vs.
530 SCRA 543
G.R. No. 158560.
August 17, 2007
CARLOS, Kaira Marie B.
Facts:
On 8 May 1996, respondents entered into a MOA [1996 MOA] agreeing to
contribute cash, property, and services to construct and develop Philamlife
Tower, a 45-storey office condominium.
On 6 December 1996, respondents assigned [1996 DOA] to Frabelle Properties
Corporation their rights and obligations under the 1996 MOA with respect to the
construction, development, and ownership of Unit No. 38-B at the 38th floor.
They stipulated that the assignee shall be deemed a co-developer of the
construction of Unit No. 38-B.
Frabelle, in turn, assigned to petitioner [Frabelle Fishing] its rights, obligations
and interests over Unit No. 38-B.
On 9 March 1998, petitioner and respondents executed a MOA [1998 MOA] to
fund the construction of designated office floors in Philamlife Tower.
However, petitioner discovered respondent’s material concealment of certain details in the 1996 DOA and 1998
MOA, and their gross violation of their contractual obligations as developers, to wit: (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 468 sq.mt. to only 315 sq.mt.
On 11 February 2002, petitioner filed with HLURB a complaint for reformation of instrument and specific
performance against respondents claiming that the contracts do not reflect the true intention of the parties, and
that it is a mere buyer and not co-developer or co-owner of the condominium unit.
On 14 May 2002, HLURB denied respondents’ plea for the case’ outright dismissal. Respondents then went to
CA via petition for prohibition with prayer for TRO claiming that HLURB has no jurisdiction over the
controversy and that the contracts between the parties provide for compulsory arbitration.
On 2 December 2002, the CA granted respondent’s petition by dismissing the complaint. It held that HLURB
has no jurisdiction over an action for reformation of contracts, and that jurisdiction lies with the RTC. Petitioner
moved to reconsider but was denied on 30 May 2003. Hence, the instant petition for review on certiorari.
Issues:
1. Whether or not HLURB has jurisdiction over complaint for reformation of instruments,
specific performance and damages.
2. Whether or not the parties should initially resort to arbitration.
Ruling:
1. NO. Jurisdiction is in RTC.
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.
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.
2. 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."
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.
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.
