Arbit Magellan

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11/21/14, 4:UPREME COURT REPORTS ANNOTATED VOLUME 355

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VOL. 355, MARCH 26, 2001 157

Magellan Capital Management Corporation vs. Zosa

G.R. No. 129916. March 26, 2001.*

MAGELLAN CAPITAL MANAGEMENT CORPORATION

and MAGELLAN CAPITAL HOLDINGS CORPORATION,

petitioners, vs. ROLANDO M. ZOSA and HON. JOSE P.

SOBERANO, JR., in his capacity as Presiding Judge of

Branch 58 of the Regional Trial Court of Cebu, 7th JudicialRegion, Respondents.

Arbitration; Courts; Jurisdiction; Under Republic Act No. 876,

otherwise known as the Arbitration Law, it is the regional trial

court which exercises jurisdiction over questions relating to

arbitration.It is error for the petitioners to claim that the case

should fall under the jurisdiction of the Securities and Exchange

Commission [SEC, for brevity]. The controversy does not in anyway

involve the election/appointment of officers of petitioner MCHC, as

claimed by petitioners in their assignment of errors. Respondent

Zosas amended complaint focuses heavily on the illegality of the

Employment Agreements Arbitration Clause initially invoked by

him in seeking his termination benefits under Section 8 of the

employment contract. And under Republic Act No. 876, otherwise

known as the Arbitration Law, it is the regional trial court which

exercises jurisdiction over questions relating to arbitration.

Actions; Judgments; Law of the Case Doctrine; Words and

Phrases;The law of the case doctrine has been defined as a termapplied to an established rule that when an appellate court passes

on a question and remands the cause to the lower court for further

proceedings, the question there settled becomes the law of the case

upon subsequent appeal.The decision of the Court of Appeals in

CA-G.R. SP No. 43059 affirming the
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_______________

*SECOND DIVISION.

158

158 SUPREME COURT REPORTS ANNOTATED


trial courts assumption of jurisdiction over the case has become the

law of the case which now binds the petitioners. The law of the

case doctrine has been defined as a term applied to an established

rule that when an appellate court passes on a question andremands the cause to the lower court for further proceedings, the

question there settled becomes the law of the case upon subsequent

appeal. To note, the CAs decision in CA-G.R. SP No. 43059 has

already attained finality as evidenced by a Resolution of this Court

ordering entry of judgment of said case.

Same; Appeals; Petition for Review; The jurisdiction of the

Supreme Court in a petition for review on certiorari under Rule 45 of

the Revised Rules of Court is limited to reviewing only errors of law,

not of fact, unless the factual findings complained of are devoid of

support by the evidence on record, or the assailed judgment is based

on misapprehension of facts.Equally unavailing for the petitioners

is the review by this Court, via the instant petition, of the factual

findings made by the trial court that the composition of the panel of

arbitrators would, in all probability, work injustice to respondent

Zosa. We have repeatedly stressed that the jurisdiction of this Court

in a petition for review on certiorari under Rule 45 of the Revised

Rules of Court is limited to reviewing only errors of law, not of fact,

unless the factual findings complained of are devoid of support by

the evidence on record, or the assailed judgment is based onmisapprehension of facts.

Same; Same; Pleadings and Practice; Issues not raised below

cannot be resolved on review in higher courts.In this connection,

petitioners attempt to put respondent in estoppel in assailing the

arbitration clause must be struck down. For one, this issue of

estoppel, as likewise noted by the Court of Appeals, found its way


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for the first time only on appeal. Well-settled is the rule that issues

not raised below cannot be resolved on review in higher courts.

Contracts; Employment Agreements; Contracts of Adhesion;

Employment agreements are usually contracts of adhesion, and any

ambiguity in its provisions is generally resolved against the party

who drafted the document.Employment agreements such as the

one at bar are usually contracts of adhesion. Any ambiguity in itsprovisions is generally resolved against the party who drafted the

document. Thus, in the relatively recent case of Phil. Federation of

Credit Cooperatives, Inc. (PFCCI) and Fr. Benedicto Jayoma vs.

NLRC and Victoria Abril, we had the occasion to stress that where

a contract of employment, being a contract of adhesion, is

ambiguous, any ambiguity therein should be construed strictly

against the party who prepared it.

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VOL. 355, MARCH 26, 2001 159


Arbitration; Arbitration proceedings are designed to level the

playing field among the parties in pursuit of a mutually acceptable

solution to their conflicting claims, and any arrangement or scheme

that would give undue advantage to a party in the negotiating table

is anathema to the very purpose of arbitration and should, therefore,

be resisted.We need only to emphasize in closing that arbitration

proceedings are designed to level the playing field among the

parties in pursuit of a mutually acceptable solution to their

conflicting claims. Any arrangement or scheme that would give

undue advantage to a party in the negotiating table is anathema to

the very purpose of arbitration and should, therefore, be resisted.

PETITION for review on certiorari of a decision of the

Regional Trial Court of Cebu City, Br. 58.

The facts are stated in the opinion of the Court.

Marifel G. Gaerlanand Carpio, Villaraza & Cruzfor

petitioners.

Francis M. Zosafor respondents.

BUENA, J.:

Under a management agreement entered into on March


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18, 1994, Magellan Capital Holdings Corporation [MCHC]

appointed Magellan Capital Management Corporation

[MCMC] as manager for the operation of its business and

affairs.1

Pursuant thereto, on the same month, MCHC,

MCMC, and private respondent Rolando M. Zosa entered

into an Employment Agreement designating Zosa as

President and Chief Executive Officer of MCHC.Under the Employment Agreement, the term of

respondent Zosas employment shall be co-terminous with

the management agreement, or until March 1996,2

unless

sooner terminated pursuant to the provisions of the

Employment Agreement,3

The grounds

_______________

1Section 1 of Amended and Restated Management Agreement, Annex

B, Rollo, p. 74.2 par. 2 of the Pre-Trial Order dated October 21, 1996, Annex BB,

Rollo, p. 241.

3Annex C of Petition, Rollo, pp. 89-101; 217-229.

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for termination of employment are also provided in the

Employment Agreement.

On May 10, 1995, the majority of MCHCs Board of

Directors decided not to re-elect respondent Zosa as

President and Chief Executive Officer of MCHC on account

of loss of trust and confidence4

arising from alleged

violation of the resolution issued by MCHCs board of

directors and of the non-competition clause of the


5

Nevertheless, respondent Zosawas elected to a new position as MCHCs Vice-

Chairman/Chairman for New Ventures Development.6

On September 26, 1995, respondent Zosa communicated

his resignation for good reason from the position of Vice-

Chairman under paragraph 7 of the Employment

Agreement on the ground that said position had less

responsibility and scope than President and Chief
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Executive Officer. He demanded that he be given

termination benefits as provided for in Section 8 (c) (i) (ii)

and (iii) of theEmployment Agreement.7

In a letter dated October 20, 1995, MCHC

communicated its non-acceptance of respondent Zosas

resignation for good reason, but instead informed him that

the Employment Agreement is terminated for cause,effective November 19, 1995, in accordance with Section 7

(a) (v) of the said agreement, on account of his breach of

Section 12 thereof. Respondent Zosa was further advised

that he shall have no further rights under the said

Agreement or any claims against the Manager or the

Corporation except the right to receive within thirty (30)

days from November 19, 1995, the amounts stated in

Section 8 (a) (i) (ii) of the Agreement.8

Disagreeing with the position taken by petitioners,

respondent Zosa invoked the Arbitration Clause of theEmployment Agreement,to wit:

_______________

4par. 5 of Petitioners Memorandum, Rollo, p. 560.

5par. 5.1-6.4, ibid.,Rollo, pp. 560-562.

6par. 4, ibid.,Rollo, p. 559.

7par. 6-7, Amended Complaint, Rollo, pp. 173-174; p. 562.

8Annex O of Petition, Rollo, p. 130.

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23.Arbitration.In the event that any dispute, controversy or claim

arises out of or under any provisions of this Agreement, then the

parties hereto agree to submit such dispute, controversy or claim to

arbitration as set forth in this Section and the determination to be

made in such arbitration shall be final and binding. Arbitration

shall be effected by a panel of three arbitrators. The Manager,

Employee and Corporation shall designate one (1) arbitrator who

shall, in turn, nominate and elect who among them shall be the

chairman of the committee. Any such arbitration, including the

rendering of an arbitration award, shall take place in Metro Manila.
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The arbitrators shall interpret this Agreement in accordance with

the substantive laws of the Republic of the Philippines. The

arbitrators shall have no power to add to, subtract from or

otherwise modify the terms of Agreement or to grant injunctive

relief of any nature. Any judgment upon the award of the

arbitrators may be entered in any court having jurisdiction thereof,

with costs of the arbitration to be borne equally by the parties,

except that each party shall pay the fees and expenses of its own

counsel in the arbitration.

On November 10, 1995, respondent Zosa designated his

brother, Atty. Francis Zosa, as his representative in the

arbitration panel9

while MCHC designated Atty. Inigo S.

Fojas10

and MCMC nominated Atty. Enrique I. Quiason11

as

their respective representatives in the arbitration panel.

However, instead of submitting the dispute to arbitration,

respondent Zosa, on April 17, 1996, filed an action fordamages against petitioners before the Regional Trial

Court of Cebu12

to enforce his benefits under the


On July 3, 1996, petitioners filed a motion to dismiss13

arguing that (1) the trial court has no jurisdiction over the

instant case since respondent Zosas claims should be

resolved through arbitration pursuant to Section 23 of the

Employment Agreementwith petitioners; and (2) the venue

is improperly laid since respondent Zosa, like the

petitioners, is a resident of Pasig City and thus, the venueof this case, granting without admitting that the

respondent

_______________

9Annex P of Petition, Rollo, p. 131.

10Annex R of Petition, Rollo, p. 133

11Annex Q of Petition, Rollo, p. 132.

12Annex BB, Rollo, p. 241.

13Annex S, Rollo, pp. 134-145.

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has a cause of action against the petitioners cognizable by

the RTC, should be limited only to RTC-Pasig City.14

Meanwhile, respondent Zosa filed an amended

complaint dated July 5, 1996.

On August 1, 1996, the RTC Branch 58 of Cebu City

issued an Order denying petitioners motion to dismiss

upon the findings that (1) the validity and legality of thearbitration provision can only be determined after trial on

the merits; and (2) the amount of damages claimed, which

is over P100,000.00, falls within the jurisdiction of the

RTC.15

Petitioners filed a motion for reconsideration which

was denied by the RTC in an order dated September 5,

1996.16

In the interim, on August 22, 1996, in compliance with

the earlier order of the court directing petitioners to file

responsive pleading to the amended complaint, petitioners

filed their Answer Ad Cautelam with counterclaimreiterating their position that the dispute should be settled

through arbitration and the court had no jurisdiction over

the nature of the action.17

On October 21, 1996, the trial court issued its pre-trial

order declaring the pre-trial stage terminated and setting

the case for hearing. The order states:

ISSUES:

The Court will only resolve one issue in so far as this case is

concerned, to wit:

Whether or not the Arbitration Clause contained in Sec. 23 of

the Employment Agreement is void and of no effect: and, if it is void

and of no effect, whether or not the plaintiff is entitled to damages

in accordance with his complaint and the defendants in accordance

with their counter-claim.

It is understood, that in the event the arbitration clause is valid

and binding between the parties, the parties shall submit their

respective

______________

14Annex U, Rollo, p. 179.

15Annex X, Rollo, pp. 185-186.

16Annex AA, Rollo, p. 240,

17Par. 9, Petitioners Memorandum, Rollo, p. 566.
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VOL. 355, MARCH 26, 2001 163


claim to the Arbitration Committee in accordance with the saidarbitration clause, in which event, this case shall be deemed

dismissed.18

On November 18, 1996, petitioners filed their Motion Ad

Cautelam for the Correction, Addition and Clarification of

the Pre-trial Order dated November 15 1996,19

which was

denied by the court in an order dated November 28, 1996.20

Thereafter, petitioners MCMC and MCHC filed a Motion

Ad Cautelam for the parties to file their Memoranda to

support their respective stand on the issue of the validity ofthe arbitration clause contained in the Employment

Agreement.In an order dated December 13, 1996, the trial

court denied the motion of petitioners MCMC and MCHC.

On January 17, 1997, petitioners MCMC and MCHC

filed a petition for certiorari and prohibition under Rule 65

of the Rules of Court with the Court of Appeals,

questioning the trial court orders dated August 1, 1996,

September 5, 1996, and December 13, 1996.21

_______________

18Pre-trial Order, Annex BB, Rollo, pp. 241-243.

19Annex CC, Rollo, pp. 248; 566-567.

20Annex DD, Rollo, p. 252.

21The issues submitted to the Court of Appeals are as follows:

I.

RESPONDENT COURT ACTED WITH GRAVE ABUSE OF DISCRETION

AMOUNTING TO LACK OF JURISDICTION WHEN IT ISSUED THEQUESTIONED ORDERS DATED 1 AUGUST 1996 (ANNEX A), 05

SEPTEMBER 1996 (ANNEX B) AND 13 DECEMBER 1996 (ANNEX C)

WHICH DEFERRED THE RESOLUTION OF THE ISSUE REGARDING THE

VALIDITY OF THE ARBITRATION CLAUSE IN THE EMPLOYMENT

AGREEMENT UNTIL AFTER TRIAL ON THE MERITS.

II.
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AMOUNTING TO LACK OF JURISDICTION WHEN IT FAILED TO RULE

THAT THE ARBITRATION CLAUSE UNDER THE EMPLOYMENT

AGREEMENT IS VALID AND BINDING ON THE PARTIES THERETO.

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On March 21, 1997, the Court of Appeals rendered a

decision, giving due course to the petition, the decretal

portion of which reads:

WHEREFORE, the petition is GIVEN DUE COURSE. The

respondent court is directed to resolve the issue on the validity or

effectivity of the arbitration clause in the Employment Agreement,

and to suspend further proceedings in the trial on the merits until

the said issue is re-

_______________

III.

RESPONDENT COURT ALTED WITHOUT OR IN EXCESS OF

JURISDICTION WHEN IT TOOK COGNIZANCE OF RESPONDENT ZOSAS

AMENDED COMPLAINT INSTEAD OF REFERRING THE SAME

IMMEDIATELY TO ARBITRATION PURSUANT TO THE EMPLOYMENT

AGREEMENT BETWEEN PETITIONERS AND RESPONDENT ZOSA.

IV.

IN ANY EVENT, RESPONDENT COURT ACTED AND IS CONTINUING

TO ACT WITHOUT JURISDICTION IN HEARING THE CASE BELOW,

CONSIDERING THAT IT HAS NO JURISDICTION OVER THE NATURE OF

THE ACTION OR SUIT SINCE CONTROVERSIES IN THE ELECTION OR

APPOINTMENT OF OFFICERS OR MANAGERS OF A CORPORATION,

SUCH AS THE ACTION BROUGHT BY RESPONDENT ZOSA, FALL

WITHIN THE ORIGINAL AND EXCLUSIVE JURISDICTION OF THE

SECURITIES AND EXCHANGE COMMISSION.

V.



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AMOUNTING TO LACK OF JURISDICTION WHEN IT REFUSED TO

DISMISS THE ACTION BELOW FOR IMPROPER VENUE.

VI.


AMOUNTING TO LACK OF JURISDICTION WHEN IT FAILED TO

DISMISS THE AMENDED COMPLAINT FOR LACK OF THE REQUISITECERTIFICATION OF NON-FORUM SHOPPING.

Court of Appeals Decision, pp. 5-6; Rollo, pp. 316-317.

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solved. The questioned orders are set aside insofar as they

contravene this Courts resolution of the issues raised as herein

pronounced.

The petitioner is required to remit to this Court the sum of

P81.80 for cost within five (5) days from notice.

SO ORDERED.22

Petitioners filed a motion for partial reconsideration of the

CA decision praying (1) for the dismissal of the case in the

trial court, on the ground of lack of jurisdiction, and (2)that the parties be directed to submit their dispute to

arbitration in accordance with theEmployment Agreement

dated March 1994. The CA, in a resolution promulgated on

June 20, 1997, denied the motion for partial

reconsideration for lack of merit.

In compliance with the CA decision, the trial court, on

July 18, 1997, rendered a decision declaring the

arbitration clause in theEmployment Agreementpartially

void and of no effect. The dispositive portion of the decision

reads:

WHEREFORE, premises considered, judgment is hereby rendered

partially declaring the arbitration clause of the Employment

Agreement void and of no effect, only insofar as it concerns the

composition of the panel of arbitrators, and directing the parties to

proceed to arbitration in accordance with the Employment
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I.

A.

B.

C.

D.

II.

Agreement under the panel of three (3) arbitrators, one for the

plaintiff, one for the defendants, and the third to be chosen by both

the plaintiff and defendants. The other terms, conditions and

stipulations in the arbitration clause remain in force and effect.23

In view of the trial courts decision, petitioners filed this

petition for review on certiorari, under Rule 45 of the Rules

of Court, assigning the following errors for the Courts

resolution:

The trial court gravely erred when it ruled that the

arbitration clause under the employment

agreement is partially void and of no effect,

considering that:

_______________

22Ibid.,pp. 329-330.

23Annex A, RTC Decision, pp. 72-73.

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The arbitration clause in the employmentagreement dated March 1994 between respondent

Zosa and defendants MCHC and MCMC is valid

and binding upon the parties thereto.

In view of the fact that there are three parties to

the employment agreement, it is but proper that

each party be represented in the arbitration panel.

The trial court grievously erred in its conclusion

that petitioners MCMC and MCHC represent the

same interest.Respondent Zosa is estopped from questioning the

validity of the arbitration clause, including the

right of petitioner MCMC to nominate its own

arbitrator, which he himself has invoked.

In any event, the trial court acted without


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III,

IV.

V.

jurisdiction in hearing the case below, considering

that it has no jurisdiction over the nature of the

action or suit since controversies in the election or

appointment of officers or managers of a

corporation, such as the action brought by

respondent Zosa, fall within the original and

exclusive jurisdiction of the Securities andExchange Commission.

Contrary to respondent Zosas allegation, the issue

of the trial courts jurisdiction over the case below

has not yet been resolved with finality considering

that petitioners have expressly reserved their right

to raise said issue in the instant petition. Moreover,

the principle of the law of the case is not applicable

in the instant case.

Contrary to respondent Zosas allegation,

petitioners MCMC and MCHC are not guilty of

forum shopping.

Contrary to respondent Zosas allegation, the

instant petition for review involves only questions

of law and not of fact.24

We rule against the petitioners.

It is error for the petitioners to claim that the case

should fall under the jurisdiction of the Securities and

Exchange Commission [SEC, for brevity]. The controversydoes not in anyway involve the election/appointment of

officers of petitioner MCHC, as claimed by petitioners in

their assignment of errors. Respondent Zosas amended

complaint focuses heavily on the illegality of the

Employment Agreements Arbitration Clause initially

invoked by him

_______________

24Rollo, pp. 571-573.

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in seeking his termination benefits under Section 8 of the

employment contract. And under Republic Act No. 876,

otherwise known as the Arbitration Law, it is the regional

trial court which exercises jurisdiction over questions

relating to arbitration. We thus advert to the following

discussions made by the Court of Appeals, speaking thru

Justice Minerva P. Gonzaga-Reyes,

25

in CA.-G.R. S.P. No.43059, viz.:

As regards the fourth assigned error, asserting that jurisdiction

lies with the SEC, which is raised for the first time in this petition,

suffice it to state that the Amended Complaint squarely put in issue

the question whether the Arbitration Clause is valid and effective

between the parties. Although the controversy which spawned the

action concerns the validity of the termination of the service of a

corporate officer, the issue on the validity and effectivity of the

arbitration clause is determinable by the regular courts, and do notfall within the exclusive and original jurisdiction of the SEC.

The determination and validity of the agreement is not a matter

intrinsically connected with the regulation and internal affairs of

corporations (see Pereyra vs. IAC, 181 SCRA 244; Sales vs. SEC,

169 SCRA 121); it is rather an ordinary case to be decided in

accordance with the general laws, and do not require any particular

expertise or training to interpret and apply (Viray vs. CA, 191

SCRA 308).26

Furthermore, the decision of the Court of Appeals in CA-G-R. SP No. 43059 affirming the trial courts assumption of

jurisdiction over the case has become the law of the case

which now binds the petitioners. The law of the case

doctrine has been defined as a term applied to an

established rule that when an appellate court passes on a

question and remands the cause to the lower court for

further proceedings, the question there settled becomes the

law of the case upon subsequent appeal.27

To note, the CAs

decision in CA-G.R. SP No. 43059 has already attained

finality as evidenced by a Resolution of this Court ordering

entry of judgment of said case, to wit:

_______________

25Now Associate Justice of this Court.

26Court of Appeals Decision, p. 16; Rollo, p. 321.
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27Loevillo C. Agustin vs. Court of Appeals and Filinvest Finance

Corporation, 271 SCRA 457 [1997].

168



ENTRY OF JUDGMENT

This is to certify that on September 8, 1997 a decision/resolution

rendered in the above-entitled case was filed in this Office, the

dispositive part of which reads as follows:

G.R. No. 129615 (Magellan Capital Management Corporation, et al. vs.

Court of Appeals, Rolando Zosa, et al.).Considering the petitioners

manifestation dated August 11, 1997 and withdrawal of intention to file

petition for review on certiorari, the Court Resolved to DECLARE THIS

CASE TERMINATED and DIRECT the Clerk of Court to INFORM the

parties that the judgment sought to be reviewed has become final and

executory, no appeal therefore having been timely perfected.

and that the same has, on September 17, 1997, become final and

executory and is hereby recorded in the Book of Entries of

Judgments.28

Petitioners, therefore, are barred from challenging anew,through another remedial measure and in any other forum,

the authority of the regional trial court to resolve the

validity of the arbitration clause, lest they be truly guilty of

forum-shopping which the courts consistently consider as a

contumacious practice that derails the orderly

administration of justice.

Equally unavailing for the petitioners is the review by

this Court, via the instant petition, of the factual findings

made by the trial court that the composition of the panel of

arbitrators would, in all probability, work injustice to

respondent Zosa. We have repeatedly stressed that the

jurisdiction of this Court in a petition for review on

certiorari under Rule 45 of the Revised Rules of Court is

limited to reviewing only errors of law, not of fact, unless

the factual findings complained of are devoid of support by

the evidence on record, or the assailed judgment is based


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on misapprehension of facts.

Even if procedural rules are disregarded, and a scrutiny

of the merits of the case is undertaken, this Court finds the

trial courts observations on why the composition of the

panel of arbitrators

_______________

28Rollo, p. 350.

29Congregation of the Religious of the Virgin Mary vs. CA, 291 SCRA

385 [1998].

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VOL. 355, MARCH 26, 2001 169


should be voided, incisively correct so as to merit our

approval. Thus,

From the memoranda of both sides, the Court is of the view that

the defendants [petitioner] MCMC and MCHC represent the same

interest. There is no quarrel that both defendants are entirely two

different corporations with personalities distinct and separate from

each other and that a corporation has a personality distinct and

separate from those persons composing the corporation as well asfrom that of any other legal entity to which it may be related.

But as the defendants [herein petitioner] represent the same

interest, it could never be expected, in the arbitration proceedings,

that they would not protect and preserve their own interest, much

less, would both or either favor the interest of the plaintiff. The

arbitration law, as all other laws, is intended for the good and

welfare of everybody. In fact, what is being challenged by the

plaintiff herein is not the law itself but the provision of the

Employment Agreement based on the said law, which is the

arbitration clause but only as regards the composition of the panel

of arbitrators. The arbitration clause in question provides, thus:

In the event that any dispute, controversy or claim arise out of or under

any provisions of this Agreement, then the parties hereto agree to submit

such dispute, controversy or claim to arbitration as set forth in this

Section and the determination to be made in such arbitration shall be


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final and binding. Arbitration shall be effected by a panel of three

arbitrators. TheManager, Employee,and Corporationshall designate one

(1) arbitrator who shall, in turn, nominate and elect as who among them

shall be the chairman of the committee. Any such arbitration, including

the rendering of an arbitration award, shall take place in Metro Manila.

The arbitrators shall interpret this Agreement in accordance with the

substantive laws of the Republic of the Philippines. The arbitrators shall

have no power to add to, subtract from or otherwise modify the terms of

this Agreement or to grant injunctive relief of any nature. Any judgment

upon the award of the arbitrators may be entered in any court having

jurisdiction thereof, with costs of the arbitration to be borne equally by

the parties, except that each party shall pay the fees and expenses of its

own counsel in the arbitration. (Emphasis supplied)

From the foregoing arbitration clause, it appears that the two

(2) defendants [petitioners] (MCMC and MCHC) have one (1)

arbitrator each to compose the panel of three (3) arbitrators. As thedefendant MCMC is the Manager of defendant MCHC, its decision

or vote in the arbitration

170



proceeding would naturally and certainly be in favor of its employerand the defendant MCHC would have to protect and preserve its

own interest; hence, the two (2) votes of both defendants (MCMC

and MCHC) would certainly be against the lone arbitrator for the

plaintiff [herein defendant]. Hence, apparently, plaintiff [defendant]

would never gpt or receive justice and fairness in the arbitration

proceedings from the panel of arbitrators as provided in the

aforequoted arbitration clause. In fairness and justice to the

plaintiff [defendant], the two defendants (MCMC and MCHC)

[herein petitioners] which represent the same interest should be

considered as one and should be entitled to only one arbitrator to

represent them in the arbitration proceedings. Accordingly, the

arbitration clause, insofar as the composition of the panel of

arbitrators is concerned should be declared void and of no effect,

because the law says, Any clause giving one of the parties power to

choose more arbitrators than the other is void and of no effect

(Article 2045, Civil Code).


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The dispute or controversy between the defendants (MCMC and

MCHC) [herein petitioners] and the plaintiff [herein defendant]

should be settled in the arbitration proceeding in accordance with

the Employment Agreement, but under the panel of three (3)

arbitrators, one (1) arbitrator to represent the plaintiff, one (1)

arbitrator to represent both defendants (MCMC and MCHC)

[herein petitioners] and the third arbitrator to be chosen by the

plaintiff [defendant Zosa] and defendants [petitioners].

x x x x x x x x x30

In this connection, petitioners attempt to put respondent in

estoppel in assailing the arbitration clause must be struck

down. For one, this issue of estoppel, as likewise noted by

the Court of Appeals, found its way for the first time only

on appeal. Well-settled is the rule that issues not raised

below cannot be resolved on review in higher courts.31

Secondly, employment agreements such as the one at barare usually contracts of adhesion. Any ambiguity in its

provisions is generally resolved against the party who

drafted the document. Thus, in the relatively recent case of

Phil Federation of Credit Cooperatives, Inc. (PFCCI) and

Fr. Benedicto Jayoma vs. NLRC and Victoria Abril,32

we

had the occasion to stress that

_______________

30Rollo, pp. 71-72.31Casolita, Sr. vs. Court of Appeals,275 SCRA 257 [1997];Manalili vs.

Court of Appeals,280 SCRA 400 [1997].

32G.R. No. 121071, December 11, 1998, 300 SCRA 72.

171

VOL. 355, MARCH 26, 2001 171


where a contract of employment, being a contract of

adhesion, is ambiguous, any ambiguity therein should be

construed strictly against the party who prepared it. And,

finally, respondent Zosa submitted himself to arbitration

proceedings (as there was none yet) before bewailing the

composition of the panel of arbitrators. He in fact, lost no
http://www.central.com.ph/sfsreader/session/00000149d17811f9f419bca3000a0082004500cc/p/AKF899/?username=Guest#p355scra8960170003http://www.central.com.ph/sfsreader/session/00000149d17811f9f419bca3000a0082004500cc/p/AKF899/?username=Guest#p355scra8960170002http://www.central.com.ph/sfsreader/session/00000149d17811f9f419bca3000a0082004500cc/p/AKF899/?username=Guest#p355scra8960170001


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time in assailing the arbitration clause upon realizing the

inequities that may mar the arbitration proceedings if the

existing line-up of arbitrators remained unchecked.

We need only to emphasize in closing that arbitration

proceedings are designed to level the playing field among

the parties in pursuit of a mutually acceptable solution to

their conflicting claims. Any arrangement or scheme thatwould give undue advantage to a party in the negotiating

table is anathema to the very purpose of arbitration and

should, therefore, be resisted.

WHEREFORE, premises considered, the petition is

hereby DISMISSED and the decision of the trial court

dated July 18, 1997 is AFFIRMED.

SO ORDERED.

Bellosillo (Chairman), Mendozaand De Leon, Jr.,

JJ., concur. Quisumbing, J., On leave.

Petition dismissed, judgment affirmed,

Notes.Interpretation by the arbitrators which was a

faithful application of the provisions of the Agreement did

not have the effect of creating a new contract. (Adamson vs.

Court of Appeals,232 SCRA 602 [1994])

A voluntary arbitrator commits grave abuse of discretion

in finding that an employee did not commit grossnegligence in the performance of her duty where the

evidence shows otherwise. (Citibank, N.A. vs. Gatchalian,

240 SCRA 212 [1995])

Absent an express stipulation in the CBA, the phrase

all disputes should be construed as limited to the areas of

conflict traditionally within the jurisdiction of Voluntary

Arbitrators, i.e., dis putes relating to contract-

interpretation, contract-implementation,

172


People vs. Medenilla

or interpretation or enforcement of company personnel


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Page 19ttp://www central com ph/sfsreader/session/00000149d17811f9f419bca3000a0082004500cc/p/AKF899/?username=Guest

policiesillegal termination disputes do not fall within any

of these categories, within a special class of disputes that

are generally within the exclusive original jurisdiction of

Labor Arbiters by express provision of law. (Vivero vs.

Court of Appeals,344 SCRA 268 [2000])

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