BENGUET CORPORATION vs DENR and J.G.

Realty and (1) Should the controversy have first been submitted to
Mining Corp. arbitration before the POA took cognizance of the
case?
Facts:
Note: Before we dwell on the substantive issues, we find that
 Benguet and J.G. Realty entered into a Royalty Agreement the instant petition can be denied outright as Benguet resorted
with Option to Purchase (RAWOP), wherein J.G. Realty was to an improper remedy.
acknowledged as the owner of four mining claims with a
total area of 288.86 hectares situated in Camarines Norte. The last paragraph of Section 79 of RA 7942 or the Philippine
Mining Act of 1995 states, A petition for review by certiorari
 J.G. Realty sent a letter to the President of Benguet and question of law may be filed by the aggrieved party with
the Supreme Court within 30 days from receipt of the order or
informing the latter that it was terminating the RAWOP
decision of the (MAB).
for failure to perform the obligations set forth in the
RAWOP.
However, this Court has already invalidated such provision in
Carpio v. Sulu Resources Development Corp. ruling that a
 In response, Benguet’s Manager for Legal Services, wrote
decision of the MAB must first be appealed to the Court of
J.G. Realty a letter, therein alleging that Benguet complied
Appeals, before recourse to this Court may be had for the
with its obligations under the RAWOP. Thus, Benguet
following reasons:
posited that there was no valid ground for the termination
(1) Section 30 of Art. VI of the Constitution provides that no law
of the RAWOP. It also reminded J.G. Realty that it should shall be passed increasing the appellate jurisdiction of the SC
submit the disagreement to arbitration rather than without its advice and consent. On the other hand, RA 7942
unilaterally terminating the RAWOP. provides that decisions of MAB may be reviewed by the SC on
petition for review by certiorari and this law expanded the SC’s
RAWOP provides that "Any disputes, differences or appellate jurisdiction, to which the SC has not consented;
disagreements between BENGUET and the OWNER with (2) the SC, in the exercise of its rule-making power, transfers to
reference to anything whatsoever pertaining to this the CA pending cases involving review of a quasi-judicial body’s
Agreement that cannot be amicably settled by them shall decision, such transfer relates only to procedure, hence does
not be cause of any action of any kind whatsoever in any not impair substantial and vested rights;
court or administrative agency but shall, upon notice of (3) Under Rule 43 of the ROC, appeals from judgments and final
one party to the other, be referred to a Board of orders of quasi-judicial agencies are now required to be
Arbitrators consisting of three (3) members, one to be brought to the CA on a verified petition for review;
selected by BENGUET, another to be selected by the (4) CA has more elbow room to resolve questions of fact;
OWNER and the third to be selected by the (5) judicial policy of observing the hierarchy of courts.
aforementioned two arbitrators so appointed.”
Petitioner having failed to properly appeal to the CA
 J.G. Realty filed a Petition for Declaration of under Rule 43, the decision of the MAB has become final and
Nullity/Cancellation of the RAWOP with the Legaspi City executory. On this ground alone, the instant petition must be
Panel of Arbitrators (POA). denied.

 POA issued a Decision, declaring the [RAWOP] and its

Supplemental Agreement cancelled and without effect.
Ruling:
 Benguet filed a Notice of Appeal with the Mining
Adjudication Board (MAB). MAB upheld the POA decision. The case should have first been brought to voluntary
arbitration before the POA

 Benguet then filed a Motion for Reconsideration of the J.G. Realty argued that RA 7942 or the Philippine Mining Act of
assailed Decision which was denied in a Resolution of the 1995 is a special law which should prevail over the stipulations
MAB. of the parties and over a general law, such as RA 876. It also
argued that the POA cannot be considered as a court under the
 Benguet filed petition for certiorari under Rule 65 seeking contemplation of RA 876 and that jurisprudence saying that
annulment of the MAB decision. there must be prior resort to arbitration before filing a case
with the courts is inapplicable to the instant case as the POA is
Issue: itself already engaged in arbitration.
On this issue, we rule for Benguet. Section 7. Stay of civil action. If any
Sec. 2 of RA 876 elucidates the scope of arbitration: suit or proceeding be brought upon an issue
arising out of an agreement providing for
Section 2. Persons and matters the arbitration thereof, the court in which
subject to arbitration. Two or more persons such suit or proceeding is pending, upon
or parties may submit to the arbitration of being satisfied that the issue involved in
one or more arbitrators any controversy such suit or proceeding is referable to
existing between them at the time of the arbitration, shall stay the action or
submission and which may be the subject of proceeding until an arbitration has been had
an action, or the parties to any contract in accordance with the terms of the
may in such contract agree to settle by agreement: Provided, That the applicant,
arbitration a controversy thereafter arising for the stay is not in default in proceeding
between them. Such submission or contract with such arbitration.
shall be valid, enforceable and irrevocable,
save upon such grounds as exist at law for In other words, in the event a case that should properly be the
the revocation of any contract. subject of voluntary arbitration is erroneously filed with the
courts or quasi-judicial agencies, on motion of the defendant,
An agreement to avail of voluntary arbitration before resort is the court or quasi-judicial agency shall determine whether
made to the courts or quasi-judicial agencies of the such contractual provision for arbitration is sufficient and
government is a valid contractual stipulation that must be effective. If in affirmative, the court or quasi-judicial agency
adhered to by the parties. As stated in Sections 6 and 7 of RA shall then order the enforcement of said provision. Besides, in
876: BF Corporation v. Court of Appeals, we already ruled:

Section 6. Hearing by court. A party In this connection, it bears stressing

aggrieved by the failure, neglect or refusal that the lower court has not lost its
of another to perform under an agreement jurisdiction over the case. Section 7 of
in writing providing for arbitration may Republic Act No. 876 provides that
petition the court for an order directing proceedings therein have only been stayed.
that such arbitration proceed in the After the special proceeding of arbitration
manner provided for in such agreement. has been pursued and completed, then the
Five days notice in writing of the hearing of lower court may confirm the award made by
such application shall be served either the arbitrator.
personally or by registered mail upon the
party in default. The court shall hear the J.G. Realtys contention that prior resort to arbitration is
parties, and upon being satisfied that the unavailing in the instant case because the POAs mandate is to
making of the agreement or such failure to arbitrate disputes involving mineral agreements, is misplaced.
comply therewith is not in issue, shall make A distinction must be made between voluntary and
an order directing the parties to proceed to compulsory arbitration. In Ludo and Luym Corporation v.
arbitration in accordance with the terms of Saordino, the Court had the occasion to distinguish between
the agreement. If the making of the the two types of arbitrations:
agreement or default be in issue the court Comparatively, in Reformist Union of R.B.
shall proceed to summarily hear such issue. Liner, Inc. vs. NLRC, compulsory arbitration
If the finding be that no agreement in has been defined both as the process of
writing providing for arbitration was made, settlement of labor disputes by a
or that there is no default in the proceeding government agency which has the
thereunder, the proceeding shall be authority to investigate and to make an
dismissed. If the finding be that a written award which is binding on all the parties, and
provision for arbitration was made and as a mode of arbitration where the parties
there is a default in proceeding are compelled to accept the resolution of
thereunder, an order shall be made their dispute through arbitration by a third
summarily directing the parties to proceed party. While a voluntary arbitrator is not
with the arbitration in accordance with the part of the governmental unit or labor
terms thereof. departments personnel, said arbitrator
renders arbitration services provided for
xxxx under labor laws.
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. Thus, J.G.
Realtys argument on this matter must fail.

As to J.G. Realtys contention that the provisions of RA 876

cannot apply to the instant case which involves an
administrative agency, it must be pointed out that Section
11.01 of the RAWOP states that:

[Any controversy with regard to the

contract] shall not be cause of any action of
any kind whatsoever in any court or
administrative agency but shall, upon
notice of one party to the other, be referred
to a Board of Arbitrators consisting of three
(3) members, one to be selected by
BENGUET, another to be selected by the
OWNER and the third to be selected by the
aforementioned two arbiters so appointed.

There can be no quibbling that POA is a quasi-judicial body

which forms part of the DENR, an administrative agency.
Hence, the provision on mandatory resort to arbitration, freely
entered into by the parties, must be held binding against them.

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.

However, we find that Benguet is already estopped from

questioning the POAs jurisdiction. As it were, when J.G. Realty
filed DENR Case, Benguet filed its answer and participated in
the proceedings before the POA, Region V. Secondly, when the
adverse POA Decision was rendered, it filed an appeal with the
MAB and again participated in the MAB proceedings. When the
adverse MAB Decision was promulgated, it filed a motion for
reconsideration with the MAB. When the adverse MAB
Resolution was issued, Benguet filed a petition with this Court
pursuant to Sec. 79 of RA 7942 impliedly recognizing MABs
jurisdiction. In this factual milieu, the Court rules that the
jurisdiction of POA and that of MAB can no longer be
questioned by Benguet at this late hour. What Benguet should
have done was to immediately challenge the POAs jurisdiction
by a special civil action for certiorari when POA ruled that it has
jurisdiction over the dispute. To redo the proceedings fully
participated in by the parties after the lapse of seven years
from date of institution of the original action with the POA
would be anathema to the speedy and efficient administration
of justice.