407 Phil. 445
BUENA, J.:
"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. 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 panel[9] while MCHC designated Atty. Inigo S. Fojas[10] and MCMC nominated Atty. Enrique I. Quiason[11] 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 for damages against petitioners before the Regional Trial Court of Cebu[12] to enforce his benefits under the Employment Agreement.
"ISSUES: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]
"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 counterclaim.
"It is understood, that in the event the arbitration clause is valid and binding between the parties, the parties shall submit their respective claim to the Arbitration Committee in accordance with the said arbitration clause, in which event, this case shall be deemed dismissed."[18]
"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 resolved. The questioned orders are set aside insofar as they contravene this Court's resolution of the issues raised as herein pronounced.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 the Employment Agreement dated March 1994. The CA, in a resolution promulgated on June 20, 1997, denied the motion for partial reconsideration for lack of merit.
"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]
"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 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 court's decision, petitioners filed this petition for review on certiorari, under Rule 45 of the Rules of Court, assigning the following errors for the Court's resolution:
"I. 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:We rule against the petitioners."II. In any event, the trial court acted 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.
"A. The arbitration clause in the employment agreement dated March 1994 between respondent Zosa and defendants MCHC and MCMC is valid and binding upon the parties thereto."B. 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."C. The trial court grievously erred in its conclusion that petitioners MCMC and MCHC represent the same interest."D. 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.
"III. Contrary to respondent Zosa's allegation, the issue of the trial court's 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.
"IV. Contrary to respondent Zosa's allegation, petitioners MCMC and MCHC are not guilty of forum shopping.
"V. Contrary to respondent Zosa's allegation, the instant petition for review involves only questions of law and not of fact."[24]
"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 not fall within the exclusive and original jurisdiction of the SEC.Furthermore, the decision of the Court of Appeals in CA-G.R. SP No. 43059 affirming the trial court's 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 CA's 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:
"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]
"ENTRY OF JUDGMENTPetitioners, 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.
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 petitioner's 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]
"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 as from 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 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 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 the defendant MCMC is the Manager of defendant MCHC, its decision or vote in the arbitration proceeding would naturally and certainly be in favor of its employer and 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 get 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).
"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].
RESPONDENT COURT ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION WHEN IT ISSUED THE QUESTIONED 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.[22] Ibid., pp. 329-330."II.
RESPONDENT COURT ACTED WITH GRAVE ABUSE OF DISCRETION 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."III.
RESPONDENT COURT ACTED WITHOUT OR IN EXCESS OF JURISDICTION WHEN IT TOOK COGNIZANCE OF RESPONDENT ZOSA'S 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.
RESPONDENT COURT ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION WHEN IT REFUSED TO DISMISS THE ACTION BELOW FOR IMPROPER VENUE."VI.
RESPONDENT COURT ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION WHEN IT FAILED TO DISMISS THE AMENDED COMPLAINT FOR LACK OF THE REQUISITE CERTIFICATION OF NON-FORUM SHOPPING."
Court of Appeals' Decision, pp. 5-6; Rollo, pp. 316-317.