GR 91228; (March, 1993) (Digest)
G.R. No. 91228 . March 22, 1993.
PUROMINES, INC., petitioner, vs. COURT OF APPEALS and PHILIPP BROTHERS OCEANIC, INC., respondents.
FACTS
Petitioner Puromines, Inc. and Makati Agro Trading, Inc. entered into a sales contract with private respondent Philipp Brothers Oceanic, Inc. for the sale of prilled Urea in bulk. The sales contract contained an arbitration clause stating that any disputes arising under the contract shall be settled by arbitration in London. The shipment was loaded on board the vessel M/V “Liliana Dimitrova” for transport to Iloilo and Manila. Three bills of lading were issued. While the shipment for Iloilo was discharged in good order, the shipments for Manila were discharged in bad order—caked, hardened, discolored, and contaminated. Damages were valued at P683,056.29. Petitioner filed a complaint for breach of contract of carriage against Maritime Factors, Inc. (the ship-agent) and private respondent (as charterer of the vessel). Private respondent filed a motion to dismiss, citing the arbitration clause in the sales contract. The trial court denied the motion, ruling that the cause of action arose from a breach of contract of carriage, not from the sales contract. The Court of Appeals reversed the trial court and dismissed the complaint, holding that the arbitration provision in the sales contract and/or the bills of lading was applicable.
ISSUE
Whether the phrase “any dispute arising under this contract” in the arbitration clause of the sales contract covers a cargo claim against the vessel (owner and/or charterers) for breach of contract of carriage.
RULING
Yes. The Supreme Court affirmed the decision of the Court of Appeals. The sales contract was comprehensive enough to include claims for damages arising from the carriage and delivery of the goods, as the seller’s obligation generally includes transmitting the goods and contracting a carrier. Furthermore, the bills of lading attached to the complaint also contained an arbitration clause. Whether liability is based on the sales contract or the bills of lading, the parties are obligated to respect the arbitration provisions. Petitioner, as a signatory to the sales contract, cannot escape its obligation under the arbitration clause. Arbitration is valid and constitutional, and courts will look with favor upon such amicable arrangements. The duty of the court in this proceeding is not to resolve the merits but to determine if the parties should proceed to arbitration. The petition was dismissed.