Case Summary (G.R. No. 91551)
Factual Background
Gonzales and Climax entities entered into a Financial and Technical Assistance Agreement and a disputed Addendum Contract containing Clause 19.1, which provided for final settlement of disputes under R.A. No. 876 by a single arbitrator in Metro Manila. While Gonzales sought annulment of the Addendum Contract before the DENR Panel on grounds of fraud, oppression and constitutional violations, Climax-Arimco concurrently filed a petition in the Makati RTC to compel arbitration.
Procedural History (G.R. No. 161957)
The Supreme Court denied Gonzales’s Rule 45 petition for certiorari in February 2005, ruling that the DENR Panel of Arbitrators lacked jurisdiction to resolve allegations of fraud and constitutional questions, which are judicial issues reserved for regular courts. Both parties moved for reconsideration: Gonzales disputed the jurisdictional finding and raised additional procedural points; Climax sought clarification regarding the independence of the arbitration clause under R.A. No. 876.
Procedural History (G.R. No. 167994)
While motions for reconsideration in No. 161957 were pending, Gonzales filed a Rule 65 petition in May 2005 to annul RTC orders dated 13 February 2001 and 7 March 2005 directing him to arbitration and appointing a sole arbitrator. He argued that the Addendum Contract (and thus the arbitration clause) was void ab initio and that the RTC failed to conduct the hearings on the issue of nullity as required by R.A. No. 876 and R.A. No. 9285.
Issues Presented
- Whether a petition for certiorari (Rule 65) is the proper remedy in lieu of an appeal under Sec. 29, R.A. No. 876.
- Whether in a summary proceeding to compel arbitration under Sec. 6, R.A. No. 876, a court must resolve the validity of the main contract containing the arbitration clause before ordering arbitration.
- Whether allegations of fraud and oppression in the main contract automatically void the arbitration clause under the doctrine of separability.
Mode of Review and Jurisdiction
The Court held that Gonzales’s resort to certiorari was improper because R.A. No. 876 expressly provides for an appeal (limited to questions of law) under Sec. 29 via Rule 45 of the Rules of Court. A petition for certiorari under Rule 65 is available only when there is no appeal or other plain, speedy and adequate remedy. Having lost the opportunity to timely appeal the RTC orders, Gonzales could not substitute certiorari for a lost appeal.
Summary Proceedings under R.A. No. 876
Section 6 of R.A. No. 876 confines the court’s function in a petition to compel arbitration to: (a) determining whether a valid written arbitration agreement exists, and (b) whether the other party has defaulted in complying with it. If the making of the arbitration agreement is in issue, the court must summarily hear that issue; otherwise, it must order arbitration within ten days after hearing.
Separability Doctrine and Independence of Arbitration Clause
The Court reaffirmed that an arbitration clause is separable and independent from the main (“container”) contract under Sec. 2(1) of R.A. No. 876, Sec. 24 of R.A. No
Case Syllabus (G.R. No. 91551)
Procedural History
- Two petitions (G.R. No. 161957 and G.R. No. 167994) consolidated on June 5, 2006; both arise from the same disputed Addendum Contract.
- G.R. No. 161957: On February 28, 2005, this Court denied Jorge Gonzales’s Rule 45 petition, ruling that the DENR Panel of Arbitrators lacked jurisdiction to annul the Addendum Contract and that the dispute involved judicial issues reserved for regular courts.
- Gonzales and respondents separately filed motions for reconsideration/clarification in G.R. No. 161957.
- G.R. No. 167994: Gonzales filed a Rule 65 petition on May 6, 2005, challenging two RTC orders (February 13, 2001 and March 7, 2005) that compelled him to arbitrate under Clause 19.1 of the Addendum Contract.
- The petitions were heard and resolved together with the more recent G.R. No. 167994 petition addressed first.
Facts
- Parties entered into an Addendum Contract, including an arbitration clause (Clause 19.1) providing for final settlement under R.A. No. 876 by a sole arbitrator.
- Gonzales filed before the DENR Panel of Arbitrators a complaint to annul the Addendum Contract on grounds of fraud, oppression and violation of the Constitution.
- While the annulment complaint was pending, Climax-Arimco Mining Corp. served Gonzales a Demand for Arbitration (March 23, 2000) and filed a petition to compel arbitration (March 31, 2000) in the RTC of Makati (Civil Case No. 00-444).
- Gonzales filed a motion to dismiss (not heard) and an Answer with Counterclaim (May 15, 2000) asserting the Addendum Contract (and Clause 19.1) was void ab initio.
- The RTC issued a series of orders: declaring the motion to dismiss moot, denying pre-trial, granting reconsideration to set pre-trial, denying and then granting Climax-Arimco’s motions, and re-raffling the case to Branch 148 before Judge Pimentel.
- Judge Pimentel, after summary hearing, ordered Gon