a +easonable ti9e afte+ the 0ispute has a+isen an0 atte9pts to settle a9icabl4 ha,e faile0E in no
case' ho8e,e+' shall the 0e9an0 he 9a0e be late+ than the ti9e of final pa49ent eBcept as othe+8ise eBp+essl4 stipulate0 in the cont+act.
(1ainst the abo,e bac<0+op' the lo8e+ cou+t foun0 that pe+ the Ma4 @!' ## a1+ee9ent' the p+o:ect 8as to be co9plete0 b4 Octobe+ @' ##.
The+eafte+' the cont+acto+ 8oul0 pa4 P$!'!!! fo+ each 0a4 of 0ela4 counte0 f+o9 No,e9be+ ' ## 8ith Hli7uifie0 CsicD 0a9a1es up to a 9aBi9u9
of JK of the total cont+act p+ice.H
The lo8e+ cou+t also foun0 that afte+ the p+o:ect 8as co9plete0 in acco+0ance 8ith the a1+ee9ent that containe0 a p+o,ision on Hp+o1+ess pa49ent
billin1'H SPI Htoo< possession an0 sta+te0 ope+ations the+eof b4 openin1 the sa9e to the public in No,e9be+' ##.H SPI' ha,in1 faile0 to pa4 fo+ the
8o+<s' petitione+ bille0 SPI in the total a9ount of P!'$$@'!.J=' containe0 in a 0e9an0 lette+ sent b4 it to SPI on Feb+ua+4 "' ##@. Instea0 of
pa4in1 the a9ount 0e9an0e0' SPI set up its o8n clai9 of P==!'!!!'!!!.!! an0 sche0ule0 a confe+ence on that clai9 fo+ %ul4 =' ##@. The
confe+ence too< place but it p+o,e0 futile.
Upon the abo,e facts' the lo8e+ cou+t conclu0e0;
28
Consi0e+in1 the fact that un0e+ the suppose0 (+bit+ation Clause in,o<e0 b4 0efen0ants' it is +e7ui+e0 that HNotice of the 0e9an0 fo+ a+bit+ation of a
0ispute shall be file0 in 8+itin1 8ith the othe+ pa+t4 . . . . in no case . . . . late+ than the ti9e of final pa49ent . . . H8hich appa+entl4' ha0 elapse0' not
onl4 because 0efen0ants ha0 ta<en possession of the finishe0 8o+<s an0 the plaintiffNs billin1s fo+ the pa49ent the+eof ha0 +e9aine0 pen0in1 since
No,e9be+' ## up to the filin1 of this case on %ul4 &' ##@' but also fo+ the +eason that 0efen0ants ha,e faile0 to file an4 8+itten notice of an4
0e9an0 fo+ a+bit+ation 0u+in1 the sai0 lon1 pe+io0 of one 4ea+ an0 ei1ht 9onths' this Cou+t fin0s that it cannot sta4 the p+ocee0in1s in this case as
+e7ui+e0 b4 Sec. " of Republic (ct No. $"A' because 0efen0ants a+e in 0efault in p+ocee0in1 8ith such a+bit+ation.
The lo8e+ cou+t 0enie0 SPINs 9otion fo+ +econsi0e+ation fo+ lac< of 9e+it an0 0i+ecte0 it an0 the othe+ 0efen0ants to file thei+ +esponsi,e plea0in1 o+
ans8e+ 8ithin fifteen CJD 0a4s f+o9 notice.
Instea0 of filin1 an ans8e+ to the co9plaint' SPI file0 a petition fo+ ce+tio+a+i un0e+ Rule AJ of the Rules of Cou+t befo+e the Cou+t of (ppeals. Sai0
appellate cou+t 1+ante0 the petition' annulle0 an0 set asi0e the o+0e+s an0 sta4e0 the p+ocee0in1s in the lo8e+ cou+t. In so +ulin1' the Cou+t of
(ppeals hel0;
The +easons 1i,en b4 the +espon0ent Cou+t in 0en4in1 petitione+sN 9otion to suspen0 p+ocee0in1s a+e untenable.
. The nota+i3e0 cop4 of the a+ticles of a1+ee9ent attache0 as (nneB ( to petitione+sN +epl4 0ate0 (u1ust =A' ##@' has been sub9itte0 b4
the9 to the +espon0ent Cou+t C(nneB G' petitionD. It bea+s the si1natu+e of petitione+ Rufo ). Cola4co' p+esi0ent of petitione+ Shan1+i?.a P+ope+ties'
Inc.' an0 of )a4ani Fe+nan0o' p+esi0ent of +espon0ent Co+po+ation C(nneB G?' petitionD. (t pa1e DG& of sai0 a+ticles of a1+ee9ent it is eBp+essl4
p+o,i0e0 that the con0itions of cont+act a+e H0ee9e0 an inte1+al pa+tH the+eof Cpa1e $$' +olloD. (n0 it is at pa1es DG&= to DG&& of the con0itions of
cont+act that the p+o,isions fo+ a+bit+ation a+e foun0 C(nneBes G?@ to G?J' petition' pp. =="?==#D. Clause No. @J on a+bit+ation specificall4 p+o,i0es;
P+o,i0e0 al8a4s that in case an4 0ispute o+ 0iffe+ence shall a+ise bet8een the O8ne+ o+ the P+o:ect Mana1e+ on his behalf an0 the Cont+acto+' eithe+
0u+in1 the p+o1+ess o+ afte+ the co9pletion o+ aban0on9ent of the Fo+<s as to the const+uction of this Cont+act o+ as to an4 9atte+ o+ thin1 of
8hatsoe,e+ natu+e a+isin1 the+eun0e+ o+ in connection the+e8ith Cinclu0in1 an4 9atte+ o+ bein1 left b4 this Cont+act to the 0isc+etion of the P+o:ect
Mana1e+ o+ the 8ithhol0in1 b4 the P+o:ect Mana1e+ of an4 ce+tificate to 8hich the Cont+acto+ 9a4 clai9 to be entitle0 o+ the 9easu+e9ent an0
,aluation 9entione0 in clause @! CJD CaD of these Con0itionsN o+ the +i1hts an0 liabilities of the pa+ties un0e+ clauses =J' =A' @= o+ @@ of these
Con0itionsD' the O8ne+ an0 the Cont+acto+ he+eb4 a1+ee to eBe+t all effo+ts to settle thei+ 0iffe+ences o+ 0ispute a9icabl4. Failin1 these effo+ts then
such 0ispute o+ 0iffe+ence shall be +efe++e0 to (+bit+ation in acco+0ance 8ith the +ules an0 p+oce0u+es of the Philippine (+bit+ation .a8.
The fact that sai0 con0itions of cont+act containin1 the a+bit+ation clause bea+ onl4 the initials of +espon0ent Co+po+ationNs +ep+esentati,es' )a4ani
Fe+nan0o an0 Re4nal0o 0e la C+u3' 8ithout that of the +ep+esentati,e of petitione+ Shan1+i?.a P+ope+ties' Inc. 0oes not 9ilitate a1ainst its effecti,it4.
Sai0 petitione+ ha,in1 cate1o+icall4 a09itte0 that the 0ocu9ent' (nneB ( to its +epl4 0ate0 (u1ust =A' ##@ C(nneB G' petitionD' is the a1+ee9ent
bet8een the pa+ties' the initial o+ si1natu+e of sai0 petitione+Ns +ep+esentati,e to si1nif4 confo+9it4 to a+bit+ation is no lon1e+ necessa+4. The pa+ties'
the+efo+e' shoul0 be allo8e0 to sub9it thei+ 0ispute to a+bit+ation in acco+0ance 8ith thei+ a1+ee9ent.
=. The +espon0ent Cou+t hel0 that petitione+s Ha+e in 0efault in p+ocee0in1 8ith such a+bit+ation.H It too< note of Hthe fact that un0e+ the
suppose0 (+bit+ation Clause in,o<e0 b4 0efen0ants' it is +e7ui+e0 that HNotice of the 0e9an0 fo+ a+bit+ation of a 0ispute shall be file0 in 8+itin1 8ith
the othe+ pa+t4 . . . in no case . . . late+ than the ti9e of final pa49ent'H 8hich appa+entl4' ha0 elapse0' not onl4 because 0efen0ants ha0 ta<en
possession of the finishe0 8o+<s an0 the plaintiffNs billin1s fo+ the pa49ent the+eof ha0 +e9aine0 pen0in1 since No,e9be+' ## up to the filin1 of
this case on %ul4 &' ##@' but also fo+ the +eason that 0efen0ants ha,e faile0 to file an4 8+itten notice of an4 0e9an0 fo+ a+bit+ation 0u+in1 the sai0
lon1 pe+io0 of one 4ea+ an0 ei1ht 9onths' . . . .H
Respon0ent Cou+t has o,e+loo<e0 the fact that un0e+ the a+bit+ation
clause I
Notice of the 0e9an0 fo+ a+bit+ation 0ispute shall be file0 in 8+itin1 8ith the othe+ pa+t4 to the cont+act an0 a cop4 file0 8ith the P+o:ect Mana1e+. The
0e9an0 fo+ a+bit+ation shall be 9a0e 8ithin a +easonable ti9e afte+ the 0ispute has a+isen an0 atte9pts to settle a9icabl4 ha0 faile0E in no case'
ho8e,e+' shall the 0e9an0 be 9a0e late+ than the ti9e of final pa49ent eBcept as othe+8ise eBp+essl4 stipulate0 in the cont+act Ce9phasis supplie0D
7uote0 in its o+0e+ C(nneB (' petitionD. (s the +espon0ent Cou+t the+e sai0' afte+ the final 0e9an0 to pa4 the a9ount of P!'$$@'!.J=' instea0 of
pa4in1' petitione+s set up its o8n clai9 a1ainst +espon0ent Co+po+ation in the a9ount of P==!'!!!'!!!.!! an0 set a confe+ence the+eon on %ul4 ='
##@. Sai0 confe+ence p+o,e0 futile. The neBt 0a4' %ul4 &' ##@' +espon0ent Co+po+ation file0 its co9plaint a1ainst petitione+s. On (u1ust @' ##@'
petitione+s 8+ote to +espon0ent Co+po+ation +e7uestin1 a+bit+ation. Un0e+ the ci+cu9stances' it cannot be sai0 that petitione+sN +eso+t to a+bit+ation
8as 9a0e be4on0 +easonable ti9e. Neithe+ can the4 be consi0e+e0 in 0efault of thei+ obli1ation to +espon0ent Co+po+ation.
-ence' this petition befo+e this Cou+t. Petitione+ assi1ns the follo8in1 e++o+s;
(
29
T-E COURT OF (PPE(.S ERRED IN ISSUING T-E ERTR(ORDIN(R6 FRIT OF CERTIOR(RI (.T-OUG- T-E REMED6 OF (PPE(. F(S
(V(I.().E TO RESPONDENTS.
)
T-E COURT OF (PPE(.S ERRED IN FINDING GR(VE ()USE OF DISCRETION IN T-E F(CTU(. FINDINGS OF T-E TRI(. COURT T-(T;
CiD T-E P(RTIES DID NOT ENTER INTO (N (GREEMENT TO (R)ITR(TE.
CiiD (SSUMING T-(T T-E P(RTIES DID ENTER INTO T-E (GREEMENT TO (R)ITR(TE' RESPONDENTS (RE (.RE(D6 IN DEF(U.T
IN INVO*ING T-E (GREEMENT TO (R)ITR(TE.
On the fi+st assi1ne0 e++o+' petitione+ conten0s that the O+0e+ of the lo8e+ cou+t 0en4in1 the 9otion to suspen0 p+ocee0in1s His a +esolution of an
inci0ent on the 9e+its.H (s such' upon the continuation of the p+ocee0in1s' the lo8e+ cou+t 8oul0 app+eciate the e,i0ence a00uce0 in thei+ totalit4
an0 the+eafte+ +en0e+ a 0ecision on the 9e+its that 9a4 o+ 9a4 not sustain the eBistence of an a+bit+ation clause. ( 0ecision containin1 a fin0in1 that
the cont+act has no a+bit+ation clause can then be ele,ate0 to a hi1he+ cou+t Hin an o+0ina+4 appealH 8he+e an a0e7uate +e9e04 coul0 be obtaine0.
-ence' to petitione+' the Cou+t of (ppeals shoul0 ha,e 0is9isse0 the petition fo+ ce+tio+a+i because the +e9e04 of appeal 8oul0 still be a,ailable to
p+i,ate +espon0ents at the p+ope+ ti9e. "
The abo,e contention is 8ithout 9e+it.
The +ule that the special ci,il action of ce+tio+a+i 9a4 not be in,o<e0 as a substitute fo+ the +e9e04 of appeal is succinctl4 +eite+ate0 in On1sitco ,.
Cou+t of (ppeals $ as follo8s;
. . . . Countless ti9es in the past' this Cou+t has hel0 that H8he+e appeal is the p+ope+ +e9e04' ce+tio+a+i 8ill not lie.H The 8+its of ce+tio+a+i an0
p+ohibition a+e +e9e0ies to co++ect lac< o+ eBcess of :u+is0iction o+ 1+a,e abuse of 0isc+etion e7ui,alent to lac< of :u+is0iction co99itte0 b4 a lo8e+
cou+t. HFhe+e the p+ope+ +e9e04 is appeal' the action fo+ ce+tio+a+i 8ill not be ente+taine0. . . . Ce+tio+a+i is not a +e9e04 fo+ e++o+s of :u019ent.
E++o+s of :u019ent a+e co++ectible b4 appeal' e++o+s of :u+is0iction a+e +e,ie8able b4 ce+tio+a+i.H
Rule AJ is ,e+4 clea+. The eBt+ao+0ina+4 +e9e0ies of ce+tio+a+i' p+ohibition an0 9an0a9us a+e a,ailable onl4 8hen Hthe+e is no appeal o+ an4 plain'
spee04 an0 a0e7uate +e9e04 in the o+0ina+4 cou+se of la8 . . . .H That is 8h4 the4 a+e +efe++e0 to as HeBt+ao+0ina+4.H . . . .
The Cou+t has li<e8ise +ule0 that Hce+tio+a+i 8ill not be issue0 to cu+e e++o+s in p+ocee0in1s o+ co++ect e++oneous conclusions of la8 o+ fact. (s lon1
as a cou+t acts 8ithin its :u+is0iction' an4 alle1e0 e++o+s co99itte0 in the eBe+cise of its :u+is0iction 8ill a9ount to nothin1 9o+e than e++o+s of
:u019ent 8hich a+e +e,ie8able b4 ti9el4 appeal an0 not b4 a special ci,il action of ce+tio+a+i.H #
This is not eBactl4 so in the instant case. Fhile this Cou+t 0oes not 0en4 the e,entual :u+is0iction of the lo8e+ cou+t o,e+ the cont+o,e+s4' the issue
pose0 basicall4 is 8hethe+ the lo8e+ cou+t p+e9atu+el4 assu9e0 :u+is0iction o,e+ it. If the lo8e+ cou+t in0ee0 p+e9atu+el4 assu9e0 :u+is0iction o,e+
the case' then it beco9es an e++o+ of :u+is0iction 8hich is a p+ope+ sub:ect of a petition fo+ ce+tio+a+i befo+e the Cou+t of (ppeals. (n0 if the lo8e+
cou+t 0oes not ha,e :u+is0iction o,e+ the cont+o,e+s4' then an4 0ecision o+ o+0e+ it 9a4 +en0e+ 9a4 be annulle0 an0 set asi0e b4 the appellate cou+t.
-o8e,e+' the 7uestion of :u+is0iction' 8hich is a 7uestion of la8 0epen0s on the 0ete+9ination of the eBistence of the a+bit+ation clause' 8hich is a
7uestion of fact. In the instant case' the lo8e+ cou+t foun0 that the+e eBists an a+bit+ation clause. -o8e,e+' it +ule0 that in conte9plation of la8' sai0
a+bit+ation clause 0oes not eBist.
The issue' the+efo+e' pose0 befo+e the Cou+t of (ppeals in a petition fo+ ce+tio+a+i is 8hethe+ the (+bit+ation Clause 0oes not in fact eBist. On its face'
the the 7uestion is one of fact 8hich is not p+ope+ in a petition fo+ ce+tio+a+i.
The Cou+t of (ppeals foun0 that an (+bit+ation Clause 0oes in fact eBist. In +esol,in1 sai0 7uestion of fact' the Cou+t of (ppeals inte+p+ete0 the
const+uction of the sub:ect cont+act 0ocu9ents containin1 the (+bit+ation Clause in acco+0ance 8ith Republic (ct No. $"A C(+bit+ation .a8D an0
eBistin1 :u+isp+u0ence 8hich 8ill be eBtensi,el4 0iscusse0 he+eun0e+. In effect' the issue pose0 befo+e the Cou+t of (ppeals 8as li<e8ise a 7uestion
of la8. )ein1 a 7uestion of la8' the p+i,ate +espon0ents +i1htfull4 in,o<e0 the special ci,il action of ce+tio+a+i.
It is that 9o0e of appeal ta<en b4 p+i,ate +espon0ents befo+e the Cou+t of (ppeals that is bein1 7uestione0 b4 the petitione+s befo+e this Cou+t. )ut at
the hea+t of sai0 issue is the 7uestion of 8hethe+ the+e eBists an (+bit+ation Clause because if an (+bit+ation Clause 0oes not eBist' then p+i,ate
+espon0ents too< the 8+on1 9o0e of appeal befo+e the Cou+t of (ppeals.
Fo+ this Cou+t to be able to +esol,e the 7uestion of 8hethe+ p+i,ate +espon0ents too< the p+ope+ 9o0e of appeal' 8hich' inci0entall4' is a 7uestion of
la8' then it has to ans8e+ the co+e issue of 8hethe+ the+e eBists an (+bit+ation Clause 8hich' a09itte0l4' is a 7uestion of fact.
30
Mo+eo,e+' 8he+e a +i1i0 application of the +ule that ce+tio+a+i cannot be a substitute fo+ appeal 8ill +esult in a 9anifest failu+e o+ 9isca++ia1e of :ustice'
the p+o,isions of the Rules of Cou+t 8hich a+e technical +ules 9a4 be +elaBe0. ! (s 8e shall sho8 he+eun0e+' ha0 the Cou+t of (ppeals 0is9isse0
the petition fo+ ce+tio+a+i' the issue of 8hethe+ o+ not an a+bit+ation clause eBists in the cont+act 8oul0 not ha,e been +esol,e0 in acco+0ance 8ith
e,i0ence eBtant in the +eco+0 of the case. Conse7uentl4' this 8oul0 ha,e +esulte0 in a :u0icial +e:ection of a cont+actual p+o,ision a1+ee0 b4 the
pa+ties to the cont+act.
In the sa9e ,ein' this Cou+t hol0s that the 7uestion of the eBistence of the a+bit+ation clause in the cont+act bet8een petitione+ an0 p+i,ate
+espon0ents is a le1al issue that 9ust be 0ete+9ine0 in this petition fo+ +e,ie8 on ce+tio+a+i.
Petitione+' 8hile not 0en4in1 that the+e eBists an a+bit+ation clause in the cont+act in 7uestion' asse+ts that in conte9plation of la8 the+e coul0 not
ha,e been one consi0e+in1 the follo8in1 points. Fi+st' the t+ial cou+t foun0 that the Hcon0itions of cont+actH e9bo04in1 the a+bit+ation clause is not
0ul4 si1ne0 b4 the pa+ties. Secon0' p+i,ate +espon0ents 9is+ep+esente0 befo+e the Cou+t of (ppeals that the4 p+o0uce0 in the t+ial cou+t a nota+i3e0
0uplicate o+i1inal cop4 of the const+uction a1+ee9ent because 8hat 8e+e sub9itte0 8e+e 9e+e photocopies the+eof. The cont+actCsD int+o0uce0 in
cou+t b4 p+i,ate +espon0ents 8e+e the+efo+e Hof 0ubious authenticit4H because; CaD the (1+ee9ent fo+ the EBecution of )uil0e+Ns Fo+< fo+ the EDS(
Pla3a P+o:ect 0oes not contain an a+bit+ation clause' CbD p+i,ate +espon0ents Hsu++eptitiousl4 attache0 as (nneBes HG?@H to HG?JH to thei+ petition
befo+e the Cou+t of (ppeals but these 0ocu9ents a+e not pa+ts of the (1+ee9ent of the pa+ties as Hthe+e 8as no fo+9al t+a0e cont+act eBecute0'H CcD
if the enti+e co9pilation of 0ocu9ents His in0ee0 a fo+9al t+a0e cont+act'H then it shoul0 ha,e been 0ul4 nota+i3e0' C0D the ce+tification f+o9 the
Reco+0s Mana1e9ent an0 (+chi,es Office 0ate0 (u1ust =A' ##@ 9e+el4 states that Hthe nota+ial +eco+0 of Nilbe+to )+iones . . . is a,ailable in the
files of Csai0D office as Nota+ial Re1ist+4 Ent+4 onl4'H CeD the sa9e ce+tification attests that the 0ocu9ent ente+e0 in the nota+ial +e1ist+4 pe+tains to the
(+ticles of (1+ee9ent onl4 8ithout an4 othe+ acco9pan4in1 0ocu9ents' an0 the+efo+e' it is not a fo+9al t+a0e cont+act' an0 CfD the co9pilation
sub9itte0 b4 +espon0ents a+e a H9e+e ho01e?po01e of 0ocu9ents an0 0o not constitute a sin1le intelli1ible a1+ee9ent.H
In othe+ 8o+0s' petitione+ 0enies the eBistence of the a+bit+ation clause p+i9a+il4 on the 1+oun0 that the +ep+esentati,es of the cont+actin1
co+po+ations 0i0 not si1n the HCon0itions of Cont+actH that containe0 the sai0 clause. Its othe+ contentions' specificall4 that insinuatin1 f+au0 as
+e1a+0s the alle1e0 inse+tion of the a+bit+ation clause' a+e 7uestions of fact that shoul0 ha,e been th+eshe0 out belo8.
This Cou+t 9a4 as 8ell p+ocee0 to 0ete+9ine 8hethe+ the a+bit+ation clause 0oes eBist in the pa+tiesN cont+act. Republic (ct No. $"A p+o,i0es fo+ the
fo+9al +e7uisites of an a+bit+ation a1+ee9ent as follo8s;
Sec. &. Fo+9 of a+bit+ation a1+ee9ent. I ( cont+act to a+bit+ate a cont+o,e+s4 the+eafte+ a+isin1 bet8een the pa+ties' as 8ell as a sub9ission to
a+bit+ate an eBistin1 cont+o,e+s4' shall be in 8+itin1 an0 subsc+ibe0 b4 the pa+t4 sou1ht to be cha+1e0' o+ b4 his la8ful a1ent.
The 9a<in1 of a cont+act o+ sub9ission fo+ a+bit+ation 0esc+ibe0 in section t8o he+eof' p+o,i0in1 fo+ a+bit+ation of an4 cont+o,e+s4' shall be 0ee9e0 a
consent of the pa+ties of the p+o,ince o+ cit4 8he+e an4 of the pa+ties +esi0es' to enfo+ce such cont+act of sub9ission. CE9phasis supplie0.D.
The fo+9al +e7ui+e9ents of an a1+ee9ent to a+bit+ate a+e the+efo+e the follo8in1; CaD it 9ust be in 8+itin1 an0 CbD it 9ust be subsc+ibe0 b4 the pa+ties
o+ thei+ +ep+esentati,es. The+e is no 0en4in1 that the pa+ties ente+e0 into a 8+itten cont+act that 8as sub9itte0 in e,i0ence befo+e the lo8e+ cou+t. To
Hsubsc+ibeH 9eans to 8+ite un0e+neath' as oneNs na9eE to si1n at the en0 of a 0ocu9ent. That 8o+0 9a4 so9eti9es be const+ue0 to 9ean to 1i,e
consent to o+ to attest. =
The Cou+t fin0s that' upon a sc+utin4 of the +eco+0s of this case' these +e7uisites 8e+e co9plie0 8ith in the cont+act in 7uestion. The (+ticles of
(1+ee9ent' 8hich inco+po+ates all the othe+ cont+acts an0 a1+ee9ents bet8een the pa+ties' 8as si1ne0 b4 +ep+esentati,es of both pa+ties an0 0ul4
nota+i3e0. The failu+e of the p+i,ate +espon0entNs +ep+esentati,e to initial the HCon0itions of Cont+actH 8oul0 the+efo+ not affect co9pliance 8ith the
fo+9al +e7ui+e9ents fo+ a+bit+ation a1+ee9ents because that pa+ticula+ po+tion of the co,enants bet8een the pa+ties 8as inclu0e0 b4 +efe+ence in the
(+ticles of (1+ee9ent.
Petitione+Ns contention that the+e 8as no a+bit+ation clause because the cont+act inco+po+atin1 sai0 p+o,ision is pa+t of a Hho01e?po01eH 0ocu9ent' is
the+efo+e untenable. ( cont+act nee0 not be containe0 in a sin1le 8+itin1. It 9a4 be collecte0 f+o9 se,e+al 0iffe+ent 8+itin1s 8hich 0o not conflict 8ith
each othe+ an0 8hich' 8hen connecte0' sho8 the pa+ties' sub:ect 9atte+' te+9s an0 consi0e+ation' as in cont+acts ente+e0 into b4 co++espon0ence.
@ ( cont+act 9a4 be enco9passe0 in se,e+al inst+u9ents e,en thou1h e,e+4 inst+u9ent is not si1ne0 b4 the pa+ties' since it is sufficient if the
unsi1ne0 inst+u9ents a+e clea+l4 i0entifie0 o+ +efe++e0 to an0 9a0e pa+t of the si1ne0 inst+u9ent o+ inst+u9ents. Si9ila+l4' a 8+itten a1+ee9ent of
8hich the+e a+e t8o copies' one si1ne0 b4 each of the pa+ties' is bin0in1 on both to the sa9e eBtent as thou1h the+e ha0 been onl4 one cop4 of the
a1+ee9ent an0 both ha0 si1ne0 it. &
The fla8 in petitione+Ns contentions the+efo+e lies in its ha,in1 se19ente0 the ,a+ious co9ponents of the 8hole cont+act bet8een the pa+ties into
se,e+al pa+ts. This not8ithstan0in1' petitione+ i+onicall4 a09its the eBecution of the (+ticles of (1+ee9ent. Notabl4' too' the lo8e+ cou+t foun0 that the
sai0 (+ticles of (1+ee9ent Halso p+o,i0es that the NCont+act Docu9entsN the+ein liste0 Nshall be 0ee9e0 an inte1+al pa+t of this (1+ee9ent'N an0 one of
the sai0 0ocu9ents is the NCon0itions of Cont+actN 8hich contains the (+bit+ation Clause.NH It is this (+ticles of (1+ee9ent that 8as 0ul4 si1ne0 b4
Rufo ). Cola4co' p+esi0ent of p+i,ate +espon0ent SPI' an0 )a4ani F. Fe+nan0o' p+esi0ent of petitione+ co+po+ation. The sa9e a1+ee9ent 8as 0ul4
31
subsc+ibe0 befo+e nota+4 public Nilbe+to R. )+iones. In othe+ 8o+0s' the subsc+iption of the p+incipal a1+ee9ent effecti,el4 co,e+e0 the othe+
0ocu9ents inco+po+ate0 b4 +efe+ence the+ein.
This Cou+t li<e8ise 0oes not fin0 that the Cou+t of (ppeals e++e0 in +ulin1 that p+i,ate +espon0ents 8e+e not in 0efault in in,o<in1 the p+o,isions of the
a+bit+ation clause 8hich states that HCtDhe 0e9an0 fo+ a+bit+ation shall be 9a0e 8ithin a +easonable ti9e afte+ the 0ispute has a+isen an0 atte9pts to
settle a9icabl4 ha0 faile0.H Un0e+ the factual 9ilieu' p+i,ate +espon0ent SPI shoul0 ha,e pai0 its liabilities tin0e+ the cont+act in acco+0ance 8ith its
te+9s. -o8e,e+' 9isun0e+stan0in1s appea+e0 to ha,e c+oppe0 up bet8een the pa+ties ostensibl4 b+ou1ht about b4 eithe+ 0ela4 in the co9pletion of
the const+uction 8o+< o+ b4 fo+ce 9a:eu+e o+ the fi+e that pa+tiall4 1utte0 the p+o:ect. The al9ost t8o?4ea+ 0ela4 in pa4in1 its liabilities 9a4 not
the+efo+e be 8holl4 asc+ibe0 to p+i,ate +espon0ent SPI.
)esi0es' p+i,ate +espon0ent SPINs initiati,e in callin1 fo+ a confe+ence bet8een the pa+ties 8as a step to8a+0s the a1+ee0 +eso+t to a+bit+ation.
-o8e,e+' petitione+ posthaste file0 the co9plaint befo+e the lo8e+ cou+t. Thus' 8hile p+i,ate +espon0ent SPINs +e7uest fo+ a+bit+ation on (u1ust @'
##@ 9i1ht appea+ an afte+thou1ht as it 8as 9a0e afte+ it ha0 file0 the 9otion to suspen0 p+ocee0in1s' it 8as because petitione+ also appea+e0 to
act hastil4 in o+0e+ to +esol,e the cont+o,e+s4 th+ou1h the cou+ts.
The a+bit+ation clause p+o,i0es fo+ a H+easonable ti9eH 8ithin 8hich the pa+ties 9a4 a,ail of the +elief un0e+ that clause. HReasonablenessH is a
+elati,e te+9 an0 the 7uestion of 8hethe+ the ti9e 8ithin 8hich an act has to be 0one is +easonable 0epen0s on atten0ant ci+cu9stances. J This
Cou+t fin0s that un0e+ the ci+cu9stances obtainin1 in this case' a one?9onth pe+io0 f+o9 the ti9e the pa+ties hel0 a confe+ence on %ul4 =' ##@ until
p+i,ate +espon0ent SPI notifie0 petitione+ that it 8as in,o<in1 the a+bit+ation clause' is a +easonable ti9e. In0ee0' petitione+ 9a4 not be faulte0 fo+
+eso+tin1 to the cou+t to clai9 8hat 8as 0ue it un0e+ the cont+act. -o8e,e+' 8e fin0 its 0enial of the eBistence of the a+bit+ation clause as an atte9pt
to co,e+ up its 9isstep in hu++ie0l4 filin1 the co9plaint befo+e the lo8e+ cou+t.
In this connection' it bea+s st+essin1 that the lo8e+ cou+t has not lost its :u+is0iction o,e+ the case. Section " of Republic (ct No. $"A p+o,i0es that
p+ocee0in1s the+ein ha,e onl4 been sta4e0. (fte+ the special p+ocee0in1 of a+bit+ation A has been pu+sue0 an0 co9plete0' then the lo8e+ cou+t 9a4
confi+9 the a8a+0 " 9a0e b4 the a+bit+ato+.
It shoul0 be note0 that in this :u+is0iction' a+bit+ation has been hel0 ,ali0 an0 constitutional. E,en befo+e the app+o,al on %une #' #J@ of Republic
(ct No. $"A' this Cou+t has countenance0 the settle9ent of 0isputes th+ou1h a+bit+ation. $ Republic (ct No. $"A 8as a0opte0 to supple9ent the
Ne8 Ci,il Co0eNs p+o,isions on a+bit+ation. # Its potentials as one of the alte+nati,e 0ispute +esolution 9etho0s that a+e no8 +i1htfull4 ,aunte0 as
Hthe 8a,e of the futu+eH in inte+national +elations' is +eco1ni3e0 8o+l08i0e. To b+ush asi0e a cont+actual a1+ee9ent callin1 fo+ a+bit+ation in case of
0isa1+ee9ent bet8een the pa+ties 8oul0 the+efo+e be a step bac<8a+0.
F-EREFORE' the 7uestione0 Decision of the Cou+t of (ppeals is he+eb4 (FFIRMED an0 the petition fo+ ce+tio+a+i DENIED. This Decision is
i99e0iatel4 eBecuto+4. Costs a1ainst petitione+.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. &@J$ %anua+4 "' =!!$
*ORE( TEC-NO.OGIES CO.' .TD.' petitione+'
,s.
-ON. (.)ERTO (. .ERM(' in his capacit4 as P+esi0in1 %u01e of )+anch =JA of Re1ional T+ial Cou+t of Muntinlupa Cit4' an0 P(CIFIC GENER(.
STEE. M(NUF(CTURING CORPOR(TION' +espon0ents.
D E C I S I O N
VE.(SCO' %R.' %.;
In ou+ :u+is0iction' the polic4 is to fa,o+ alte+nati,e 9etho0s of +esol,in1 0isputes' pa+ticula+l4 in ci,il an0 co99e+cial 0isputes. (+bit+ation alon1 8ith
9e0iation' conciliation' an0 ne1otiation' bein1 ineBpensi,e' spee04 an0 less hostile 9etho0s ha,e lon1 been fa,o+e0 b4 this Cou+t. The petition
befo+e us puts at issue an a+bit+ation clause in a cont+act 9utuall4 a1+ee0 upon b4 the pa+ties stipulatin1 that the4 8oul0 sub9it the9sel,es to
a+bit+ation in a fo+ei1n count+4. Re1+ettabl4' instea0 of hastenin1 the +esolution of thei+ 0ispute' the pa+ties 8ittin1l4 o+ un8ittin1l4 p+olon1e0 the
cont+o,e+s4.
32
Petitione+ *o+ea Technolo1ies Co.' .t0. C*OGIESD is a *o+ean co+po+ation 8hich is en1a1e0 in the suppl4 an0 installation of .i7uefie0 Pet+oleu9
Gas C.PGD C4lin0e+ 9anufactu+in1 plants' 8hile p+i,ate +espon0ent Pacific Gene+al Steel Manufactu+in1 Co+p. CPGSMCD is a 0o9estic co+po+ation.
On Ma+ch J' ##"' PGSMC an0 *OGIES eBecute0 a Cont+act 8he+eb4 *OGIES 8oul0 set up an .PG C4lin0e+ Manufactu+in1 Plant in Ca+9ona'
Ca,ite. The cont+act 8as eBecute0 in the Philippines. On (p+il "' ##"' the pa+ties eBecute0' in *o+ea' an (9en09ent fo+ Cont+act No. *.P?#"!@!
0ate0 Ma+ch J' ##"= a9en0in1 the te+9s of pa49ent. The cont+act an0 its a9en09ent stipulate0 that *OGIES 8ill ship the 9achine+4 an0 facilities
necessa+4 fo+ 9anufactu+in1 .PG c4lin0e+s fo+ 8hich PGSMC 8oul0 pa4 USD '==&'!!!. *OGIES 8oul0 install an0 initiate the ope+ation of the plant
fo+ 8hich PGSMC boun0 itself to pa4 USD @!A'!!! upon the plant>s p+o0uction of the ?<1. .PG c4lin0e+ sa9ples. Thus' the total cont+act p+ice
a9ounte0 to USD 'J@!'!!!.
On Octobe+ &' ##"' PGSMC ente+e0 into a Cont+act of .ease@ 8ith Fo+th P+ope+ties' Inc. CFo+thD fo+ use of Fo+th>s J'!"#?s7ua+e 9ete+ p+ope+t4
8ith a &'!@=?s7ua+e 9ete+ 8a+ehouse buil0in1 to house the .PG 9anufactu+in1 plant. The 9onthl4 +ental 8as PhP @=='JA! co99encin1 on %anua+4
' ##$ 8ith a !K annual inc+e9ent clause. Subse7uentl4' the 9achine+ies' e7uip9ent' an0 facilities fo+ the 9anufactu+e of .PG c4lin0e+s 8e+e
shippe0' 0eli,e+e0' an0 installe0 in the Ca+9ona plant. PGSMC pai0 *OGIES USD '==&'!!!.
-o8e,e+' 1leane0 f+o9 the Ce+tificate& eBecute0 b4 the pa+ties on %anua+4 ==' ##$' afte+ the installation of the plant' the initial ope+ation coul0 not
be con0ucte0 as PGSMC encounte+e0 financial 0ifficulties affectin1 the suppl4 of 9ate+ials' thus fo+cin1 the pa+ties to a1+ee that *OGIES 8oul0 be
0ee9e0 to ha,e co9pletel4 co9plie0 8ith the te+9s an0 con0itions of the Ma+ch J' ##" cont+act.
Fo+ the +e9ainin1 balance of USD@!A'!!! fo+ the installation an0 initial ope+ation of the plant' PGSMC issue0 t8o post0ate0 chec<s; CD )PI Chec<
No. !@A&= 0ate0 %anua+4 @!' ##$ fo+ PhP &'J!!'!!!E an0 C=D )PI Chec< No. !@A&@ 0ate0 Ma+ch @!' ##$ fo+ PhP &'J!!'!!!.J
Fhen *OGIES 0eposite0 the chec<s' these 8e+e 0ishono+e0 fo+ the +eason HP(6MENT STOPPED.H Thus' on Ma4 $' ##$' *OGIES sent a 0e9an0
lette+A to PGSMC th+eatenin1 c+i9inal action fo+ ,iolation of )atas Pa9bansa )l1. == in case of nonpa49ent. On the sa9e 0ate' the 8ife of
PGSMC>s P+esi0ent faBe0 a lette+ 0ate0 Ma4 "' ##$ to *OGIES> P+esi0ent 8ho 8as then sta4in1 at a Ma<ati Cit4 hotel. She co9plaine0 that not
onl4 0i0 *OGIES 0eli,e+ a 0iffe+ent b+an0 of h40+aulic p+ess f+o9 that a1+ee0 upon but it ha0 not 0eli,e+e0 se,e+al e7uip9ent pa+ts al+ea04 pai0 fo+.
On Ma4 &' ##$' PGSMC +eplie0 that the t8o chec<s it issue0 *OGIES 8e+e full4 fun0e0 but the pa49ents 8e+e stoppe0 fo+ +easons p+e,iousl4
9a0e <no8n to *OGIES."
On %une ' ##$' PGSMC info+9e0 *OGIES that PGSMC 8as cancelin1 thei+ Cont+act 0ate0 Ma+ch J' ##" on the 1+oun0 that *OGIES ha0
alte+e0 the 7uantit4 an0 lo8e+e0 the 7ualit4 of the 9achine+ies an0 e7uip9ent it 0eli,e+e0 to PGSMC' an0 that PGSMC 8oul0 0is9antle an0 t+ansfe+
the 9achine+ies' e7uip9ent' an0 facilities installe0 in the Ca+9ona plant. Fi,e 0a4s late+' PGSMC file0 befo+e the Office of the Public P+osecuto+ an
(ffi0a,it?Co9plaint fo+ Estafa 0oc<ete0 as I.S. No. #$?!@$@ a1ainst M+. Dae -4un *an1' P+esi0ent of *OGIES.
On %une J' ##$' *OGIES 8+ote PGSMC info+9in1 the latte+ that PGSMC coul0 not unilate+all4 +escin0 thei+ cont+act no+ 0is9antle an0 t+ansfe+
the 9achine+ies an0 e7uip9ent on 9e+e i9a1ine0 ,iolations b4 *OGIES. It also insiste0 that thei+ 0isputes shoul0 be settle0 b4 a+bit+ation as a1+ee0
upon in (+ticle J' the a+bit+ation clause of thei+ cont+act.
On %une =@' ##$' PGSMC a1ain 8+ote *OGIES +eite+atin1 the contents of its %une ' ##$ lette+ th+eatenin1 that the 9achine+ies' e7uip9ent' an0
facilities installe0 in the plant 8oul0 be 0is9antle0 an0 t+ansfe++e0 on %ul4 &' ##$. Thus' on %ul4 ' ##$' *OGIES institute0 an (pplication fo+
(+bit+ation befo+e the *o+ean Co99e+cial (+bit+ation )oa+0 C*C()D in Seoul' *o+ea pu+suant to (+t. J of the Cont+act as a9en0e0.
On %ul4 @' ##$' *OGIES file0 a Co9plaint fo+ Specific Pe+fo+9ance' 0oc<ete0 as Ci,il Case No. #$?"$ a1ainst PGSMC befo+e the Muntinlupa
Cit4 Re1ional T+ial Cou+t CRTCD. The RTC 1+ante0 a te9po+a+4 +est+ainin1 o+0e+ CTROD on %ul4 &' ##$' 8hich 8as subse7uentl4 eBten0e0 until %ul4
==' ##$. In its co9plaint' *OGIES alle1e0 that PGSMC ha0 initiall4 a09itte0 that the chec<s that 8e+e stoppe0 8e+e not fun0e0 but late+ on
clai9e0 that it stoppe0 pa49ent of the chec<s fo+ the +eason that Hthei+ ,alue 8as not +ecei,e0H as the fo+9e+ alle1e0l4 b+eache0 thei+ cont+act b4
Halte+in1 the 7uantit4 an0 lo8e+in1 the 7ualit4 of the 9achine+4 an0 e7uip9entH installe0 in the plant an0 faile0 to 9a<e the plant ope+ational althou1h
it ea+lie+ ce+tifie0 to the cont+a+4 as sho8n in a %anua+4 ==' ##$ Ce+tificate. .i<e8ise' *OGIES a,e++e0 that PGSMC ,iolate0 (+t. J of thei+
Cont+act' as a9en0e0' b4 unilate+all4 +escin0in1 the cont+act 8ithout +eso+tin1 to a+bit+ation. *OGIES also as<e0 that PGSMC be +est+aine0 f+o9
0is9antlin1 an0 t+ansfe++in1 the 9achine+4 an0 e7uip9ent installe0 in the plant 8hich the latte+ th+eatene0 to 0o on %ul4 &' ##$.
On %ul4 #' ##$' PGSMC file0 an opposition to the TRO a+1uin1 that *OGIES 8as not entitle0 to the TRO since (+t. J' the a+bit+ation clause' 8as
null an0 ,oi0 fo+ bein1 a1ainst public polic4 as it ousts the local cou+ts of :u+is0iction o,e+ the instant cont+o,e+s4.
On %ul4 "' ##$' PGSMC file0 its (ns8e+ 8ith Co9pulso+4 Counte+clai9# asse+tin1 that it ha0 the full +i1ht to 0is9antle an0 t+ansfe+ the
9achine+ies an0 e7uip9ent because it ha0 pai0 fo+ the9 in full as stipulate0 in the cont+actE that *OGIES 8as not entitle0 to the PhP #'!!!'!!!
co,e+e0 b4 the chec<s fo+ failin1 to co9pletel4 install an0 9a<e the plant ope+ationalE an0 that *OGIES 8as liable fo+ 0a9a1es a9ountin1 to PhP
&'J!!'!!! fo+ alte+in1 the 7uantit4 an0 lo8e+in1 the 7ualit4 of the 9achine+ies an0 e7uip9ent. Mo+eo,e+' PGSMC a,e++e0 that it has al+ea04 pai0
33
PhP ='=J"'#=! in +ent Cco,e+in1 %anua+4 to %ul4 ##$D to Fo+th an0 it 8as not 8illin1 to fu+the+ shoul0e+ the cost of +entin1 the p+e9ises of the plant
consi0e+in1 that the .PG c4lin0e+ 9anufactu+in1 plant ne,e+ beca9e ope+ational.
(fte+ the pa+ties sub9itte0 thei+ Me9o+an0a' on %ul4 =@' ##$' the RTC issue0 an O+0e+ 0en4in1 the application fo+ a 8+it of p+eli9ina+4 in:unction'
+easonin1 that PGSMC ha0 pai0 *OGIES USD '==&'!!!' the ,alue of the 9achine+ies an0 e7uip9ent as sho8n in the cont+act such that *OGIES
no lon1e+ ha0 p+op+ieta+4 +i1hts o,e+ the9. (n0 finall4' the RTC hel0 that (+t. J of the Cont+act as a9en0e0 8as in,ali0 as it ten0e0 to oust the t+ial
cou+t o+ an4 othe+ cou+t :u+is0iction o,e+ an4 0ispute that 9a4 a+ise bet8een the pa+ties. *OGIES> p+a4e+ fo+ an in:uncti,e 8+it 8as 0enie0.! The
0ispositi,e po+tion of the O+0e+ state0;
F-EREFORE' in ,ie8 of the fo+e1oin1 consi0e+ation' this Cou+t belie,es an0 so hol0s that no co1ent +eason eBists fo+ this Cou+t to 1+ant the 8+it of
p+eli9ina+4 in:unction to +est+ain an0 +ef+ain 0efen0ant f+o9 0is9antlin1 the 9achine+ies an0 facilities at the lot an0 buil0in1 of Fo+th P+ope+ties'
Inco+po+ate0 at Ca+9ona' Ca,ite an0 t+ansfe+ the sa9e to anothe+ site; an0 the+efo+e 0enies plaintiff>s application fo+ a 8+it of p+eli9ina+4 in:unction.
On %ul4 =#' ##$' *OGIES file0 its Repl4 to (ns8e+ an0 (ns8e+ to Counte+clai9. *OGIES 0enie0 it ha0 alte+e0 the 7uantit4 an0 lo8e+e0 the
7ualit4 of the 9achine+4' e7uip9ent' an0 facilities it 0eli,e+e0 to the plant. It clai9e0 that it ha0 pe+fo+9e0 all the un0e+ta<in1s un0e+ the cont+act an0
ha0 al+ea04 p+o0uce0 ce+tifie0 sa9ples of .PG c4lin0e+s. It a,e++e0 that 8hate,e+ 8as unfinishe0 8as PGSMC>s fault since it faile0 to p+ocu+e +a8
9ate+ials 0ue to lac< of fun0s. *OGIES' +el4in1 on Chun1 Fu In0ust+ies CPhils.D' Inc. ,. Cou+t of (ppeals'= insiste0 that the a+bit+ation clause 8as
8ithout 7uestion ,ali0.
(fte+ *OGIES file0 a Supple9ental Me9o+an0u9 8ith Motion to Dis9iss@ ans8e+in1 PGSMC>s 9e9o+an0u9 of %ul4 ==' ##$ an0 see<in1
0is9issal of PGSMC>s counte+clai9s' *OGIES' on (u1ust &' ##$' file0 its Motion fo+ Reconsi0e+ation& of the %ul4 =@' ##$ O+0e+ 0en4in1 its
application fo+ an in:uncti,e 8+it clai9in1 that the cont+act 8as not 9e+el4 fo+ 9achine+4 an0 facilities 8o+th USD '==&'!!! but 8as fo+ the sale of an
H.PG 9anufactu+in1 plantH consistin1 of Hsuppl4 of all the 9achine+4 an0 facilitiesH an0 Ht+ansfe+ of technolo14H fo+ a total cont+act p+ice of USD
'J@!'!!! such that the 0is9antlin1 an0 t+ansfe+ of the 9achine+4 an0 facilities 8oul0 +esult in the 0is9antlin1 an0 t+ansfe+ of the ,e+4 plant itself to
the 1+eat p+e:u0ice of *OGIES as the still unpai0 o8ne+Gselle+ of the plant. Mo+eo,e+' *OGIES points out that the a+bit+ation clause un0e+ (+t. J of
the Cont+act as a9en0e0 8as a ,ali0 a+bit+ation stipulation un0e+ (+t. =!&& of the Ci,il Co0e an0 as hel0 b4 this Cou+t in Chun1 Fu In0ust+ies
CPhils.D' Inc.J
In the 9eanti9e' PGSMC file0 a Motion fo+ Inspection of Thin1sA to 0ete+9ine 8hethe+ the+e 8as in0ee0 alte+ation of the 7uantit4 an0 lo8e+in1 of
7ualit4 of the 9achine+ies an0 e7uip9ent' an0 8hethe+ these 8e+e p+ope+l4 installe0. *OGIES oppose0 the 9otion positin1 that the 7ue+ies an0
issues +aise0 in the 9otion fo+ inspection fell un0e+ the co,e+a1e of the a+bit+ation clause in thei+ cont+act.
On Septe9be+ =' ##$' the t+ial cou+t issue0 an O+0e+ CD 1+antin1 PGSMC>s 9otion fo+ inspectionE C=D 0en4in1 *OGIES> 9otion fo+ +econsi0e+ation
of the %ul4 =@' ##$ RTC O+0e+E an0 C@D 0en4in1 *OGIES> 9otion to 0is9iss PGSMC>s co9pulso+4 counte+clai9s as these counte+clai9s fell 8ithin
the +e7uisites of co9pulso+4 counte+clai9s.
On Octobe+ =' ##$' *OGIES file0 an U+1ent Motion fo+ Reconsi0e+ation" of the Septe9be+ =' ##$ RTC O+0e+ 1+antin1 inspection of the plant
an0 0en4in1 0is9issal of PGSMC>s co9pulso+4 counte+clai9s.
Ten 0a4s afte+' on Octobe+ =' ##$' 8ithout 8aitin1 fo+ the +esolution of its Octobe+ =' ##$ u+1ent 9otion fo+ +econsi0e+ation' *OGIES file0 befo+e
the Cou+t of (ppeals CC(D a petition fo+ ce+tio+a+i$ 0oc<ete0 as C(?G.R. SP No. &#=&#' see<in1 annul9ent of the %ul4 =@' ##$ an0 Septe9be+ ='
##$ RTC O+0e+s an0 p+a4in1 fo+ the issuance of 8+its of p+ohibition' 9an0a9us' an0 p+eli9ina+4 in:unction to en:oin the RTC an0 PGSMC f+o9
inspectin1' 0is9antlin1' an0 t+ansfe++in1 the 9achine+ies an0 e7uip9ent in the Ca+9ona plant' an0 to 0i+ect the RTC to enfo+ce the specific
a1+ee9ent on a+bit+ation to +esol,e the 0ispute.
In the 9eanti9e' on Octobe+ #' ##$' the RTC 0enie0 *OGIES> u+1ent 9otion fo+ +econsi0e+ation an0 0i+ecte0 the )+anch She+iff to p+ocee0 8ith
the inspection of the 9achine+ies an0 e7uip9ent in the plant on Octobe+ =$' ##$.#
The+eafte+' *OGIES file0 a Supple9ent to the Petition=! in C(?G.R. SP No. &#=&# info+9in1 the C( about the Octobe+ #' ##$ RTC O+0e+. It also
+eite+ate0 its p+a4e+ fo+ the issuance of the 8+its of p+ohibition' 9an0a9us an0 p+eli9ina+4 in:unction 8hich 8as not acte0 upon b4 the C(. *OGIES
asse+te0 that the )+anch She+iff 0i0 not ha,e the technical eBpe+tise to asce+tain 8hethe+ o+ not the 9achine+ies an0 e7uip9ent confo+9e0 to the
specifications in the cont+act an0 8e+e p+ope+l4 installe0.
On No,e9be+ ' ##$' the )+anch She+iff file0 his She+iff>s Repo+t= fin0in1 that the enu9e+ate0 9achine+ies an0 e7uip9ent 8e+e not full4 an0
p+ope+l4 installe0.
The Cou+t of (ppeals affi+9e0 the t+ial cou+t an0 0ecla+e0
the a+bit+ation clause a1ainst public polic4
34
On Ma4 @!' =!!!' the C( +en0e+e0 the assaile0 Decision== affi+9in1 the RTC O+0e+s an0 0is9issin1 the petition fo+ ce+tio+a+i file0 b4 *OGIES. The
C( foun0 that the RTC 0i0 not 1+a,el4 abuse its 0isc+etion in issuin1 the assaile0 %ul4 =@' ##$ an0 Septe9be+ =' ##$ O+0e+s. Mo+eo,e+' the C(
+easone0 that *OGIES> contention that the total cont+act p+ice fo+ USD 'J@!'!!! 8as fo+ the 8hole plant an0 ha0 not been full4 pai0 8as cont+a+4 to
the fin0in1 of the RTC that PGSMC full4 pai0 the p+ice of USD '==&'!!!' 8hich 8as fo+ all the 9achine+ies an0 e7uip9ent. (cco+0in1 to the C(' this
0ete+9ination b4 the RTC 8as a factual fin0in1 be4on0 the a9bit of a petition fo+ ce+tio+a+i.
On the issue of the ,ali0it4 of the a+bit+ation clause' the C( a1+ee0 8ith the lo8e+ cou+t that an a+bit+ation clause 8hich p+o,i0e0 fo+ a final
0ete+9ination of the le1al +i1hts of the pa+ties to the cont+act b4 a+bit+ation 8as a1ainst public polic4.
On the issue of nonpa49ent of 0oc<et fees an0 non?attach9ent of a ce+tificate of non?fo+u9 shoppin1 b4 PGSMC' the C( hel0 that the
counte+clai9s of PGSMC 8e+e co9pulso+4 ones an0 pa49ent of 0oc<et fees 8as not +e7ui+e0 since the (ns8e+ 8ith counte+clai9 8as not an
initiato+4 plea0in1. Fo+ the sa9e +eason' the C( sai0 a ce+tificate of non?fo+u9 shoppin1 8as also not +e7ui+e0.
Fu+the+9o+e' the C( hel0 that the petition fo+ ce+tio+a+i ha0 been file0 p+e9atu+el4 since *OGIES 0i0 not 8ait fo+ the +esolution of its u+1ent 9otion
fo+ +econsi0e+ation of the Septe9be+ =' ##$ RTC O+0e+ 8hich 8as the plain' spee04' an0 a0e7uate +e9e04 a,ailable. (cco+0in1 to the C(' the
RTC 9ust be 1i,en the oppo+tunit4 to co++ect an4 alle1e0 e++o+ it has co99itte0' an0 that since the assaile0 o+0e+s 8e+e inte+locuto+4' these cannot
be the sub:ect of a petition fo+ ce+tio+a+i.
-ence' 8e ha,e this Petition fo+ Re,ie8 on Ce+tio+a+i un0e+ Rule &J.
The Issues
Petitione+ posits that the appellate cou+t co99itte0 the follo8in1 e++o+s;
a. PRONOUNCING T-E 2UESTION OF OFNERS-IP OVER T-E M(C-INER6 (ND F(CI.ITIES (S H( 2UESTION OF F(CTH H)E6OND T-E
(M)IT OF ( PETITION FOR CERTIOR(RIH INTENDED ON.6 FOR CORRECTION OF ERRORS OF %URISDICTION OR GR(VE ()USE OF
DISCRETION (MOUNTING TO .(C* OF CSICD ERCESS OF %URISDICTION' (ND CONC.UDING T-(T T-E TRI(. COURT>S FINDING ON T-E
S(ME 2UESTION F(S IMPROPER.6 R(ISED IN T-E PETITION )E.OFE
b. DEC.(RING (S NU.. (ND VOID T-E (R)ITR(TION C.(USE IN (RTIC.E J OF T-E CONTR(CT )ETFEEN T-E P(RTIES FOR )EING
HCONTR(R6 TO PU).IC PO.IC6H (ND FOR OUSTING T-E COURTS OF %URISDICTIONE
c. DECREEING PRIV(TE RESPONDENT>S COUNTERC.(IMS TO )E (.. COMPU.SOR6 NOT NECESSIT(TING P(6MENT OF DOC*ET FEES
(ND CERTIFIC(TION OF NON?FORUM S-OPPINGE
0. RU.ING T-(T T-E PETITION F(S FI.ED PREM(TURE.6 FIT-OUT F(ITING FOR T-E RESO.UTION OF T-E MOTION FOR
RECONSIDER(TION OF T-E ORDER D(TED SEPTEM)ER =' ##$ OR FIT-OUT GIVING T-E TRI(. COURT (N OPPORTUNIT6 TO
CORRECT ITSE.FE
e. PROC.(IMING T-E TFO ORDERS D(TED %U.6 =@ (ND SEPTEM)ER =' ##$ NOT TO )E PROPER SU)%ECTS OF CERTIOR(RI (ND
PRO-I)ITION FOR )EING HINTER.OCUTOR6 IN N(TUREEH
f. NOT GR(NTING T-E RE.IEFS (ND REMEDIES PR(6ED FOR IN -E CSICD PETITION (ND' INSTE(D' DISMISSING T-E S(ME FOR
(..EGED.6 HFIT-OUT MERIT.H=@
The Cou+t>s Rulin1
The petition is pa+tl4 9e+ito+ious.
)efo+e 8e 0el,e into the substanti,e issues' 8e shall fi+st tac<le the p+oce0u+al issues.
The +ules on the pa49ent of 0oc<et fees fo+ counte+clai9s
an0 c+oss clai9s 8e+e a9en0e0 effecti,e (u1ust A' =!!&
*OGIES st+on1l4 a+1ues that 8hen PGSMC file0 the counte+clai9s' it shoul0 ha,e pai0 0oc<et fees an0 file0 a ce+tificate of non?fo+u9 shoppin1'
an0 that its failu+e to 0o so 8as a fatal 0efect.
Fe 0isa1+ee 8ith *OGIES.
35
(s aptl4 +ule0 b4 the C(' the counte+clai9s of PGSMC 8e+e inco+po+ate0 in its (ns8e+ 8ith Co9pulso+4 Counte+clai9 0ate0 %ul4 "' ##$ in
acco+0ance 8ith Section $ of Rule ' ##" Re,ise0 Rules of Ci,il P+oce0u+e' the +ule that 8as effecti,e at the ti9e the (ns8e+ 8ith Counte+clai9
8as file0. Sec. $ on eBistin1 counte+clai9 o+ c+oss?clai9 states' H( co9pulso+4 counte+clai9 o+ a c+oss?clai9 that a 0efen0in1 pa+t4 has at the ti9e
he files his ans8e+ shall be containe0 the+ein.H
On %ul4 "' ##$' at the ti9e PGSMC file0 its (ns8e+ inco+po+atin1 its counte+clai9s a1ainst *OGIES' it 8as not liable to pa4 filin1 fees fo+ sai0
counte+clai9s bein1 co9pulso+4 in natu+e. Fe st+ess' ho8e,e+' that effecti,e (u1ust A' =!!& un0e+ Sec. "' Rule &' as a9en0e0 b4 (.M. No. !&?
=?!&?SC' 0oc<et fees a+e no8 +e7ui+e0 to be pai0 in co9pulso+4 counte+clai9 o+ c+oss?clai9s.
(s to the failu+e to sub9it a ce+tificate of fo+u9 shoppin1' PGSMC>s (ns8e+ is not an initiato+4 plea0in1 8hich +e7ui+es a ce+tification a1ainst fo+u9
shoppin1 un0e+ Sec. J=& of Rule "' ##" Re,ise0 Rules of Ci,il P+oce0u+e. It is a +esponsi,e plea0in1' hence' the cou+ts a 7uo 0i0 not co99it
+e,e+sible e++o+ in 0en4in1 *OGIES> 9otion to 0is9iss PGSMC>s co9pulso+4 counte+clai9s.
Inte+locuto+4 o+0e+s p+ope+ sub:ect of ce+tio+a+i
Citin1 Ga9boa ,. C+u3'=J the C( also p+onounce0 that Hce+tio+a+i an0 P+ohibition a+e neithe+ the +e9e0ies to 7uestion the p+op+iet4 of an
inte+locuto+4 o+0e+ of the t+ial cou+t.H=A The C( e++e0 on its +eliance on Ga9boa. Ga9boa in,ol,e0 the 0enial of a 9otion to ac7uit in a c+i9inal case
8hich 8as not assailable in an action fo+ ce+tio+a+i since the 0enial of a 9otion to 7uash +e7ui+e0 the accuse0 to plea0 an0 to continue 8ith the t+ial'
an0 8hate,e+ ob:ections the accuse0 ha0 in his 9otion to 7uash can then be use0 as pa+t of his 0efense an0 subse7uentl4 can be +aise0 as e++o+s
on his appeal if the :u019ent of the t+ial cou+t is a0,e+se to hi9. The 1ene+al +ule is that inte+locuto+4 o+0e+s cannot be challen1e0 b4 an appeal.="
Thus' in 6a9ao<a ,. Pesca+ich Manufactu+in1 Co+po+ation' 8e hel0;
The p+ope+ +e9e04 in such cases is an o+0ina+4 appeal f+o9 an a0,e+se :u019ent on the 9e+its' inco+po+atin1 in sai0 appeal the 1+oun0s fo+
assailin1 the inte+locuto+4 o+0e+s. (llo8in1 appeals f+o9 inte+locuto+4 o+0e+s 8oul0 +esult in the Uso++4 spectacle> of a case bein1 sub:ect of a
counte+p+o0ucti,e pin1?pon1 to an0 f+o9 the appellate cou+t as often as a t+ial cou+t is pe+cei,e0 to ha,e 9a0e an e++o+ in an4 of its inte+locuto+4
+ulin1s. -o8e,e+' 8he+e the assaile0 inte+locuto+4 o+0e+ 8as issue0 8ith 1+a,e abuse of 0isc+etion o+ patentl4 e++oneous an0 the +e9e04 of appeal
8oul0 not affo+0 a0e7uate an0 eBpe0itious +elief' the Cou+t allo8s ce+tio+a+i as a 9o0e of +e0+ess.=$
(lso' appeals f+o9 inte+locuto+4 o+0e+s 8oul0 open the floo01ates to en0less occasions fo+ 0ilato+4 9otions. Thus' 8he+e the inte+locuto+4 o+0e+ 8as
issue0 8ithout o+ in eBcess of :u+is0iction o+ 8ith 1+a,e abuse of 0isc+etion' the +e9e04 is ce+tio+a+i.=#
The alle1e0 1+a,e abuse of 0isc+etion of the +espon0ent cou+t e7ui,alent to lac< of :u+is0iction in the issuance of the t8o assaile0 o+0e+s couple0 8ith
the fact that the+e is no plain' spee04' an0 a0e7uate +e9e04 in the o+0ina+4 cou+se of la8 a9pl4 p+o,i0es the basis fo+ allo8in1 the +eso+t to a
petition fo+ ce+tio+a+i un0e+ Rule AJ.
P+e9atu+it4 of the petition befo+e the C(
Neithe+ 0o 8e thin< that *OGIES 8as 1uilt4 of fo+u9 shoppin1 in filin1 the petition fo+ ce+tio+a+i. Note that *OGIES> 9otion fo+ +econsi0e+ation of the
%ul4 =@' ##$ RTC O+0e+ 8hich 0enie0 the issuance of the in:uncti,e 8+it ha0 al+ea04 been 0enie0. Thus' *OGIES> onl4 +e9e04 8as to assail the
RTC>s inte+locuto+4 o+0e+ ,ia a petition fo+ ce+tio+a+i un0e+ Rule AJ.
Fhile the Octobe+ =' ##$ 9otion fo+ +econsi0e+ation of *OGIES of the Septe9be+ =' ##$ RTC O+0e+ +elatin1 to the inspection of thin1s' an0 the
allo8ance of the co9pulso+4 counte+clai9s has not 4et been +esol,e0' the ci+cu9stances in this case 8oul0 allo8 an eBception to the +ule that
befo+e ce+tio+a+i 9a4 be a,aile0 of' the petitione+ 9ust ha,e file0 a 9otion fo+ +econsi0e+ation an0 sai0 9otion shoul0 ha,e been fi+st +esol,e0 b4 the
cou+t a 7uo. The +eason behin0 the +ule is Hto enable the lo8e+ cou+t' in the fi+st instance' to pass upon an0 co++ect its 9ista<es 8ithout the
inte+,ention of the hi1he+ cou+t.H@!
The Septe9be+ =' ##$ RTC O+0e+ 0i+ectin1 the b+anch she+iff to inspect the plant' e7uip9ent' an0 facilities 8hen he is not co9petent an0
<no8le01eable on sai0 9atte+s is e,i0entl4 fla8e0 an0 0e,oi0 of an4 le1al suppo+t. Mo+eo,e+' the+e is an u+1ent necessit4 to +esol,e the issue on the
0is9antlin1 of the facilities an0 an4 fu+the+ 0ela4 8oul0 p+e:u0ice the inte+ests of *OGIES. In0ee0' the+e is +eal an0 i99inent th+eat of i++epa+able
0est+uction o+ substantial 0a9a1e to *OGIES> e7uip9ent an0 9achine+ies. Fe fin0 the +eso+t to ce+tio+a+i base0 on the 1+a,el4 abusi,e o+0e+s of
the t+ial cou+t sans the +ulin1 on the Octobe+ =' ##$ 9otion fo+ +econsi0e+ation to be p+ope+.
The Co+e Issue; (+ticle J of the Cont+act
Fe no8 1o to the co+e issue of the ,ali0it4 of (+t. J of the Cont+act' the a+bit+ation clause. It p+o,i0es;
(+ticle J. (+bit+ation.I(ll 0isputes' cont+o,e+sies' o+ 0iffe+ences 8hich 9a4 a+ise bet8een the pa+ties' out of o+ in +elation to o+ in connection 8ith
this Cont+act o+ fo+ the b+each the+eof' shall finall4 be settle0 b4 a+bit+ation in Seoul' *o+ea in acco+0ance 8ith the Co99e+cial (+bit+ation Rules of
36
the *o+ean Co99e+cial (+bit+ation )oa+0. The a8a+0 +en0e+e0 b4 the a+bit+ationCsD shall be final an0 bin0in1 upon both pa+ties conce+ne0.
CE9phasis supplie0.D
Petitione+ clai9s the RTC an0 the C( e++e0 in +ulin1 that the a+bit+ation clause is null an0 ,oi0.
Petitione+ is co++ect.
Establishe0 in this :u+is0iction is the +ule that the la8 of the place 8he+e the cont+act is 9a0e 1o,e+ns. .eB loci cont+actus. The cont+act in this case
8as pe+fecte0 he+e in the Philippines. The+efo+e' ou+ la8s ou1ht to 1o,e+n. Nonetheless' (+t. =!&& of the Ci,il Co0e sanctions the ,ali0it4 of 9utuall4
a1+ee0 a+bit+al clause o+ the finalit4 an0 bin0in1 effect of an a+bit+al a8a+0. (+t. =!&& p+o,i0es' H(n4 stipulation that the a+bit+ato+s> a8a+0 o+ 0ecision
shall be final' is ,ali0' 8ithout p+e:u0ice to (+ticles =!@$' =!@# an0 =!&!.H CE9phasis supplie0.D
(+ts. =!@$'@ =!@#'@= an0 =!&!@@ abo,ecite0 +efe+ to instances 8he+e a co9p+o9ise o+ an a+bit+al a8a+0' as applie0 to (+t. =!&& pu+suant to (+t.
=!&@'@& 9a4 be ,oi0e0' +escin0e0' o+ annulle0' but these 8oul0 not 0eni1+ate the finalit4 of the a+bit+al a8a+0.
The a+bit+ation clause 8as 9utuall4 an0 ,olunta+il4 a1+ee0 upon b4 the pa+ties. It has not been sho8n to be cont+a+4 to an4 la8' o+ a1ainst 9o+als'
1oo0 custo9s' public o+0e+' o+ public polic4. The+e has been no sho8in1 that the pa+ties ha,e not 0ealt 8ith each othe+ on e7ual footin1. Fe fin0 no
+eason 8h4 the a+bit+ation clause shoul0 not be +especte0 an0 co9plie0 8ith b4 both pa+ties. In Gon3ales ,. Cli9aB Minin1 .t0.'@J 8e hel0 that
sub9ission to a+bit+ation is a cont+act an0 that a clause in a cont+act p+o,i0in1 that all 9atte+s in 0ispute bet8een the pa+ties shall be +efe++e0 to
a+bit+ation is a cont+act.@A (1ain in Del Monte Co+po+ation?US( ,. Cou+t of (ppeals' 8e li<e8ise +ule0 that HStThe p+o,ision to sub9it to a+bit+ation an4
0ispute a+isin1 the+ef+o9 an0 the +elationship of the pa+ties is pa+t of that cont+act an0 is itself a cont+act.H@"
(+bit+ation clause not cont+a+4 to public polic4
The a+bit+ation clause 8hich stipulates that the a+bit+ation 9ust be 0one in Seoul' *o+ea in acco+0ance 8ith the Co99e+cial (+bit+ation Rules of the
*C()' an0 that the a+bit+al a8a+0 is final an0 bin0in1' is not cont+a+4 to public polic4. This Cou+t has sanctione0 the ,ali0it4 of a+bit+ation clauses in a
catena of cases. In the #J" case of Eastboa+0 Na,i1ation .t0. ,. %uan 6s9ael an0 Co.' Inc.'@$ this Cou+t ha0 occasion to +ule that an a+bit+ation
clause to +esol,e 0iffe+ences an0 b+eaches of 9utuall4 a1+ee0 cont+actual te+9s is ,ali0. In )F Co+po+ation ,. Cou+t of (ppeals' 8e hel0 that HSiTn this
:u+is0iction' a+bit+ation has been hel0 ,ali0 an0 constitutional. E,en befo+e the app+o,al on %une #' #J@ of Republic (ct No. $"A' this Cou+t has
countenance0 the settle9ent of 0isputes th+ou1h a+bit+ation. Republic (ct No. $"A 8as a0opte0 to supple9ent the Ne8 Ci,il Co0e>s p+o,isions on
a+bit+ation.H@# (n0 in .M Po8e+ En1inee+in1 Co+po+ation ,. Capitol In0ust+ial Const+uction G+oups' Inc.' 8e 0ecla+e0 that;
)ein1 an ineBpensi,e' spee04 an0 a9icable 9etho0 of settlin1 0isputes' a+bit+ationXXalon1 8ith 9e0iation' conciliation an0 ne1otiationXXis
encou+a1e0 b4 the Sup+e9e Cou+t. (si0e f+o9 unclo11in1 :u0icial 0oc<ets' a+bit+ation also hastens the +esolution of 0isputes' especiall4 of the
co99e+cial <in0. It is thus +e1a+0e0 as the H8a,e of the futu+eH in inte+national ci,il an0 co99e+cial 0isputes. )+ushin1 asi0e a cont+actual
a1+ee9ent callin1 fo+ a+bit+ation bet8een the pa+ties 8oul0 be a step bac<8a+0.
Consistent 8ith the abo,e?9entione0 polic4 of encou+a1in1 alte+nati,e 0ispute +esolution 9etho0s' cou+ts shoul0 libe+all4 const+ue a+bit+ation
clauses. P+o,i0e0 such clause is susceptible of an inte+p+etation that co,e+s the asse+te0 0ispute' an o+0e+ to a+bit+ate shoul0 be 1+ante0. (n4 0oubt
shoul0 be +esol,e0 in fa,o+ of a+bit+ation.&!
-a,in1 sai0 that the instant a+bit+ation clause is not a1ainst public polic4' 8e co9e to the 7uestion on 8hat 1o,e+ns an a+bit+ation clause specif4in1
that in case of an4 0ispute a+isin1 f+o9 the cont+act' an a+bit+al panel 8ill be constitute0 in a fo+ei1n count+4 an0 the a+bit+ation +ules of the fo+ei1n
count+4 8oul0 1o,e+n an0 its a8a+0 shall be final an0 bin0in1.
R( #=$J inco+po+ate0 the UNCITR(. Mo0el la8
to 8hich 8e a+e a si1nato+4
Fo+ 0o9estic a+bit+ation p+ocee0in1s' 8e ha,e pa+ticula+ a1encies to a+bit+ate 0isputes a+isin1 f+o9 cont+actual +elations. In case a fo+ei1n a+bit+al
bo04 is chosen b4 the pa+ties' the a+bit+ation +ules of ou+ 0o9estic a+bit+ation bo0ies 8oul0 not be applie0. (s si1nato+4 to the (+bit+ation Rules of the
UNCITR(. Mo0el .a8 on Inte+national Co99e+cial (+bit+ation& of the Unite0 Nations Co99ission on Inte+national T+a0e .a8 CUNCITR(.D in the
Ne8 6o+< Con,ention on %une =' #$J' the Philippines co99itte0 itself to be boun0 b4 the Mo0el .a8. Fe ha,e e,en inco+po+ate0 the Mo0el .a8
in Republic (ct No. CR(D #=$J' othe+8ise <no8n as the (lte+nati,e Dispute Resolution (ct of =!!& entitle0 (n (ct to Institutionali3e the Use of an
(lte+nati,e Dispute Resolution S4ste9 in the Philippines an0 to Establish the Office fo+ (lte+nati,e Dispute Resolution' an0 fo+ Othe+ Pu+poses'
p+o9ul1ate0 on (p+il =' =!!&. Secs. # an0 =! of Chapte+ & of the Mo0el .a8 a+e the pe+tinent p+o,isions;
C-(PTER & ? INTERN(TION(. COMMERCI(. (R)ITR(TION
SEC. #. (0option of the Mo0el .a8 on Inte+national Co99e+cial (+bit+ation.XXInte+national co99e+cial a+bit+ation shall be 1o,e+ne0 b4 the Mo0el
.a8 on Inte+national Co99e+cial (+bit+ation Cthe HMo0el .a8HD a0opte0 b4 the Unite0 Nations Co99ission on Inte+national T+a0e .a8 on %une ='
37
#$J CUnite0 Nations Docu9ent (G&!G"D an0 +eco99en0e0 fo+ enact9ent b4 the Gene+al (sse9bl4 in Resolution No. &!G"= app+o,e0 on
Dece9be+ ' #$J' cop4 of 8hich is he+eto attache0 as (ppen0iB H(H.
SEC. =!. Inte+p+etation of Mo0el .a8.XXIn inte+p+etin1 the Mo0el .a8' +e1a+0 shall be ha0 to its inte+national o+i1in an0 to the nee0 fo+ unifo+9it4 in
its inte+p+etation an0 +eso+t 9a4 be 9a0e to the t+a,auB p+epa+ato+ies an0 the +epo+t of the Sec+eta+4 Gene+al of the Unite0 Nations Co99ission on
Inte+national T+a0e .a8 0ate0 Ma+ch =J' #$J entitle0' HInte+national Co99e+cial (+bit+ation; (nal4tical Co99enta+4 on D+aft T+a0e i0entifie0 b4
+efe+ence nu9be+ (GCN. #G=A&.H
Fhile R( #=$J 8as passe0 onl4 in =!!&' it nonetheless applies in the instant case since it is a p+oce0u+al la8 8hich has a +et+oacti,e effect.
.i<e8ise' *OGIES file0 its application fo+ a+bit+ation befo+e the *C() on %ul4 ' ##$ an0 it is still pen0in1 because no a+bit+al a8a+0 has 4et been
+en0e+e0. Thus' R( #=$J is applicable to the instant case. Fell?settle0 is the +ule that p+oce0u+al la8s a+e const+ue0 to be applicable to actions
pen0in1 an0 un0ete+9ine0 at the ti9e of thei+ passa1e' an0 a+e 0ee9e0 +et+oacti,e in that sense an0 to that eBtent. (s a 1ene+al +ule' the
+et+oacti,e application of p+oce0u+al la8s 0oes not ,iolate an4 pe+sonal +i1hts because no ,este0 +i1ht has 4et attache0 no+ a+isen f+o9 the9.&=
(9on1 the pe+tinent featu+es of R( #=$J appl4in1 an0 inco+po+atin1 the UNCITR(. Mo0el .a8 a+e the follo8in1;
CD The RTC 9ust +efe+ to a+bit+ation in p+ope+ cases
Un0e+ Sec. =&' the RTC 0oes not ha,e :u+is0iction o,e+ 0isputes that a+e p+ope+l4 the sub:ect of a+bit+ation pu+suant to an a+bit+ation clause' an0
9an0ates the +efe++al to a+bit+ation in such cases' thus;
SEC. =&. Refe++al to (+bit+ation.XX( cou+t befo+e 8hich an action is b+ou1ht in a 9atte+ 8hich is the sub:ect 9atte+ of an a+bit+ation a1+ee9ent shall'
if at least one pa+t4 so +e7uests not late+ than the p+e?t+ial confe+ence' o+ upon the +e7uest of both pa+ties the+eafte+' +efe+ the pa+ties to a+bit+ation
unless it fin0s that the a+bit+ation a1+ee9ent is null an0 ,oi0' inope+ati,e o+ incapable of bein1 pe+fo+9e0.
C=D Fo+ei1n a+bit+al a8a+0s 9ust be confi+9e0 b4 the RTC
Fo+ei1n a+bit+al a8a+0s 8hile 9utuall4 stipulate0 b4 the pa+ties in the a+bit+ation clause to be final an0 bin0in1 a+e not i99e0iatel4 enfo+ceable o+
cannot be i9ple9ente0 i99e0iatel4. Sec. @J&@ of the UNCITR(. Mo0el .a8 stipulates the +e7ui+e9ent fo+ the a+bit+al a8a+0 to be +eco1ni3e0 b4 a
co9petent cou+t fo+ enfo+ce9ent' 8hich cou+t un0e+ Sec. @A of the UNCITR(. Mo0el .a8 9a4 +efuse +eco1nition o+ enfo+ce9ent on the 1+oun0s
p+o,i0e0 fo+. R( #=$J inco+po+ate0 these p+o,isos to Secs. &=' &@' an0 && +elati,e to Secs. &" an0 &$' thus;
SEC. &=. (pplication of the Ne8 6o+< Con,ention.XXThe Ne8 6o+< Con,ention shall 1o,e+n the +eco1nition an0 enfo+ce9ent of a+bit+al a8a+0s
co,e+e0 b4 sai0 Con,ention.
The +eco1nition an0 enfo+ce9ent of such a+bit+al a8a+0s shall be file0 8ith the Re1ional T+ial Cou+t in acco+0ance 8ith the +ules of p+oce0u+e to be
p+o9ul1ate0 b4 the Sup+e9e Cou+t. Sai0 p+oce0u+al +ules shall p+o,i0e that the pa+t4 +el4in1 on the a8a+0 o+ appl4in1 fo+ its enfo+ce9ent shall file
8ith the cou+t the o+i1inal o+ authenticate0 cop4 of the a8a+0 an0 the a+bit+ation a1+ee9ent. If the a8a+0 o+ a1+ee9ent is not 9a0e in an4 of the
official lan1ua1es' the pa+t4 shall suppl4 a 0ul4 ce+tifie0 t+anslation the+eof into an4 of such lan1ua1es.
The applicant shall establish that the count+4 in 8hich fo+ei1n a+bit+ation a8a+0 8as 9a0e in pa+t4 to the Ne8 6o+< Con,ention.
B B B B
SEC. &@. Reco1nition an0 Enfo+ce9ent of Fo+ei1n (+bit+al (8a+0s Not Co,e+e0 b4 the Ne8 6o+< Con,ention.XXThe +eco1nition an0 enfo+ce9ent of
fo+ei1n a+bit+al a8a+0s not co,e+e0 b4 the Ne8 6o+< Con,ention shall be 0one in acco+0ance 8ith p+oce0u+al +ules to be p+o9ul1ate0 b4 the
Sup+e9e Cou+t. The Cou+t 9a4' on 1+oun0s of co9it4 an0 +ecip+ocit4' +eco1ni3e an0 enfo+ce a non?con,ention a8a+0 as a con,ention a8a+0.
SEC. &&. Fo+ei1n (+bit+al (8a+0 Not Fo+ei1n %u019ent.XX( fo+ei1n a+bit+al a8a+0 8hen confi+9e0 b4 a cou+t of a fo+ei1n count+4' shall be
+eco1ni3e0 an0 enfo+ce0 as a fo+ei1n a+bit+al a8a+0 an0 not as a :u019ent of a fo+ei1n cou+t.
( fo+ei1n a+bit+al a8a+0' 8hen confi+9e0 b4 the Re1ional T+ial Cou+t' shall be enfo+ce0 in the sa9e 9anne+ as final an0 eBecuto+4 0ecisions of
cou+ts of la8 of the Philippines
B B B B
SEC. &". Venue an0 %u+is0iction.XXP+ocee0in1s fo+ +eco1nition an0 enfo+ce9ent of an a+bit+ation a1+ee9ent o+ fo+ ,acations' settin1 asi0e'
co++ection o+ 9o0ification of an a+bit+al a8a+0' an0 an4 application 8ith a cou+t fo+ a+bit+ation assistance an0 supe+,ision shall be 0ee9e0 as special
p+ocee0in1s an0 shall be file0 8ith the Re1ional T+ial Cou+t CiD 8he+e a+bit+ation p+ocee0in1s a+e con0ucte0E CiiD 8he+e the asset to be attache0 o+
38
le,ie0 upon' o+ the act to be en:oine0 is locate0E CiiiD 8he+e an4 of the pa+ties to the 0ispute +esi0es o+ has his place of businessE o+ Ci,D in the
National %u0icial Capital Re1ion' at the option of the applicant.
SEC. &$. Notice of P+ocee0in1 to Pa+ties.XXIn a special p+ocee0in1 fo+ +eco1nition an0 enfo+ce9ent of an a+bit+al a8a+0' the Cou+t shall sen0 notice
to the pa+ties at thei+ a00+ess of +eco+0 in the a+bit+ation' o+ if an4 pa+t cannot be se+,e0 notice at such a00+ess' at such pa+t4>s last <no8n a00+ess.
The notice shall be sent al least fifteen CJD 0a4s befo+e the 0ate set fo+ the initial hea+in1 of the application.
It is no8 clea+ that fo+ei1n a+bit+al a8a+0s 8hen confi+9e0 b4 the RTC a+e 0ee9e0 not as a :u019ent of a fo+ei1n cou+t but as a fo+ei1n a+bit+al
a8a+0' an0 8hen confi+9e0' a+e enfo+ce0 as final an0 eBecuto+4 0ecisions of ou+ cou+ts of la8.
Thus' it can be 1leane0 that the concept of a final an0 bin0in1 a+bit+al a8a+0 is si9ila+ to :u019ents o+ a8a+0s 1i,en b4 so9e of ou+ 7uasi?:u0icial
bo0ies' li<e the National .abo+ Relations Co99ission an0 Mines (0:u0ication )oa+0' 8hose final :u019ents a+e stipulate0 to be final an0 bin0in1'
but not i99e0iatel4 eBecuto+4 in the sense that the4 9a4 still be :u0iciall4 +e,ie8e0' upon the instance of an4 pa+t4. The+efo+e' the final fo+ei1n
a+bit+al a8a+0s a+e si9ila+l4 situate0 in that the4 nee0 fi+st to be confi+9e0 b4 the RTC.
C@D The RTC has :u+is0iction to +e,ie8 fo+ei1n a+bit+al a8a+0s
Sec. &= in +elation to Sec. &J of R( #=$J 0esi1nate0 an0 ,este0 the RTC 8ith specific autho+it4 an0 :u+is0iction to set asi0e' +e:ect' o+ ,acate a
fo+ei1n a+bit+al a8a+0 on 1+oun0s p+o,i0e0 un0e+ (+t. @&C=D of the UNCITR(. Mo0el .a8. Secs. &= an0 &J p+o,i0e;
SEC. &=. (pplication of the Ne8 6o+< Con,ention.XXThe Ne8 6o+< Con,ention shall 1o,e+n the +eco1nition an0 enfo+ce9ent of a+bit+al a8a+0s
co,e+e0 b4 sai0 Con,ention.
The +eco1nition an0 enfo+ce9ent of such a+bit+al a8a+0s shall be file0 8ith the Re1ional T+ial Cou+t in acco+0ance 8ith the +ules of p+oce0u+e to be
p+o9ul1ate0 b4 the Sup+e9e Cou+t. Sai0 p+oce0u+al +ules shall p+o,i0e that the pa+t4 +el4in1 on the a8a+0 o+ appl4in1 fo+ its enfo+ce9ent shall file
8ith the cou+t the o+i1inal o+ authenticate0 cop4 of the a8a+0 an0 the a+bit+ation a1+ee9ent. If the a8a+0 o+ a1+ee9ent is not 9a0e in an4 of the
official lan1ua1es' the pa+t4 shall suppl4 a 0ul4 ce+tifie0 t+anslation the+eof into an4 of such lan1ua1es.
The applicant shall establish that the count+4 in 8hich fo+ei1n a+bit+ation a8a+0 8as 9a0e is pa+t4 to the Ne8 6o+< Con,ention.
If the application fo+ +e:ection o+ suspension of enfo+ce9ent of an a8a+0 has been 9a0e' the Re1ional T+ial Cou+t 9a4' if it consi0e+s it p+ope+'
,acate its 0ecision an0 9a4 also' on the application of the pa+t4 clai9in1 +eco1nition o+ enfo+ce9ent of the a8a+0' o+0e+ the pa+t4 to p+o,i0e
app+op+iate secu+it4.
B B B B
SEC. &J. Re:ection of a Fo+ei1n (+bit+al (8a+0.XX( pa+t4 to a fo+ei1n a+bit+ation p+ocee0in1 9a4 oppose an application fo+ +eco1nition an0
enfo+ce9ent of the a+bit+al a8a+0 in acco+0ance 8ith the p+oce0u+es an0 +ules to be p+o9ul1ate0 b4 the Sup+e9e Cou+t onl4 on those 1+oun0s
enu9e+ate0 un0e+ (+ticle V of the Ne8 6o+< Con,ention. (n4 othe+ 1+oun0 +aise0 shall be 0is+e1a+0e0 b4 the Re1ional T+ial Cou+t.
Thus' 8hile the RTC 0oes not ha,e :u+is0iction o,e+ 0isputes 1o,e+ne0 b4 a+bit+ation 9utuall4 a1+ee0 upon b4 the pa+ties' still the fo+ei1n a+bit+al
a8a+0 is sub:ect to :u0icial +e,ie8 b4 the RTC 8hich can set asi0e' +e:ect' o+ ,acate it. In this sense' 8hat this Cou+t hel0 in Chun1 Fu In0ust+ies
CPhils.D' Inc. +elie0 upon b4 *OGIES is applicable insofa+ as the fo+ei1n a+bit+al a8a+0s' 8hile final an0 bin0in1' 0o not oust cou+ts of :u+is0iction since
these a+bit+al a8a+0s a+e not absolute an0 8ithout eBceptions as the4 a+e still :u0iciall4 +e,ie8able. Chapte+ " of R( #=$J has 9a0e it clea+ that all
a+bit+al a8a+0s' 8hethe+ 0o9estic o+ fo+ei1n' a+e sub:ect to :u0icial +e,ie8 on specific 1+oun0s p+o,i0e0 fo+.
C&D G+oun0s fo+ :u0icial +e,ie8 0iffe+ent in 0o9estic an0 fo+ei1n a+bit+al a8a+0s
The 0iffe+ences bet8een a final a+bit+al a8a+0 f+o9 an inte+national o+ fo+ei1n a+bit+al t+ibunal an0 an a8a+0 1i,en b4 a local a+bit+al t+ibunal a+e the
specific 1+oun0s o+ con0itions that ,est :u+is0iction o,e+ ou+ cou+ts to +e,ie8 the a8a+0s.
Fo+ fo+ei1n o+ inte+national a+bit+al a8a+0s 8hich 9ust fi+st be confi+9e0 b4 the RTC' the 1+oun0s fo+ settin1 asi0e' +e:ectin1 o+ ,acatin1 the a8a+0 b4
the RTC a+e p+o,i0e0 un0e+ (+t. @&C=D of the UNCITR(. Mo0el .a8.
Fo+ final 0o9estic a+bit+al a8a+0s' 8hich also nee0 confi+9ation b4 the RTC pu+suant to Sec. =@ of R( $"A&& an0 shall be +eco1ni3e0 as final an0
eBecuto+4 0ecisions of the RTC'&J the4 9a4 onl4 be assaile0 befo+e the RTC an0 ,acate0 on the 1+oun0s p+o,i0e0 un0e+ Sec. =J of R( $"A.&A
CJD RTC 0ecision of assaile0 fo+ei1n a+bit+al a8a+0 appealable
39
Sec. &A of R( #=$J p+o,i0es fo+ an appeal befo+e the C( as the +e9e04 of an a11+ie,e0 pa+t4 in cases 8he+e the RTC sets asi0e' +e:ects' ,acates'
9o0ifies' o+ co++ects an a+bit+al a8a+0' thus;
SEC. &A. (ppeal f+o9 Cou+t Decision o+ (+bit+al (8a+0s.I( 0ecision of the Re1ional T+ial Cou+t confi+9in1' ,acatin1' settin1 asi0e' 9o0if4in1 o+
co++ectin1 an a+bit+al a8a+0 9a4 be appeale0 to the Cou+t of (ppeals in acco+0ance 8ith the +ules an0 p+oce0u+e to be p+o9ul1ate0 b4 the Sup+e9e
Cou+t.
The losin1 pa+t4 8ho appeals f+o9 the :u019ent of the cou+t confi+9in1 an a+bit+al a8a+0 shall be +e7ui+e0 b4 the appellate cou+t to post a
counte+bon0 eBecute0 in fa,o+ of the p+e,ailin1 pa+t4 e7ual to the a9ount of the a8a+0 in acco+0ance 8ith the +ules to be p+o9ul1ate0 b4 the
Sup+e9e Cou+t.
The+eafte+' the C( 0ecision 9a4 fu+the+ be appeale0 o+ +e,ie8e0 befo+e this Cou+t th+ou1h a petition fo+ +e,ie8 un0e+ Rule &J of the Rules of Cou+t.
PGSMC has +e9e0ies to p+otect its inte+ests
Thus' base0 on the fo+e1oin1 featu+es of R( #=$J' PGSMC 9ust sub9it to the fo+ei1n a+bit+ation as it boun0 itself th+ou1h the sub:ect cont+act.
Fhile it 9a4 ha,e 9is1i,in1s on the fo+ei1n a+bit+ation 0one in *o+ea b4 the *C()' it has a,ailable +e9e0ies un0e+ R( #=$J. Its inte+ests a+e 0ul4
p+otecte0 b4 the la8 8hich +e7ui+es that the a+bit+al a8a+0 that 9a4 be +en0e+e0 b4 *C() 9ust be confi+9e0 he+e b4 the RTC befo+e it can be
enfo+ce0.
Fith ou+ 0is7uisition abo,e' petitione+ is co++ect in its contention that an a+bit+ation clause' stipulatin1 that the a+bit+al a8a+0 is final an0 bin0in1' 0oes
not oust ou+ cou+ts of :u+is0iction as the inte+national a+bit+al a8a+0' the a8a+0 of 8hich is not absolute an0 8ithout eBceptions' is still :u0iciall4
+e,ie8able un0e+ ce+tain con0itions p+o,i0e0 fo+ b4 the UNCITR(. Mo0el .a8 on IC( as applie0 an0 inco+po+ate0 in R( #=$J.
Finall4' it 9ust be note0 that the+e is nothin1 in the sub:ect Cont+act 8hich p+o,i0es that the pa+ties 9a4 0ispense 8ith the a+bit+ation clause.
Unilate+al +escission i9p+ope+ an0 ille1al
-a,in1 +ule0 that the a+bit+ation clause of the sub:ect cont+act is ,ali0 an0 bin0in1 on the pa+ties' an0 not cont+a+4 to public polic4E conse7uentl4'
bein1 boun0 to the cont+act of a+bit+ation' a pa+t4 9a4 not unilate+all4 +escin0 o+ te+9inate the cont+act fo+ 8hate,e+ cause 8ithout fi+st +eso+tin1 to
a+bit+ation.
Fhat this Cou+t hel0 in Uni,e+sit4 of the Philippines ,. De .os (n1eles&" an0 +eite+ate0 in succee0in1 cases'&$ that the act of t+eatin1 a cont+act as
+escin0e0 on account of inf+actions b4 the othe+ cont+actin1 pa+t4 is ,ali0 albeit p+o,isional as it can be :u0iciall4 assaile0' is not applicable to the
instant case on account of a ,ali0 stipulation on a+bit+ation. Fhe+e an a+bit+ation clause in a cont+act is a,ailin1' neithe+ of the pa+ties can unilate+all4
t+eat the cont+act as +escin0e0 since 8hate,e+ inf+actions o+ b+eaches b4 a pa+t4 o+ 0iffe+ences a+isin1 f+o9 the cont+act 9ust be b+ou1ht fi+st an0
+esol,e0 b4 a+bit+ation' an0 not th+ou1h an eBt+a:u0icial +escission o+ :u0icial action.
The issues a+isin1 f+o9 the cont+act bet8een PGSMC an0 *OGIES on 8hethe+ the e7uip9ent an0 9achine+ies 0eli,e+e0 an0 installe0 8e+e
p+ope+l4 installe0 an0 ope+ational in the plant in Ca+9ona' Ca,iteE the o8ne+ship of e7uip9ent an0 pa49ent of the cont+act p+iceE an0 8hethe+ the+e
8as substantial co9pliance b4 *OGIES in the p+o0uction of the sa9ples' 1i,en the alle1e0 fact that PGSMC coul0 not suppl4 the +a8 9ate+ials
+e7ui+e0 to p+o0uce the sa9ple .PG c4lin0e+s' a+e 9atte+s p+ope+ fo+ a+bit+ation. In0ee0' 8e note that on %ul4 ' ##$' *OGIES institute0 an
(pplication fo+ (+bit+ation befo+e the *C() in Seoul' *o+ea pu+suant to (+t. J of the Cont+act as a9en0e0. Thus' it is incu9bent upon PGSMC to
abi0e b4 its co99it9ent to a+bit+ate.
Co+olla+il4' the t+ial cou+t 1+a,el4 abuse0 its 0isc+etion in 1+antin1 PGSMC>s Motion fo+ Inspection of Thin1s on Septe9be+ =' ##$' as the sub:ect
9atte+ of the 9otion is un0e+ the p+i9a+4 :u+is0iction of the 9utuall4 a1+ee0 a+bit+al bo04' the *C() in *o+ea.
In a00ition' 8hate,e+ fin0in1s an0 conclusions 9a0e b4 the RTC )+anch She+iff f+o9 the inspection 9a0e on Octobe+ =$' ##$' as o+0e+e0 b4 the
t+ial cou+t on Octobe+ #' ##$' is of no 8o+th as sai0 She+iff is not technicall4 co9petent to asce+tain the actual status of the e7uip9ent an0
9achine+ies as installe0 in the plant.
Fo+ these +easons' the Septe9be+ =' ##$ an0 Octobe+ #' ##$ RTC O+0e+s pe+tainin1 to the 1+ant of the inspection of the e7uip9ent an0
9achine+ies ha,e to be +ecalle0 an0 nullifie0.
Issue on o8ne+ship of plant p+ope+ fo+ a+bit+ation
Petitione+ assails the C( +ulin1 that the issue petitione+ +aise0 on 8hethe+ the total cont+act p+ice of USD 'J@!'!!! 8as fo+ the 8hole plant an0 its
installation is be4on0 the a9bit of a Petition fo+ Ce+tio+a+i.
40
Petitione+>s position is untenable.
It is settle0 that 7uestions of fact cannot be +aise0 in an o+i1inal action fo+ ce+tio+a+i.&# Fhethe+ o+ not the+e 8as full pa49ent fo+ the 9achine+ies an0
e7uip9ent an0 installation is in0ee0 a factual issue p+ohibite0 b4 Rule AJ.
-o8e,e+' 8hat appea+s to constitute a 1+a,e abuse of 0isc+etion is the o+0e+ of the RTC in +esol,in1 the issue on the o8ne+ship of the plant 8hen it
is the a+bit+al bo04 C*C()D an0 not the RTC 8hich has :u+is0iction an0 autho+it4 o,e+ the sai0 issue. The RTC>s 0ete+9ination of such factual issue
constitutes 1+a,e abuse of 0isc+etion an0 9ust be +e,e+se0 an0 set asi0e.
RTC has inte+i9 :u+is0iction to p+otect the +i1hts of the pa+ties
(nent the %ul4 =@' ##$ O+0e+ 0en4in1 the issuance of the in:uncti,e 8+it pa,in1 the 8a4 fo+ PGSMC to 0is9antle an0 t+ansfe+ the e7uip9ent an0
9achine+ies' 8e fin0 it to be in o+0e+ consi0e+in1 the factual 9ilieu of the instant case.
Fi+stl4' 8hile the issue of the p+ope+ installation of the e7uip9ent an0 9achine+ies 9i1ht 8ell be un0e+ the p+i9a+4 :u+is0iction of the a+bit+al bo04 to
0eci0e' 4et the RTC un0e+ Sec. =$ of R( #=$J has :u+is0iction to hea+ an0 1+ant inte+i9 9easu+es to p+otect ,este0 +i1hts of the pa+ties. Sec. =$
pe+tinentl4 p+o,i0es;
SEC. =$. G+ant of inte+i9 Measu+e of P+otection.ICaD It is not inco9patible 8ith an a+bit+ation a1+ee9ent fo+ a pa+t4 to +e7uest' befo+e constitution of
the t+ibunal' f+o9 a Cou+t to 1+ant such 9easu+e. (fte+ constitution of the a+bit+al t+ibunal an0 0u+in1 a+bit+al p+ocee0in1s' a +e7uest fo+ an inte+i9
9easu+e of p+otection' o+ 9o0ification the+eof' 9a4 be 9a0e 8ith the a+bit+al o+ to the eBtent that the a+bit+al t+ibunal has no po8e+ to act o+ is unable
to act effecti,it4' the +e7uest 9a4 be 9a0e 8ith the Cou+t. The a+bit+al t+ibunal is 0ee9e0 constitute0 8hen the sole a+bit+ato+ o+ the thi+0 a+bit+ato+'
8ho has been no9inate0' has accepte0 the no9ination an0 8+itten co99unication of sai0 no9ination an0 acceptance has been +ecei,e0 b4 the
pa+t4 9a<in1 the +e7uest.
CbD The follo8in1 +ules on inte+i9 o+ p+o,isional +elief shall be obse+,e0;
(n4 pa+t4 9a4 +e7uest that p+o,isional +elief be 1+ante0 a1ainst the a0,e+se pa+t4.
Such +elief 9a4 be 1+ante0;
CiD to p+e,ent i++epa+able loss o+ in:u+4E
CiiD to p+o,i0e secu+it4 fo+ the pe+fo+9ance of an4 obli1ationE
CiiiD to p+o0uce o+ p+ese+,e an4 e,i0enceE o+
Ci,D to co9pel an4 othe+ app+op+iate act o+ o9ission.
CcD The o+0e+ 1+antin1 p+o,isional +elief 9a4 be con0itione0 upon the p+o,ision of secu+it4 o+ an4 act o+ o9ission specifie0 in the o+0e+.
C0D Inte+i9 o+ p+o,isional +elief is +e7ueste0 b4 8+itten application t+ans9itte0 b4 +easonable 9eans to the Cou+t o+ a+bit+al t+ibunal as the case 9a4
be an0 the pa+t4 a1ainst 8ho9 the +elief is sou1ht' 0esc+ibin1 in app+op+iate 0etail the p+ecise +elief' the pa+t4 a1ainst 8ho9 the +elief is +e7ueste0'
the 1+oun0s fo+ the +elief' an0 the e,i0ence suppo+tin1 the +e7uest.
CeD The o+0e+ shall be bin0in1 upon the pa+ties.
CfD Eithe+ pa+t4 9a4 appl4 8ith the Cou+t fo+ assistance in i9ple9entin1 o+ enfo+cin1 an inte+i9 9easu+e o+0e+e0 b4 an a+bit+al t+ibunal.
C1D ( pa+t4 8ho 0oes not co9pl4 8ith the o+0e+ shall be liable fo+ all 0a9a1es +esultin1 f+o9 nonco9pliance' inclu0in1 all eBpenses' an0 +easonable
atto+ne4Ns fees' pai0 in obtainin1 the o+0e+>s :u0icial enfo+ce9ent. CE9phasis ou+s.D
(+t. "C=D of the UNCITR(. Mo0el .a8 on IC( 0efines an Hinte+i9 9easu+eH of p+otection as;
(+ticle ". Po8e+ of a+bit+al t+ibunal to o+0e+ inte+i9 9easu+es
BBB BBB BBB
C=D (n inte+i9 9easu+e is an4 te9po+a+4 9easu+e' 8hethe+ in the fo+9 of an a8a+0 o+ in anothe+ fo+9' b4 8hich' at an4 ti9e p+io+ to the issuance of
the a8a+0 b4 8hich the 0ispute is finall4 0eci0e0' the a+bit+al t+ibunal o+0e+s a pa+t4 to;
41
CaD Maintain o+ +esto+e the status 7uo pen0in1 0ete+9ination of the 0isputeE
CbD Ta<e action that 8oul0 p+e,ent' o+ +ef+ain f+o9 ta<in1 action that is li<el4 to cause' cu++ent o+ i99inent ha+9 o+ p+e:u0ice to the a+bit+al p+ocess
itselfE
CcD P+o,i0e a 9eans of p+ese+,in1 assets out of 8hich a subse7uent a8a+0 9a4 be satisfie0E o+
C0D P+ese+,e e,i0ence that 9a4 be +ele,ant an0 9ate+ial to the +esolution of the 0ispute.
(+t. " % of UNCITR(. Mo0el .a8 on IC( also 1+ants cou+ts po8e+ an0 :u+is0iction to issue inte+i9 9easu+es;
(+ticle " %. Cou+t?o+0e+e0 inte+i9 9easu+es
( cou+t shall ha,e the sa9e po8e+ of issuin1 an inte+i9 9easu+e in +elation to a+bit+ation p+ocee0in1s' i++especti,e of 8hethe+ thei+ place is in the
te++ito+4 of this State' as it has in +elation to p+ocee0in1s in cou+ts. The cou+t shall eBe+cise such po8e+ in acco+0ance 8ith its o8n p+oce0u+es in
consi0e+ation of the specific featu+es of inte+national a+bit+ation.
In the +ecent =!!A case of T+ansfiel0 Philippines' Inc. ,. .u3on -40+o Co+po+ation' 8e 8e+e eBplicit that e,en Hthe pen0enc4 of an a+bit+al p+ocee0in1
0oes not fo+eclose +eso+t to the cou+ts fo+ p+o,isional +eliefs.H Fe eBplicate0 this 8a4;
(s a fun0a9ental point' the pen0enc4 of a+bit+al p+ocee0in1s 0oes not fo+eclose +eso+t to the cou+ts fo+ p+o,isional +eliefs. The Rules of the ICC'
8hich 1o,e+ns the pa+ties> a+bit+al 0ispute' allo8s the application of a pa+t4 to a :u0icial autho+it4 fo+ inte+i9 o+ conse+,ato+4 9easu+es. .i<e8ise'
Section & of Republic (ct CR.(.D No. $"A CThe (+bit+ation .a8D +eco1ni3es the +i1hts of an4 pa+t4 to petition the cou+t to ta<e 9easu+es to safe1ua+0
an0Go+ conse+,e an4 9atte+ 8hich is the sub:ect of the 0ispute in a+bit+ation. In a00ition' R.(. #=$J' othe+8ise <no8n as the H(lte+nati,e Dispute
Resolution (ct of =!!&'H allo8s the filin1 of p+o,isional o+ inte+i9 9easu+es 8ith the +e1ula+ cou+ts 8hene,e+ the a+bit+al t+ibunal has no po8e+ to act
o+ to act effecti,el4.J!
It is thus be4on0 ca,il that the RTC has autho+it4 an0 :u+is0iction to 1+ant inte+i9 9easu+es of p+otection.
Secon0l4' consi0e+in1 that the e7uip9ent an0 9achine+ies a+e in the possession of PGSMC' it has the +i1ht to p+otect an0 p+ese+,e the e7uip9ent
an0 9achine+ies in the best 8a4 it can. Consi0e+in1 that the .PG plant 8as non?ope+ational' PGSMC has the +i1ht to 0is9antle an0 t+ansfe+ the
e7uip9ent an0 9achine+ies eithe+ fo+ thei+ p+otection an0 p+ese+,ation o+ fo+ the bette+ 8a4 to 9a<e 1oo0 use of the9 8hich is ineluctabl4 8ithin the
9ana1e9ent 0isc+etion of PGSMC.
Thi+0l4' an0 of 1+eate+ i9po+t is the +eason that 9aintainin1 the e7uip9ent an0 9achine+ies in Fo+th>s p+ope+t4 is not to the best inte+est of PGSMC
0ue to the p+ohibiti,e +ent 8hile the .PG plant as set?up is not ope+ational. PGSMC 8as losin1 PhP@=='JA! as 9onthl4 +entals o+ PhP@.$"M fo+
##$ alone 8ithout consi0e+in1 the !K annual +ent inc+e9ent in 9aintainin1 the plant.
Fou+thl4' an0 co+olla+il4' 8hile the *C() can +ule on 9otions o+ petitions +elatin1 to the p+ese+,ation o+ t+ansfe+ of the e7uip9ent an0 9achine+ies as
an inte+i9 9easu+e' 4et on hin0si1ht' the %ul4 =@' ##$ O+0e+ of the RTC allo8in1 the t+ansfe+ of the e7uip9ent an0 9achine+ies 1i,en the non?
+eco1nition b4 the lo8e+ cou+ts of the a+bit+al clause' has acco+0e0 an inte+i9 9easu+e of p+otection to PGSMC 8hich 8oul0 othe+8ise been
i++epa+abl4 0a9a1e0.
Fifth' *OGIES is not un:ustl4 p+e:u0ice0 as it has al+ea04 been pai0 a substantial a9ount base0 on the cont+act. Mo+eo,e+' *OGIES is a9pl4
p+otecte0 b4 the a+bit+al action it has institute0 befo+e the *C()' the a8a+0 of 8hich can be enfo+ce0 in ou+ :u+is0iction th+ou1h the RTC. )esi0es' b4
ou+ 0ecision' PGSMC is co9pelle0 to sub9it to a+bit+ation pu+suant to the ,ali0 a+bit+ation clause of its cont+act 8ith *OGIES.
PGSMC to p+ese+,e the sub:ect e7uip9ent an0 9achine+ies
Finall4' 8hile PGSMC 9a4 ha,e been 1+ante0 the +i1ht to 0is9antle an0 t+ansfe+ the sub:ect e7uip9ent an0 9achine+ies' it 0oes not ha,e the +i1ht
to con,e4 o+ 0ispose of the sa9e consi0e+in1 the pen0in1 a+bit+al p+ocee0in1s to settle the 0iffe+ences of the pa+ties. PGSMC the+efo+e 9ust
p+ese+,e an0 9aintain the sub:ect e7uip9ent an0 9achine+ies 8ith the 0ili1ence of a 1oo0 fathe+ of a fa9il4J until final +esolution of the a+bit+al
p+ocee0in1s an0 enfo+ce9ent of the a8a+0' if an4.
F-EREFORE' this petition is P(RT.6 GR(NTED' in that;
CD The Ma4 @!' =!!! C( Decision in C(?G.R. SP No. &#=&# is REVERSED an0 SET (SIDEE
C=D The Septe9be+ =' ##$ an0 Octobe+ #' ##$ RTC O+0e+s in Ci,il Case No. #$?" a+e REVERSED an0 SET (SIDEE
42
C@D The pa+ties a+e he+eb4 ORDERED to sub9it the9sel,es to the a+bit+ation of thei+ 0ispute an0 0iffe+ences a+isin1 f+o9 the sub:ect Cont+act befo+e
the *C()E an0
C&D PGSMC is he+eb4 (..OFED to 0is9antle an0 t+ansfe+ the e7uip9ent an0 9achine+ies' if it ha0 not 0one so' an0 ORDERED to p+ese+,e an0
9aintain the9 until the finalit4 of 8hate,e+ a+bit+al a8a+0 is 1i,en in the a+bit+ation p+ocee0in1s.
No p+onounce9ent as to costs.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN )(NC

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

ROMERO' %.;
F+o9 a sub9ission a1+ee9ent of the .u3on De,elop9ent )an< C.D)D an0 the (ssociation of .u3on De,elop9ent )an< E9plo4ees C(.D)ED a+ose
an a+bit+ation case to +esol,e the follo8in1 issue;
Fhethe+ o+ not the co9pan4 has ,iolate0 the Collecti,e )a+1ainin1 (1+ee9ent p+o,ision an0 the Me9o+an0u9 of (1+ee9ent 0ate0 (p+il ##&' on
p+o9otion.
(t a confe+ence' the pa+ties a1+ee0 on the sub9ission of thei+ +especti,e Position Pape+s on Dece9be+ ?J' ##&. (tt4. Este+ S. Ga+cia' in he+
capacit4 as Volunta+4 (+bit+ato+' +ecei,e0 (.D)ENs Position Pape+ on %anua+4 $' ##J. .D)' on the othe+ han0' faile0 to sub9it its Position Pape+
0espite a lette+ f+o9 the Volunta+4 (+bit+ato+ +e9in0in1 the9 to 0o so. (s of Ma4 =@' ##J no Position Pape+ ha0 been file0 b4 .D).
On Ma4 =&' ##J' 8ithout .D)Ns Position Pape+' the Volunta+4 (+bit+ato+ +en0e+e0 a 0ecision 0isposin1 as follo8s;
F-EREFORE' fin0in1 is he+eb4 9a0e that the )an< has not a0he+e0 to the Collecti,e )a+1ainin1 (1+ee9ent p+o,ision no+ the Me9o+an0u9 of
(1+ee9ent on p+o9otion.
-ence' this petition fo+ ce+tio+a+i an0 p+ohibition see<in1 to set asi0e the 0ecision of the Volunta+4 (+bit+ato+ an0 to p+ohibit he+ f+o9 enfo+cin1 the
sa9e.
In labo+ la8 conteBt' a+bit+ation is the +efe+ence of a labo+ 0ispute to an i9pa+tial thi+0 pe+son fo+ 0ete+9ination on the basis of e,i0ence an0
a+1u9ents p+esente0 b4 such pa+ties 8ho ha,e boun0 the9sel,es to accept the 0ecision of the a+bit+ato+ as final an0 bin0in1.
(+bit+ation 9a4 be classifie0' on the basis of the obli1ation on 8hich it is base0' as eithe+ co9pulso+4 o+ ,olunta+4.
Co9pulso+4 a+bit+ation is a s4ste9 8he+eb4 the pa+ties to a 0ispute a+e co9pelle0 b4 the 1o,e+n9ent to fo+e1o thei+ +i1ht to st+i<e an0 a+e
co9pelle0 to accept the +esolution of thei+ 0ispute th+ou1h a+bit+ation b4 a thi+0 pa+t4. The essence of a+bit+ation +e9ains since a +esolution of a
0ispute is a++i,e0 at b4 +eso+t to a 0isinte+este0 thi+0 pa+t4 8hose 0ecision is final an0 bin0in1 on the pa+ties' but in co9pulso+4 a+bit+ation' such a
thi+0 pa+t4 is no+9all4 appointe0 b4 the 1o,e+n9ent.
Un0e+ ,olunta+4 a+bit+ation' on the othe+ han0' +efe++al of a 0ispute b4 the pa+ties is 9a0e' pu+suant to a ,olunta+4 a+bit+ation clause in thei+ collecti,e
a1+ee9ent' to an i9pa+tial thi+0 pe+son fo+ a final an0 bin0in1 +esolution. = I0eall4' a+bit+ation a8a+0s a+e suppose0 to be co9plie0 8ith b4 both
43
pa+ties 8ithout 0ela4' such that once an a8a+0 has been +en0e+e0 b4 an a+bit+ato+' nothin1 is left to be 0one b4 both pa+ties but to co9pl4 8ith the
sa9e. (fte+ all' the4 a+e p+esu9e0 to ha,e f+eel4 chosen a+bit+ation as the 9o0e of settle9ent fo+ that pa+ticula+ 0ispute. Pu+suant the+eto' the4 ha,e
chosen a 9utuall4 acceptable a+bit+ato+ 8ho shall hea+ an0 0eci0e thei+ case. (bo,e all' the4 ha,e 9utuall4 a1+ee0 to 0e boun0 b4 sai0 a+bit+ato+Ns
0ecision.
In the Philippine conteBt' the pa+ties to a Collecti,e )a+1ainin1 (1+ee9ent CC)(D a+e +e7ui+e0 to inclu0e the+ein p+o,isions fo+ a 9achine+4 fo+ the
+esolution of 1+ie,ances a+isin1 f+o9 the inte+p+etation o+ i9ple9entation of the C)( o+ co9pan4 pe+sonnel policies. @ Fo+ this pu+pose' pa+ties to a
C)( shall na9e an0 0esi1nate the+ein a ,olunta+4 a+bit+ato+ o+ a panel of a+bit+ato+s' o+ inclu0e a p+oce0u+e fo+ thei+ selection' p+efe+abl4 f+o9 those
acc+e0ite0 b4 the National Conciliation an0 Me0iation )oa+0 CNCM)D. (+ticle =A of the .abo+ Co0e acco+0in1l4 p+o,i0es fo+ eBclusi,e o+i1inal
:u+is0iction of such ,olunta+4 a+bit+ato+ o+ panel of a+bit+ato+s o,e+ CD the inte+p+etation o+ i9ple9entation of the C)( an0 C=D the inte+p+etation o+
enfo+ce9ent of co9pan4 pe+sonnel policies. (+ticle =A= autho+i3es the9' but onl4 upon a1+ee9ent of the pa+ties' to eBe+cise :u+is0iction o,e+ othe+
labo+ 0isputes.
On the othe+ han0' a labo+ a+bite+ un0e+ (+ticle =" of the .abo+ Co0e has :u+is0iction o,e+ the follo8in1 enu9e+ate0 cases;
. . . CaD EBcept as othe+8ise p+o,i0e0 un0e+ this Co0e the .abo+ (+bite+s shall ha,e o+i1inal an0 eBclusi,e :u+is0iction to hea+ an0 0eci0e' 8ithin thi+t4
C@!D calen0a+ 0a4s afte+ the sub9ission of the case b4 the pa+ties fo+ 0ecision 8ithout eBtension' e,en in the absence of steno1+aphic notes' the
follo8in1 cases in,ol,in1 all 8o+<e+s' 8hethe+ a1+icultu+al o+ non?a1+icultu+al;
. Unfai+ labo+ p+actice casesE
=. Te+9ination 0isputesE
@. If acco9panie0 8ith a clai9 fo+ +einstate9ent' those cases that 8o+<e+s 9a4 file in,ol,in1 8a1es' +ates of pa4' hou+s of 8o+< an0 othe+
te+9s an0 con0itions of e9plo49entE
&. Clai9s fo+ actual' 9o+al' eBe9pla+4 an0 othe+ fo+9s of 0a9a1es a+isin1 f+o9 the e9plo4e+?e9plo4ee +elationsE
J. Cases a+isin1 f+o9 an4 ,iolation of (+ticle =A& of this Co0e' inclu0in1 7uestions in,ol,in1 the le1alit4 of st+i<es an0 loc<outsE
A. EBcept clai9s fo+ E9plo4ees Co9pensation' Social Secu+it4' Me0ica+e an0 9ate+nit4 benefits' all othe+ clai9s' a+isin1 f+o9 e9plo4e+?
e9plo4ee +elations' inclu0in1 those of pe+sons in 0o9estic o+ househol0 se+,ice' in,ol,in1 an a9ount eBcee0in1 fi,e thousan0 pesos CPJ'!!!.!!D
+e1a+0less of 8hethe+ acco9panie0 8ith a clai9 fo+ +einstate9ent.
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It 8ill thus be note0 that the :u+is0iction confe++e0 b4 la8 on a ,olunta+4 a+bit+ato+ o+ a panel of such a+bit+ato+s is 7uite li9ite0 co9pa+e0 to the
o+i1inal :u+is0iction of the labo+ a+bite+ an0 the appellate :u+is0iction of the National .abo+ Relations Co99ission CN.RCD fo+ that 9atte+. & The state
of ou+ p+esent la8 +elatin1 to ,olunta+4 a+bit+ation p+o,i0es that HCtDhe a8a+0 o+ 0ecision of the Volunta+4 (+bit+ato+ . . . shall be final an0 eBecuto+4
afte+ ten C!D calen0a+ 0a4s f+o9 +eceipt of the cop4 of the a8a+0 o+ 0ecision b4 the pa+ties'H J 8hile the HC0Decision' a8a+0s' o+ o+0e+s of the .abo+
(+bite+ a+e final an0 eBecuto+4 unless appeale0 to the Co99ission b4 an4 o+ both pa+ties 8ithin ten C!D calen0a+ 0a4s f+o9 +eceipt of such
0ecisions' a8a+0s' o+ o+0e+s.H A -ence' 8hile the+e is an eBp+ess 9o0e of appeal f+o9 the 0ecision of a labo+ a+bite+' Republic (ct No. A"J is silent
8ith +espect to an appeal f+o9 the 0ecision of a ,olunta+4 a+bit+ato+.
6et' past p+actice sho8s that a 0ecision o+ a8a+0 of a ,olunta+4 a+bit+ato+ is' 9o+e often than not' ele,ate0 to the Sup+e9e Cou+t itself on a petition
fo+ ce+tio+a+i' " in effect e7uatin1 the ,olunta+4 a+bit+ato+ 8ith the N.RC o+ the Cou+t of (ppeals. In the ,ie8 of the Cou+t' this is illo1ical an0 i9poses
an unnecessa+4 bu+0en upon it.
In Vol<schel .abo+ Union' et al. ,. N.RC' et al.' $ on the settle0 p+e9ise that the :u019ents of cou+ts an0 a8a+0s of 7uasi?:u0icial a1encies 9ust
beco9e final at so9e 0efinite ti9e' this Cou+t +ule0 that the a8a+0s of ,olunta+4 a+bit+ato+s 0ete+9ine the +i1hts of pa+tiesE hence' thei+ 0ecisions
ha,e the sa9e le1al effect as :u019ents of a cou+t. In Oceanic )ic Di,ision CFFFD' et al. ,. Ro9e+o' et al.' # this Cou+t +ule0 that Ha ,olunta+4
a+bit+ato+ b4 the natu+e of he+ functions acts in a 7uasi?:u0icial capacit4.H Un0e+ these +ulin1s' it follo8s that the ,olunta+4 a+bit+ato+' 8hethe+ actin1
solel4 o+ in a panel' en:o4s in la8 the status of a 7uasi?:u0icial a1enc4 but in0epen0ent of' an0 apa+t f+o9' the N.RC since his 0ecisions a+e not
appealable to the latte+. !
Section # of ).P. )l1. =#' as a9en0e0 b4 Republic (ct No. "#!=' p+o,i0es that the Cou+t of (ppeals shall eBe+cise;
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44
C)D EBclusi,e appellate :u+is0iction o,e+ all final :u019ents' 0ecisions' +esolutions' o+0e+s o+ a8a+0s of Re1ional T+ial Cou+ts an0 7uasi?:u0icial
a1encies' inst+u9entalities' boa+0s o+ co99issions' inclu0in1 the Secu+ities an0 EBchan1e Co99ission' the E9plo4ees Co9pensation Co99ission
an0 the Ci,il Se+,ice Co99ission' eBcept those fallin1 8ithin the appellate :u+is0iction of the Sup+e9e Cou+t in acco+0ance 8ith the Constitution' the
.abo+ Co0e of the Philippines un0e+ P+esi0ential Dec+ee No. &&=' as a9en0e0' the p+o,isions of this (ct' an0 of subpa+a1+aph CD of the thi+0
pa+a1+aph an0 subpa+a1+aph C&D of the fou+th pa+a1+aph of Section " of the %u0icia+4 (ct of #&$.
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(ssu9in1 a+1uen0o that the ,olunta+4 a+bit+ato+ o+ the panel of ,olunta+4 a+bit+ato+s 9a4 not st+ictl4 be consi0e+e0 as a 7uasi?:u0icial a1enc4' boa+0
o+ co99ission' still both he an0 the panel a+e co9p+ehen0e0 8ithin the concept of a H7uasi?:u0icial inst+u9entalit4.H It 9a4 e,en be state0 that it 8as
to 9eet the ,e+4 situation p+esente0 b4 the 7uasi?:u0icial functions of the ,olunta+4 a+bit+ato+s he+e' as 8ell as the subse7uent a+bit+ato+Ga+bit+al
t+ibunal ope+atin1 un0e+ the Const+uction In0ust+4 (+bit+ation Co99ission' that the b+oa0e+ te+9 Hinst+u9entalitiesH 8as pu+posel4 inclu0e0 in the
abo,e?7uote0 p+o,ision.
(n Hinst+u9entalit4H is an4thin1 use0 as a 9eans o+ a1enc4. = Thus' the te+9s 1o,e+n9ental Ha1enc4H o+ Hinst+u9entalit4H a+e s4non49ous in the
sense that eithe+ of the9 is a 9eans b4 8hich a 1o,e+n9ent acts' o+ b4 8hich a ce+tain 1o,e+n9ent act o+ function is pe+fo+9e0. @ The 8o+0
Hinst+u9entalit4'H 8ith +espect to a state' conte9plates an autho+it4 to 8hich the state 0ele1ates 1o,e+n9ental po8e+ fo+ the pe+fo+9ance of a state
function. & (n in0i,i0ual pe+son' li<e an a09inist+ato+ o+ eBecuto+' is a :u0icial inst+u9entalit4 in the settlin1 of an estate' J in the sa9e 9anne+ that
a sub?a1ent appointe0 b4 a ban<+uptc4 cou+t is an inst+u9entalit4 of the cou+t' A an0 a t+ustee in ban<+uptc4 of a 0efunct co+po+ation is an
inst+u9entalit4 of the state. "
The ,olunta+4 a+bit+ato+ no less pe+fo+9s a state function pu+suant to a 1o,e+n9ental po8e+ 0ele1ate0 to hi9 un0e+ the p+o,isions the+efo+ in the
.abo+ Co0e an0 he falls' the+efo+e' 8ithin the conte9plation of the te+9 Hinst+u9entalit4H in the afo+e7uote0 Sec. # of ).P. =#. The fact that his
functions an0 po8e+s a+e p+o,i0e0 fo+ in the .abo+ Co0e 0oes not place hi9 8ithin the eBceptions to sai0 Sec. # since he is a 7uasi?:u0icial
inst+u9entalit4 as conte9plate0 the+ein. It 8ill be note0 that' althou1h the E9plo4ees Co9pensation Co99ission is also p+o,i0e0 fo+ in the .abo+
Co0e' Ci+cula+ No. ?#' 8hich is the fo+e+unne+ of the p+esent Re,ise0 (09inist+ati,e Ci+cula+ No. ?#J' lai0 0o8n the p+oce0u+e fo+ the
appealabilit4 of its 0ecisions to the Cou+t of (ppeals un0e+ the fo+e1oin1 +ationali3ation' an0 this 8as late+ a0opte0 b4 Republic (ct No. "#!= in
a9en0in1 Sec. # of ).P. =#.
( fo+tio+i' the 0ecision o+ a8a+0 of the ,olunta+4 a+bit+ato+ o+ panel of a+bit+ato+s shoul0 li<e8ise be appealable to the Cou+t of (ppeals' in line 8ith the
p+oce0u+e outline0 in Re,ise0 (09inist+ati,e Ci+cula+ No. ?#J' :ust li<e those of the 7uasi?:u0icial a1encies' boa+0s an0 co99issions enu9e+ate0
the+ein.
This 8oul0 be in fu+the+ance of' an0 consistent 8ith' the o+i1inal pu+pose of Ci+cula+ No. ?# to p+o,i0e a unifo+9 p+oce0u+e fo+ the appellate +e,ie8
of a0:u0ications of all 7uasi?:u0icial entities $ not eBp+essl4 eBcepte0 f+o9 the co,e+a1e of Sec. # of ).P. =# b4 eithe+ the Constitution o+ anothe+
statute. No+ 8ill it +un counte+ to the le1islati,e inten09ent that 0ecisions of the N.RC be +e,ie8able 0i+ectl4 b4 the Sup+e9e Cou+t since' p+ecisel4'
the cases 8ithin the a0:u0icati,e co9petence of the ,olunta+4 a+bit+ato+ a+e eBclu0e0 f+o9 the :u+is0iction of the N.RC o+ the labo+ a+bite+.
In the sa9e ,ein' it is 8o+th 9entionin1 that un0e+ Section == of Republic (ct No. $"A' also <no8n as the (+bit+ation .a8' a+bit+ation is 0ee9e0 a
special p+ocee0in1 of 8hich the cou+t specifie0 in the cont+act o+ sub9ission' o+ if none be specifie0' the Re1ional T+ial Cou+t fo+ the p+o,ince o+ cit4
in 8hich one of the pa+ties +esi0es o+ is 0oin1 business' o+ in 8hich the a+bit+ation is hel0' shall ha,e :u+is0iction. ( pa+t4 to the cont+o,e+s4 9a4' at
an4 ti9e 8ithin one CD 9onth afte+ an a8a+0 is 9a0e' appl4 to the cou+t ha,in1 :u+is0iction fo+ an o+0e+ confi+9in1 the a8a+0 an0 the cou+t 9ust
1+ant such o+0e+ unless the a8a+0 is ,acate0' 9o0ifie0 o+ co++ecte0. #
In effect' this e7uates the a8a+0 o+ 0ecision of the ,olunta+4 a+bit+ato+ 8ith that of the +e1ional t+ial cou+t. Conse7uentl4' in a petition fo+ ce+tio+a+i
f+o9 that a8a+0 o+ 0ecision' the Cou+t of (ppeals 9ust be 0ee9e0 to ha,e concu++ent :u+is0iction 8ith the Sup+e9e Cou+t. (s a 9atte+ of polic4' this
Cou+t shall hencefo+th +e9an0 to the Cou+t of (ppeals petitions of this natu+e fo+ p+ope+ 0isposition.
(CCORDING.6' the Cou+t +esol,e0 to REFER this case to the Cou+t of (ppeals.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
T-IRD DIVISION
G.R. No. !=$$ Dece9be+ "' ##=
45
TO6OT( MOTOR P-I.IPPINES CORPOR(TION' petitione+'
,s.
T-E COURT OF (PPE(.S' -ON. FERN(NDO V. GOROSPE' %R. an0 SUN V(..E6 M(NUF(CTURING 5 DEVE.OPMENT CORPOR(TION'
+espon0ents.

GUTIERRE/' %R.' %.;
This case in,ol,es a boun0a+4 0ispute bet8een To4ota Moto+ Phil. Co+po+ation CTo4otaD an0 Sun Valle4 Manufactu+in1 an0 De,elop9ent Co+po+ation
CSun Valle4D.
)oth To4ota an0 Sun Valle4 a+e the +e1iste+e0 o8ne+s of t8o C=D a0:oinin1 pa+cels of lan0 situate0 in .a -ue+ta' Pa+aMa7ue' Met+o Manila 8hich the4
pu+chase0 f+o9 the (sset P+i,ati3ation T+ust C(PTD.
The p+ope+ties in 7uestion fo+9e+l4 belon1e0 to Delta Moto+s Co+po+ation CDMCD. The4 8e+e fo+eclose0 b4 the Philippine National )an< CPN)D an0
late+ t+ansfe++e0 to the national 1o,e+n9ent th+ou1h the (PT fo+ 0isposition.
(PT then p+ocee0e0 to classif4 the DMC p+ope+ties acco+0in1 to the eBistin1 i9p+o,e9ents' i.e.' buil0in1s' 0+i,e8a4s' pa+<in1 a+eas' pe+i9ete+
fence' 8alls an0 1ates an0 the lan0 on 8hich the i9p+o,e9ents stoo0. The enti+e DMC p+ope+t4 is calle0 GC III?Delta Moto+s Co+po+ation' 0i,i0e0
into Delta I' Delta II' an0 Delta III. Fu+the+ sub0i,isions fo+ the sepa+ate catalo1ues 8e+e 9a0e fo+ each 0i,ision e.1. Delta I into .ots ' = an0 @. (fte+
this classification' (PT pa+celle0 out an0 catalo1ue0 the p+ope+ties fo+ bi00in1 an0 sale.
Pa+t of the 0ul4 pa+celle0 Delta I p+ope+t4 C.ot =D 8as sol0 to To4ota th+ou1h public bi00in1 on Ma4 =' #$$ fo+ the a9ount of P#J'@$J'!!!.!!. (fte+
its pu+chase' To4ota const+ucte0 a conc+ete hollo8 bloc< CC-)D pe+i9ete+ fence a+oun0 its alle1e0 p+ope+t4.
On Octobe+ J' ##!' anothe+ pa+t of the pa+celle0 Delta I C.ot D co,e+in1 an a+ea of JJ'=@A s7ua+e 9ete+s 8as pu+chase0 b4 Sun Valle4 f+o9 (PT
fo+ the bi0 p+ice of P=&'@&#'"A".!!. Rel4in1 upon the title 0esc+iption of its p+ope+t4 an0 the su+,e4s it ha0 co99issione0' Sun Valle4 clai9e0 that
To4otaNs pe+i9ete+ fence o,e+laps Sun Valle4Ns p+ope+t4 alon1 co+ne+s to J b4 @== s7ua+e 9ete+s an0 co+ne+s # to b4 &! s7ua+e 9ete+s fo+ a
total of "=@ s7ua+e 9ete+s. CRollo' p. $&D
Ne1otiations bet8een the t8o C=D co+po+ations fo+ a possible settle9ent of the 0ispute bo11e0 0o8n. Cou+t battles ensue0' 1+oun0e0 on pu+el4
p+oce0u+al issues. In pu+suin1 the +esolution of the 0ispute' both To4ota an0 Sun Valle4 opte0 to file sepa+ate actions. Much of the co9plications that
a+ose an0 a+e no8 befo+e us can be t+ace0 to the t8o sepa+ate cases pu+sue0 b4 both pa+ties. The+e a+e othe+ cases a+isin1 f+o9 the sa9e 0ispute
but 8hich a+e not befo+e us.
Culle0 f+o9 the +eco+0s' these a+e the antece0ents of the t8o cases 8hich t+anspi+e0 belo8.

TO6OT( C(SE CCi,il Case No. #?=J!&D
On Septe9be+ ' ##' To4ota file0 a case a1ainst (PT an0 Sun Valle4 0oc<ete0 as Ci,il Case No. #?=J!& 8ith the Re1ional T+ial Cou+t of Ma<ati'
)+anch &A p+esi0e0 b4 %u01e Sal,a0o+ Tensuan. The co9plaint 8as fo+ the +efo+9ation of the Dee0 of Sale eBecute0 bet8een To4ota an0 (PT.
To4ota alle1es that the inst+u9ent faile0 to +eflect the t+ue intention of the pa+ties' as e,i0ence0 b4 the failu+e of the title to inclu0e the "=@ s7ua+e
9ete+s st+ip of lan0.
To4ota alle1es that the 0isc+epanc4 ca9e about because of the se+ious fla8 in the classificationGcatalo1uin1 of p+ope+ties bi00e0 out fo+ sale b4 (PT.
To4ota 8as 9a0e to un0e+stan0 that inclu0e0 in its pe+i9ete+ fence is the 0ispute0 st+ip of lan0. Thus' To4ota sou1ht the +esu+,e4 of the p+ope+t4 to
co++ect this e++o+ in the title. Sun Valle4 8as i9plea0e0 consi0e+in1 that it pu+chase0 the a0:oinin1 lan0 8hose title alle1e0l4 inclu0e0 the "=@ s7ua+e
9ete+s p+ope+t4.
On Septe9be+ ' ##' upon To4otaNs application' %u01e Tensuan issue0 a te9po+a+4 +est+ainin1 o+0e+ CTROD en:oinin1 Sun Valle4 an0 (PT f+o9
an4 act of 0est+uction an0 +e9o,al of To4otaNs 8alls an0 st+uctu+es. Sun Valle4 an0 (PT 8e+e +especti,el4 se+,e0 su99ons on the follo8in1 0a4.
On Septe9be+ A' ##' Sun Valle4 file0 a 9otion to 0is9iss' on the 1+oun0 that the To4ota co9plaint faile0 to state a cause of action a1ainst it CD
since it 8as not a pa+t4 to the cont+act of the 0ee0 of sale bet8een To4ota an0 (PT' an0 C=D the co9plaint 8as in effect a collate+al attac< on its title.
On Septe9be+ ="' ##' %u01e Tensuan initiall4 0enie0 To4otaNs application fo+ p+eli9ina+4 in:unction on the fin0in1 that the+e 8as no e,i0ence of
an4 th+eatene0 0est+uction' +e9o,al o+ 0ispossession of To4otaNs p+ope+t4.
46
On Octobe+ !' ##' %u01e Tensuan 0enie0 Sun Valle4Ns 9otion to 0is9iss.
)oth To4ota an0 Sun Valle4 file0 thei+ +especti,e 9otions fo+ +econsi0e+ation. To4ota 9o,e0 to +econsi0e+ the 0enial of its in:uncti,e application 8hile
Sun Valle4 9o,e0 to +econsi0e+ the 0enial of its 9otion to 0is9iss.
On Octobe+ @!' ##' (PT file0 its ans8e+ 8ith affi+9ati,e 0efenses alle1in1 that the co9plaint 9ust be 0is9isse0 on the 1+oun0 that To4ota an0
(PT shoul0 fi+st ha,e +eso+te0 to a+bit+ation as p+o,i0e0 in To4otaNs 0ee0 of sale 8ith (PT. On Dece9be+ &' ##' To4ota file0 a 9otion alle1in1 that
Sun Valle4Ns lon1 th+eatene0 0est+uction an0 +e9o,al of To4otaNs 8alls an0 st+uctu+es 8e+e actuall4 bein1 i9ple9ente0 to 8hich %u01e Tensuan
issue0 anothe+ TRO en:oinin1 acts of 0est+uction an0 +e9o,al of the pe+i9ete+ 8alls an0 st+uctu+es on the conteste0 a+ea.
Conse7uentl4' on Dece9be+ "' ##' %u01e Tensuan +econsi0e+e0 his ea+lie+ 0enial of To4otaNs application fo+ in:unction an0 1+ante0 a 8+it of
p+eli9ina+4 in:unction en:oinin1 Sun Valle4 f+o9 p+ocee0in1 8ith its th+eatene0 0est+uction an0 +e9o,al of To4otaNs 8alls an0 0i+ecte0 Sun Valle4 to
+esto+e the p+e9ises to the status 7uo ante.
On Dece9be+ ' ##' %u01e Tensuan 0enie0 Sun Valle4Ns 9otion fo+ +econsi0e+ation of its 9otion to 0is9iss. Sun Valle4 ele,ate0 this 0enial to the
Cou+t of (ppeals. The case 8as 0oc<ete0 as C(?G.R. Sp. No. =A#&= an0 +affle0 to the Ele,enth CthD Di,ision.
%u01e TensuanNs :u+is0iction to act consi0e+in1 the 0efense of p+e9atu+it4 of action fo+ failu+e to a+bit+ate the ,ali0it4 of the TRO issue0 on Dece9be+
&' ## an0 the o+0e+ 1+antin1 in:uncti,e +eliefs 8e+e challen1e0 in a petition fo+ ce+tio+a+i file0 8ith the Cou+t of (ppeals an0 0oc<ete0 as C(?G.R.
No. =A$@' assi1ne0 to the Secon0 C=n0D Di,ision.

SUN V(..E6 C(SE CCi,il Case No. #?=JJ!D
On Septe9be+ A' ##' Sun Valle4' on the othe+ han0' file0 a case fo+ +eco,e+4 of possession of the 0ispute0 "=@ s7ua+e 9ete+s boun0a+4 8ith the
Re1ional T+ial Cou+t CRTCD Ma<ati' )+anch A p+esi0e0 b4 %u01e Fe+nan0o Go+ospe' %+.
On the sa9e 0a4' %u01e Go+ospe issue0 a TRO en:oinin1 To4ota f+o9 co99ittin1 fu+the+ acts of 0ispossession a1ainst Sun Valle4.
On Septe9be+ #' ##' To4ota 9o,e0 to lift the TRO an0 oppose0 Sun Valle4Ns application fo+ in:unction.
On Septe9be+ =@' ##' To4ota file0 a 9otion to 0is9iss on the 1+oun0 that the RTC has no :u+is0iction o,e+ the case since the co9plaint 8as a
si9ple e:ect9ent case co1ni3able b4 the Met+opolitan T+ial Cou+t CMTCD. The 9otion to 0is9iss 8as set fo+ hea+in1 on Septe9be+ ="' ##.
On Septe9be+ ="' ##' Sun Valle4 file0 an a9en0e0 co9plaint to inco+po+ate an alle1ation that To4otaNs possession of the alle1e0 0ispute0 a+ea
be1an in Septe9be+' #$$ 8hen To4ota pu+chase0 the p+ope+t4.
Rulin1 that the a9en09ent 8as a 9atte+ of +i1ht' %u01e Go+ospe a09itte0 the a9en0e0 co9plaint. To4ota a0opte0 its 9otion to 0is9iss the o+i1inal
co9plaint as its 9otion to 0is9iss the a9en0e0 co9plaint. (fte+ the a+1u9ents to To4otaNs 9otion to 0is9iss' the sa9e 8as sub9itte0 fo+ +esolution.
Sun Valle4Ns application fo+ p+ohibito+4 an0 9an0ato+4 in:unction containe0 in its co9plaint 8as set fo+ hea+in1 on Octobe+ ' ##.
P+otestin1 the a09ission of the a9en0e0 co9plaint' To4ota 8ent to the Cou+t of (ppeals' on ce+tio+a+i on Octobe+ ' ##. This petition 8as
0oc<ete0 as C(?G.R. No. =AJ= +affle0 to the Tenth C!thD Di,ision.
To4ota 8as late+ p+o9pte0 to file t8o supple9ental petitions' befo+e the Cou+t of (ppeals as a +esult of %u01e Go+ospeNs alle1e0 hast4 issuance of
fou+ C&D O+0e+s' all 0ate0 Octobe+ ' ##=. These a+e;
CD Fi+st supple9ental petition 0ate0 Octobe+ &' ## 8hich sou1ht to nullif4 the O+0e+ 0en4in1 To4otaNs 9otion to 0is9iss the a9en0e0
co9plaint.
C=D Secon0 supple9ental petition 0ate0 Octobe+ =@' ## 8hich sou1ht the nullification of the o+0e+s 1+antin1 Sun Valle4Ns application fo+
p+eli9ina+4 p+ohibito+4 an0 9an0ato+4 in:unction an0 0en4in1 To4otaNs 9otion to c+oss?eBa9ine Sun Valle4Ns 8itnesses on the latte+Ns in:unction
application.
On No,e9be+ ="' ##' +espon0ent Cou+t of (ppealsN Tenth Di,ision p+o9ul1ate0 its 7uestione0 0ecision 8hich is p+i9a+il4 the sub:ect 9atte+ of the
p+esent petition befo+e us.
47
The +espon0ent cou+t 0enie0 0ue cou+se to the To4ota petition on the fin0in1 that the a9en09ent of Sun Valle4Ns co9plaint 8as a ,ali0 one as Sun
Valle4Ns action 8as not fo+ unla8ful 0etaine+ but an accion publiciana. Fu+the+9o+e' the supple9ental petitions file0 b4 To4ota assailin1 the
p+ohibito+4 an0 9an0ato+4 in:uncti,e 8+it 8e+e not +ule0 upon as the4 8e+e eBpun1e0 f+o9 the +eco+0s because of To4otaNs failu+e to attach a 9otion
to a09it these supple9ental petitions.
Conse7uentl4' To4ota file0 the p+esent petition fo+ ce+tio+a+i on Dece9be+ #' ##.
Ea+lie+' upon an eB?pa+te 9otion to cla+if4 file0 b4 Sun Valle4 on Octobe+ =J' ##' %u01e Go+ospe issue0 anothe+ o+0e+ 0ate0 Dece9be+ =' ##
8hich follo8e0 Sun Valle4 to b+ea< open an0 0e9olish a po+tion of the To4ota pe+i9ete+ 8alls' an0 e,entuall4 to secu+e possession of the 0ispute0
a+ea. To4ota 8as const+aine0 to co9e to this Cou+t fo+ +elief.
On Dece9be+ ' ##' 8e issue0 a TRO en:oinin1 the i9ple9entation of %u01e Go+ospeNs in:unction an0 b+ea<?open o+0e+s 0ate0 Octobe+ ' ##
an0 Dece9be+ =' ## +especti,el4 as 8ell as fu+the+ p+ocee0in1s in Ci,il Case No. #?=JJ!.
Mean8hile' the Cou+t of (ppealsN Secon0 Di,ision issue0 a TRO o+0e+in1 +espon0ent %u01e Tensuan an0 all othe+ pe+sons actin1 in his behalf to
cease an0 0esist f+o9 fu+the+ p+ocee0in1 8ith Ci,il Case No. #?=J!& an0 f+o9 enfo+cin1 the O+0e+ 0ate0 Dece9be+ "' ## an0 the 8+it of
p+eli9ina+4 9an0ato+4 in:unction 0ate0 Dece9be+ #' ##.
This p+o9pte0 To4ota to file a 9otion to 7uash the TRO an0 file a supple9ental petition 8ith this Cou+t i9plea0in1 the Cou+t of (ppealsN Secon0
Di,ision.
On %anua+4 @' ##=' 8e a09itte0 the supple9ental petition.
On %anua+4 !' ##=' the Cou+t of (ppealsN Secon0 Di,ision issue0 the Resolution 1+antin1 Sun Valle4Ns application fo+ p+eli9ina+4 in:unction 8hich
en:oine0 %u01e Tensuan in the To4ota case f+o9 i9ple9entin1 his in:unction O+0e+ an0 f+o9 p+ocee0in1 8ith the case befo+e hi9 CCi,il Case No. #?
=J!&D.
Thus' To4ota file0 its Secon0 Supple9ental Petition 8ith this Cou+t challen1in1 the ,ali0it4 of the in:unction 8+it issue0 b4 the Cou+t of (ppealsN
Secon0 Di,ision.
This Secon0 Supple9ental Petition 8as a09itte0 on Feb+ua+4 !' ##=.
On Feb+ua+4 !' ##=' 8e 1a,e 0ue cou+se to To4otaNs petition.
Subse7uentl4' th+ou1h a 9anifestation 0ate0 (p+il =#' ##=' To4ota info+9e0 the Cou+t that on (p+il J' ##=' the Cou+t of (ppealsN th Di,ision
CSun Valle4 caseD +en0e+e0 a 0ecision 0is9issin1 the case befo+e it fo+ lac< of 9e+it. The Cou+t of (ppeals +ule0 that the To4ota co9plaint 8as not a
collate+al attac< on Sun Valle4Ns title an0 that 9is:oin0e+ of pa+ties is not a 1+oun0 fo+ 0is9issal.
( subse7uent 9otion fo+ +econsi0e+ation 8as 0enie0 in a +esolution 0ate0 (u1ust !' ##=.
In the instant petition To4ota +aises the follo8in1 issues' to 8it;
. The Cou+t of (ppealsN !th Di,ision 1+a,el4 abuse0 its 0isc+etion 8hen it i1no+e0 o+ p+eten0e0 to i1no+e To4otaNs p+otests a1ainst %u01e
Go+ospeNs in:unction o+0e+s.
=. Sun Valle4 is 1uilt4 of fo+u9?shoppin1 an0 %u01e Go+ospe of case?1+abbin1.
Sun Valle4' on the othe+ han0 +aises the follo8in1;
. Fhethe+ o+ not the petitione+ a,aile0 of the p+ope+ 9o0e of ele,atin1 the case to this Cou+t.
=. Fhethe+ o+ not the Cou+t of (ppeals co99itte0 1+a,e abuse of 0isc+etion in +efusin1 to act upon petitione+Ns supple9ental petitions fo+
ce+tio+a+i.
@. Fhethe+ o+ not the co9plaint file0 in the cou+t belo8 is an accion publiciana 8hich is 8ithin the :u+is0iction of the RTC.
&. Fhethe+ o+ not %u01e Sal,a0o+ S. Tensuan ha0 :u+is0iction to ta<e co1ni3ance of Ci,il Case No. =J!& fo+ +efo+9ation of inst+u9ent.
J. Fhethe+ o+ not +espon0ent %u01e Go+ospe' %+. co99itte0 1+a,e abuse of 0isc+etion in 1+antin1 p+i,ate +espon0entNs application fo+ a 8+it of
p+eli9ina+4 p+ohibito+4G9an0ato+4 in:unction.
48
A. Fhethe+ o+ not %u01e Tensuan co99itte0 1+a,e abuse of 0isc+etion in issuin1 the 8+it of 9an0ato+4 in:unction 0ate0 Dece9be+ #' ##.
This case is fa+ f+o9 settle9ent on the 9e+its. Th+ou1h le1al 9aneu,e+in1s' the pa+ties ha,e succee0e0 in 9u00lin1 up the ,ital issues of the case
an0 1ettin1 the lo8e+ cou+ts e9b+oile0 in nu9e+ous appeals o,e+ technicalities. (s it is no8' the+e a+e th+ee appellate 0ecisionsG+esolutions befo+e us
fo+ +e,ie8 an0 conflictin1 o+0e+s issue0 b4 lo8e+ cou+ts as a +esult of the sepa+ate cases file0 b4 the pa+ties. (s in the case of Consoli0ate0 )an<
an0 T+ust Co+p. ,. Cou+t of (ppeal's #@ SCR( J$ S##T' the Cou+t is eBplicit in statin1 that;
BBB BBB BBB
Fhe+e the+e a+e conflictin1 but ineBt+icabl4 inte+connecte0 issues in one an0 the sa9e co9plicate0 case' it is best that these be +esol,e0 in one
inte1+ate0 p+ocee0in1 8he+e an o,e+all pictu+e of the enti+et4 of the case can be p+esente0 an0 eBa9ine0. Piece9eal 0ete+9inations b4 se,e+al t+ial
cou+ts on se19ents of the basic issue an0 0isconnecte0 appeals to 0iffe+ent Di,isions of the Cou+t of (ppeals +esultin1 in sepa+ate 0ecisions each
0ealin1 8ith onl4 pa+t of the p+oble9 a+e 0iscou+a1e0. Nee0less 9ultiplicit4 of suits is so9ethin1 8hich is f+o8ne0 upon.
BBB BBB BBB
(9i0 the clutte+ of eBt+aneous 9ate+ials 8hich ha,e ce+tainl4 bloate0 the +eco+0s of this case' 8e fin0 onl4 t8o C=D issues ,ital to the 0isposition of
the petition; fi+st' is the 9atte+ of :u+is0iction' 8ho as bet8een %u01e Tensuan o+ %u01e Go+ospe has :u+is0iction o,e+ the 0isputeE an0 secon0' 8ho
as bet8een the pa+ties has the +i1htful possession of the lan0.
(nent the issue on :u+is0iction' 8e eBa9ine the t8o actions file0 b4 the pa+ties.
To4ota file0 an action fo+ +efo+9ation on Septe9be+ ' ##' befo+e %u01e Tensuan alle1in1 that the t+ue intentions of the pa+ties 8e+e not
eBp+esse0 in the inst+u9ent C(+t. @J# Ci,il Co0eD. The inst+u9ent sou1ht to be +efo+9e0 is the 0ee0 of sale eBecute0 b4 (PT in fa,o+ of To4ota.
To4ota alle1es that the+e 8as a 9ista<e in the 0esi1nation of the +eal p+ope+ties sub:ect 9atte+ of the cont+act. Sun Valle4 8as i9plea0e0 in o+0e+ to
obtain co9plete +elief since it 8as the o8ne+ of the a0:acent lot.
Sun Valle4' ho8e,e+' a+1ues that the co9plaint fo+ +efo+9ation states no cause of action a1ainst it since an action fo+ +efo+9ation is basicall4 one
st+ictl4 bet8een the pa+ties to the cont+act itself. Thi+0 pe+sons 8ho a+e not pa+ties to the cont+act cannot an0 shoul0 not be in,ol,e0. Thus' Sun
Valle4 conten0s that it shoul0 not ha,e been i9plea0e0 as a 0efen0ant.
The Cou+t of (ppealsN th Di,ision' in its 0ecision p+o9ul1ate0 on (p+il J' ##= 8he+e the 0enial of Sun Valle4Ns 9otion to 0is9iss 8as sustaine0'
co++ectl4 +ule0 that 9is:oin0e+ of pa+ties is not a 1+oun0 fo+ 0is9issal.
(9e+ican :u+isp+u0ence f+o9 8he+e p+o,isions on +efo+9ation of inst+u9ents 8e+e ta<en 0iscloses that suits to +efo+9 8+itten inst+u9ents a+e sub:ect
to the 1ene+al +ule in e7uit4 that all pe+sons inte+este0 in the sub:ect 9atte+ of the liti1ation' 8hethe+ it is a le1al o+ an e7uitable inte+est shoul0 be
9a0e pa+ties' so that the cou+t 9a4 settle all thei+ +i1hts at once an0 thus p+e,ent the necessit4 of a 9ultiplicit4 of suits C)e,is Const+uction Co. ,.
G+ace SFla (ppT J So =0 $&E G+een ,. Stone' J& N.%.E. @$"' @& ( !##D. (s a 1ene+al +ule' the+efo+e' all pe+sons to be affecte0 b4 the p+opose0
+efo+9ation 9ust be 9a0e pa+ties C(9e+ican Fi0elit4 5 Casualt4 Co. ,. El0e+' $# Ga ==#' J SE =0 AA$E *e9p ,. Fun0e+bu+<' ==& NC @J@' @! SE =0
JJD. In an action to +efo+9 a 0ee0' all pa+ties clai9in1 an inte+est in the lan0 o+ an4 pa+t the+eof pu+po+te0l4 con,e4e0 b4 the inst+u9ent sou1ht to
be +efo+9e0' an0 8hose inte+ests 8ill be affecte0 b4 the +efo+9ation of the inst+u9ent a+e necessa+4 pa+ties to the action C*e9p ,. Fun0e+bu+<' ==&
NC @J@' @! SE =0 JJD.
F+o9 the fo+e1oin1 :u+isp+u0ence' it 8oul0 appea+ that To4ota 8as co++ect in i9plea0in1 Sun Valle4 as pa+t4 0efen0ant. -o8e,e+' these p+inciples
a+e not applicable un0e+ the pa+ticula+ ci+cu9stances of this case. Un0e+ the facts of the p+esent case' To4otaNs action fo+ +efo+9ation is 0is9issible
as a1ainst Sun Valle4.
(ttention 9ust fi+st be b+ou1ht to the fact that the cont+act of sale eBecute0 bet8een (PT an0 To4ota p+o,i0es an a+bit+ation clause 8hich states that;
BBB BBB BBB
J. In case of 0isa1+ee9ent o+ conflict a+isin1 out of this Cont+act' the pa+ties he+eb4 un0e+ta<e to sub9it the 9atte+ fo+ 0ete+9ination b4 a
co99ittee of eBpe+ts' actin1 as a+bit+ato+s' the co9position of 8hich shall be as follo8s;
aD One 9e9be+ to be appointe0 b4 the VENDORE
bD One 9e9be+ to be appointe0 b4 the VENDEEE
cD One 9e9be+' 8ho shall be a la84e+' to be appointe0 b4 both of the afo+esai0 pa+tiesE
49
The 9e9be+s of the (+bit+ation Co99ittee shall be appointe0 not late+ than th+ee C@D 8o+<in1 0a4s f+o9 +eceipt of a 8+itten notice f+o9 eithe+ o+ both
pa+ties. The (+bit+ation Co99ittee shall con,ene not late+ than th+ee C@D 8ee<s afte+ all its 9e9be+s ha,e been appointe0 an0 p+ocee0 8ith the
a+bit+ation of the 0ispute 8ithin th+ee C@D calen0a+ 9onths counte0 the+ef+o9. )4 8+itten 9utual a1+ee9ent b4 the pa+ties he+eto' such ti9e li9it fo+
the a+bit+ation 9a4 be eBten0e0 fo+ anothe+ calen0a+ 9onth. The 0ecision of the (+bit+ation Co99ittee b4 9a:o+it4 ,ote of at least t8o C=D 9e9be+s
shall be final an0 bin0in1 upon both the VENDOR an0 the VENDEEE CRollo' pp. $A?$"D
BBB BBB BBB
The contention that the a+bit+ation clause has beco9e 0isfunctional because of the p+esence of thi+0 pa+ties is untenable.
Cont+acts a+e +especte0 as the la8 bet8een the cont+actin1 pa+ties CMe+cantile Ins. Co. Inc. ,. Felipe 6s9ael' %+. 5 Co.' Inc.' A# SCR( AA S#$#TD.
(s such' the pa+ties a+e the+eb4 eBpecte0 to abi0e 8ith 1oo0 faith in thei+ cont+actual co99it9ents C2uillan ,. C(' A# SCR( ="# S#$#TD. To4ota is
the+efo+e boun0 to +espect the p+o,isions of the cont+act it ente+e0 into 8ith (PT.
To4ota file0 an action fo+ +efo+9ation of its cont+act 8ith (PT' the pu+pose of 8hich is to loo< into the +eal intentionsGa1+ee9ent of the pa+ties to the
cont+act an0 to 0ete+9ine if the+e 8as +eall4 a 9ista<e in the 0esi1nation of the boun0a+ies of the p+ope+t4 as alle1e0 b4 To4ota. Such 7uestions can
onl4 be ans8e+e0 b4 the pa+ties to the cont+act the9sel,es. This is a cont+o,e+s4 8hich clea+l4 a+ose f+o9 the cont+act ente+e0 into b4 (PT an0
To4ota. Inas9uch as this conce+ns 9o+e i9po+tantl4 the pa+ties (PT an0 To4ota the9sel,es' the a+bit+ation co99ittee is the+efo+e the p+ope+ an0
con,enient fo+u9 to settle the 9atte+ as clea+l4 p+o,i0e0 in the 0ee0 of sale.
-a,in1 been app+ise0 of the p+esence of the a+bit+ation clause in the 9otion to 0is9iss file0 b4 (PT' %u01e Tensuan shoul0 ha,e at least suspen0e0
the p+ocee0in1s an0 0i+ecte0 the pa+ties to settle thei+ 0ispute b4 a+bit+ation C)en1son ,. Chan' "$ SCR( @ S#""T' Sec. "' R( $"AD. %u01e
Tensuan shoul0 ha,e not ta<en co1ni3ance of the case.
)ut the 9o+e appa+ent +eason 8hich 8a++ants the 0is9issal of the action as a1ainst Sun Valle4 is the fact that the co9plaint fo+ +efo+9ation a9ounts
to a collate+al attac< on Sun Valle4Ns title' cont+a+4 to the fin0in1 of the Cou+t of (ppealsN th Di,ision.
It is 0ispute0 that Sun Valle4 has a To++ens title +e1iste+e0 in its na9e b4 ,i+tue of its pu+chase of the lan0 f+o9 (PT.
To4ota conten0s that the "=@ s7ua+e 9ete+s st+ip of lan0 8hich it un0e+stoo0 to be inclu0e0 in its pu+chase f+o9 (PT 8as e++oneousl4 inclu0e0 in
Sun Valle4Ns title. This is the +eason 8h4 +efo+9ation 8as sou1ht to co++ect the 9ista<e.
Fell?settle0 is the +ule that a ce+tificate of title can not be alte+e0' 9o0ifie0' o+ cancelle0 eBcept in a 0i+ect p+ocee0in1 in acco+0ance 8ith la8
CSection &$' P.D. No. J=#D.
In the case of Do9in1o ,. Santos On1sia<o' .i9 4 Sia CJJ Phil. @A S#@!TD' the Cou+t hel0 that;
. . . The fact shoul0 not be o,e+loo<e0 that 8e a+e he+e conf+onte0 8ith 8hat is +eall4 a collate+al attac< upon a To++ens title. The ci+cu9stance that
the action 8as 0i+ectl4 b+ou1ht to +eco,e+ a pa+cel of lan0 0oes not alte+ the t+uth that the p+ocee0in1 in,ol,es a collate+al attac< upon a To++ens title'
because as 8e ha,e foun0' the lan0 in cont+o,e+s4 lies 8ithin the boun0a+ies 0ete+9ine0 b4 that title. The .an0 Re1ist+ation .a8 0efines the
9etho0s un0e+ 8hich a 8+on1ful a0:u0ication of title to lan0 un0e+ the To++ens s4ste9 9a4 be co++ecte0 . . .
Fhile +efo+9ation 9a4 often be ha0 to co++ect 9ista<es in 0efinin1 the boun0a+4 of lan0s con,e4e0 so as to i0entif4 the lan0s' it 9a4 not be use0 to
pass othe+ lan0s f+o9 those inten0e0 to be bou1ht an0 sol0' not8ithstan0in1 a 9ista<e in pointin1 out the lines' since +efo+9ation un0e+ these
ci+cu9stances 8oul0 be ine7uitable an0 un:ust. CMcCa4 ,. %en<ins' =&& (la AJ!' J So =0 &!#' &# (.R "&AD
(ssu9in1 that To4ota is affo+0e0 the +elief p+a4e0 fo+ in the Tensuan cou+t' the latte+ can not ,ali0l4 o+0e+ the conteste0 po+tion to be ta<en out f+o9
the Sun Valle4Ns TCT an0 a8a+0 it in fa,o+ of To4ota.
(n action fo+ +efo+9ation is in pe+sona9' not in +e9 CCohen ,. -ell9an Co99e+cial T+ust 5 Sa,in1s )an<' @@ Cal (pp "J$' =& P=0 #A!E E08a+0s ,.
Ne8 6o+< .ife Ins. Co. "@ Tenn !=' & SF =0 $!$D e,en 8hen +eal estate is in,ol,e0 C(1u+s ,. -olt' =@= .a !=A' #J So =0 A&&E Vallee ,. Vallee
C.a (ppD $! So =0 J"!D. It is 9e+el4 an e7uitable +elief 1+ante0 to the pa+ties 8he+e th+ou1h 9ista<e o+ f+au0' the inst+u9ent faile0 to eBp+ess the
+eal a1+ee9ent o+ intention of the pa+ties. Fhile it is a +eco1ni3e0 +e9e04 affo+0e0 b4 cou+ts of e7uit4 it 9a4 not be applie0 if it is cont+a+4 to 8ell?
settle0 p+inciples o+ +ules. It is a lon1 stan0in1 p+inciple that e7uit4 follo8s the la8. It is applie0 in the abscence of an0 ne,e+ a1ainst statuto+4 la8
C/abat ,. Cou+t of (ppeals' &= SCR( J$" S#$ATD. Cou+ts a+e boun0 b4 +ules of la8 an0 ha,e no a+bit+a+4 0isc+etion to 0is+e1a+0 the9. CSee (+senal
,. Inte+9e0iate (ppellate Cou+t' &@ SCR( &! S#$AT.D Cou+ts of e7uit4 9ust p+ocee0 8ith ut9ost caution especiall4 8hen +i1hts of thi+0 pa+ties 9a4
inte+,ene. Thus in the instant case' ,is?a?,is 8ell?settle0 p+inciples o+ +ules in lan0 +e1ist+ation' the e7uitable +elief of +efo+9ation 9a4 not co9e into
pla4 in o+0e+ to t+ansfe+ o+ app+op+iate a piece of lan0 that one clai9s to o8n but 8hich is title0 in the na9e of a thi+0 pa+t4.
50
On the othe+ han0' Sun Valle4 file0 an action fo+ +econ,e4ance a1ainst To4ota to +eco,e+ possession of the st+ip of lan0 enc+oache0 upon an0
occupie0 b4 the latte+. Fhat Sun Valle4 see<s in its co9plaint is the +eco,e+4 of possession 0e :u+e an0 not 9e+el4 possession 0e facto. To4ota
9o,e0 to 0is9iss on the assu9ption that the co9plaint 8as one fo+ unla8ful 0etaine+ co1ni3able b4 the MTC.
Fe 0o not fin0 an4 +e,e+sible e++o+ in the 0ecision of the Cou+t of (ppealsN !th Di,ision 8he+e it uphel0 %u01e Go+ospeNs o+0e+ 0en4in1 To4otaNs
9otion to 0is9iss. (n a9en09ent to a co9plaint befo+e a +esponsi,e plea0in1 is file0' is a 9atte+ of +i1ht CRule !' Sec. =D. Fhethe+ o+ not the
co9plaint 8as a9en0e0' Sun Valle4Ns co9plaint 8as one fo+ accion publiciana co1ni3able b4 the RTC. Its +i1ht o,e+ the lan0 is p+e9ise0 on the
ce+tificate of title +e1iste+e0 in its na9e afte+ it ha0 pu+chase0 sai0 lan0 f+o9 (PT. (s the +e1iste+e0 o8ne+ it ha0 the +i1ht of possession of sai0 lan0
ille1all4 occupie0 b4 anothe+ C6baMe3 ,. I(C' #& SCR( "&@ S##TD. The case of )ana4os ,. Susana Realt4' Inc. C" SCR( JJ" S#"ATD is 7uite
inst+ucti,e;
BBB BBB BBB
Fe 0ee9 it a0,isable' at this point' to +eite+ate the essential 0iffe+ences bet8een th+ee <in0s of actions fo+ the +eco,e+4 of possession of +eal
p+ope+t4' na9el4; CD the su99a+4 action fo+ fo+cible ent+4 an0 unla8ful 0etaine+E C=D the accion publicianaE an0 C@D the accion 0e +ei,in0icacion.
The action fo+ fo+cible ent+4 9a4 be b+ou1ht 8he+e 0ispossession of +eal p+ope+t4 ha0 ta<en place b4 an4 of the 9eans p+o,i0e0 fo+ in Section of
Rule "! of the Re,ise0 Rules of Cou+t' an0 in the case of unla8ful 0etaine+' 8he+e the possession is 8ithhel0 afte+ the eBpi+ation o+ te+9ination of
the +i1ht to hol0 possession' b4 ,i+tue of an4 cont+act eBp+ess o+ i9plie0. These t8o actions 9ust be file0 8ithin one CD 4ea+ afte+ such unla8ful
0ep+i,ation o+ 8ithhol0in1 of possession 8ith the 9unicipal o+ cit4 cou+t. These actions in thei+ essence a+e 9e+e 7uietin1 p+ocesses b4 ,i+tue of
8hich a pa+t4 in possession of lan0 9a4 not be' b4 fo+ce' 0ispossesse0 of that lan0' the la8 +esto+in1 to hi9 such possession in a su99a+4 9anne+'
until the +i1ht of o8ne+ship can be t+ie0 in 0ue cou+se of la8. The4 a+e' the+efo+e' inten0e0 to p+o,i0e an eBpe0itious 9eans of p+otectin1 actual
possession o+ +i1ht to possession of p+ope+t4. The afo+esai0 Rule "! 0oes not' ho8e,e+' co,e+ all of the cases of 0ispossession of lan0s. Thus'
H8hene,e+ the o8ne+ is 0ispossesse0 b4 an4 othe+ 9eans than those 9entione0 he 9a4 9aintain his action in the Cou+t of Fi+st Instance' an0 it is
not necessa+4 fo+ hi9 to 8ait until the eBpi+ation of t8el,e 9onths befo+e co99encin1 an action to be +epossesse0 o+ 0ecla+e0 to be o8ne+ of lan0.H
CGu9i+an ,. Gu9i+an' = Phil. "&' "#. Cf. Me0ina' et al. ,. Val0ellon' A@ SCR( ="$D Cou+ts of Fi+st Instance ha,e :u+is0iction o,e+ actions to
+eco,e+ possession of +eal p+ope+t4 ille1all4 0etaine0' to1ethe+ 8ith +ents 0ue an0 0a9a1es' e,en thou1h one CD 4ea+ has not eBpi+e0 f+o9 the
be1innin1 of such ille1al 0etention' p+o,i0e0 the 7uestion of o8ne+ship of such p+ope+t4 is also in,ol,e0. In othe+ 8o+0s' if the pa+t4 ille1al
0ispossesse0 0esi+es to +aise the 7uestion of ille1al 0ispossession as 8ell as that of the o8ne+ship o,e+ the p+ope+t4' he 9a4 co99ence such action
in the Cou+t of Fi+st Instance i99e0iatel4 o+ at an4 ti9e afte+ such ille1al 0ispossession. If he 0eci0es to +aise the 7uestion of ille1al 0ispossession
onl4' an0 the action is file0 9o+e than one CD 4ea+ afte+ such 0ep+i,ation o+ 8ithhol0in1 of possession' then the Cou+t of Fi+st Instance 8ill ha,e
o+i1inal :u+is0iction o,e+ the case. C)ishop of Cebu ,. Man1o+on' A Phil. =$AE Catholic Chu+ch ,. Ta+lac an0 Victo+ia' # Phil. &J!E .e0es9a ,. Ma+cos'
# Phil. A$E Me0ina' et al. ,. Val0ellon' sup+aD The fo+9e+ is an accion 0e +ei,in0icacion 8hich see<s the +eco,e+4 of o8ne+ship as 8ell as
possession' 8hile the latte+ +efe+s to an accion publiciana' 8hich is the +eco,e+4 of the +i1ht to possess an0 is a plena+4 action in an o+0ina+4
p+ocee0in1 in the Cou+t of Fi+st Instance. CSec. $$' Rep. (ct No. =#AE Rule "!' Rules of Cou+tE Manila Rail+oa0 Co. ,. (tto+ne4 Gene+al' =! Phil. J=@E
.i9 Ca4 ,. Del' JJ Phil. A#=E Cent+al (3uca+e+a 0e Ta+lac ,. De .eon' JA Phil. A#E Na,a++o ,. (1uila' AA Phil. A!&E .una ,. Ca+an0an1' =A SCR( @!AE
Me0ina' et al. ,. Val0ellon' sup+aE Pasa7ui' et al. ,. Villablanca' et al.' sup+aD.
Fith the fin0in1 that To4otaNs action fo+ +efo+9ation is 0is9issable as it is in effect a collate+al attac< on Sun Valle4Ns title' Sun Valle4Ns action fo+
+eco,e+4 of possession file0 befo+e %u01e Go+ospe no8 stan0s to be the p+ope+ fo+u9 8he+e the follo8in1 0ispute 9a4 be t+ie0 o+ hea+0.
Fe no8 co9e to the issue as to 8hich of the pa+ties has a le1al +i1ht o,e+ the p+ope+t4 to 8a++ant the issuance of the p+eli9ina+4
9an0ato+4Gp+ohibito+4 in:unction.
In actions in,ol,in1 +ealt4' p+eli9ina+4 in:unction 8ill lie onl4 afte+ the plaintiff has full4 establishe0 his title o+ +i1ht the+eto b4 a p+ope+ action fo+ the
pu+pose. To autho+i3e a te9po+a+4 in:unction' the co9plainant 9ust 9a<e out at least a p+i9a facie sho8in1 of a +i1ht to the final +elief. P+eli9ina+4
in:unction 8ill not issue to p+otect a +i1ht not in esse C)ua4an Cattle Co. Inc. ,. 2uintillan' =$ SCR( =$A?=$" S#$&TE O+ti1as 5 Co9pan4' .i9ite0
Pa+tne+ship ,. Rui3' &$ SCR( @=A S#$"TD.
T8o +e7uisites a+e necessa+4 if a p+eli9ina+4 in:unction is to issue' na9el4' the eBistence of the +i1ht to be p+otecte0' an0 the facts a1ainst 8hich the
in:unction is to be 0i+ecte0' a+e ,iolati,e of sai0 +i1ht. In pa+ticula+' fo+ a 8+it of p+eli9ina+4 in:unction to issue' the eBistence of the +i1ht an0 the
,iolation 9ust appea+ in the alle1ations of the co9plaint an0 an in:unction is p+ope+ also 8hen the plaintiff appea+s to be entitle0 to the +elief
0e9an0e0 in his co9plaint. Fu+the+9o+e' the co9plaint fo+ in:uncti,e +elief 9ust be const+ue0 st+ictl4 a1ainst the plea0e+ CO+ti1as 5 Co9pan4'
.i9ite0 Pa+tne+ship ,. Rui3' sup+aD.
In the instant case the eBistence of a Hclea+ positi,e +i1htH especiall4 callin1 fo+ :u0icial p+otection has been sho8n b4 Sun Valle4.
To4otaNs clai9 o,e+ the 0ispute0 p+ope+t4 is ancho+e0 on the fact of its pu+chase of the p+ope+t4 f+o9 (PT' that f+o9 the ci+cu9stances of the
pu+chase an0 the intention of the pa+ties' the p+ope+t4 inclu0in1 the 0ispute0 a+ea 8as sol0 to it.
51
Sun Valle4' on the othe+ han0 has TCT No. &#!# of the Re1ist+4 of Dee0s of Pa+aMa7ue e9b+acin1 the afo+esai0 p+ope+t4 in its na9e' ha,in1 been
,ali0l4 ac7ui+e0 also f+o9 (PT b4 ,i+tue of a Dee0 of Sale eBecute0 in its fa,o+ on Dece9be+ J' ##! CRollo' pp. $=@?$=JE $=A?$="D.
The+e a+e othe+ ci+cu9stances in the case 8hich 9ilitate a1ainst To4otaNs clai9 fo+ le1al possession o,e+ the 0ispute0 a+ea.
The fact that To4ota has file0 a suit fo+ +efo+9ation see<in1 the inclusion of the "=@ s7ua+e 9ete+s st+ip of lan0 is sufficient to 0e0uce that it is not
entitle0 to ta<e o,e+ the piece of p+ope+t4 it no8 atte9pts to app+op+iate fo+ itself.
(s ea+l4 as Septe9be+' #$$ p+io+ to the const+uction of the pe+i9ete+ fence' To4ota 8as al+ea04 a8a+e of the 0isc+epancies in the p+ope+t4Ns
0esc+iption in the title an0 the actual su+,e4.
The lette+ of its su+,e4o+ co9pan4' Su99a *u9a1ai thus +e,eals;
!# Septe9be+' #$$
TO6OT( MOTOR P-I.IPPINES CORPOR(TION
!th Floo+' Met+oban< Pla3a
Sen. Gil %. Pu4at (,e.
Ma<ati' Met+o Manila
(TTENTION; MR. F.ORENCIO %UR(DO
Finance Office+
SU)%ECT; P-(SE I RENOV(TION FOR*
PERIMETER FENCE
GENT.EMEN;
This is in connection 8ith the const+uction of the Pe+i9ete+ Fence fo+ the To4ota Moto+ Plant Facilities 8hich to this 0ate 8e ha,e not sta+te0 4et 0ue
to the follo8in1 +easons;
. .ac< of fencin1 pe+9it 8hich can onl4 be applie0 to an0 issue0 b4 the Pa+aMa7ue )uil0in1 Official upon +eceipt of the t+ansfe+ ce+tificate to
title an0 taB 0ecla+ation.
=. (lthou1h the )uil0in1 Official has ,e+ball4 inst+ucte0 us to p+ocee0 8ith the +eno,ation 8o+< an0 const+uction of fence' 8e coul0 not
eBecute the fencin1 8o+< 0ue to 0isc+epancies on the consoli0ation plan an0 the eBistin1 p+ope+t4 9onu9ents. These 0isc+epancies 8as CsicD
confi+9e0 8ith the +ep+esentati,es of the Geo0etic En1inee+.
*in0l4 eBpe0ite the i99e0iate confi+9ation 8ith the Geo0etic En1inee+ on the final 0esc+iptions of the p+ope+t4 lines.
Fe 8oul0 app+eciate 4ou+ usual p+o9pt attention +e1a+0in1 this 9atte+.
Ve+4 t+ul4 4ou+s'
CES(R D. E.E
P+o:ect Mana1e+ CE9phasis supplie0' Rollo' p. $D
Despite such notification' To4ota continue0 to buil0 the pe+i9ete+ fence. It is hi1hl4 0oubtful 8hethe+ To4ota 9a4 be consi0e+e0 a buil0e+ in 1oo0 faith
to be entitle0 to p+otection un0e+ (+ticle &&$ of the Ci,il Co0e.
The +eco+0s also +e,eal that To4otaNs o8n su+,e4o+' the Ce+te3a Su+,e4in1 5 (c+ophoto S4ste9s' Inc. confi+9e0 in its +epo+ts 0ate0 (p+il an0 (p+il
J' ## that To4otaNs pe+i9ete+ fence o,e+laps the boun0a+ies of Sun Valle4Ns lot CRollo' pp. $@@?@$@D.
E,en co99unication eBchan1es bet8een an0 a9on1 (PT' To4ota 5 Sun Valle4 sho8 that the pa+ties a+e ce+tainl4 a8a+e that the o8ne+ship of the
0ispute0 p+ope+t4 9o+e p+ope+l4 pe+tains to Sun Valle4. (9on1 these a+e the follo8in1;
Ma4 =$' ##
MR. %OSE C-. (.V(RE/
P+esi0ent
52
Sun Valle4 Manufactu+in1 5
De,elop9ent Co+p. CSVMDCD
Co+. (u+o+a )l,0. an0 (n0+e8s (,e.
Pasa4 Cit4' Met+o Manila
Dea+ M+. (l,a+e3;
Than< 4ou fo+ hono+in1 ou+ in,itation to a luncheon 9eetin1 hel0 at noon ti9e to0a4 at Su1i Restau+ant.
(s pe+ ou+ un0e+stan0in1' 8e 8oul0 li<e to p+opose as a pac<a1e the settle9ent of 0iffe+ences bet8een 4ou+ p+ope+t4 an0 ou+s as follo8s;
. )oun0a+4 Issue bet8een TMP Main Office 5 Facto+4 an0 the +ecentl4 ac7ui+e0 p+ope+t4 of SVMDC.
The boun0a+4 lines to ou+ p+ope+t4 lines bi00e0 ea+l4 #$$ 8e+e 0ete+9ine0 afte+ 9a<in1 full pa49ent in (u1ust #$$ :ointl4 b4 +ep+esentati,es of
TMPGMet+oban< I Mess+s. Mita<e' Pe0+osa' (lon3o an0 %u+a0o' (PT I M+. )ince to1ethe+ 8ith +ep+esentati,es of Geo?Resou+ces 8ho installe0
the 9onu9ents an0 p+epa+e0 the technical 0esc+iption of the p+ope+t4. The const+uction of the fence utili3e0 eBistin1 fence 9a+<e0 4ello8 on EBhibit
an0 9a0e su+e that the ne8 fence to set boun0a+ies 8e+e on top of the 9onu9ents set b4 Geo?Resou+ces. The +eplace9ent of eBistin1 8i+e fence
8e+e affecte0 b4 settin1 conc+ete 8alls on eBactl4 the sa9e position.
This is the +eason 8h4 8e a+e su+p+ise0 top be info+9e0 that ou+ fence 1oes be4on0 the boun0a+4 lines set fo+th in the Technical Desc+iption on the
T+ansfe+ Ce+tificate of Title CTCTD to ou+ p+ope+t4. This occu+s e,en on fence al+ea04 eBistin1 an0 shoul0 ha,e been 9aintaine0 in the TCT.
Since 8e ha,e 9anifeste0 ou+ intention 8hen 8e set boun0a+ies to ou+ p+ope+t4' 8e p+opose the follo8in1 in +elation to the eBcess a+ea occupie0 b4
TMP.
. Fe offe+ to 1i,e 8a4 to an access +oa0 J 9. 8i0e 9o+e o+ less f+o9 point J to A of .ot = C&.AJ 9. in len1thD at the bac< of ou+ Paint Sto+a1e
)uil0in1 CEBhibit =D.
=. Fe p+opose to pa4 fo+ the balance of eBcess lan0 insi0e TMP fence Cconteste0 a+easD at a p+ice 9utuall4 a1+ee0 upon.
II. 2uestion of o8ne+ship of ce+tain pe+9anent i9p+o,e9ents Cun0e+1+oun0 8ate+ +ese+,oi+ an0 pe+i9ete+ 8allsGfencesD locate0 at .ot A 8hich 8e
8on b4 bi00in1 f+o9 (PT on Octobe+ J' ##!.
Fe ha,e 9a0e ou+ position to (PT that these pe+9anent i9p+o,e9ents a+e pa+t of .ot A on Has is 8he+e isH bi0 basis CSee eBplanato+4 9ap I
EBhibit @D. -o8e,e+' since 4ou ha,e +ela4e0 to us that the un0e+1+oun0 8ate+ +ese+,oi+ is of no use to 4ou' as pa+t of the total pac<a1e 8e a+e
p+oposin1 to pa4 fo+ the un0e+1+oun0 8ate+ +ese+,oi+' the applicable pe+i9ete+ 8allsGfences an0 the 8ate+ pu9pGpipin1s at a p+ice 9utuall4 a1+ee0
upon.
Fe hope that th+ou1h this p+oposal 8e 8oul0 settle ou+ 0iffe+ences an0 loo< fo+8a+0 to a 9o+e coope+ati,e +elationship bet8een 1oo0 nei1hbo+s.
Fe 8ill app+eciate 4ou+ fa,o+able consi0e+ation an0 i99e0iate attention on the 9atte+.
Ve+4 t+ul4 4ou+s'
M(S(O MIT(*E
P+esi0ent

%ul4 &' ##
TO6OT( MOTOR P-I.IPPINES CORPOR(TION
R9. J' South Supe+hi1h8a4
Pa+aMa7ue' Met+o Manila
(TTENTION; MR. M(S(O MIT(*E
P+esi0ent
Gentle9en;
53
This +efe+s to ou+ se,e+al 9eetin1s +e1a+0in1 the p+ope+t4 p+oble9s at H.ot AH an0 4ou+ enc+oach9ent of SVMD .OT I.
Fe 8ish to than< 4ou fo+ finall4 ac<no8le01in1 the le1iti9ac4 of ou+ 0e9an0s on both p+ope+ties. In o+0e+ to sta+t a 1oo0 business +elationship' 8e
p+opose that the p+ope+t4 p+oble9 at H.OT AH 8hich consists of the pe+i9ete+ fence' 8ate+ +ese+,oi+' 8ate+ pu9p an0 s4ste9s be settle0 fi+st' in the
a9ount of P@'J!!'!!!.!! pa4able to CM(NC.
Fe also 8oul0 li<e to +e7uest 4ou to allo8 us to continue usa1e of the MER(.CO posts an0 lines connectin1 to SVMD po8e+ station 8hich passes
th+u 4ou+ p+ope+t4 an0 allo8 ent+4 of MER(.CO line9en f+o9 ti9e to ti9e.
Upon acceptance of these +e7uests' I 8ill confe+ 8hich ou+ %apanese pa+tne+s to consi0e+ the sellin1 of the "=@ s7. 9. of lan0 a0:acent to 4ou+
(sse9bl4 Plant 8hich 4ou continue to use e,en afte+ sai0 p+ope+t4 has been le1all4 t+ansfe++e0 to us f+o9 last 7ua+te+ of ##!.
In ,ie8 of 4ou+ p+esent 1oo0 beha,io+' 8e a+e hopin1 that this fi+st p+oble9 be settle0 not late+ than %ul4 J' ##' othe+8ise' 8e 8ill consi0e+ the
8hole 9atte+ as unacceptable to 4ou an0 8e' the+efo+e' p+ocee0 as ea+lie+ 0e9an0e0 to i99e0iatel4 0e9olish the C-) fence that p+e,ents us f+o9
usin1 ou+ p+ope+t4.
Fe hope fo+ 4ou+ i99e0iate action to sta+t the +esolution of these un8ante0 p+oble9s.
Ve+4 t+ul4 4ou+s'
%OSE C-. (.V(RE/
P+esi0ent CRollo' p. $@=E E9phasis supplie0D
Mo+eo,e+' Sun Valle4 puts fo+th e,i0ence that To4ota has alte+e0 the boun0a+ies of its o8n p+ope+t4 b4 9o,in1 the 9onu9ents e+ecte0 the+eon b4
(PTNs su+,e4o+ Geo?Resou+ces an0 Consultanc4' Inc. 8hen .ot = 8as initiall4 su+,e4e0 in (u1ust #$$;
The (sset P+i,itali3ation T+ust
!th Floo+' )(?.epanto )uil0in1
#$&" Paseo 0e RoBas )uil0in1
Met+o Manila
(ttention; M+. Felipe ). )ince' %+.
(ssociate EBecuti,e T+ustee
Dea+ Si+s;
This has +efe+ence to ou+ lette+ to 4ou+ office 0ate0 (p+il $' ##' a cop4 of 8hich is attache0' +e1a+0in1 the chec< su+,e4 of Delta I. (fte+ as<in1
so9e of the fiel0 9en 8ho pa+ticipate0 in the ,a+ious su+,e4s of Delta I f+o9 the consoli0ation to sub0i,ision su+,e4s' 8e foun0 out that so9e 9o+e
of the p+esent co+ne+ points a+e not the sa9e points sho8n to the9 0u+in1 the su+,e4s. Fe shall sho8 this 0u+in1 a 9eetin1 8ith the +ep+esentati,es
of the o8ne+s of .ots an0 =.
Fe hope this 8ill cla+if4 the 0isc+epancies.
Ve+4 t+ul4 4ou+s'
NOR)ERTO S. VI.(
EBec. Vice P+es. 5 Gen. Mana1e+
CE9phasis supplie0E Rollo' p. $@#D
The+e is the+efo+e sufficient an0 con,incin1 p+oof that Sun Valle4 has a clea+ le1al +i1ht to possession in its fa,o+ to 8a++ant the issuance of a 8+it of
p+eli9ina+4G9an0ato+4 in:unction. Sun Valle4Ns TCT 1i,es it that +i1ht to possession. On the othe+ han0' To4ota has not establishe0 its +i1ht o,e+ the
sai0 p+ope+t4 eBcept fo+ the asse+tion that the+e 8as a 9ista<e in an inst+u9ent 8hich pu+po+te0l4 shoul0 ha,e inclu0e0 the 7uestione0 st+ip of lan0.
(s bet8een the t8o C=D pa+ties' Sun Valle4 has a bette+ +i1ht. Un0e+ the ci+cu9stances' the+efo+e' an0 consi0e+in1 that the clea+ le1al +i1ht of To4ota
to possession of the 0ispute0 a+ea has not been establishe0 sufficient to 1+ant the p+a4e0 fo+ +elief' a 8+it of p+eli9ina+4 9an0ato+4 in:unction 9a4 be
issue0 pen0ente lite. CSee Ma+a' Inc. ,. Est+ella' AJ SCR( &" S#"JTE De G+acia ,. Santos' "# Phil. @AJ S#&"TE Ro0ulfa ,. (lfonso' "A Phil. ==J
S#&AT an0 To++e ,. 2ue+ubin' ! Phil. J@ S#J"TD
54
In ,ie8 of all the fo+e1oin1' the petition is he+eb4 DISMISSED fo+ failu+e to sho8 +e,e+sible e++o+' 9uch less 1+a,e abuse of 0isc+etion' on the pa+t of
the +espon0ent cou+t.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION

G.R. No. @J@A= Dece9be+ @' ###
-EIRS OF (UGUSTO .. S(.(S' %R.' na9el4; TERESIT( D. S(.(S fo+ he+self an0 as le1al 1ua+0ian of the 9ino+ F()RICE C6RI.. D. S(.(S'
M(. CRISTIN( S. .ES(C(' an0 *(RIN( TERES( D. S(.(S' petitione+s'
,s.
.(PER(. RE(.T6 CORPOR(TION' ROC*F(6 RE(. EST(TE CORPOR(TION' SOUT- RIDGE VI..(GE' INC.' M(-(R(MI DEVE.OPMENT
CORPOR(TION' Spouses T-E.M( D. ()R(%(NO an0 GREGORIO ()R(%(NO' OSC(R D(CI..O' Spouses VIRGINI( D. .(V( an0 RODE.
.(V(' EDU(RDO (. V(CUN(' F.OR(NTE DE .( CRU/' %ESUS VICENTE ). C(PE..(N' an0 the REGISTER OF DEEDS FOR .IP( CIT6'
+espon0ents.

DE .EON' %R.' %.;
)efo+e us is a petition fo+ +e,ie8 on ce+tio+a+i of the O+0e+ of )+anch $J of the Re1ional T+ial Cou+t of .ipa Cit4 = 0is9issin1 petitione+sN co9plaint @
fo+ +escission of se,e+al sale t+ansactions in,ol,in1 lan0 o8ne0 b4 (u1usto .. Salas' %+.' thei+ p+e0ecesso+?in?inte+est' on the 1+oun0 that the4 faile0
to fi+st +eso+t to a+bit+ation.
Salas' %+. 8as the +e1iste+e0 o8ne+ of a ,ast t+act of lan0 in .ipa Cit4' )atan1as spannin1 '&$&'@J& s7ua+e 9ete+s.
On Ma4 J' #$"' he ente+e0 into an O8ne+?Cont+acto+ (1+ee9ent & Che+einafte+ +efe++e0 to as the (1+ee9entD 8ith +espon0ent .ape+al Realt4
Co+po+ation Che+einafte+ +efe++e0 to as .ape+al Realt4D to +en0e+ an0 p+o,i0e co9plete Cho+i3ontalD const+uction se+,ices on his lan0.
On Septe9be+ =@' #$$' Salas' %+. eBecute0 a Special Po8e+ of (tto+ne4 in fa,o+ of +espon0ent .ape+al Realt4 to eBe+cise 1ene+al cont+ol'
supe+,ision an0 9ana1e9ent of the sale of his lan0' fo+ cash o+ on install9ent basis.
On %une !' #$#' Salas' %+. left his ho9e in the 9o+nin1 fo+ a business t+ip to Nue,a Eci:a. -e ne,e+ +etu+ne0.
On (u1ust A' ##A' Te+esita Dia3 Salas file0 8ith the Re1ional T+ial Cou+t of Ma<ati Cit4 a ,e+ifie0 petition fo+ the 0ecla+ation of p+esu9pti,e 0eath of
he+ husban0' Salas' %+.' 8ho ha0 then been 9issin1 fo+ 9o+e than se,en C"D 4ea+s. It 8as 1+ante0 on Dece9be+ =' ##A. J
Meanti9e' +espon0ent .ape+al Realt4 sub0i,i0e0 the lan0 of Salas' %+. an0 sol0 sub0i,i0e0 po+tions the+eof to +espon0ents Roc<8a4 Real Estate
Co+po+ation an0 South Ri01e Villa1e' Inc. on Feb+ua+4 ==' ##!E to +espon0ent spouses (b+a:ano an0 .a,a an0 Osca+ Dacillo on %une ="' ##E
an0 to +espon0ents E0ua+0o Vacuna' Flo+ante 0e la C+u3 an0 %esus Vicente Capalan on %une &' ##A Call of 8ho9 a+e he+einafte+ +efe++e0 to as
+espon0ent lot bu4e+sD.
On Feb+ua+4 @' ##$' petitione+s as hei+s of Salas' %+. file0 in the Re1ional T+ial Cou+t of .ipa Cit4 a Co9plaint A fo+ 0ecla+ation of nullit4 of sale'
+econ,e4ance' cancellation of cont+act' accountin1 an0 0a9a1es a1ainst he+ein +espon0ents 8hich 8as 0oc<ete0 as Ci,il Case No. #$?!!&".
On (p+il =&' ##$' +espon0ent .ape+al Realt4 file0 a Motion to
Dis9iss " on the 1+oun0 that petitione+s faile0 to sub9it thei+ 1+ie,ance to a+bit+ation as +e7ui+e0 un0e+ (+ticle VI of the (1+ee9ent 8hich p+o,i0es;
(+t. VI. (R)ITR(TION.
(ll cases of 0ispute bet8een CONTR(CTOR an0 OFNERNS +ep+esentati,e shall be +efe++e0 to the co99ittee +ep+esente0 b4;
a. One +ep+esentati,e of the OFNERE
b. One +ep+esentati,e of the CONTR(CTORE
55
c. One +ep+esentati,e acceptable to both OFNER an0 CONTR(CTOR. $
On Ma4 J' ##$' +espon0ent spouses (b+a:ano an0 .a,a an0 +espon0ent Dacillo file0 a %oint (ns8e+ 8ith Counte+clai9 an0 C+ossclai9 # p+a4in1
fo+ 0is9issal of petitione+sN Co9plaint fo+ the sa9e +eason.
On (u1ust #' ##$' the t+ial cou+t issue0 the he+ein assaile0 O+0e+ 0is9issin1 petitione+sN Co9plaint fo+ non?co9pliance 8ith the fo+e1oin1 a+bit+ation
clause.
-ence this petition.
Petitione+s a+1ue' thus;
The petitione+sN causes of action 0i0 not e9anate f+o9 the O8ne+?Cont+acto+ (1+ee9ent.
The petitione+sN causes of action fo+ cancellation of cont+act an0 accountin1 a+e co,e+e0 b4 the eBception un0e+ the (+bit+ation .a8.
Failu+e to a+bit+ate is not a 1+oun0 fo+ 0is9issal. !
In a catena of cases inspi+e0 b4 %ustice Malcol9Ns p+o,ocati,e 0issent in Ve1a ,. San Ca+los Millin1 Co. =' this Cou+t has +eco1ni3e0 a+bit+ation
a1+ee9ents as ,ali0' bin0in1' enfo+ceable an0 not cont+a+4 to public polic4 so 9uch so that 8hen the+e obtains a 8+itten p+o,ision fo+ a+bit+ation
8hich is not co9plie0 8ith' the t+ial cou+t shoul0 suspen0 the p+ocee0in1s an0 o+0e+ the pa+ties to p+ocee0 to a+bit+ation in acco+0ance 8ith the
te+9s of thei+
a1+ee9ent @. (+bit+ation is the H8a,e of the futu+eH in 0ispute +esolution. & To b+ush asi0e a cont+actual a1+ee9ent callin1 fo+ a+bit+ation in case of
0isa1+ee9ent bet8een pa+ties 8oul0 be a step bac<8a+0. J
Nonetheless' 8e 1+ant the petition.
( sub9ission to a+bit+ation is a cont+act. A (s such' the (1+ee9ent' containin1 the stipulation on a+bit+ation' bin0s the pa+ties the+eto' as 8ell as
thei+ assi1ns an0 hei+s. " )ut onl4 the4. Petitione+s' as hei+s of Salas' %+.' an0 +espon0ent .ape+al Realt4 a+e ce+tainl4 boun0 b4 the (1+ee9ent. If
+espon0ent .ape+al Realt4 ha0 assi1ne0 its +i1hts un0e+ the (1+ee9ent to a thi+0 pa+t4' 9a<in1 the fo+9e+' the assi1no+' an0 the latte+' the assi1nee'
such assi1nee 8oul0 also be boun0 b4 the a+bit+ation p+o,ision since assi1n9ent in,ol,es such t+ansfe+ of +i1hts as to ,est in the assi1nee the
po8e+ to enfo+ce the9 to the sa9e eBtent as the assi1no+ coul0 ha,e enfo+ce0 the9 a1ainst the 0ebto+ $ o+ in this case' a1ainst the hei+s of the
o+i1inal pa+t4 to the (1+ee9ent. -o8e,e+' +espon0ents Roc<8a4 Real Estate Co+po+ation' South Ri01e Villa1e' Inc.' Maha+a9i De,elop9ent
Co+po+ation' spouses (b+a:ano' spouses .a,a' Osca+ Dacillo' E0ua+0o Vacuna' Flo+ante 0e la C+u3 an0 %esus Vicente Capellan a+e not assi1nees
of the +i1hts of +espon0ent .ape+al Realt4 un0e+ the (1+ee9ent to 0e,elop Salas' %+.Ns lan0 an0 sell the sa9e. The4 a+e' +athe+' bu4e+s of the lan0
that +espon0ent .ape+al Realt4 8as 1i,en the autho+it4 to 0e,elop an0 sell un0e+ the (1+ee9ent. (s such' the4 a+e not Hassi1nsH conte9plate0 in (+t.
@ of the Ne8 Ci,il Co0e 8hich p+o,i0es that Hcont+acts ta<e effect onl4 bet8een the pa+ties' thei+ assi1ns an0 hei+sH.
Petitione+s clai9 that the4 suffe+e0 lesion of 9o+e than one?fou+th CG&D of the ,alue of Salas' %+.Ns lan0 8hen +espon0ent .ape+al Realt4 sub0i,i0e0 it
an0 sol0 po+tions the+eof to +espon0ent lot bu4e+s. Thus' the4 institute0 action # a1ainst both +espon0ent .ape+al Realt4 an0 +espon0ent lot bu4e+s
fo+ +escission of the sale t+ansactions an0 +econ,e4ance to the9 of the sub0i,i0e0 lots. The4 a+1ue that +escission' bein1 thei+ cause of action' falls
un0e+ the eBception clause in Sec. = of Republic (ct No. $"A 8hich p+o,i0es that Hsuch sub9ission StoT o+ cont+act Sof a+bit+ationT shall be ,ali0'
enfo+ceable an0 i++e,ocable' sa,e upon such 1+oun0s as eBist at la8 fo+ the +e,ocation of an4 cont+actH.
The petitione+sN contention is 8ithout 9e+it. Fo+ 8hile +escission' as a 1ene+al +ule' is an a+bit+able issue' =! the4 i9plea0e0 in the suit fo+ +escission
the +espon0ent lot bu4e+s 8ho a+e neithe+ pa+ties to the (1+ee9ent no+ the latte+Ns assi1ns o+ hei+s. Conse7uentl4' the +i1ht to a+bit+ate as p+o,i0e0 in
(+ticle VI of the (1+ee9ent 8as ne,e+ ,este0 in +espon0ent lot bu4e+s.
Respon0ent .ape+al Realt4' as a cont+actin1 pa+t4 to the (1+ee9ent' has the +i1ht to co9pel petitione+s to fi+st a+bit+ate befo+e see<in1 :u0icial +elief.
-o8e,e+' to split the p+ocee0in1s into a+bit+ation fo+ +espon0ent .ape+al Realt4 an0 t+ial fo+ the +espon0ent lot bu4e+s' o+ to hol0 t+ial in abe4ance
pen0in1 a+bit+ation bet8een petitione+s an0 +espon0ent .ape+al Realt4' 8oul0 in effect +esult in 9ultiplicit4 of suits' 0uplicitous p+oce0u+e an0
unnecessa+4 0ela4. On the othe+ han0' it 8oul0 be in the inte+est of :ustice if the t+ial cou+t hea+s the co9plaint a1ainst all he+ein +espon0ents an0
a0:u0icates petitione+sN +i1hts as a1ainst thei+s in a sin1le an0 co9plete p+ocee0in1.
F-EREFORE' the instant petition is he+eb4 GR(NTED. The O+0e+ 0ate0 (u1ust #' ##$ of )+anch $J of the Re1ional T+ial Cou+t of .ipa Cit4 is
he+eb4 NU..IFIED an0 SET (SIDE. Sai0 cou+t is he+eb4 o+0e+e0 to p+ocee0 8ith the hea+in1 of Ci,il Case No. #$?!!&".
Costs a1ainst p+i,ate +espon0ents.
56
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. @AJ& Feb+ua+4 "' =!!
DE. MONTE CORPOR(TION?US(' P(U. E. DER)6' %R.' D(NIE. CO..INS an0 .UIS -ID(.GO' petitione+s'
,s.
COURT OF (PPE(.S' %UDGE )IENVENIDO .. RE6ES in his capacit4 as P+esi0in1 %u01e' RTC?)+. "&' Malabon' Met+o Manila' MONTE)UENO
M(R*ETING' INC.' .IONG .IONG C. S6 an0 S()ROS( FOODS' INC.' +espon0ents.
)E..OSI..O' %.;
This Petition fo+ Re,ie8 on ce+tio+a+i assails the " %ul4 ##$ Decision of the Cou+t of (ppeals affi+9in1 the No,e9be+ ##" O+0e+= of the
Re1ional T+ial Cou+t 8hich 0enie0 petitione+sN Motion to Suspen0 P+ocee0in1s in Ci,il Case No. =A@"?MN. It also 7uestions the appellate cou+tNs
Resolution@ of @! Octobe+ ##$ 8hich 0enie0 petitione+sN Motion fo+ Reconsi0e+ation.
On %ul4 ##&' in a Dist+ibuto+ship (1+ee9ent' petitione+ Del Monte Co+po+ation?US( CDMC?US(D appointe0 p+i,ate +espon0ent Montebueno
Ma+<etin1' Inc. CMMID as the sole an0 eBclusi,e 0ist+ibuto+ of its Del Monte p+o0ucts in the Philippines fo+ a pe+io0 of fi,e CJD 4ea+s' +ene8able fo+ t8o
C=D consecuti,e fi,e CJD 4ea+ pe+io0s 8ith the consent of the pa+ties. The a1+ee9ent p+o,i0e0' a9on1 othe+s' fo+ an a+bit+ation clause 8hich states X
=. GOVERNING .(F (ND (R)ITR(TION&
This (1+ee9ent shall be 1o,e+ne0 b4 the la8s of the State of Califo+nia an0Go+' if applicable' the Unite0 States of (9e+ica. (ll 0isputes a+isin1 out of
o+ +elatin1 to this (1+ee9ent o+ the pa+tiesN +elationship' inclu0in1 the te+9ination the+eof' shall be +esol,e0 b4 a+bit+ation in the Cit4 of San
F+ancisco' State of Califo+nia' un0e+ the Rules of the (9e+ican (+bit+ation (ssociation. The a+bit+ation panel shall consist of th+ee 9e9be+s' one of
8ho9 shall be selecte0 b4 DMC?US(' one of 8ho9 shall be selecte0 b4 MMI' an0 thi+0 of 8ho9 shall be selecte0 b4 the othe+ t8o 9e9be+s an0
shall ha,e +ele,ant eBpe+ience in the in0ust+4 B B B B
In Octobe+ ##& the appoint9ent of p+i,ate +espon0ent MMI as the sole an0 eBclusi,e 0ist+ibuto+ of Del Monte p+o0ucts in the Philippines 8as
publishe0 in se,e+al ne8spape+s in the count+4. I99e0iatel4 afte+ its appoint9ent' p+i,ate +espon0ent MMI appointe0 Sab+osa Foo0s' Inc. CSFID' 8ith
the app+o,al of petitione+ DMC?US(' as MMINs 9a+<etin1 a+9 to concent+ate on its 9a+<etin1 an0 sellin1 function as 8ell as to 9ana1e its c+itical
+elationship 8ith the t+a0e.
On @ Octobe+ ##A p+i,ate +espon0ents MMI' SFI an0 MMINs Mana1in1 Di+ecto+ .ion1 .ion1 C. S4 C.I.6 S6D file0 a Co9plaintJ a1ainst petitione+s
DMC?US(' Paul E. De+b4' %+.'A Daniel Collins" an0 .uis -i0al1o'$ an0 De8e4 .t0.# befo+e the Re1ional T+ial Cou+t of Malabon' Met+o Manila.
P+i,ate +espon0ents p+e0icate0 thei+ co9plaint on the alle1e0 ,iolations b4 petitione+s of (+ts. =!'! = an0 =@= of the Ci,il Co0e. (cco+0in1 to
p+i,ate +espon0ents' DMC?US( p+o0ucts continue0 to be b+ou1ht into the count+4 b4 pa+allel i9po+te+s 0espite the appoint9ent of p+i,ate
+espon0ent MMI as the sole an0 eBclusi,e 0ist+ibuto+ of Del Monte p+o0ucts the+eb4 causin1 the9 1+eat e9ba++ass9ent an0 substantial 0a9a1e.
The4 alle1e0 that the p+o0ucts b+ou1ht into the count+4 b4 these i9po+te+s 8e+e a1e0' 0a9a1e0' fa<e o+ counte+feit' so that in Ma+ch ##J the4 ha0
to cause' afte+ p+io+ consultation 8ith (ntonio On1pin' Ma+<et Di+ecto+ fo+ Special Ma+<ets of Del Monte Philippines' Inc.' the publication of a
H8a+nin1 to the t+a0eH pai0 a0,e+tise9ent in lea0in1 ne8spape+s. Petitione+s DMC?US( an0 Paul E. De+b4' %+.' appa+entl4 upset 8ith the publication'
inst+ucte0 p+i,ate +espon0ent MMI to stop coo+0inatin1 8ith (ntonio On1pin an0 to co99unicate 0i+ectl4 instea0 8ith petitione+ DMC?US( th+ou1h
Paul E. De+b4' %+.
P+i,ate +espon0ents fu+the+ a,e++e0 that petitione+s <no8in1l4 an0 su++eptitiousl4 continue0 to 0eal 8ith the fo+9e+ in ba0 faith b4 in,ol,in1
0isinte+este0 thi+0 pa+ties an0 b4 p+oposin1 solutions 8hich 8e+e enti+el4 out of thei+ cont+ol. P+i,ate +espon0ents clai9e0 that the4 ha0 eBhauste0 all
possible a,enues fo+ an a9icable +esolution an0 settle9ent of thei+ 1+ie,ancesE that as a +esult of the f+au0' ba0 faith' 9alice an0 8anton attitu0e of
petitione+s' the4 shoul0 be hel0 +esponsible fo+ all the actual eBpenses incu++e0 b4 p+i,ate +espon0ents in the 0ela4e0 ship9ent of o+0e+s 8hich
+esulte0 in the eBt+a han0lin1 the+eof' the actual eBpenses an0 cost of 9one4 fo+ the unuse0 .ette+s of C+e0it C.CsD an0 the substantial oppo+tunit4
losses 0ue to c+eate0 out?of?stoc< situations an0 unautho+i3e0 ship9ents of Del Monte?US( p+o0ucts to the Philippine Dut4 F+ee (+ea an0 Econo9ic
3oneE that the ba0 faith' f+au0ulent acts an0 8illful ne1li1ence of petitione+s' 9oti,ate0 b4 thei+ 0ete+9ination to s7uee3e p+i,ate +espon0ents out of
the outstan0in1 an0 on1oin1 Dist+ibuto+ship (1+ee9ent in fa,o+ of anothe+ pa+t4' ha0 place0 p+i,ate +espon0ent .I.6 S6 on tente+hoo<s since thenE
an0' that the sh+e80 an0 subtle 9anne+ 8ith 8hich petitione+s concocte0 i9a1ina+4 ,iolations b4 p+i,ate +espon0ent MMI of the Dist+ibuto+ship
57
(1+ee9ent in o+0e+ to :ustif4 the unti9el4 te+9ination the+eof 8as a subte+fu1e. Fo+ the fo+e1oin1' p+i,ate +espon0ents clai9e0' a9on1 othe+ +eliefs'
the pa49ent of actual 0a9a1es' eBe9pla+4 0a9a1es' atto+ne4Ns fees an0 liti1ation eBpenses.
On = Octobe+ ##A petitione+s file0 a Motion to Suspen0 P+ocee0in1s@ in,o<in1 the a+bit+ation clause in thei+ (1+ee9ent 8ith p+i,ate
+espon0ents.Y8phi.nZt
In a Resolution& 0ate0 =@ Dece9be+ ##A the t+ial cou+t 0efe++e0 consi0e+ation of petitione+sN Motion to Suspen0 P+ocee0in1s as the 1+oun0s
alle1e0 the+ein 0i0 not constitute the suspension of the p+ocee0in1s consi0e+in1 that the action 8as fo+ 0a9a1es 8ith p+a4e+ fo+ the issuance of F+it
of P+eli9ina+4 (ttach9ent an0 not on the Dist+ibuto+ship (1+ee9ent.
On J %anua+4 ##" petitione+s file0 a Motion fo+ Reconsi0e+ation to 8hich +espon0ents file0 thei+ Co99entGOpposition. On @ %anua+4 ##"
petitione+s file0 thei+ Repl4. Subse7uentl4' p+i,ate +espon0ents file0 an U+1ent Motion fo+ .ea,e to (09it Supple9ental Plea0in1 0ate0 = (p+il ##".
This Motion 8as a09itte0' o,e+ petitione+sN opposition' in an O+0e+ of the t+ial cou+t 0ate0 =" %une ##".
(s a +esult of the a09ission of the Supple9ental Co9plaint' petitione+s file0 on == %ul4 ##" a Manifestation a0optin1 thei+ Motion to Suspen0
P+ocee0in1s of " Octobe+ ##A an0 Motion fo+ Reconsi0e+ation of & %anua+4 ##".
On No,e9be+ ##" the Motion to Suspen0 P+ocee0in1s 8as 0enie0 b4 the t+ial cou+t on the 1+oun0 that it H8ill not se+,e the en0s of :ustice an0
to allo8 sai0 suspension 8ill onl4 0ela4 the 0ete+9ination of the issues' f+ust+ate the 7uest of the pa+ties fo+ a :u0icious 0ete+9ination of thei+
+especti,e clai9s' an0Go+ 0ep+i,e an0 0ela4 thei+ +i1hts to see< +e0+ess.HJ
On appeal' the Cou+t of appeals affi+9e0 the 0ecision of the t+ial cou+t. It hel0 that the alle1e0 0a9a1in1 acts +ecite0 in the Co9plaint' constitutin1
petitione+sN causes of action' +e7ui+e0 the inte+p+etation of (+t. = of the Ci,il Co0eA an0 that in 0ete+9inin1 8hethe+ petitione+s ha0 ,iolate0 it
H8oul0 +e7ui+e a full blo8n t+ialH 9a<in1 a+bit+ation Hout of the 7uestion.H" Petitione+sN Motion fo+ Reconsi0e+ation of the affi+9ation 8as 0enie0.
-ence' this Petition fo+ Re,ie8.
The c+uB of the cont+o,e+s4 boils 0o8n to 8hethe+ the 0ispute bet8een the pa+ties 8a++ants an o+0e+ co9pellin1 the9 to sub9it to a+bit+ation.
Petitione+s conten0 that the sub:ect 9atte+ of p+i,ate +espon0entsN causes of action a+ises out of o+ +elates to the (1+ee9ent bet8een petitione+s an0
p+i,ate +espon0ents. Thus' consi0e+in1 that the a+bit+ation clause of the (1+ee9ent p+o,i0es that all 0isputes a+isin1 out of o+ +elatin1 to the
(1+ee9ent o+ the pa+tiesN +elationship' inclu0in1 the te+9ination the+eof' shall be +esol,e0 b4 a+bit+ation' the4 insist on the suspension of the
p+ocee0in1s in Ci,il Case No. =A@"?MN as 9an0ate0 b4 Sec. " of R( $"A$ X
Sec. ". Sta4 of Ci,il (ction. If an4 suit o+ p+ocee0in1 be b+ou1ht upon an issue a+isin1 out of an a1+ee9ent p+o,i0in1 fo+ a+bit+ation the+eof' the cou+t
in 8hich such suit o+ p+ocee0in1 is pen0in1' upon bein1 satisfie0 that the issue in,ol,e0 in such suit o+ p+ocee0in1 is +efe+able to a+bit+ation' shall
sta4 the action o+ p+ocee0in1 until an a+bit+ation has been ha0 in acco+0ance 8ith the te+9s of the a1+ee9ent. P+o,i0e0' That the applicant fo+ the
sta4 is not in 0efault in p+ocee0in1 8ith such a+bit+ation.
P+i,ate +espon0ents clai9' on the othe+ han0' that thei+ causes of action a+e +oote0 in (+ts. =!' = an0 =@ of the Ci,il Co0e'# the 0ete+9ination of
8hich 0e9an0s a full blo8n t+ial' as co++ectl4 hel0 b4 the Cou+t of (ppeals. Mo+eo,e+' the4 clai9 that the issues befo+e the t+ial cou+t 8e+e not :oine0
so that the -ono+able %u01e 8as not 1i,en the oppo+tunit4 to satisf4 hi9self that the issue in,ol,e0 in the case 8as +efe+able to a+bit+ation. The4
sub9it that' appa+entl4' petitione+s file0 a 9otion to suspen0 p+ocee0in1s instea0 of sen0in1 a 8+itten 0e9an0 to p+i,ate +espon0ents to a+bit+ate
because petitione+s 8e+e not su+e 8hethe+ the case coul0 be a sub:ect of a+bit+ation. The4 9aintain that ha0 petitione+s 0one so an0 p+i,ate
+espon0ents faile0 to ans8e+ the 0e9an0' petitione+s coul0 ha,e file0 8ith the t+ial cou+t thei+ 0e9an0 fo+ a+bit+ation that 8oul0 8a++ant a
0ete+9ination b4 the :u01e 8hethe+ to +efe+ the case to a+bit+ation. (cco+0in1l4' p+i,ate +espon0ents asse+t that a+bit+ation is out of the 7uestion.
P+i,ate +espon0ents fu+the+ conten0 that the a+bit+ation clause cente+s 9o+e on ,enue +athe+ than on a+bit+ation. The4 finall4 alle1e that petitione+s
file0 thei+ 9otion fo+ eBtension of ti9e to file this petition on the sa9e 0ate=! petitione+ DMC?US( file0 a petition to co9pel p+i,ate +espon0ent MMI
to a+bit+ate befo+e the Unite0 States Dist+ict Cou+t in No+the+n Califo+nia' 0oc<ete0 as Case No. C?#$?&&&A. The4 insist that the filin1 of the petition to
co9pel a+bit+ation in the Unite0 States 9a0e the petition file0 befo+e this Cou+t an alte+nati,e +e9e04 an0' in a 8a4' an aban0on9ent of the cause
the4 a+e fi1htin1 fo+ he+ in the Philippines' thus 8a++antin1 the 0is9issal of the p+esent petition befo+e this Cou+t.
The+e is no 0oubt that a+bit+ation is ,ali0 an0 constitutional in ou+ :u+is0iction.= E,en befo+e the enact9ent of R( $"A' this Cou+t has countenance0
the settle9ent of 0isputes th+ou1h a+bit+ation. Unless the a1+ee9ent is such as absolutel4 to close the 0oo+s of the cou+ts a1ainst the pa+ties' 8hich
a1+ee9ent 8oul0 be ,oi0' the cou+ts 8ill loo< 8ith fa,o+ upon such a9icable a++an1e9ent an0 8ill onl4 inte+fe+e 8ith 1+eat +eluctance to anticipate o+
nullif4 the action of the a+bit+ato+.== Mo+eo,e+' as R( $"A eBp+essl4 autho+i3es a+bit+ation of 0o9estic 0isputes' fo+ei1n a+bit+ation as a s4ste9 of
settlin1 co99e+cial 0isputes 8as li<e8ise +eco1ni3e0 8hen the Philippines a0he+e0 to the Unite0 Nations HCon,ention on the Reco1nition an0 the
Enfo+ce9ent of Fo+ei1n (+bit+al (8a+0s of #J$H un0e+ the ! Ma4 #AJ Resolution No. " of the Philippine Senate' 1i,in1 +ecip+ocal +eco1nition
an0 allo8in1 enfo+ce9ent of inte+national a+bit+ation a1+ee9ents bet8een pa+ties of 0iffe+ent nationalities 8ithin a cont+actin1 state.=@
58
( ca+eful eBa9ination of the instant case sho8s that the a+bit+ation clause in the Dist+ibuto+ship (1+ee9ent bet8een petitione+ DMC?US( an0 p+i,ate
+espon0ent MMI is ,ali0 an0 the 0ispute bet8een the pa+ties is a+bit+able. -o8e,e+' this Cou+t 9ust 0en4 the petition.
The (1+ee9ent bet8een petitione+ DMC?US( an0 p+i,ate +espon0ent MMI is a cont+act. The p+o,ision to sub9it to a+bit+ation an4 0ispute a+isin1
the+ef+o9 an0 the +elationship of the pa+ties is pa+t of that cont+act an0 is itself a cont+act. (s a +ule' cont+acts a+e +especte0 as the la8 bet8een the
cont+actin1 pa+ties an0 p+o0uce effect as bet8een the9' thei+ assi1ns an0 hei+s.=& Clea+l4' onl4 pa+ties to the (1+ee9ent' i.e.' petitione+s DMC?US(
an0 its Mana1in1 Di+ecto+ fo+ EBpo+t Sales Paul E. De+b4' %+.' an0 p+i,ate +espon0ents MMI an0 its Mana1in1 Di+ecto+ .I.6 S6 a+e boun0 b4 the
(1+ee9ent an0 its a+bit+ation clause as the4 a+e the onl4 si1nato+ies the+eto. Petitione+s Daniel Collins an0 .uis -i0al1o' an0 p+i,ate +espon0ent SFI'
not pa+ties to the (1+ee9ent an0 cannot e,en be consi0e+e0 assi1ns o+ hei+s of the pa+ties' a+e not boun0 b4 the (1+ee9ent an0 the a+bit+ation
clause the+ein. Conse7uentl4' +efe++al to a+bit+ation in the State of Califo+nia pu+suant to the a+bit+ation clause an0 the suspension of the p+ocee0in1s
in Ci,il Case No. =A@"?MN pen0in1 the +etu+n of the a+bit+al a8a+0 coul0 be calle0 fo+=J but onl4 as to petitione+s DMC?US( an0 Paul E. De+b4' %+.'
an0 p+i,ate +espon0ents MMI an0 .I.6 S6' an0 not as to the othe+ pa+ties in this case. This is consistent 8ith the +ecent case of -ei+s of (u1usto ..
Salas' %+. ,. .ape+al Realt4 Co+po+ation'=A 8hich supe+se0e0 that of To4ota Moto+ Philippines Co+p. ,. Cou+t of (ppeals.="
In To4ota' the Cou+t +ule0 that HStThe contention that the a+bit+ation clause has beco9e 04sfunctional because of the p+esence of thi+0 pa+ties is
untenableH +atiocinatin1 that HScTont+acts a+e +especte0 as the la8 bet8een the cont+actin1 pa+tiesH=$ an0 that HSaTs such' the pa+ties a+e the+eb4
eBpecte0 to abi0e 8ith 1oo0 faith in thei+ cont+actual co99it9ents.H=# -o8e,e+' in Salas' %+.' onl4 pa+ties to the (1+ee9ent' thei+ assi1ns o+ hei+s
ha,e the +i1ht to a+bit+ate o+ coul0 be co9pelle0 to a+bit+ate. The Cou+t 8ent fu+the+ b4 0ecla+in1 that in +eco1ni3in1 the +i1ht of the cont+actin1
pa+ties to a+bit+ate o+ to co9pel a+bit+ation' the splittin1 of the p+ocee0in1s to a+bit+ation as to so9e of the pa+ties on one han0 an0 t+ial fo+ the othe+s
on the othe+ han0' o+ the suspension of t+ial pen0in1 a+bit+ation bet8een so9e of the pa+ties' shoul0 not be allo8e0 as it 8oul0' in effect' +esult in
9ultiplicit4 of suits' 0uplicitous p+oce0u+e an0 unnecessa+4 0ela4.@!
The ob:ect of a+bit+ation is to allo8 the eBpe0itious 0ete+9ination of a 0ispute.@ Clea+l4' the issue befo+e us coul0 not be spee0il4 an0 efficientl4
+esol,e0 in its enti+et4 if 8e allo8 si9ultaneous a+bit+ation p+ocee0in1s an0 t+ial' o+ suspension of t+ial pen0in1 a+bit+ation. (cco+0in1l4' the inte+est of
:ustice 8oul0 onl4 be se+,e0 if the t+ial cou+t hea+s an0 a0:u0icates the case in a sin1le an0 co9plete p+ocee0in1.@=
F-EREFORE' the petition is DENIED. The Decision of the Cou+t of (ppeals affi+9in1 the O+0e+ of the Re1ional T+ial Cou+t of Malabon' Met+o
Manila' in Ci,il Case No. =A@"?MN' 8hich 0enie0 petitione+sN Motion to Suspen0 P+ocee0in1s' is (FFIRMED. The Re1ional T+ial Cou+t conce+ne0 is
0i+ecte0 to p+ocee0 8ith the hea+in1 of Ci,il Case No. =A@"?MN 8ith 0ispatch. No costs.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION

G.R. No. J&= No,e9be+ #' ###
-OME )(N*ERS S(VINGS (ND TRUST COMP(N6' petitione+'
,s.
COURT OF (PPE(.S an0 F(R E(ST )(N* 5 TRUST CO.' INC. +espon0ents.

)UEN(' %.;
This appeal b4 ce+tio+a+i un0e+ Rule &J of the Rules of Cou+t see<s to annul an0 set asi0e the 0ecision of the Cou+t of (ppeals = 0ate0 %anua+4 ='
##& in C(?G.R. SP No. =#"=J' 0is9issin1 the petition fo+ ce+tio+a+i file0 b4 petitione+ to annul the t8o C=D o+0e+s issue0 b4 the Re1ional T+ial Cou+t
of Ma<ati @ in Ci,il Case No. #=?&J' the fi+st' 0ate0 (p+il @!' ##=' 0en4in1 petitione+Ns 9otion to 0is9iss an0 the secon0' 0ate0 Octobe+ ' ##=
0en4in1 petitione+Ns 9otion fo+ +econsi0e+ation the+eof.
The pe+tinent facts 9a4 be b+iefl4 state0 as follo8s; Victo+ Tancuan' one of the 0efen0ants in Ci,il Case No. #=?&J' issue0 -o9e )an<e+s Sa,in1s
an0 T+ust Co9pan4 C-)STCD chec< No. #@&#$ fo+ P=J'=J!'!!!.!! 8hile Eu1ene (++ies1a0o issue0 Fa+ East )an< an0 T+ust Co9pan4 CFE)TCD
chec< Nos. &A&=A&' &A&="= an0 &A&=" fo+ P$'A!!'!!!.!!' P$'J!!'!!!.!! an0 P$'!!'!!!.!!' +especti,el4' the th+ee chec<s a9ountin1 to
P=J'=!!'!!!.!!. Tancuan an0 (++ies1a0o eBchan1e0 each othe+Ns chec<s an0 0eposite0 the9 8ith thei+ +especti,e ban<s fo+ collection. Fhen
FE)TC p+esente0 TancuanNs -)STC chec< fo+ clea+in1' -)STC 0ishono+e0 it fo+ bein1 HD+a8n (1ainst Insufficient Fun0s.H On Octobe+ J' ##'
59
-)STC sent (++ies1a0oNs th+ee C@D FE)TC chec<s th+ou1h the Philippine Clea+in1 -ouse Co+po+ation CPC-CD to FE)TC but 8as +etu+ne0 on
Octobe+ $' ## as HD+a8n (1ainst Insufficient Fun0s.H -)STC +ecei,e0 the notice of 0ishono+ on Octobe+ =' ## but +efuse0 to accept the
chec<s an0 on Octobe+ ==' ##' +etu+ne0 the9 to FE)TC th+ou1h the PC-C fo+ the +eason H)e4on0 Re1le9enta+4 Pe+io0'H i9pl4in1 that -)STC
al+ea04 t+eate0 the th+ee C@D FE)TC chec<s as clea+e0 an0 allo8e0 the p+ocee0s the+eof to be 8ith0+a8n. & FE)TC 0e9an0e0 +ei9bu+se9ent fo+
the +etu+ne0 chec<s an0 in7ui+e0 f+o9 -)STC 8hethe+ it ha0 pe+9itte0 an4 8ith0+a8al of fun0s a1ainst the unfun0e0 chec<s an0 if so' on 8hat
0ate. -)STC' ho8e,e+' +efuse0 to 9a<e an4 +ei9bu+se9ent an0 to p+o,i0e FE)TC 8ith the nee0e0 info+9ation.
Thus' on Dece9be+ =' ##' FE)TC sub9itte0 the 0ispute fo+ a+bit+ation befo+e the PC-C (+bit+ation Co99ittee' J un0e+ the PC-CNs
Supple9enta+4 Rules on Re1ional Clea+in1 to 8hich FE)TC an0 -)STC a+e boun0 as pa+ticipants in the +e1ional clea+in1 ope+ations a09iniste+e0
b4 the PC-C. A
On %anua+4 "' ##=' 8hile the a+bit+ation p+ocee0in1 8as still pen0in1' FE)TC file0 an action fo+ su9 of 9one4 an0 0a9a1es 8ith p+eli9ina+4
attach9ent " a1ainst -)STC' Robe+t 6oun1' Victo+ Tancuan an0 Eu1ene (++ies1a0o 8ith the Re1ional T+ial Cou+t of Ma<ati' )+anch @@. ( 9otion to
0is9iss 8as file0 b4 -)STC clai9in1 that the co9plaint state0 no cause of action an0 acco+0in1l4 H. . . shoul0 be 0is9isse0 because it see<s to
enfo+ce an a+bit+al a8a+0 8hich as 4et 0oes not eBist.H $ The t+ial cou+t issue0 an o9nibus o+0e+ 0ate0 (p+il @!' ##= 0en4in1 the 9otion to 0is9iss
an0 an o+0e+ 0ate0 Octobe+ ' ##= 0en4in1 the 9otion fo+ +econsi0e+ation.
On Dece9be+ A' ##=' -)STC file0 a petition fo+ ce+tio+a+i 8ith the +espon0ent Cou+t of (ppeals conten0in1 that the t+ial cou+t acte0 8ith 1+a,e
abuse of 0isc+etion a9ountin1 to lac< of :u+is0iction in 0en4in1 the 9otion to 0is9iss file0 b4 -)STC.
In a Decision # 0ate0 %anua+4 =' ##&' the +espon0ent cou+t 0is9isse0 the petition fo+ lac< of 9e+it an0 hel0 that HFE)TC can +eite+ate its cause of
action befo+e the cou+ts 8hich it ha0 al+ea04 +aise0 in the a+bit+ation caseH ! afte+ fin0in1 that the co9plaint file0 b4 FE)TC H. . . see<s to collect a
su9 of 9one4 f+o9 -)T S-)STCT an0 not to enfo+ce o+ confi+9 an a+bit+al a8a+0.H The +espon0ent cou+t obse+,e0 that HSiTn the Co9plaint'
FE)TC applie0 fo+ the issuance of a 8+it of p+eli9ina+4 attach9ent o,e+ -)TNs S-)STCT p+ope+t4H = an0 citin1 section & of Republic (ct No. $"A'
othe+8ise <no8n as the (+bit+ation .a8' 9aintaine0 that HSnTecessa+il4' it has to +eite+ate its 9ain cause of action fo+ su9 of 9one4 a1ainst -)T
S-)STCT'H @ an0 that HStThis p+a4e+ fo+ conse+,ato+4 +elief S8+it of p+eli9ina+4 attach9entT satisfies the +e7ui+e9ent of a cause of action 8hich
FE)TC 9a4 pu+sue in the cou+ts.H &
Fu+the+9o+e' the +espon0ent cou+t +ule0 that base0 on section " of the (+bit+ation .a8 an0 the cases of National Union Fi+e Insu+ance Co9pan4 of
Pittsbu+1 ,s. Stolt?Nielsen Philippines' Inc.' J an0 )en1son ,s. Chan' A H. . . 8hen the+e is a con0ition +e7ui+in1 p+io+ sub9ission to a+bit+ation
befo+e the institution of a cou+t action' the co9plaint is not to be 0is9isse0 but shoul0 be suspen0e0 fo+ a+bit+ation.H " Fin0in1 no 9e+it in -)STCNs
contention that section " of the (+bit+ation .a8 H. . . conte9plates a situation in 8hich a pa+t4 to an a+bit+ation a1+ee9ent has file0 a cou+t action
8ithout fi+st +eso+tin1 to a+bit+ation' 8hile in the case at ba+' FE)TC has initiate0 a+bit+ation p+ocee0in1s befo+e filin1 a cou+t action'H the +espon0ent
cou+t hel0 that H. . . if the absence of a p+io+ a+bit+ation 9a4 sta4 cou+t action' so too an0 8ith 9o+e +eason' shoul0 an a+bit+ation al+ea04 pen0in1 as
obtains in this case sta4 the cou+t action. ( pa+t4 to a pen0in1 a+bit+al p+ocee0in1 9a4 1o to cou+t to obtain conse+,ato+4 +eliefs in connection 8ith his
cause of action althou1h the 0isposal of that action on the 9e+its cannot as 4et be obtaine0.H $ The +espon0ent cou+t 0isca+0e0 Pu+o9ines' Inc. ,s.
Cou+t of (ppeals' # statin1 that H. . . pe+haps Pu+o9ines 9a4 ha,e been 0eci0e0 on a 0iffe+ent factual basis.H =!
In the instant petition' = petitione+ conten0s that fi+st' Hno pa+t4 liti1ant can file a non?eBistent co9plaint'H == a+1uin1 that H. . . one cannot file a
co9plaint in cou+t o,e+ a sub:ect that is un0e+1oin1 a+bit+ation.H =@ Secon0' petitione+ sub9its that HSsTince a+bit+ation is a special p+ocee0in1 b4 a
clea+ p+o,ision of la8' =& the ci,il suit file0 belo8 is' 8ithout a sha0o8 of 0oubt' ba++e0 b4 litis pen0entia an0 shoul0 be 0is9isse0 0e plano insofa+ as
-)STC is conce+ne0.H =J Thi+0' petitione+ insists that HS8Then a+bit+ation is a1+ee0 upon an0 suit is file0 8ithout a+bit+ation ha,in1 been hel0 an0
te+9inate0' the case that is file0 shoul0 be 0is9isse0'H =A citin1 (ssociate0 )an< ,s. Cou+t of (ppeals' =" Pu+o9ines' Inc. ,s. Cou+t of (ppeals' =$
as an0 .e0es9a ,s. Cou+t of (ppeals. =# Petitione+ 0e9u+s that the Pu+o9ines +ulin1 8as 0elibe+atel4 not follo8e0 b4 the +espon0ent cou+t 8hich
clai9e0 that;
BBB BBB BBB
It 8oul0 +eall4 be 9uch easie+ fo+ Us to +ule to 0is9iss the co9plaint as the petitione+ he+e see<s to 0o' follo8in1 Pu+o9ines. )ut 8ith ut9ost
0efe+ence to the -ono+able Sup+e9e Cou+t' pe+haps Pu+o9ines 9a4 ha,e been 0eci0e0 on a 0iffe+ent factual basis.
BBB BBB BBB @!
Petitione+ ta<es eBception to FE)TCNs contention that Pu+o9ines cannot 9o0if4 o+ +e,e+se the +ulin1s in National Union Fi+e Insu+ance Co9pan4 of
Pittsbu+1 ,s. Stolt?Nielsen Philippines' Inc.' @ an0 )en1son ,s. Chan' @= 8he+e this Cou+t suspen0e0 the action file0 pen0in1 a+bit+ation' an0
a+1ues that HSsToun0 polic4 +e7ui+es that the conclusion of 8hethe+ a Sup+e9e Cou+t 0ecision has o+ has not +e,e+se0 o+ 9o0ifie0 SaT p+e,ious
0oct+ine' shoul0 be left to the Sup+e9e Cou+t itselfE until then' the latest p+onounce9ent shoul0 p+e,ail.H @@ Fou+th' petitione+ alle1es that the 8+it of
p+eli9ina+4 attach9ent issue0 b4 the t+ial cou+t is ,oi0 consi0e+in1 that the case file0 befo+e it His a sepa+ate action 8hich cannot eBist'H @& an0 H. . .
60
the+e is e,en no nee0 fo+ the attach9ent as fa+ as -)STC is conce+ne0 because such auto9atic 0ebitGc+e0it p+oce0u+e @J 9a4 be +e1a+0e0 as a
secu+it4 fo+ the t+ansactions in,ol,e0 an0' as :u+isp+u0ence confi+9s' one +e7ui+e9ent in the issuance of an attach9ent S8+it of p+eli9ina+4
attach9entT is that the 0ebto+ has no sufficient secu+it4.H @A Petitione+ asse+ts fu+the+ that a 8+it of p+eli9ina+4 attach9ent is un8a++ante0 because no
1+oun0 eBists fo+ its issuance. (cco+0in1 to petitione+' H. . . the onl4 alle1ations a1ainst it S-)STCT a+e that it +efuse0 to +efun0 the a9ounts of the
chec<s of FE)TC an0 that it <ne8 about the f+au0 pe+pet+ate0 b4 the othe+ 0efen0ants'H @" 8hich' at best' constitute onl4 Hinci0ental f+au0H an0 not
causal f+au0 8hich :ustifies the issuance of the 8+it of p+eli9ina+4 attach9ent.
P+i,ate +espon0ent FE)TC' on the othe+ han0' conten0s that H. . . the cause of action fo+ collection Sof a su9 of 9one4T can coeBist in the ci,il suit
an0 the a+bit+ation Sp+ocee0in1TH @$ citin1 section " of the (+bit+ation .a8 8hich p+o,i0es fo+ the sta4 of the ci,il action until an a+bit+ation has been
ha0 in acco+0ance 8ith the te+9s of the a1+ee9ent p+o,i0in1 fo+ a+bit+ation. P+i,ate +espon0ent fu+the+ asse+ts that follo8in1 section &C@D' a+ticle VIII
@# of the #$" Constitution' the subse7uent case of Pu+o9ines 0oes not o,e+tu+n the +ulin1 in the ea+lie+ cases of National Union Fi+e Insu+ance
Co9pan4 of Pittsbu+1 ,s. Stolt?Nielsen Philippines' Inc.' &! an0 )en1son ,s. Chan' & hence' p+i,ate +espon0ent conclu0es that the p+e,ailin1
0oct+ine is that the ci,il action 9ust be sta4e0 +athe+ than 0is9isse0 pen0in1 a+bit+ation.
In this petition' the lone issue p+esente0 fo+ the consi0e+ation of this Cou+t is;
F-ET-ER OR NOT PRIV(TE RESPONDENT F-IC- COMMENCED (N (R)ITR(TION PROCEEDING UNDER T-E (USPICES OF T-E
P-I.IPPINE C.E(RING -OUSE CORPOR(TION CPC-CD M(6 SU)SE2UENT.6 FI.E ( SEP(R(TE C(SE IN COURT OVER T-E S(ME
SU)%ECT M(TTER OF (R)ITR(TION DESPITE T-E PENDENC6 OF T-(T (R)ITR(TION' SIMP.6 TO O)T(IN T-E PROVISION(. REMED6
OF (TT(C-MENT (G(INST T-E )(N* T-E (DVERSE P(RT6 IN T-E (R)ITR(TION PROCEEDING. &=
Fe fin0 no 9e+it in the petition. Section & of Republic (ct $"A' othe+8ise <no8n as the (+bit+ation .a8' allo8s an4 pa+t4 to the a+bit+ation
p+ocee0in1 to petition the cou+t to ta<e 9easu+es to safe1ua+0 an0Go+ conse+,e an4 9atte+ 8hich is the sub:ect of the 0ispute in a+bit+ation' thus;
Sec. &. Subpoena an0 subpoena 0uces tecu9. I (+bit+ato+s shall ha,e the po8e+ to +e7ui+e an4 pe+son to atten0 a hea+in1 as a 8itness. The4
shall ha,e the po8e+ to subpoena 8itnesses an0 0ocu9ents 8hen the +ele,anc4 of the testi9on4 an0 the 9ate+ialit4 the+eof has been 0e9onst+ate0
to the a+bit+ato+s. (+bit+ato+s 9a4 also +e7ui+e the +eti+e9ent of an4 8itness 0u+in1 the testi9on4 of an4 othe+ 8itness. (ll of the a+bit+ato+s appointe0
in an4 cont+o,e+s4 9ust atten0 all the hea+in1s in that 9atte+ an0 hea+ all the alle1ations an0 p+oofs of the pa+tiesE but an a8a+0 b4 the 9a:o+it4 of
the9 is ,ali0 unless the concu++ence of all of the9 is eBp+essl4 +e7ui+e0 in the sub9ission o+ cont+act to a+bit+ate. The a+bit+ato+ o+ a+bit+ato+s shall
ha,e the po8e+ at an4 ti9e' befo+e +en0e+in1 the a8a+0' 8ithout p+e:u0ice to the +i1hts of an4 pa+t4 to petition the cou+t to ta<e 9easu+es to
safe1ua+0 an0Go+ conse+,e an4 9atte+ 8hich is the sub:ect of the 0ispute in a+bit+ation. Ce9phasis supplie0D
Petitione+Ns eBposition of the fo+e1oin1 p+o,ision 0ese+,es scant consi0e+ation. Section & si9pl4 1+ants an a+bit+ato+ the po8e+ to issue subpoena
an0 subpoena 0uces tecu9 at an4 ti9e befo+e +en0e+in1 the a8a+0. The eBe+cise of such po8e+ is 8ithout p+e:u0ice to the +i1ht of a pa+t4 to file a
petition in cou+t to safe1ua+0 an4 9atte+ 8hich is the sub:ect of the 0ispute in a+bit+ation. In the case at ba+' p+i,ate +espon0ent file0 an action fo+ a
su9 of 9one4 8ith p+a4e+ fo+ a 8+it of p+eli9ina+4 attach9ent. Un0oubte0l4' such action in,ol,e0 the sa9e sub:ect 9atte+ as that in a+bit+ation' i.e.'
the su9 of P=J'=!!'!!!.!! 8hich 8as alle1e0l4 0ep+i,e0 f+o9 p+i,ate +espon0ent in 8hat is <no8n in ban<in1 as a H<itin1 sche9e.H -o8e,e+' the
ci,il action 8as not a si9ple case of a 9one4 clai9 since p+i,ate +espon0ent has inclu0e0 a p+a4e+ fo+ a 8+it of p+eli9ina+4 attach9ent' 8hich is
sanctione0 b4 section & of the (+bit+ation .a8.
Petitione+ cites the cases of (ssociate0 )an< ,s. Cou+t of (ppeals' &@ Pu+o9ines' Inc. ,s. Cou+t of (ppeals' && an0 .e0es9a ,s. Cou+t of (ppeals
&J in conten0in1 that HS8Then a+bit+ation is a1+ee0 upon an0 suit is file0 8ithout a+bit+ation ha,in1 been hel0 an0 te+9inate0' the case that is file0
shoul0 be 0is9isse0.H &A -o8e,e+' the sai0 cases a+e not in point. In (ssociate0 )an<' 8e affi+9e0 the 0is9issal of the thi+0?pa+t4 co9plaint file0 b4
(ssociate0 )an< a1ainst Philippine Co99e+cial Inte+national )an<' Fa+ East )an< 5 T+ust Co9pan4' Secu+it4 )an< an0 T+ust Co9pan4' an0
Cit4t+ust )an<in1 Co+po+ation fo+ lac< of :u+is0iction' it bein1 sho8n that the sai0 pa+ties 8e+e boun0 b4 the Clea+in1 -ouse Rules an0 Re1ulations
on (+bit+ation of the Philippine Clea+in1 -ouse Co+po+ation. In (ssociate0 )an<' 8e 0ecla+e0 that;
. . . . . .. Un0e+ the +ules an0 +e1ulations of the Philippine Clea+in1 -ouse Co+po+ation CPC-CD' the 9e+e act of pa+ticipation of the pa+ties conce+ne0
in its ope+ations in effect a9ounts to a 9anifestation of a1+ee9ent b4 the pa+ties to abi0e b4 its +ules an0 +e1ulations. (s a conse7uence of such
pa+ticipation' a pa+t4 cannot in,o<e the :u+is0iction of the cou+ts o,e+ 0isputes an0 cont+o,e+sies 8hich fall un0e+ the PC-C Rules an0 Re1ulations
8ithout fi+st 1oin1 th+ou1h the a+bit+ation p+ocesses lai0 out b4 the bo04. &" Ce9phasis supplie0D
(n0 thus 8e conclu0e0;
Clea+l4 the+efo+e' petitione+ (ssociate0 )an<' b4 its ,olunta+4 pa+ticipation an0 its consent to the a+bit+ation +ules cannot 1o 0i+ectl4 to the Re1ional
T+ial Cou+t 8hen it fin0s it con,enient to 0o so. The :u+is0iction of the PC-C un0e+ the +ules an0 +e1ulations is clea+' un0eniable an0 is pa+ticula+l4
applicable to all the pa+ties in the thi+0 pa+t4 co9plaint un0e+ thei+ obli1ation to fi+st see< +e0+ess of thei+ 0isputes an0 1+ie,ances 8ith the PC-C
befo+e 1oin1 to the t+ial cou+t. &$ Ce9phasis supplie0D
61
Si9pl4 put' pa+ticipants in the +e1ional clea+in1 ope+ations of the Philippine Clea+in1 -ouse Co+po+ation cannot b4pass the a+bit+ation p+ocess lai0
out b4 the bo04 an0 see< +elief 0i+ectl4 f+o9 the cou+ts. In the case at ba+' un0eniabl4' p+i,ate +espon0ent has initiate0 a+bit+ation p+ocee0in1s as
+e7ui+e0 b4 the PC-C +ules an0 +e1ulations' an0 pen0in1 a+bit+ation has sou1ht +elief f+o9 the t+ial cou+t fo+ 9easu+es to safe1ua+0 an0Go+ conse+,e
the sub:ect of the 0ispute un0e+ a+bit+ation' as sanctione0 b4 section & of the (+bit+ation .a8' an0 othe+8ise not sho8n to be cont+a+4 to the PC-C
+ules an0 +e1ulations.
.i<e8ise' in the case of Pu+o9ines' Inc. ,s. Cou+t of (ppeals' &# 8e ha,e +ule0 that;
In an4 case' 8hethe+ the liabilit4 of +espon0ent shoul0 be base0 on the sales cont+act o+ that of the bill of la0in1' the pa+ties a+e ne,e+theless
obli1ate0 to +espect the a+bit+ation p+o,isions on the sales cont+act an0Go+ bill of la0in1. Petitione+ bein1 a si1nato+4 an0 pa+t4 to the sales cont+act
cannot escape f+o9 his obli1ation un0e+ the a+bit+ation clause as state0 the+ein.
In Pu+o9ines' 8e foun0 the a+bit+ation clause state0 in the sales cont+act to be ,ali0 an0 applicable' thus' 8e +ule0 that the pa+ties' bein1 si1nato+ies
to the sales cont+act' a+e obli1ate0 to +espect the a+bit+ation p+o,isions on the cont+act an0 cannot escape f+o9 such obli1ation b4 filin1 an action fo+
b+each of cont+act in cou+t 8ithout +eso+tin1 fi+st to a+bit+ation' as a1+ee0 upon b4 the pa+ties.
(t this point' 8e e9phasi3e that a+bit+ation' as an alte+nati,e 9etho0 of 0ispute +esolution' is encou+a1e0 b4 this Cou+t. (si0e f+o9 unclo11in1
:u0icial 0oc<ets' it also hastens solutions especiall4 of co99e+cial 0isputes. J! The Cou+t loo<s 8ith fa,o+ upon such a9icable a++an1e9ent an0 8ill
onl4 inte+fe+e 8ith 1+eat +eluctance to anticipate o+ nullif4 the action of the a+bit+ato+. J
F-EREFORE' p+e9ises consi0e+e0' the petition is he+eb4 DISMISSED an0 the 0ecision of the cou+t a 7uo is (FFIRMED.
SO ORDERED.
62