[G.R. No. 129916.
March 26, 2001] one (1) arbitrator who shall, in turn, nominate and elect who among
MAGELLAN CAPITAL MANAGEMENT CORPORATION and MAGELLAN
CAPITAL HOLDINGS CORPORATION, petitioners, vs. ROLANDO M.
ZOSA and HON. JOSE P. SOBERANO, JR., in his capacity as Presiding
Judge of Branch 58 of the Regional Trial Court Of Cebu, 7th Judicial
Region, respondents.
FACTS: March 18, 1994 – a management agreement were entered between
Magellan Capital Holdings Corporation [MCHC] and Magellan Capital
Management Corporation [MCMC] the latter being appointed as the manager
for the operation of its business and affairs of the prior.
MCHC, MCMC, and private respondent Rolando M. Zosa entered into an
"Employment Agreement" designating Zosa as President and Chief
Executive Officer of MCHC.
Under the "Employment Agreement", the term of respondent Zosa's
employment shall be co-terminous with the management agreement, or
until March 1996,[2] unless sooner terminated pursuant to the provisions of
the Employment Agreement.
May 10, 1995 - majority of MCHCs Board of Directors decided not to re-elect
respondent Zosa as President and Chief Executive Officer of MCHC on
account of loss of trust and confidence[4] arising from alleged violation of
the resolution issued by MCHC's board of directors and of the non-
competition clause of the Employment Agreement.[5] Nevertheless,
respondent Zosa was elected to a new position as MCHC's Vice-
Chairman/Chairman for New Ventures Development.
September 26, 1995 - Zosa communicated his resignation for good reason
from the position of Vice-Chairman under paragraph 7 of the Employment
Agreement 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.
October 20, 1995 - MCHC communicated its non-acceptance of respondent
Zosa's resignation for good reason, but instead terminated him for cause.
He was further advised that he shall have no further rights under the said
Agreement or any claims against the Manager or the Corporation except the
right to receive within thirty (30) days from November 19, 1995.
Disagreeing with the position taken by petitioners, respondent Zosa invoked
the Arbitration Clause of the Employment Agreement.
23. Arbitration. In the event that any dispute, controversy or claim arises
out of or under any provisions of this Agreement, then the parties hereto
agree to submit such dispute, controversy or claim to arbitration as set forth
in this Section and the determination to be made in such arbitration shall be
final and binding. Arbitration shall be effected by a panel of three
arbitrators. The Manager, Employee and Corporation shall designate
them shall be the chairman of the committee. Any such arbitration,
including the rendering of an arbitration award, shall take place in Metro
Manila. The arbitrators shall interpret this Agreement in accordance with the
substantive laws of the Republic of the Philippines. The arbitrators shall have
no power to add to, subtract from or otherwise modify the terms of
Agreement or to grant injunctive relief of any nature. Any judgment upon
the award of the arbitrators may be entered in any court having jurisdiction
thereof, with costs of the arbitration to be borne equally by the parties,
except that each party shall pay the fees and expenses of its own counsel
in the arbitration.
November 10, 1995 - respondent Zosa designated his brother, Atty. Francis
Zosa, as his representative while MCHC designated Atty. Inigo S.
Fojas[10] and MCMC nominated Atty. Enrique I. Quiason[11] as their
respective representatives in the arbitration panel.
But instead of submitting the dispute to arbitration, respondent Zosa, on
April 17, 1996, filed an action for damages against petitioners before the
RTC OF CEBU[12] to enforce his benefits under the Employment Agreement.
July 3, 1996 - petitioners filed a motion to dismiss[13] arguing that (1) the
trial court has no jurisdiction over the instant case since respondent Zosa's
claims should be resolved through arbitration pursuant to Section 23 of
the Employment Agreement with petitioners; and (2) the venue is
improperly laid since respondent Zosa, like the petitioners, is a resident of
Pasig City thus the case is cognizable by RTC of PASIG.
July 5, 1996 - respondent Zosa filed an amended complaint
August 1, 1996 - RTC Branch 58 of Cebu City issued an Order denying
petitioners motion to dismiss upon the findings that (1) the validity and
legality of the arbitration provision can only be determined after trial on the
merits; and (2) the amount of damages claimed, which is over P100,000.00,
falls within the jurisdiction of the RTC.
MR: Denied
August 22, 1996 - in compliance with the earlier order of the court directing
petitioners to file responsive pleading to the amended complaint, petitioners
filed their Answer Ad Cautelam with counterclaim reiterating their position
that the dispute should be settled through arbitration and the court had no
jurisdiction over the nature of the action.
October 21, 1996 - the trial court issued its pre-trial order declaring the pre-
trial stage terminated and setting the case for hearing. The order states:
ISSUES:
The Court will only resolve one issue in so far as this case is concerned, to
wit:
Whether or not the Arbitration Clause contained in Sec.23 of the
Employment Agreement is void and of no effect: and, if it is void and of no
effect, whether or not the plaintiff is entitled to damages in accordance with
his complaint and the defendants in accordance with their counterclaim.
It is understood, that in the event the arbitration clause is valid and binding
between the parties, the parties shall submit their respective claim to the
Arbitration Committee in accordance with the said arbitration clause, in
which event, this case shall be deemed dismissed.[18]
November 18, 1996, - petitioners filed their Motion Ad Cautelam for the
Correction, Addition and Clarification of the Pre-trial Order dated November
15 1996.
November 28, 1996 – the court denied the Motion Ad Cautelam.
Petitioners MCMC and MCHC filed a Motion Ad Cautelam for the parties to
file their Memoranda to support their respective stand on the issue of the
validity of the arbitration clause contained in the Employment Agreement.
December 13, 1996 - trial court denied the motion of petitioners MCMC
and MCHC.
January 17, 1997 - petitioners MCMC and MCHC filed a petition for certiorari
and prohibition under Rule 65 of the Rules of Court with the Court of
Appeals, questioning the trial court orders dated August 1, 1996, September
5, 1996, and December 13, 1996.
CA: rendered a decision, RTC is directed to resolve the issue on the validity
or effectivity of the arbitration clause in the Employment Agreement, giving
due course to the petition.
Petitioners filed a motion for partial reconsideration of the CA decision
praying (1) for the dismissal of the case in the trial court, on the ground of
lack of jurisdiction, and (2) that the parties be directed to submit their
dispute to arbitration in accordance with the Employment Agreement.
CA: denied the motion for partial reconsideration for lack of merit.
July 18, 1997 - In compliance with the CA decision, RTC rendered a decision
declaring the arbitration clause in the Employment Agreement partially void
and of no effect. Dispositive reads as.
WHEREFORE, premises considered, judgment is hereby rendered partially
declaring the arbitration clause of the Employment Agreement void and of
no effect, only insofar as it concerns the composition of the panel of
arbitrators, and directing the parties to proceed to arbitration in accordance
with the Employment Agreement under the panel of three (3) arbitrators,
one for the plaintiff, one for the defendants, and the third to be chosen by
both the plaintiff and defendants. The other terms, conditions and
stipulations in the arbitration clause remain in force and effect."[23]
Hence the current petition for review on certiorari, under Rule 45 of the.
ISSUE/S:
WON SEC has jurisdiction over the case - Negative
WON Article 23 of the Employment Agreement or the Arbitration Clause
Valid - Affirmative
HELD:
The controversy does not in any way involve the
election/appointment of officers of petitioner MCHC, as claimed by
petitioners in their assignment of errors. Respondent Zosas amended
complaint focuses heavily on the illegality of the Employment
Agreements Arbitration Clause initially invoked by him in seeking his
termination benefits under Section 8 of the employment contract. And under
Republic Act No. 876, otherwise known as the Arbitration Law, it is the
regional trial court which exercises jurisdiction over questions relating to
arbitration.
That jurisdiction lies with the SEC, which is raised for the first time
in this petition, suffice it to state that the Amended Complaint squarely put
in issue the question whether the Arbitration Clause is valid and effective
between the parties. Although the controversy which spawned the action
concerns the validity of the termination of the service of a corporate officer,
the issue on the validity and effectivity of the arbitration clause is
determinable by the regular courts, and do not fall within the exclusive and
original jurisdiction of the SEC.
The determination and validity of the agreement is not a matter
intrinsically connected with the regulation and internal affairs of
corporations it is rather an ordinary case to be decided in accordance with
the general laws, and do not require any particular expertise or training to
interpret and apply.
Decision of the CA affirming the trial courts assumption of
jurisdiction over the case has become the law of the case which now binds
the petitioners. The law of the case doctrine has been defined as a term
applied to an established rule that when an appellate court passes on a
question and remands the cause to the lower court for further proceedings,
the question there settled becomes the law of the case upon subsequent
appeal.[27] CAs decision has already attained finality as evidenced by a
Resolution of this Court ordering entry of judgment of said case.
 Petitioners, therefore, are barred from challenging anew, through
another remedial measure and in any other forum, the authority of the
regional trial court to resolve the validity of the arbitration clause.
There is no quarrel that both defendants are entirely two different
corporations with personalities distinct and separate from each other and
that a corporation has a personality distinct and separate from those
persons composing the corporation as well as from that of any other legal
entity to which it may be related.
But as the defendants [herein petitioner] represent the same interest, 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 everybody. In fact, what is being
challenged by the plaintiff herein is not the law itself but the provision of the
Employment Agreement based on the said law, which is the arbitration
clause but only as regards the composition of the panel of
arbitrators. Arbitration Clause state:
It appears that the two (2) defendants [petitioners] (MCMC and MCHC) have
one (1) arbitrator each to compose the panel of three (3) arbitrators. As the
defendant MCMC is the Manager of defendant MCHC, its decision or vote in
the arbitration proceeding would naturally and certainly be in favor of its
employer and the defendant MCHC would have to protect and preserve its
own interest; hence, the two (2) votes of both defendants (MCMC and
MCHC) would certainly be against the lone arbitrator for the plaintiff [herein
defendant].Hence, apparently, plaintiff [defendant] would never get or
receive justice and fairness in the arbitration proceedings from the panel of
arbitrators as provided in the aforequoted arbitration clause. In fairness and
justice to the plaintiff [defendant], the two defendants (MCMC and
MCHC)[herein 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 proceedings. Accordingly, the arbitration clause,
insofar as the composition of the panel of arbitrators is concerned should be
declared void and of no effect, because the law says, Any clause giving one
of the parties power to choose more arbitrators than the other is void and
of no effect.
The dispute or controversy between the defendants (MCMC and MCHC)
[herein petitioners] and the plaintiff [herein defendant] should be settled in
the arbitration proceeding in accordance with the Employment Agreement,
but under the panel of three (3) arbitrators, one (1) arbitrator to represent
the plaintiff, one (1) arbitrator to represent both defendants (MCMC and
MCHC) [herein petitioners] and the third arbitrator to be chosen by the
plaintiff [defendant Zosa] and defendants [petitioners].
This issue of estoppel, well- settled is the rule that issues not raised below
cannot be resolved on review in higher courts.[31] Secondly, employment
agreements such as the one at bar are usually contracts of adhesion. Any
ambiguity in its provisions is generally resolved against the party who
drafted the document.
A contract of employment, being a contract of adhesion, is ambiguous, any
ambiguity therein should be construed strictly against the party who
prepared it. And, finally, respondent Zosa never submitted himself to
arbitration proceedings (as there was none yet) before bewailing the
composition of the panel of arbitrators. He in fact, lost no time in assailing
the arbitration clause upon realizing the inequities that may mar the
arbitration proceedings if the existing line-up of arbitrators remained
unchecked.
We need only to emphasize in closing that arbitration proceedings are
designed to level the playing field among the parties in pursuit of a mutually
acceptable solution to their conflicting claims. Any arrangement or scheme
that would give undue advantage to a party in the negotiating table is
anathema to the very purpose of arbitration and should, therefore, be
resisted.
WHEREFORE, premises considered, the petition is hereby DISMISSED
and the decision of the trial court dated July 18, 1997 is AFFIRMED.
SO ORDERED.
Magellan Capital Management Corp vs Zosa
FACTS:
Under a management agreement, Magellan Capital Holdings
(MCHC) appointed Magellan Capital Management Corp (MCMC) as
manager for the operation of its business and affairs.
Pursant thereto, Zosa, MCHC and MCMC entered into an
"EMPLOYMENT AGREEMENT" where Zosa was designated as
President and CEO of MCMC, and which provided that his term is co-
terminous w/ the management agreement (until March 1996)
unless sooner terminated.
The dispute arose when Zosa was not re-elected by MCHC's Board
of Directors on May 1995 for account of loss of trust and confidence
arising from alleged violation of the resolution issued by MCHC's
board of directors and of the non-competition clause of the
Employment Agreement. Nevertheless, respondent Zosa was
elected to a new position as MCHC's Vice-
Chairman/Chairman for New Ventures Development.
-September 1995: Zosa resigned for good reason from
VChair position under PAR7, EMPLOYMENT AGREEMENT: position
had less responsibility and scope than President and Chief Executive
Officer. Demanded that he be given termination benefits as provided
in the Employment Agreement. Instead, he was terminated for
cause (breach of SECTION 12) and was further advised that he
shall have no further rights under the EMPLOYMENT
AGREEMENT. His demand for termination benefits were granted
however.
RESORT TO ARBITRATION
Disagreeing with the position taken by petitioners, respondent
Zosa invoked the Arbitration Clause of the Employment
Agreement, to wit:
"23. Arbitration. In the event that any dispute, controversy or claim
arises out of or under any provisions of this Agreement, then the
parties hereto agree to submit such dispute, controversy or claim to
arbitration as set forth in this Section and the determination to be
made in such arbitration shall be final and binding. Arbitration shall
be effected by a panel of three arbitrators.
The Manager, Employee and Corporation shall designate one (1)
arbitrator who shall, in turn, nominate and elect who among
them shall be the chairman of the committee. Any such
arbitration, including the rendering of an arbitration award, shall
take place in Metro Manila. The arbitrators shall interpret this
Agreement in accordance with the substantive laws of the
Republic of the Philippines. The arbitrators shall have no power to
add to, subtract from or otherwise modify the terms of
Agreement or to grant injunctive relief of any nature. Any
judgment upon the award of the arbitrators may be entered in any
court having jurisdiction thereof, with costs of the arbitration to be
borne equally by the parties, except that each party shall pay the
fees and expenses of its own counsel in the arbitration."
-Zosa, MCMC and MCHC each designated their nominees for the arbitration
panel BUT Zosa ABANDONED RESORT TO ARBITRATION AND FILED
AN ACTION FOR DAMAGES TO ENFORCE BENEFITS UNDER THE
EMPLOYMENT AGREEMENT before RTC Cebu.
-MTD:
a. RTC had no jurisdiction: should resort to Arbitration
b. Venue improperly laid: all the parties are residents of Pasig City
so the proper venue should be RTC Pasig, w/o admitting that Zosa
had a COA.
*Zosa filed Amended Complaint
*RTC: MTD DISMISSED
a. Validity and legality of the arbitration provision can only be
determined after trial on the merits
b. Amount of damages claimed (P100k) falls w/n jurisdiction of RTC
MR DENIED. So MCMC and MCHC filed ANSWER AD CAUTELAM (w/
same arguments as MTD).MCMC and MCHC still insisted that the
dispute is arbitrable, thus the RTC should dismiss it. As the RTC
denied their motions and wanted to proceed with trial on the merits,
they filed a R65 Petition for Certiorari before CA
*CA: RTC directed to resolve the issue on the validity or effectivity
of the arbitration clause + suspend trial on the merits until the
validity of the arbitration clause is resolved. MCMC and MCHC filed
MOTIONS FOR PARTIAL RECON. Denied for lack of merit.
*RTC: rendered arbitration clause PARTIALLY VOID insofar as it
concerns the composition of the panel of arbitrators (each of the
parties elect 1 arbitrator); directed the parties to proceed w/
arbitration with 3 arbitrators, 1 for Zosa, 1 for MCMC and MCHC, and
the 3rd to be selected by both parties.
-to appeal, MCMC and MCHC filed R45 Petition: RTC erred
in ruling that the manner of selection of the panel arbitrators
is void insofar as MCMC and MCHC represent the same interest
and that Zosa is estopped from questioning the validity of the
arbitration agreement as he already designated his own arbitrator.
ISSUES:.
(1) WON the case should fall under SEC jurisdiction (apparently, this
was raised as an issue before the CA). NO.
(2) WON TC erred in voiding the arbitration clause as it
would work injustice (in all probability) to Zosa? NO.
(3) WON Zosa is estopped from assailing the validity of the
arbitration clause? NO
RULING:
(1) The controversy does not in anyway involve the
election/appointment of officers of petitioner MCHC BUT THE
ILLEGALITY OF THE ARBITRATION CLAUSE IN THE
EMPLOYMENT
AGREEMENT.
IT FALLS UNDER RTC. Under Republic Act No. 876, otherwise known
as the "Arbitration Law,"it is the regional trial court which exercises
jurisdiction over questions relating to arbitration.
Although the dispute stems from the validity of the termination of
the service of a corporate officer, the issue on the validity and
effectivity of the arbitration clause is determinable by the regular
courts, and do not fall within the exclusive and original jurisdiction
of the SEC.
LAW OF THE CASE DOCTRINE: a term applied to an established rule
that when an appellate court passes on a question and remands the
cause to the lower court for further proceedings, the question there
settled becomes the law of the case upon subsequent appeal. MCMC
and MCHC are therefore barred from challenging anew the
authority of the RTC to resolve the validity of the arbitration clause,
or else guilty of forum shopping.
(2) -R45 Petition is limited to reviewing errors of law.-even if we
review facts, RTC still correct:
*MCMC and MCHC represent the same interest. Though they are 2
corporations w/ distinct personalities, they represent the same
interest. Thus, it would be expected that they would protect and
preserve their own interest and neither would favor Zosa's
interest during arbitration. If the arbitration clause would be
followed, MCMC would have 1 arbitrator, MCHC would have another
arbitrator, and Zosa would have 1. But MCMC is the manager of
MCHC, MCHC would naturally favor its employer. Thus, their 2 votes
would win vs. Zosa's lone vote.
-A2045, NCC: "Any clause giving one of the parties power to choose
more arbitrators than the other is void and of no effect" (Article
2045, Civil Code).
(3) a. Issue of estoppel raised for the 1st time on appeal. Issues not
raised in the pleadings
cannot be resolved on review in higher courts.
b. Employment agreements are contracts of adhesion. Any
ambiguity in its provision is generally resolved against the party
who drafted the document.
CHA: But nothing is ambiguous in the arbitration clause. It may be
unfair but it's not ambiguous.
c. Zosa never submitted himself to arbitration proceedings,
immediately assailed the arbitration clause upon realizing the
inequities that may mar the arbitration proceedings...
DISPOSITION: DISMISS PETITION. RTC AFFIRMED
OIL AND NATURAL GAS COMMISSION v CA
FACTS: This proceeding involves the enforcement of a foreign
judgment rendered by the Civil Judge of Dehra Dun, India in favor
of the petitioner, against the private respondent, PACIFIC CEMENT
COMPANY, INCORPORATED. The petitioner is a foreign corporation
owned and controlled by the Government of India while the private
respondent is a private corporation duly organized and existing
under the laws of the Philippines.
The conflict between the petitioner and the private respondent
rooted from the failure of the respondent to deliver 43,000 metric
tons of oil well cement to the petitioner even it had already received
payment and despite petitioner’s several demands. The petitioner
then informed the private respondent that it was referring its claim
to an arbitrator pursuant to Clause 16 of their contract which
stipulates that he venue for arbitration shall be at Dehra dun.
The chosen arbitrator, one Shri N.N. Malhotra, resolved the dispute
in favour of the petitioner setting forth the arbitral award. To enable
the petitioner to execute the above award, it filed a Petition before
the Court of the Civil Judge in Dehra Dun. India praying that the
decision of the arbitrator be made "the Rule of Court" in India. This
was objected by the respondent but foreign court refused to admit
the private respondent's objections for failure to pay the required
filing fees. Despite notice sent to the private respondent of the
foregoing order and several demands by the petitioner for
compliance therewith, the private respondent refused to pay the
amount adjudged by the foreign court as owing to the petitioner.
The petitioner filed a complaint with Branch 30 of the Regional Trial
Court (RTC) of Surigao City for the enforcement of the
aforementioned judgment of the foreign court. The private
respondent moved to dismiss the complaint. RTC dismissed the
complaint for lack of a valid cause of action. The petitioner then
appealed to the respondent Court of Appeals which affirmed the
dismissal of the complaint. In its decision, the appellate court
concurred with the RTC's ruling that the arbitrator did not have
jurisdiction over the dispute between the parties, thus, the foreign
court could not validly adopt the arbitrator's award. The petitioner
filed this petition for review on certiorari,
ISSUE:
Whether or not the arbitrator had jurisdiction over the dispute
between the petitioner and the private respondent under Clause 16
of the contract.
RULING:
The constitutional mandate that no decision shall be rendered by
any court without expressing therein dearly and distinctly the facts
and the law on which it is based does not preclude the validity of
"memorandum decisions" which adopt by reference the findings of
fact and conclusions of law contained in the decisions of inferior
tribunals.
Furthermore, the recognition to be accorded a foreign judgment is
not necessarily affected by the fact that the procedure in the courts
of the country in which such judgment was rendered differs from
that of the courts of the country in which the judgment is relied on.
If the procedure in the foreign court mandates that an Order of the
Court becomes final and executory upon failure to pay the necessary
docket fees, then the courts in this jurisdiction cannot invalidate the
order of the foreign court simply because our rules provide
otherwise.
WHEREFORE, the instant petition is GRANTED, and the assailed
decision of the Court of Appeals sustaining the trial court's dismissal
of the OIL AND NATURAL GAS COMMISSION's complaint before
Branch 30 of the RTC of Surigao City is REVERSED,
OIL GAS CASE
The private respondent bewails the presumed bias on the part of the
arbitrator who was a former employee of the petitioner. This point deserves
scant consideration in view of the following stipulation in the contract:
. . . . It will be no objection any such appointment that the arbitrator so
appointed is a Commission employer (sic) that he had to deal with the
matter to which the supply or contract relates and that in the course of his
duties as Commission's employee he had expressed views on all or any of
the matter in dispute or difference. 37 (Emphasis supplied.)
Finally, we reiterate hereunder our pronouncement in the case of Northwest
Orient Airlines, Inc. v. Court of Appeals 38 that:
A foreign judgment is presumed to be valid and binding in the country from
which it comes, until the contrary is shown. It is also proper to presume the
regularity of the proceedings and the giving of due notice therein.
Under Section 50, Rule 39 of the Rules of Court, a judgment in an action in
personam of a tribunal of a foreign country having jurisdiction to pronounce
the same is presumptive evidence of a right as between the parties and their
successors-in-interest by a subsequent title. The judgment may, however,
be assailed by evidence of want of jurisdiction, want of notice to the party,
collusion, fraud, or clear mistake of law or fact. Also, under Section 3 of Rule
131, a court, whether of the Philippines or elsewhere, enjoys the
presumption that it was acting in the lawful exercise of jurisdiction and has
regularly performed its official duty. 39
Consequently, the party attacking a foreign judgment, the private
respondent herein, had the burden of overcoming the presumption of its
validity which it failed to do in the instant case.
The foreign judgment being valid, there is nothing else left to be done than
to order its enforcement, despite the fact that the petitioner merely prays
for the remand of the case to the RTC for further proceedings. As this Court
has ruled on the validity and enforceability of the said foreign judgment in
this jurisdiction, further proceedings in the RTC for the reception of evidence
to prove otherwise are no longer necessary.
 which represent the same interest should be considered as one
and should be entitled to only one arbitrator to represent them in
the arbitration proceedings. In consideration of the arbitration
clause in the participation of the panel of arbitrators, the Court
MAGELLAN CASE declared it void and of no effect, because the law says, as state in
"From the foregoing arbitration clause, it appears that the two (2) Article 2045 of the New Civil Code, “Any clause giving one of the
defendants [petitioners] (MCMC and MCHC) have one (1) arbitrator each to parties power to choose more arbitrators than the other is void
compose the panel of three (3) arbitrators. As the defendant MCMC is the and of no effect". While in the Oil and Natural Gas Case, the Court
Manager of defendant MCHC, its decision or vote in the arbitration observe the judgment of the Foreign Court that the said Clause 16
proceeding would naturally and certainly be in favor of its employer and the is valid, this particular provision, “It will be no objection to any
such appointment that the arbitrator so appointed is a Commission
defendant MCHC would have to protect and preserve its own interest; hence,
employer (sic) that he had to deal with the matter to which the
the two (2) votes of both defendants (MCMC and MCHC) would certainly be
supply or contract relates and that in the course of his duties as
against the lone arbitrator for the plaintiff [herein defendant]. Hence, Commission's employee he had expressed views on all or any of
apparently, plaintiff [defendant] would never get or receive justice and the matter in dispute or difference.
fairness in the arbitration proceedings from the panel of arbitrators as
provided in the aforequoted arbitration clause. In fairness and justice to the
plaintiff [defendant], the two defendants (MCMC and MCHC) [herein
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 proceedings. Accordingly, the arbitration clause, insofar as the
composition of the panel of arbitrators is concerned should be declared void
and of no effect, because the law says, "Any clause giving one of the parties
power to choose more arbitrators than the other is void and of no effect"
(Article 2045, Civil Code).

"The dispute or controversy between the defendants (MCMC and MCHC)

[herein petitioners] and the plaintiff [herein defendant] should be settled in
the arbitration proceeding in accordance with the Employment Agreement,
but under the panel of three (3) arbitrators, one (1) arbitrator to represent
the plaintiff, one (1) arbitrator to represent both defendants (MCMC and
MCHC) [herein petitioners] and the third arbitrator to be chosen by the
plaintiff [defendant Zosa] and defendants [petitioners].

In comparing the Magellan vs. Zosa Case and the Oil Gas vs CA Case, the
following were observed in the decision of the Supreme Court in the Parties’
participation in the appointment of Arbitrators:
A) In the Magellan Case, the 3 arbitrators where individually selected
based on the terms of the arbitration clause as indicated in the
agreement, however, the Court held that it is undeniably shown
that the two (2) votes of both defendants (MCMC and MCHC)
would certainly be against the lone arbitrator for the plaintiff
[herein defendant]. The Court further held that in the spirit of
fairness and justice to Zosa, the two defendants, MCMC and MCHC