Perlas v. Ehrman
REITERATIONFacts
The Antecedents: The case originated from a milling contract between Pablo Perlas, a sugar cane producer, and Alfred Ehrman et al., doing business as Calamba Sugar Estate, a sugar milling company. Procedural History: The parties, recognizing that the sole issue was one of accounts, agreed to submit the case to three referees. They stipulated that the decision of the majority would be final and binding, and that the court would render a decision in accordance with the referees' report, which would also be final. The majority of the referees submitted their report, with one dissenting. The court accepted the majority report and rendered a decision based on it. An appeal was taken from this decision. The Appeal: The appellant attacked the validity of the referees' act, primarily on the ground that two of the referees did not take their oath of office before discharging their duties. This contention was raised only after the appellant was granted a period to present his bill of exceptions.
Issue(s)
Whether the failure of two referees to take their oath of office vitiates the proceedings and the subsequent judgment. Whether the judgment rendered by the court, based on the majority report of the referees and the evidence, is final and binding.
Ruling
The Supreme Court affirmed the judgment of the lower court. It held that the judgment based on the majority report of the referees, which was agreed to be final and binding by the parties, and further supported by the court's own consideration of the evidence, is valid and final. The Court also ruled that the defect of the referees not taking their oath of office was a mere irregularity that did not vitiate the proceedings, especially since the issue was not raised until after the period for presenting the bill of exceptions had been granted.
Ratio Decidendi
On the issue of the referees' oath of office: The Court held that the failure of two referees to take their oath of office was a mere irregularity that did not vitiate the proceedings. This was particularly true because the question was not raised until after the appellant was granted an extension to present his bill of exceptions. The Court emphasized that such defects are considered waived if not raised at the earliest opportunity, either before the referees commenced their hearing or before the court rendered its decision. The parties' agreement to the arbitration process and their subsequent participation without objection estopped them from later challenging the proceedings on this ground. On the finality of the judgment based on the arbitration award: The Court affirmed that the parties had expressly agreed that the opinion of the majority of the referees would be final and conclusive. They further agreed that the court's decision, rendered in view of this report, would likewise be final. Crucially, the court's decision was not solely based on the referees' report but also on its own consideration of the evidence presented to the referees. This dual basis, coupled with the parties' explicit agreement on finality, rendered the judgment unappealable and binding upon them. The Court found no merit in other assignments of error presented by the appellant.
Main Doctrine
When parties to a contract agree to submit their dispute to arbitration, with the majority decision of the referees being final and binding, and the court renders judgment in accordance with the referees' report after considering the evidence, such judgment is final and binding. Furthermore, any procedural irregularities, such as the failure of referees to take an oath of office, are considered waived if not raised by the parties before the referees proceed with the hearing or before the court renders its decision.