FACTS:

The case involves two petitions consolidated together. In the first petition (G.R. No. 161957), petitioner Jorge Gonzales sought the annulment of an Addendum Contract on grounds of fraud and violation of the Constitution. The Court denied Gonzales' petition, ruling that the DENR Panel of Arbitrators had no jurisdiction over the complaint and that the action should have been brought before the regular courts. Both parties filed motions for reconsideration. Gonzales argued that the Panel of Arbitrators had jurisdiction over the mining dispute, while respondents argued that the Addendum Contract and its arbitration clause remained valid pending a separate action to challenge its validity. In the second petition (G.R. No. 167994), Gonzales challenged the orders of the RTC requiring him to proceed with arbitration proceedings as sought by Climax-Arimco Mining Corporation. The two cases were consolidated since they were both rooted in the same Addendum Contract. The petition to compel arbitration was filed by Climax-Arimco before the RTC, while Gonzales' complaint for nullification of the Addendum Contract was pending before the DENR Panel of Arbitrators. Gonzales questioned the validity of the Addendum Contract and its arbitration clause, alleging fraud, oppression, and violation of the Constitution. The RTC initially granted Gonzales' motion for pre-trial but later denied Climax-Arimco's motion to compel arbitration.

The case involves a petition to compel arbitration filed by Climax-Arimco Mining Corporation (Climax-Arimco) against Juanito Gonzales. The case was initially assigned to Judge Potenciano Ilusorio but was later raffled to the sala of public respondent Judge Oscar B. Pimentel of Branch 148. On August 23, 2000, Climax-Arimco filed a motion for reconsideration of the order granting the motion to inhibit and ordering the re-raffling of the case. Judge Pimentel granted the motion and directed the parties to arbitration. Gonzales filed a motion for reconsideration, however, this was denied. Gonzales then filed a Rule 65 petition assailing the orders of Judge Pimentel, arguing that the arbitration clause in the addendum contract is null and void. Gonzales cites provisions of RA No. 876 and RA No. 9285 to support his argument that the issue of nullity must be resolved by the trial court before referring the parties to arbitration. Climax-Arimco argues that Gonzales should have appealed instead of filing a petition for certiorari.

The respondent, Climax-Arimco Mining Corporation, entered into a Contract with the petitioner, Jose Gonzales, for the construction of a mining processing plant. The Contract contained an arbitration clause. Subsequently, the parties executed an Addendum Contract, which Gonzales claims to be a separate and independent contract, and which he then repudiated.

Climax-Arimco filed a Motion to Compel Arbitration under Section 6 of Republic Act No. 876, seeking to enforce the arbitration clause in the original Contract. Gonzales opposed the motion, arguing that the Addendum Contract was void and that the arbitration clause contained therein should also be deemed invalid.

The Regional Trial Court (RTC) granted Climax-Arimco's motion and ordered the parties to proceed with arbitration. Gonzales then filed a Petition for Certiorari with the Court of Appeals (CA) seeking to nullify the RTC's order. The CA dismissed the petition for being filed out of time.

Gonzales elevated the case to the Supreme Court through a Petition for Certiorari. Gonzales argued that the CA erred in dismissing his petition, and that the RTC should not have ordered the parties to arbitrate given the issues of validity and nullity raised by Gonzales regarding the Addendum Contract and the arbitration clause.

Climax-Arimco, in its Comment, argued that Gonzales' petition should be dismissed for being filed beyond the reglementary period. It emphasized that Gonzales' remedy was an appeal, not a petition for certiorari. Climax-Arimco also asserted that the RTC's jurisdiction in the motion to compel arbitration is limited to determining the existence of a written contract to arbitrate and whether there was failure to comply with that contract. It maintained that Gonzales' repudiation of the Addendum Contract should not affect the enforceability of the arbitration clause in the original Contract. Lastly, Climax-Arimco explained that the summary proceeding to compel arbitration is distinct from an ordinary action covered by R.A. No. 9285, which provides for a different procedure.

The Supreme Court noted that the main issue to be resolved is whether the validity of the Addendum Contract affects the enforceability of the arbitration clause. The Court also observed that Gonzales' petition should have been dismissed for being filed out of time and for using an erroneous mode of appeal.

The case involves the petition of Spouses Arrieta who seek to reverse and set aside the decision of the Court of Appeals (CA) which affirmed the judgment of the Regional Trial Court (RTC) of Lipa City. The dispute revolves around a piece of residential land located in Lipa City. Lipa City Land Development Corporation (LCLDC) claims ownership and actual possession of the land, alleging that the Spouses Arrieta unlawfully occupied the property. The Spouses Arrieta, on the other hand, contend that they are the true owners of the land and that they registered it in their name before the Register of Deeds and have occupied it openly, continuously, and adversely for a long period of time. The RTC ruled in favor of LCLDC, finding that the Spouses Arrieta failed to substantiate their claim of ownership and were not able to prove adverse possession. The CA affirmed the RTC's decision, prompting the Spouses Arrieta to file the present petition for certiorari before the Supreme Court.

ISSUES:

1. Whether it was proper for the RTC to order the parties to arbitrate despite the defendant raising the issues of validity and nullity of the Addendum Contract and the arbitration clause.

2. Whether the petition for certiorari filed by the defendant should be dismissed on procedural grounds.

3. Whether or not the court gravely abused its discretion in ordering the parties to proceed with arbitration

4. Whether or not the existence of a written provision for arbitration is a condition precedent for the court to direct the parties to proceed with arbitration in accordance with the terms thereof.

5. Whether or not the invalidity of the main contract nullifies the arbitration clause.

6. Whether the validity of the main contract affects the applicability of the arbitration clause.

7. Whether the complaint filed before the DENR Panel of Arbitrators falls within the jurisdiction of the regular courts.

8. Whether the complaint adequately alleges fraud and misrepresentation.

9. Whether the action to declare the nullity of the Addendum Contract has prescribed.

10. Whether the petitioners are entitled to the grant of their motion for reconsideration.

11. Whether the assailed decision should be reversed and set aside.

RULING:

1. The court held that the RTC was proper in ordering the parties to arbitrate even though the defendant raised the issues of validity and nullity of the Addendum Contract and the arbitration clause. The court pointed out that under the Arbitration Law, if a party requests arbitration, the court may refer the parties to arbitration, unless it finds that the arbitration agreement is null and void, inoperative or incapable of being performed. The court also referenced Art. 8 of the UNCITRAL Model Law, which states that arbitral proceedings may proceed even while a related action is pending.

2. The court dismissed the petition for certiorari filed by the defendant on procedural grounds. The court emphasized that a petition for certiorari is not a substitute for a lost appeal, and since the Arbitration Law specifically provides for an appeal by certiorari, the defendant should have filed a petition for review under certiorari. The court further clarified that the permissive term "may" in the filing of appeals does not discount the filing of a petition for certiorari. The court also distinguished the BF Corporation case cited by the defendant, stating that it does not support his argument and that the question in that case was different.

3. No, the court did not gravely abuse its discretion. The court acted in accordance with the procedure prescribed in R.A. No. 876 when it ordered the parties to proceed with arbitration and appointed a sole arbitrator after determining the existence of an arbitration agreement. As long as a court acts within its jurisdiction and does not gravely abuse its discretion, any supposed error committed by it will be considered an error of judgment reviewable by appeal and not assailable by a special civil action of certiorari.

4. Yes, the existence of a written provision for arbitration is a condition precedent for the court to direct the parties to proceed with arbitration in accordance with the terms thereof. If no such agreement exists, the proceeding shall be dismissed. The court's role in this case is only to determine if the parties should proceed to arbitration or not.

5. No, the invalidity of the main contract does not nullify the arbitration clause. The arbitration agreement is treated as a separate and independent agreement, and its validity and enforceability are not affected by the invalidity of the main contract.

6. The validity of the main contract does not affect the applicability of the arbitration clause. A party's repudiation of the main contract is not sufficient to avoid arbitration. The separability doctrine applies to avoid such a situation.

7. The complaint filed before the DENR Panel of Arbitrators does not fall within the jurisdiction of the regular courts. The complaint involves judicial issues and should be resolved by the regular courts.

8. The complaint does not adequately allege fraud and misrepresentation. The ultimate facts and circumstances constituting the alleged fraud were not stated with particularity, in violation of Sec. 5, Rule 8 of the Rules of Court.

9. The issue of prescription is not resolved as the time of discovery of the alleged fraud was not clear from the allegations of the complaint.

10. Yes, the petitioners are entitled to the grant of their motion for reconsideration.

11. Yes, the assailed decision should be reversed and set aside.

PRINCIPLES:

• The court may refer the parties to arbitration if requested, unless it finds that the arbitration agreement is null and void, inoperative or incapable of being performed.

• Arbitral proceedings may proceed even while a related action is pending.

• A petition for certiorari is not a substitute for a lost appeal.

• The right to appeal is a mere statutory privilege to be exercised in accordance with law.

• The use of the term "may" in the filing of appeals does not discount the filing of a petition for certiorari.

• Arbitration is a recognized and accepted mode of settling disputes in the jurisdiction. It is provided for in the Civil Code, R.A. No. 876, and R.A. No. 9285.

• Disputes can only be submitted to arbitration if the parties have agreed to abide by the arbitrator's decision and if there is a contract governing the arbitration process.

• The special proceeding under Sec. 6 of R.A. No. 876 recognizes the contractual nature of arbitration agreements and serves as the procedural mechanism for the enforcement of the contract to arbitrate.

• The jurisdiction of the courts in relation to Sec. 6 of R.A. No. 876 is limited to determining the existence of an agreement in writing providing for arbitration.

• The doctrine of separability/severability states that an arbitration agreement is independent of the main contract and remains valid even if the main contract is invalid or terminated.

• The separability doctrine is confirmed in Art. 16(1) of the UNCITRAL Model Law and Art. 21(2) of the UNCITRAL Arbitration Rules.

• Arbitration clauses are considered "separable" from the contracts in which they are embedded, and allegations of fraudulent inducement directed only to the main contract do not affect the enforceability of the arbitration clause.

• A petition for arbitration under the law is limited only to the question of whether the arbitration agreement exists.

• The validity of the main contract does not affect the applicability of the arbitration clause, as governed by the separability doctrine.

• Complaints involving judicial issues should be resolved by the regular courts, not the arbitral tribunals.

• Allegations of fraud and misrepresentation should state the ultimate facts and circumstances with particularity, as required by Sec. 5, Rule 8 of the Rules of Court.

• Action for annulment of a voidable contract based on fraud must be brought within four years from the discovery of the fraud, under Art. 1391 of the Civil Code.

• The Court has the authority to grant a motion for reconsideration if it finds merit in the arguments presented by the petitioners.

• The Court has the power to reverse and set aside its previous decision if it determines that there are significant errors or omissions in the original ruling.