1.

Concept, Nature and purpose of Pre-Trial (Rule 18)

LCK Industries Inc. vs. Planters Development Bank,
G.R. No. 170606, November 23, 2007

Facts:

The petition centers on the claim propounded by petitioners that there was
an overpayment of the loan obligation in the amount of ₱1,856,416.67. On the
other hand, respondent bank counters that the question of overpayment, not being
included in the issues stipulated in Pre-Trial Order dated 8 September 2000, and
totally unrelated therein, cannot be considered by the RTC. The belated ventilation
of the alleged overpayment precluded the RTC from ruling on the matter in
consonance with the primordial purpose of the pre-trial conference which is to
delineate the issues necessary for the disposition of the case.

In the Pre-Trial Order dated 8 September 2000, the RTC defined the issues
as follows: (1) whether or not the petition was filed with the Office of the Clerk of
Court; (2) whether or not the extrajudicial foreclosure of real estate mortgage by
defendant bank was made in accordance with the provisions of Act No. 3135; and
(3) whether or not the parties are entitled to their respective claims for attorney’s
fees and damages.

Based on the admissions and stipulations during the pre-trial conference and
the issues defined by the court a quo as embodied in the Pre-Trial Order, the
parties agreed to submit the case for the resolution of the RTC. Both petitioners
and respondent also manifested that they would forego their respective claims for
attorney’s fees, leaving solely the issue of the validity of the foreclosure of
mortgage and auction sale for the RTC’s disposition. However, in petitioners’
Memorandum filed after the case was submitted for resolution, petitioners raised
the question of overpayment, a new issue that was included neither in their
Complaint nor in the issues defined in the Pre-Trial Order issued by the RTC.

Issue:

Whether or not the alleged overpayment precluded the RTC from ruling on
the matter considering that it was not included in the issues stipulated during pre-
trial.

Ruling:

No, it does not preclude RTC from ruling the matter.

In Interlining Corporation v. Philippine Trust Company, 428 Phil. 584,

588 (2002), it was held that “The purpose of entering into a stipulation of facts is to
expedite trial and to relieve the parties and the court as well of the costs of proving
facts which will not be disputed on trial and the truth of which can be ascertained
by reasonable inquiry. Its main objective is to simplify, abbreviate and expedite the
trial, or totally dispense with it.”

Pre-trial is a procedural device intended to clarify and limit the basic issues
between the parties and to take the trial of cases out of the realm of surprise and
maneuvering.

Pre-trial is an answer to the clarion call for the speedy disposition of cases.
Hailed as the most important procedural innovation in Anglo-Saxon justice in the
nineteenth century, pre-trial is a device intended to clarify and limit the basic
issues between the parties. It thus paves the way for a less cluttered trial and
resolution of the case. Pre-trial seeks to achieve the following:

(a) The possibility of an amicable settlement or of a submission to

alternative modes of dispute resolution;

(b) The simplification of the issues;

(c) The necessity or desirability of amendments to the pleadings;

(d) The possibility of obtaining stipulations or admissions of facts and of

documents to avoid unnecessary proof;

(e) The limitation of the number of witnesses;

(f) The advisability of a preliminary reference of issues to a commissioner;

(g) The propriety of rendering judgment on the pleadings, or summary

judgment, or of dismissing the action should a valid ground therefor be
found to exist;

(h) The advisability or necessity of suspending the proceedings; and

(i) Such other matters as may aid in the prompt disposition of the action.

Pre-trial is primarily intended to make certain that all issues necessary to the
disposition of a case are properly raised. Thus, to obviate the element of surprise,
parties are expected to disclose at the pre-trial conference all issues of law and fact
they intend to raise at the trial. (Caltex (Philippines), Inc. v. Court of Appeals, G.R.
No. 97753, 10 August 1992) However, in cases in which the issue may involve
privileged or impeaching matters (Co v. Court of Appeals, 353 Phil. 305, 312
(1998)), or if the issues are impliedly included therein or may be inferable
therefrom by necessary implication to be integral parts of the pre-trial order as
much as those that are expressly stipulated, the general rule will not apply.
(Velasco v. Apostol, G.R. No. 44588, 9 May 1989)

Thus, in Velasco v. Apostol, supra, Supreme Court highlighted the aforesaid

exception and ruled in this wise, “A pre-trial order is not meant to be a detailed
catalogue of each and every issue that is to be or may be taken up during the
trial. Issues that are impliedly included therein or may be inferable therefrom
by necessary implication are as much integral parts of the pre-trial order as
those that are expressly stipulated.”

Here, it would be absurd and inexplicable for the respondent company

to knowingly disregard or deliberately abandon the issue of non-payment of
the premium on the policy considering that it is the very core of its defense.
Correspondingly, Supreme Court cannot but perceive here an undesirable
resort to technicalities to evade an issue determinative of a defense duly
averred. The case at bar falls under this particular exception. Upon scrupulous
examination of the Pre-Trial Order dated 8 September 2000, it can be deduced that
the parties stipulated that the remaining sum of petitioner LCK’s obligation as of
13 October 1997 was ₱2,962,500.00. In the same Pre-Trial Order, the parties
likewise stipulated that the Baguio City property was sold at the public auction for
₱2,625,000.00 and the Quezon City property for ₱2,231,416.67. On both
occasions, respondent bank emerged as the highest bidder. By applying simple
mathematical operation, the mortgaged properties were purchased by the
respondent at the public auctions for ₱4,856,416.67; thus, after deducting
therefrom the balance of petitioner LCK’s obligation in the amount of
₱2,962,500.00, an excess in the sum of ₱1,893,916.67 remains. Needless to say,
the fact of overpayment, though not expressly included in the issues raised in the
Pre-Trial Order dated 8 September 2000, can be evidently inferred from the
stipulations and admissions made by the parties therein. Even only upon plain
reading of the said Pre-Trial Order, it can be readily discerned that there was an
overpayment.
10. Effect of failure to file (sec. 5, Rule 18)
Ramos v. Spouses Lavendia, 568 SCRA 293, G.R. No. 176706, October 8, 2008

Facts:

The pre-trial of the case was set on September 7, 1998 during which
petitioner was present as well as defendant spouses Severino but it was reset to
October 1, 1998 at 8:30 in the morning due to the absence of the therein defendant
spouses Alvendia. On the rescheduled pre-trial on October 1, 1998, after
petitioner’s complaint was called in open court, the trial court issued an Order
declaring petitioner non-suited for "failure of his counsel to appear" and to file pre-
trial brief, and accordingly dismissing the Complaint. Petitioner, through counsel,
filed a Motion for Reconsideration and for the Reinstatement of the Case with
Apology and Prayer for Compassion, explaining that his counsel arrived for the
pre-trial alright but was late, and giving an account of the non-filing in court of a
pre-trial brief. That with respect to his late arrival, the undersigned arrived at 8:55
and it was his intention to arrive at exactly 8:30 a.m. but he was prevented by an
unusual heavy traffic along the Baclaran/Coastal Road and he was not able to
estimate his arrival time. RTC denied the said motion stating that it did not come
forward with the most persuasive of reasons for the relaxation of Rule 18 (on Pre-
Trial) of the Rules of Court. CA sustained the RTC Order. Hence, this petition.

Issue:

Whether or not the complaint should be reinstated.

Ruling:

Yes, the complaint should be reinstated.

Section 6, Rule 18 of the Rules of Court (Rules) mandates that parties shall
file with the court and serve on the adverse party their pre-trial briefs at least three
days before the scheduled pre-trial. The Rules also provide that failure to file the
pre-trial brief shall have the same effect as failure to appear at the pre-trial.
Therefore, plaintiff’s failure to file the pre-trial brief shall be cause for dismissal of
the action.

However, in the case of Calalang v. Court of Appeals, G.R. No. 103185,

January 22, 1993, the Supreme Court held that “The precipitate haste of the lower
court in declaring the respondent bank non-suited was uncalled for and deserved a
second look. Considering the fact that the counsel for the plaintiff/respondent bank
did arrive for the pre-trial conference, though a bit late and that counsel for the
defendant was himself also late, the trial court should have called the case again.
An admonition to both counsel to be more prompt in appearing before the Court as
scheduled would have sufficed, instead of having dismissed the complaint outright.
 Unless a party’s conduct is so negligent, irresponsible, contumacious, or
dilatory as to provide substantial grounds for dismissal for non-appearance, the
courts should consider lesser sanctions which would still amount into achieving the
desired end.

Inconsiderate dismissals, even if without prejudice, do not constitute a

panacea nor a solution to the congestion of court dockets; while they lend a
deceptive aura of efficiency to records of individual judges, they merely postpone
the ultimate reckoning between the parties. In the absence of clear lack of merit or
intention to delay, justice is better served by a brief continuance, trial on the merits,
and final disposition of the cases before the court.”

Here, while petitioner’s counsel’s explanation behind his failure to file pre-
trial brief may not be convincing, given, among other considerations, the plaintiff-
herein petitioner’s presence when the case was called for pre-trial, the nature of the
case, the subject involved – real properties located in Las Piñas City, and the
eventual appearance in the court of petitioner’s counsel whose claim that he was,
on arrival initially barred from entering it and was even shouted upon by the trial
judge has not been disputed, the dismissal of the case by the trial court had been
too precipitate and was not commensurate with the level of non-compliance by
petitioner’s counsel with the order of the court.
19. Implied issues are deemed included in the pre-trial order
Philippine Export And Foreign Loan Guarantee Corp. v. Amalgamated
Management and Development Corp., G.R. No. 177729, September 28, 2011

Facts:

The RTC rendered judgment in favor of the plaintiff and against defendant
AMDC. Defendants Cuevas and Saddul were absolved from the obligation as well
as from the deficiency claim as a consequence, the case against them was
dismissed. The cross-claim of defendant/cross-claimant defendant Saddul against
defendant AMDC was also dismissed for lack of sufficient basis to grant the same.
CA affirmed the said judgment. Hence, this petition.

The petitioner posits that based on the RTC’s pre-trial order, the only issue
to be resolved was whether there was a deficiency claim after the foreclosure of the
real estate mortgage; that the liability of Cuevas and Saddul on the deficiency
claim was already an admitted fact under the pre-trial order; and that the RTC
improperly considered and determined their liability.

Issue:

Whether or not the RTC is precluded from ruling on the matter not included
in the issues stipulated during pre-trial.

Ruling:

No, the RTC is not precluded from ruling on the said matter.

While Section 7, Rule 18 of the Rules of Court states that “The proceedings
in the pre-trial shall be recorded.1âwphi1 Upon the termination thereof, the court
shall issue an order which shall recite in detail the matters taken up in the
conference, the action taken thereon, the amendments allowed to the pleadings,
and the agreements or admissions made by the parties as to any of the matters
considered. Should the action proceed to trial, the order shall explicitly define and
limit the issues to be tried. The contents of the order shall control the subsequent
course of the action, unless modified before trial to prevent manifest injustice.”

However, in the case of Velasco v. Apostol, G.R. No. 44588, May 9, 1989, it
was held that “a pre-trial order is not intended to be a detailed catalogue of each
and every issue that is to be taken during the trial, for it is unavoidable that there
are issues that are impliedly included among those listed or that may be inferable
from those listed by necessary implication which are as much integral parts of the
pre-trial order as those expressly listed.”
 Here, the pre-trial order nowhere stated that Cuevas and Saddul already
admitted their liability on the petitioner’s deficiency claim. Their admission
appearing in the pre-trial order referred only to the fact that they and AMDC had
received advances in large amounts from the petitioner, and that the real estate
mortgage securing the loan had already been foreclosed. Whether Cuevas and
Saddul were liable on the deficiency claim was proper for the ascertainment and
determination by the RTC as the trial court and the CA as the appellate tribunal,
notwithstanding the silence of the pre-trial order on it, because such issue was
deemed necessarily included in or inferred from the stated issue of whether there
was a deficiency still to be paid by AMDC, Cuevas and Saddul.
28. Modes of discovery under the Rules of Court
Caguiat vs. Torres, 30 SCRA 106, G.R. No. L-25481, October 31, 1969

Facts:

On August 18, 1964, after defendant had filed his answer with counterclaim,
and the plaintiffs, their reply to defendant's answer, the herein petitioners served on
respondent Caguiat a notice to take his deposition. On August 26, 1964 respondent
Caguiat filed with the lower court an urgent motion to prevent the taking of the
deposition or to restrict its scope, which urgent motion the petitioners opposed. On
the 29th of the same month the respondent Judge issued an order, to hold in
abeyance the resolution of his co-respondent's urgent motion until after the pre-trial
set for September 3, 1963 which was, however, reset for October 2, 1964 to give
the parties time to consider an amicable settlement. The parties however failed to
arrive at an amicable settlement.

On October 3, 1964 herein petitioners again served on respondent Caguiat a

second notice for the taking of his deposition upon oral, to prevent which, the latter
filed an urgent motion on the 14th of the same month. Petitioners opposed
respondent Caguiat's urgent motion. Resolving the urgent motion and the
opposition thereto, the respondent Judge, on the 17th, granted his co-respondent's
urgent motion and ordered the petitioners to refrain from taking the contemplated
deposition. Petitioner's motion for reconsideration was denied.

CA affirms the RTC Order stating that the petitioners' avowed purpose in
securing the deposition of respondent Caguiat is to get the latter to lay his cards on
the table and/or to simplify or abbreviate the proceedings. Respondent Caguiat, on
the other hand, affirms that he has already revealed practically his entire defense,
even to the extent of naming his witnesses, during the pre-trial, so that the
necessity of a deposition has been obviated. In fact, according to respondent
Caguiat, he had expressed willingness to enter into a stipulation of facts, but
apparently the petitioners did not want to.

Issue:

Whether or not the respondent judge is correct in ordering the petitioners to

refrain from taking the contemplated deposition.

Ruling:

Yes, the respondent judge is correct.

There can be no question that the trial court has jurisdiction to direct, in its
discretion, that a deposition shall not be taken, if there are valid reasons for so
ruling. (Cojuangco v. Caluag, L-7952, July 30, 1955, unreported) That the right of
a party to take depositions as means of discovery is not exactly absolute is implicit
in the provisions of the Rules of Court cited by appellants themselves, sections 16
and 18 of Rule 24, which are precisely designed to protect parties and their
witnesses, whenever in the opinion of the trial court, the move to take their
depositions under the guise of discovery is actually intended to only annoy,
embarrass or oppress them. In such instances, these provisions expressly authorize
the court to either prevent the taking of a deposition or stop one that is already
being taken.

In this case, aside from having practically disclosed all his evidence at the
pre-trial, appellee expressed willingness to enter into a stipulation of facts, which
offer, appellants rejected. Moreover, according to Court of Appeals, the parties
herein filed a joint motion for hearing on the merits even before the orders in
question were issued. Under these circumstances, it is inevitable to conclude that
there was indeed no further need for the deposition desired by appellants. It could
have served no useful purpose, for there was nothing anymore to discover.
Appellants have not shown any real concrete reason for such deposition.
37. Construction Arbitration
William Golangco Construction Corp. v. Ray Burton Development Corp.,
G.R. No. 163582, August 9, 2010

Facts:

On July 20, 1995, respondent Ray Burton Development Corporation

(RBDC) and petitioner William Golangco Construction Corporation (WGCC)
entered into a Contract for the construction of the Elizabeth Place
(Office/Residential Condominium). On March 18, 2002, WGCC filed a complaint
with a request for arbitration with the Construction Industry Arbitration
Commission (CIAC). In its complaint, WGCC prayed that CIAC render judgment
ordering RBDC to pay WGCC the amount of ₱53,667,219.45 plus interest.

RBDC filed a Motion to Dismiss the aforesaid complaint on the ground of

lack of jurisdiction contending that the CIAC acquires jurisdiction over disputes
arising from or connected with construction contracts only when the parties to the
contract agree to submit the same to voluntary arbitration. In the contract between
them, it claimed that only disputes by reason of differences in interpretation of the
contract documents shall be deemed subject to arbitration.

The CIAC denied the said motion but the CA reversed it and ruled that
CIAC lacks jurisdiction. Hence, this petition.

Issue:

Whether or not the CIAC has jurisdiction over the case.

Ruling:

Yes, CIAC has jurisdiction over the case.

Under Section 4 of Executive Order No. 1008, also known as the

"Construction Industry Arbitration Law," the CIAC has original and exclusive
jurisdiction over disputes arising from, or connected with, contracts entered into by
parties involved in construction in the Philippines.

In HUTAMA-RSEA Joint Operations, Inc. v. Citra Metro Manila

Tollways Corporation, G.R. No. 180640, April 24, 2009 the Court held that:

Under Section 1, Article III of the CIAC Rules, an arbitration clause in a

construction contract shall be deemed as an agreement to submit an existing or
future controversy to CIAC jurisdiction, "notwithstanding the reference to a
different arbitration institution or arbitral body in such contract x x x." Elementary
is the rule that when laws or rules are clear, it is incumbent on the court to apply
them. When the law (or rule) is unambiguous and unequivocal, application, not
interpretation thereof, is imperative.

Hence, the bare fact that the parties herein incorporated an arbitration clause
in the EPCC is sufficient to vest the CIAC with jurisdiction over any construction
controversy or claim between the parties. The arbitration clause in the construction
contract ipso facto vested the CIAC with jurisdiction. This rule applies, regardless
of whether the parties specifically choose another forum or make reference to
another arbitral body. Since the jurisdiction of CIAC is conferred by law, it cannot
be subjected to any condition; nor can it be waived or diminished by the
stipulation, act or omission of the parties, as long as the parties agreed to submit
their construction contract dispute to arbitration, or if there is an arbitration clause
in the construction contract. The parties will not be precluded from electing to
submit their dispute to CIAC, because this right has been vested in each party by
law.

It bears to emphasize that the mere existence of an arbitration clause in

the construction contract is considered by law as an agreement by the parties
to submit existing or future controversies between them to CIAC jurisdiction,
without any qualification or condition precedent. To affirm a condition
precedent in the construction contract, which would effectively suspend the
jurisdiction of the CIAC until compliance therewith, would be in conflict with the
recognized intention of the law and rules to automatically vest CIAC with
jurisdiction over a dispute should the construction contract contain an arbitration
clause.

Moreover, the CIAC was created in recognition of the contribution of the

construction industry to national development goals. Realizing that delays in the
resolution of construction industry disputes would also hold up the development of
the country, Executive Order No. 1008 expressly mandates the CIAC to
expeditiously settle construction industry disputes and, for this purpose, vests in
the CIAC original and exclusive jurisdiction over disputes arising from, or
connected with, contracts entered into by the parties involved in construction in the
Philippines.

Thus, there is no question that in this case, the CIAC properly took
cognizance of petitioner's complaint as it had jurisdiction over the same.
46. Republic Act No. 876, June 19, 1953
Continental Marble Corp. V. National Labor Relations Commission (NLRC);,
Et Al., G.R. No. L-43825, May 9, 1988

Facts:

Private respondent Rodito Nasayao claimed that he was appointed plant

manager of the petitioner corporation, with an alleged compensation of P3,000.00,
a month, or 25% of the monthly net income of the company, whichever is greater,
and when the company failed to pay his salary for the months of May, June, and
July 1974, Rodito Nasayao filed a complaint with the NLRC, for the recovery of
said unpaid varies. Answering, the herein petitioner denied that Rodito Nasayao
was employed in the company as plant manager with a fixed monthly salary of
P3,000.00. They claimed that the undertaking agreed upon by the parties was a
joint venture, a sort of partnership, wherein Rodito Nasayao was to keep the
machinery in good working condition and, in return, he would get the contracts
from end-users for the installation of marble products, in which the company
would not interfere.

The case was submitted for voluntary arbitration and the parties selected the
herein respondent Jose T. Collado as voluntary arbitrator. In the course of the
proceedings, however, the herein petitioners challenged the arbitrator's capacity to
try and decide the case fairly and judiciously and asked him to desist from further
hearing the case. But, the respondent arbitrator refused. Consequently, he rendered
judgment in favor of the complainant, ordering the herein petitioners to pay Rodito
Nasayao the amount of P9,000.00, within 10 days from notice. Upon receipt of the
decision, the herein petitioners appealed to the NLRC on grounds that the labor
arbiter gravely abused his discretion in persisting to hear and decide the case
notwithstanding petitioners' request for him to desist therefrom and that the
appealed decision is not supported by evidence. Rodito Nasayao filed a motion to
dismiss the appeal on the ground that the decision of the voluntary arbitrator is
final, unappealable, and immediately executory. Acting on the motions, the
respondent Commission dismissed the appeal on the ground that the decision
appealed from is final, unappealable and immediately executory, and ordered the
herein petitioners to comply with the decision of the voluntary arbitrator within 10
days from receipt of the resolution. Hence, this petition. The respondent Rodito
Nasayao contends that the judgment or award of the voluntary arbitrator is final,
unappealable and immediately executory, and may not be reviewed by the
Supreme Court. If so, only questions of law, and not findings of fact of a voluntary
arbitrator may be reviewed by the Court, since the findings of fact of the voluntary
arbitrator are conclusive upon the Court.

Issue:

Whether or not respondent Rodito Nasayao is correct.

Ruling:

No, respondent Rodito Nasayao is not correct.

Sec. 29 of Republic Act No. 876, otherwise known as the Arbitration Law,
provides that “An appeal may be taken from an order made in a proceeding under
this Act, or from a judgment entered upon an award through certiorari proceedings,
but such appeals shall be limited to questions of law. The proceedings upon such
an appeal, including the judgment thereon shall be governed by the Rules of Court
in so far as they are applicable.”

in Mantrade FMMC Division Employees and Workers Union vs. Bacungan,

G.R. No. L-48437, Sept. 30,1986, it was held that, “A voluntary arbitrator by the
nature of her functions acts in quasi-judicial capacity. There is no reason why her
decisions involving interpretation of law should be beyond this Court's review.
Administrative officials are presumed to act in accordance with law and yet we do
hesitate to pass upon their work where a question of law is involved or where a
showing of abuse of authority or discretion in their official acts is properly raised
in petitions for certiorari.”

While the Court has accorded great respect for, and finality to, findings of
fact of a voluntary arbitrator (Oceanic Bic Division (FFW) vs. Romero, G.R. No. L-
43890, July 16,1984) and administrative agencies which have acquired expertise in
their respective fields, like the Labor Department and the National Labor Relations
Commission, (Franklin Baker Company of the Philippines vs. Trajano G.R. No
75039, Jan. 28, 1988) their findings of fact and the conclusions drawn therefrom
have to be supported by substantial evidence.

ln this case, the finding of the voluntary arbitrator that Rodito Nasayao was
an employee of the petitioner corporation is not supported by the evidence or by
the law. On the other hand, Supreme Court finds the version of the petitioners to
be more plausible and in accord with human nature and the ordinary course of
things. As pointed out by the petitioners, it was illogical for them to hire the private
respondent Rodito Nasayao as plant manager with a monthly salary of P3,000.00,
an amount which they could ill-afford to pay, considering that the business was
losing, at the time he was hired, and that they were about to close shop in a few
months' time. Besides, there is nothing in the record which would support the
claim of Rodito Nasayao that he was an employee of the petitioner corporation. He
was not included in the company payroll, nor in the list of company employees
furnished the Social Security System. Most of all, the element of control is
lacking.
55. Special Rules of Court on Alternative Dispute Resolution
Koppel, Inc. (Formerly Known As Kpl Aircon, Inc.), v. Makati Rotary Club
Foundation, Inc., G.R. No. 198075, September 4, 2013

Facts:

In this case for ejectment suit, the subject deed of donation and 2005 lease
contract between the parties was being questioned pertaining the arbitration clause
of said contract. Under the 2005 lease contract, it stated among others that, “The
provisions of this 2005 Lease Contract shall be governed, interpreted and
construed in all aspects in accordance with the laws of the Republic of the
Philippines. Any disagreement as to the interpretation, application or execution of
this 2005 Lease Contract shall be submitted to a board of three (3) arbitrators
constituted in accordance with the arbitration law of the Philippines. The decision
of the majority of the arbitrators shall be binding upon FKI and respondent.”

The MeTC rendered judgment in favor of the petitioner. While the MeTC
refused to dismiss the action on the ground that the dispute is subject to arbitration,
it nonetheless sided with the petitioner with respect to the issues regarding the
insufficiency of the respondent’s demand and the nullity of the 2005 Lease
Contract.

This was reversed by the RTC ratiocinating that the petitioner cannot validly
invoke the arbitration clause of the 2005 Lease Contract while, at the same time,
impugn such contract’s validity. Even assuming that it can, petitioner still did not
file a formal application before the MeTC so as to render such arbitration clause
operational. The CA affirmed the RTC decision. Hence, this petition.

Issue No. 1:

Whether or not petitioner may still invoke the arbitration clause of the 2005
Lease Contract notwithstanding the fact that it assails the validity of such contract.

Ruling No. 1:

Yes, petitioner may still invoke the arbitration clause of the 2005 Lease
Contract even if it assails the validity of such contract.

In Gonzales v. Climax Mining Ltd., 541 Phil. 143, 158, 166 (2007), it was
held that, “Under the doctrine of separability, an arbitration agreement is
considered as independent of the main contract. Being a separate contract in itself,
the arbitration agreement may thus be invoked regardless of the possible nullity or
invalidity of the main contract.”
Issue No. 2

Whether or not the operation of the arbitration clause in this case is defeated
by the failure of the petitioner to file a formal "request" or application therefor with
the MeTC.

Ruling No. 2

No, the operation of the arbitration clause in this case is not defeated.

Sec. 24 of RA 9285 provides, “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.”

Rule 4.1. of A.M. No. 07-11-08-SC or the Special Rules of Court on

Alternative Dispute Resolution (Special ADR Rules) reads: “a party to a pending
action filed in violation of the arbitration agreement x x x 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. The fact that the
petitioner and respondent already underwent through JDR proceedings before the
RTC, will not make the subsequent conduct of arbitration between the parties
unnecessary or circuitous. The JDR system is substantially different from
arbitration proceedings.