ChanRobles Virtual law Library

[G.R. No. 136154July 18, 2001]

DEL MONTE CORP.-USA et. al. vs. CA et al.

SECOND DIVISION

Gentleman :

Quoted hereunder, for your information, is a resolution of this Court dated JUL 18 2001.

G.R. No. 136154(Del Monte Corporation-USA, Paul E. Derby, Daniel Collins and Luis Hidalgo vs. Court of Appeals, Judge Bienvenido L. Reyes in his capacity as Presiding Judge, RTC-Br. 74, Malabon, Metro Manila, Montebueno Marketing, Inc., Liong Liong C. Sy and Sabrosa Foods, Inc.)

On 1 July 1994, in a Distributorship Agreement, petitioner Del Monte Corporation-USA (DMC-USA) appointed private respondent Montebueno Marketing, Inc. (MMI) as the sole and exclusive distributor of its Del Monte products in the Philippines. The Agreement provided for an arbitration clause.

On 3 October 1996 private respondents filed a complaint against petitioners for violation of Arts. 20, 21 and 23 of the Civil Code. Petitioners filed a Motion to Suspend Proceedings invoking the arbitration clause in their Distributorship Agreement with private respondent MMI.

In a Resolution dated 23 December 1996 the trial court deferred consideration of petitioners' Motion to Suspend Proceedings as the grounds alleged therein did not warrant suspension of the proceedings considering that the action was for damages with prayer for the issuance of a Writ of Preliminary Attachment and not on the Distributorship Agreement. On 11 November 1997 the Motion to Suspend Proceedings was denied by the trial court on the ground that it "will not serve the ends of justice and to allow said suspension will only delay the determination of the issues, frustrate the quest of the parties for a judicious determination of their respective claims, and/or deprive and delay their rights to seek redress."

On appeal, the Court of Appeals affirmed the decision of the trial court. The appellate court held that the alleged damaging acts recited in the complaint, constituting petitioners' causes of action, required the interpretation of Art. 21 of the Civil Code, and that in determining whether petitioners had violated it "would require a full blown trial" thus making arbitration "out of the question." Petitioners filed a Motion for Reconsideration but the motion was denied.

Petitioners came to this Court on a petition for certiorari. On 7 February 2001 the Court denied the petition, affirmed the Decision of the Court of Appeals and directed the trial court to proceed with the hearing of the case. This Court ruled that the arbitration clause in the Arbitration Agreement only applied to the parties thereto, ratiocinating that

The object of arbitration is to allow the expeditious determination of a dispute. ¹ Decision citing Coquia, Jorge R., Annotation, Arbitration as a Means of Reducing Court Congestion, 29 July 1977, 78 SCRA 121.Clearly, the issue before us could be speedily and efficiently resolved in its entirety if we allow simultaneous arbitration proceedings and trial, or suspension of trial pending arbitration. Accordingly, the interest of justice would only be served if the trial court hears and adjudicates the case in a single and complete proceeding. ² Ibid, citing Heirs of Au gusto L. Salas, Jr. v. Laperal Realty Corporation, G.R. No. 135362, 13 December 1999, 320 SCRA 610.

On 23 March 2001 petitioners filed the instant Motion for Reconsideration primarily alleging that if the decision was not reconsidered, it would set a dangerous precedent where a party to an arbitration clause can effectively defeat the arbitration clause by the simple expedient of commencing court proceedings with the inclusion of third parties as additional parties to the case. On 29 June 2001 respondent MMI filed its Comment/Opposition to the Motion for Reconsideration.

We deny the motion of petitioners. The inclusion of third parties to defeat the arbitration clause presupposes bad faith; and bad faith is never presumed. In the instant case, it is not alleged nor even hinted at that the inclusion of third parties was specifically and intentionally done to negate the effect of the arbitration clause. Consequently, the pronouncement of the Court in the Salas case that only parties to the agreement, their assigns or heirs have the right to arbitrate, or could be compelled to arbitrate, must be adopted. This is in accord with the object of arbitration to allow the expeditious determination of disputes by preventing multiplicity of suits, duplicitous procedure and unnecessary delay.

IN VIEW WHEREOF, the Court DENIES the Motion for Reconsideration WITH FINALITY for lack of substantial argument to justify reconsideration of its Decision of 7 February 2001, and reiterates its directive therein to the trial court to proceed with the hearing of this case without further delay.

SO ORDERED.

Very truly yours,

(Sgd.) TOMASITA M. DRIS

Clerk of Court

Back to Home | Back to Main

CLICK HERE FOR THE LATEST SUPREME COURT JURISPRUDENCE