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Daigle, Jerrymie

ADR- CASES
Third Parties to Arbitration Agreement
1. Gilat Satellite Networks, Ltd. v. United Coconut Planters Bank
General Insurance Co., Inc., G.R. No. 189563, April 7, 2014
Facts:
On September 15, 1999, One Virtual placed with GILAT a purchase order for
various telecommunications equipment (sic), accessories, spares, services and
software, at a total purchase price of Two Million One Hundred Twenty Eight
Thousand Two Hundred Fifty Dollars (US$2,128,250.00). Of the said purchase price
for the goods delivered, One Virtual promised to pay a portion thereof totaling
US$1.2 Million in accordance with the payment schedule dated 22 November
1999. To ensure the prompt payment of this amount, it obtained defendant
UCPB General Insurance Co., Inc. 's surety bond dated 3 December 1999, in favor
of GILAT.
During the period between September 1999 and June 2000, GILAT shipped and
delivered to One Virtual the purchased products and equipment, as evidenced by
airway bills/Bill of Lading. All of the equipment (including the software
components for which payment was secured by the surety bond, was shipped by
GILAT and duly received by One Virtual.
One Virtual failed to pay GILAT the amount of (US$400,000.00) on the due
date of May 30, 2000 in accordance with the payment scheduled prompting GILA
T to write the surety defendant UCPB on June 5, 2000, a demand letter for
payment of the said amount of US$400,000.00. No part of the amount set forth in
this demand has been paid to date by either One Virtual or defendant UCPB.
One Virtual likewise failed to pay on the succeeding payment installment date of
30 November 2000 prompting GILAT to send a second demand letter dated
January 24, 2001, for the payment of the full amount of US$1,200,000.00
guaranteed under the surety bond, plus interests and expenses and which letter
was received by the defendant surety on January 25, 2001. However, defendant
UCPB failed to settle the amount of US$1,200,000.00 or a part thereof, hence, the
instant complaint.
RTC- rendered decision in favor of plaintiff and against the defendant
SC- Plaintiff-appellant Gilat Satellite Networks Ltd., and One Virtual are ordered
to proceed to arbitration, the outcome of which shall necessary bind the parties,
including the surety, defendant-appellant United Coconut Planters Bank General
Insurance Co., Inc.
ISSUE: Whether or not the CA erred in dismissing the case and ordering petitioner
and One Virtual to arbitrate.
RULLING:
YES,
The assailed Decision and
REVERSED
The decision of RTC is reinstated.

Resolution

of

the Court

of Appeals are

The existence of a suretyship agreement does not give the suretyship


the right to intervene in the principal contract, nor can an arbitration
clause between the buyer and the seller be invoked by a non-party such
as the surety.
Section 24 of Republic Act No. 928542 is clear in stating that a referral to
arbitration may only take place "if at least one party so requests not later than the
pre-trial conference, or upon the request of both parties thereafter." Respondent
has not presented even an iota of evidence to show that either petitioner or One
Virtual submitted its contesting claim for arbitration.

2. Del Monte Corporation-USA, et al. v. Court of Appeals, et al., 351


SCRA 373, G.R. No. 136154, February 7, 2001
Facts:
In October 1994 the appointment of private respondent MMI as the sole and
exclusive distributor of Del Monte products in the Philippines was published in
several newspapers in the country. Immediately after its appointment, private
respondent MMI appointed Sabrosa Foods, Inc. (SFI), with the approval of
petitioner DMC-USA, as MMIs marketing arm to concentrate on its marketing and
selling function as well as to manage its critical relationship with the trade.
On 3 October 1996 private respondents MMI, SFI and MMIs Managing
Director Liong Liong C. Sy (LILY SY) filed a Complaint against petitioners DMC-USA,
Paul E. Derby, Jr., Daniel Collins and Luis Hidalgo, and Dewey Ltd. before the RTC
of Malabon, Metro Manila. Private respondents predicated their complaint on the
alleged violations by petitioners of Arts. 20, 21, and 23 of the Civil Code.
According to private respondents, DMC-USA products continued to be brought into
the country by parallel importers despite the appointment of private respondent
MMI as the sole and exclusive distributor of Del Monte products thereby causing
them great embarrassment and substantial damage. They alleged that the
products brought into the country by these importers were aged, damaged, fake
or counterfeit, so that in March 1995 they had to cause, after prior consultation
with Antonio Ongpin, Market Director for Special Markets of Del Monte Philippines,
Inc., the publication of a "warning to the trade" paid advertisement in leading
newspapers.
Petitioners filed a Motion to Suspend Proceedings invoking the arbitration
clause in their Agreement with private respondents where in it states that the law
governed by the laws of the State of California and/or, if applicable, the United
States of America. All disputes arising out of or relating to this Agreement or the
parties relationship, including the termination thereof, shall be resolved by
arbitration in the City of San Francisco, State of California, under the Rules of the
American Arbitration Association.
RTC denied the motion on the ground that it "will not serve the ends of
justice and to allow said suspension will only delay the determination of the
issues, frustrate the quest of the parties for a judicious determination of their
respective claims, and/or deprive and delay their rights to seek redress."
CA affirmed the decision of the trial court.
Issue: whether or not the dispute between the parties warrants an order
compelling them to submit to arbitration.
Rulings: No
The Agreement between petitioner DMC-USA and private respondent MMI is a
contract. The provision to submit to arbitration any dispute arising therefrom and
the relationship of the parties is part of that contract and is itself a contract. As a
rule, contracts are respected as the law between the contracting parties and
produce effect as between them, their assigns and heirs. Clearly, only parties to
the Agreement, i.e., petitioners DMC-USA and its Managing Director for Export
Sales Paul E. Derby, Jr., and private respondents MMI and its Managing Director
LILY SY are bound by the Agreement and its arbitration clause as they are the only
signatories thereto. Petitioners Daniel Collins and Luis Hidalgo, and private
respondent SFI, not parties to the Agreement and cannot even be considered
assigns or heirs of the parties, are not bound by the Agreement and the
arbitration clause therein. Consequently, referral to arbitration in the State of
California pursuant to the arbitration clause and the suspension of the

proceedings in Civil Case No. 2637-MN pending the return of the arbitral award
could be called for but only as to petitioners DMC-USA and Paul E. Derby, Jr., and
private respondents MMI and LILY SY, and not as to the other parties in this case
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.
The petition is DENIED. The Decision of the Court of Appeals affirming the
Order of the Regional Trial Court of Malabon, Metro Manila, in which denied
petitioners Motion to Suspend Proceedings, is AFFIRMED
3 Heirs of Augusto L. Salas, Jr. vs. Laperal Realty Corporation, et al.,
320 SCRA 610, G.R. No. 135362, December 13, 1999
Facts:
Salas Jr. was the registered owner of a vast tract of land in Lipa City,
Batangas spanning 1,484,354 square meters. On May 15, 1987, he entered into
an Owner-Contractor Agreement with respondent Laperal Realty Corporation to
render and provide complete (horizontal) construction services on his land. On
September 23, 1988, 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. On June 10,
1989, Salas, Jr. left his home in the morning for a business trip to Nueva Ecija. He
never returned. After 7 years, Teresita Diaz Salas filed with the Regional Trial Court
of Makati City a verified petition for the declaration of presumptive death of her
husband, Salas, Jr., who had then been missing for more than seven (7) years. It
was granted on December 12, 1996.
Meantime, respondent Laperal Realty subdivided the land of Salas, Jr. and
sold subdivided portions thereof to respondents Rockway Real Estate Corporation
and South Ridge Village, Inc.; to respondent spouses Abrajano and Lava and Oscar
Dacillo; and to respondents Eduardo Vacuna, Florante de la Cruz and Jesus Vicente
Capalan (all of whom are hereinafter referred to as respondent lot buyers).
On February 3, 1998, petitioners as heirs of Salas, Jr. filed in the Regional
Trial Court of Lipa City a Complaint 6 for declaration of nullity of sale,
reconveyance, cancellation of contract, accounting and damages against herein
respondents which was docketed as Civil Case No. 98-0047. On April 24, 1998,
respondent Laperal Realty filed a Motion toDismiss on the ground that petitioners
failed to submit their grievance to arbitration as required under Article VI of the
Agreement of their arbitration clause.
Issue: Whether or not rescission is an arbitrable?
Rulings:
Yes
The petitioners' contention is without merit. For while rescission, as a
general rule, is an arbitrable issue, they impleaded in the suit for rescission the
respondent lot buyers who are neither parties to the Agreement nor the latter's
assigns or heirs. Consequently, the right to arbitrate as provided in Article VI of
the Agreement was never vested in respondent lot buyers.
Respondent Laperal Realty, as a contracting party to the Agreement, has
the right to compel petitioners to first arbitrate before seeking judicial relief.
However, to split the proceedings into arbitration for respondent Laperal Realty
and trial for the respondent lot buyers, or to hold trial in abeyance pending
arbitration between petitioners and respondent Laperal Realty, would in effect

result in multiplicity of suits, duplicitous procedure and unnecessary delay. On the


other hand, it would be in the interest of justice if the trial court hears the
complaint against all herein respondents and adjudicates petitioners' rights as
against theirs in a single and complete proceeding.
4. Demosthenes P. Agan, Jr., et al. v. Philippine International Air
Terminals Co., Inc. (PIATCO), et al., G.R. No. 155001; Salacnib F. Baterina,
et al. v. PIATCO, et al., G.R. No. 155547; Cefernio C. Lopez, et al. v.
PIATCO, et al., G.R. No. 155661, May 5, 2003
Facts:
The cases at bar are special civil actions for certiorari and prohibition, they
contend that the principle of hierarchy of courts precludes this Court from taking
primary jurisdiction over them.
Briefly, On October 5, 1994, Asias Emerging Dragon Corp. (AEDC) submitted
an unsolicited proposal to the Philippine Government through the Department of
Transportation and Communication (DOTC) and Manila International Airport
Authority (MIAA) for the construction and development of the NAIA IPT III under a
build-operate-and-transfer arrangement pursuant to R.A. No. 6957, as amended
by R.A. No. 7718 (BOT Law). In accordance with the BOT Law and its Implementing
Rules and Regulations, the DOTC/MIAA invited the public for submission of
competitive and comparative proposals to the unsolicited proposal of AEDC. On
September 20, 1996 a consortium composed of the Peoples Air Cargo and
Warehousing Co., Inc. (Paircargo), Phil. Air and Grounds Services, Inc. (PAGS) and
Security Bank Corp. (Security Bank) (collectively, Paircargo Consortium),
submitted their competitive proposal to the Prequalification Bids and Awards
Committee (PBAC)
The DOTC issued the notice of award for the NAIA IPT III project to the
Paircargo Consortium, which later organized into herein respondent PIATCO. On
July 12, 1997, the Government, through its duly government officers signed the
Concession Agreement for the Build-Operate-and-Transfer Arrangement of the
Ninoy Aquino International Airport Passenger Terminal III (1997 Concession
Agreement). On November 26, 1998, the 1997 Concession Agreement was
superseded by the Amended and Restated Concession Agreement (ARCA)
containing certain revisions and modifications from the original contract . A series
of supplemental agreements was entered into by the Government and PIATCO.
Various petition was filed to to annul the 1997 Concesion Agreement, the
Arca and the supplements and to prohibit DOTC and MIAA from implementing
them.
The court granted the said petitions and declared the 1987 Concession
Agreement, the Arca and the supplements null and void. Thus, this petition was
filed seeking for the reversal of the decision of the Courtand pray that the petition
be dismissed. PIATCO prays that the court should not strike down the entire 1997
Concession Agreement, the ARCA and its supplements in light of seperability
clause. Respondent Congresman and NMTAI also pray that in alternative, the
cases at bar should be refers to arbitration pursuant to the provision of ARCA.
Issue: Whether or not the case can go in arbitration?
Rulings:

5. Contra Toyota Motor Philippines Corporation v. The Court of


Appeals, et al., 216 SCRA 236, G.R. No. 102881, December 7, 1992

Order to Arbitrate; Special Jurisdiction of Courts; Sec. 6, The Arbitration


Law
6. La Naval Drug Corporation vs. The Honorable Court of Appeals,
et al., 236 SCRA 78, G.R. No. 103200, August 31, 1994

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