You are on page 1of 13

Heirs of Augusto Salas vs Laperal Realty

Augusto Salas, Jr., the registered owner of a vast tract of land in Lipa City, Batangas,
entered into an Owner-Contractor Agreement with Respondent Laperal Realty
Corporation to render and provide complete construction services on his land. The
agreement contains an arbitration clause that in all cases of dispute, there should
be one representative for owner and contractor and one representative acceptable
to both.
Salas, Jr. executed a Special Power of Attorney in favor of Respondent Laperal Realty
to exercise general control, supervision and management of the sale of his land, for
cash or on installment basis. Laperal Realty then subdivided said land and sold
portions thereof.
Salas left in 1989 and never returned. In 1998, the heirs of Salas filed a Complaint
for Declaration of Nullity of Sale, Reconveyance, Cancellation of Contract. The RTC
dismissed the petition for non-compliance with the arbitration clause.
Whether or not the arbitration clause in the Owner-Contractor Agreement is binding
upon the Respondent Lot Buyers?
No. The respondent Lot Buyers are neither parties to the Agreement nor the latters
assigns or heirs. Consequently, the right to arbitrate as provided in Article VI of the
Agreement was never vested in Respondent Lot Buyers.
Respondent Laperal Realty, on the other hand, as a contracting party to the
Agreement, has the right to compel Petitioners to first arbitrate before seeking
judicial relief. However, to split the proceedings into arbitration for Respondent
Laperal Realty and trial for the Respondent Lot Buyers, or to hold trial in abeyance
pending arbitration between Petitioners and Respondent Laperal Realty, would in
effect result in multiplicity of suits, duplicitous procedure and unnecessary delay.
On the other hand, it would be in the interest of justice if the trial court hears the
complaint against all herein Respondents and adjudicates Petitioners rights as
against theirs in a single and complete proceeding.

BF Corporation v. CA, 288 SCRA 267 (1998)

Petitioner and respondent Shangri-la Properties entered into an agreement wherein
petitioner will construct the main structure of the EDSA Plaza Project. Petitioner
incurred delay in the construction work, which resulted in disagreements between
the parties as regards their respective liabilities under the contract.
Petitioner filed with the RTC of Pasig a complaint for collection of the balance due
under the construction agreement. Shangri-la filed a motion to suspend proceedings
alleging that the formal trade contract for the construction of the project provided
for a clause requiring prior resort to arbitration before judicial intervention could be
invoked in any dispute arising from the contract. Petitioner opposed said motion
claiming that there was no formal contract between the parties although they
entered into an agreement defining their rights and obligations in undertaking the
Whether or not the contract between petitioner and respondent embodies an
arbitration clause in case of disagreement between the parties in the
implementation of contractual provisions.
Yes. The making of a contract or submission for arbitration described in Sec. 2 of
R.A. 876 providing for arbitration of any controversy, shall be deemed a consent of
the parties of the province or city where any of the parties resides, to enforce such
contract of submission.
The formal requirements of an agreement to arbitrate are: (a) it must be in writing
and (b) it must be subscribed by the parties or their representatives. There is no
denying that the parties entered into a written contract that was submitted in
evidence before the lower court.
The Court finds that, upon a scrutiny of the records of this case, these requisites
were complied with in the contract in question. The Articles of Agreement, which
incorporates all the other contracts and agreements between the parties, was
signed by representatives of both parties and duly notarized. The failure of the
private respondent's representative to sign the "Conditions of Contract" would not
affect the compliance with the formal requirements for arbitration agreements


Hi-Precision entered a construction contract with Steel Builders, wherein Steel
Builders would complete a P21M construction project until Oct. 8, 1990. However,
the project's completion date was moved to Nov. 1990. Come Nov. 1990, the
construction was only almost 76% complete. Each party attributed delay to the
other. Hi-Precision undertook the project and completed it February 1991.
Steel builders then filed a request for arbitration with the CIAC, as well as a
complaint for collection of unpaid progress buildings. The CIAC ordered Hi-Precision
to pay Steel Builders. High Precision now goes to the SC to set aside the CIAC
Arbitrator's award alleging errors of law and grave abuse of discretion on the part of
the CIAC.
Whether or not ther was serious error of law amounting to grave abuse of discretion
resulting in lack of jurisdiction on the part of the CIAC.
Petition was dismissed. The matters raised by High Precision are really matters of
fact that are not subject to review of the SC.
Based on the objective of voluntary arbitration in the construction industry, the
Court will not assist one or the other or even both parties in any effort to subvert or
defeat that objective for their private purposes. The Court will not review the factual
findings of an arbitral tribunal upon the artful allegation that such body had
"misapprehended the facts" and will not pass upon issues which are, at bottom,
issues of fact, no matter how cleverly disguised they might be as "legal questions."
The parties here had recourse to arbitration and chose the arbitrators themselves;
they must have had confidence in such arbitrators.


LM Power Engineering Corporation and Capitol Industrial Construction Groups Inc.
entered into a Subcontract Agreement involving electrical work at the Third Port of
Zamboanga. Due to the inability of the petitioner to procure materials, Capitol
Industrial took over some of the work contracted to the former. After the completion
of the contract, petitioner billed respondent in the amount of P6, 711,813.90 but the
respondent refused to pay.
Petitioner filed with the RTC of Makati a Complaint for the collection of the amount
representing the alleged balance due it under the subcontract. Respondent filed a
Motion to Dismiss, alleging that the Complaint was premature, due to the absence
of prior recourse to arbitration.
RTC denied the Motion on the ground that the dispute did not involve the
interpretation or the implementation of the Agreement and was not covered by the
arbitral clause and ruled in favor of the petitioner. Respondent appealed to the CA,
the latter reversed the decision of the RTC and ordered the referral of the case to
Whether or not there is a need for the prior arbitration before filing of the complaint
with the court.
Yes. The case at hand involves technical discrepancies that are better left to an
arbitral body that has expertise in the subject matter. Moreover, the agreement
between the parties contains arbitral clause that any dispute or conflict as regards
to interpretation and implementation of this agreement which cannot be settled
between respondent and petitioner amicably shall be settled by means of
arbitration. The resolution of the dispute between the parties herein requires a
referral to the provisions of their agreement. Within the scope of the arbitration
clause are discrepancies as to the amount of advances and billable
accomplishments, the application of the provision on termination, and the
consequent set-off of expenses.

There is no need for prior request for arbitration by the parties with the CIAC in
order for it to acquire jurisdiction because when a contract contains a clause for the
submission of a future controversy to arbitration, it is not necessary for the parties
to enter into a submission agreement before the claimant may invoke the
jurisdiction of CIAC. The arbitral clause in the agreement is a commitment on the
part of the parties to submit to arbitration the disputes covered therein.


Victor Tancuan issued Home Bankers Savings and Trust Company (HBSTC) check for
P25, 250,000.00, while Eugene Arriesgado issued Far East Bank and Trust Company
(FEBTC) three checks amounting to P25, 200,000.00.
Tancuan and Arriesgado exchanged each other's checks and deposited them with
their respective banks for collection. When FEBTC presented Tancuan's HBSTC check
for clearing, HBSTC dishonored as it was "Drawn against Insufficient Funds." HBSTC
sent Arriesgado's three FEBTC checks to FEBTC but was returned as "Drawn Against
Insufficient Funds." HBSTC received the notice of dishonor but refused to accept the
checks and returned them to FEBTC through the PCHC for the reason "Beyond
Reglementary Period," implying that HBSTC already treated the three FEBTC checks
as cleared and allowed the proceeds thereof to be withdrawn. FEBTC demanded
reimbursement for the returned checks and inquired from HBSTC whether it had
permitted any withdrawal of funds against the unfunded checks and if so, on what
date. HBSTC, however, refused to make any reimbursement and to provide FEBTC
with the needed information.
Whether or not private respondent may subsequently file a separate case in court
over the same subject matter of arbitration, simply to obtain the provisional remedy
of attachment against the petitioner.
Yes. Section 14 of Republic Act 876, otherwise known as the Arbitration Law, allows
any party to the arbitration proceeding to petition the court to take measures to
safeguard and/or conserve any matter which is the subject of the dispute in
arbitration. The exercise of such power is without prejudice to the right of a party to
file a petition in court to safeguard any matter which is the subject of the dispute in

arbitration. In the case at bar, private respondent filed an action for a sum of money
with prayer for a writ of preliminary attachment. Undoubtedly, such action involved
the same subject matter as that in arbitration. However, the civil action was not a
simple case of a money claim since private respondent has included a prayer for a
writ of preliminary attachment, which is sanctioned by section 14 of the Arbitration
Law. Participants in the regional clearing operations of the Philippine Clearing House
Corporation cannot bypass the arbitration process laid out by the body and seek
relief directly from the courts.


Petitioner RCBC filed a complaint for recovery of a sum of money against Magwin
Marketing Corporation, Nelson Tiu, Benito Sy and Anderson Uy. Discussions between
petitioner and respondents were undertaken to restructure the indebtedness of
respondent. Petitioner approved a debt payment scheme for the corporation which
was communicated to the latter by means of a letter for the conformity of its
officers and respondent. Only respondent Nelson Tiu affixed his signature on the
letter to signify his agreement to the terms and conditions of the restructuring.
The trial court dismissed the case for failure to prosecute its action for an
unreasonable length of time. Petitioner moved for reconsideration and filed a
Manifestation and Motion to Set Case for Pre-Trial Conference alleging that only
defendant Nelson Tiu had affixed his signature on the letter which informed the
defendants that petitioner already approved defendant Magwin Marketing
Corporations request for restructuring of its loan obligations. The trial court denied
petitioner's motion to calendar the Case for pre-trial.
Whether or not failure to compromise warrants procedural sanction.
A compromise agreement or amicable settlement is a remedy strongly encouraged
under our jurisdiction. However, the failure to consummate one does not warrant

any procedural sanction, much less provide an authority for the court to jettison the
This Court's ruling is pursuant to the case of Goldloop Properties, Inc. v. Court of
Appeals, where it was held that the trial court cannot dismiss a complaint for failure
of the parties to submit a compromise agreement.


Chatham Properties and Metro Construction (MCI) entered into a contract for the
construction of a multi-storey building known as the Chatham House. Petitioner
sought to collect from respondent a sum of money for unpaid progress billings and
other charges and instituted a request for adjudication of its claims with the CIAC.
The CIAC holds that the provision of the contract cannot justifiably be applied in the
instant case because of the implied take-over of the Chatham House project by
respondent. The Tribunal found no necessity to resolve whether or not MCI
completed and/or delivered the project within the approved completion period.
In upholding the decision of the CIAC, the Court of Appeals confirmed the
jurisprudential principle that absent any showing of arbitrariness, the CIAC's findings
as an administrative agency and quasi judicial body should not only be accorded
great respect but also given the stamp of finality. Hence, this petition.
Whether or not the Court of Appeals can review findings of facts of the CIAC

The Supreme Court ruled that EO. No. 1008 vest upon the CIAC original and
exclusive jurisdiction over disputes arising from, or connected with, contracts
entered into by parties involved in construction in the Philippines, whether the
dispute arises before or after the completion of the contract, or after the
abandonment or breach thereof. By express provision of Section 19 thereof, the
arbitral award of the CIAC is final and unappealable, except on questions of law,
which are appealable to the Supreme Court.
The Court of Appeals shall have the power to try cases and conduct hearings,
receive evidence and perform any and all acts necessary to resolve factual issues
raised in cases falling within its original and appellate jurisdiction, including the
power to grant and conduct new trials or further proceedings.


Private respondent Cid spouses filed a complaint against Philrock and its officers.
Both parties agreed to refer the matter to the CIAC. A preliminary conference was
held among the parties and their appointed arbitrators. Disagreements arose as to
whether moral and exemplary damages and tort should be included as an issue
along with breach of contract, and whether the seven officers and engineers of
Philrock who are not parties to the Agreement to Arbitrate should be included in the
arbitration proceedings. No common ground could be reached. Hence, both parties
requested that the case be remanded to the trial court. The Court ordered that it no
longer had jurisdiction over the case and remanded the same to CIAC for arbitral
proceeding. The parties proceeded to finalize, approve and sign the Terms of
Reference which stated that the parties agree that their differences be settled by an
Arbitral Tribunal. Thereafter, the petitioner filed a Motion to dismiss alleging that the
CIAC has lost jurisdiction over the case.
Whether or not the CIAC has jurisdiction over the case

Yes. The CIAC is vested with the original and exclusive jurisdiction over disputes
arising from or connected with construction contracts entered into by parties that
have agreed to submit their dispute to voluntary arbitration.
The parties submitted themselves to the jurisdiction of the Commission. Petitioner
continued participating in the arbitration even after the CIAC Order had been issued.
It even concluded and signed the Terms of Reference. The document clearly
confirms both parties intention and agreement to submit the dispute to voluntary
arbitration. In view of this fact, we fail to see how the CIAC could have been
divested of its jurisdiction.
The Court will not countenance the effort of any party to subvert or defeat the
objective of voluntary arbitration for its own private motives. After submitting itself
to arbitration proceedings and actively participating therein, petitioner is estopped
from assailing the jurisdiction of the CIAC, merely because the latter rendered an
adverse decision.


Sea-Land Services and private respondent A.P. Moller/ Maersk Line (AMML) entered
into a vessel sharing agreement whereby they mutually agreed to purchase, share
and exchange needed space for cargo in their respective containerships. Under the
Agreement, they could be, depending on the occasion, either a principal carrier or a
containership operator.
Florex International delivered to AMML cargo. The corresponding Bill of Lading was
issued to Florex by respondent AMML. Pursuant to the Agreement, respondent AMML
loaded the subject cargo on MS Sealand Pacer. Therefore, respondent AMML was the
principal carrier while petitioner was the containership operator.
Consignee refused to pay for the cargo, alleging that delivery thereof was delayed.
Florex filed a complaint against respondent AMML for reimbursement of the value of

the cargo and other charges. AMML alleges that Sea-Land should be liable and filed
a third-party complaint against petitioner. Petitioner filed a motion to dismiss the
third-party complaint on the ground that there exists an arbitration agreement
between it and respondent AMML. The petition was denied.
Whether or not the CA erred in denying petitioner's prayer for arbitration
Yes. For respondent Court of Appeals to say that the terms of the contract do not
require arbitration as a condition precedent to judicial action is erroneous. In the
light of the Agreement clauses, it is clear that arbitration is the mode provided by
which respondent AMML as Principal Carrier can seek damages and/or indemnity
from petitioner, as Containership Operator.


As appointed manager of Magellan Capital Holdings (MCHC), Magellan Capital
Management Corporation (MCMC) appointed respondent Zosa as President. The
appointment was embodied in the Employment Agreement which shall cease if the
management agreement between MCHC and MCMC ceases unless terminated
pursuant to the Employment Agreement.
Majority of MCHC's Board of Directors decided not to re-elect Zosa on account of
loss of trust and confidence arising. Nevertheless, Zosa was elected to a new
position as MCHC's Vice-Chairman/Chairman for New Ventures Development. Zosa
then filed his resignation to the company on the ground that said position had less

responsibility and scope than President and Chief Executive Officer. He demanded
that he be given termination benefits as provided for in the Employment
MCHC did not accept respondent Zosa's resignation, but instead informed him that
the Employment Agreement is terminated for cause, in accordance with the said
agreement. Disagreeing with the position taken by petitioners, Zosa invoked the
Arbitration Clause of the Employment Agreement. However, instead of submitting
the dispute to arbitration, Zosa, filed an action for damages against petitioners
before the Regional Trial Court of Cebu to enforce his benefits under the
Employment Agreement.
ISSUE: Whether or not the arbitration clause is valid and effective.
The Arbitration clause is invalid in so far as the composition of panel of arbitrators is
Petitioners MCMC and MCHC represent the same interest. Thus, it could never be
expected, in the arbitration proceedings, that they would not protect and preserve
their own interest, much less, would both or either favor the interest of the plaintiff.
The arbitration law, as all other laws, is intended for the good and welfare of
The two petitioners have one arbitrator each to compose the panel of three
arbitrators. Hence, respondent would never get or receive justice and fairness in the
arbitration proceedings from the panel of arbitrators. In fairness and justice to the
both petitioners which represent the same interest should be considered as one and
should be entitled to only one arbitrator to represent them in the arbitration


A Distributorship Agreement was entered into by petitioner Del Monte CorporationUSA and private respondent Montebueno Marketing, Inc. (MMI), wherein the latter
was the sole and exclusive distributor of Del Monte products of the former in the
Philippines. The agreement provides for an arbitration clause.

MMI filed a complaint against Del Monte on alleged violations of Arts. 20, 21 and 23
of the Civil Code. Respondent claimed that they had exhausted all possible avenues
for an amicable resolution and settlement of their grievances. Petitioners filed a
Motion to Suspend Proceedings invoking the arbitration clause in their Agreement
with private respondents. Trial Court denied petitioners motion. Court of Appeals
affirmed the Trial Courts decision.
Whether or not the dispute between the parties warrants an order compelling them
to submit to arbitration
The arbitration clause in the Distributorship Agreement between petitioner DMCUSA and private respondent MMI is valid and the dispute between the parties is
arbitrable. However, this Court must deny the petition.
Splitting of the proceedings to arbitration as to some of the parties on one hand and
trial for the others on the other hand, or the suspension of trial pending arbitration
between some of the parties, should not be allowed as it would result in multiplicity
of suits, duplicitous procedure and unnecessary delay.
The object of arbitration is to allow the expeditious determination of a dispute.
Clearly, the issue before us could not be speedily and efficiently resolved in its
entirety if we allow simultaneous arbitration proceedings and trial, or suspension of
trial pending arbitration. Accordingly, the interest of justice would only be served if
the trial court hears and adjudicates the case in a single and complete proceeding.



An information for libel was filed before the RTC of Manila against private
respondents Baskinas and Manapat, with petitioner Francisco Chavez as the
Private respondents moved to quash the Information and the warrants of arrest
which was denied by the RTC. Private respondents then filed a Petition for Certiorari
with the CA, which was granted, holding that the Information against private
respondents states that the libelous matter was "caused to be published in Smart
File, a magazine of general circulation in Manila." CA held that the information did
not indicate that the libelous articles were printed or first published in Manila, or
that petitioner resided in Manila at the time of the publication of the articles.
Does the subject information sufficiently vest jurisdiction in the Manila trial courts to
hear the libel charge, in consonance with Article 360 of the Revised Penal Code?
The Information states that the libelous articles were published in Smart File, and
not that they were published in Manila.
Indeed, if we hold that the Information at hand sufficiently vests jurisdiction in
Manila courts since the publication is in general circulation in Manila, there would be
no impediment to the filing of the libel action in other locations where Smart File is
in general circulation.
If this disquisition impresses an unduly formalistic reading of the Information at
hand, it should be reiterated that the flaws in the Information strike at the very
heart of the jurisdiction of the Manila RTC. It is settled that jurisdiction of a court
over a criminal case is determined by the allegations of the complaint or
information, and the offense must have been committed or any one of its essential
ingredients took place within the territorial jurisdiction of the court.