G.R. No.

125932 April 21, 1999

PUROMINES, INC., Petitioners,
vs.
COURT OF APPEALS and PHILIPP BROTHERS OCEANIC, INC., Respondent.
FACTS:
Petitioner entered in a contract with the respondent for the bulk sales of prilled Urea. The contract
states that any dispute regarding the contract shall be settled in arbitration in London and if the
arbitration failed, the case shall be settled in the High Courts of Justice in London. Three bills of
lading was issued for the shipment. The Bill of Lading No. 2 was delivered accordingly, however
Bills of Lading Nos. 1 and 3 were delivered in bad order and condition. This opted the petitioner to
file an action for breach of contract against the respondent. The respondent filed a motion to
dismiss on the ground that the arbitration was not yet complied with. It was opposed by the
petitioner alleging that the case has a different cause of action and not based on the contract. The
motion was denied by the trial court. On appeal, CA dismissed the complaint of the petitioner
upholding the written terms in the contract of the parties regarding the arbitration. Hence, this
present petition.
ISSUE:
Whether or not the arbitration in London must be complied.
RULING:
Yes. The arbitration in London must be complied.
ln any case, whether the liability of respondent should be based on the sales contract or that of the
bill of lading, the parties are nevertheless obligated to respect the arbitration provisions on the sales
contract and/or the bill of lading. Petitioner being a signatory and party to the sales contract cannot
escape from his obligation under the arbitration clause as stated therein.

Neither can petitioner contend that the arbitration provision in the bills of lading should not have
been discussed as an issue in the decision of the Court of Appeals since it was not raised as a special
or affirmative defense. The three bills of lading were attached to the complaint as Annexes "A," "B,"
and "C," and are therefore parts thereof and may be considered as evidence although not introduced
as such. Hence, it was then proper for the court a quo to discuss the contents of the bills of lading,
having been made part of the record.

Going back to the main subject of this case, arbitration has been held valid and constitutional. Even
before the enactment of Republic Act No. 876, this Court has countenanced the settlement of
disputes through arbitration. The rule now is that unless the agreement is such as absolutely to close
the doors of the courts against the parties, which agreement would be void, the courts will look with
favor upon such amicable arrangements and will only interfere with great reluctance to anticipate or
nullify the action of the arbitrator.