Puromines Inc v CA (1) The sales contract is comprehensive enough to include claims for damages

Topic: Contracts with Arbitration Clause arising from carriage and delivery of the goods. The disputed sales contract
provides for conditions relative to the delivery of goods, such as date of
Doctrine: Parties to sales contract and/or bill of lading bound by arbitration clause shipment, demurrage, weight as determined by the B/L at load port, among
thereat other provisions. In any case, whether the liability of Philipp Brothers should
be based on the sales contract or that of the B/L, the parties are nevertheless
Facts: obligated to respect the arbitration provisions on the sales contract and/or
(1) Petitioner Puromines Inc and Makati Agro Trading Inc. entered into a contract the B/L. Puromines being a signatory and a party to the sales contract, cannot
with private respondents Philipp Brothers Oceanic Inc. for the sale of prilled Urea escape from his obligation under the arbitration clause as stated therein.
in bulk. The Sales contract provided an arbitration clause which states that, “Any
disputes arising under the contract shall be settled by arbitration in London in (2) Arbitration has been held valid and constitutional. Even before the
accordance with the Arbitration Act 1950…” enactment of RA No. 876, this court has countenanced the settlement of
(2) Subsequently, a vessel M/V Liliana Dimitrova loaded on board at Yuzhny, USSR, a disputes through arbitration. The rule now is that unless the agreement is
shipment of 15,500 metric tons of prilled Urea in bulk, complete and in good such as absolutely to close the doors of the courts against the parties, which
order and condition for transport to Iloilo and Manila, to be delivered to agreement would be void, the courts will look with favor upon such amicable
Puromines. arrangements and will only interfere with great reluctance to anticipate or
(3) Accordingly, 3 B/Ls were issued therein. The shipment covered by B/L No. 2 was nullify the action of the arbitrator.
discharged in Iloilo complete and in good order and condition. However, the
shipments covered by B/Ls No. 1 and 3 were discharged in Manila in bad order Fallo: Court upholds the validity and applicability of the arbitration clause as stated in
and condition, caked, hardened and lumpy, discolored and contaminated with the Sales contract. Hence, petition is DISMISSED.
rust and dirt, amounting to P683,056.29 in damages.
(4) Consequently, Puromines filed a complaint with the trial court for breach of
contract of carriage against Martime Factors Inc., as ship agent in the Philippines
for the owners of MV Liliana, while Philipp Brothers was impleaded as charterer
of the said vessel and party to accord complete relief.
(5) Philipp Brothers filed a MTD on the ground that the complaint was prematurely
filed and Puromines should comply with the arbitration clause in the sales
contract.
(6) Puromines contended that the arbitration clause is inapplicable inasmuch as the
cause of action did not arise from a violation of the terms of the sales contract
but rather for claims of cargo damages where there is no arbitration agreement.
The sales contract does not include the contract of carriage which is difference
contract entered into by the carried with the cargo owners.
(7) RTC: Denied MTD.
(8) CA: Reversed. The arbitration provision in the sales contract and/or B/L is
applicable in the present case.

Issue: W/N the phrase “any dispute arising under the contract” in the arbitration
clause of the sales contract covers a cargo claim against the vessel (owners and/or
charterers) for breach of contract of carriage. (YES)

Held: