Heirs of Salas Jr. vs. Laperal Realty

Heirs of Augusto Salas, Jr. vs.
Laperal Realty Corporation

G.R. No. 135362, December 13, 1999
Doctrine: 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. On September 23, 1988, 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.
On June 10, 1989, Salas, Jr. left his home in the morning for a business trip to Nueva
Ecija and never returned. Teresita Diaz Salas filed with the Regional Trial Court of
Makati City a verified petition for the declaration of presumptive death of her husband,
who had then been missing for more than seven (7) years. It was granted on December
12, 1996. Respondent Laperal Realty subdivided the land of Salas, Jr. and sold
subdivided portions to respondents Rockway Real Estate Corporation and South Ridge
Village, Inc..
Petitioners as heirs of Salas, Jr. filed in the Regional Trial Court of Lipa City a Complaint
for declaration of nullity of sale, reconveyance, cancellation of contract, accounting and
damages against respondents. Laperal Realty filed a Motion to Dismiss on the ground
that petitioners failed to submit their grievance to arbitration as required under Article VI
of the Agreement which provides:
“ARTICLE VI. ARBITRATION.

All cases of dispute between CONTRACTOR and OWNER’S representative shall be
referred to the committee represented by:
a. One representative of the OWNER;
b. One representative of the CONTRACTOR;
c. One representative acceptable to both OWNER and CONTRACTOR.”
Alternative Dispute Resolution

Digested by: TUBBALI, KAREN L. – JD 2
Issue:
Whether or not the arbitration clause under Article VI of the owner/contractor agreement
is binding upon the respondent lot buyers.
Ruling:
No. In a catena of cases inspired by Justice Malcolm’s provocative dissent in Vega v.
San Carlos Milling Co., this 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.
Respondent Laperal Realty, as a contracting party to the Agreement, has the right to
compel petitioners to first arbitrate before seeking judicial relief. However, to split the
proceedings into arbitration for respondent Laperal Realty and trial for the respondent
lot buyers, or to hold trial in abeyance pending arbitration between petitioners and
respondent Laperal Realty, would in effect result in multiplicity of suits, duplicitous
procedure and unnecessary delay.
Alternative Dispute Resolution

Digested by: TUBBALI, KAREN L. – JD 2

Heirs of Salas Jr. vs. Laperal Realty

Uploaded by

Copyright:

Available Formats

Heirs of Salas Jr. vs. Laperal Realty

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Heirs of Salas Jr. vs. Laperal Realty

Uploaded by

Copyright:

Available Formats

Heirs of Augusto Salas, Jr. vs.

Laperal Realty Corporation

Doctrine: As a contract, the Agreement containing the stipulation on arbitration, binds

“ARTICLE VI. ARBITRATION.

Alternative Dispute Resolution

A submission to arbitration is a contract. As such, the Agreement, containing the

Alternative Dispute Resolution

You might also like