|
ORMOC SUGARCANE
PLANTERS’ ASSOCIATION, INC. (OSPA),OCCIDENTAL LEYTE FARMERS MULTI-PURPOSE
COOPERATIVE, INC. (OLFAMCA), UNIFARM MULTI-PURPOSE COOPERATIVE, INC.
(UNIFARM) and ORMOC NORTH DISTRICT IRRIGATION MULTI-PURPOSE COOPERATIVE, INC.
(ONDIMCO), Petitioners, -versus- THE COURT OF APPEALS (Special Former Sixth
Division), HIDECO SUGAR MILLING CO., INC., and ORMOC SUGAR MILLING CO., INC., Respondents. |
G.R. No.
156660 Present: pUNO, C.J., Chairperson, CARPIO, Corona, LEONARDO-DE CASTRO, and BERSAMIN, JJ. Promulgated: August 24, 2009 |
x----------------------------------------------------------------------------------------x
LEONARDO-DE CASTRO, J.:
Before the Court is a
special civil action for certiorari assailing the Decision[1]
dated December 7, 2001 and the Resolution dated October 30, 2002 of the Court
of Appeals (CA) in CA-G.R. SP No. 56166 which set aside the Joint Orders[2]
dated August 26, 1999 and October 29, 1999 issued by the Regional Trial Court
(RTC) of Ormoc City, Branch 12 upholding petitioners’ legal personality to
demand arbitration from respondents and directing respondents to nominate two
arbitrators to represent them in the Board of Arbitrators.
Petitioners are associations organized by and whose
members are individual sugar planters (Planters). The membership of each association follows:
264 Planters were members of OSPA; 533 Planters belong to OLFAMCA; 617 Planters
joined UNIFARM; 760 Planters enlisted with ONDIMCO; and the rest belong to
BAP-MPC which did not join the lawsuit.
Respondents Hideco Sugar Milling Co., Inc. (Hideco)
and Ormoc Sugar Milling Co, Inc. (OSCO) are sugar centrals engaged in grinding
and milling sugarcane delivered to them by numerous individual sugar planters,
who may or may not be members of an association such as petitioners.
Petitioners assert that the relationship between
respondents and the individual sugar planters is governed by milling
contracts. To buttress this claim,
petitioners presented representative samples of the milling contracts.[3]
Notably, Article VII of the milling contracts
provides that 34% of the sugar and molasses produced from milling the Planter’s
sugarcane shall belong to the centrals (respondents) as compensation, 65%
thereof shall go to the Planter and the remaining 1% shall go the association
to which the Planter concerned belongs, as aid to the said association. The 1% aid shall be used by the association
for any purpose that it may deem fit for its members, laborers and their dependents. If the Planter was not a member of any
association, then the said 1% shall revert to the centrals. Article XIV,
paragraph B[4]
states that the centrals may not, during the life of the milling contract, sign
or execute any contract or agreement that will provide better or more benefits
to a Planter, without the written consent of the existing and recognized
associations except to Planters whose plantations are situated in areas beyond
thirty (30) kilometers from the mill.
Article XX provides that all differences and controversies which may
arise between the parties concerning the agreement shall be submitted for
discussion to a Board of Arbitration, consisting of five (5) members—two (2) of
which shall be appointed by the centrals, two (2) by the Planter and the fifth
to be appointed by the four appointed by the parties.
On June 4, 1999, petitioners, without impleading
any of their individual members, filed twin petitions with the RTC for Arbitration under R.A. 876, Recovery of Equal Additional Benefits,
Attorney’s Fees and Damages, against HIDECO and OSCO, docketed as Civil
Case Nos. 3696-O and 3697-O, respectively.
Petitioners claimed that respondents violated the
Milling Contract when they gave to independent planters who do not belong to
any association the 1% share, instead of reverting said share to the centrals.
Petitioners contended that respondents unduly accorded the independent Planters
more benefits and thus prayed that an order be issued directing the parties to
commence with arbitration in accordance with the terms of the milling
contracts. They also demanded that
respondents be penalized by increasing their member Planters’ 65% share
provided in the milling contract by 1%, to 66%.
Respondents filed a motion to dismiss on ground of
lack of cause of action because petitioners had no milling contract with
respondents. According to respondents, only some eighty (80) Planters who were
members of OSPA, one of the petitioners, executed milling contracts.
Respondents and these 80 Planters were the signatories of the milling
contracts. Thus, it was the individual
Planters, and not petitioners, who had legal standing to invoke the arbitration
clause in the milling contracts. Petitioners, not being privy to the milling
contracts, had no legal standing whatsoever to demand or sue for arbitration.
On August 26, 1999, the RTC issued a Joint Order[5]
denying the motion to dismiss, declaring the existence of a milling contract
between the parties, and directing respondents to nominate two arbitrators to
the Board of Arbitrators, to wit:
When these cases were called for
hearing today, counsels for the petitioners and respondents argued their
respective stand. The Court is convinced
that there is an existing milling contract between the petitioners and
respondents and these planters are represented by the officers of the
associations. The petitioners have the
right to sue in behalf of the planters.
This Court, acting on the petitions,
directs the respondents to nominate two arbitrators to represent HIDECO/HISUMCO
and OSCO in the Board of Arbitrators within fifteen (15) days from receipt of
this Order. xxx
However, if the respondents fail to
nominate their two arbitrators, upon proper motion by the petitioners, then the
Court will be compelled to use its discretion to appoint the two (2)
arbitrators, as embodied in the Milling Contract and R.A. 876.
x x x
Their subsequent motion for reconsideration having
been denied by the RTC in its Joint Order[6]
dated October 29, 1999, respondents elevated the case to the CA through a Petition for Certiorari with Prayer for the
Issuance of Temporary Restraining Order and/or Writ of Preliminary Injunction.
On December 7, 2001, the CA rendered its challenged
Decision, setting aside the assailed Orders of the RTC. The CA held that petitioners neither had an
existing contract with respondents nor were they privy to the milling contracts
between respondents and the individual Planters. In the main, the CA concluded that petitioners
had no legal personality to bring the action against respondents or to demand
for arbitration.
Petitioners filed a motion for reconsideration, but
it too was denied by the CA in its Resolution[7]
dated October 30, 2002. Thus, the
instant petition.
At the outset, it must be noted that petitioners
filed the instant petition for certiorari under Rule 65 of the Rules of Court,
to challenge the judgment of the CA. Section 1 of Rule 65 states:
Section
1. Petition for Certiorari. – When any
tribunal, board or officer exercising judicial or quasi-judicial functions has
acted without or in excess of its jurisdiction, or with grave abuse of
discretion amounting to lack or excess of its or his jurisdiction and there is no appeal, or any plain, speedy and
adequate remedy in the course of law, a person aggrieved thereby may file a
verified petition in the proper court, alleging the facts with certainty and
praying that judgment be rendered annulling or modifying the proceedings of
such tribunal, board or officer, and granting such incidental relief as law and
justice require. xxx xxx xxx (emphasis ours)
The instant recourse is
improper because the resolution of the CA was a final order from which the
remedy of appeal was available under Rule 45 in relation to Rule 56. The existence and availability of
the right of appeal proscribes resort to certiorari because one of the
requirements for availment of the latter is precisely that there should be no
appeal. It is elementary that for
certiorari to prosper, it is not enough that the trial court committed grave
abuse of discretion amounting to lack or excess of jurisdiction; the
requirement that there is no appeal, nor any plain, speedy and adequate remedy
in the ordinary course of law must likewise be satisfied.[8] The proper mode of recourse for petitioners was to file a petition for
review of the CA’s decision under Rule 45.
Petitioners
principally argue that the CA committed a grave error in setting aside the
challenged Joint Orders of the RTC which allegedly unduly curtailed the right
of petitioners to represent their planters-members and enforce the milling
contracts with respondents. Petitioners
assert the said which orders were issued in accordance with Article XX of the
Milling Contract and the applicable provisions of Republic Act (R.A.) No. 876.
Where
the issue or question involved affects the wisdom or legal soundness of the
decision – not the jurisdiction of the court to render said decision – the same
is beyond the province of a special civil action for certiorari. Erroneous findings and conclusions do not
render the appellate court vulnerable to the corrective writ of
certiorari. For where the court has
jurisdiction over the case, even if its findings are not correct, they would,
at most constitute errors of law and not abuse of discretion correctable by
certiorari.[9]
Moreover, even if this Court overlooks the
procedural lapse committed by petitioners and decides this matter on the
merits, the present petition will still not prosper.
Stripped to the core, the pivotal issue here is
whether or not petitioners ― sugar planters’ associations ― are clothed with legal personality to file a suit
against, or demand arbitration from, respondents in their own name without
impleading the individual Planters.
On this point, we agree with the findings of the
CA.
Section 2 of R.A. No. 876 (the Arbitration Law)[10]
pertinently provides:
Sec. 2. Persons and matters subject to arbitration. –
Two or more persons or parties may
submit to the arbitration of one or more arbitrators any controversy existing
between them at the time of the submission and which may be the subject of
an action, or the parties to any contract may in such
contract agree to settle by arbitration a controversy thereafter arising
between them. Such submission or contract shall be valid, enforceable and
irrevocable, save upon such grounds as exist at law for the revocation of any
contract. xxx (Emphasis ours)
The foregoing provision speaks of two modes of
arbitration: (a) an agreement to submit to arbitration some future dispute, usually
stipulated upon in a civil contract between the parties, and known as an agreement to submit to arbitration, and
(b) an agreement submitting an existing matter of difference to arbitrators,
termed the submission agreement. Article XX of the milling contract is an agreement to submit to arbitration
because it was made in anticipation of a dispute that might arise between the parties after the contract’s execution.
Except
where a compulsory arbitration is provided by statute, the first step toward
the settlement of a difference by arbitration is the entry by the parties into
a valid agreement to arbitrate. An
agreement to arbitrate is a contract, the relation of the parties is
contractual, and the rights and liabilities of the parties are controlled by
the law of contracts.[11] In an agreement for arbitration, the ordinary
elements of a valid contract must appear, including an agreement to arbitrate
some specific thing, and an agreement to abide by the award, either in express
language or by implication.
The requirements that an arbitration agreement must
be written and subscribed by the parties thereto were enunciated by the Court
in B.F. Corporation v. CA.[12]
During the proceedings before the CA, it was
established that there were more than two thousand (2,000) Planters in the
district at the time the case was commenced at the RTC in 1999. The CA further found that of those 2,000
Planters, only about eighty (80) Planters, who were all members of petitioner
OSPA, in fact individually executed milling contracts with respondents. No milling contracts signed by members of the
other petitioners were presented before the CA.
By their own allegation, petitioners are
associations duly existing and organized under Philippine law, i.e. they
have juridical personalities separate and distinct from that of their member
Planters. It is likewise undisputed that
the eighty (80) milling contracts that were presented were signed only by the
member Planter concerned and one of the Centrals as parties. In other words, none of the petitioners were
parties or signatories to the milling contracts. This circumstance is fatal to petitioners'
cause since they anchor their right to demand arbitration from the respondent
sugar centrals upon the arbitration clause found in the milling contracts. There is no legal basis for petitioners'
purported right to demand arbitration when they are not parties to the milling
contracts, especially when the language of the arbitration clause expressly grants
the right to demand arbitration only to the parties to the contract.
Simply put, petitioners do not have any agreement
to arbitrate with respondents. Only
eighty (80) Planters who were all members of OSPA were shown to have such an
agreement to arbitrate, included as a stipulation in their individual milling
contracts. The other petitioners failed
to prove that any of their members had milling contracts with respondents, much
less, that respondents had an agreement to arbitrate with the petitioner associations
themselves.
Even assuming that all the petitioners were able to
present milling contracts in favor of their members, it is undeniable that
under the arbitration clause in these contracts it is the parties thereto who
have the right to submit a controversy or dispute to arbitration.
Section 4 of
R.A. 876 provides:
Section
4. Form of Arbitration Agreement – A
contract to arbitrate a controversy thereafter arising between the parties, as
well as a submission to arbitrate an existing controversy, shall be in writing
and subscribed by the party sought to be charged, or by his lawful agent.
The
making of a contract or submission for arbitration described in section two
hereof, providing for arbitration of any controversy, shall be deemed a consent
of the parties to the jurisdiction of the Court of First Instance of the
province or city where any of the parties resides, to enforce such contract of
submission.
The formal requirements of an agreement to
arbitrate are therefore the following: (a) it must be in writing and (b) it
must be subscribed by the parties or their representatives. To subscribe
means to write underneath, as one’s name; to sign at the end of a
document. That word may sometimes be
construed to mean to give consent to or to attest.[13]
Petitioners would argue that they could sue
respondents, notwithstanding the fact that they were not signatories in the
milling contracts because they are the recognized representatives of the Planters.
This claim has no leg to stand on since petitioners
did not sign the milling contracts at all, whether as a party or as a
representative of their member Planters.
The individual Planter and the appropriate central were the only
signatories to the contracts and there is no provision in the milling contracts
that the individual Planter is authorizing the association to represent him/her
in a legal action in case of a dispute over the milling contracts.
Moreover, even assuming that petitioners are indeed
representatives of the member Planters who have milling contracts with the
respondents and assuming further that petitioners signed the milling contracts
as representatives of their members, petitioners could not initiate
arbitration proceedings in their own name as they had done in the
present case. As mere agents, they
should have brought the suit in the name of the principals that they
purportedly represent. Even if Section 4
of R.A. No. 876 allows the agreement to arbitrate to be signed by a
representative, the principal is still the one who has the right to demand
arbitration.
Indeed, Rule 3, Section 2 of the Rules
of Court requires suits to be brought in the name of the real party in
interest, to wit:
Sec. 2. Parties in interest. A real party in interest is the party
who stands to be benefited or injured by the judgment in the suit, or the party
entitled to the avails of the suit. Unless otherwise authorized by law or these
Rules, every action must be prosecuted or defended in the name of the real
party in interest.
We held in Oco v. Limbaring[14] that:
As applied to the present case, this provision has two
requirements: 1) to institute an action, the plaintiff must be the real party
in interest; and 2) the action must be prosecuted in the name of the real party
in interest. Necessarily, the purposes
of this provision are 1) to prevent the prosecution of actions by persons
without any right, title or interest in the case; 2) to require that the actual
party entitled to legal relief be the one to prosecute the action; 3) to avoid
a multiplicity of suits; and 4) to discourage litigation and keep it within
certain bounds, pursuant to sound public policy.
Interest within the meaning of the Rules means
material interest or an interest in issue to be affected by the decree or
judgment of the case, as distinguished from mere curiosity
about the question involved. One having no material interest to protect
cannot invoke the jurisdiction of the court as the plaintiff in an action. When the plaintiff is not the real party
in interest, the case is dismissible on the ground of lack of cause of action.
xxx xxx xxx
The parties to a contract are the real parties in interest
in an action upon it, as consistently held by the Court. Only the contracting
parties are bound by the stipulations in the contract; they are the ones who
would benefit from and could violate it.
Thus, one who is not a party to a contract, and for whose benefit it was
not expressly made, cannot maintain an action on it. One cannot do so, even if the contract
performed by the contracting parties would incidentally inure to one’s benefit.
(emphasis ours)
In Uy v. Court of Appeals,[15] this Court held that the
agents of the parties to a contract do not have the right to bring an action
even if they rendered some service on behalf of their principals. To quote from that decision:
…[Petitioners] are mere agents of the owners of the land
subject of the sale. As agents, they only render some service or do something
in representation or on behalf of their principals. The rendering of such
service did not make them parties to the contracts of sale executed in
behalf of the latter. Since a contract may be violated only by the parties
thereto as against each other, the real parties-in-interest, either as
plaintiff or defendant, in an action upon that contract must, generally, either
be parties to said contract. (emphasis and words in brackets ours)
The main cause of action of petitioners
in their request for arbitration with the RTC is the alleged violation of the
clause in the milling contracts involving the proportionate sharing in the
proceeds of the harvest. Petitioners essentially demand that respondents
increase the share of the member Planters to 66% to equalize their situation
with those of the non-member Planters.
Verily, from petitioners' own allegations, the party who would be
injured or benefited by a decision in the arbitration proceedings will be the
member Planters involved and not petitioners. In sum, petitioners are not the real
parties in interest in the present case.
Assuming petitioners had properly
brought the case in the name of their members who had existing milling
contracts with respondents, petitioners must still prove that they were indeed
authorized by the said members to institute an action for and on the members'
behalf. In the same manner that an officer of the
corporation cannot bring action in behalf of a corporation unless it is clothed
with a board resolution authorizing an officer to do so, an authorization from
the individual member planter is a sine
qua non for the association or any of its officers to bring an action
before the court of law. The mere fact
that petitioners were organized for the purpose of advancing the interests and
welfare of their members does not necessarily mean that petitioners have the authority
to represent their members in legal proceedings, including the present
arbitration proceedings.
As we see it, petitioners had no intention to
litigate the case in a representative capacity, as they contend. All the
pleadings from the RTC to this Court belie this claim. Under Section 3 of Rule 3, where the action
is allowed to be prosecuted by a representative, the beneficiary shall be
included in the title of the case and shall be deemed to be the real party in
interest. As repeatedly pointed out
earlier, the individual Planters were not even impleaded as parties to this
case. In addition, petitioners need a
power-of-attorney to represent the Planters whether in the lawsuit or to demand
arbitration.[16] None was ever presented here.
Lastly, petitioners theorize that they could demand
and sue for arbitration independently of the Planters because the milling
contract is a contract pour autrui
under Article 1311 of the Civil Code.
ART.
1311. Contracts take effect only between
the parties, their assigns and heirs, except in case where the rights and
obligations arising from the contract are not transmissible by their nature, or
by stipulation or by provision of law.
The heir is not liable beyond the value of the property he received from
the decedent.
If a
contract should contain some stipulation in favor of a third person, he may
demand its fulfillment provided he communicated his acceptance to the obligor
before its revocation. A mere incidental
benefit or interest of a person is not sufficient. The contracting parties must have clearly and
deliberately conferred a favor upon a third person.
To summarize, the
requisites of a stipulation pour autrui
or a stipulation in favor of a third person are the following: (1) there must
be a stipulation in favor of a third person, (2) the stipulation must be a
part, not the whole, of the contract, (3) the contracting parties must have
clearly and deliberately conferred a favor upon a third person, not a mere
incidental benefit or interest, (4) the third person must have communicated his
acceptance to the obligor before its revocation, and (5) neither of the
contracting parties bears the legal representation or authorization of the
third party.[17] These requisites are not present in this
case.
Article VI of the Milling Contract is the solitary
provision that mentions some benefit in favor of the association of which the
planter is a member and we quote:
VI
SHARE IN THE SUGAR
Thirty
four per centrum (34%) of the sugar ad molasses resulting from the milling of
the PLANTER’s sugarcane, as computed from the weight and analysis of the
sugarcane delivered by the PLANTER, shall belong to the CENTRAL; sixty five per
centum (65%) thereof to the PLANTER, and one per centum (1%) as aid to the association
of the PLANTER; provided that, if the PLANTER is not a member of any
association recognized by the CENTRAL, said one per centum (1%) shall revert to
the CENTRAL. The 1% aid shall be used by
the association for any purpose that it may deem fit for its members, laborers
and their dependents, or for its other socio-economic projects.
The foregoing provision cannot, by any stretch of
the imagination, be considered as a stiputation pour autrui or for the benefit of the petitioners. The primary rationale for the said
stipulation is to ensure a just share in the proceeds of the harvest to the
Planters. In other words, it is a
stipulation meant to benefit the Planters. Even the 1% share to be given to the
association as aid does not redound to the benefit of the association but is
intended to be used for its member Planters.
Not only that, it is explicit that said share reverts back to respondent
sugar centrals if the contracting Planter is not affiliated with any recognized
association.
To be considered a pour autrui provision, an incidental benefit or interest, which
another person gains, is not sufficient.
The contracting parties must have clearly and deliberately conferred a
favor upon a third person.[18] Even the clause stating that respondents must secure the
consent of the association if respondents grant better benefits to a Planter
has for its rationale the protection of the member Planter. The only interest of the association therein
is that its member Planter will not be put at a disadvantage vis a vis other Planters. Thus, the associations’ interest in these
milling contracts is only incidental to their avowed purpose of advancing the
welfare and rights of their member Planters.
In
all, the Court finds no grave abuse of discretion nor reversible error
committed by the CA in setting aside the Joint Orders issued by the RTC.
WHEREFORE,
petition is hereby DISMISSED.
Costs
against petitioners.
SO ORDERED.
TERESITA
J. LEONARDO-DE CASTRO
Associate
Justice
WE CONCUR:
REYNATO S. PUNO
Chief Justice Chairperson |
|
|
|
ANTONIO T. CARPIO Associate
Justice |
RENATO C. CORONA Associate
Justice |
|
|
LUCAS P. BERSAMIN Associate
Justice |
||
Chief Justice
[1] Penned by Associate Justice Eloy R. Bello, Jr. (ret.), with Associate Justices Godardo A. Jacinto (ret.) and Josefina Guevarra-Salonga concurring; rollo, pp. 43-55.
[2] Id. at 153-156.
[3] Id. at 88-105.
[4] In the sample Milling Contract with OSCO, this provision is found in Article XV, paragraph B.
[5] Rollo, p. 153.
[6] Id. at 154-156.
[7] Id. at 57-59.
[8] Manacop,
Jose F. v. Equitable PCIBank, G.R. Nos. 162814-17, August 25, 2005, 468
SCRA 256, 270-271.
[9] New York Marine Manager v. CA, et al., G.R. No. 111837, Oct. 24, 1995, 249 SCRA 416, 420.
[10] Otherwise known as AN ACT TO AUTHORIZE THE MAKING OF ARBITRATION AND SUBMISSION AGREEMENTS, TO PROVIDE FOR THE APPOINTMENT OF ARBITRATORS AND THE PROCEDURE FOR ARBITRATION IN CIVIL CONTROVERSIES, AND FOR OTHER PURPOSES.
[11] 5 Am Jur 2d Appeal and Error, Arbitration and Award, p. 527.
[12] G.R. No. 120105, March 27, 1998, 288 SCRA
267.
[13] BF
Corporation v. CA, supra note 12,
p. 283.
[14] G.R. No. 161298, January 31, 2006, 481 SCRA 348, 358-359.
[15] G.R. No. 120465,
September 9, 1999, 314 SCRA 76, 77.
[16] Article 1878. Special Powers of Attorney are necessary in
the following cases:
xxx
(3) To compromise, to submit questions to
arbitration, xxx.
[17] South
Pachem Development, Inc v. CA and Makati Commercial Estate Association, Inc., G.R. No.
126260, December 16, 2004, 447 SCRA 85, 94.
[18] Associated Bank v. CA, G.R. No. 123793, June 29, 1998, 291 SCRA 511, 526.