Heirs of Salas, Jr. v. Laperal Realty Corporation

Doctrines:

• The Court has recognized arbitration agreements as valid, binding, enforceable and not contrary to public policy. 
• As a contract, the Agreement containing the stipulation on arbitration, binds the parties thereto, as well as their assigns and heirs. 

Facts: Salas, Jr. was the registered owner of a vast tract of land in Lipa City, Batangas. He entered into an Owner-Contractor Agreement with respondent Laperal Realty Corporation to render and provide complete (horizontal) construction services on his land. Salas, Jr. executed a Special Power of Attorney in favor of respondent Laperal Realty to exercise general control, supervision and management of the sale of his land, for cash or on installment basis. 

In 1989, Salas, Jr. left his home in the morning for a business trip to Nueva Ecija. He never returned. Teresita Diaz Salas filed with the RTC Makati City a verified petition for the declaration of presumptive death of her husband, Salas, Jr., who had then been missing for more than 7 years. The petition was granted.

Meantime, respondent Laperal Realty subdivided the land of Salas, Jr. and sold subdivided portions thereof to respondents Rockway Real Estate Corporation and South Ridge Village, Inc., to respondent spouses Abrajano and Lava and Oscar Dacillo on June 27, 1991; and to respondents Eduardo Vacuna, Florante de la Cruz and Jesus Vicente Capalan. 

Petitioners as heirs of Salas, Jr. filed in the RTC Lipa City a Complaint for declaration of nullity of sale, reconveyance, cancellation of contract, accounting and damages against herein respondents. Laperal Realty filed a Motion to Dismiss on the ground that petitioners failed to submit their grievance to arbitration. The trial court dismissed the petitioners’ complaint for noncompliance with the foregoing arbitration clause. 

Issues: 

The petitioners’ causes of action did not emanate from the Owner- Contractor Agreement;

The petitioners’ causes of action for cancellation of contract and accounting are covered by the exception under the Arbitration Law; and 

Failure to arbitrate is not a ground for dismissal.

Held: No. The Court has recognized arbitration agreements as valid, binding, enforceable and not contrary to public policy so much so that when there obtains a written provision for arbitration which is not complied with, the trial court should suspend the proceedings and order the parties to proceed to arbitration in accordance with the terms of their agreement. Arbitration is the “wave of the future” in dispute resolution. To brush aside a contractual agreement calling for arbitration in case of disagreement between parties would be a step backward. 

A submission to arbitration is a contract. As such, the Agreement, containing the stipulation on arbitration, binds the parties thereto, as well as their assigns and heirs. But only they, Petitioners, as heirs of Salas, Jr., and respondent Laperal Realty are certainly bound by the Agreement. If respondent Laperal Realty had assigned its rights under the Agreement to a third party, making the former, the assignor, and the latter, the assignee, such assignee would also be bound by the arbitration provision since assignment involves such transfer of rights as to vest in the assignee the power to enforce them to the same extent as the assignor could have enforced them against the debtor or in this case, against the heirs of the original party to the Agreement.