Heirs of Augusto Salas vs. Laperal Realty Corp.

G.R. No. 135362, December 13, 1999

Facts:

Augusto Salas, Jr. entered into an Owner-Contractor Agreement with respondent Laperal Realty
Corporation to render and provide complete construction services on a tract of land owned by the
former. Salas, Jr. executed a Special Power of Attorney in favor of the respondent to exercise general
control, supervision and management of the sale of his land, for cash or on installment basis. When
Salas, Jr. went missing for more than seven years, his wife filed a verified petition for the declaration of
presumptive death. Respondent Laperal Realty subdivided the land of Salas, Jr. and sold the subdivided
portions thereof to the respondent lot buyers.

Petitioners as heirs of Salas, Jr. filed a Complaint for declaration of nullity of sale, reconveyance,
cancellation of contract, accounting and damages against herein respondents. Respondent Laperal
Realty filed a Motion to Dismiss on the ground that petitioners failed to submit their grievance to
arbitration as required under Article VI of the Agreement. The trial court dismissed the Complaint for
non-compliance with the arbitration clause provided under the Agreement.

Issue:

Whether or not the causes of action by the petitioners for the rescission of the sale transactions
and reconveyance of the subdivided lots are covered by the exception under the Arbitration Law when
there exist such grounds at law for the revocation of any contract.

Ruling:

The court held that rescission is an arbitrable issue, thus arbitration was necessary before a suit
could be filed in court. The Court likewise held that the respondents other than Laperal Realty
Corporation were not bound by the Agreement, the respondent lot buyers not being those
contemplated as assignees of the rights of respondent Laperal Realty. The respondent lot buyers where
therefore not vested with the right to arbitrate. However, to impose that arbitration be had between
petitioners and Laperal Realty and a trial for respondent lot buyers would result in multiplicity of suits,
duplicitous procedure and unnecessary delay.

The Court granted the petition and set aside the dismissal of the petitioner’s complaint and
directed that the case proceed in the interest of justice.
 Del Monte Corp. – USA, et al. vs. Court of Appeals, et al.
(G.R. No. 136154. February 7, 2001)

Facts:

Private respondents filed a Complaint against petitioners for violations by petitioners of

Arts. 20, 21, and 23 of the Civil Code. According to private respondents, DMC-USA products
continued to be brought into the country by parallel importers despite the appointment of private
respondent MMI as the sole and exclusive distributor of Del Monte products thereby causing them
great embarrassment and substantial damage. They alleged that the products brought into the
country by these importers were aged, damaged, fake or counterfeit, so that they had to cause the
publication of a "warning to the trade" paid advertisement in leading newspapers. Petitioners filed a
Motion to Suspend Proceedings invoking the arbitration clause in their Agreement with private
respondents where in it states that the law governed by the laws of the State of California and/or, if
applicable, the United States of America. All disputes arising out of or relating to this Agreement or the
parties’ relationship, including the termination thereof, shall be resolved by arbitration in the City
of San Francisco, State of California, under the Rules of the American Arbitration Association. The RTC
denied the motion 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 the irrespective claims, and/or deprive and delay their rights to seek redress.” CA
affirmed the decision of the trial court.

Issue:

The Court ruled the validity of the arbitration clause in the Contract between the contracting
parties. However, the Court held that provisions in a contract are binding only between the contracting
parties, their assigns and heirs. In the present case, arbitration as provided in the contract can therefore
be called for only as to petitioners DMC-USA, Paul Derby and respondents MMI and Lily Sy, and not to
other parties. Only the assigns and heirs can have the right to arbitrate.

Citing the case of Salas Jr. vs. Laperal Realty Corporation, the splitting of the proceedings to
arbitration as to some of the parties on one hand and trial for the others cannot be allowed. Otherwise,
it would result in a multiplicity of suits, duplicitous procedure and unnecessary delay. To effect a speedy
and efficient resolution of the issues and claims of the parties, a full blown trial must be had. Only then
can the interest of justice be served.