FRABELLE FISHING CORPORATION,
Petitioner, -
versus - THE
PHILIPPINE AMERICAN LIFE INSURANCE COMPANY, PHILAM PROPERTIES CORPORATION and
PERF REALTY CORPORATION, Respondents. |
G.R.
No. 158560
Present: pUNO, C.J., Chairperson, Sandoval-Gutierrez, AZCUNA, and GARCIA,
JJ. Promulgated: |
x
--------------------------------------------------------------------------------------x
|
|
|
|
|
DECISION
|
|
|
|
|
|
SANDOVAL-GUTIERREZ, J.: |
|
Before us is the instant Petition for
Review on Certiorari under Rule 45 of the 1997 Rules of Civil
Procedure, as amended, assailing the Decision[1]
and Resolution of the Court of Appeals dated
The facts
are:
Philam Properties Corporation, Philippine American Life
Insurance Company, and PERF Realty Corporation, herein respondents, are all
corporations duly organized and existing under Philippine laws.
On May
8, 1996, respondents entered into a Memorandum of Agreement (1996 MOA)[2]
whereby each agreed to contribute cash, property, and services for the
construction and development of Philamlife Tower, a 45-storey office
condominium along Paseo de Roxas, Makati City.
On December 6, 1996, respondents executed a Deed of
Assignment (1996 DOA)[3]
wherein they assigned to Frabelle Properties Corporation (Frabelle) their
rights and obligations under the 1996 MOA with respect to the construction,
development, and subsequent ownership of Unit No. 38-B located at the 38th
floor of Philamlife Tower. The parties
also stipulated that the assignee shall be deemed as a co-developer of the
construction project with respect to Unit No. 38-B.[4]
Frabelle, in turn, assigned to Frabelle Fishing Corporation
(Frabelle Fishing), petitioner herein, its rights, obligations and interests
over Unit No. 38-B.
On
The dispute between the parties started when petitioner found
material concealment on the part of respondents regarding certain details in
the 1996 DOA and 1998 MOA and their gross violation of their contractual
obligations as condominium developers.
These violations are: (a) the non-construction of a partition wall between
Unit No. 38-B and the rest of the floor area; and (b) the reduction of the net
usable floor area from four hundred sixty eight (468) square meters to only
three hundred fifteen (315) square meters.
Dissatisfied
with its existing arrangement with respondents, petitioner, on
On
After
considering their respective memoranda, HLURB Arbiter Atty. Dunstan T. San
Vicente, with the approval of HLURB Regional Director Jesse A. Obligacion,
issued an Order[9] dated
Accordingly, respondents’ plea for the outright dismissal of the
present case is denied. Set the initial
preliminary hearing of this case on
IT IS SO ORDERED.
Respondents
then filed with the Court of Appeals a petition for prohibition with prayer for
the issuance of a temporary restraining order and/or writ of preliminary injunction,[10]
docketed as CA-G.R. SP No. 71389. Petitioner
claimed, among others, that the HLURB has no jurisdiction over the subject
matter of the controversy and that the contracts between the parties provide
for compulsory arbitration.
On
WHEREFORE, premises considered, the petition is GRANTED. Public
respondents Atty. Dunstan San Vicente and Jesse A. Obligacion of the Housing
and Land Use Regulatory Board, Expanded National Capital Region Field Office
are hereby permanently ENJOINED and PROHIBITED from further proceeding with and
acting on HLURB Case No. REM-021102-11791. The order of
SO ORDERED.
In
dismissing petitioner’s complaint, the Court of
Appeals held that the HLURB has no jurisdiction over an action for reformation
of contracts. The jurisdiction lies with the Regional Trial
Court.
Forthwith,
petitioner filed a motion for reconsideration[12]
but it was denied by the appellate court in its Resolution[13]
dated
Hence, the instant petition for review on certiorari.
The
issues for our resolution are: (1) whether the HLURB has jurisdiction over the
complaint for reformation of instruments, specific performance and damages; and
(2) whether the parties should initially resort to arbitration.
The
petition lacks merit.
As the
records show, the complaint filed by petitioner with the HLURB is one for reformation
of instruments. Petitioner claimed
that the terms of the contract are not clear and prayed that they should be
reformed to reflect the true stipulations of the parties. Petitioner prayed:
WHEREFORE, in view of all the foregoing, it
is respectfully prayed of this Honorable Office that after due notice and
hearing, a judgment be please rendered:
1. Declaring
that the instruments executed by the complainant FRABELLE and respondent PHILAM
to have been in fact a Contract to Sell. The parties are thereby
governed by the provisions of P.D. 957 entitled, “Regulating the Sale of
Subdivision Lots and Condominiums, Providing Penalties for Violations Thereof”
as buyer and developer, respectively, of a condominium unit and not as
co-developer and/or co-owner of the same;
x x x (Emphasis supplied)
We hold
that being an action for reformation of instruments, petitioner’s
complaint necessarily falls under the jurisdiction of the Regional Trial Court
pursuant to Section 1, Rule 63 of the 1997 Rules of Civil Procedure, as
amended, which provides:
SECTION 1. Who may file petition.
– Any person interested under a deed, will, contract or other written
instrument, whose rights are affected by a statute, executive order or
regulation, ordinance, or any other governmental regulation may, before breach
or violation thereof, bring an action in the appropriate Regional Trial
Court to determine any question of construction or validity arising, and
for a declaration of his rights or duties thereunder.
An action for the reformation of
an instrument, to quiet title to real property or remove clouds therefrom,
or to consolidate ownership under Article 1607 of the Civil Code, may be
brought under this Rule. (Emphasis ours)
As
correctly held by the Court of Appeals, any disagreement as to the nature of
the parties’ relationship which would require
first an amendment or reformation of their contract is an issue which the courts
may and can resolve without the need of the expertise and specialized knowledge
of the HLURB.
With
regard to the second and last issue, paragraph 4.2 of the 1998 MOA mandates
that any dispute between or among
the parties “shall finally be settled by arbitration conducted in accordance
with the Rules of Conciliation and Arbitration of the International Chamber of
Commerce.”[14] Petitioner referred the dispute to the PDRCI
but respondents refused to submit to its jurisdiction.
It bears
stressing that such arbitration agreement is the law between the parties. They are, therefore, expected to abide by it
in good faith.[15]
This
Court has previously held that arbitration is one of the alternative methods of
dispute resolution that is now rightfully vaunted as “the wave of the future”
in international relations, and is recognized worldwide. To brush aside a contractual agreement
calling for arbitration in case of disagreement between the parties would
therefore be a step backward.[16]
WHEREFORE, we DENY the petition. The
challenged Decision and Resolution of the Court of Appeals in CA-G.R. SP No.
71389 are AFFIRMED.
Costs
against petitioner.
SO
ORDERED.
ANGELINA SANDOVAL-GUTIERREZ
Associate Justice
WE
CONCUR:
REYNATO S. PUNO
Chief Justice Chairperson |
|
|
RENATO C. CORONA Associate Justice |
ADOLFO S. AZCUNA Associate Justice |
|
CANCIO C. GARCIA Associate Justice |
|
Chief Justice
[1] Penned by Associate Justice Remedios A. Salazar-Fernando and concurred in by Associate Justice Ruben T. Reyes (now a member of this Court) and Associate Justice Edgardo F. Sundiam.
[2] Annex “1” of the petition, rollo, pp. 207-215.
[3] Annex “2” of the petition, id., pp. 216-223.
[4] Paragraph 2 of the 1996 DOA reads, “Upon the effectivity and subject to the stipulations of this Assignment, the Assignee shall be deemed as a co-developer of the Project to the extent of the Assigned Office Space and Assigned Slots, and in such capacity shall have all the rights and obligations of a co-developer under the MOA, including but not limited to the obligation of providing funds to finance the cost of construction of the Assigned Office Space and Assigned Slots, and the right of receiving the Assigned Office Space and Assigned Slots upon completion of construction thereof.”
[5] Annex “3” of the petition, rollo, pp. 224-243.
[6]
[7]
[8] Annex “A” of the petition, id., pp. 36-50.
[9] Annex “G” of the petition, id., pp. 179-183.
[10] Annex “H” of the petition, id., pp. 184-211.
[11] Annex “K” of the petition, id., pp. 260-270.
[12] Annex “L” of the petition, id., pp. 271-289.
[13]
[14] Annex “3,” supra at 228.
[15] Fiesta World Mall Corporation v. Linberg Philippines, Inc., G.R. No. 152471, August 18, 2006, 499 SCRA 332, 338, citing LM Power Engineering Corporation v. Capitol Industrial Construction Groups, Inc., 399 SCRA 562 (2003).
[16] Sea-Land Service, Inc. v. Court of Appeals, G.R. No. 126212, March 2, 2000, 327 SCRA 135, citing BF Corporation v. Court of Appeals, 288 SCRA 267, 286 (1998).