FACTS:

Petitioner Sea-Land Services, Inc. and private respondent A.P. Moller/Maersk Line entered into a contract entitled "Co-operation in the Pacific," which allowed them to purchase, share, and exchange cargo space in their respective containerships. On May 18, 1991, Florex International, Inc. delivered cargo to private respondent AMML, which was then loaded onto a vessel owned by petitioner. However, the consignee refused to pay for the cargo, claiming that the delivery was delayed. Subsequently, Florex filed a complaint against respondent Maersk-Tabacalera Shipping Agency (Filipinas), Inc. and respondent AMML filed a Third Party Complaint against petitioner, alleging that petitioner should be liable for any damages. Petitioner filed a Motion to Dismiss the Third Party Complaint, but the lower court denied it. Petitioner then filed a petition for certiorari with the Court of Appeals, which was subsequently dismissed. Petitioner now seeks to annul these orders and raises the issues of agreement to arbitrate and failure to state a cause of action.

ISSUES:

1. Whether or not the Court of Appeals erred in refusing to dismiss the Third-Party Complaint for failure to state a cause of action and ruling that the failure to state a cause of action may be remedied by reference to its attachments.

2. Whether or not the Court of Appeals disregarded an agreement to arbitrate in violation of statute and Supreme Court decisions holding that arbitration is a condition precedent to suit where such an agreement to arbitrate exists.

RULING:

1. The Court of Appeals did not err in reading the Complaint of Florex and respondent AMML's Answer together with the Third-Party Complaint to determine whether a cause of action is properly alleged. Annexes attached to the complaint may be considered in the determination of whether or not the complaint states a cause of action.

2. The Court of Appeals did not disregard an agreement to arbitrate. The pertinent clauses of the "Co-operation in the Pacific" contract entered into by the parties provide for arbitration. The Principal Carrier shall have the right to seek damages and/or an indemnity from the Containership Operator by arbitration pursuant to Clause 32 of the agreement. The Court of Appeals did not violate any statute or Supreme Court decisions on arbitration as it ruled on the issue based on the provisions of the contract.

PRINCIPLES:

• Annexes attached to the complaint may be considered in the determination of whether or not the complaint states a cause of action.

• Parties to a contract may agree to arbitration as a means to settle disputes, and such agreement is binding unless it is contrary to law or public policy.