ADR NOTES (PAGE 3)

LM Power Engineering Corporation v. Capitol Industrial Construction Groups, Inc., 399 SCRA 562,
G.R. No. 141833, March 26, 2003
Topic: Liberal construction in favor of arbitration

Facts:

On February 22, 1983, Petitioner LM Power Engineering Corporation and Respondent Capitol
Industrial Construction Groups Inc. entered into a "Subcontract Agreement" involving electrical work
at the Third Port of Zamboanga. On April 25, 1985, Capitol took over some of the work contracted to
LM Power. Allegedly, LM Power failed to finish it because of its inability to procure materials.

Upon completing its task under the Contract, LM Power billed Capitol in the amount of
P6,711,813.90. Contesting the accuracy of the amount of advances and billable accomplishments
listed by the former, the latter refused to pay. Capitol also took refuge in the termination clause of
the Agreement. That clause allowed Capitol to set off the cost of the work that LM Power failed to
undertake -- due to termination or take-over -- against the amount it owed the latter.

Because of the dispute, LM Power filed with the RTC of Makati a Complaint for the collection of
the amount representing the alleged balance due it under the Subcontract. Instead of submitting an
Answer, Capitol filed a Motion to Dismiss, alleging that the Complaint was premature, because there
was no prior recourse to arbitration.

On September 15, 1987, the RTC denied the Motion on the ground that the dispute did not
involve the interpretation or the implementation of the Agreement and was, therefore, not covered
by the arbitral clause. After trial on the merits, the RTC ruled that the take-over of some work items
by Capitol was not equivalent to a termination, but a mere modification, of the Subcontract. The
latter was ordered to give full payment for the work completed by LM Power.

On appeal, the CA reversed the RTC and ordered the referral of the case to arbitration. The
appellate court held as arbitrable the issue of whether respondent’s take-over of some work items
had been intended to be a termination of the original contract under Letter "K" of the Subcontract.

Issues:

1.) WON the dispute is arbitrable?

2.) WON there is a need for a prior request for arbitration?

Ruling:

1.) YES. The SC ruled in favor of the respondent Capitol with regard to its contention that there is
a need for prior arbitration as provided in the Agreement. Essentially, the dispute arose from the
parties’ ncongruent positions on whether certain provisions of their Agreement could be applied to
the facts. The instant case involves technical discrepancies that are better left to an arbitral body
that has expertise in those areas. In any event, the inclusion of an arbitration clause in a contract
does not ipso facto divest the courts of jurisdiction to pass upon the findings of arbitral bodies,
because the awards are still judicially reviewable under certain conditions.

The Subcontract also contained that in the case of a dispute 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.

Clearly, 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.

Being an inexpensive, speedy and amicable method of settling disputes, arbitration -- along with
mediation, conciliation and negotiation -- is encouraged by the Supreme Court. Aside from
unclogging judicial dockets, arbitration also hastens the resolution of disputes, especially of the
commercial kind. It is thus regarded as the "wave of the future" in international civil and commercial
disputes. Brushing aside a contractual agreement calling for arbitration between the parties would
be a step backward.

Consistent with the above-mentioned policy of encouraging alternative dispute resolution

methods, courts should liberally construe arbitration clauses. Provided such clause is susceptible
of an interpretation that covers the asserted dispute, an order to arbitrate should be granted. Any
doubt should be resolved in favor of arbitration.

2.) NO. Clearly, there is no more need to file a request with the CIAC in order to vest it with
jurisdiction to decide a construction dispute. The arbitral clause in the Agreement is a commitment
on the part of the parties to submit to arbitration the disputes covered therein. Because that clause
is binding, they are expected to abide by it in good faith. And because it covers the dispute between
the parties in the present case, either of them may compel the other to arbitrate.
 Since petitioner has already filed a Complaint with the RTC without prior recourse to arbitration,
the proper procedure to enable the CIAC to decide on the dispute is to request the stay or
suspension of such action, as provided under RA 876 [the Arbitration Law].

National Union Fire Insurance Company of Pittsburg… v. Stolt-Nielsen Philippines, Inc., et al., 184
SCRA 682, G.R. No. 87958, April 26, 1990
Topic: Formal Requisites of Arbitration Agreement; Incorporation by Reference; Complementary
Contracts-Construed-Together Doctrine

Facts:

On 9 January 1985, United Coconut Chemicals, Inc. (referred to as SHIPPER) shipped 404.774
metric tons of distilled C6-C18 fatty acid on board MT "Stolt Sceptre," a tanker owned by Stolt-
Nielsen Philippines Inc. (referred to as CARRIER), from Bauan, Batangas, Philippines, consigned to
"Nieuwe Matex" at Rotterdam, Netherlands, covered by Tanker Bill of Lading BL No. BAT-1. The
shipment was insured under a marine cargo policy with Petitioner National Union Fire Insurance
Company of Pittsburg (referred to as INSURER), a non-life American insurance corporation, through
its settling agent in the Philippines, the American International Underwriters (Philippines), Inc., the
other petitioner herein.

The bill of lading issued by the Stolt-Nielsen contained a general statement of incorporation of the
terms of a Charter Party between the shipper and Parcel Tankers, Inc. Said Charter Party provided
for arbitration. When the cargo arrived and received by the consignee in the Netherlands, it was
found to be discolored and totally contaminated. After the claim filed by the SHIPPER against Stolt-
Nielsen was denied, the National Union indemnified the SHIPPER pursuant to the insurance policy.

On April 21, 1986, as subrogee of the SHIPPER, National Union filed a suit against Stolt-Nielsen
before the RTC of Makati for the recovery of the sum of P 1,619,469.21 with interest. Stolt-Nielsen
moved to dismiss/suspend the proceedings on the ground that the RTC had no jurisdiction over the
claim the same being an arbitrable one; that as subrogee of the SHIPPER, the National Union is
subject to the provisions of the Bill of Lading.

National Union opposed the dismissal/suspension of the proceedings on the ground that it was
not legally bound to submit the claim for arbitration inasmuch as the arbitration clause provided in
the Charter Party was not incorporated into the Bill of Lading, and that the arbitration clause is void
for being unreasonable and unjust. The RTC initially denied the Motion, but subsequently
reconsidered and deferred resolution on the Motion to Dismiss/Suspend Proceedings until trial on
the merits. Stolt-Nielsen then filed a petition for certiorari before the SC seeking annulment of the
RTC deferment order. The CA set aside the RTC order and directed National Union to submit its claim
for arbitration.

Issue: WON terms of the Charter Party, particularly the provision on arbitration, binding on the
petitioner?

Ruling:

YES. The Bill of Lading incorporates by reference the terms of the Charter Party. The pertinent
portion of the Bill of Lading in issue provides in part:

“This shipment is carried under and pursuant to the terms of the Charter dated December 21st 1984
at Greenwich, Connecticut, U.S.A. between Parcel Tankers. Inc. and United Coconut Chemicals, Ind.
as Charterer and all the terms whatsoever of the said Charter except the rate and payment of freight
specified therein apply to and govern the rights of the parties concerned in this shipment. Copy of
the Charter may be obtained from the Shipper or Charterer.”

It is settled law that the charter may be made part of the contract under which the goods are
carried by an appropriate reference in the Bill of Lading. This should include the provision on
arbitration even without a specific stipulation to that effect. The entire contract must be read
together and its clauses interpreted in relation to one another and not by parts.

Thus, National Union cannot feign ignorance of the arbitration clause since it was already charged
with notice of the existence of the charter party due to an appropriate reference thereof in the bill
of lading. Furthermore, as the subrogee of the SHIPPER, National Union is contractually bound by
the terms of the Charter Party. Any claim of inconvenience or additional expense on its part should
not render the arbitration clause unenforceable.

Arbitration, as an alternative mode of settling disputes, has long been recognized and accepted
in our jurisdiction (Chapter 2, Title XIV, Book IV, Civil Code). Republic Act No. 876 (The Arbitration
Law) also expressly authorizes arbitration of domestic disputes. Foreign arbitration as a system of
settling commercial disputes of an international character was likewise recognized when the
Philippines adhered to the United Nations "Convention on the Recognition and the Enforcement
of Foreign Arbitral Awards of 1958," under the 10 May 1965 Resolution No. 71 of the Philippine
Senate, giving reciprocal recognition and allowing enforcement of international arbitration
agreements between parties of different nationalities within a contracting state. Thus, it
pertinently provides:

1. Each Contracting State shall recognize an agreement in writing under which the parties undertake
to submit to arbitration all or any differences which have arisen or which may arise between them in
respect of a defined legal relationship, whether contractual or not, concerning a subject matter
capable of settlement by arbitration.

2. The term "agreement in writing" shall include an arbitral clause in a contract or an arbitration
agreement, signed by the parties or contained in an exchange of letters or telegrams.

3. The court of a Contracting State, when seized of an action in a matter in respect of which the
parties have made an agreement within the meaning of this article, shall, at the request of one of
the parties, refer the parties to arbitration, unless it finds that the said agreement is null and void,
inoperative or incapable of being performed.

It has not been shown that the arbitral clause in question is null and void, inoperative, or
incapable of being performed. Nor has any conflict been pointed out between the Charter Party and
the Bill of Lading. Thus, the CA’s referral to the New York Convention pursuant to the arbitration
clause is indeed called for.

Puromines, Inc. v. Court of Appeals, et al., 220 SCRA 281, G.R. No. 91228, March 22, 1993
Topic: Formal Requisites of Arbitration Agreement; Incorporation by Reference; Complementary
Contracts-Construed-Together Doctrine

Facts:

The petitioner Puromines Inc. and Makati Argo Trading Inc. entered into a contract with private
respondents Philipp Brothers Oceanic, Inc. for the sale of prilled Urea in bulk. The Sales Contract No.
S151.8.01018 provided, among others an arbitration clause which states, thus:

"9. Arbitration

"Any disputes arising under this contract shall be settled by arbitration in London in accordance with
the Arbitration Act 1950 and any statutory amendment or modification thereof. Each party is to
appoint an Arbitrator, and should they be unable to agree, the decision of an Umpire appointed by
them to be final. The Arbitrators and Umpire are all to be commercial men and resident in London.
This submission may be made a rule of the High Court of Justice in England by either party."
 The shipment covered by 3 bills of lading was loaded on MV Liliana Dmitrova with Philipp
Brothers as the charterer of said vessel. The shipment covered by Bill of Lading No. 2 was discharged
in Iloilo City complete and in good order and condition. However, the shipments covered by Bill of
Lading Nos. 1 and 3 were discharged in Manila in bad order and condition, caked, hardened and
lumpy, discolored and contaminated with rust and dirt. Damages were valued at P683, 056. 29
including additional discharging expenses.

Puromines filed a complaint with the trial court for breach of contract of carriage against
Maritime Factors Inc. as ship-agent in the Philippines for the owners of the vessel MV "Liliana
Dimitrova," while private respondent, Philipp Brothers Oceanic Inc., was impleaded as charterer of
the said vessel. Philipp filed a motion to dismiss on the ground that the petitioner should comply
with the arbitration clause in the sales contract. Puromines opposed contending the inapplicability
of the arbitration clause 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.

Issue: WON the arbitration clause in the sales contract covers claims for violations of contract of
carriage?

Ruling:

YES. The sales contract is comprehensive enough to include claims for damages arising from
carriage and delivery of the goods. Puromines derives its right to the cargo from the bill of lading
which is the contract of affreightment together with the sales contract. Consequently, it is bound
by the provisions and terms of the said bill of lading and of the arbitration clause incorporated in
the sales contract.

Responsibility to third persons for goods shipped on board a vessel follows the vessel's possession
and employment. Assuming the cause of action is based on contract of carriage, it must be first
determined what kind of charter party had with the ship owner to determine liability. If it is a
contract of affreightment, the charterer is not liable as possession is still with owner. If it is a charter
of demise or bareboat, then the charterer is liable as it is considered the owner and therefore would
be liable for damage or loss.

In any case, whether the liability of respondent should be based on the same contract or that of
the bill of lading, the parties are nevertheless obligated to respect the arbitration provisions on the
sales contract and/or the bill of lading. Petitioner being a signatory and party to the sales contract
cannot escape from his obligation under the arbitration clause as stated therein.

Arbitration has been held valid and constitutional. Even before the enactment of Republic Act No.
876, this Court has countenanced the settlement of disputes through arbitration. The rule now is
that unless the agreement is such as absolutely to close the doors of the courts against the parties,
which agreement would be void, the courts will look with favor upon such amicable arrangements
and will only interfere with great reluctance to anticipate or nullify the action of the arbitrator.

BF Corporation v. Court of Appeals, et al., 288 SCRA 267, G.R. No. 120105, March 27, 1998
Topic: Formal Requisites of Arbitration Agreement; Incorporation by Reference; Complementary
Contracts-Construed-Together Doctrine

Facts:

Petitioner and respondent Shangri-la Properties, Inc. (SPI) entered into an agreement whereby
the latter engaged the former to construct the main structure of the "EDSA Plaza Project," a
shopping mall complex in Mandaluyong. The construction work was in progress when SPI decided to
expand the project by engaging the services of petitioner again. Thus, the parties entered into an
agreement for the main contract works after which construction work began.

However, petitioner incurred delay in the construction work that SPI considered as "serious and
substantial." On the other hand, according to petitioner, the construction works "progressed in
faithful compliance with the First Agreement until a fire broke out on November 30, 1990 damaging
Phase I" of the Project. Hence, SPI proposed the re-negotiation of the agreement between them.

Thereafter, petitioner and SPI entered into a written agreement denominated as "Agreement for
the Execution of Builder's Work for the EDSA Plaza Project." Said agreement would cover the
construction work on said project as of May 1, 1991 until its eventual completion.

According to SPI, petitioner "failed to complete the construction works and abandoned the
project." This resulted in disagreements between the parties as regards their respective liabilities
under the contract. On July 12, 1993, upon SPI's initiative, the parties' respective representatives
met in conference but they failed to come to an agreement.

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
project.

Issue: WON the contract for the construction between petitioner BF Corporation and respondent
Shangri-la Properties, Inc. embodies an arbitration clause in case of disagreement between the
parties in the implementation of contractual provisions?

Ruling:

YES. The petitioner in this case denies the existence of the arbitration clause primarily on the
ground that the representatives of the contracting corporations did not sign the "Conditions of
Contract" that contained the said clause. Its other contentions, specifically that insinuating fraud as
regards the alleged insertion of the arbitration clause, are questions of fact that should have been
threshed out below. Republic Act No. 876 provides for the formal requisites of an arbitration
agreement as follows:

Sec. 4. Form of arbitration agreement. — A contract to arbitrate a controversy thereafter arising

between the parties, as well as a submission to arbitrate an existing controversy, shall be in writing
and subscribed by the party sought to be charged, or by his lawful agent.

The making of a contract or submission for arbitration described in section two hereof, 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 therefore the following: (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. To "subscribe" means to write underneath, as one's name; to sign at the end of a document.
That word may sometimes be construed to mean to give consent to or to attest.

Upon checking 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 initial the "Conditions of Contract" would therefor not
affect compliance with the formal requirements for arbitration agreements because that particular
portion of the covenants between the parties was included by reference in the Articles of
Agreement.

The arbitration clause provides for a "reasonable time" within which the parties may avail of
the relief under that clause. "Reasonableness" is a relative term and the question of whether the
time within which an act has to be done is reasonable depends on attendant circumstances. The
Court finds that under the circumstances obtaining in this case, a one-month period from the time
the parties held a conference on July 12, 1993 until private respondent SPI notified petitioner that it
was invoking the arbitration clause, is a reasonable time. Indeed, petitioner may not be faulted for
resorting to the court to claim what was due it under the contract. However, the Supreme Court
finds its denial of the existence of the arbitration clause as an attempt to cover up its misstep in
hurriedly filing the complaint before the lower court. Section 7 of Republic Act No. 876 provides
that proceedings therein have only been stayed. After the special proceeding of arbitration has
been pursued and completed, then the lower court may confirm the award made by the arbitrator.

Stronghold Insurance Company, Inc. v. Spouses Rune and Lea Stroem, G.R. No. 204689, January 21,
2015
Topic: Formal Requisites of Arbitration Agreement; Incorporation by Reference; Complementary
Contracts-Construed-Together Doctrine

Facts:

Spouses Stroem entered into an Owners-Contractor Agreement with Asis-Leif for the construction
of a two-storey house on the lot owned by them.

On November 15, 1999, pursuant to the agreement, Asis-Leif secured Performance Bond No. in
the amount of P4,500,000.00 from Stronghold Insurance Company, Inc. Stronghold and Asis-Leif,
through Ms. Ma. Cynthia bound themselves jointly and severally to pay Spouses Stroem the agreed
amount in the event that the construction project is not completed. Asis-Leif failed to finish the
project on time despite repeated demands of the Spouses Stroem. Spouses Stroem subsequently
rescinded the agreement. Then they hired an independent appraiser to evaluate the progress of the
construction project.

On April 5, 2001, Stronghold sent a letter to Asis-Leif requesting that the company settle its
obligations with the Spouses Stroem. No response was received from Asis-Leif. On September 12,
2002, the Spouses Stroem filed a Complaint for breach of contract and for sum of money with a
claim for damages against Asis-Leif, Ms. Cynthia, and Stronghold. Only Stronghold was served
summons. Ms. Cynthia allegedly absconded and moved out of the country.

The RTC rendered a judgment in favor of the Spouses Stroem. Both Stronghold and the Spouses
Stroem appealed to the Court of Appeals. The CA affirmed with modification the trial court’s
Decision.

Issue: WON the liability of a surety under a performance bond is connected to a construction
contract and, therefore, falls under the exclusive jurisdiction of the CIAC?

Ruling:

Section 4 of Executive Order No. 1008 is clear in defining the exclusive jurisdiction of the CIAC:

SECTION 4. Jurisdiction – The CIAC shall have 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. These disputes may involve government or private contracts.
For the Board to acquire jurisdiction, the parties to a dispute must agree to submit the same to
voluntary arbitration.

The jurisdiction of the CIAC may include but is not limited to violation of specifications for
materials and workmanship; violation of the terms of agreement; interpretation and/or
application of contractual time and delays; maintenance and defects; payment, default of
employer or contractor and changes in contract cost.

Excluded from the coverage of this law are disputes arising from employer-employee relationships
which shall continue to be covered by the Labor Code of the Philippines.

Similarly, Section 35 of Republic Act No. 9285 or the Alternative Dispute Resolution Act of 2004
states:

SEC. 35. Coverage of the Law. - Construction disputes which fall within the original and exclusive
jurisdiction of the Construction Industry Arbitration Commission (the “Commission”) shall include
those between or among parties to, or who are otherwise bound by, an arbitration agreement,
directly or by reference whether such parties are project owner, contractor, subcontractor,
quantity surveyor, bondsman or issuer of an insurance policy in a construction project.

The Commission shall continue to exercise original and exclusive jurisdiction over construction
disputes although the arbitration is “commercial” pursuant to Section 21 of this Act.
 In Heunghwa Industry Co., Ltd., v. DJ Builders Corporation, this court held that “there are two
acts which may vest the CIAC with jurisdiction over a construction dispute. One is the presence of
an arbitration clause in a construction contract, and the other is the agreement by the parties to
submit the dispute to the CIAC.”

This court has previously held that a performance bond, which is meant “to guarantee the supply
of labor, materials, tools, equipment, and necessary supervision to complete the project[,]” is
significantly and substantially connected to the construction contract and, therefore, falls under
the jurisdiction of the CIAC.

Verily, “[i]n enforcing a surety contract, the ‘complementary-contracts-construed-together’

doctrine finds application. According to this principle, an accessory contract must be read in its
entirety and together with the principal agreement.” Article 1374 of the Civil Code provides:

ART. 1374. The various stipulations of a contract shall be interpreted together, attributing to the
doubtful ones that sense which may result from all of them taken jointly.

Applying the “complementary-contracts-construed-together” doctrine, this court in Prudential

held that the surety willingly acceded to the terms of the construction contract despite the silence of
the performance bond as to arbitration:

In the case at bar, the performance bond was silent with regard to arbitration. On the other hand,
the construction contract was clear as to arbitration in the event of disputes. Applying the said
doctrine, we rule that the silence of the accessory contract in this case could only be construed as
acquiescence to the main contract. The construction contract breathes life into the performance
bond. We are not ready to assume that the performance bond contains reservations with regard to
some of the terms and conditions in the construction contract where in fact it is silent. On the other
hand, it is more reasonable to assume that the party who issued the performance bond carefully
and meticulously studied the construction contract that it guaranteed, and if it had reservations, it
would have and should have mentioned them in the surety contract.

This court, however, cannot apply the ruling in Prudential to the present case. The contractual
stipulations in this case and in Prudential are different.

This court in Prudential held that the construction contract expressly incorporated the
performance bond into the contract. In the present case, Article 7 of the Owners-Contractor
Agreement merely stated that a performance bond shall be issued in favor of respondents, in which
case petitioner and Asis-Leif Builders and/or Ms. Ma. Cynthia Asis-Leif shall pay P4,500,000.00 in the
event that Asis-Leif fails to perform its duty under the Owners-Contractor Agreement.
Consequently, the performance bond merely referenced the contract entered into by respondents
and Asis-Leif, which pertained to Asis-Leif’s duty to construct a two-storey residence building with
attic, pool, and landscaping over respondents’ property.

However, where a surety in a construction contract actively participates in a collection suit, it is

estopped from raising jurisdiction later. Assuming that petitioner is privy to the construction
agreement, we cannot allow petitioner to invoke arbitration at this late stage of the proceedings
since to do so would go against the law’s goal of prompt resolution of cases in the construction
industry.

Hygienic Packing Corporation v. Nutri-Asia, Inc. … G.R. No. 201302, January 23, 2019

Topic: Formal Requisites of Arbitration Agreement; Incorporation by Reference; Complementary

Contracts-Construed-Together Doctrine

Facts:

From 1998 to 2009, Hygienic supplied Nutri-Asia with KG plastic containers for its banana catsup
products. Every transaction was covered by a Purchase Order issued by Nutri-Asia. From December
29, 2007 to January 22, 2009, Nutri-Asia purchased from Hygienic 457,128 plastic containers, for a
total consideration of P9,737,674.62. Hygienic issued Sales Invoices and Delivery Receipts to cover
these transactions. On July 29, 2009, Hygienic filed a Complaint for sum of money against Nutri-Asia.
It instituted the case before the Regional Trial Court of Manila "pursuant to the stipulation of the
parties as stated in the Sales Invoices submitting themselves to the jurisdiction of the Courts of the
City of Manila in any legal action arising out of their transaction[.]"

Hygienic alleged that based on the Purchase Orders and Sales Invoices, Nutri-Asia agreed to pay
Hygienic 30 days after every delivery of plastic containers. However, Nutri-Asia refused to pay for the
goods delivered from December 29, 2007 to January 22, 2009 after their payment became due,
despite oral and written demands from Hygienic. On the other hand, Nutri-Asia argued that the case
should be dismissed as Hygienic failed to comply with a condition precedent prior to its filing of the
Complaint. It claimed that under the Terms and Conditions of the Purchase Orders, Hygienic should
have first referred the matter to the Arbitration Committee.
 Nutri-Asia alleged that the venue was also improperly laid since the Regional Trial Court of Manila
was not the proper venue for the institution of Hygienic's personal action. The Complaint should
have been filed either before the trial courts of San Pedro, Laguna or Pasig City, where the principal
places of business of Hygienic and Nutri-Asia are located, respectively. The venue of actions as stated
in the Sales Invoices could not bind Nutri-Asia since it did not give its express conformity to that
stipulation. Nutri-Asia admitted purchasing the plastic containers, and receiving Hygienic's Demand
Letter and Final Demand Letter. However, it countered that Hygienic's claim "has been extinguished
on the ground of compensation."

After Hygienic filed its Reply, Nutri-Asia filed an Omnibus Motion. Nutri-Asia reiterated its
arguments in its Answer, adding that its affirmative defenses could "be resolved on the basis of the
pleadings and the documents attached to the complaint without the need of further hearing."
Hygienic opposed Nutri-Asia's Omnibus Motion. It countered that the allegation of noncompliance
with a condition precedent was incorrect.

Hygienic claimed that even if the cause of action was based on all attached documents in the
Complaint, which included the Purchase Orders, the arbitration clause was "inoperative or incapable
of being performed." This is because of the conflict between the arbitration clause in the Purchase
Orders and the submission of parties to the Manila courts' jurisdiction in the Sales Invoices. The
arbitration clause was merely an offer from Nutri-Asia, which Hygienic rejected in its Sales Invoices.
To submit the dispute to arbitration, there should have been an unequivocal agreement between
the parties. This agreement was lacking in their case.

The RTC denied the Omnibus Motion. It held that the venue was properly laid. It considered the
signatures ofNutri-Asia's representatives in the Sales Invoices as the company's concurrence that any
dispute would be raised before the courts of Manila.

The CA overturned the ruling of the RTC. The CA held that since the signature of Nutri-Asia's
employee in the Sales Invoices was only for the receipt of goods, Nutri-Asia did not agree to be
bound by the venue stipulation in the Sales Invoices. Meanwhile, Hygienic did not deny that an
arbitration clause was written on the Purchase Orders. Its representative even "acknowledged its
conformity to the purchase orders."Since Hygienic "availed of the advantages and benefits of the
purchase orders when it acted on them, it is thus estopped from rebuffing the arbitration clause.

Issue: WON the action for collection of sum of money was properly filed?

Ruling:
 NO. Parties are allowed to constitute any stipulation on the venue or mode of dispute
resolution as part of their freedom to contract under Article 1306 of the Civil Code of the
Philippines, which provides:

ARTICLE 1306. The contracting parties may establish such stipulations, clauses, terms and conditions
as they may deem convenient, provided they are not contrary to law, morals, good customs, public
order, or public policy.

Here, however, the records lack any written contract of sale containing the specific terms and
conditions agreed upon by the parties. The parties failed to provide evidence of any contract, which
could have contained stipulations on the venue of dispute resolution. Nonetheless, petitioner and
respondent both claim that the Sales Invoices and the Purchase Orders, respectively, contained a
stipulation on where to raise issues on any conflict regarding the sale of plastic containers. Each
party also insists that the other party accepted the venue stipulation in the Sales Invoices or the
Purchase Orders when its representative signed them.

Upon examination of the Sales Invoices and the Purchase Orders, this Court cannot consider the
documents as contracts that would bind the parties as to the venue of dispute resolution. A closer
look at the Sales Invoices issued by petitioner reveals that above the signature of respondent's
representative is the phrase, "Received the above goods in good order and condition." Clearly, the
purpose of respondent's representative in signing the Sales Invoices is merely to acknowledge that
he or she has received the plastic containers in good condition. He or she did not affix his or her
signature in any other capacity except as the recipient of the goods. To extend the effect of the
signature by including the venue stipulation would be to stretch the intention of the signatory
beyond his or her objective. This Court, then, cannot bind respondent to the other stipulations in the
Sales Invoices.

Thus, it was necessary for petitioner's representative to sign the document for the processing of
payment. The act of signing the Purchase Orders, then, was limited to acknowledging respondent's
order and facilitating the payment of the goods to be delivered. It did not bind petitioner to the
terms and conditions in the Purchase Orders, which included the arbitration clause.

Petitioner and respondent may have entered into a contract of sale with respect to petitioner's
merchandise. However, the case records do not show that they have a contract in relation to the
venue of any civil action arising from their business transaction.
 Third Parties to Arbitration Agreement

Section 25 of R.A. 9285

SEC. 25. Interpretation of the Act. - In interpreting the Act, the court shall have due regard to the
policy of the law in favor of arbitration. Where action is commenced by or against multiple parties,
one or more of whom are parties who are bound by the arbitration agreement although the civil
action may continue as to those who are not bound by such arbitration agreement.

Toyota Motor Philippines Corporation v. The Court of Appeals, et al., 216 SCRA 236, G.R. No.
102881, December 7, 1992
Topic: Third Parties to Arbitration Agreement

Facts:

This case involves a boundary dispute between Toyota Motor Phil. Corporation and Sun Valley
Manufacturing and Development Corporation.

Both Toyota and Sun Valley are the registered owners of 2 adjoining parcels of land situated in La
Huerta, Parañaque, Metro Manila which they purchased from the Asset Privatization Trust. The
properties in question formerly belonged to Delta Motors Corporation (DMC). They were foreclosed
by the PNB and later transferred to the national government through the APT for disposition.

APT then proceeded to classify the DMC properties according to the existing improvements. The
entire DMC property is called GC III-Delta Motors Corporation, divided into Delta I, Delta II, and Delta
III. Further subdivisions for the separate catalogues were made for each division e.g. Delta I into Lots
1, 2 and 3. After this classification, APT parcelled out and catalogued the properties for bidding and
sale.

Part of the duly parcelled Delta I property (Lot 2) was sold to Toyota through public bidding. After
its purchase, Toyota constructed a concrete hollow block (CHB) perimeter fence around its alleged
property. Subsequently, another part of the parcelled Delta I (Lot 1) was purchased by Sun Valley
from APT.
 Petitioner then filed a case against APT for the reformation of the Deed of Sale executed between
them alleging that the instrument failed to reflect the true intention of the parties as the title failed
to include 723 square meters strip of land. On the other hand, Sun Valley, filed a case for recovery of
possession of the disputed 723 square meters relying upon the title description of its property and
the surveys it has commissioned. Through legal maneuverings, the parties have succeeded in
muddling up the vital issues of the case and getting the lower courts embroiled in numerous appeals
over technicalities. Hence, the three appellate decisions/resolutions before the Court for review and
conflicting orders issued by lower courts as a result of the separate cases filed by the parties.

Issue: WON the arbitration clause has become disfunctional because of the presence of third
parties?

Ruling:

NO. The contention that the arbitration clause has become disfunctional because of the
presence of third parties is untenable. Contracts are respected as the law between the contracting
parties. As such, the parties are thereby expected to abide with good faith in their contractual
commitments. Toyota is therefore bound to respect the provisions of the contract it entered into
with APT.

Toyota filed an action for reformation of its contract with APT, the purpose of which is to look into
the real intentions/agreement of the parties to the contract and to determine if there was really a
mistake in the designation of the boundaries of the property as alleged by Toyota. Such questions
can only be answered by the parties to the contract themselves. This is a controversy which clearly
arose from the contract entered into by APT and Toyota. Inasmuch as this concerns more
importantly the parties APT and Toyota themselves, the arbitration committee is therefore the
proper and convenient forum to settle the matter as clearly provided in the deed of sale.

Having been apprised of the presence of the arbitration clause in the motion to dismiss filed by
APT, Judge Tensuan should have at least suspended the proceedings and directed the parties to
settle their dispute by arbitration (Bengson v. Chan, 78 SCRA 113 [1977], Sec. 7, RA 876). Judge
Tensuan should have not taken cognizance of the case.

Note: Section 7. Stay of civil action. - If any suit or proceeding be brought upon an issue arising out of
an agreement providing for the arbitration thereof, the court in which such suit or proceeding is
pending, upon being satisfied that the issue involved in such suit or proceeding is referable to
arbitration, shall stay the action or proceeding until an arbitration has been had in accordance with
the terms of the agreement: Provided, That the applicant, for the stay is not in default in proceeding
with such arbitration. (Section 7, R.A. 876)

Luzon Iron Development Group Corporation, et al. v. Bridestone Mining and Development
Corporation, et al., G.R. No. 220546, December 7, 2016
Topic: Referral to Arbitration

Facts:

Respondents Bridestone Mining and Anaconda Mining filed separate complaints before the RTC
for rescission of contract and damages against petitioners Luzon Iron and Consolidated Iron. Both
complaints sought the rescission of the Tenement Partnership and Acquisition Agreement (TPAA)
entered into by Luzon Iron and Consolidated Iron, on one hand, and Bridestone and Anaconda, on
the other, for the assignment of the Exploration Permit Application of the former in favor of the
latter. The complaints also sought the return of the Exploration Permits to Bridestone and Anaconda.

Thereafter, Luzon Iron and Consolidated Iron filed their Special Appearance with Motion to
Dismiss separately against Bridestone's complaint and Anaconda's complaint. Both motions to
dismiss presented similar grounds for dismissal. They contended that the RTC could not acquire
jurisdiction over Consolidated Iron because it was a foreign corporation that had never transacted
business in the Philippines. Likewise, they argued that the RTC had no jurisdiction over the subject
matter because of an arbitration clause in the TPAA.

The RTC ordered the consolidation of the two cases. Subsequently, Luzon Iron and Consolidated
Iron filed their Special Appearance and Supplement to Motions to Dismiss seeking the dismissal of
the consolidated cases. The petitioners alleged that Bridestone and Anaconda were guilty of forum
shopping because they filed similar complaints before the DENR, Mines and Geosciences Bureau,
Regional Panel of Arbitrators against Luzon Iron.

RTC denied the motions to dismiss, as well as the supplemental motion to dismiss, finding that
Consolidated Iron was doing business in the Philippines, with Luzon Iron as its resident agent. The
RTC ruled that it had jurisdiction over the subject matter because under clause 14.8 of the TPAA, the
parties could go directly to courts when a direct and/or blatant violation of the provisions of the
TPAA had been committed. The RTC also opined that the complaint filed before the DENR did not
constitute forum shopping because there was neither identity of parties nor identity of reliefs
sought. Luzon Iron and Consolidated Iron moved for reconsideration, but the RTC denied their
motion. On appeal, the CA affirmed the decision of the RTC. The CA agreed that the court acquired
jurisdiction over the person of Consolidated Iron because the summons may be validly served
through its agent Luzon Iron, considering that the latter was merely the business conduit of the
former. The CA also sustained the jurisdiction of the RTC over the subject matter opining that the
arbitration clause in the TPAA provided for an exception where parties could directly go to court.

Issue: WON the RTC has jurisdiction over the subject matter?

Ruling:

In  Bases Conversion Development Authority v. DMCI Project Developers, Inc. the Court
emphasized that the State favored arbitration, to wit:

The state adopts a policy in favor of arbitration. Republic Act No. 9285 expresses this policy:

SEC. 2.  Declaration of Policy. — It is hereby declared the policy of the State to actively promote party
autonomy in the resolution of disputes or the freedom of the parties to make their own
arrangements to resolve their disputes. Towards this end, the State shall encourage and actively
promote the use of Alternative Dispute Resolution (ADR) as an important means to achieve
speedy and impartial justice and declog court dockets. As such, the State shall provide means for
the use of ADR as an efficient tool and an alternative procedure for the resolution of appropriate
cases. Likewise, the State shall enlist active private sector participation in the settlement of disputes
through ADR. This Act shall be without prejudice to the adoption by the Supreme Court of any ADR
system, such as mediation, conciliation, arbitration, or any combination thereof as a means of
achieving speedy and efficient means of resolving cases pending before all courts in the Philippines
which shall be governed by such rules as the Supreme Court may approve from time to time.

Our policy in favor of party autonomy in resolving disputes has been reflected in our laws as early
as 1949 when our Civil Code was approved. Republic Act No. 876 later explicitly recognized the
validity and enforceability of parties' decision to submit disputes and related issues to arbitration.

Arbitration agreements are liberally construed in favor of proceeding to arbitration. We adopt the
interpretation that would render effective an arbitration clause if the terms of the agreement
allow for such interpretation.

Thus, consistent with the state policy of favoring arbitration, the present TPAA must be
construed in such a manner that would give life to the arbitration clause rather than defeat it, if
such interpretation is permissible. With this in mind, the Court views the interpretation forwarded
by the petitioners as more in line with the state policy favoring arbitration.

Paragraphs 14.8 and 15.1 of the TPAA should be harmonized in such a way that the arbitration
clause is given life, especially since such construction is possible in the case at bench. A synchronized
reading of the abovementioned TPAA provisions will show that a claim or action raising the
sufficiency, validity, legality or constitutionality of: (a) the assignments of the EP to Luzon Iron; (b)
any other assignments contemplated by the TPAA; or (c) any agreement to which the EPs may be
converted, may be instituted only when there is a direct and/or blatant violation of the TPAA. In
turn, the said action or claim is commenced by proceeding with arbitration, as espoused in the TPAA.

The Court disagrees with the respondents that Paragraph 14.8 of the TPAA should be construed
as an exception to the arbitration clause where direct court action may be resorted to in case of
direct and/or blatant violation of the TPAA occurs. If such interpretation is to be espoused, the
arbitration clause would be rendered inutile as practically all matters may be directly brought before
the courts. Such construction is anathema to the policy favoring arbitration.

A closer perusal of the TPAA will also reveal that paragraph 14 and all its sub-paragraphs are
general provisions, whereas paragraphs 15 and all its sub-clauses specifically refer to arbitration.
When general and specific provisions are inconsistent, the specific provision shall be paramount and
govern the general provision.

The petitioners' failure to refer the case for arbitration, however, does not render the arbitration
clause in the TPAA inoperative. In Koppel, Inc. v. Makati Rotary Club Foundation, Inc. (Koppel), the
Court explained that an arbitration clause becomes operative, notwithstanding the lack of a formal
request, when a party has appraised the trial court of the existence of an arbitration clause, viz:

xxx The operation of the arbitration clause in this case is not at all defeated by the failure of the
petitioner to file a formal "request" or application therefor with the MeTC. We find that the filing
of a "request" pursuant to Section 24 of R.A. No. 9285 is not the sole means by which an arbitration
clause may be validly invoked in a pending suit.

Section 24 of R.A. No. 9285 reads:

SEC. 24.  Referral to Arbitration. — A court before which an action is brought in a matter which is
the subject matter of an arbitration agreement shall, if at least one party so requests not later that
the pre-trial conference, or upon the request of both parties thereafter, refer the parties to
arbitration unless it finds that the arbitration agreement is null and void, inoperative or incapable of
being performed.

The "request" referred to in the above provision is, in turn, implemented by Rules 4.1 to 4.3 of A.M.
No. 07-11-08-SC or the Special Rules of Court on Alternative Dispute Resolution (Special ADR
Rules):

RULE 4: REFERRAL TO ADR

Rule 4.1. Who makes the request. — A party to a pending action filed in violation of the arbitration
agreement, whether contained in an arbitration clause or in a submission agreement, may request
the court to refer the parties to arbitration in accordance with such agreement.

xxxx
Attention must be paid, however, to the salient wordings of Rule 4.1. It reads: "[a] party to a
pending action filed in violation of the arbitration agreement xxx may request the court to refer the
parties to arbitration in accordance with such agreement."

In using the word "may" to qualify the act of filing a "request" under Section 24 of R.A. No. 9285,
the Special ADR Rules clearly did not intend to limit the invocation of an arbitration agreement in
a pending suit solely via such "request." After all, non-compliance with an arbitration agreement is
a valid defense to any offending suit and, as such, may even be raised in an answer as provided in
our ordinary rules of procedure.

In this case, it is conceded that petitioner was not able to file a separate " request" of arbitration
before the MeTC. However, it is equally conceded that the petitioner, as early as in its Answer with
Counterclaim, had already apprised the MeTC of the existence of the arbitration clause in the 2005
Lease Contract  and, more significantly, of its desire to have the same enforced in this case.  This act
of petitioner is enough valid invocation of his right to arbitrate. Xxx

It is undisputed that the petitioners Luzon Iron and Consolidated Iron never made any formal
request for arbitration. As expounded in Koppel, however, a formal request is not the sole means of
invoking an arbitration clause in a pending suit. Similar to the said case, the petitioners here made
the RTC aware of the existence of the arbitration clause in the TPAA as they repeatedly raised this as
an issue in all their motions to dismiss. As such, it was enough to activate the arbitration clause and,
thus, should have alerted the RTC in proceeding with the case.

Moreover, judicial restraint should be exercised pursuant to the competence-competence

principle embodied in Rule 2.4 of the Special Rules of Court on Alternative Dispute Resolution. The
said provision reads:

RULE 2.4. Policy Implementing Competence-Competence Principle. — The arbitral tribunal shall be

accorded the first opportunity or competence to rule on the issue of whether or not it has the
competence or jurisdiction to decide a dispute submitted to it for decision, including any objection
with respect to the existence or validity of the arbitration agreement. When a court is asked to rule
upon issue/s affecting the competence or jurisdiction of an arbitral tribunal in a dispute brought
before it, either before or after the arbitral tribunal is constituted, the court must exercise judicial
restraint and defer to the competence or jurisdiction of the arbitral tribunal by allowing the
arbitral tribunal the first opportunity to rule upon such issues.

Where the court is asked to make a determination of whether the arbitration agreement is null and
void, inoperative or incapable of being performed, under this policy of judicial restraint, the court
must make no more than a prima facie determination of that issue.

Unless the court, pursuant to such  prima facie determination, concludes that the arbitration
agreement is null and void, inoperative or incapable of being performed, the court must suspend the
action before it and refer the parties to arbitration pursuant to the arbitration agreement.

Generally, the action of the court is stayed if the matter raised before it is subject to arbitration.
In the case at bench, however, the complaints filed before the RTC should have been dismissed
considering that the petitioners were able to establish the ground for their dismissal, that is,
violating the prohibition on forum shopping. The parties, nevertheless, are directed to initiate
arbitration proceedings as provided under Paragraph 15.1 of the TPAA.

La Naval Drug Corporation v. The Honorable Court of Appeals, et al., 236 SCRA 78, G.R. No.
103200, August 31, 1994
Topic: Order to Arbitrate; Special Jurisdiction of Courts; §6, R.A. No. 876

Section 6, R.A. 876:

Section 6. Hearing by court. - A party aggrieved by the failure, neglect or refusal of another to
perform under an agreement in writing providing for arbitration may petition the court for an order
directing that such arbitration proceed in the manner provided for in such agreement. Five days
notice in writing of the hearing of such application shall be served either personally or by registered
mail upon the party in default. The court shall hear the parties, and upon being satisfied that the
making of the agreement or such failure to comply therewith is not in issue, shall make an order
directing the parties to proceed to arbitration in accordance with the terms of the agreement. If the
making of the agreement or default be in issue the court shall proceed to summarily hear such issue.
If the finding be that no agreement in writing providing for arbitration was made, or that there is no
default in the proceeding thereunder, the proceeding shall be dismissed. If the finding be that a
written provision for arbitration was made and there is a default in proceeding thereunder, an order
shall be made summarily directing the parties to proceed with the arbitration in accordance with the
terms thereof.

Facts:

Respondent Yao was the owner of a commercial building, a portion of which is leased to herein
petitioner. However, during the renewal of the contract of lease, the two disagreed on the rental
rate, and to resolve the controversy, they submitted their disagreement to arbitration. Two
arbitrators (Alamarez and Sabile) has been appointed by the parties while the appointment of the
third arbitrator (Tupang) was held in abeyance because La Naval Drug instructed its arbitrator to
defer the same until its Board of Directors could convene and approved Tupang’s appointment. This
was theorized by the respondent as dilatory tactics, hence, he prayed that a summary hearing be
conducted and direct the 2arbitrators to proceed with the arbitration in accordance with Contract of
Lease and the applicable provisions of the Arbitration law, by appointing and confirming the
appointment of the Third Arbitrator; and that the Board of Three Arbitrators be ordered to
immediately convene and resolve the controversy before it. The respondent court announced that
the two arbitrators chose Mrs. Eloisa R. Narciso as the third arbitrator and ordered the parties to
submit their position papers on the issue as to whether or not respondent Yao's claim for damages
may be litigated upon in the summary proceeding for enforcement of arbitration agreement. In
moving for reconsideration of the said Order, petitioner argued that in Special Case No. 6024, the
respondent court sits as a special court exercising limited jurisdiction and is not competent to act on
respondent Yao's claim for damages, which poses an issue litigable in an ordinary civil action.
However, respondent court was not persuaded by petitioner's submission, hence, it denied the
motion for reconsideration. While the appellate court has agreed with petitioner that, under
Section 6 of Republic Act No. 876, a court, acting within the limits of its special jurisdiction, may in
this case solely determine the issue of whether the litigants should proceed or not to arbitration,
it, however, considered petitioner in estoppel from questioning the competence of the court to
additionally hear and decide in the summary proceedings private respondent's claim for damages,
it(petitioner) having itself filed similarly its own counterclaim with the court a quo.

In moving for reconsideration, petitioner argued that in Special Case No. 6024, the respondent
court sits as a special court exercising limited jurisdiction and is not competent to act on respondent
Yao's claim for damages, which poses an issue litigable in an ordinary civil action. But the respondent
court was not persuaded by petitioner's submission.

Issues:

1. WON the court it has jurisdiction over the person

2. WON the court a quo has jurisdiction over the subject matter.

Ruling:

1. The lack of jurisdiction over the person of the defendant may be waived either expressly or
impliedly. When a defendant voluntarily appears, he is deemed to have submitted himself to the
jurisdiction of the court. If he so wishes not to waive this defense, he must do so seasonably by
motion for the purpose of objecting to the jurisdiction of the court; otherwise, he shall be deemed
to have submitted himself to that jurisdiction. The decisions promulgated heretofore by this Court
would likewise seemingly apply estoppel to bar the defendant from pursuing that defense by
alleging in his answer any other issue for dismissing the action.
Any ground for dismissal in a motion to dismiss, except improper venue, may, as further set forth in
Section 5 of the same rule, be pleaded as an affirmative defense and a preliminary hearing may be
had thereon as if a motion to dismiss had been filed. An answer itself contains the negative, as well
as affirmative, defenses upon which the defendant may rely (Section 4, Rule 6, Rules of Court). A
negative defense denies the material facts averred in the complaint essential to establish the
plaintiff's cause of action, while an affirmative defense in an allegation of a new matter which, while
admitting the material allegations of the complaint, would, nevertheless, prevent or bar recovery by
the plaintiff. Inclusive of these defenses are those mentioned in Rule 16 of the Rules of Court which
would permit the filing of a motion to dismiss.

In the same manner that the plaintiff may assert two or more causes of action in a court suit, a
defendant is likewise expressly allowed, under Section 2, Rule 8, of the Rules of Court, to put up his
own defenses alternatively or even hypothetically. Indeed, under Section 2, Rule 9, of the Rules of
Court, defenses and objections not pleaded either in a motion to dismiss or in an answer, except for
the failure to state a cause of action, are deemed waived. We take this to mean that a defendant
may, in fact, feel enjoined to set up, along with his objection to the court's jurisdiction over his
person, all other possible defenses. It thus appears that it is not the invocation of any of such
defenses, but the failure to so raise them, that can result in waiver or estoppel. By defenses, of
course, we refer to the grounds provided for in Rule 16 of the Rules of Court that must be asserted
in a motion to dismiss or by way of affirmative defenses in an answer.

2. Lack of jurisdiction over the subject matter of the suit is yet another matter. Whenever it appears
that the court has no jurisdiction over the subject matter, the action shall be dismissed (Section 2,
Rule 9, Rules of Court). This defense may be interposed at any time, during appeal or even after final
judgment. Such is understandable, as this kind of jurisdiction is conferred by law and not within the
courts, let alone the parties, to themselves determine or conveniently set aside.

Jurisdiction over the nature of the action, in concept, differs from jurisdiction over the subject
matter. Illustrated, lack of jurisdiction over the nature of the action is the situation that arises when
a court, which ordinarily would have the authority and competence to take a case, is rendered
without it either because a special law has limited the exercise of its normal jurisdiction on a
particular matter or because the type of action has been reposed by law in certain other courts or
quasi-judicial agencies for determination. Nevertheless, it can hardly be questioned that the rules
relating to the effects of want of jurisdiction over the subject matter should apply with equal vigor to
cases where the court is similarly bereft of jurisdiction over the nature of the action.
In summary, it is our considered view, as we now so hereby express,

that —

(1) Jurisdiction over the person must be seasonably raised, i.e., that it is pleaded in a motion to
dismiss or by way of an affirmative defense in an answer. Voluntary appearance shall be deemed a
waiver of this defense. The assertion, however, of affirmative defenses shall not be constructed as
an estoppel or as a waiver of such defense.

(2) Where the court itself clearly has no jurisdiction over the subject matter or the nature of the
action, the invocation of this defense may be done at any time. It is neither for the courts nor the
parties to violate or disregard that rule, let alone to confer that jurisdiction, this matter being
legislative in character. Barring highly meritorious and exceptional circumstances, such as
hereinbefore exemplified, neither estoppel nor waiver shall apply.

In the case at bench, the want of jurisdiction by the court is indisputable, given the nature of the
controversy. The arbitration law explicitly confines the court's authority only to pass upon the
issue of whether there is or there is no agreement in writing providing for arbitration. In the
affirmative, the statute ordains that the court shall issue an order "summarily directing the parties
to proceed with the arbitration in accordance with the terms thereof." If the court, upon the other
hand, finds that no such agreement exists, "the proceeding shall be dismissed." The proceedings
are summary in nature.