Alternative Dispute Resolution Cases Jerraemie Nikka Patulot

1. Teodoro Vega v The San Carlos Milling Co., LTD (Romualdez,1924))

Facts:

1. The action is for the recovery of P32,959 kilos of centrifugal sugar, or its
value P6,252 plus the payment of P500 damages and the costs
2. Defendants filed an answer and set up special defenses.
3. CFI tried the case and rendered that:
The plaintiff must be held to have a better right to the possession of
the 32,959 kilos of centrifugal sugar manufactured in the
defendantss central
Claimed for damages is denied
4. The defendant company appealed and alleged that:
The lower court erred in having held itself with jurisdiction to take
cognizance of and render judgment
That the defendant was bound to supply cars gratuitously to the
plaintiff for the cane
Not ordering to pay the defendant for the cars used by him
5. It is an admitted fact that the difference which; arose between the parties and
which are the subject of the present litigation have not been submitted to
arbitration provided on the Clause 3 of the Mill's covenants and clause 14 of
the Planter's Covenant
6. DEFENDANTS CONTENTION:
That the stipulations or arbitration are valid, they constitute a condition
precedent, to which the plaintiff should have resorted before applying to
the courts, as he prematurely did.

ISSUES:

1. Whether or not the covenants on arbitration barred judicial action?
2. Whether the defendant was obliged to supply the plaintiff cars gratuitously
for cane?

HELD:
1. No. The covenants on arbitration did not bar judicial action.
2. No. The defendant was not obliged to supply the cars.

RATIONALE:


1. COURT ruled that the defendant is right that the covenants on arbitration are
valid, buy they ate not for the reason a bar to judicial action because
Alternative Dispute Resolution Cases Jerraemie Nikka Patulot
An agreement to submit to arbitration, not consummated by an award is
no bar to suit a law or in equity concerning the subject matter submitted
It cannot be held based on the covenants on arbitration, the parties
proposed to establish the arbitration as a condition precedent to judicial
action (the clause does not create a condition either expressly or
impliedly.
A condition precedent to a suit upon the contract depends upon the
language employed in each particular stipulation
Neither does reciprocal covenant No. 7 of the contract expressly or
impliedly establish arbitration as a condition.
2. By the covenant (clause 3 of the "Covenant by Mill), the defendant bound
itself to construct branch lines of the railway at such points on the estate as
might be necessary but the said clause hardly construed to bind the
defendant to gratuitously supply the plaintiff with cars to transport cane
from his fields to the branch lines agreed upon on its estate.

The defendant cannot now demand payment of the plaintiff for such use of
the cars. And this is so, not because the fact of having supplied them was an
act of pure liberality, to which having once started it, the defendant was
forever bound, which would be unreasonable, but because the act of
providing such cars was, under the circumstances of the case, of compliance
of an obligation to which defendant is bound on account of having induced
the plaintiff to believe, and to act and incur expenses on the strength of this
belief. Thus, the defendant has no right to demand any payment from the
plaintiff.


2. California and Hawaiian Sugar Company, v Pioneer Insurance and Surety
Corporation

Facts:

1. The vessel MV Sugar Islander arrived at the port of Manila carrying a cargo of
soybean meal in bulk consigned to several consignees. (Metro)
2. Discharging of cargo from the vessel to barges commenced on Nov. 1990.
From the barges, the cargo was allegedly offloaded, rebagged and reloaded
on the consignees delivery trucks.
3. RESPONDENTS CONTENTION:
That there was a shortage of 255.051 metric tons valued at P1,621,171.16
The shipment was insured with private respondent in the amount of
P19,976,404
Respondent paid the Consignee Metro
4. Private respondent filed a complaint for damages against the petitioner.
5. Petitioner filed a Motion to Dismiss the complaint o n the ground that it
is premature, the same being arbitrable.
Alternative Dispute Resolution Cases Jerraemie Nikka Patulot
6. RTC denied the motion of the petitioner.
7. Plaintiff filed their Answer with Counterclaim and Crossclaim alleging
that the respondent did not comply with the arbitration clause of the
charter party.
8. RTC denied the Motion to Set Preliminary Hearing.
9. PETITIONERS CONTENTION
Petitioners argue that [the RTC] committed grave abuse of discretion
amounting to lack or excess of jurisdiction in denying the preliminary
hearing of the affirmative defense of lack of cause of action for failure to
comply with the arbitration clause.
10. CA On the issue raised by petitioners that private respondents claim is
premature for failure to comply with [the] arbitration clause, we hold
that the right of the respondent as subrogee, in filing the complaint
against herein petitions is not dependent upon the charter party relied
upon by petitioners; nor does it grow out of any privity contract or
upon written assignment of claim. It accrues simply upon payment of the
insurance claim by respondent as insurer to the insured.
The CA also erred when it held that the arbitration clause was not binding
on respondent.

ISSUE:

Whether the CA erred when it held that the arbitration clause was not
binding on respondent?
HELD:
Yes. The CA erred in its decision.

RATIONALE:

The CA also erred when it held that the arbitration clause was not binding on
respondent. We reiterate that the crux of this case is whether the trial court
committed grave abuse of discretion in denying the aforecited Motion. There was
neither need nor reason to rule on the applicability of the arbitration clause.
Be that as it may, we find the CAs reasoning on this point faulty. Citing Pan
Malayan Insurance Corporation v. CA,[17] it ruled that the right of respondent
insurance company as subrogee was not based on the charter party or any other
contract; rather, it accrued upon the payment of the insurance claim by private
respondent to the insured consignee. There was nothing in Pan Malayan, however,
that prohibited the applicability of the arbitration clause to the subrogee. That case
merely discussed, inter alia, the accrual of the right of subrogation and the legal
basis therefor.[18] This issue is completely different from that of
the consequences of such subrogation; that is, the rights that the insurer acquires
from the insured upon payment of the indemnity.

Alternative Dispute Resolution Cases Jerraemie Nikka Patulot


3. Associated Bank v CA
1. In a complaint for the Violation of the Negotiable Instrument Law and
Damages:
Seek the recovery of the amount of P900,913.60 which the
defendant bank charged against their current account by virtue of the 16
checks drawn despite of the apparent alteration in the name of the payee
(Filipinas Shell was erased)
2. In the answer, the defendant bank claim that the subject checks appeared
to have been regularly issued and free from any irregularity which would
arouse any suspicion or warrant their honor.
3. The defendant bank filed a third party complaint to other banks
(collecting banks) for reimbursement, contribution, and indemnity.
4. Collecting Banks averred that the subject checks appeared to be complete
and regular on its face with no indication that the original payees was
erased
5. The other Collecting Bank Security Bank and Trust Company filed a
Motion to Dismiss on the ground that the plaintiff resort to
arbitration.
6. Philippine Commercial International Bank alleged that the subject check
was complete and regular on its face and was paid by it only upon
presentment to the drawee bank for clearing . That this Court has no
jurisdiction over the suit as it and third-party plaintiff are members
of the Philippine Clearing House and bound by the Rules and
Regulations thereof providing for arbitration.
7. Plaintiff maintained that the court has jurisdiction over the suit as the
provision of the Clearing House Rules and regulations are applicable
only if the suit or action is between participating member banks,
whereas the plaintiffs are private persons and the third-party complaint
between participating member banks is only a consequence of the
original action initiated by the plaintiffs.
8. TRIAL COURT third-party complaint for lack of jurisdiction citing Section
36 of the Clearing House Rules and Regulations of the PCHC providing for
settlement of disputes and controversies involving any check or item
cleared through the body with the PCHC.
As the plaintiffs are not parties to the third party complaint, the
provisions of the clearing house rules and regulations on
arbitration are, therefore, applicable to Third-Party plaintiff and
third party defendant. Consequently this court has no
jurisdiction over the third party complaint.




Alternative Dispute Resolution Cases Jerraemie Nikka Patulot
ISSUE:
Whether or not that petitioner drawee banks third party complaint against private
respondent collecting banks fall within the jurisdiction of the pchc and not the
regular court?

HELD: it falls under the jurisdiction of PCHC.

RATTIONALE:

The Clearing House Rules and Regulations on Arbitration of the Philippine
Clearing House Corporation are clearly applicable to petitioner and private
respondents, third party plaintiff and defendants, respectively, in the court below.
Petitioner Associated Banks third party complaint in the trial court was one for
reimbursement, contribution and indemnity against the Philippine Commercial and
Industrial Bank (PCIB), the Far East Bank and Trust, Co. (FEBTC), Security Bank and
Trust Co. (SBTC), and the CityTrust Banking Corporation (CTBC), in connection with
petitioners having honored sixteen checks which said respondent banks
supposedly endorsed to the former for collection in 1989. Under the rules and
regulations of the Philippine Clearing House Corporation (PCHC), the mere act of
participation of the parties concerned in its operations in effect amounts to a
manifestation of agreement by the parties to abide by its rules and regulations. 7 As
a consequence of such participation, a party cannot invoke the jurisdiction of
the courts over disputes and controversies which fall under the PCHC Rules
and Regulations without first going through the arbitration processes laid out
by the body. Since claims relating to the regularity of checks cleared by
banking institutions are among those claims which should first be submitted
for resolution by the PCHCs Arbitration Committee, petitioner Associated
Bank, having voluntarily bound itself to abide by such rules and regulations, is
estopped from seeking relief from the Regional Trial Court on the coattails of
a private claim and in the guise of a third party complaint without first having
obtained a decision adverse to its claim from the said body. It cannot bypass
the arbitration process on the basis of its averment that its third party
complaint is inextricably linked to the original complaint in the Regional Trial
Court.

Clearly therefore, petitioner Associated Bank, by its voluntary participation
and its consent to the arbitration rules cannot go directly to the Regional Trial Court
when it finds it convenient to do so. The jurisdiction of the PCHC under the rules and
regulations is clear, undeniable and is particularly applicable to all the parties in the
third party complaint under their obligation to first seek redress of their disputes
and grievances with the PCHC before going to the trial cour