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Case Digest: FIESTA WORLD MALL CORP, vs. LINBERG, G.R. NO. 152471 August 18, 2006

Case Digest: G.R. NO. 152471 August 18, 2006 

FIESTA WORLD MALL CORPORATION, Petitioner, vs.
LINBERG PHILIPPINES, INC., Respondent.

Case Digest on Alternative Dispute Resolution

Facts

This is a case involving arbitration where in the respondent, Linberg Philippines ,Inc.,  constructed the power plant in Lipa City at a cost of about P130,000,000.00., and subsequently started billing petitioner, Fiesta World Mall Corpotation. However, petitioner questioned the said amount and refused to pay despite respondent’s repeated demands. 

Respondent filed a Complaint for Sum of Money against petitioner, which the later found it to be premature taking into consideration the arbitration clause as provided in their agreement, to wit: 

If FIESTA WORLD disputes the amount specified by any invoice, it shall pay the undisputed amount on or before such date(s), and the disputed amount shall be resolved by arbitration of three (3) persons, one (1) by mutual choice, while the other two (2) to be each chosen by the parties themselves, within fourteen (14) days after the due date for such invoice and all or any part of the disputed amount paid to LINBERG shall be paid together with interest pursuant to Article XXV from the due date of the invoice. 

Issue

Whether or not the filing with the trial court of respondent’s complaint is premature. 

Ruling

Yes. 

The Contract, quoted earlier, mandates that should petitioner dispute any amount of energy fees in the invoice and billings made by respondent, the same “shall be resolved by arbitration of three (3) persons, one (1) by mutual choice, while the other two (2) to be each chosen by the parties themselves.” The parties, in incorporating such agreement in their Contract, expressly intended that the said matter in dispute must first be resolved by an arbitration panel before it reaches the court. They made such arbitration mandatory. 

It should be noted that in this jurisdiction, arbitration has been held valid and constitutional. And to brush aside such agreement providing for arbitration in case of disputes between the parties would be a step backward 

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