GR NO.

163101

Benguet Corporation vs. DENR

FACTS:

Benguet Corporation (“Benguet”) and J.G. Realty and Mining (“J.G. Realty”) entered into a Royalty Agreement with
Option to Purchase (“RAWOP”), wherein J.G. Realty was acknowledged as the owner of four mining claims covered
by Mineral Production Sharing Agreement (“MPSA”) Application No. APSA-V-0009 jointly filed by J.G. Realty as
claimowner and Benguet as operator.  The RAWOP, among others, provide that “any disputes x x x between
Benguet and [J.G. Realty] with reference to anything whatsoever pertaining to [the RAWOP]  x x x shall not
be cause of any action x x x in any court or administrative agency but shall x x x be referred to a Board of
Arbitrators consisting of three (3) members, one to be selected by Benguet, another to be selected by [J.G.
Realty] and the third to be selected by the aforementioned two arbitrators so appointed.”  It further provides
that “no action shall be instituted in court as to any matter in dispute as hereinabove stated, except to enforce the
decision of the majority of the Arbitrators.”  

J.G. Realty subsequently informed Benguet that it was terminating the RAWOP by reason of Benguet’s failure to
comply with its obligations thereunder.  J.G. Realty sought the cancellation of the RAWOP, filing a petition for this
purpose with the Panel of Arbitrators (“POA”)  having territorial jurisdiction over the mining area involved.  In its
Decision, the POA declared the RAWOP cancelled. Benguet then filed a notice of appeal with the MAB. The decision
was affirmed on appeal to the Mines Adjudication Board (“MAB”).

Benguet contended that the issue raised by the J.G. Realty should have been raised first with the arbitration before
POA took cognizance of the case.

ISSUE

WON the controversy should have first been submitted to arbitration before the POA

HELD

YES. Sec. 2 of RA 876 elucidates the scope of arbitration:

 
Section 2. Persons and matters subject to arbitration.Two or more persons or parties may submit to the
arbitration of one or more arbitrators any controversy existing between them at the time of the submission
and which may be the subject of an action, or the parties to any contract may in such contract agree to settle
by arbitration a controversy thereafter arising between them. Such submission or contract shall be valid,
enforceable and irrevocable, save upon such grounds as exist at law for the revocation of any contract.

In RA 9285 or the Alternative Dispute Resolution Act of 2004, the Congress reiterated the efficacy of
arbitration as an alternative mode of dispute resolution by stating in Sec. 32 thereof that domestic arbitration
shall still be governed by RA 876. Clearly, a contractual stipulation that requires prior resort to voluntary
arbitration before the parties can go directly to court is not illegal and is in fact promoted by the State.

To reiterate, availment of voluntary arbitration before resort is made to the courts or quasi-judicial agencies
of the government is a valid contractual stipulation that must be adhered to by the parties. As stated in Secs.
6 and 7 of RA 876:
 
Section 6. Hearing by court.A party aggrieved by the failure, neglect or refusal of
another to perform under an agreement in writing providing for arbitration may petition the
court for an order directing that such arbitration proceed in the manner provided for in such
agreement. Five days notice in writing of the hearing of such application shall be served either
personally or by registered mail upon the party in default. The court shall hear the parties, and
upon being satisfied that the making of the agreement or such failure to comply therewith is
not in issue, shall make an order directing the parties to proceed to arbitration in
accordance with the terms of the agreement. If the making of the agreement or default be in
issue the court shall proceed to summarily hear such issue. If the finding be that no
agreement in writing providing for arbitration was made, or that there is no default in the
proceeding thereunder, the proceeding shall be dismissed. If the finding be that a written
 provision for arbitration was made and there is a default in proceeding thereunder, an order
shall be made summarily directing the parties to proceed with the arbitration in accordance
with the terms thereof. 
 
xxxx
 
Section 7. Stay of civil action.If any suit or proceeding be brought upon an issue arising out of an agreement
providing for the arbitration thereof, the court in which such suit or proceeding is pending, upon being satisfied that
the issue involved in such suit or proceeding is referable to arbitration, shall stay the action or proceeding until an
arbitration has been had in accordance with the terms of the agreement: Provided, That the applicant, for the stay is
not in default in proceeding with such arbitration.

In other words, in the event a case that should properly be the subject of voluntary arbitration is erroneously filed with
the courts or quasi-judicial agencies, on motion of the defendant, the court or quasi-judicial agency shall determine
whether such contractual provision for arbitration is sufficient and effective. If in affirmative, the court or quasi-judicial
agency shall then order the enforcement of said provision.

Moreover, there is a clear distinction between compulsory and voluntary arbitration. The arbitration provided
by the POA is compulsory, while the nature of the arbitration provision in the RAWOP is voluntary, not
involving any government agency.

In sum, on the issue of whether POA should have referred the case to voluntary arbitration, we find that,
indeed, POA has no jurisdiction over the dispute which is governed by RA 876, the arbitration law. 

ASIAN CONSTRUCTION AND DEVELOPMENT CORPORATION, petitioner  

vs.

SUMITOMO CORPORATION, respondent. 

[G.R. No. 196723, 28 August 2013]

Summary of Rulings:        The Supreme Court held that forum shopping may be committed when one case is filed
before a court and the other before an arbitral tribunal when both petitions seek for the same relief.   It also held that
awards made by the CIAC arbitration tribunal may be reviewed by the Court of Appeals on questions of fact, law or
mixed questions of fact and law grounded on any of the following: (1) want of jurisdiction, (2) violation of due process,
(3) denial of substantial justice, or (4) erroneous interpretation of the law.

Facts:     In 2008, Petitioner filed a complaint before the Construction Industry Arbitration Commission ("CIAC")
against Respondent for alleged losses and reimbursements amounting to US $9M and attorney's fees of PhP 2M to
which Respondent set up a counterclaim amounting to PhP 10M.  An Arbitral Tribunal was constituted and it
rendered a Partial Award dismissing the claims and counterclaims of both parties for being time-barred under New
York State Law, the agreed governing law.  Petitioner filed a Petition for Review before the Court of Appeals under
Rule 43 ("First Petition") seeking the reversal of the Partial Award.  While the First Petition was pending, the Arbitral
Tribunal ordered both parties to submit proof of costs and attorney's fees incurred due to the arbitration proceedings. 
Respondent complied but Petitioner did not and instead filed an Opposition against the claims for costs by
Respondent.  The Arbitral Tribunal did not act on the Opposition because it treated it as a Motion for Reconsideration
of the Partial Award which was a prohibited pleading under the CIAC Rules.  The Arbitral Tribunal rendered a Final
Award granting attorney's fees in favor for Respondent, reasoning that Respondent was merely forced to litigate to
defend its interest.  Aggrieved, Petitioner filed before the Court of Appeals another Petition for Review under Rule 43
("Second Petition") assailing, this time, the Final Award.  The Court of Appeals dismissed the First Petition on the
ground of forum shopping but gave due course to the Second Petition.  In deciding the Second Petition, the Court of
Appeals modified the Final Award by deleting the attorney's fees awarded to Respondent. Petitioner filed a petition
for certiorari under Rule 65 to set aside the denial of the First Petition while Respondent filed a separate petition for
certiorari to assail the modification made in the Second Petition.  The cases were consolidated before the Supreme
Court.

Issues / Rulings:

1. WON the dismissal of the Petition for Review of a Partial Award of the Arbitral Tribunal on the ground of
forum shopping proper

Yes.  The Supreme Court enumerated three ways by which forum shopping can be committed: (a) by filing multiple
cases with same cause of action and prayer when neither of the cases filed has yet been terminated; (b) by filing
multiple cases with the same cause of action and prayer when one case has already been finally resolved; and (c) by
filing multiple cases with the same cause of action but with different prayers for relief.

The filing of the First Petition before the Court of Appeals and the Opposition before the Arbitral Tribunal when both
were still pending constituted forum shopping under the first mode.  This is true even if one was not a court but an
arbitral tribunal, since the Petitioner was asking for the same relief--the reversal of the Partial Award.

In passing, the Supreme Court held that in any case, the First Petition was dismissible because only final awards, as
opposed to partial awards, are subject to review pursuant to the CIAC Revised Rules.  

2. WON Court of Appeals can modify a final and non-appealable award of the Arbitral Tribunal

Yes.  The Supreme Court ruled that notwithstanding a statement in the law (E.O. 1008) that the decision of the CIAC
arbitral tribunal shall be final and non-appealable, the same is still subject to judicial review.

Courts may take cognizance of the case when there is a showing of (1) want of jurisdiction, (2) violation of due
process, (3) denial of substantial justice, or (4) erroneous interpretation of the law.  This is sanctioned both by Rule
43 of the Rules of Court and the CIAC Revised Rules which provide that decisions of the CIAC arbitral tribunals may
be appealed to the Court of Appeals on questions of fact, law or mixed questions of fact and law.

Since the Arbitral Tribunal made an erroneous interpretation of the law, the Court of Appeals was justified in
modifying the Final Award.  The error consisted in attributing bad faith on the part of Petitioner when it refused to
settle the case amicably.  The acceptance of a compromise agreement the Supreme Court said, is contractual in
nature and consent to a compromise is discretionary on the part of Petitioner.  Hence, refusing to accept an offered
compromise is not tantamount to bad faith justifying an award of attorney's fees.