GR 198226; (July, 2014) (Digest)
G.R. No. 198226 & 198228, July 18, 2014
ABOITIZ TRANSPORT SYSTEM CORPORATION and ABOITIZ SHIPPING CORPORATION, Petitioners, vs. CARLOS A. GOTHONG LINES, INC. and VICTOR S. CHIONGBIAN, Respondents.
FACTS
Petitioners Aboitiz Shipping Corporation (ASC) and respondent Carlos A. Gothong Lines, Inc. (CAGLI), along with William Lines, Inc. (WLI) owned by respondent Victor S. Chiongbian, entered into an Agreement dated January 8, 1996, to merge their shipping assets into WLI, which would be renamed WG&A, Inc. The Agreement contained an arbitration clause (Section 11.06) for disputes arising from it. A related letter from Chiongbian to CAGLI committed WLI to acquire inventory from CAGLI not exceeding ₱400 Million, but a valuation showed CAGLI’s inventory was ₱514 Million. WLI eventually received inventory valued at ₱558.89 Million but only paid ₱400 Million. In 2002, the Chiongbian and Gothong families sold their shares in WG&A to the Aboitiz family via a Share Purchase Agreement, and WG&A was renamed Aboitiz Transport System Corporation (ATSC). In 2008, CAGLI demanded payment from ATSC for the excess inventory and sought arbitration. CAGLI filed a complaint before the Regional Trial Court (RTC) to compel Chiongbian, ATSC, ASC, and Aboitiz Equity Ventures (AEV) to submit to arbitration. The RTC dismissed the case against AEV but, in an Order dated February 26, 2010, directed CAGLI, Chiongbian, ATSC, and ASC to proceed to arbitration. Pending ATSC’s motion to exclude Chiongbian from arbitration, CAGLI filed a Notice of Dismissal of its complaint. The RTC confirmed the dismissal without prejudice in an Order dated August 13, 2010, denied reconsideration, and deemed ATSC’s motion to exclude Chiongbian moot.
ISSUE
1. Whether the RTC was correct in confirming CAGLI’s notice of dismissal and dismissing the case without prejudice.
2. Whether respondent Victor S. Chiongbian should be excluded from the arbitration proceedings.
RULING
1. No. The RTC erred in confirming the notice of dismissal. CAGLI’s complaint was a special proceeding under Section 6 of Republic Act No. 876 (The Arbitration Law) to enforce an arbitration agreement. The RTC’s Order dated February 26, 2010, directing the parties to proceed to arbitration, constituted a judgment on the merits of that complaint. Once a judgment or final order on the merits has been rendered, the period “before service of the answer or of a motion for summary judgment,” under Section 1, Rule 17 of the Rules of Court, when a plaintiff may file a notice of dismissal as a matter of right, no longer applies. Therefore, the notice of dismissal should not have been entertained.
2. Yes. Only parties to the arbitration agreement may be compelled to arbitrate. The arbitration clause in the Agreement was binding only on the signatory parties: ASC, CAGLI, and WLI. Respondent Victor S. Chiongbian signed the Agreement in his representative capacity as President of WLI, not in his personal capacity. He is not a party to the Agreement and, therefore, cannot be compelled to submit to the arbitration proceedings arising from it.