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G.R. No.

126619

December 20, 2006

UNIWIDE SALES REALTY AND RESOURCES CORPORATION, petitioner, vs. TITAN-I EDA CONSTRUCTION AND DE!ELOP"ENT CORPORATION, respondent.

The parties e9e(uted the third a1ree.ent /Pro5e(t ,0 in ;a% "&&!. In a written :Constru(tion Contra(t,: Titan undertoo to (onstru(t the 2niwide Sales Depart.ent Store 3uildin1 in Baloo an Cit% for the pri(e of P""7,888,888.88 pa%a$le in pro1ress $illin1s to $e (ertified to $% 2niwide4s representative."8 It was stipulated that the pro5e(t shall $e (o.pleted not later than !7 #e$ruar% "&&,. The pro5e(t was (o.pleted and turned over to 2niwide in @une "&&,. 2niwide asserted in its petition thatC /a0 it overpaid Titan for unauthori?ed additional wor s in Pro5e(t " and Pro5e(t ,D /$0 it is not lia$le to pa% the Ealue*)dded Ta9 /E)T0 for Pro5e(t "D /(0 it is entitled to liFuidated da.a1es for the dela% in(urred in (onstru(tin1 Pro5e(t " and Pro5e(t ,D and /d0 it should not have $een found lia$le for defi(ien(ies in the defe(tivel% (onstru(ted Pro5e(t !. )n )r$itral Tri$unal (onsistin1 of a (hair.an and two .e.$ers was (reated in a((ordan(e with the CI)C Rules of Pro(edure +overnin1 Constru(tion )r$itration. It (ondu(ted a preli.inar% (onferen(e with the parties and thereafter issued a Ter.s of Referen(e /TOR0 whi(h was si1ned $% the parties. The tri$unal also (ondu(ted an o(ular inspe(tion, hearin1s, and re(eived the eviden(e of the parties (onsistin1 of affidavits whi(h were su$5e(t to (ross*e9a.ination. On "- )pril "&&5, after the parties su$.itted their respe(tive .e.oranda, the )r$itral Tri$unal pro.ul1ated a De(ision,"" the de(retal portion of whi(h is as followsC :<GERE#ORE, 5ud1.ent is here$% rendered as followsC On Pro5e(t " H =i$isC I2niwideJ is a$solved of an% lia$ilit% for the (lai.s .ade $% ITitanJ on this Pro5e(t. Pro5e(t ! H Edsa CentralC I2niwideJ is a$solved of an% lia$ilit% for E)T pa%.ent on this pro5e(t, the sa.e $ein1 for the a((ount of the ITitanJ. On the other hand, ITitanJ is a$solved of an% lia$ilit% on the (ounter(lai. for defe(tive (onstru(tion of this pro5e(t. I2niwideJ is held lia$le for the unpaid $alan(e in the a.ount of P',,8",8-5.-- whi(h is ordered to $e paid to the ITitanJ with "!A interest per annu. (o..en(in1 fro. "& De(e.$er "&&! until the date of pa%.ent. On Pro5e(t , H Baloo anC I2niwideJ is held lia$le for the unpaid $alan(e in the a.ount of P5,"57,,'4.', whi(h is ordered to $e paid to the ITitanJ with "!A interest per annu. (o..en(in1 fro. 87 Septe.$er "&&, until the date of pa%.ent. I2niwideJ is held lia$le to pa% in full the E)T on this pro5e(t, in su(h a.ount as .a% $e (o.puted $% the 3ureau of Internal Revenue to $e paid dire(tl% thereto. The 3IR is here$% notified that I2niwideJ Sales Realt% and Resour(es Corporation has assu.ed responsi$ilit% and is held lia$le for E)T pa%.ent on this pro5e(t. This a((ordin1l% e9e.pts Clai.ant Titan*I eda Constru(tion and Develop.ent Corporation fro. this o$li1ation. =et a (op% of this De(ision $e furnished the Gonora$le )urora P. Navarette Re(ina, Presidin1 @ud1e, 3ran(h ""&, Pasa% Cit%, in Civil Case No. &4*87"4 entitled TitanIkeda Construction Development Corporation Plainti!! " versus " #ni$ide %ales

DECISION

TINGA, J.# This Petition for Review on Certiorari under Rule 45 see s the partial reversal of the !" #e$ruar% "&&' De(ision" of the Court of )ppeals #ifteenth Division in C)*+.R. SP No. ,-&5- whi(h .odified the "- )pril "&&5 De(ision! of the Constru(tion Industr% )r$itration Co..ission /CI)C0. The (ase ori1inated fro. an a(tion for a su. of .one% filed $% Titan*I eda Constru(tion and Develop.ent Corporation /Titan0 a1ainst 2niwide Sales Realt% and Resour(es Corporation /2niwide0 with the Re1ional Trial Court /RTC0, 3ran(h ""&,, Pasa% Cit% arisin1 fro. 2niwide4s non*pa%.ent of (ertain (lai.s $illed $% Titan after (o.pletion of three pro5e(ts (overed $% a1ree.ents the% entered into with ea(h other. 2pon 2niwide4s .otion to dis.iss6suspend pro(eedin1s and Titan4s open (ourt .anifestation a1reein1 to the suspension, Civil Case No. &7* 87"4 was suspended for it to under1o ar$itration.4 Titan4s (o.plaint was thus re*filed with the CI)C.5 3efore the CI)C, 2niwide filed an answer whi(h was later a.ended and re*a.ended, den%in1 the .aterial alle1ations of the (o.plaint, with (ounter(lai.s for refund of overpa%.ents, a(tual and e9e.plar% da.a1es, and attorne%4s fees. The a1ree.ents $etween Titan and 2niwide are $riefl% des(ri$ed $elow. PROJECT 1.' The first a1ree.ent /Pro5e(t "0 was a written :Constru(tion Contra(t: entered into $% Titan and 2niwide so.eti.e in ;a% "&&" where$% Titan undertoo to (onstru(t 2niwide4s <arehouse Clu$ and )d.inistration 3uildin1 in =i$is, >ue?on Cit% for a fee of P"!8,&,',5&".58, pa%a$le in .onthl% pro1ress $illin1s to $e (ertified to $% 2niwide4s representative.- The parties stipulated that the $uildin1 shall $e (o.pleted not later than ,8 Nove.$er "&&". )s found $% the CI)C, the $uildin1 was eventuall% finished on "5 #e$ruar% "&&!7 and turned over to 2niwide. PROJECT 2. So.eti.e in @ul% "&&!, Titan and 2niwide entered into the se(ond a1ree.ent /Pro5e(t !0 where$% the for.er a1reed to (onstru(t an additional floor and to renovate the latter4s warehouse lo(ated at the EDS) Central ;ar et )rea in ;andalu%on1 Cit%. There was no written (ontra(t e9e(uted $etween the parties for this pro5e(t. Constru(tion was alle1edl% to $e on the $asis of drawin1s and spe(ifi(ations provided $% 2niwide4s stru(tural en1ineers. The parties pro(eeded on the $asis of a (ost esti.ate of P!",,8",8-5.-- in(lusive of Titan4s !8A .ar *up. Titan (on(eded in its (o.plaint to havin1 re(eived P"5,888,888.88 of this a.ount. This pro5e(t was (o.pleted in the latter part of O(to$er "&&! and turned over to 2niwide. PROJECT 3.&

Realt& and Resources Corporation, Defendant, pendin1 $efore said (ourt for infor.ation and proper a(tion. SO ORDERED.:"! 2niwide filed a .otion for re(onsideration of the "- )pril "&&5 de(ision whi(h was denied $% the CI)C in its Resolution dated ' @ul% "&&5. 2niwide a((ordin1l% filed a petition for review with the Court of )ppeals,", whi(h rendered the assailed de(ision on !" #e$ruar% "&&'. 2niwide4s .otion for re(onsideration was li ewise denied $% the Court of )ppeals in its assailed Resolution "4 dated ,8 Septe.$er "&&'. Gen(e, 2niwide (o.es to this Court via a petition for review under Rule 45. The issues su$.itted for resolution of this Court are as followsC"5 /"0 <hether 2niwide is entitled to a return of the a.ount it alle1edl% paid $% .ista e to Titan for additional wor s done on Pro5e(t "D /!0 <hether 2niwide is lia$le for the pa%.ent of the Ealue*)dded Ta9 /E)T0 on Pro5e(t "D /,0 <hether 2niwide is entitled to liFuidated da.a1es for Pro5e(ts " and ,D and /40 <hether 2niwide is lia$le for defi(ien(ies in Pro5e(t !. )s a rule, findin1s of fa(t of ad.inistrative a1en(ies and Fuasi*5udi(ial $odies, whi(h have a(Fuired e9pertise $e(ause their 5urisdi(tion is (onfined to spe(ifi( .atters, are 1enerall% a((orded not onl% respe(t, $ut also finalit%, espe(iall% when affir.ed $% the Court of )ppeals."' In parti(ular, fa(tual findin1s of (onstru(tion ar$itrators are final and (on(lusive and not reviewa$le $% this Court on appeal."- This rule, however ad.its of (ertain e9(eptions. In David v. Construction Industr& and 'r(itration Commission "7 we ruled that, as e9(eptions, fa(tual findin1s of (onstru(tion ar$itrators .a% $e reviewed $% this Court when the petitioner proves affir.ativel% thatC /"0 the award was pro(ured $% (orruption, fraud or other undue .eansD /!0 there was evident partialit% or (orruption of the ar$itrators or of an% of the.D /,0 the ar$itrators were 1uilt% of .is(ondu(t in refusin1 to hear eviden(e pertinent and .aterial to the (ontrovers%D /40 one or .ore of the ar$itrators were disFualified to a(t as su(h under Se(tion nine of Repu$li( )(t No. 7-' and willfull% refrained fro. dis(losin1 su(h disFualifi(ations or of an% other .is$ehavior $% whi(h the ri1hts of an% part% have $een .ateriall% pre5udi(edD or /50 the ar$itrators e9(eeded their powers, or so i.perfe(tl% e9e(uted the., that a .utual, final and definite award upon the su$5e(t .atter su$.itted to the. was not .ade."& Other re(o1ni?ed e9(eptions are as followsC /"0 when there is a ver% (lear showin1 of 1rave a$use of dis(retion!8 resultin1 in la( or loss of 5urisdi(tion as when a part% was deprived of a fair opportunit% to present its position $efore the )r$itral Tri$unal or when an award is o$tained throu1h fraud or the (orruption of ar$itrators,!" /!0 when the findin1s of the Court of )ppeals are (ontrar% to those of the CI)C,!! and /,0 when a part% is deprived of ad.inistrative due pro(ess.!, Thus, in )i-Precision %teel Center Inc. v. *im +im ,uilders Inc.,!4 we refused to review the findin1s of fa(t of the CI)C for the reason that petitioner was reFuirin1 the Court to 1o over ea(h individual (lai. and (ounter(lai. su$.itted $% the parties in the CI)C. ) review of the CI)C4s findin1s of fa(t would have had the effe(t of :settin1 at nau1ht the $asi( o$5e(tive of a voluntar% ar$itration and would redu(e ar$itration to a lar1el% inutile institution.: #urther, petitioner therein failed to show an% serious error of law a.ountin1 to 1rave a$use of dis(retion resultin1 in la( of 5urisdi(tion on the part of the )r$itral Tri$unal, in either the .ethods e.plo%ed or the results rea(hed $% the )r$itral Tri$unal, in disposin1 of the detailed (lai.s of the respe(tive parties. In -etro Construction Inc. v. C.at.am Properties Inc.,!5 we reviewed the findin1s of fa(t of the Court of )ppeals $e(ause its findin1s on the issue of whether petitioner therein was in dela% were (ontrar% to the findin1s of the CI)C. #inall%, in -e/a$orld 0lo(us 'sia Inc. v. D%Construction and Development Corporation !' we de(lined to depart fro. the findin1s of the )r$itral Tri$unal (onsiderin1 that the (o.putations, as well as the propriet% of the awards, are

unFuestiona$l% fa(tual issues that have $een dis(ussed $% the )r$itral Tri$unal and affir.ed $% the Court of )ppeals. In the present (ase, onl% the first issue presented for resolution of this Court is a Fuestion of law while the rest are fa(tual in nature. Gowever, we do not hesitate to inFuire into these fa(tual issues for the reason that the CI)C and the Court of )ppeals, in so.e .atters, differed in their findin1s. <e now pro(eed to dis(uss the issues in seriati.. Pa&ment (& -istake !or Pro1ect 1 The first issue refers to the P5,7!,,47".-5 paid $% 2niwide for additional wor s done on Pro5e(t ". 2niwide asserts that Titan was not entitled to $e paid this a.ount $e(ause the additional wor s were without an% written authori?ation. It should $e noted that the (ontra(ts do not (ontain stipulations on :additional wor s,: 2niwide4s lia$ilit% for :additional wor s,: and prior approval as a reFuire.ent $efore Titan (ould perfor. :additional wor s.: Nonetheless, 2niwide (ites )rti(le /)rt. 0 "-!4 of the New Civil Code as $asis for its (lai. that it is not lia$le to pa% for :additional wor s: it did not authori?e or a1ree upon in writin1. The provision statesC )rt. "-!4. The (ontra(tor who underta es to $uild a stru(ture or an% other wor for a stipulated pri(e, in (onfor.it% with plans and spe(ifi(ations a1reed upon with the landowner, (an neither withdraw fro. the (ontra(t nor de.and an in(rease in the pri(e on a((ount of the hi1her (ost of la$or or .aterials, save when there has $een a (han1e in the plans and spe(ifi(ations, providedC /"0 Su(h (han1e has $een authori?ed $% the proprietor in writin1D and /!0 The additional pri(e to $e paid to the (ontra(tor has $een deter.ined in writin1 $% $oth parties. The Court of )ppeals did ta e note of this provision, $ut dee.ed it inappli(a$le to the (ase at $ar $e(ause 2niwide had alread% paid, al$eit with unwritten reservations, for the :additional wor s.: The provision would have $een operative had 2niwide refused to pa% for the (osts of the :additional wor s.: Instead, the Court of )ppeals applied )rt. "4!,!- of the New Civil Code and (hara(teri?ed 2niwide4s pa%.ent of the said a.ount as a voluntar% fulfill.ent of a natural o$li1ation. The situation was (hara(teri?ed as $ein1 a in to 2niwide $ein1 a de$tor who paid a de$t even while it new that it was not le1all% (o.pelled to do so. )s su(h de$tor, 2niwide (ould no lon1er de.and the refund of the a.ount alread% paid. 2niwide (ounters that )rt. "-!4 .a es no distin(tion as to whether pa%.ent for the :additional wor s: had alread% $een .ade. It (lai.s that it had .ade the pa%.ents, su$5e(t to reservations, upon the false representation of Titan*I eda that the :additional wor s: were authori?ed in writin1. 2niwide (hara(teri?es the pa%.ent as a :.ista e,: and not a :voluntar%: fulfill.ent under )rt. "4!, of the Civil Code. Gen(e, it ur1es the appli(ation, instead, of the prin(iple of solutio inde(iti under )rts. !"54!7 and !"5'!& of the Civil Code.

To $e (ertain, this Court has not $een wont to 1ive an e9pansive (onstru(tion of )rt. "-!4, den%in1, for e9a.ple, (lai.s that it applies to (onstru(tions .ade of ship vessels,,8 or that it (an validl% den% the (lai. for pa%.ent of professional fees to the ar(hite(t.," The present situation thou1h presents a thornier pro$le.. Clearl%, )rt. "-!4 denies, as a .atter of ri1ht, pa%.ent to the (ontra(tor for additional wor s whi(h were not authori?ed in writin1 $% the proprietor, and the additional pri(e of whi(h was not deter.ined in writin1 $% the parties. Ket the distin(tion pointed out $% the Court of )ppeals is .aterial. The issue is no lon1er (entered on the ri1ht of the (ontra(tor to de.and pa%.ent for additional wor s underta en $e(ause pa%.ent, whether .ista en or not, was alread% .ade $% 2niwide. Thus, it would not an%.ore $e in(u.$ent on Titan to esta$lish that it had the ri1ht to de.and or re(eive su(h pa%.ent. 3ut, even if the Court a((epts )rt. "-!4 as appli(a$le in this (ase, su(h re(o1nition does not ipso !acto a((ord 2niwide the ri1ht to $e rei.$ursed for pa%.ents alread% .ade, sin(e )rt. "-!4 does not effe(t su(h ri1ht of rei.$urse.ent. It has to $e understood that )rt. "-!4 does not pre(lude the pa%.ent to the (ontra(tor who perfor.s additional wor s without an% prior written authori?ation or a1ree.ent as to the pri(e for su(h wor s if the owner de(ides an%wa% to .a e su(h pa%.ent. <hat the provision does pre(lude is the ri1ht of the (ontra(tor to insist upon pa%.ent for unauthori?ed additional wor s. )((ordin1l%, 2niwide, as the owner who did pa% the (ontra(tor for su(h additional wor s even if the% had not $een authori?ed in writin1, has to esta$lish its own ri1ht to rei.$urse.ent not under )rt. "-!4, $ut under a different provision of law. 2niwide4s $urden of esta$lishin1 its le1al ri1ht to rei.$urse.ent $e(o.es even .ore (ru(ial in the li1ht of the 1eneral presu.ption (ontained in Se(tion ,/f0, Rule "," of the Rules of Court that :.one% paid $% one to another was due to the latter.: 2niwide underta es su(h a tas $efore this Court, (itin1 the provisions on solutio inde(iti under )rts. !"54 and !"5' of the Civil Code. Gowever, it is not enou1h to prove that the pa%.ents .ade $% 2niwide to Titan were :not due: $e(ause there was no prior authori?ation or a1ree.ent with respe(t to additional wor s. There is a further reFuire.ent that the pa%.ent $% the de$tor was .ade either throu1h .ista e or under a (loud of dou$t. In short, for the provisions on solutio inde(iti to appl%, there has to $e eviden(e esta$lishin1 the fra.e of .ind of the pa%or at the ti.e the pa%.ent was .ade.,! The CI)C refused to a( nowled1e that the additional wor s on Pro5e(t " were indeed unauthori?ed $% 2niwide. Neither did the Court of )ppeals arrive at a (ontrar% deter.ination. There would thus $e so.e diffi(ult% for this Court to a1ree with this .ost $asi( pre.ise su$.itted $% 2niwide that it did not authori?e the additional wor s on Pro5e(t " underta en $% Titan. Still, 2niwide does (ite testi.onial eviden(e fro. the re(ord alludin1 to a (on(ession $% e.plo%ees of Titan that these additional wor s on Pro5e(t " were either authori?ed or do(u.ented.,, Ket even (on(edin1 that the additional wor s on Pro5e(t " were not authori?ed or (o..itted into writin1, the undisputed fa(t re.ains that 2niwide paid for these additional wor s. Thus, to (lai. a refund of pa%.ents .ade under the prin(iple of solutio inde(iti 2niwide .ust $e a$le to esta$lish that these pa%.ents were .ade throu1h .ista e. )1ain, this is a fa(tual .atter that would have a(Fuired a .antle of invulnera$ilit% had it $een deter.ined $% $oth the CI)C and the Court of )ppeals. Gowever, $oth $odies failed to arrive at su(h a (on(lusion. ;oreover, 2niwide is una$le to dire(t our attention to an% pertinent part of the re(ord that would indeed esta$lish that the pa%.ents were .ade $% reason of .ista e. <e note that 2niwide alle1ed in its petition that the CI)C award in favor of Titan in the a.ount P5,"57,,'4.', as the unpaid $alan(e in Pro5e(t , in(luded (lai.s for additional wor s of

P",87-,!"4."7 for whi(h no written authori?ation was presented. 2nfortunatel%, this issue was not in(luded in its .e.orandu. as one of the issues su$.itted for the resolution of the Court. *ia(ilit& !or t.e 2alue-'dded Ta3 42'T5 The se(ond issue ta es us into an inFuir% on who, under the law, is lia$le for the pa%.ent of the E)T, in the a$sen(e of a written stipulation on the .atter. 2niwide (lai.s that the E)T was alread% in(luded in the (ontra(t pri(e for Pro5e(t ". Citin1 Se(s. && and "8! of the National Internal Revenue Code, 2niwide asserts that E)T, $ein1 an indire(t ta9, .a% $e shifted to the $u%er $% in(ludin1 it in the (ash or sellin1 pri(e and it is entirel% up to the $u%er to a1ree or not to a1ree to a$sor$ the E)T.,4 Thus, 2niwide (on(ludes, if there is no provision in the (ontra(t as to who should pa% the E)T, it is presu.ed that it would $e the seller.,5 The (ontra(t for Pro5e(t " is silent on whi(h part% should shoulder the E)T while the (ontra(t for Pro5e(t , (ontained a provision to the effe(t that 2niwide is the part% responsi$le for the pa%.ent of the E)T.,' Thus, when 2niwide paid the a.ount of P!,488,888.88 as $illed $% Titan for E)T, it assu.ed that it was the E)T for Pro5e(t ,. Gowever, the CI)C and the Court of )ppeals found that the sa.e was for Pro5e(t ". <e a1ree with the (on(lusions of $oth the CI)C and the Court of )ppeals that the a.ount of P!,488,888.88 was paid $% 2niwide as E)T for Pro5e(t ". This (on(lusion was drawn fro. an Order of Pa%.ent,- dated - O(to$er "&&! wherein Titan $illed 2niwide the a.ount of P!,488,888.88 as :Ealue )dded Ta9 $ased on P'8,888,888.88 Contra(t,: (o.puted on the $asis of 4A of P'8,888,888.88. Said do(u.ent whi(h was approved $% the President of 2niwide e9pressl% indi(ated that the pro5e(t involved was the :2NI<IDE S)=ES <)REGO2SE C=23 L )D;IN 3=D+.: lo(ated at :&8 E. RODRI+2EM @R. )EE., =I3IS, >.C.: The redu(ed $ase for the (o.putation of the ta9, a((ordin1 to the Court of )ppeals, was an indi(ation that the parties a1reed to pass the E)T for Pro5e(t " to 2niwide $ut $ased on a lower (ontra(t pri(e. Indeed, the CI)C found as followsC <ithout an% do(u.entar% eviden(e than E9hi$it :G: to show the e9tent of ta9 lia$ilit% assu.ed $% I2niwideJ, the Tri$unal holds that the parties is Isi(J o$li1ed to pa% onl% a share of the E)T pa%.ent up to P'8,888,888.88 out of the total (ontra(t pri(e of P"!8,&,',5&".58. A$ e%&'()*e+ b, -)mm, Go., !AT )$ &()+ o* '(bor o*', /or co*$0r1c0)o* co*0r(c0$ $)*ce !AT 2(+ ('re(+, bee* &()+ o* 02e m(0er)('$ &1rc2($e+. S)*ce '(bor co$0$ )$ 3$)c4 &ro&or0)o*(0e', &'(ce+ (0 605-605 o/ 02e co*0r(c0 &r)ce, $)m&')/)e+ (cco1*0)*7 com&10e$ !AT (0 65 o/ 02e co*0r(c0 &r)ce. <hatever is the $alan(e for E)T that re.ains to $e paid on Pro5e(t " H =i$is shall re.ain the o$li1ation of ITitanJ. /E.phasis supplied.0,7 =iFuidated Da.a1es On the third issue of liFuidated da.a1es, the CI)C re5e(ted su(h (lai. while the Court of )ppeals held that the .atter should $e left for deter.ination in future pro(eedin1s where the issue has $een .ade (lear. In re5e(tin1 2niwide4s (lai. for liFuidated da.a1es, the CI)C held that there is no le1al $asis for passin1 upon and resolvin1 2niwide4s (lai. for the followin1 reasonsC /"0 no (lai. for liFuidated da.a1es arisin1 fro. the alle1ed dela% was ever .ade $% 2niwide at an% ti.e $efore the (o..en(e.ent of Titan4s (o.plaintD /!0 the (lai. for liFuidated da.a1es was not in(luded in the (ounter(lai.s stated in 2niwide4s answer to Titan4s (o.plaintD /,0 the (lai. was not for.ulated as an issue to $e resolved $% the CI)C in the TORD,& and /40 no atte.pt was .ade to .odif% the TOR to a((o..odate the sa.e as an issue to $e resolved.

2niwide insists that the CI)C should have applied Se(tion 5, Rule "8 of the Rules of Court.48 On this .atter, the Court of )ppeals held that the CI)C is an ar$itration $od%, whi(h is not ne(essaril% $ound $% the Rules of Court. )lso, the Court of )ppeals found that the issue has never $een .ade (on(rete enou1h to .a e Titan and the CI)C aware that it will $e an issue. In fa(t, 2niwide onl% introdu(ed and Fuantified its (lai. for liFuidated da.a1es in its ;e.orandu. su$.itted to the CI)C at the end of the ar$itration pro(eedin1. The Court of )ppeals also noted that the onl% eviden(e on re(ord to prove dela% in the (onstru(tion of Pro5e(t " is the testi.on% of Titan4s en1ineer re1ardin1 the date of (o.pletion of the pro5e(t while the onl% eviden(e of dela% in the (onstru(tion of Pro5e(t , is the affidavit of 2niwide4s President. )((ordin1 to 2niwide, the rulin1 of the Court of )ppeals on the issue of liFuidated da.a1es 1oes a1ainst the esta$lished 5udi(ial poli(% that a (ourt should alwa%s strive to settle in one pro(eedin1 the entire (ontrovers% leavin1 no root or $ran(h to $ear the seeds of future liti1ations.4" 2niwide (lai.s that the reFuired eviden(e for an affir.ative rulin1 on its (lai. is alread% on the re(ord. It (ites the pertinent provisions of the written (ontra(ts whi(h (ontained deadlines for liFuidated da.a1es. 2niwide also noted that the eviden(e show that Pro5e(t " was (o.pleted either on "5 #e$ruar% "&&!, as found $% the CI)C, or "! ;ar(h "&&!, as shown $% Titan4s own eviden(e, while Pro5e(t ,, a((ordin1 to 2niwide4s President, was (o.pleted in @une "&&,. #urther.ore, 2niwide asserts, the CI)C should have applied pro(edural rules su(h as Se(tion 5, Rule "8 with .ore li$eralit% $e(ause it was an ad.inistrative tri$unal free fro. the ri1id te(hni(alities of re1ular (ourts.4! On this point, the CI)C heldC The Rule of Pro(edure +overnin1 Constru(tion )r$itration pro.ul1ated $% the CI)C (ontains no provision on the appli(ation of the Rules of Court to ar$itration pro(eedin1s, even in a suppletor% (apa(it%. G%potheti(all% ad.ittin1 that there is su(h a provision, suppletor% appli(ation is .ade onl% if it would not (ontravene a spe(ifi( provision in the ar$itration rules and the spirit thereof. The Tri$unal holds that $1c2 )m&or0(0)o* o/ 02e R1'e$ o/ Co1r0 &ro8)$)o* o* (me*+me*0 0o co*/orm 0o e8)+e*ce .o1'+ co*0r(8e*e 02e $&)r)0, )/ *o0 02e 'e00er o/ 02e CIAC r1'e$. This is for the reason that the for.ulation of the Ter.s of Referen(e is done with the a(tive parti(ipation of the parties and their (ounsel the.selves. The TOR is further reFuired to $e si1ned $% all the parties, their respe(tive (ounsel and all the .e.$ers of the )r$itral Tri$unal. 2nless the issues thus (arefull% for.ulated in the Ter.s of Referen(e were e9pressl% showed Isi(J to $e a.ended, issues outside thereof .a% not $e resolved. )s alread% noted in the De(ision, :no atte.pt was ever .ade $% the I2niwideJ to .odif% the TOR in order to a((o..odate the issues related to its $elated (ounter(lai.: on this issue. /E.phasis supplied.0 )r$itration has $een defined as :an arran1e.ent for ta in1 and a$idin1 $% the 5ud1.ent of sele(ted persons in so.e disputed .atter, instead of (arr%in1 it to esta$lished tri$unals of 5usti(e, and is intended to avoid the for.alities, the dela%, the e9pense and ve9ation of ordinar% liti1ation.:4, Eoluntar% ar$itration, on the other hand, involves the referen(e of a dispute to an i.partial $od%, the .e.$ers of whi(h are (hosen $% the parties the.selves, whi(h parties freel% (onsent in advan(e to a$ide $% the ar$itral award issued after pro(eedin1s where $oth parties had the opportunit% to $e heard. The $asi( o$5e(tive is to provide a speed% and ine9pensive .ethod of settlin1 disputes $% allowin1 the parties to avoid the for.alities, dela%, e9pense and a11ravation whi(h (o..onl% a((o.pan% ordinar% liti1ation, espe(iall% liti1ation whi(h 1oes throu1h the entire hierar(h% of (ourts.44 )s an ar$itration $od%, the CI)C (an onl% resolve issues $rou1ht $efore it $% the parties throu1h the TOR whi(h fun(tions si.ilarl% as a pre*trial $rief. Thus, if 2niwide4s (lai. for liFuidated da.a1es was not raised as an issue in the TOR or in an% .odified or a.ended version of it, the CI)C (annot .a e a rulin1 on it. The Rules of Court (annot $e used to (ontravene the spirit of the CI)C rules, whose poli(% and o$5e(tive is to :provide a fair and e9peditious settle.ent of (onstru(tion disputes throu1h a non*5udi(ial pro(ess whi(h ensures har.onious and friendl% relations $etween or a.on1 the parties.:45

#urther, a part% .a% not $e deprived of due pro(ess of law $% an a.end.ent of the (o.plaint as provided in Se(tion 5, Rule "8 of the Rules of Court. In this (ase, as noted $% the Court of )ppeals, 2niwide onl% introdu(ed and Fuantified its (lai. for liFuidated da.a1es in its .e.orandu. su$.itted to the CI)C at the end of the ar$itration pro(eedin1. Eeril%, Titan was not 1iven a (han(e to present eviden(e to (ounter 2niwide4s (lai. for liFuidated da.a1es. 2niwide alludes to an alle1ed 5udi(ial ad.ission .ade $% En1r. =u?on Ta$lante wherein he stated that Pro5e(t " was (o.pleted on "8 ;ar(h "&&!. It now (lai.s that $% virtue of En1r. Ta$lante4s state.ent, Titan had ad.itted that it was in dela%. <e disa1ree. The testi.on% of En1r. Ta$lante was offered onl% to prove that Pro5e(t " was indeed (o.pleted. It was not offered to prove the fa(t of dela%. It .ust $e re.e.$ered that the purpose for whi(h eviden(e is offered .ust $e spe(ified $e(ause su(h eviden(e .a% $e ad.issi$le for several purposes under the do(trine of .ultiple ad.issi$ilit%, or .a% $e ad.issi$le for one purpose and not for another, otherwise the adverse part% (annot interpose the proper o$5e(tion. Eviden(e su$.itted for one purpose .a% not $e (onsidered for an% other purpose.4' #urther.ore, even assu.in1, for the sa e of ar1u.ent, that said testi.on% on the date of (o.pletion of Pro5e(t " is ad.itted, the esta$lish.ent of the .ere fa(t of dela% is not suffi(ient for the i.position of liFuidated da.a1es. It .ust further $e shown that dela% was attri$uta$le to the (ontra(tor if not otherwise 5ustifia$le. Contraril%, 2niwide4s $elated (lai. (onstitutes an ad.ission that the dela% was 5ustified and i.plies a waiver of its ri1ht to su(h da.a1es. Pro1ect 26 7as-(uilt7 plans overpricin/ de!ective construction To deter.ine whether or not 2niwide is lia$le for the unpaid $alan(e of P',,8",8-5.-- for Pro5e(t !, we need to resolve four su$*issues, na.el%C /"0 whether or not it was ne(essar% for Titan to su$.it :as*$uilt: plans $efore it (an $e paid $% 2niwideD /!0 whether or not there was overpri(in1 of the pro5e(tD /,0 whether or not the P"5,888,888.88 paid $% 2niwide to Titan for Pro5e(t ! (onstitutes full pa%.entD and /40 whether or not Titan (an $e held lia$le for defe(tive (onstru(tion of Pro5e(t !. The CI)C, as affir.ed $% the Court of )ppeals, held 2niwide lia$le for defi(ien(% relatin1 to Pro5e(t ! in the a.ount of P',,8",8-5.--. It is nonetheless alle1ed $% 2niwide that Titan failed to su$.it an% :as*$uilt: plans for Pro5e(t !, su(h plans alle1edl% servin1 as a (ondition pre(edent for pa%.ent. 2niwide further (lai.s that Titan had su$stantiall% over(har1ed 2niwide for Pro5e(t !, there $ein1 un(ontradi(ted e9pert testi.on% that the total (ost of Pro5e(t ! did not e9(eed P-,7"!,"!,.'8. #urther.ore, 2niwide alle1ed that the wor s perfor.ed were stru(turall% defe(tive, as eviden(ed $% the stru(tural da.a1e on four (olu.ns as o$served on o(ular inspe(tion $% the CI)C and (onfir.ed $% Titan4s pro5e(t .ana1er. On the ne(essit% of su$.ittin1 :as*$uilt: plans, this Court rules that the su$.ission of su(h plans is not a pre*reFuisite for Titan to $e paid $% 2niwide. The ar1u.ent that said plans are reFuired $% Se(tion ,87 of Presidential De(ree No. "8&7 /National 3uildin1 Code0 and $% Se(tion !."" of its I.ple.entin1 Rules $efore pa%.ent (an $e .ade is untena$le. The purpose of the law is :to safe1uard life, health, propert%, and pu$li( welfare, (onsistent with the prin(iples of sound environ.ental .ana1e.ent and (ontrol.: The su$.ission of these plans is ne(essar% onl% in furtheran(e of the law4s purpose $% settin1 .ini.u. standards and reFuire.ents to (ontrol the :lo(ation, site, desi1n, Fualit% of .aterials, (onstru(tion, use, o((upan(%, and .aintenan(e: of $uildin1s (onstru(ted and not as a reFuire.ent for pa%.ent to the (ontra(tor.4- The testi.on% of En1r. Ta$lante to the effe(t that the :as*$uilt: plans are reFuired $efore pa%.ent (an $e (lai.ed $% Titan is a .ere le1al (on(lusion whi(h is not $indin1 on this Court. 2niwide (lai.s that, a((ordin1 to one of its (onsultants, the true pri(e for Pro5e(t ! is onl% P-,7"!,"!,.'8. The CI)C and the Court of )ppeals, however, found the testi.on% of this (onsultant suspe(t and ruled that the total (ontra(t pri(e for Pro5e(t ! is P!",,8",8-5.--. The CI)C heldC

The Cost Esti.ate for )r(hite(tural and Site Develop.ent <or s for the EDS) Central, Dau 3ran(h Pro5e(t /E9hi$it :!*): for I2niwideJ and .ade as a (o..on e9hi$it $% ITitanJ who had it .ar ed at 8sic9 its own E9hi$it :2:0, whi(h was ad.ittedl% prepared $% #er.indo?a and )sso(iates, I2niwideJ4s own ar(hite(ts, shows that the a.ount of P"-,-58,7&'.47 was arrived at. To1ether with the a1reed upon .ar *up of !8A on said a.ount, the total pro5e(t (ost was P!",,8",8-5.--. The Tri$unal holds that the fore1oin1 do(u.ent is $indin1 upon the I2niwideJ, it $ein1 the .ode a1reed upon $% whi(h its lia$ilit% for the pro5e(t (ost was to $e deter.ined.47 /E.phasis supplied.0 Indeed, 2niwide is $ound $% the a.ount indi(ated in the a$ove do(u.ent. Clai.s of (onnivan(e or fraudulent (onspira(% $etween Titan and 2niwide4s representatives whi(h, it is alle1ed, 1rossl% e9a11erated the pri(e .a% properl% $e dis.issed. )s held $% the CI)CC The Tri$unal holds that I2niwideJ has not introdu(ed an% eviden(e to sustain its (har1e of fraudulent (onspira(%. )s a .atter of fa(t, I2niwideJ4s own prin(ipal witness, @i..% +ow, ad.itted on (ross*e9a.ination that he does not have an% dire(t eviden(e to prove his (har1e of (onnivan(e or (o.pli(it% $etween the ITitanJ and his own representatives. Ge onl% .ade that (on(lusion $% the pro(ess of his own :lo1i(al reasonin1: arisin1 fro. his (onsultation with other (ontra(tors who 1ave hi. a .u(h lower esti.ate for the (onstru(tion of the Dau Pro5e(t. There is thus no reason to invalidate the $indin1 (hara(ter of E9hi$it :!*): whi(h, it is si1nifi(ant to point out, is I2niwideJ4s own eviden(e.4& /E.phasis supplied.0 )((ordin1l%, dedu(tin1 the P"5,888,888.88 alread% paid $% 2niwide fro. the total (ontra(t pri(e of P!",,8",8-5.--, the unpaid $alan(e due for Pro5e(t ! is P',,8",8-5.--. This is the sa.e a.ount refle(ted in the Order of Pa%.ent prepared $% 2niwide4s representative, =e Consulte(h, In(. and si1ned $% no less than four top offi(ers and ar(hite(ts of =e Consulte(h, In(. endorsin1 for pa%.ent $% 2niwide to Titan the a.ount of P',,8",8-5.--.58 2niwide asserts that Titan should not have $een allowed to re(over on Pro5e(t ! $e(ause the said pro5e(t was defe(tive and would reFuire repairs in the a.ount of P788,888.88. It (lai.s that the CI)C and the Court of )ppeals should have applied :akpil and %ons v. Court o! 'ppeals5" and )rt. "-!, of the New Civil Code holdin1 a (ontra(tor responsi$le for da.a1es if the edifi(e (onstru(ted falls within fifteen %ears fro. (o.pletion on a((ount of defe(ts in the (onstru(tion or the use of .aterials of inferior Fualit% furnished $% hi. or due to an% violation of the ter.s of the (ontra(t. On this .atter, the CI)C (ondu(ted an o(ular inspe(tion of the pre.ises on ,8 @anuar% "&&5. <hat transpired in the said o(ular inspe(tion is des(ri$ed thusC On ,8 @anuar% "&&5, an o(ular inspe(tion was (ondu(ted $% the )r$itral Tri$unal as reFuested $% I2niwideJ. Photo1raphs were ta en of the alle1ed (onstru(tion defe(ts, an a(tual rippin1 off of the plaster of a (ertain (olu.n to e9pose the alle1ed stru(tural defe(t that is (lai.ed to have resulted in its $ein1 :heavil% da.a1ed: was done, (larifi(ator% Fuestions were as ed and .anifestations on o$servations were .ade $% the parties and their respe(tive (ounsels. The entire pro(eedin1s were re(orded on tape and su$seFuentl% trans(ri$ed. The photo1raphs and trans(ript of the o(ular inspe(tion for. part of the re(ords and (onsidered as eviden(e.5! )nd, a((ordin1 to these eviden(e, the CI)C (on(luded as followsC

It is li ewise the holdin1 of this Tri$unal that I2niwideJ4s (ounter(lai. of defe(tive (onstru(tion has not $een suffi(ientl% proven. The (redi$ilit% of En1r. Cru?, I2niwideJ4s prin(ipal witness on this issue, has $een severel% i.paired. Durin1 the o(ular inspe(tion of the pre.ises, he 1ave su(h assuran(e of the soundness of his opinion as an e9pert that a (ertain (olu.n was heavil% da.a1ed 5ud1in1 fro. the e9ternal (ra( s that was readil% apparent 9 9 9 9999 On insisten(e of the Tri$unal, the plaster was (hipped off and revealed a stru(turall% sound (olu.n 9 9 9 #urther, it turns out that what was $ein1 passed off as a defe(tive (onstru(tion $% ITitanJ, was in fa(t an old (olu.n, as ad.itted $% ;r. +ow hi.self 9 9 9 95, /E.phasis supplied.0 2niwide had the $urden of provin1 that there was defe(tive (onstru(tion in Pro5e(t ! $ut it failed to dis(har1e this $urden. Even the (redi$ilit% of its own witness was severel% i.paired. #urther, it was found that the (on(rete sla$ pla(ed $% Titan was not atta(hed to the old (olu.ns where (ra( s were dis(overed. The CI)C held that the post*tensionin1 of the new (on(rete sla$ (ould not have (aused an% of the defe(ts .anifested $% the old (olu.ns. <e are $ound $% this findin1 of fa(t $% the CI)C. It is worth% to stress our rulin1 in )i-Precision %teel Center Inc. v. *im +im %teel ,uilders Inc. 54 whi(h was reiterated in David v. Construction Industr& and 'r(itration Commission 55 thatC 9 9 9 E9e(utive Order No. "887 (reated an ar$itration fa(ilit% to whi(h the (onstru(tion industr% in the Philippines (an have re(ourse. T2e E%ec10)8e Or+er .($ e*(c0e+ 0o e*co1r(7e 02e e(r', (*+ e%&e+)0)o1$ $e00'eme*0 o/ +)$&10e$ )* 02e co*$0r1c0)o* )*+1$0r,, ( &1b')c &o')c, 02e )m&'eme*0(0)o* o/ .2)c2 )$ *ece$$(r, (*+ )m&or0(*0 /or 02e re(')9(0)o* o/ *(0)o*(' +e8e'o&me*0 7o('$. )ware of the o$5e(tive of voluntar% ar$itration in the la$or field, in the (onstru(tion industr%, and in an% other area for that .atter, the Court will not assist one or the other or even $oth parties in an% effort to su$vert or defeat that o$5e(tive for their private purposes. The Court will not review the fa(tual findin1s of an ar$itral tri$unal upon the artful alle1ation that su(h $od% had :.isapprehended fa(ts: and will not pass upon issues whi(h are, at $otto., issues of fa(t, no .atter how (leverl% dis1uised the% .i1ht $e as :le1al Fuestions.: The parties here had re(ourse to ar$itration and (hose the ar$itrators the.selvesD the% .ust have had (onfiden(e in su(h ar$itrators. The Court will not, therefore, per.it the parties to reliti1ate $efore it the issues of fa(ts previousl% presented and ar1ued $efore the )r$itral Tri$unal, save onl% where a (lear showin1 is .ade that, in rea(hin1 its fa(tual (on(lusions, the )r$itral Tri$unal (o..itted an error so e1re1ious and hurtful to one part% as to (onstitute a 1rave a$use of dis(retion resultin1 in la( or loss of 5urisdi(tion. Protot%pi(al e9a.ples would $e fa(tual (on(lusions of the Tri$unal whi(h resulted in deprivation of one or the other part% of a fair opportunit% to present its position $efore the )r$itral Tri$unal, and an award o$tained throu1h fraud or the (orruption of ar$itrators. )n% other, .ore rela9ed rule would result in settin1 at nau1ht the $asi( o$5e(tive of a voluntar% ar$itration and would redu(e ar$itration to a lar1el% inutile institution. /E.phasis supplied.0 <GERE#ORE, pre.ises (onsidered, the petition is DENIED and the De(ision of the Court of )ppeals dated !" #e$ruar% "&&' in C)*+.R. SP No. ,-&5- is here$% )##IR;ED.

SO ORDERED. G.R. No. 16:101 ;ebr1(r, 1:, 200<

a. The fa(t that %our (o.pan% has failed to perfor. the o$li1ations set forth in the R)<OP, i.e., to underta e develop.ent wor s within ! %ears fro. the e9e(ution of the )1ree.entD $. Eiolation of the Contra(t $% allowin1 hi1h 1raders to operate on our (lai.. (. No stipulation was provided with respe(t to the ter. li.it of the R)<OP. d. Non*pa%.ent of the ro%alties thereon as provided in the R)<OP.-

=ENGUET CORPORATION, petitioner, vs. DEPART"ENT O; EN!IRON"ENT AND NATURAL RESOURCES -"INES AD-UDICATION =OARD (*+ -.G. REALTY AND "INING CORPORATION, respondents. DECISION !ELASCO, -R., J.# The instant petition under Rule '5 of the Rules of Court see s the annul.ent of the De(e.$er !, !88! De(ision" and ;ar(h "-, !884 Resolution! of the Depart.ent of Environ.ent and Natural Resour(es*;inin1 )d5udi(ation 3oard /DENR*;)30 in ;)3 Case No. 8"!4*8" /;ines )d.inistrative Case No. R*;*!888*8"0 entitled ,en/uet Corporation 4,en/uet5 v. J.0. Realt& and -inin/ Corporation 4J.0. Realt&5. The De(e.$er !, !88! De(ision upheld the ;ar(h "&, !88" De(ision, of the ;)3 Panel of )r$itrators /PO)0 whi(h (an(eled the Ro%alt% )1ree.ent with Option to Pur(hase /R)<OP0 dated @une ", "&7-4 $etween 3en1uet and @.+. Realt%, and e9(luded 3en1uet fro. the 5oint ;ineral Produ(tion Sharin1 )1ree.ent /;PS)0 appli(ation over four .inin1 (lai.s. The ;ar(h "-, !884 Resolution denied 3en1uetNs ;otion for Re(onsideration. T2e ;(c0$ On @une ", "&7-, 3en1uet and @.+. Realt% entered into a R)<OP, wherein @.+. Realt% was a( nowled1ed as the owner of four .inin1 (lai.s respe(tivel% na.ed as 3onito*I, 3onito*II, 3onito*III, and 3onito*IE, with a total area of !77.7'5' he(tares, situated in 3aran1a% =u lu a., Sitio 3a1on1 3a%an, ;uni(ipalit% of @ose Pan1ani$an, Ca.arines Norte. The parties also e9e(uted a Supple.ental )1ree.ent5 dated @une ", "&7-. The .inin1 (lai.s were (overed $% ;PS) )ppli(ation No. )PS)*E*888& 5ointl% filed $% @.+. Realt% as (lai.owner and 3en1uet as operator. In the R)<OP, 3en1uet o$li1ated itself to perfe(t the ri1hts to the .inin1 (lai.s and6or otherwise a(Fuire the .inin1 ri1hts to the .ineral (lai.s. <ithin !4 .onths fro. the e9e(ution of the R)<OP, 3en1uet should also (ause the e9a.ination of the .inin1 (lai.s for the purpose of deter.inin1 whether or not the% are worth developin1 with reasona$le pro$a$ilit% of profita$le produ(tion. 3en1uet undertoo also to furnish @.+. Realt% with a report on the e9a.ination, within a reasona$le ti.e after the (o.pletion of the e9a.ination. ;oreover, also within the e9a.ination period, 3en1uet shall (ondu(t all ne(essar% e9ploration in a((ordan(e with a prepared e9ploration pro1ra.. If it (hooses to do so and $efore the e9piration of the e9a.ination period, 3en1uet .a% underta e to develop the .inin1 (lai.s upon written noti(e to @.+. Realt%. 3en1uet .ust then pla(e the .inin1 (lai.s into (o..er(ial produ(tive sta1e within !4 .onths fro. the written noti(e.' It is also provided in the R)<OP that if the .inin1 (lai.s were pla(ed in (o..er(ial produ(tion $% 3en1uet, @.+. Realt% should $e entitled to a ro%alt% of five per(ent /5A0 of net reali?a$le value, and to ro%alt% for an% produ(tion done $% 3en1uet whether durin1 the e9a.ination or develop.ent periods. Thus, on )u1ust &, "&7&, the E9e(utive Ei(e*President of 3en1uet, )ntonio N. Ta(hulin1, issued a letter infor.in1 @.+. Realt% of its intention to develop the .inin1 (lai.s. Gowever, on #e$ruar% &, "&&&, @.+. Realt%, throu1h its President, @ohnn% =. Tan, then sent a letter to the President of 3en1uet infor.in1 the latter that it was ter.inatin1 the R)<OP on the followin1 1roundsC

In response, 3en1uetNs ;ana1er for =e1al Servi(es, Re%naldo P. ;endo?a, wrote @.+. Realt% a letter dated ;ar(h 7, "&&&,7 therein alle1in1 that 3en1uet (o.plied with its o$li1ations under the R)<OP $% investin1 PhP 4!.4 .illion to reha$ilitate the .ines, and that the (o..er(ial operation was ha.pered $% the non*issuan(e of a ;ines Te.porar% Per.it $% the ;ines and +eos(ien(es 3ureau /;+30 whi(h .ust $e (onsidered as !orce ma1eure, entitlin1 3en1uet to an e9tension of ti.e to prose(ute su(h per.it. 3en1uet further (lai.ed that the hi1h 1raders .entioned $% @.+. Realt% were alread% operatin1 prior to 3en1uetNs ta in1 over of the pre.ises, and that @.+. Realt% had the o$li1ation of e5e(tin1 su(h s.all s(ale .iners. 3en1uet also alle1ed that the nature of the .inin1 $usiness .ade it diffi(ult to spe(if% a ti.e li.it for the R)<OP. 3en1uet then ar1ued that the ro%alties due to @.+. Realt% were in fa(t in its offi(e and read% to $e pi( ed up at an% ti.e. It appeared that, previousl%, the pra(ti(e $% @.+. Realt% was to pi( *up (he( s fro. 3en1uet representin1 su(h ro%alties. Gowever, startin1 )u1ust "&&4, @.+. Realt% alle1edl% refused to (olle(t su(h (he( s fro. 3en1uet. Thus, 3en1uet posited that there was no valid 1round for the ter.ination of the R)<OP. It also re.inded @.+. Realt% that it should su$.it the disa1ree.ent to ar$itration rather than unilaterall% ter.inatin1 the R)<OP. On @une -, !888, @.+. Realt% filed a Petition for De(laration of Nullit%6Can(ellation of the R)<OP& with the =e1aspi Cit% PO), Re1ion E, do( eted as DENR Case No. !888*8" and entitled J.0. Realt& v. ,en/uet. On ;ar(h "&, !88", the PO) issued a De(ision,"8 dwellin1 upon the issues of /"0 whether the ar$itrators had 5urisdi(tion over the (aseD and /!0 whether 3en1uet violated the R)<OP 5ustif%in1 the unilateral (an(ellation of the R)<OP $% @.+. Realt%. The dispositive portion statedC <GERE#ORE, pre.ises (onsidered, the @une 8", "&7- IR)<OPJ and its Supple.ental )1ree.ent is here$% de(lared (an(elled and without effe(t. 3EN+2ET is here$% e9(luded fro. the 5oint ;PS) )ppli(ation over the .ineral (lai.s deno.inated as :3ONITO*I:, :3ONITO*II:, :3ONITO*III: and :3ONITO*IE:. SO ORDERED. Therefro., 3en1uet filed a Noti(e of )ppeal"" with the ;)3 on )pril !,, !88", do( eted as ;ines )d.inistrative Case No. R*;*!888*8". Thereafter, the ;)3 issued the assailed De(e.$er !, !88! De(ision. 3en1uet then filed a ;otion for Re(onsideration of the assailed De(ision whi(h was denied in the ;ar(h "-, !884 Resolution of the ;)3. Gen(e, 3en1uet filed the instant petition. T2e I$$1e$ ". There was serious and palpa$le error when the Gonora$le 3oard failed to rule that the (ontra(tual o$li1ation of the parties to ar$itrate under the Ro%alt% )1ree.ent is .andator%.

!. The Gonora$le 3oard e9(eeded its 5urisdi(tion when it sustained the (an(ellation of the Ro%alt% )1ree.ent for alle1ed $rea(h of (ontra(t despite the a$sen(e of eviden(e. ,. The >uestioned De(ision of the Gonora$le 3oard in (an(ellin1 the R)<OP pre5udi(eIdJ the su$stantial ri1hts of 3en1uet under the (ontra(t to the un5ust enri(h.ent of @+ Realt%. "! Restated, the issues areC /"0 Should the (ontrovers% have first $een su$.itted to ar$itration $efore the PO) too (o1ni?an(e of the (aseOD /!0 <as the (an(ellation of the R)<OP supported $% eviden(eOD and /,0 Did the (an(ellation of the R)<OP a.ount to un5ust enri(h.ent of @.+. Realt% at the e9pense of 3en1uetO T2e Co1r0>$ R1')*7 3efore we dwell on the su$stantive issues, we find that the instant petition (an $e denied outri1ht as 3en1uet resorted to an i.proper re.ed%. The last para1raph of Se(tion -& of Repu$li( )(t No. /R)0 -&4! or the :Philippine ;inin1 )(t of "&&5: states, :) petition for review $% (ertiorari and Fuestion of law .a% $e filed $% the a11rieved part% with the Supre.e Court within thirt% /,80 da%s fro. re(eipt of the order or de(ision of the I;)3J.: Gowever, this Court has alread% invalidated su(h provision in Carpio v. %ulu Resources Development Corp.,", rulin1 that a de(ision of the ;)3 .ust first $e appealed to the Court of )ppeals /C)0 under Rule 4, of the Rules of Court, $efore re(ourse to this Court .a% $e had. <e held, thusC To su..ari?e, there are suffi(ient le1al footin1s authori?in1 a review of the ;)3 De(ision under Rule 4, of the Rules of Court. ;irst Se(tion ,8 of )rti(le EI of the "&7- Constitution, .andates that :InJo law shall $e passed in(reasin1 the appellate 5urisdi(tion of the Supre.e Court as provided in this Constitution without its advi(e and (onsent.: On the other hand, Se(tion -& of R) No. -&4! provides that de(isions of the ;)3 .a% $e reviewed $% this Court on a :petition for review $% (ertiorari.: This provision is o$viousl% an e9pansion of the CourtNs appellate 5urisdi(tion, an e9pansion to whi(h this Court has not (onsented. Indis(ri.inate ena(t.ent of le1islation enlar1in1 the appellate 5urisdi(tion of this Court would unne(essaril% $urden it. %econd when the Supre.e Court, in the e9er(ise of its rule*.a in1 power, transfers to the C) pendin1 (ases involvin1 a review of a Fuasi*5udi(ial $od%Ns de(isions, su(h transfer relates onl% to pro(edureD hen(e, it does not i.pair the su$stantive and vested ri1hts of the parties. The a11rieved part%Ns ri1ht to appeal is preservedD what is (han1ed is onl% the pro(edure $% whi(h the appeal is to $e .ade or de(ided. The parties still have a re.ed% and a (o.petent tri$unal to 1rant this re.ed%. T.ird the Revised Rules of Civil Pro(edure in(luded Rule 4, to provide a unifor. rule on appeals fro. Fuasi*5udi(ial a1en(ies. 2nder the rule, appeals fro. their 5ud1.ents and final orders are now reFuired to $e $rou1ht to the C) on a verified petition for review. ) Fuasi*5udi(ial a1en(% or $od% has $een defined as an or1an of 1overn.ent, other than a (ourt or le1islature, whi(h affe(ts the ri1hts of private parties throu1h either ad5udi(ation or rule*.a in1. ;)3 falls under this definitionD hen(e, it is no different fro. the other Fuasi*5udi(ial $odies enu.erated under Rule 4,. 3esides, the introdu(tor% words in Se(tion " of Cir(ular No. "*&"HH:a.on1 these a1en(ies are:HH indi(ate that the enu.eration is not e9(lusive or (on(lusive and a( nowled1e the

e9isten(e of other Fuasi*5udi(ial a1en(ies whi(h, thou1h not e9pressl% listed, should $e dee.ed in(luded therein. ;ourt. the Court reali?es that under 3atas Pa.$ansa /3P0 3l1. "!& as a.ended $% R) No. -&8!, fa(tual (ontroversies are usuall% involved in de(isions of Fuasi*5udi(ial $odiesD and the C), whi(h is li ewise tas ed to resolve Fuestions of fa(t, has .ore el$ow roo. to resolve the.. 3% in(ludin1 Fuestions of fa(t a.on1 the issues that .a% $e raised in an appeal fro. Fuasi*5udi(ial a1en(ies to the C), Se(tion , of Revised )d.inistrative Cir(ular No. "*&5 and Se(tion , of Rule 4, e9pli(itl% e9panded the list of su(h issues. )((ordin1 to Se(tion , of Rule 4,, :IaJn appeal under this Rule .a% $e ta en to the Court of )ppeals within the period and in the .anner herein provided whether the appeal involves Fuestions of fa(t, of law, or .i9ed Fuestions of fa(t and law.: Gen(e, appeals fro. Fuasi*5udi(ial a1en(ies even onl% on Fuestions of law .a% $e $rou1ht to the C). ;i!t., the 5udi(ial poli(% of o$servin1 the hierar(h% of (ourts di(tates that dire(t resort fro. ad.inistrative a1en(ies to this Court will not $e entertained, unless the redress desired (annot $e o$tained fro. the appropriate lower tri$unals, or unless e9(eptional and (o.pellin1 (ir(u.stan(es 5ustif% avail.ent of a re.ed% fallin1 within and (allin1 for the e9er(ise of our pri.ar% 5urisdi(tion."4 The a$ove prin(iple was reiterated in 'sap.il Construction and Development Corporation v. Tuason Jr. 4'sap.il5."5 Gowever, the Carpio rulin1 was not applied to 'sap.il as the petition in the latter (ase was filed in "&&& or three %ears $efore the pro.ul1ation of Carpio in !88!. Gere, the petition was filed on )pril !7, !884 when the Carpio de(ision was alread% appli(a$le, thus 3en1uet should have filed the appeal with the C). Petitioner havin1 failed to properl% appeal to the C) under Rule 4,, the de(ision of the ;)3 has $e(o.e final and e9e(utor%. On this 1round alone, the instant petition .ust $e denied. Even if we entertain the petition althou1h 3en1uet s irted the appeal to the C) via Rule 4,, still, the De(e.$er !, !88! De(ision and ;ar(h "-, !884 Resolution of the DENR*;)3 in ;)3 Case No. 8"!4*8" should $e .aintained. ;)r$0 I$$1e# T2e c($e $2o1'+ 2(8e /)r$0 bee* bro1720 0o 8o'1*0(r, (rb)0r(0)o* be/ore 02e POA Se(s. "".8" and "".8! of the R)<OP pertinentl% provideC "".8" )r$itration )n% disputes, differen(es or disa1ree.ents $etween 3EN+2ET and the O<NER with referen(e to an%thin1 whatsoever pertainin1 to this )1ree.ent that (annot $e a.i(a$l% settled $% the. shall not $e (ause of an% a(tion of an% ind whatsoever in an% (ourt or ad.inistrative a1en(% $ut shall, upon noti(e of one part% to the other, $e referred to a 3oard of )r$itrators (onsistin1 of three /,0 .e.$ers, one to $e sele(ted $% 3EN+2ET, another to $e sele(ted $% the O<NER and the third to $e sele(ted $% the afore.entioned two ar$itrators so appointed. 9999

"".8! Court )(tion No a(tion shall $e instituted in (ourt as to an% .atter in dispute as hereina$ove stated, e9(ept to enfor(e the de(ision of the .a5orit% of the )r$itrators."' Thus, 3en1uet ar1ues that the PO) should have first referred the (ase to voluntar% ar$itration $efore ta in1 (o1ni?an(e of the (ase, (itin1 Se(. ! of R) 7-' on persons and .atters su$5e(t to ar$itration. On the other hand, in den%in1 su(h ar1u.ent, the PO) ruled thatC <hile the parties .a% esta$lish su(h stipulations (lauses, ter.s and (onditions as the% .a% dee. (onvenient, the sa.e .ust not $e (ontrar% to law and pu$li( poli(%. )t a 1lan(e, there is nothin1 wron1 with the ter.s and (onditions of the a1ree.ent. 3ut to state that an a11rieved part% (annot initiate an a(tion without 1oin1 to ar$itration would $e t%in1 oneNs hand even if there is a law whi(h allows hi. to do so."The ;)3, .eanwhile, denied 3en1uetNs (ontention on the 1round of estoppel, statin1C 3esides, $% its own a(t, 3en1uet is alread% estopped in Fuestionin1 the 5urisdi(tion of the Panel of )r$itrators to hear and de(ide the (ase. )s pointed out in the appealed De(ision, 3en1uet initiated and filed an )dverse Clai. do( eted as ;)C*R*;*!888* 8! over the sa.e .inin1 (lai.s without under1oin1 (ontra(tual ar$itration. In this parti(ular (ase /;)C*R*;*!888*8!0 now su$5e(t of the appeal, 3en1uet is li ewise in estoppel fro. Fuestionin1 the (o.peten(e of the Panel of )r$itrators to hear and de(ide in the su..ar% pro(eedin1s @.+. Realt%Ns petition, when 3en1uet itself did not .erel% .ove for the dis.issal of the (ase $ut also filed an )nswer with (ounter(lai. see in1 affir.ative reliefs fro. the Panel of )r$itrators."7 ;oreover, the ;)3 ruled that the (ontra(tual provision on ar$itration .erel% provides for an additional foru. or venue and does not divest the PO) of the 5urisdi(tion to hear the (ase."& In its @ul% !8, !884 Co..ent,!8 @.+. Realt% reiterated the a$ove rulin1s of the PO) and ;)3. It ar1ued that R) -&4! or the :Philippine ;inin1 )(t of "&&5: is a spe(ial law whi(h should prevail over the stipulations of the parties and over a 1eneral law, su(h as R) 7-'. It also ar1ued that the PO) (annot $e (onsidered as a :(ourt: under the (onte.plation of R) 7-' and that 5urispruden(e sa%in1 that there .ust $e prior resort to ar$itration $efore filin1 a (ase with the (ourts is inappli(a$le to the instant (ase as the PO) is itself alread% en1a1ed in ar$itration. On this issue, we rule for 3en1uet. Se(. ! of R) 7-' elu(idates the s(ope of ar$itrationC Se(tion !. Persons and matters su(1ect to ar(itration.HHT.o or more &er$o*$ or &(r0)e$ m(, $1bm)0 0o 02e (rb)0r(0)o* o/ o*e or more (rb)0r(0or$ (*, co*0ro8er$, e%)$0)*7 be0.ee* 02em (0 02e 0)me o/ 02e $1bm)$$)o* (*+ .2)c2 m(, be 02e $1b?ec0 o/ (* (c0)o*, or 02e &(r0)e$ 0o (*, co*0r(c0 m(, )* $1c2 co*0r(c0 (7ree 0o $e00'e b, (rb)0r(0)o* ( co*0ro8er$, 02ere(/0er (r)$)*7 be0.ee* 02em. S1c2 $1bm)$$)o* or co*0r(c0 $2('' be 8(')+, e*/orce(b'e (*+ )rre8oc(b'e, $(8e 1&o* $1c2 7ro1*+$ ($ e%)$0 (0 '(. /or 02e re8oc(0)o* o/ (*, co*0r(c0.

Su(h su$.ission or (ontra(t .a% in(lude FuestionIsJ arisin1 out of valuations, appraisals or other (ontroversies whi(h .a% $e (ollateral, in(idental, pre(edent or su$seFuent to an% issue $etween the parties. /E.phasis supplied.0 In R) &!75 or the :)lternative Dispute Resolution )(t of !884,: the Con1ress reiterated the effi(a(% of ar$itration as an alternative .ode of dispute resolution $% statin1 in Se(. ,! thereof that do.esti( ar$itration shall still $e 1overned $% R) 7-'. Clearl%, a (ontra(tual stipulation that reFuires prior resort to voluntar% ar$itration $efore the parties (an 1o dire(tl% to (ourt is not ille1al and is in fa(t pro.oted $% the State. Thus, petitioner (orre(tl% (ites several (ases where$% ar$itration (lauses have $een upheld $% this Court.!" ;oreover, the (ontention that R) -&4! prevails over R) 7-' presupposes a (onfli(t $etween the two laws. Su(h is not the (ase here. To reiterate, avail.ent of voluntar% ar$itration $efore resort is .ade to the (ourts or Fuasi*5udi(ial a1en(ies of the 1overn.ent is a valid (ontra(tual stipulation that .ust $e adhered to $% the parties. )s stated in Se(s. ' and - of R) 7-'C Se(tion '. )earin/ (& court.HHA &(r0, (77r)e8e+ b, 02e /()'1re, *e7'ec0 or re/1$(' o/ (*o02er 0o &er/orm 1*+er (* (7reeme*0 )* .r)0)*7 &ro8)+)*7 /or (rb)0r(0)o* m(, &e0)0)o* 02e co1r0 /or (* or+er +)rec0)*7 02(0 $1c2 (rb)0r(0)o* &rocee+ )* 02e m(**er &ro8)+e+ /or )* $1c2 (7reeme*0. #ive da%s noti(e in writin1 of the hearin1 of su(h appli(ation shall $e served either personall% or $% re1istered .ail upon the part% in default. T2e co1r0 $2('' 2e(r 02e &(r0)e$, (*+ 1&o* be)*7 $(0)$/)e+ 02(0 02e m(@)*7 o/ 02e (7reeme*0 or $1c2 /()'1re 0o com&', 02ere.)02 )$ *o0 )* )$$1e, $2('' m(@e (* or+er +)rec0)*7 02e &(r0)e$ 0o &rocee+ 0o (rb)0r(0)o* )* (ccor+(*ce .)02 02e 0erm$ o/ 02e (7reeme*0. I/ 02e m(@)*7 o/ 02e (7reeme*0 or +e/(1'0 be )* )$$1e 02e co1r0 $2('' &rocee+ 0o $1mm(r)', 2e(r $1c2 )$$1e. I/ 02e /)*+)*7 be 02(0 *o (7reeme*0 )* .r)0)*7 &ro8)+)*7 /or (rb)0r(0)o* .($ m(+e, or 02(0 02ere )$ *o +e/(1'0 )* 02e &rocee+)*7 02ere1*+er, 02e &rocee+)*7 $2('' be +)$m)$$e+. I/ 02e /)*+)*7 be 02(0 ( .r)00e* &ro8)$)o* /or (rb)0r(0)o* .($ m(+e (*+ 02ere )$ ( +e/(1'0 )* &rocee+)*7 02ere1*+er, (* or+er $2('' be m(+e $1mm(r)', +)rec0)*7 02e &(r0)e$ 0o &rocee+ .)02 02e (rb)0r(0)o* )* (ccor+(*ce .)02 02e 0erm$ 02ereo/. 9999 Se(tion -. %ta& o! civil action.HHIf an% suit or pro(eedin1 $e $rou1ht upon an issue arisin1 out of an a1ree.ent providin1 for the ar$itration thereof, the (ourt in whi(h su(h suit or pro(eedin1 is pendin1, upon $ein1 satisfied that the issue involved in su(h suit or pro(eedin1 is refera$le to ar$itration, shall sta% the a(tion or pro(eedin1 until an ar$itration has $een had in a((ordan(e with the ter.s of the a1ree.entC Provided, That the appli(ant, for the sta% is not in default in pro(eedin1 with su(h ar$itration. /E.phasis supplied.0 In other words, in the event a (ase that should properl% $e the su$5e(t of voluntar% ar$itration is erroneousl% filed with the (ourts or Fuasi*5udi(ial a1en(ies, on .otion of the defendant, the (ourt or Fuasi*5udi(ial a1en(% shall deter.ine whether su(h (ontra(tual provision for ar$itration is suffi(ient and effe(tive. If in affir.ative, the (ourt or Fuasi*5udi(ial a1en(% shall then order the enfor(e.ent of said provision. 3esides, in ,; Corporation v. Court o! 'ppeals, we alread% ruledC In this (onne(tion, it $ears stressin1 that the lower (ourt has not lost its 5urisdi(tion over the (ase. Se(tion - of Repu$li( )(t No. 7-' provides that pro(eedin1s therein have onl% $een sta%ed. )fter the spe(ial pro(eedin1 of ar$itration has $een pursued and (o.pleted, then the lower (ourt .a% (onfir. the award .ade $% the ar$itrator.!!

@.+. Realt%Ns (ontention, that prior resort to ar$itration is unavailin1 in the instant (ase $e(ause the PO)Ns .andate is to ar$itrate disputes involvin1 .ineral a1ree.ents, is .ispla(ed. ) distin(tion .ust $e .ade $etween voluntar% and (o.pulsor% ar$itration. In *udo and *u&m Corporation v. %aordino, the Court had the o((asion to distin1uish $etween the two t%pes of ar$itrationsC Co.parativel%, in Re!ormist #nion o! R.,. *iner Inc. vs. :*RC, (o.pulsor% ar$itration has $een defined $oth as :the pro(ess of settle.ent of la$or disputes b, ( 7o8er*me*0 (7e*c, .2)c2 2($ 02e (102or)0, 0o )*8e$0)7(0e (*+ 0o m(@e (* (.(r+ whi(h is $indin1 on all the parties, and as a .ode of ar$itration where the parties are (o.pelled to a((ept the resolution of their dispute throu1h ar$itration $% a third part%.: <hile a voluntar% ar$itrator is *o0 &(r0 o/ 02e 7o8er*me*0(' 1*)0 or '(bor +e&(r0me*0>$ &er$o**e', said ar$itrator renders ar$itration servi(es provided for under la$or laws.!, /E.phasis supplied.0 There is a (lear distin(tion $etween (o.pulsor% and voluntar% ar$itration. The ar$itration provided $% the PO) is (o.pulsor%, while the nature of the ar$itration provision in the R)<OP is voluntar%, not involvin1 an% 1overn.ent a1en(%. Thus, @.+. Realt%Ns ar1u.ent on this .atter .ust fail. )s to @.+. Realt%Ns (ontention that the provisions of R) 7-' (annot appl% to the instant (ase whi(h involves an ad.inistrative a1en(%, it .ust $e pointed out that Se(tion "".8" of the R)<OP states thatC I)n% (ontrovers% with re1ard to the (ontra(tJ shall not $e (ause of an% a(tion of an% ind whatsoever in an% (ourt or (+m)*)$0r(0)8e (7e*c, $ut shall, upon noti(e of one part% to the other, $e referred to a 3oard of )r$itrators (onsistin1 of three /,0 .e.$ers, one to $e sele(ted $% 3EN+2ET, another to $e sele(ted $% the O<NER and the third to $e sele(ted $% the afore.entioned two ar$iters so appointed.!4 /E.phasis supplied.0 There (an $e no Fui$$lin1 that PO) is a Fuasi*5udi(ial $od% whi(h for.s part of the DENR, an ad.inistrative a1en(%. Gen(e, the provision on .andator% resort to ar$itration, freel% entered into $% the parties, .ust $e held $indin1 a1ainst the..!5 In su., on the issue of whether PO) should have referred the (ase to voluntar% ar$itration, we find that, indeed, PO) has no 5urisdi(tion over the dispute whi(h is 1overned $% R) 7-', the ar$itration law. Gowever, we find that 3en1uet is alread% estopped fro. Fuestionin1 the PO)Ns 5urisdi(tion. )s it were, when @.+. Realt% filed DENR Case No. !888*8", 3en1uet filed its answer and parti(ipated in the pro(eedin1s $efore the PO), Re1ion E. Se(ondl%, when the adverse ;ar(h "&, !88" PO) De(ision was rendered, it filed an appeal with the ;)3 in ;ines )d.inistrative Case No. R*;*!888*8" and a1ain parti(ipated in the ;)3 pro(eedin1s. <hen the adverse De(e.$er !, !88! ;)3 De(ision was pro.ul1ated, it filed a .otion for re(onsideration with the ;)3. <hen the adverse ;ar(h "-, !884 ;)3 Resolution was issued, 3en1uet filed a petition with this Court pursuant to Se(. -& of R) -&4! i.pliedl% re(o1ni?in1 ;)3Ns 5urisdi(tion. In this fa(tual .ilieu, the Court rules that the 5urisdi(tion of PO) and that of ;)3 (an no lon1er $e Fuestioned $% 3en1uet at this late hour. <hat 3en1uet should have done was to i..ediatel% (hallen1e the PO)Ns 5urisdi(tion $% a spe(ial (ivil a(tion for (ertiorari when PO) ruled that it has 5urisdi(tion over the dispute. To redo the pro(eedin1s full% parti(ipated in $% the parties after the lapse of seven %ears fro. date of institution of the ori1inal a(tion with the PO) would $e anathe.a to the speed% and effi(ient ad.inistration of 5usti(e.

Seco*+ I$$1e# T2e c(*ce''(0)o* o/ 02e RAWOP .($ $1&&or0e+ b, e8)+e*ce The (an(ellation of the R)<OP $% the PO) was $ased on two 1roundsC /"0 3en1uetNs failure to pa% @.+. Realt%Ns ro%alties for the .inin1 (lai.sD and /!0 3en1uetNs failure to seriousl% pursue ;PS) )ppli(ation No. )PS)*E*888& over the .inin1 (lai.s. )s to the ro%alties, 3en1uet (lai.s that the (he( s representin1 pa%.ents for the ro%alties of @.+. Realt% were availa$le for pi( *up in its offi(e and it is the latter whi(h refused to (lai. the.. 3en1uet then thus (on(ludes that it did not violate the R)<OP for nonpa%.ent of ro%alties. #urther, 3en1uet reasons that @.+. Realt% has the $urden of provin1 that the for.er did not pa% su(h ro%alties followin1 the prin(iple that the (o.plainants .ust prove their affir.ative alle1ations. <ith re1ard to the failure to pursue the ;PS) appli(ation, 3en1uet (lai.s that the len1th% ti.e of approval of the appli(ation is due to the failure of the ;+3 to approve it. In other words, 3en1uet ar1ues that the approval of the appli(ation is solel% in the hands of the ;+3. 3en1uetNs ar1u.ents are $ereft of .erit. Se(. "4.85 of the R)<OP providesC "4.85 3an )((ount O<NER shall .aintain a $an a((ount at PPPPPPPPPPP or an% other $an fro. ti.e to ti.e sele(ted $% O<NER with noti(e in writin1 to 3EN+2ET where 3EN+2ET shall deposit to the O<NERNs (redit an% and all advan(es and pa%.ents whi(h .a% $e(o.e due the O<NER under this )1ree.ent as well as the pur(hase pri(e herein a1reed upon in the event that 3EN+2ET shall e9er(ise the option to pur(hase provided for in the )1ree.ent. A*, (*+ ('' +e&o$)0$ $o m(+e b, =ENGUET $2('' be ( /1'' (*+ com&'e0e (cA1)00(*ce (*+ re'e($e 0o Isi(4 =ENGUET /rom (*, /1r02er ')(b)')0, 0o 02e OWNER o/ 02e (mo1*0$ re&re$e*0e+ b, $1c2 +e&o$)0$. /E.phasis supplied.0 Evidentl%, the R)<OP itself provides for the .ode of ro%alt% pa%.ent $% 3en1uet. The fa(t that there was the previous pra(ti(e where$% @.+. Realt% pi( ed*up the (he( s fro. 3en1uet is unavailin1. The .ode of pa%.ent is e.$odied in a (ontra(t $etween the parties. )s su(h, the (ontra(t .ust $e (onsidered as the law $etween the parties and $indin1 on $oth.!' Thus, after @.+. Realt% infor.ed 3en1uet of the $an a((ount where deposits of its ro%alties .a% $e .ade, 3en1uet had the o$li1ation to deposit the (he( s. @.+. Realt% had no o$li1ation to furnish 3en1uet with a 3oard Resolution (onsiderin1 that the R)<OP itself provided for su(h pa%.ent s(he.e. Nota$l%, 3en1uetNs (lai. that @.+. Realt% .ust prove nonpa%.ent of its ro%alties is $oth illo1i(al and unsupported $% law and 5urispruden(e. The alle1ation of nonpa%.ent is not a positive alle1ation as (lai.ed $% 3en1uet. Rather, su(h is a ne1ative alle1ation that does not reFuire proof and in fa(t transfers the $urden of proof to 3en1uet. Thus, this Court ruled in Jimene< v. :ational *a(or Relations CommissionC )s a 1eneral rule, one who pleads pa%.ent has the $urden of provin1 it. Even where the plaintiff .ust alle1e non*pa%.ent, the 1eneral rule is that the $urden rests on the

defendant to prove pa%.ent, rather than on the plaintiff to prove non*pa%.ent. T2e +eb0or 2($ 02e b1r+e* o/ $2o.)*7 .)02 'e7(' cer0()*0, 02(0 02e ob')7(0)o* 2($ bee* +)$c2(r7e+ b, &(,me*0.!- /E.phasis supplied.0 In the instant (ase, the o$li1ation of 3en1uet to pa% ro%alties to @.+. Realt% has $een ad.itted and supported $% the provisions of the R)<OP. Thus, the $urden to prove su(h o$li1ation rests on 3en1uet. It should also $e $orne in .ind that ;PS) )ppli(ation No. )PS)*E*888& has $een pendin1 with the ;+3 for a (onsidera$le len1th of ti.e. 3en1uet, in the R)<OP, o$li1ated itself to perfe(t the ri1hts to the .inin1 (lai.s and6or otherwise a(Fuire the .inin1 ri1hts to the .ineral (lai.s $ut failed to present an% eviden(e showin1 that it e9erted efforts to speed up and have the appli(ation approved. In fa(t, 3en1uet never even alle1ed that it (ontinuousl% followed*up the appli(ation with the ;+3 and that it was in (onstant (o..uni(ation with the 1overn.ent a1en(% for the e9peditious resolution of the appli(ation. Su(h alle1ations would show that, indeed, 3en1uet was re.iss in prose(utin1 the ;PS) appli(ation and (learl% failed to (o.pl% with its o$li1ation in the R)<OP. T2)r+ I$$1e# T2ere )$ *o 1*?1$0 e*r)c2me*0 )* 02e )*$0(*0 c($e 3ased on the fore1oin1 dis(ussion, the (an(ellation of the R)<OP was $ased on valid 1rounds and is, therefore, 5ustified. The ne(essar% i.pli(ation of the (an(ellation is the (essation of 3en1uetNs ri1ht to prose(ute ;PS) )ppli(ation No. )PS)*E*888& and to further develop su(h .inin1 (lai.s. In Car Cool P.ilippines Inc. v. #s.io Realt& and Development Corporation , we defined un5ust enri(h.ent, as followsC <e have held that :ItJhere is un5ust enri(h.ent when a person 1*?1$0', retains a $enefit to the loss of another, or when a person retains .one% or propert% of another a1ainst the funda.ental prin(iples of 5usti(e, eFuit% and 1ood (ons(ien(e.: )rti(le !! of the Civil Code provides that :IeJver% person who throu1h an a(t of perfor.an(e $% another, or an% other .eans, a(Fuires or (o.es into possession of so.ethin1 at the e9pense of the latter without 5ust or le1al 1round, shall return the sa.e to hi..: The prin(iple of un5ust enri(h.ent under )rti(le !! reFuires two (onditionsC /"0 that a person is $enefited without a valid $asis or 5ustifi(ation, and /!0 that su(h $enefit is derived at anotherNs e9pense or da.a1e. T2ere )$ *o 1*?1$0 e*r)c2me*0 .2e* 02e &er$o* .2o .)'' be*e/)0 2($ ( 8(')+ c'()m 0o $1c2 be*e/)0.!7 /E.phasis supplied.0 Clearl%, there is no un5ust enri(h.ent in the instant (ase as the (an(ellation of the R)<OP, whi(h left 3en1uet without an% le1al ri1ht to parti(ipate in further developin1 the .inin1 (lai.s, was $rou1ht a$out $% its violation of the R)<OP. Gen(e, 3en1uet has no one to $la.e $ut itself for its predi(a.ent. WBERE;ORE, we DIS"ISS the petition, and A;;IR" the De(e.$er !, !88! De(ision and ;ar(h "-, !884 Resolution of the DENR*;)3 in ;)3 Case No. 8"!4*8" upholdin1 the (an(ellation of the @une ", "&7- R)<OP. No (osts. SO ORDERED.

G.R. No. 16:C<1

-(*1(r, D, 200<

OREA TECBNOLOGIES CO., LTD., petitioner, vs. BON. AL=ERTO A. LER"A, )* 2)$ c(&(c)0, ($ Pre$)+)*7 -1+7e o/ =r(*c2 2C6 o/ Re7)o*(' Tr)(' Co1r0 o/ "1*0)*'1&( C)0,, (*+ PACI;IC GENERAL STEEL "ANU;ACTURING CORPORATION, respondents. DECISION !ELASCO, -R., J.# In our 5urisdi(tion, the poli(% is to favor alternative .ethods of resolvin1 disputes, parti(ularl% in (ivil and (o..er(ial disputes. )r$itration alon1 with .ediation, (on(iliation, and ne1otiation, $ein1 ine9pensive, speed% and less hostile .ethods have lon1 $een favored $% this Court. The petition $efore us puts at issue an ar$itration (lause in a (ontra(t .utuall% a1reed upon $% the parties stipulatin1 that the% would su$.it the.selves to ar$itration in a forei1n (ountr%. Re1retta$l%, instead of hastenin1 the resolution of their dispute, the parties wittin1l% or unwittin1l% prolon1ed the (ontrovers%. Petitioner Borea Te(hnolo1ies Co., =td. /BO+IES0 is a Borean (orporation whi(h is en1a1ed in the suppl% and installation of =iFuefied Petroleu. +as /=P+0 C%linder .anufa(turin1 plants, while private respondent Pa(ifi( +eneral Steel ;anufa(turin1 Corp. /P+S;C0 is a do.esti( (orporation. On ;ar(h 5, "&&-, P+S;C and BO+IES e9e(uted a Contra(t" where$% BO+IES would set up an =P+ C%linder ;anufa(turin1 Plant in Car.ona, Cavite. The (ontra(t was e9e(uted in the Philippines. On )pril -, "&&-, the parties e9e(uted, in Borea, an ).end.ent for Contra(t No. B=P*&-8,8" dated ;ar(h 5, "&&-! a.endin1 the ter.s of pa%.ent. The (ontra(t and its a.end.ent stipulated that BO+IES will ship the .a(hiner% and fa(ilities ne(essar% for .anufa(turin1 =P+ (%linders for whi(h P+S;C would pa% 2SD ",!!4,888. BO+IES would install and initiate the operation of the plant for whi(h P+S;C $ound itself to pa% 2SD ,8',888 upon the plantNs produ(tion of the ""* 1. =P+ (%linder sa.ples. Thus, the total (ontra(t pri(e a.ounted to 2SD ",5,8,888. On O(to$er "4, "&&-, P+S;C entered into a Contra(t of =ease, with <orth Properties, In(. /<orth0 for use of <orthNs 5,8-&*sFuare .eter propert% with a 4,8,!*sFuare .eter warehouse $uildin1 to house the =P+ .anufa(turin1 plant. The .onthl% rental was PhP ,!!,5'8 (o..en(in1 on @anuar% ", "&&7 with a "8A annual in(re.ent (lause. Su$seFuentl%, the .a(hineries, eFuip.ent, and fa(ilities for the .anufa(ture of =P+ (%linders were shipped, delivered, and installed in the Car.ona plant. P+S;C paid BO+IES 2SD ",!!4,888. Gowever, 1leaned fro. the Certifi(ate4 e9e(uted $% the parties on @anuar% !!, "&&7, after the installation of the plant, the initial operation (ould not $e (ondu(ted as P+S;C en(ountered finan(ial diffi(ulties affe(tin1 the suppl% of .aterials, thus for(in1 the parties to a1ree that BO+IES would $e dee.ed to have (o.pletel% (o.plied with the ter.s and (onditions of the ;ar(h 5, "&&- (ontra(t. #or the re.ainin1 $alan(e of 2SD,8',888 for the installation and initial operation of the plant, P+S;C issued two postdated (he( sC /"0 3PI Che( No. 8,"'4"! dated @anuar% ,8, "&&7 for PhP 4,588,888D and /!0 3PI Che( No. 8,"'4", dated ;ar(h ,8, "&&7 for PhP 4,588,888.5

<hen BO+IES deposited the (he( s, these were dishonored for the reason :P)K;ENT STOPPED.: Thus, on ;a% 7, "&&7, BO+IES sent a de.and letter' to P+S;C threatenin1 (ri.inal a(tion for violation of ,atas Pam(ansa ,l/. !! in (ase of nonpa%.ent. On the sa.e date, the wife of P+S;CNs President fa9ed a letter dated ;a% -, "&&7 to BO+IESN President who was then sta%in1 at a ;a ati Cit% hotel. She (o.plained that not onl% did BO+IES deliver a different $rand of h%drauli( press fro. that a1reed upon $ut it had not delivered several eFuip.ent parts alread% paid for. On ;a% "4, "&&7, P+S;C replied that the two (he( s it issued BO+IES were full% funded $ut the pa%.ents were stopped for reasons previousl% .ade nown to BO+IES. On @une ", "&&7, P+S;C infor.ed BO+IES that P+S;C was (an(elin1 their Contra(t dated ;ar(h 5, "&&- on the 1round that BO+IES had altered the Fuantit% and lowered the Fualit% of the .a(hineries and eFuip.ent it delivered to P+S;C, and that P+S;C would dis.antle and transfer the .a(hineries, eFuip.ent, and fa(ilities installed in the Car.ona plant. #ive da%s later, P+S;C filed $efore the Offi(e of the Pu$li( Prose(utor an )ffidavit*Co.plaint for Esta!a do( eted as I.S. No. &7*8,7", a1ainst ;r. Dae G%un Ban1, President of BO+IES. On @une "5, "&&7, BO+IES wrote P+S;C infor.in1 the latter that P+S;C (ould not unilaterall% res(ind their (ontra(t nor dis.antle and transfer the .a(hineries and eFuip.ent on .ere i.a1ined violations $% BO+IES. It also insisted that their disputes should $e settled $% ar$itration as a1reed upon in )rti(le "5, the ar$itration (lause of their (ontra(t. On @une !,, "&&7, P+S;C a1ain wrote BO+IES reiteratin1 the (ontents of its @une ", "&&7 letter threatenin1 that the .a(hineries, eFuip.ent, and fa(ilities installed in the plant would $e dis.antled and transferred on @ul% 4, "&&7. Thus, on @ul% ", "&&7, BO+IES instituted an )ppli(ation for )r$itration $efore the Borean Co..er(ial )r$itration 3oard /BC)30 in Seoul, Borea pursuant to )rt. "5 of the Contra(t as a.ended. On @ul% ,, "&&7, BO+IES filed a Co.plaint for Spe(ifi( Perfor.an(e, do( eted as Civil Case No. &7*""-7 a1ainst P+S;C $efore the ;untinlupa Cit% Re1ional Trial Court /RTC0. The RTC 1ranted a te.porar% restrainin1 order /TRO0 on @ul% 4, "&&7, whi(h was su$seFuentl% e9tended until @ul% !!, "&&7. In its (o.plaint, BO+IES alle1ed that P+S;C had initiall% ad.itted that the (he( s that were stopped were not funded $ut later on (lai.ed that it stopped pa%.ent of the (he( s for the reason that :their value was not re(eived: as the for.er alle1edl% $rea(hed their (ontra(t $% :alterin1 the Fuantit% and lowerin1 the Fualit% of the .a(hiner% and eFuip.ent: installed in the plant and failed to .a e the plant operational althou1h it earlier (ertified to the (ontrar% as shown in a @anuar% !!, "&&7 Certifi(ate. =i ewise, BO+IES averred that P+S;C violated )rt. "5 of their Contra(t, as a.ended, $% unilaterall% res(indin1 the (ontra(t without resortin1 to ar$itration. BO+IES also as ed that P+S;C $e restrained fro. dis.antlin1 and transferrin1 the .a(hiner% and eFuip.ent installed in the plant whi(h the latter threatened to do on @ul% 4, "&&7. On @ul% &, "&&7, P+S;C filed an opposition to the TRO ar1uin1 that BO+IES was not entitled to the TRO sin(e )rt. "5, the ar$itration (lause, was null and void for $ein1 a1ainst pu$li( poli(% as it ousts the lo(al (ourts of 5urisdi(tion over the instant (ontrovers%. On @ul% "-, "&&7, P+S;C filed its )nswer with Co.pulsor% Counter(lai.& assertin1 that it had the full ri1ht to dis.antle and transfer the .a(hineries and eFuip.ent $e(ause it had paid for the. in full as stipulated in the (ontra(tD that BO+IES was not entitled to the PhP &,888,888 (overed $% the (he( s for failin1 to (o.pletel% install and .a e the plant operationalD and that BO+IES was lia$le for da.a1es a.ountin1 to PhP 4,588,888 for alterin1 the Fuantit% and lowerin1 the Fualit% of the .a(hineries and eFuip.ent. ;oreover, P+S;C averred that it has alread% paid PhP !,!5-,&!8 in rent /(overin1 @anuar% to @ul% "&&70 to <orth and it was not

willin1 to further shoulder the (ost of rentin1 the pre.ises of the plant (onsiderin1 that the =P+ (%linder .anufa(turin1 plant never $e(a.e operational. )fter the parties su$.itted their ;e.oranda, on @ul% !,, "&&7, the RTC issued an Order den%in1 the appli(ation for a writ of preli.inar% in5un(tion, reasonin1 that P+S;C had paid BO+IES 2SD ",!!4,888, the value of the .a(hineries and eFuip.ent as shown in the (ontra(t su(h that BO+IES no lon1er had proprietar% ri1hts over the.. )nd finall%, the RTC held that )rt. "5 of the Contra(t as a.ended was invalid as it tended to oust the trial (ourt or an% other (ourt 5urisdi(tion over an% dispute that .a% arise $etween the parties. BO+IESN pra%er for an in5un(tive writ was denied."8 The dispositive portion of the Order statedC <GERE#ORE, in view of the fore1oin1 (onsideration, this Court $elieves and so holds that no (o1ent reason e9ists for this Court to 1rant the writ of preli.inar% in5un(tion to restrain and refrain defendant fro. dis.antlin1 the .a(hineries and fa(ilities at the lot and $uildin1 of <orth Properties, In(orporated at Car.ona, Cavite and transfer the sa.e to another siteC and therefore denies plaintiffNs appli(ation for a writ of preli.inar% in5un(tion. On @ul% !&, "&&7, BO+IES filed its Repl% to )nswer and )nswer to Counter(lai.."" BO+IES denied it had altered the Fuantit% and lowered the Fualit% of the .a(hiner%, eFuip.ent, and fa(ilities it delivered to the plant. It (lai.ed that it had perfor.ed all the underta in1s under the (ontra(t and had alread% produ(ed (ertified sa.ples of =P+ (%linders. It averred that whatever was unfinished was P+S;CNs fault sin(e it failed to pro(ure raw .aterials due to la( of funds. BO+IES, rel%in1 on C.un/ ;u Industries 4P.ils.5 Inc. v. Court o! 'ppeals,"! insisted that the ar$itration (lause was without Fuestion valid. )fter BO+IES filed a Supple.ental ;e.orandu. with ;otion to Dis.iss", answerin1 P+S;CNs .e.orandu. of @ul% !!, "&&7 and see in1 dis.issal of P+S;CNs (ounter(lai.s, BO+IES, on )u1ust 4, "&&7, filed its ;otion for Re(onsideration"4 of the @ul% !,, "&&7 Order den%in1 its appli(ation for an in5un(tive writ (lai.in1 that the (ontra(t was not .erel% for .a(hiner% and fa(ilities worth 2SD ",!!4,888 $ut was for the sale of an :=P+ .anufa(turin1 plant: (onsistin1 of :suppl% of all the .a(hiner% and fa(ilities: and :transfer of te(hnolo1%: for a total (ontra(t pri(e of 2SD ",5,8,888 su(h that the dis.antlin1 and transfer of the .a(hiner% and fa(ilities would result in the dis.antlin1 and transfer of the ver% plant itself to the 1reat pre5udi(e of BO+IES as the still unpaid owner6seller of the plant. ;oreover, BO+IES points out that the ar$itration (lause under )rt. "5 of the Contra(t as a.ended was a valid ar$itration stipulation under )rt. !844 of the Civil Code and as held $% this Court in C.un/ ;u Industries 4P.ils.5 Inc."5 In the .eanti.e, P+S;C filed a ;otion for Inspe(tion of Thin1s"' to deter.ine whether there was indeed alteration of the Fuantit% and lowerin1 of Fualit% of the .a(hineries and eFuip.ent, and whether these were properl% installed. BO+IES opposed the .otion positin1 that the Fueries and issues raised in the .otion for inspe(tion fell under the (overa1e of the ar$itration (lause in their (ontra(t. On Septe.$er !", "&&7, the trial (ourt issued an Order /"0 1rantin1 P+S;CNs .otion for inspe(tionD /!0 den%in1 BO+IESN .otion for re(onsideration of the @ul% !,, "&&7 RTC OrderD and /,0 den%in1 BO+IESN .otion to dis.iss P+S;CNs (o.pulsor% (ounter(lai.s as these (ounter(lai.s fell within the reFuisites of (o.pulsor% (ounter(lai.s. On O(to$er !, "&&7, BO+IES filed an 2r1ent ;otion for Re(onsideration"- of the Septe.$er !", "&&7 RTC Order 1rantin1 inspe(tion of the plant and den%in1 dis.issal of P+S;CNs (o.pulsor% (ounter(lai.s.

Ten da%s after, on O(to$er "!, "&&7, without waitin1 for the resolution of its O(to$er !, "&&7 ur1ent .otion for re(onsideration, BO+IES filed $efore the Court of )ppeals /C)0 a petition for (ertiorari"7 do( eted as C)*+.R. SP No. 4&!4&, see in1 annul.ent of the @ul% !,, "&&7 and Septe.$er !", "&&7 RTC Orders and pra%in1 for the issuan(e of writs of prohi$ition, .anda.us, and preli.inar% in5un(tion to en5oin the RTC and P+S;C fro. inspe(tin1, dis.antlin1, and transferrin1 the .a(hineries and eFuip.ent in the Car.ona plant, and to dire(t the RTC to enfor(e the spe(ifi( a1ree.ent on ar$itration to resolve the dispute. In the .eanti.e, on O(to$er "&, "&&7, the RTC denied BO+IESN ur1ent .otion for re(onsideration and dire(ted the 3ran(h Sheriff to pro(eed with the inspe(tion of the .a(hineries and eFuip.ent in the plant on O(to$er !7, "&&7."& Thereafter, BO+IES filed a Supple.ent to the Petition!8 in C)*+.R. SP No. 4&!4& infor.in1 the C) a$out the O(to$er "&, "&&7 RTC Order. It also reiterated its pra%er for the issuan(e of the writs of prohi$ition, .anda.us and preli.inar% in5un(tion whi(h was not a(ted upon $% the C). BO+IES asserted that the 3ran(h Sheriff did not have the te(hni(al e9pertise to as(ertain whether or not the .a(hineries and eFuip.ent (onfor.ed to the spe(ifi(ations in the (ontra(t and were properl% installed. On Nove.$er "", "&&7, the 3ran(h Sheriff filed his SheriffNs Report!" findin1 that the enu.erated .a(hineries and eFuip.ent were not full% and properl% installed. T2e Co1r0 o/ A&&e('$ (//)rme+ 02e 0r)(' co1r0 (*+ +ec'(re+ 02e (rb)0r(0)o* c'(1$e (7()*$0 &1b')c &o')c, On ;a% ,8, !888, the C) rendered the assailed De(ision!! affir.in1 the RTC Orders and dis.issin1 the petition for (ertiorari filed $% BO+IES. The C) found that the RTC did not 1ravel% a$use its dis(retion in issuin1 the assailed @ul% !,, "&&7 and Septe.$er !", "&&7 Orders. ;oreover, the C) reasoned that BO+IESN (ontention that the total (ontra(t pri(e for 2SD ",5,8,888 was for the whole plant and had not $een full% paid was (ontrar% to the findin1 of the RTC that P+S;C full% paid the pri(e of 2SD ",!!4,888, whi(h was for all the .a(hineries and eFuip.ent. )((ordin1 to the C), this deter.ination $% the RTC was a fa(tual findin1 $e%ond the a.$it of a petition for (ertiorari. On the issue of the validit% of the ar$itration (lause, the C) a1reed with the lower (ourt that an ar$itration (lause whi(h provided for a final deter.ination of the le1al ri1hts of the parties to the (ontra(t $% ar$itration was a1ainst pu$li( poli(%. On the issue of nonpa%.ent of do( et fees and non*atta(h.ent of a (ertifi(ate of non*foru. shoppin1 $% P+S;C, the C) held that the (ounter(lai.s of P+S;C were (o.pulsor% ones and pa%.ent of do( et fees was not reFuired sin(e the )nswer with (ounter(lai. was not an initiator% pleadin1. #or the sa.e reason, the C) said a (ertifi(ate of non*foru. shoppin1 was also not reFuired. #urther.ore, the C) held that the petition for (ertiorari had $een filed pre.aturel% sin(e BO+IES did not wait for the resolution of its ur1ent .otion for re(onsideration of the Septe.$er !", "&&7 RTC Order whi(h was the plain, speed%, and adeFuate re.ed% availa$le. )((ordin1 to the C), the RTC .ust $e 1iven the opportunit% to (orre(t an% alle1ed error it has (o..itted, and that sin(e the assailed orders were interlo(utor%, these (annot $e the su$5e(t of a petition for (ertiorari. Gen(e, we have this Petition for Review on Certiorari under Rule 45.

T2e I$$1e$ Petitioner posits that the appellate (ourt (o..itted the followin1 errorsC a. PRONO2NCIN+ TGE >2ESTION O# O<NERSGIP OEER TGE ;)CGINERK )ND #)CI=ITIES )S :) >2ESTION O# #)CT: :3EKOND TGE );3IT O# ) PETITION #OR CERTIOR)RI: INTENDED ON=K #OR CORRECTION O# ERRORS O# @2RISDICTION OR +R)EE )32SE O# DISCRETION );O2NTIN+ TO =)CB O# /SIC0 EQCESS O# @2RISDICTION, )ND CONC=2DIN+ TG)T TGE TRI)= CO2RTNS #INDIN+ ON TGE S);E >2ESTION <)S I;PROPER=K R)ISED IN TGE PETITION 3E=O<D $. DEC=)RIN+ )S N2== )ND EOID TGE )R3ITR)TION C=)2SE IN )RTIC=E "5 O# TGE CONTR)CT 3ET<EEN TGE P)RTIES #OR 3EIN+ :CONTR)RK TO P23=IC PO=ICK: )ND #OR O2STIN+ TGE CO2RTS O# @2RISDICTIOND (. DECREEIN+ PRIE)TE RESPONDENTNS CO2NTERC=)I;S TO 3E )== CO;P2=SORK NOT NECESSIT)TIN+ P)K;ENT O# DOCBET #EES )ND CERTI#IC)TION O# NON*#OR2; SGOPPIN+D d. R2=IN+ TG)T TGE PETITION <)S #I=ED PRE;)T2RE=K <ITGO2T <)ITIN+ #OR TGE RESO=2TION O# TGE ;OTION #OR RECONSIDER)TION O# TGE ORDER D)TED SEPTE;3ER !", "&&7 OR <ITGO2T +IEIN+ TGE TRI)= CO2RT )N OPPORT2NITK TO CORRECT ITSE=#D e. PROC=)I;IN+ TGE T<O ORDERS D)TED @2=K !, )ND SEPTE;3ER !", "&&7 NOT TO 3E PROPER S23@ECTS O# CERTIOR)RI )ND PROGI3ITION #OR 3EIN+ :INTER=OC2TORK IN N)T2RED: f. NOT +R)NTIN+ TGE RE=IE#S )ND RE;EDIES PR)KED #OR IN GE /SIC0 PETITION )ND, INSTE)D, DIS;ISSIN+ TGE S);E #OR )==E+ED=K :<ITGO2T ;ERIT.:!, T2e Co1r0>$ R1')*7 The petition is partl% .eritorious. 3efore we delve into the su$stantive issues, we shall first ta( le the pro(edural issues. T2e r1'e$ o* 02e &(,me*0 o/ +oc@e0 /ee$ /or co1*0erc'()m$ (*+ cro$$ c'()m$ .ere (me*+e+ e//ec0)8e A171$0 16, 2006 BO+IES stron1l% ar1ues that when P+S;C filed the (ounter(lai.s, it should have paid do( et fees and filed a (ertifi(ate of non*foru. shoppin1, and that its failure to do so was a fatal defe(t. <e disa1ree with BO+IES. )s aptl% ruled $% the C), the (ounter(lai.s of P+S;C were in(orporated in its )nswer with Co.pulsor% Counter(lai. dated @ul% "-, "&&7 in a((ordan(e with Se(tion 7 of Rule "", "&&Revised Rules of Civil Pro(edure, the rule that was effe(tive at the ti.e the )nswer with Counter(lai. was filed. Se(. 7 on e9istin1 (ounter(lai. or (ross*(lai. states, :) (o.pulsor%

(ounter(lai. or a (ross*(lai. that a defendin1 part% has at the ti.e he files his answer shall $e (ontained therein.: On @ul% "-, "&&7, at the ti.e P+S;C filed its )nswer in(orporatin1 its (ounter(lai.s a1ainst BO+IES, it was not lia$le to pa% filin1 fees for said (ounter(lai.s $ein1 (o.pulsor% in nature. <e stress, however, that effe(tive )u1ust "', !884 under Se(. -, Rule "4", as a.ended $% ).;. No. 84*!*84*SC, do( et fees are now reFuired to $e paid in (o.pulsor% (ounter(lai. or (ross*(lai.s. )s to the failure to su$.it a (ertifi(ate of foru. shoppin1, P+S;CNs )nswer is not an initiator% pleadin1 whi(h reFuires a (ertifi(ation a1ainst foru. shoppin1 under Se(. 5 !4 of Rule -, "&&Revised Rules of Civil Pro(edure. It is a responsive pleadin1, hen(e, the (ourts a =uo did not (o..it reversi$le error in den%in1 BO+IESN .otion to dis.iss P+S;CNs (o.pulsor% (ounter(lai.s. I*0er'oc10or, or+er$ &ro&er $1b?ec0 o/ cer0)or(r)

<hile the O(to$er !, "&&7 .otion for re(onsideration of BO+IES of the Septe.$er !", "&&7 RTC Order relatin1 to the inspe(tion of thin1s, and the allowan(e of the (o.pulsor% (ounter(lai.s has not %et $een resolved, the (ir(u.stan(es in this (ase would allow an e9(eption to the rule that $efore (ertiorari .a% $e availed of, the petitioner .ust have filed a .otion for re(onsideration and said .otion should have $een first resolved $% the (ourt a Fuo. The reason $ehind the rule is :to ena$le the lower (ourt, in the first instan(e, to pass upon and (orre(t its .ista es without the intervention of the hi1her (ourt.:,8 The Septe.$er !", "&&7 RTC Order dire(tin1 the $ran(h sheriff to inspe(t the plant, eFuip.ent, and fa(ilities when he is not (o.petent and nowled1ea$le on said .atters is evidentl% flawed and devoid of an% le1al support. ;oreover, there is an ur1ent ne(essit% to resolve the issue on the dis.antlin1 of the fa(ilities and an% further dela% would pre5udi(e the interests of BO+IES. Indeed, there is real and i..inent threat of irrepara$le destru(tion or su$stantial da.a1e to BO+IESN eFuip.ent and .a(hineries. <e find the resort to (ertiorari $ased on the 1ravel% a$usive orders of the trial (ourt sans the rulin1 on the O(to$er !, "&&7 .otion for re(onsideration to $e proper. T2e Core I$$1e# Ar0)c'e 1C o/ 02e Co*0r(c0

Citin1 0am(oa v. Cru<,!5 the C) also pronoun(ed that :(ertiorari and Prohi$ition are neither the re.edies to Fuestion the propriet% of an interlo(utor% order of the trial (ourt.: !' The C) erred on its relian(e on 0am(oa. 0am(oa involved the denial of a .otion to a(Fuit in a (ri.inal (ase whi(h was not assaila$le in an a(tion for (ertiorari sin(e the denial of a .otion to Fuash reFuired the a((used to plead and to (ontinue with the trial, and whatever o$5e(tions the a((used had in his .otion to Fuash (an then $e used as part of his defense and su$seFuentl% (an $e raised as errors on his appeal if the 5ud1.ent of the trial (ourt is adverse to hi.. The 1eneral rule is that interlo(utor% orders (annot $e (hallen1ed $% an appeal.!- Thus, in >amaoka v. Pescaric. -anu!acturin/ Corporation, we heldC The proper re.ed% in su(h (ases is an ordinar% appeal fro. an adverse 5ud1.ent on the merits, in(orporatin1 in said appeal the 1rounds for assailin1 the interlo(utor% orders. )llowin1 appeals fro. interlo(utor% orders would result in the Rsorr% spe(ta(leN of a (ase $ein1 su$5e(t of a (ounterprodu(tive pin/-pon/ to and fro. the appellate (ourt as often as a trial (ourt is per(eived to have .ade an error in an% of its interlo(utor% rulin1s. Gowever, where the assailed interlo(utor% order was issued with 1rave a$use of dis(retion or patentl% erroneous and the re.ed% of appeal would not afford adeFuate and e9peditious relief, the Court allows (ertiorari as a .ode of redress.!7 )lso, appeals fro. interlo(utor% orders would open the flood1ates to endless o((asions for dilator% .otions. Thus, where the interlo(utor% order was issued without or in e9(ess of 5urisdi(tion or with 1rave a$use of dis(retion, the re.ed% is (ertiorari.!& The alle1ed 1rave a$use of dis(retion of the respondent (ourt eFuivalent to la( of 5urisdi(tion in the issuan(e of the two assailed orders (oupled with the fa(t that there is no plain, speed%, and adeFuate re.ed% in the ordinar% (ourse of law a.pl% provides the $asis for allowin1 the resort to a petition for (ertiorari under Rule '5. Prem(01r)0, o/ 02e &e0)0)o* be/ore 02e CA Neither do we thin that BO+IES was 1uilt% of foru. shoppin1 in filin1 the petition for (ertiorari. Note that BO+IESN .otion for re(onsideration of the @ul% !,, "&&7 RTC Order whi(h denied the issuan(e of the in5un(tive writ had alread% $een denied. Thus, BO+IESN onl% re.ed% was to assail the RTCNs interlo(utor% order via a petition for (ertiorari under Rule '5.

<e now 1o to the (ore issue of the validit% of )rt. "5 of the Contra(t, the ar$itration (lause. It providesC )rti(le "5. 'r(itration.S)ll disputes, (ontroversies, or differen(es whi(h .a% arise $etween the parties, out of or in relation to or in (onne(tion with this Contra(t or for the $rea(h thereof, shall finall% $e settled $% ar$itration in Seoul, Borea in a((ordan(e with the Co..er(ial )r$itration Rules of the Borean Co..er(ial )r$itration 3oard. T2e (.(r+ re*+ere+ b, 02e (rb)0r(0)o*E$F $2('' be /)*(' (*+ b)*+)*7 1&o* bo02 &(r0)e$ co*cer*e+. /E.phasis supplied.0 Petitioner (lai.s the RTC and the C) erred in rulin1 that the ar$itration (lause is null and void. Petitioner is (orre(t. Esta$lished in this 5urisdi(tion is the rule that the law of the pla(e where the (ontra(t is .ade 1overns. *e3 loci contractus. The (ontra(t in this (ase was perfe(ted here in the Philippines. Therefore, our laws ou1ht to 1overn. Nonetheless, )rt. !844 of the Civil Code san(tions the validit% of .utuall% a1reed ar$itral (lause or the finalit% and $indin1 effe(t of an ar$itral award. )rt. !844 provides, :A*, $0)&1'(0)o* 02(0 02e (rb)0r(0or$> (.(r+ or +ec)$)o* $2('' be /)*(', )$ 8(')+, without pre5udi(e to )rti(les !8,7, !8,& and !848.: /E.phasis supplied.0 )rts. !8,7,," !8,&,,! and !848,, a$ove(ited refer to instan(es where a (o.pro.ise or an ar$itral award, as applied to )rt. !844 pursuant to )rt. !84,,,4 .a% $e voided, res(inded, or annulled, $ut these would not deni1rate the finalit% of the ar$itral award. The ar$itration (lause was .utuall% and voluntaril% a1reed upon $% the parties. It has not $een shown to $e (ontrar% to an% law, or a1ainst .orals, 1ood (usto.s, pu$li( order, or pu$li( poli(%. There has $een no showin1 that the parties have not dealt with ea(h other on eFual footin1. <e find no reason wh% the ar$itration (lause should not $e respe(ted and (o.plied with $% $oth parties. In 0on<ales v. Clima3 -inin/ *td.,,5 we held that su$.ission to ar$itration is a (ontra(t and that a (lause in a (ontra(t providin1 that all .atters in dispute $etween the parties shall $e referred to ar$itration is a (ontra(t.,' )1ain in Del -onte Corporation-#%' v. Court o! 'ppeals, we li ewise ruled that :ItJhe provision to su$.it to ar$itration an% dispute arisin1 therefro. and the relationship of the parties is part of that (ontra(t and is itself a (ontra(t.: ,-

Arb)0r(0)o* c'(1$e *o0 co*0r(r, 0o &1b')c &o')c, The ar$itration (lause whi(h stipulates that the ar$itration .ust $e done in Seoul, Borea in a((ordan(e with the Co..er(ial )r$itration Rules of the BC)3, and that the ar$itral award is final and $indin1, is not (ontrar% to pu$li( poli(%. This Court has san(tioned the validit% of ar$itration (lauses in a catena of (ases. In the "&5- (ase of East(oard :avi/ation *td. v. Juan >smael and Co. Inc.,,7 this Court had o((asion to rule that an ar$itration (lause to resolve differen(es and $rea(hes of .utuall% a1reed (ontra(tual ter.s is valid. In ,; Corporation v. Court o! 'ppeals, we held that :IiJn this 5urisdi(tion, ar$itration has $een held valid and (onstitutional. Even $efore the approval on @une "&, "&5, of Repu$li( )(t No. 7-', this Court has (ountenan(ed the settle.ent of disputes throu1h ar$itration. Repu$li( )(t No. 7-' was adopted to supple.ent the New Civil CodeNs provisions on ar$itration.: ,& )nd in *- Po$er En/ineerin/ Corporation v. Capitol Industrial Construction 0roups Inc., we de(lared thatC 3ein1 an ine9pensive, speed% and a.i(a$le .ethod of settlin1 disputes, ar$itrationHH alon1 with .ediation, (on(iliation and ne1otiationHHis en(oura1ed $% the Supre.e Court. )side fro. un(lo11in1 5udi(ial do( ets, ar$itration also hastens the resolution of disputes, espe(iall% of the (o..er(ial ind. It is thus re1arded as the :wave of the future: in international (ivil and (o..er(ial disputes. 3rushin1 aside a (ontra(tual a1ree.ent (allin1 for ar$itration $etween the parties would $e a step $a( ward. Consistent with the a$ove*.entioned poli(% of en(oura1in1 alternative dispute resolution .ethods, (ourts should li$erall% (onstrue ar$itration (lauses. Provided su(h (lause is sus(epti$le of an interpretation that (overs the asserted dispute, an order to ar$itrate should $e 1ranted. )n% dou$t should $e resolved in favor of ar$itration.48 Gavin1 said that the instant ar$itration (lause is not a1ainst pu$li( poli(%, we (o.e to the Fuestion on what 1overns an ar$itration (lause spe(if%in1 that in (ase of an% dispute arisin1 fro. the (ontra(t, an ar$itral panel will $e (onstituted in a forei1n (ountr% and the ar$itration rules of the forei1n (ountr% would 1overn and its award shall $e final and $indin1. RA 92<C )*cor&or(0e+ 02e UNCITRAL "o+e' '(. 0o .2)c2 .e (re ( $)7*(0or, #or do.esti( ar$itration pro(eedin1s, we have parti(ular a1en(ies to ar$itrate disputes arisin1 fro. (ontra(tual relations. In (ase a forei1n ar$itral $od% is (hosen $% the parties, the ar$itration rules of our do.esti( ar$itration $odies would not $e applied. )s si1nator% to the )r$itration Rules of the 2NCITR)= ;odel =aw on International Co..er(ial )r$itration 4" of the 2nited Nations Co..ission on International Trade =aw /2NCITR)=0 in the New Kor Convention on @une !", "&75, the Philippines (o..itted itself to $e $ound $% the ;odel =aw. <e have even in(orporated the ;odel =aw in Repu$li( )(t No. /R)0 &!75, otherwise nown as the )lternative Dispute Resolution )(t of !884 entitled 'n 'ct to Institutionali<e t.e #se o! an 'lternative Dispute Resolution %&stem in t.e P.ilippines and to Esta(lis. t.e O!!ice !or 'lternative Dispute Resolution and !or Ot.er Purposes, pro.ul1ated on )pril !, !884. Se(s. "& and !8 of Chapter 4 of the ;odel =aw are the pertinent provisionsC CG)PTER 4 * INTERN)TION)= CO;;ERCI)= )R3ITR)TION SEC. "&. 'doption o! t.e -odel *a$ on International Commercial 'r(itration.HH International (o..er(ial ar$itration shall $e 1overned $% the ;odel =aw on International Co..er(ial )r$itration /the :;odel =aw:0 adopted $% the 2nited Nations Co..ission on International Trade =aw on @une !", "&75 /2nited Nations Do(u.ent )6486"-0 and re(o..ended for ena(t.ent $% the +eneral )sse.$l% in Resolution No.

486-! approved on De(e.$er "", "&75, (op% of whi(h is hereto atta(hed as )ppendi9 :):. SEC. !8. Interpretation o! -odel *a$.HHIn interpretin1 the ;odel =aw, re1ard shall $e had to its international ori1in and to the need for unifor.it% in its interpretation and resort .a% $e .ade to the travau3 preparatories and the report of the Se(retar% +eneral of the 2nited Nations Co..ission on International Trade =aw dated ;ar(h !5, "&75 entitled, :International Co..er(ial )r$itrationC )nal%ti(al Co..entar% on Draft Trade identified $% referen(e nu.$er )6CN. &6!'4.: <hile R) &!75 was passed onl% in !884, it nonetheless applies in the instant (ase sin(e it is a pro(edural law whi(h has a retroa(tive effe(t. =i ewise, BO+IES filed its appli(ation for ar$itration $efore the BC)3 on @ul% ", "&&7 and it is still pendin1 $e(ause no ar$itral award has %et $een rendered. Thus, R) &!75 is appli(a$le to the instant (ase. <ell*settled is the rule that pro(edural laws are (onstrued to $e appli(a$le to a(tions pendin1 and undeter.ined at the ti.e of their passa1e, and are dee.ed retroa(tive in that sense and to that e9tent. )s a 1eneral rule, the retroa(tive appli(ation of pro(edural laws does not violate an% personal ri1hts $e(ause no vested ri1ht has %et atta(hed nor arisen fro. the..4! ).on1 the pertinent features of R) &!75 appl%in1 and in(orporatin1 the 2NCITR)= ;odel =aw are the followin1C E1F T2e RTC m1$0 re/er 0o (rb)0r(0)o* )* &ro&er c($e$ 2nder Se(. !4, the RTC does not have 5urisdi(tion over disputes that are properl% the su$5e(t of ar$itration pursuant to an ar$itration (lause, and .andates the referral to ar$itration in su(h (ases, thusC SEC. !4. Re!erral to 'r(itration.HH) (ourt $efore whi(h an a(tion is $rou1ht in a .atter whi(h is the su$5e(t .atter of an ar$itration a1ree.ent shall, if at least one part% so reFuests not later than the pre*trial (onferen(e, or upon the reFuest of $oth parties thereafter, refer the parties to ar$itration unless it finds that the ar$itration a1ree.ent is null and void, inoperative or in(apa$le of $ein1 perfor.ed. E2F ;ore)7* (rb)0r(' (.(r+$ m1$0 be co*/)rme+ b, 02e RTC #orei1n ar$itral awards while .utuall% stipulated $% the parties in the ar$itration (lause to $e final and $indin1 are not i..ediatel% enfor(ea$le or (annot $e i.ple.ented i..ediatel%. Se(. ,54, of the 2NCITR)= ;odel =aw stipulates the reFuire.ent for the ar$itral award to $e re(o1ni?ed $% a (o.petent (ourt for enfor(e.ent, whi(h (ourt under Se(. ,' of the 2NCITR)= ;odel =aw .a% refuse re(o1nition or enfor(e.ent on the 1rounds provided for. R) &!75 in(orporated these provisos to Se(s. 4!, 4,, and 44 relative to Se(s. 4- and 47, thusC SEC. 4!. 'pplication o! t.e :e$ >ork Convention.HHThe New Kor Convention shall 1overn the re(o1nition and enfor(e.ent of ar$itral awards (overed $% said Convention. The re(o1nition and enfor(e.ent of su(h ar$itral awards shall $e filed with the Re7)o*(' Tr)(' Co1r0 in a((ordan(e with the rules of pro(edure to $e pro.ul1ated $% the Supre.e Court. Said pro(edural rules shall provide that the part% rel%in1 on the award or appl%in1 for its enfor(e.ent shall file with the (ourt the ori1inal or authenti(ated (op% of the award and the ar$itration a1ree.ent. If the award or

a1ree.ent is not .ade in an% of the offi(ial lan1ua1es, the part% shall suppl% a dul% (ertified translation thereof into an% of su(h lan1ua1es. The appli(ant shall esta$lish that the (ountr% in whi(h forei1n ar$itration award was .ade in part% to the New Kor Convention. 9999 SEC. 4,. Reco/nition and En!orcement o! ;orei/n 'r(itral '$ards :ot Covered (& t.e :e$ >ork Convention.HHThe re(o1nition and enfor(e.ent of forei1n ar$itral awards not (overed $% the New Kor Convention shall $e done in a((ordan(e with pro(edural rules to $e pro.ul1ated $% the Supre.e Court. The Court .a%, on 1rounds of (o.it% and re(ipro(it%, re(o1ni?e and enfor(e a non*(onvention award as a (onvention award. SEC. 44. ;orei/n 'r(itral '$ard :ot ;orei/n Jud/ment.HH) forei1n ar$itral award when (onfir.ed $% a (ourt of a forei1n (ountr%, shall $e re(o1ni?ed and enfor(ed as a forei1n ar$itral award and not as a 5ud1.ent of a forei1n (ourt. ) forei1n ar$itral award, when (onfir.ed $% the Re1ional Trial Court, shall $e enfor(ed in the sa.e .anner as final and e9e(utor% de(isions of (ourts of law of the Philippines 9999 SEC. 4-. 2enue and Jurisdiction.HHPro(eedin1s for re(o1nition and enfor(e.ent of an ar$itration a1ree.ent or for va(ations, settin1 aside, (orre(tion or .odifi(ation of an ar$itral award, and an% appli(ation with a (ourt for ar$itration assistan(e and supervision shall $e dee.ed as spe(ial pro(eedin1s and shall $e filed with the Re1ional Trial Court /i0 where ar$itration pro(eedin1s are (ondu(tedD /ii0 where the asset to $e atta(hed or levied upon, or the a(t to $e en5oined is lo(atedD /iii0 where an% of the parties to the dispute resides or has his pla(e of $usinessD or /iv0 in the National @udi(ial Capital Re1ion, at the option of the appli(ant. SEC. 47. :otice o! Proceedin/ to Parties.HHIn a spe(ial pro(eedin1 for re(o1nition and enfor(e.ent of an ar$itral award, the Court shall send noti(e to the parties at their address of re(ord in the ar$itration, or if an% part (annot $e served noti(e at su(h address, at su(h part%Ns last nown address. The noti(e shall $e sent al least fifteen /"50 da%s $efore the date set for the initial hearin1 of the appli(ation. It is now (lear that forei1n ar$itral awards when (onfir.ed $% the RTC are dee.ed not as a 5ud1.ent of a forei1n (ourt $ut as a forei1n ar$itral award, and when (onfir.ed, are enfor(ed as final and e9e(utor% de(isions of our (ourts of law. Thus, it (an $e 1leaned that the (on(ept of a final and $indin1 ar$itral award is si.ilar to 5ud1.ents or awards 1iven $% so.e of our Fuasi*5udi(ial $odies, li e the National =a$or Relations Co..ission and ;ines )d5udi(ation 3oard, whose final 5ud1.ents are stipulated to $e final and $indin1, $ut not i..ediatel% e9e(utor% in the sense that the% .a% still $e 5udi(iall% reviewed, upon the instan(e of an% part%. Therefore, the final forei1n ar$itral awards are si.ilarl% situated in that the% need first to $e (onfir.ed $% the RTC. E:F T2e RTC 2($ ?1r)$+)c0)o* 0o re8)e. /ore)7* (rb)0r(' (.(r+$

Se(. 4! in relation to Se(. 45 of R) &!75 desi1nated and vested the RTC with spe(ifi( authorit% and 5urisdi(tion to set aside, re5e(t, or va(ate a forei1n ar$itral award on 1rounds provided under )rt. ,4/!0 of the 2NCITR)= ;odel =aw. Se(s. 4! and 45 provideC SEC. 4!. 'pplication o! t.e :e$ >ork Convention.HHThe New Kor Convention shall 1overn the re(o1nition and enfor(e.ent of ar$itral awards (overed $% said Convention. The re(o1nition and enfor(e.ent of su(h ar$itral awards shall $e filed with the Re7)o*(' Tr)(' Co1r0 in a((ordan(e with the rules of pro(edure to $e pro.ul1ated $% the Supre.e Court. Said pro(edural rules shall provide that the part% rel%in1 on the award or appl%in1 for its enfor(e.ent shall file with the (ourt the ori1inal or authenti(ated (op% of the award and the ar$itration a1ree.ent. If the award or a1ree.ent is not .ade in an% of the offi(ial lan1ua1es, the part% shall suppl% a dul% (ertified translation thereof into an% of su(h lan1ua1es. The appli(ant shall esta$lish that the (ountr% in whi(h forei1n ar$itration award was .ade is part% to the New Kor Convention. If the appli(ation for re5e(tion or suspension of enfor(e.ent of an award has $een .ade, the Re1ional Trial Court .a%, if it (onsiders it proper, va(ate its de(ision and .a% also, on the appli(ation of the part% (lai.in1 re(o1nition or enfor(e.ent of the award, order the part% to provide appropriate se(urit%. 9999 SEC. 45. Re1ection o! a ;orei/n 'r(itral '$ard.HH) part% to a forei1n ar$itration pro(eedin1 .a% oppose an appli(ation for re(o1nition and enfor(e.ent of the ar$itral award in a((ordan(e with the pro(edures and rules to $e pro.ul1ated $% the Supre.e Court onl% on those 1rounds enu.erated under )rti(le E of the New Kor Convention. )n% other 1round raised shall $e disre1arded $% the Re1ional Trial Court. Thus, while the RTC does not have 5urisdi(tion over disputes 1overned $% ar$itration .utuall% a1reed upon $% the parties, still the forei1n ar$itral award is su$5e(t to 5udi(ial review $% the RTC whi(h (an set aside, re5e(t, or va(ate it. In this sense, what this Court held in C.un/ ;u Industries 4P.ils.5 Inc. relied upon $% BO+IES is appli(a$le insofar as the forei1n ar$itral awards, while final and $indin1, do not oust (ourts of 5urisdi(tion sin(e these ar$itral awards are not a$solute and without e9(eptions as the% are still 5udi(iall% reviewa$le. Chapter - of R) &!75 has .ade it (lear that all ar$itral awards, whether do.esti( or forei1n, are su$5e(t to 5udi(ial review on spe(ifi( 1rounds provided for. E6F Gro1*+$ /or ?1+)c)(' re8)e. +)//ere*0 )* +ome$0)c (*+ /ore)7* (rb)0r(' (.(r+$ The differen(es $etween a final ar$itral award fro. an international or forei1n ar$itral tri$unal and an award 1iven $% a lo(al ar$itral tri$unal are the spe(ifi( 1rounds or (onditions that vest 5urisdi(tion over our (ourts to review the awards. #or forei1n or international ar$itral awards whi(h .ust first $e (onfir.ed $% the RTC, the 1rounds for settin1 aside, re5e(tin1 or va(atin1 the award $% the RTC are provided under )rt. ,4/!0 of the 2NCITR)= ;odel =aw.

#or final do.esti( ar$itral awards, whi(h also need (onfir.ation $% the RTC pursuant to Se(. !, of R) 7-'44 and shall $e re(o1ni?ed as final and e9e(utor% de(isions of the RTC,45 the% .a% onl% $e assailed $efore the RTC and va(ated on the 1rounds provided under Se(. !5 of R) 7-'.4' ECF RTC +ec)$)o* o/ ($$()'e+ /ore)7* (rb)0r(' (.(r+ (&&e('(b'e Se(. 4' of R) &!75 provides for an appeal $efore the C) as the re.ed% of an a11rieved part% in (ases where the RTC sets aside, re5e(ts, va(ates, .odifies, or (orre(ts an ar$itral award, thusC SEC. 4'. 'ppeal !rom Court Decision or 'r(itral '$ards.S) de(ision of the Re1ional Trial Court (onfir.in1, va(atin1, settin1 aside, .odif%in1 or (orre(tin1 an ar$itral award .a% $e appealed to the Court of )ppeals in a((ordan(e with the rules and pro(edure to $e pro.ul1ated $% the Supre.e Court. The losin1 part% who appeals fro. the 5ud1.ent of the (ourt (onfir.in1 an ar$itral award shall $e reFuired $% the appellate (ourt to post a (ounter$ond e9e(uted in favor of the prevailin1 part% eFual to the a.ount of the award in a((ordan(e with the rules to $e pro.ul1ated $% the Supre.e Court. Thereafter, the C) de(ision .a% further $e appealed or reviewed $efore this Court throu1h a petition for review under Rule 45 of the Rules of Court. PGS"C 2($ reme+)e$ 0o &ro0ec0 )0$ )*0ere$0$ Thus, $ased on the fore1oin1 features of R) &!75, P+S;C .ust su$.it to the forei1n ar$itration as it $ound itself throu1h the su$5e(t (ontra(t. <hile it .a% have .is1ivin1s on the forei1n ar$itration done in Borea $% the BC)3, it has availa$le re.edies under R) &!75. Its interests are dul% prote(ted $% the law whi(h reFuires that the ar$itral award that .a% $e rendered $% BC)3 .ust $e (onfir.ed here $% the RTC $efore it (an $e enfor(ed. <ith our disFuisition a$ove, petitioner is (orre(t in its (ontention that an ar$itration (lause, stipulatin1 that the ar$itral award is final and $indin1, does not oust our (ourts of 5urisdi(tion as the international ar$itral award, the award of whi(h is not a$solute and without e9(eptions, is still 5udi(iall% reviewa$le under (ertain (onditions provided for $% the 2NCITR)= ;odel =aw on IC) as applied and in(orporated in R) &!75. #inall%, it .ust $e noted that there is nothin1 in the su$5e(t Contra(t whi(h provides that the parties .a% dispense with the ar$itration (lause. U*)'(0er(' re$c)$$)o* )m&ro&er (*+ )''e7(' Gavin1 ruled that the ar$itration (lause of the su$5e(t (ontra(t is valid and $indin1 on the parties, and not (ontrar% to pu$li( poli(%D (onseFuentl%, $ein1 $ound to the (ontra(t of ar$itration, a part% .a% not unilaterall% res(ind or ter.inate the (ontra(t for whatever (ause without first resortin1 to ar$itration. <hat this Court held in #niversit& o! t.e P.ilippines v. De *os 'n/eles4- and reiterated in su((eedin1 (ases,47 that the a(t of treatin1 a (ontra(t as res(inded on a((ount of infra(tions $% the other (ontra(tin1 part% is valid al$eit provisional as it (an $e 5udi(iall% assailed, is not appli(a$le to the instant (ase on a((ount of a valid stipulation on ar$itration. <here an ar$itration (lause in a (ontra(t is availin1, neither of the parties (an unilaterall% treat the (ontra(t

as res(inded sin(e whatever infra(tions or $rea(hes $% a part% or differen(es arisin1 fro. the (ontra(t .ust $e $rou1ht first and resolved $% ar$itration, and not throu1h an e9tra5udi(ial res(ission or 5udi(ial a(tion. The issues arisin1 fro. the (ontra(t $etween P+S;C and BO+IES on whether the eFuip.ent and .a(hineries delivered and installed were properl% installed and operational in the plant in Car.ona, CaviteD the ownership of eFuip.ent and pa%.ent of the (ontra(t pri(eD and whether there was su$stantial (o.plian(e $% BO+IES in the produ(tion of the sa.ples, 1iven the alle1ed fa(t that P+S;C (ould not suppl% the raw .aterials reFuired to produ(e the sa.ple =P+ (%linders, are .atters proper for ar$itration. Indeed, we note that on @ul% ", "&&7, BO+IES instituted an )ppli(ation for )r$itration $efore the BC)3 in Seoul, Borea pursuant to )rt. "5 of the Contra(t as a.ended. Thus, it is in(u.$ent upon P+S;C to a$ide $% its (o..it.ent to ar$itrate. Corollaril%, the trial (ourt 1ravel% a$used its dis(retion in 1rantin1 P+S;CNs ;otion for Inspe(tion of Thin1s on Septe.$er !", "&&7, as the su$5e(t .atter of the .otion is under the pri.ar% 5urisdi(tion of the .utuall% a1reed ar$itral $od%, the BC)3 in Borea. In addition, whatever findin1s and (on(lusions .ade $% the RTC 3ran(h Sheriff fro. the inspe(tion .ade on O(to$er !7, "&&7, as ordered $% the trial (ourt on O(to$er "&, "&&7, is of no worth as said Sheriff is not te(hni(all% (o.petent to as(ertain the a(tual status of the eFuip.ent and .a(hineries as installed in the plant. #or these reasons, the Septe.$er !", "&&7 and O(to$er "&, "&&7 RTC Orders pertainin1 to the 1rant of the inspe(tion of the eFuip.ent and .a(hineries have to $e re(alled and nullified. I$$1e o* o.*er$2)& o/ &'(*0 &ro&er /or (rb)0r(0)o* Petitioner assails the C) rulin1 that the issue petitioner raised on whether the total (ontra(t pri(e of 2SD ",5,8,888 was for the whole plant and its installation is $e%ond the a.$it of a Petition for Certiorari. PetitionerNs position is untena$le. It is settled that Fuestions of fa(t (annot $e raised in an ori1inal a(tion for (ertiorari. 4& <hether or not there was full pa%.ent for the .a(hineries and eFuip.ent and installation is indeed a fa(tual issue prohi$ited $% Rule '5. Gowever, what appears to (onstitute a 1rave a$use of dis(retion is the order of the RTC in resolvin1 the issue on the ownership of the plant when it is the ar$itral $od% /BC)30 and not the RTC whi(h has 5urisdi(tion and authorit% over the said issue. The RTCNs deter.ination of su(h fa(tual issue (onstitutes 1rave a$use of dis(retion and .ust $e reversed and set aside. RTC 2($ )*0er)m ?1r)$+)c0)o* 0o &ro0ec0 02e r)720$ o/ 02e &(r0)e$ )nent the @ul% !,, "&&7 Order den%in1 the issuan(e of the in5un(tive writ pavin1 the wa% for P+S;C to dis.antle and transfer the eFuip.ent and .a(hineries, we find it to $e in order (onsiderin1 the fa(tual .ilieu of the instant (ase. #irstl%, while the issue of the proper installation of the eFuip.ent and .a(hineries .i1ht well $e under the pri.ar% 5urisdi(tion of the ar$itral $od% to de(ide, %et the RTC under Se(. !7 of R)

&!75 has 5urisdi(tion to hear and 1rant interi. .easures to prote(t vested ri1hts of the parties. Se(. !7 pertinentl% providesC SEC. !7. 0rant o! interim -easure o! Protection.S/a0 I0 )$ *o0 )*com&(0)b'e .)02 (* (rb)0r(0)o* (7reeme*0 /or ( &(r0, 0o reA1e$0, be/ore co*$0)010)o* o/ 02e 0r)b1*(', /rom ( Co1r0 0o 7r(*0 $1c2 me($1re. )fter (onstitution of the ar$itral tri$unal and durin1 ar$itral pro(eedin1s, a reFuest for an interi. .easure of prote(tion, or .odifi(ation thereof, .a% $e .ade with the ar$itral or 0o 02e e%0e*0 02(0 02e (rb)0r(' 0r)b1*(' 2($ *o &o.er 0o (c0 or )$ 1*(b'e 0o (c0 e//ec0)8)0,, 02e reA1e$0 m(, be m(+e .)02 02e Co1r0. The ar$itral tri$unal is dee.ed (onstituted when the sole ar$itrator or the third ar$itrator, who has $een no.inated, has a((epted the no.ination and written (o..uni(ation of said no.ination and a((eptan(e has $een re(eived $% the part% .a in1 the reFuest. /$0 The followin1 rules on interi. or provisional relief shall $e o$servedC )n% part% .a% reFuest that provisional relief $e 1ranted a1ainst the adverse part%. Su(h relief .a% $e 1rantedC /i0 0o &re8e*0 )rre&(r(b'e 'o$$ or )*?1r,D

999 999 999 /!0 )n )*0er)m me($1re is an% te.porar% .easure, whether in the for. of an award or in another for., $% whi(h, at an% ti.e prior to the issuan(e of the award $% whi(h the dispute is finall% de(ided, the ar$itral tri$unal orders a part% toC 4a5 ;aintain or restore the status Fuo pendin1 deter.ination of the disputeD 4(5 Ta e a(tion that would prevent, or refrain fro. ta in1 a(tion that is li el% to (ause, (urrent or i..inent har. or pre5udi(e to the ar$itral pro(ess itselfD 4c5 Provide a .eans of preservin1 assets out of whi(h a su$seFuent award .a% $e satisfiedD or 4d5 Preserve eviden(e that .a% $e relevant and .aterial to the resolution of the dispute. )rt. "- @ of 2NCITR)= ;odel =aw on IC) also 1rants (ourts power and 5urisdi(tion to issue interi. .easuresC 'rticle 1? J. Court-ordered interim measures

/ii0 to provide se(urit% for the perfor.an(e of an% o$li1ationD /iii0 to produ(e or preserve an% eviden(eD or /iv0 to (o.pel an% other appropriate a(t or o.ission. /(0 The order 1rantin1 provisional relief .a% $e (onditioned upon the provision of se(urit% or an% a(t or o.ission spe(ified in the order. /d0 Interi. or provisional relief is reFuested $% written appli(ation trans.itted $% reasona$le .eans to the Court or ar$itral tri$unal as the (ase .a% $e and the part% a1ainst who. the relief is sou1ht, des(ri$in1 in appropriate detail the pre(ise relief, the part% a1ainst who. the relief is reFuested, the 1rounds for the relief, and the eviden(e supportin1 the reFuest. /e0 T2e or+er $2('' be b)*+)*7 1&o* 02e &(r0)e$. /f0 Either part% .a% appl% with the Court for assistan(e in i.ple.entin1 or enfor(in1 an interi. .easure ordered $% an ar$itral tri$unal. /10 ) part% who does not (o.pl% with the order shall $e lia$le for all da.a1es resultin1 fro. non(o.plian(e, in(ludin1 all e9penses, and reasona$le attorne%4s fees, paid in o$tainin1 the orderNs 5udi(ial enfor(e.ent. /E.phasis ours.0 )rt. "-/!0 of the 2NCITR)= ;odel =aw on IC) defines an :interi. .easure: of prote(tion asC 'rticle 1?. Po$er o! ar(itral tri(unal to order interim measures ) (ourt shall have the sa.e power of issuin1 an interi. .easure in relation to ar$itration pro(eedin1s, irrespe(tive of whether their pla(e is in the territor% of this State, as it has in relation to pro(eedin1s in (ourts. The (ourt shall e9er(ise su(h power in a((ordan(e with its own pro(edures in (onsideration of the spe(ifi( features of international ar$itration. In the re(ent !88' (ase of Trans!ield P.ilippines Inc. v. *u<on )&dro Corporation, we were e9pli(it that even :the penden(% of an ar$itral pro(eedin1 does not fore(lose resort to the (ourts for provisional reliefs.: <e e9pli(ated this wa%C )s a funda.ental point, the penden(% of ar$itral pro(eedin1s does not fore(lose resort to the (ourts for provisional reliefs. The Rules of the ICC, whi(h 1overns the partiesN ar$itral dispute, allows the appli(ation of a part% to a 5udi(ial authorit% for interi. or (onservator% .easures. =i ewise, Se(tion "4 of Repu$li( )(t /R.).0 No. 7-' /The )r$itration =aw0 re(o1ni?es the ri1hts of an% part% to petition the (ourt to ta e .easures to safe1uard and6or (onserve an% .atter whi(h is the su$5e(t of the dispute in ar$itration. In addition, R.). &!75, otherwise nown as the :)lternative Dispute Resolution )(t of !884,: allows the filin1 of provisional or interi. .easures with the re1ular (ourts whenever the ar$itral tri$unal has no power to a(t or to a(t effe(tivel%. 58 It is thus $e%ond (avil that the RTC has authorit% and 5urisdi(tion to 1rant interi. .easures of prote(tion. Se(ondl%, (onsiderin1 that the eFuip.ent and .a(hineries are in the possession of P+S;C, it has the ri1ht to prote(t and preserve the eFuip.ent and .a(hineries in the $est wa% it (an. Considerin1 that the =P+ plant was non*operational, P+S;C has the ri1ht to dis.antle and transfer the eFuip.ent and .a(hineries either for their prote(tion and preservation or for the $etter wa% to .a e 1ood use of the. whi(h is inelu(ta$l% within the .ana1e.ent dis(retion of P+S;C.

Thirdl%, and of 1reater i.port is the reason that .aintainin1 the eFuip.ent and .a(hineries in <orthNs propert% is not to the $est interest of P+S;C due to the prohi$itive rent while the =P+ plant as set*up is not operational. P+S;C was losin1 PhP,!!,5'8 as .onthl% rentals or PhP,.7-; for "&&7 alone without (onsiderin1 the "8A annual rent in(re.ent in .aintainin1 the plant. #ourthl%, and (orollaril%, while the BC)3 (an rule on .otions or petitions relatin1 to the preservation or transfer of the eFuip.ent and .a(hineries as an interi. .easure, %et on hindsi1ht, the @ul% !,, "&&7 Order of the RTC allowin1 the transfer of the eFuip.ent and .a(hineries 1iven the non*re(o1nition $% the lower (ourts of the ar$itral (lause, has a((orded an interi. .easure of prote(tion to P+S;C whi(h would otherwise $een irrepara$l% da.a1ed. #ifth, BO+IES is not un5ustl% pre5udi(ed as it has alread% $een paid ( su$stantial a.ount $ased on the (ontra(t. ;oreover, BO+IES is a.pl% prote(ted $% the ar$itral a(tion it has instituted $efore the BC)3, the award of whi(h (an $e enfor(ed in our 5urisdi(tion throu1h the RTC. 3esides, $% our de(ision, P+S;C is (o.pelled to su$.it to ar$itration pursuant to the valid ar$itration (lause of its (ontra(t with BO+IES. PGS"C 0o &re$er8e 02e $1b?ec0 eA1)&me*0 (*+ m(c2)*er)e$ #inall%, while P+S;C .a% have $een 1ranted the ri1ht to dis.antle and transfer the su$5e(t eFuip.ent and .a(hineries, it does not have the ri1ht to (onve% or dispose of the sa.e (onsiderin1 the pendin1 ar$itral pro(eedin1s to settle the differen(es of the parties. P+S;C therefore .ust preserve and .aintain the su$5e(t eFuip.ent and .a(hineries with the dili1en(e of a 1ood father of a fa.il%5" until final resolution of the ar$itral pro(eedin1s and enfor(e.ent of the award, if an%. WBERE;ORE, this petition is PARTLY GRANTED, in thatC /"0 The ;a% ,8, !888 C) De(ision in C)*+.R. SP No. 4&!4& is RE!ERSED and SET ASIDED /!0 The Septe.$er !", "&&7 and O(to$er "&, "&&7 RTC Orders in Civil Case No. &7*""- are RE!ERSED and SET ASIDED /,0 The parties are here$% ORDERED to su$.it the.selves to the ar$itration of their dispute and differen(es arisin1 fro. the su$5e(t Contra(t $efore the BC)3D and /40 P+S;C is here$% ALLOWED to dis.antle and transfer the eFuip.ent and .a(hineries, if it had not done so, and ORDERED to preserve and .aintain the. until the finalit% of whatever ar$itral award is 1iven in the ar$itration pro(eedin1s. No pronoun(e.ent as to (osts. SO ORDERED. G.R. No. 1C6660 A171$0 26, 2009

vs. TBE COURT O; APPEALS ES&ec)(' ;ormer S)%02 D)8)$)o*F, BIDECO SUGAR "ILLING CO., INC., (*+ OR"OC SUGAR "ILLING CO., INC., Respondents. DECISION LEONARDO-DE CASTRO, J.: 3efore the Court is a spe(ial (ivil a(tion for (ertiorari assailin1 the De(ision " dated De(e.$er -, !88" and the Resolution dated O(to$er ,8, !88! of the Court of )ppeals /C)0 in C)*+.R. SP No. 5'"'' whi(h set aside the @oint Orders! dated )u1ust !', "&&& and O(to$er !&, "&&& issued $% the Re1ional Trial Court /RTC0 of Or.o( Cit%, 3ran(h "! upholdin1 petitionersN le1al personalit% to de.and ar$itration fro. respondents and dire(tin1 respondents to no.inate two ar$itrators to represent the. in the 3oard of )r$itrators. Petitioners are asso(iations or1ani?ed $% and whose .e.$ers are individual su1ar planters /Planters0. The .e.$ership of ea(h asso(iation followsC !'4 Planters were .e.$ers of OSP)D 5,, Planters $elon1 to O=#);C)D '"- Planters 5oined 2NI#)R;D -'8 Planters enlisted with ONDI;COD and the rest $elon1 to 3)P*;PC whi(h did not 5oin the lawsuit. Respondents Gide(o Su1ar ;illin1 Co., In(. /Gide(o0 and Or.o( Su1ar ;illin1 Co, In(. /OSCO0 are su1ar (entrals en1a1ed in 1rindin1 and .illin1 su1ar(ane delivered to the. $% nu.erous individual su1ar planters, who .a% or .a% not $e .e.$ers of an asso(iation su(h as petitioners. Petitioners assert that the relationship $etween respondents and the individual su1ar planters is 1overned $% .illin1 (ontra(ts. To $uttress this (lai., petitioners presented representative sa.ples of the .illin1 (ontra(ts., Nota$l%, )rti(le EII of the .illin1 (ontra(ts provides that ,4A of the su1ar and .olasses produ(ed fro. .illin1 the PlanterNs su1ar(ane shall $elon1 to the (entrals /respondents0 as (o.pensation, '5A thereof shall 1o to the Planter and the re.ainin1 "A shall 1o the asso(iation to whi(h the Planter (on(erned $elon1s, as aid to the said asso(iation. The "A aid shall $e used $% the asso(iation for an% purpose that it .a% dee. fit for its .e.$ers, la$orers and their dependents. If the Planter was not a .e.$er of an% asso(iation, then the said "A shall revert to the (entrals. )rti(le QIE, para1raph 34 states that the (entrals .a% not, durin1 the life of the .illin1 (ontra(t, si1n or e9e(ute an% (ontra(t or a1ree.ent that will provide $etter or .ore $enefits to a Planter, without the written (onsent of the e9istin1 and re(o1ni?ed asso(iations e9(ept to Planters whose plantations are situated in areas $e%ond thirt% /,80 ilo.eters fro. the .ill. )rti(le QQ provides that all differen(es and (ontroversies whi(h .a% arise $etween the parties (on(ernin1 the a1ree.ent shall $e su$.itted for dis(ussion to a 3oard of )r$itration, (onsistin1 of five /50 .e.$ersStwo /!0 of whi(h shall $e appointed $% the (entrals, two /!0 $% the Planter and the fifth to $e appointed $% the four appointed $% the parties. On @une 4, "&&&, petitioners, without i.pleadin1 an% of their individual .e.$ers, filed twin petitions with the RTC for )r$itration under R.). 7-', Re(over% of EFual )dditional 3enefits, )ttorne%Ns #ees and Da.a1es, a1ainst GIDECO and OSCO, do( eted as Civil Case Nos. ,'&'* O and ,'&-*O, respe(tivel%. Petitioners (lai.ed that respondents violated the ;illin1 Contra(t when the% 1ave to independent planters who do not $elon1 to an% asso(iation the "A share, instead of revertin1 said share to the (entrals. Petitioners (ontended that respondents undul% a((orded the independent Planters .ore $enefits and thus pra%ed that an order $e issued dire(tin1 the parties to (o..en(e with ar$itration in a((ordan(e with the ter.s of the .illin1 (ontra(ts. The%

OR"OC SUGARCANE PLANTERSG ASSOCIATION, INC. EOSPAF,OCCIDENTAL LEYTE ;AR"ERS "ULTI-PURPOSE COOPERATI!E, INC. EOL;A"CAF, UNI;AR" "ULTIPURPOSE COOPERATI!E, INC. EUNI;AR"F (*+ OR"OC NORTB DISTRICT IRRIGATION "ULTI-PURPOSE COOPERATI!E, INC. EONDI"COF, Petitioners,

also de.anded that respondents $e penali?ed $% in(reasin1 their .e.$er PlantersN '5A share provided in the .illin1 (ontra(t $% "A, to ''A. Respondents filed a .otion to dis.iss on 1round of la( of (ause of a(tion $e(ause petitioners had no .illin1 (ontra(t with respondents. )((ordin1 to respondents, onl% so.e ei1ht% /780 Planters who were .e.$ers of OSP), one of the petitioners, e9e(uted .illin1 (ontra(ts. Respondents and these 78 Planters were the si1natories of the .illin1 (ontra(ts. Thus, it was the individual Planters, and not petitioners, who had le1al standin1 to invo e the ar$itration (lause in the .illin1 (ontra(ts. Petitioners, not $ein1 priv% to the .illin1 (ontra(ts, had no le1al standin1 whatsoever to de.and or sue for ar$itration. On )u1ust !', "&&&, the RTC issued a @oint Order5 den%in1 the .otion to dis.iss, de(larin1 the e9isten(e of a .illin1 (ontra(t $etween the parties, and dire(tin1 respondents to no.inate two ar$itrators to the 3oard of )r$itrators, to witC <hen these (ases were (alled for hearin1 toda%, (ounsels for the petitioners and respondents ar1ued their respe(tive stand. The Court is (onvin(ed that there is an e9istin1 .illin1 (ontra(t $etween the petitioners and respondents and these planters are represented $% the offi(ers of the asso(iations. The petitioners have the ri1ht to sue in $ehalf of the planters. This Court, a(tin1 on the petitions, dire(ts the respondents to no.inate two ar$itrators to represent GIDECO6GIS2;CO and OSCO in the 3oard of )r$itrators within fifteen /"50 da%s fro. re(eipt of this Order. 999 Gowever, if the respondents fail to no.inate their two ar$itrators, upon proper .otion $% the petitioners, then the Court will $e (o.pelled to use its dis(retion to appoint the two /!0 ar$itrators, as e.$odied in the ;illin1 Contra(t and R.). 7-'. 999 Their su$seFuent .otion for re(onsideration havin1 $een denied $% the RTC in its @oint Order ' dated O(to$er !&, "&&&, respondents elevated the (ase to the C) throu1h a Petition for Certiorari with Pra%er for the Issuan(e of Te.porar% Restrainin1 Order and6or <rit of Preli.inar% In5un(tion. On De(e.$er -, !88", the C) rendered its (hallen1ed De(ision, settin1 aside the assailed Orders of the RTC. The C) held that petitioners neither had an e9istin1 (ontra(t with respondents nor were the% priv% to the .illin1 (ontra(ts $etween respondents and the individual Planters. In the .ain, the C) (on(luded that petitioners had no le1al personalit% to $rin1 the a(tion a1ainst respondents or to de.and for ar$itration. Petitioners filed a .otion for re(onsideration, $ut it too was denied $% the C) in its Resolution dated O(to$er ,8, !88!. Thus, the instant petition. )t the outset, it .ust $e noted that petitioners filed the instant petition for (ertiorari under Rule '5 of the Rules of Court, to (hallen1e the 5ud1.ent of the C). Se(tion " of Rule '5 statesC Se(tion ". Petition for Certiorari. H <hen an% tri$unal, $oard or offi(er e9er(isin1 5udi(ial or Fuasi*5udi(ial fun(tions has a(ted without or in e9(ess of its 5urisdi(tion, or with 1rave a$use of dis(retion a.ountin1 to la( or e9(ess of its or his 5urisdi(tion and there is no appeal, or an% plain, speed% and adeFuate re.ed% in the (ourse of law, a person a11rieved there$% .a% file a verified petition in the proper (ourt, alle1in1 the fa(ts with (ertaint% and pra%in1 that 5ud1.ent $e

rendered annullin1 or .odif%in1 the pro(eedin1s of su(h tri$unal, $oard or offi(er, and 1rantin1 su(h in(idental relief as law and 5usti(e reFuire. 999 999 999 /e.phasis ours0 The instant re(ourse is i.proper $e(ause the resolution of the C) was a final order fro. whi(h the re.ed% of appeal was availa$le under Rule 45 in relation to Rule 5'. The e9isten(e and availa$ilit% of the ri1ht of appeal pros(ri$es resort to (ertiorari $e(ause one of the reFuire.ents for avail.ent of the latter is pre(isel% that there should $e no appeal. It is ele.entar% that for (ertiorari to prosper, it is not enou1h that the trial (ourt (o..itted 1rave a$use of dis(retion a.ountin1 to la( or e9(ess of 5urisdi(tionD the reFuire.ent that there is no appeal, nor an% plain, speed% and adeFuate re.ed% in the ordinar% (ourse of law .ust li ewise $e satisfied.7 The proper .ode of re(ourse for petitioners was to file a petition for review of the C)Ns de(ision under Rule 45. Petitioners prin(ipall% ar1ue that the C) (o..itted a 1rave error in settin1 aside the (hallen1ed @oint Orders of the RTC whi(h alle1edl% undul% (urtailed the ri1ht of petitioners to represent their planters*.e.$ers and enfor(e the .illin1 (ontra(ts with respondents. Petitioners assert the said whi(h orders were issued in a((ordan(e with )rti(le QQ of the ;illin1 Contra(t and the appli(a$le provisions of Repu$li( )(t /R.).0 No. 7-'. <here the issue or Fuestion involved affe(ts the wisdo. or le1al soundness of the de(ision H not the 5urisdi(tion of the (ourt to render said de(ision H the sa.e is $e%ond the provin(e of a spe(ial (ivil a(tion for (ertiorari. Erroneous findin1s and (on(lusions do not render the appellate (ourt vulnera$le to the (orre(tive writ of (ertiorari. #or where the (ourt has 5urisdi(tion over the (ase, even if its findin1s are not (orre(t, the% would, at .ost (onstitute errors of law and not a$use of dis(retion (orre(ta$le $% (ertiorari.& ;oreover, even if this Court overloo s the pro(edural lapse (o..itted $% petitioners and de(ides this .atter on the .erits, the present petition will still not prosper. Stripped to the (ore, the pivotal issue here is whether or not petitioners T su1ar plantersN asso(iations T are (lothed with le1al personalit% to file a suit a1ainst, or de.and ar$itration fro., respondents in their own na.e without i.pleadin1 the individual Planters. On this point, we a1ree with the findin1s of the C). Se(tion ! of R.). No. 7-' /the )r$itration =aw0"8 pertinentl% providesC Se(. !. Persons and .atters su$5e(t to ar$itration. H Two or .ore persons or parties .a% su$.it to the ar$itration of one or .ore ar$itrators an% (ontrovers% e9istin1 $etween the. at the ti.e of the su$.ission and whi(h .a% $e the su$5e(t of an a(tion, or the parties to an% (ontra(t .a% in su(h (ontra(t a1ree to settle $% ar$itration a (ontrovers% thereafter arisin1 $etween the.. Su(h su$.ission or (ontra(t shall $e valid, enfor(ea$le and irrevo(a$le, save upon su(h 1rounds as e9ist at law for the revo(ation of an% (ontra(t. 999 /E.phasis ours0 The fore1oin1 provision spea s of two .odes of ar$itrationC /a0 an a1ree.ent to su$.it to ar$itration so.e future dispute, usuall% stipulated upon in a (ivil (ontra(t $etween the parties, and nown as an a1ree.ent to su$.it to ar$itration, and /$0 an a1ree.ent su$.ittin1 an e9istin1 .atter of differen(e to ar$itrators, ter.ed the su$.ission a1ree.ent. )rti(le QQ of the .illin1 (ontra(t is an a1ree.ent to su$.it to ar$itration $e(ause it was .ade in anti(ipation of a dispute that .i1ht arise $etween the parties after the (ontra(tNs e9e(ution. E9(ept where a (o.pulsor% ar$itration is provided $% statute, the first step toward the settle.ent of a differen(e $% ar$itration is the entr% $% the parties into a valid a1ree.ent to ar$itrate. )n

a1ree.ent to ar$itrate is a (ontra(t, the relation of the parties is (ontra(tual, and the ri1hts and lia$ilities of the parties are (ontrolled $% the law of (ontra(ts."" In an a1ree.ent for ar$itration, the ordinar% ele.ents of a valid (ontra(t .ust appear, in(ludin1 an a1ree.ent to ar$itrate so.e spe(ifi( thin1, and an a1ree.ent to a$ide $% the award, either in e9press lan1ua1e or $% i.pli(ation. The reFuire.ents that an ar$itration a1ree.ent .ust $e written and su$s(ri$ed $% the parties thereto were enun(iated $% the Court in 3.#. Corporation v. C). "! Durin1 the pro(eedin1s $efore the C), it was esta$lished that there were .ore than two thousand /!,8880 Planters in the distri(t at the ti.e the (ase was (o..en(ed at the RTC in "&&&. The C) further found that of those !,888 Planters, onl% a$out ei1ht% /780 Planters, who were all .e.$ers of petitioner OSP), in fa(t individuall% e9e(uted .illin1 (ontra(ts with respondents. No .illin1 (ontra(ts si1ned $% .e.$ers of the other petitioners were presented $efore the C). 3% their own alle1ation, petitioners are asso(iations dul% e9istin1 and or1ani?ed under Philippine law, i.e. the% have 5uridi(al personalities separate and distin(t fro. that of their .e.$er Planters. It is li ewise undisputed that the ei1ht% /780 .illin1 (ontra(ts that were presented were si1ned onl% $% the .e.$er Planter (on(erned and one of the Centrals as parties. In other words, none of the petitioners were parties or si1natories to the .illin1 (ontra(ts. This (ir(u.stan(e is fatal to petitioners4 (ause sin(e the% an(hor their ri1ht to de.and ar$itration fro. the respondent su1ar (entrals upon the ar$itration (lause found in the .illin1 (ontra(ts. There is no le1al $asis for petitioners4 purported ri1ht to de.and ar$itration when the% are not parties to the .illin1 (ontra(ts, espe(iall% when the lan1ua1e of the ar$itration (lause e9pressl% 1rants the ri1ht to de.and ar$itration onl% to the parties to the (ontra(t. Si.pl% put, petitioners do not have an% a1ree.ent to ar$itrate with respondents. Onl% ei1ht% /780 Planters who were all .e.$ers of OSP) were shown to have su(h an a1ree.ent to ar$itrate, in(luded as a stipulation in their individual .illin1 (ontra(ts. The other petitioners failed to prove that an% of their .e.$ers had .illin1 (ontra(ts with respondents, .u(h less, that respondents had an a1ree.ent to ar$itrate with the petitioner asso(iations the.selves. Even assu.in1 that all the petitioners were a$le to present .illin1 (ontra(ts in favor of their .e.$ers, it is undenia$le that under the ar$itration (lause in these (ontra(ts it is the parties thereto who have the ri1ht to su$.it a (ontrovers% or dispute to ar$itration. Se(tion 4 of R.). 7-' providesC Se(tion 4. #or. of )r$itration )1ree.ent H ) (ontra(t to ar$itrate a (ontrovers% thereafter arisin1 $etween the parties, as well as a su$.ission to ar$itrate an e9istin1 (ontrovers%, shall $e in writin1 and su$s(ri$ed $% the part% sou1ht to $e (har1ed, or $% his lawful a1ent. The .a in1 of a (ontra(t or su$.ission for ar$itration des(ri$ed in se(tion two hereof, providin1 for ar$itration of an% (ontrovers%, shall $e dee.ed a (onsent of the parties to the 5urisdi(tion of the Court of #irst Instan(e of the provin(e or (it% where an% of the parties resides, to enfor(e su(h (ontra(t of su$.ission. The for.al reFuire.ents of an a1ree.ent to ar$itrate are therefore the followin1C /a0 it .ust $e in writin1 and /$0 it .ust $e su$s(ri$ed $% the parties or their representatives. To su$s(ri$e .eans to write underneath, as oneNs na.eD to si1n at the end of a do(u.ent. That word .a% so.eti.es $e (onstrued to .ean to 1ive (onsent to or to attest.",

Petitioners would ar1ue that the% (ould sue respondents, notwithstandin1 the fa(t that the% were not si1natories in the .illin1 (ontra(ts $e(ause the% are the re(o1ni?ed representatives of the Planters. This (lai. has no le1 to stand on sin(e petitioners did not si1n the .illin1 (ontra(ts at all, whether as a part% or as a representative of their .e.$er Planters. The individual Planter and the appropriate (entral were the onl% si1natories to the (ontra(ts and there is no provision in the .illin1 (ontra(ts that the individual Planter is authori?in1 the asso(iation to represent hi.6her in a le1al a(tion in (ase of a dispute over the .illin1 (ontra(ts. ;oreover, even assu.in1 that petitioners are indeed representatives of the .e.$er Planters who have .illin1 (ontra(ts with the respondents and assu.in1 further that petitioners si1ned the .illin1 (ontra(ts as representatives of their .e.$ers, petitioners (ould not initiate ar$itration pro(eedin1s )* 02e)r o.* *(me as the% had done in the present (ase. )s .ere a1ents, the% should have $rou1ht the suit in the na.e of the prin(ipals that the% purportedl% represent. Even if Se(tion 4 of R.). No. 7-' allows the a1ree.ent to ar$itrate to $e si1ned $% a representative, the prin(ipal is still the one who has the ri1ht to de.and ar$itration. Indeed, Rule ,, Se(tion ! of the Rules of Court reFuires suits to $e $rou1ht in the na.e of the real part% in interest, to witC Se(. !. Parties in interest. ) real part% in interest is the part% who stands to $e $enefited or in5ured $% the 5ud1.ent in the suit, or the part% entitled to the avails of the suit. 2nless otherwise authori?ed $% law or these Rules, ever% a(tion .ust $e prose(uted or defended in the na.e of the real part% in interest. <e held in Oco v. *im(arin/"4 thatC )s applied to the present (ase, this provision has two reFuire.entsC "0 to institute an a(tion, the plaintiff .ust $e the real part% in interestD and !0 the a(tion .ust $e prose(uted in the na.e of the real part% in interest. Ne(essaril%, the purposes of this provision are "0 to prevent the prose(ution of a(tions $% persons without an% ri1ht, title or interest in the (aseD !0 to reFuire that the a(tual part% entitled to le1al relief $e the one to prose(ute the a(tionD ,0 to avoid a .ultipli(it% of suitsD and 40 to dis(oura1e liti1ation and eep it within (ertain $ounds, pursuant to sound pu$li( poli(%. Interest .)02)* 02e me(*)*7 o/ 02e R1'e$ me(*$ m(0er)(' )*0ere$0 or (* )*0ere$0 )* )$$1e 0o be (//ec0e+ b, 02e +ecree or ?1+7me*0 o/ 02e c($e, as distin1uished fro. .ere (uriosit% a$out the Fuestion involved. One havin1 no .aterial interest to prote(t (annot invo e the 5urisdi(tion of the (ourt as the plaintiff in an a(tion. W2e* 02e &'()*0)// )$ *o0 02e re(' &(r0, )* )*0ere$0, 02e c($e )$ +)$m)$$)b'e o* 02e 7ro1*+ o/ '(c@ o/ c(1$e o/ (c0)o*. 999 999 999

T2e &(r0)e$ 0o ( co*0r(c0 (re 02e re(' &(r0)e$ )* )*0ere$0 )* (* (c0)o* 1&o* )0, ($ co*$)$0e*0', 2e'+ b, 02e Co1r0. Onl% the (ontra(tin1 parties are $ound $% the stipulations in the (ontra(tD 02e, (re 02e o*e$ .2o .o1'+ be*e/)0 /rom (*+ co1'+ 8)o'(0e )0. Thus, one who is not a part% to a (ontra(t, and for whose $enefit it was not e9pressl% .ade, c(**o0 m()*0()* (* (c0)o* o* )0. One (annot do so, e8e* )/ 02e co*0r(c0 &er/orme+ b, 02e co*0r(c0)*7 &(r0)e$ .o1'+ )*c)+e*0('', )*1re 0o o*e>$ be*e/)0. /e.phasis ours0

In #& v. Court o! 'ppeals,"5 this Court held that the a1ents of the parties to a (ontra(t do not have the ri1ht to $rin1 an a(tion even if the% rendered so.e servi(e on $ehalf of their prin(ipals. To Fuote fro. that de(isionC UIPetitionersJ are .ere a1ents of the owners of the land su$5e(t of the sale. )s a1ents, the% onl% render so.e servi(e or do so.ethin1 in representation or on $ehalf of their prin(ipals. T2e re*+er)*7 o/ $1c2 $er8)ce +)+ *o0 m(@e 02em &(r0)e$ 0o 02e co*0r(c0$ of sale e9e(uted in $ehalf of the latter. Sin(e a (ontra(t .a% $e violated onl% $% the parties thereto as a1ainst ea(h other, 02e re(' &(r0)e$-)*-)*0ere$0, e)02er ($ &'()*0)// or +e/e*+(*0, )* (* (c0)o* 1&o* 02(0 co*0r(c0 m1$0, 7e*er('',, e)02er be &(r0)e$ 0o $()+ co*0r(ct. /e.phasis and words in $ra( ets ours0 The .ain (ause of a(tion of petitioners in their reFuest for ar$itration with the RTC is the alle1ed violation of the (lause in the .illin1 (ontra(ts involvin1 the proportionate sharin1 in the pro(eeds of the harvest. Petitioners essentiall% de.and that respondents in(rease the share of the .e.$er Planters to ''A to eFuali?e their situation with those of the non*.e.$er Planters. Eeril%, fro. petitioners4 own alle1ations, the part% who would $e in5ured or $enefited $% a de(ision in the ar$itration pro(eedin1s will $e the .e.$er Planters involved and *o0 &e0)0)o*er$. In su., petitioners are not the real parties in interest in the present (ase. )ssu.in1 petitioners had properl% $rou1ht the (ase in the na.e of their .e.$ers who had e9istin1 .illin1 (ontra(ts with respondents, petitioners .ust still prove that the% were indeed authori?ed $% the said .e.$ers to institute an a(tion for and on the .e.$ers4 $ehalf. In the sa.e .anner that an offi(er of the (orporation (annot $rin1 a(tion in $ehalf of a (orporation unless it is (lothed with a $oard resolution authori?in1 an offi(er to do so, an authori?ation fro. the individual .e.$er planter is a sine Fua non for the asso(iation or an% of its offi(ers to $rin1 an a(tion $efore the (ourt of law. The .ere fa(t that petitioners were or1ani?ed for the purpose of advan(in1 the interests and welfare of their .e.$ers does not ne(essaril% .ean that petitioners have the authorit% to represent their .e.$ers in le1al pro(eedin1s, in(ludin1 the present ar$itration pro(eedin1s. )s we see it, petitioners had no intention to liti1ate the (ase in a representative (apa(it%, as the% (ontend. )ll the pleadin1s fro. the RTC to this Court $elie this (lai.. 2nder Se(tion , of Rule ,, where the a(tion is allowed to $e prose(uted $% a representative, the $enefi(iar% shall $e in(luded in the title of the (ase and shall $e dee.ed to $e the real part% in interest. )s repeatedl% pointed out earlier, the individual Planters were not even i.pleaded as parties to this (ase. In addition, petitioners need a power*of*attorne% to represent the Planters whether in the lawsuit or to de.and ar$itration."' None was ever presented here. =astl%, petitioners theori?e that the% (ould de.and and sue for ar$itration independentl% of the Planters $e(ause the .illin1 (ontra(t is a (ontra(t pour autrui under )rti(le ","" of the Civil Code. )RT. ","". Contra(ts ta e effe(t onl% $etween the parties, their assi1ns and heirs, e9(ept in (ase where the ri1hts and o$li1ations arisin1 fro. the (ontra(t are not trans.issi$le $% their nature, or $% stipulation or $% provision of law. The heir is not lia$le $e%ond the value of the propert% he re(eived fro. the de(edent. If a (ontra(t should (ontain so.e stipulation in favor of a third person, he .a% de.and its fulfill.ent provided he (o..uni(ated his a((eptan(e to the o$li1or $efore its revo(ation. ) .ere in(idental $enefit or interest of a person is not suffi(ient. The (ontra(tin1 parties .ust have (learl% and deli$eratel% (onferred a favor upon a third person.

To su..ari?e, the reFuisites of a stipulation pour autrui or a stipulation in favor of a third person are the followin1C /"0 there .ust $e a stipulation in favor of a third person, /!0 the stipulation .ust $e a part, not the whole, of the (ontra(t, /,0 the (ontra(tin1 parties .ust have (learl% and deli$eratel% (onferred a favor upon a third person, not a .ere in(idental $enefit or interest, /40 the third person .ust have (o..uni(ated his a((eptan(e to the o$li1or $efore its revo(ation, and /50 neither of the (ontra(tin1 parties $ears the le1al representation or authori?ation of the third part%."- These reFuisites are not present in this (ase. )rti(le EI of the ;illin1 Contra(t is the solitar% provision that .entions so.e $enefit in favor of the asso(iation of whi(h the planter is a .e.$er and we FuoteC EI SG)RE IN TGE S2+)R Thirt% four per (entru. /,4A0 of the su1ar ad .olasses resultin1 fro. the .illin1 of the P=)NTERNs su1ar(ane, as (o.puted fro. the wei1ht and anal%sis of the su1ar(ane delivered $% the P=)NTER, shall $elon1 to the CENTR)=D si9t% five per (entu. /'5A0 thereof to the P=)NTER, and one per (entu. /"A0 as aid to the asso(iation of the P=)NTERD provided that, if the P=)NTER is not a .e.$er of an% asso(iation re(o1ni?ed $% the CENTR)=, said one per (entu. /"A0 shall revert to the CENTR)=. The "A aid shall $e used $% the asso(iation for an% purpose that it .a% dee. fit for its .e.$ers, la$orers and their dependents, or for its other so(io*e(ono.i( pro5e(ts. The fore1oin1 provision (annot, $% an% stret(h of the i.a1ination, $e (onsidered as a stiputation pour autrui or for the $enefit of the petitioners. The pri.ar% rationale for the said stipulation is to ensure a 5ust share in the pro(eeds of the harvest to the Planters. In other words, it is a stipulation .eant to $enefit the Planters. Even the "A share to $e 1iven to the asso(iation as aid does not redound to the $enefit of the asso(iation $ut is intended to $e used for its .e.$er Planters. Not onl% that, it is e9pli(it that said share reverts $a( to respondent su1ar (entrals if the (ontra(tin1 Planter is not affiliated with an% re(o1ni?ed asso(iation. To $e (onsidered a pour autrui provision, an in(idental $enefit or interest, whi(h another person 1ains, is not suffi(ient. The (ontra(tin1 parties .ust have (learl% and deli$eratel% (onferred a favor upon a third person."7 Even the (lause statin1 that respondents .ust se(ure the (onsent of the asso(iation if respondents 1rant $etter $enefits to a Planter has for its rationale the prote(tion of the .e.$er Planter. The onl% interest of the asso(iation therein is that its .e.$er Planter will not $e put at a disadvanta1e vis a vis other Planters. Thus, the asso(iationsN interest in these .illin1 (ontra(ts is onl% in(idental to their avowed purpose of advan(in1 the welfare and ri1hts of their .e.$er Planters. In all, the Court finds no 1rave a$use of dis(retion nor reversi$le error (o..itted $% the C) in settin1 aside the @oint Orders issued $% the RTC. <GERE#ORE, petition is here$% DIS;ISSED. Costs a1ainst petitioners. SO ORDERED.

G.R. No. 1DC606

-(*1(r, :1, 2011

CARGILL PBILIPPINES, INC., Petitioner, vs. SAN ;ERNANDO REGALA TRADING, INC., Respondent. DECISION PERALTA, J.: 3efore us is a petition for review on certiorari see in1 to reverse and set aside the De(ision" dated @ul% ,", !88' and the Resolution! dated Nove.$er ",, !88' of the Court of )ppeals /C)0 in C) +.R. SP No. 58,84. The fa(tual ante(edents are as followsC On @une "7, "&&7, respondent San #ernando Re1ala Tradin1, In(. filed with the Re1ional Trial Court /RTC0 of ;a ati Cit% a Co.plaint for Res(ission of Contra(t with Da.a1es, a1ainst petitioner Car1ill Philippines, In(. In its Co.plaint, respondent alle1ed that it was en1a1ed in $u%in1 and sellin1 of .olasses and petitioner was one of its various sour(es fro. who. it pur(hased .olasses. Respondent alle1ed that it entered into a (ontra(t dated @ul% "", "&&' with petitioner, wherein it was a1reed upon that respondent would pur(hase fro. petitioner "!,888 .etri( tons of Thailand ori1in (ane $la( strap .olasses at the pri(e of 2SV"&! per .etri( tonD that the deliver% of the .olasses was to $e .ade in @anuar%6#e$ruar% "&&- and pa%.ent was to $e .ade $% .eans of an Irrevo(a$le =etter of Credit pa%a$le at si1ht, to $e opened $% Septe.$er "5, "&&'D that so.eti.e prior to Septe.$er "5, "&&', the parties a1reed that instead of @anuar%6#e$ruar% "&&-, the deliver% would $e .ade in )pril6;a% "&&- and that pa%.ent would $e $% an Irrevo(a$le =etter of Credit pa%a$le at si1ht, to $e opened upon petitioner4s advi(e. Petitioner, as seller, failed to (o.pl% with its o$li1ations under the (ontra(t, despite de.ands fro. respondent, thus, the latter pra%ed for res(ission of the (ontra(t and pa%.ent of da.a1es. On @ul% !4, "&&7, petitioner filed a ;otion to Dis.iss6Suspend Pro(eedin1s and To Refer Controvers% to Eoluntar% )r$itration,4 wherein it ar1ued that the alle1ed (ontra(t $etween the parties, dated @ul% "", "&&', was never (onsu..ated $e(ause respondent never returned the proposed a1ree.ent $earin1 its written a((eptan(e or (onfor.it% nor did respondent open the Irrevo(a$le =etter of Credit at si1ht. Petitioner (ontended that the (ontrovers% $etween the parties was whether or not the alle1ed (ontra(t $etween the parties was le1all% in e9isten(e and the RTC was not the proper foru. to ventilate su(h issue. It (lai.ed that the (ontra(t (ontained an ar$itration (lause, to witC )R3ITR)TION )n% dispute whi(h the 3u%er and Seller .a% not $e a$le to settle $% .utual a1ree.ent shall $e settled $% ar$itration in the Cit% of New Kor $efore the ).eri(an )r$itration )sso(iation. The )r$itration )ward shall $e final and $indin1 on $oth parties.5 that respondent .ust first (o.pl% with the ar$itration (lause $efore resortin1 to (ourt, thus, the RTC .ust either dis.iss the (ase or suspend the pro(eedin1s and dire(t the parties to pro(eed with ar$itration, pursuant to Se(tions '' and -- of Repu$li( )(t /R.).0 No. 7-', or the )r$itration =aw.

Respondent filed an Opposition, wherein it ar1ued that the RTC has 5urisdi(tion over the a(tion for res(ission of (ontra(t and (ould not $e (han1ed $% the su$5e(t ar$itration (lause. It (ited (ases wherein ar$itration (lauses, su(h as the su$5e(t (lause in the (ontra(t, had $een stru( down as void for $ein1 (ontrar% to pu$li( poli(% sin(e it provided that the ar$itration award shall $e final and $indin1 on $oth parties, thus, oustin1 the (ourts of 5urisdi(tion. In its Repl%, petitioner .aintained that the (ited de(isions were alread% inappli(a$le, havin1 $een rendered prior to the effe(tivit% of the New Civil Code in "&58 and the )r$itration =aw in "&5,. In its Re5oinder, respondent ar1ued that the ar$itration (lause relied upon $% petitioner is invalid and unenfor(ea$le, (onsiderin1 that the reFuire.ents i.posed $% the provisions of the )r$itration =aw had not $een (o.plied with. 3% wa% of Sur*Re5oinder, petitioner (ontended that respondent had even (larified that the issue $oiled down to whether the ar$itration (lause (ontained in the (ontra(t su$5e(t of the (o.plaint is valid and enfor(ea$leD that the ar$itration (lause did not violate an% of the (ited provisions of the )r$itration =aw. On Septe.$er "-, "&&7, the RTC rendered an Order,7 the dispositive portion of whi(h readsC Pre.ises (onsidered, defendant4s :;otion To Dis.iss6Suspend Pro(eedin1s and To Refer Controvers% To Eoluntar% )r$itration: is here$% DENIED. Defendant is dire(ted to file its answer within ten /"80 da%s fro. re(eipt of a (op% of this order.& In den%in1 the .otion, the RTC found that there was no (lear $asis for petitioner4s plea to dis.iss the (ase, pursuant to Se(tion - of the )r$itration =aw. The RTC said that the provision dire(ted the (ourt (on(erned onl% to sta% the a(tion or pro(eedin1 $rou1ht upon an issue arisin1 out of an a1ree.ent providin1 for the ar$itration thereof, $ut did not i.pose the san(tion of dis.issal. Gowever, the RTC did not find the suspension of the pro(eedin1s warranted, sin(e the )r$itration =aw (onte.plates an ar$itration pro(eedin1 that .ust $e (ondu(ted in the Philippines under the 5urisdi(tion and (ontrol of the RTCD and $efore an ar$itrator who resides in the (ountr%D and that the ar$itral award is su$5e(t to (ourt approval, disapproval and .odifi(ation, and that there .ust $e an appeal fro. the 5ud1.ent of the RTC. The RTC found that the ar$itration (lause in Fuestion (ontravened these pro(edures, i.e., the ar$itration (lause (onte.plated an ar$itration pro(eedin1 in New Kor $efore a non*resident ar$itrator /).eri(an )r$itration )sso(iation0D that the ar$itral award shall $e final and $indin1 on $oth parties. The RTC said that to appl% Se(tion - of the )r$itration =aw to su(h an a1ree.ent would result in disre1ardin1 the other se(tions of the sa.e law and rendered the. useless and .ere surplusa1es. Petitioner filed its ;otion for Re(onsideration, whi(h the RTC denied in an Order "8 dated Nove.$er !5, "&&7. Petitioner filed a petition for certiorari with the C) raisin1 the sole issue that the RTC a(ted in e9(ess of 5urisdi(tion or with 1rave a$use of dis(retion in refusin1 to dis.iss or at least suspend the pro(eedin1s a =uo, despite the fa(t that the part%4s a1ree.ent to ar$itrate had not $een (o.plied with. Respondent filed its Co..ent and Repl%. The parties were then reFuired to file their respe(tive ;e.oranda.

On @ul% ,", !88', the C) rendered its assailed De(ision den%in1 the petition and affir.in1 the RTC Orders. In den%in1 the petition, the C) found that stipulation providin1 for ar$itration in (ontra(tual o$li1ation is $oth valid and (onstitutionalD that ar$itration as an alternative .ode of dispute resolution has lon1 $een a((epted in our 5urisdi(tion and e9pressl% provided for in the Civil CodeD that R.). No. 7-' /the )r$itration =aw0 also e9pressl% authori?ed the ar$itration of do.esti( disputes. The C) found error in the RTC4s holdin1 that Se(tion - of R.). No. 7-' was inappli(a$le to ar$itration (lause si.pl% $e(ause the (lause failed to (o.pl% with the reFuire.ents pres(ri$ed $% the law. The C) found that there was nothin1 in the Civil Code, or R.). No. 7-', that reFuire that ar$itration pro(eedin1s .ust $e (ondu(ted onl% in the Philippines and the ar$itrators should $e Philippine residents. It also found that the RTC rulin1 effe(tivel% invalidated not onl% the disputed ar$itration (lause, $ut all other a1ree.ents whi(h provide for forei1n ar$itration. The C) did not find ille1al or a1ainst pu$li( poli(% the ar$itration (lause so as to render it null and void or ineffe(tual. Notwithstandin1 su(h findin1s, the C) still held that the (ase (annot $e $rou1ht under the )r$itration =aw for the purpose of suspendin1 the pro(eedin1s $efore the RTC, sin(e in its ;otion to Dis.iss6Suspend pro(eedin1s, petitioner alle1ed, as one of the 1rounds thereof, that the su$5e(t (ontra(t $etween the parties did not e9ist or it was invalidD that the said (ontra(t $earin1 the ar$itration (lause was never (onsu..ated $% the parties, thus, it was proper that su(h issue $e first resolved $% the (ourt throu1h an appropriate trialD that the issue involved a Fuestion of fa(t that the RTC should first resolve. )r$itration is not proper when one of the parties repudiated the e9isten(e or validit% of the (ontra(t. Petitioner4s .otion for re(onsideration was denied in a Resolution dated Nove.$er ",, !88'. Gen(e, this petition. Petitioner alle1es that the C) (o..itted an error of law in rulin1 that ar$itration (annot pro(eed despite the fa(t thatC /a0 it had ruled, in its assailed de(ision, that the ar$itration (lause is valid, enfor(ea$le and $indin1 on the partiesD /$0 the (ase of 0on<ales v. Clima3 -inin/ *td."" is inappli(a$le hereD /(0 parties are 1enerall% allowed, under the Rules of Court, to adopt several defenses, alternativel% or h%potheti(all%, even if su(h defenses are in(onsistent with ea(h otherD and /d0 the (o.plaint filed $% respondent with the trial (ourt is pre.ature. Petitioner alle1es that the C) adopted in(onsistent positions when it found the ar$itration (lause $etween the parties as valid and enfor(ea$le and %et in the sa.e $reath de(reed that the ar$itration (annot pro(eed $e(ause petitioner assailed the e9isten(e of the entire a1ree.ent (ontainin1 the ar$itration (lause. Petitioner (lai.s the inappli(a$ilit% of the (ited 0on<ales (ase de(ided in !885, $e(ause in the present (ase, it was respondent who had filed the (o.plaint for res(ission and da.a1es with the RTC, whi(h $ased its (ause of a(tion a1ainst petitioner on the alle1ed a1ree.ent dated @ul% "", !88' $etween the partiesD and that the sa.e a1ree.ent (ontained the ar$itration (lause sou1ht to $e enfor(ed $% petitioner in this (ase. Thus, whether petitioner assails the 1enuineness and due e9e(ution of the a1ree.ent, the fa(t re.ains that the a1ree.ent sued upon provides for an ar$itration (lauseD that respondent (annot use the provisions favora$le to hi. and (o.pletel% disre1ard those that are unfavora$le, su(h as the ar$itration (lause. Petitioner (ontends that as the defendant in the RTC, it presented two alternative defenses, i.e., the parties had not entered into an% a1ree.ent upon whi(h respondent as plaintiff (an sue uponD and, assu.in1 that su(h a1ree.ent e9isted, there was an ar$itration (lause that should

$e enfor(ed, thus, the dispute .ust first $e su$.itted to ar$itration $efore an a(tion (an $e instituted in (ourt. Petitioner ar1ues that under Se(tion "/50 of Rule "' of the Rules of Court, in(luded as a 1round to dis.iss a (o.plaint is when a (ondition pre(edent for filin1 the (o.plaint has not $een (o.plied withD and that su$.ission to ar$itration when su(h has $een a1reed upon is one su(h (ondition pre(edent. Petitioner su$.its that the pro(eedin1s in the RTC .ust $e dis.issed, or at least suspended, and the parties $e ordered to pro(eed with ar$itration. On ;ar(h "!, !88-, petitioner filed a ;anifestation"! sa%in1 that the C)4s rationale in de(linin1 to order ar$itration $ased on the !885 0on<ales rulin1 had $een .odified upon a .otion for re(onsideration de(ided in !88-D that the C) de(ision lost its le1al $asis, $e(ause it had $een ruled that the ar$itration a1ree.ent (an $e i.ple.ented notwithstandin1 that one of the parties thereto repudiated the (ontra(t whi(h (ontained su(h a1ree.ent $ased on the do(trine of separa$ilit%. In its Co..ent, respondent ar1ues that certiorari under Rule '5 is not the re.ed% a1ainst an order den%in1 a ;otion to Dis.iss6Suspend Pro(eedin1s and To Refer Controvers% to Eoluntar% )r$itration. It (lai.s that the )r$itration =aw whi(h petitioner invo ed as $asis for its ;otion pres(ri$ed, under its Se(tion !&, a re.ed%, i.e., appeal $% a petition for review on certiorari under Rule 45. Respondent (ontends that the 0on<ales (ase, whi(h was de(ided in !88-, is inappli(a$le in this (ase, espe(iall% as to the do(trine of separa$ilit% enun(iated therein. Respondent ar1ues that even if the e9isten(e of the (ontra(t and the ar$itration (lause is (on(eded, the de(isions of the RTC and the C) de(linin1 referral of the dispute $etween the parties to ar$itration would still $e (orre(t. This is so $e(ause respondent4s (o.plaint filed in Civil Case No. &7*",-' presents the prin(ipal issue of whether under the fa(ts alle1ed in the (o.plaint, respondent is entitled to res(ind its (ontra(t with petitioner and for the latter to pa% da.a1esD that su(h issue (onstitutes a 5udi(ial Fuestion or one that reFuires the e9er(ise of 5udi(ial fun(tion and (annot $e the su$5e(t of ar$itration. Respondent (ontends that Se(tion 7 of the Rules of Court, whi(h allowed a defendant to adopt in the sa.e a(tion several defenses, alternativel% or h%potheti(all%, even if su(h defenses are in(onsistent with ea(h other refers to alle1ations in the pleadin1s, su(h as (o.plaint, (ounter(lai., (ross*(lai., third*part% (o.plaint, answer, $ut not to a .otion to dis.iss. #inall%, respondent (lai.s that petitioner4s ar1u.ent is pre.ised on the e9isten(e of a (ontra(t with respondent (ontainin1 a provision for ar$itration. Gowever, its relian(e on the (ontra(t, whi(h it repudiates, is inappropriate. In its Repl%, petitioner insists that respondent filed an a(tion for res(ission and da.a1es on the $asis of the (ontra(t, thus, respondent ad.itted the e9isten(e of all the provisions (ontained thereunder, in(ludin1 the ar$itration (lauseD that if respondent relies on said (ontra(t for its (ause of a(tion a1ainst petitioner, it .ust also (onsider itself $ound $% the rest of the ter.s and (onditions (ontained thereunder notwithstandin1 that respondent .a% find so.e provisions to $e adverse to its positionD that respondentNs (itation of the 0on<ales (ase, de(ided in !885, to show that the validit% of the (ontra(t (annot $e the su$5e(t of the ar$itration pro(eedin1 and that it is the RTC whi(h has the 5urisdi(tion to resolve the situation $etween the parties herein, is not (orre(t sin(e in the resolution of the +on?ales4 .otion for re(onsideration in !88-, it had $een ruled that an ar$itration a1ree.ent is effe(tive notwithstandin1 the fa(t that one of the parties thereto repudiated the .ain (ontra(t whi(h (ontained it. <e first address the pro(edural issue raised $% respondent that petitionerNs petition for certiorari under Rule '5 filed in the C) a1ainst an RTC Order den%in1 a ;otion to Dis.iss6Suspend Pro(eedin1s and to Refer Controvers% to Eoluntar% )r$itration was a wron1 re.ed% invo in1 Se(tion !& of R.). No. 7-', whi(h providesC Se(tion !&.

9 9 9 )n appeal .a% $e ta en fro. an order .ade in a pro(eedin1 under this )(t, or fro. a 5ud1.ent entered upon an award throu1h certiorari pro(eedin1s, $ut su(h appeals shall $e li.ited to Fuestion of law. 9 9 9. To support its ar1u.ent, respondent (ites the (ase of 0on<ales v. Clima3 -inin/ *td.", /+on?ales (ase0, wherein we ruled the i.propriet% of a petition for certiorari under Rule '5 as a .ode of appeal fro. an RTC Order dire(tin1 the parties to ar$itration. <e find the (ited (ase not in point. In the 0on<ales (ase, Cli.a9*)ri.(o filed $efore the RTC of ;a ati a petition to (o.pel ar$itration under R.). No. 7-', pursuant to the ar$itration (lause found in the )ddendu. Contra(t it entered with +on?ales. @ud1e Os(ar Pi.entel of the RTC of ;a ati then dire(ted the parties to ar$itration pro(eedin1s. +on?ales filed a petition for certiorari with 2s (ontendin1 that @ud1e Pi.entel a(ted with 1rave a$use of dis(retion in i..ediatel% orderin1 the parties to pro(eed with ar$itration despite the proper, valid and ti.el% raised ar1u.ent in his )nswer with (ounter(lai. that the )ddendu. Contra(t (ontainin1 the ar$itration (lause was null and void. Cli.a9*)ri.(o assailed the .ode of review availed of $% +on?ales, (itin1 Se(tion !& of R.). No. 7-' (ontendin1 that certiorari under Rule '5 (an $e availed of onl% if there was no appeal or an% adeFuate re.ed% in the ordinar% (ourse of lawD that R.). No. 7-' provides for an appeal fro. su(h order. <e then ruled that +on?ales4 petition for certiorari should $e dis.issed as it was filed in lieu of an appeal $% certiorari whi(h was the pres(ri$ed re.ed% under R.). No. 7-' and the petition was filed far $e%ond the re1le.entar% period. <e found that +on?alesN petition for certiorari raises a Fuestion of law, $ut not a Fuestion of 5urisdi(tionD that @ud1e Pi.entel a(ted in a((ordan(e with the pro(edure pres(ri$ed in R.). No. 7-' when he ordered +on?ales to pro(eed with ar$itration and appointed a sole ar$itrator after .a in1 the deter.ination that there was indeed an ar$itration a1ree.ent. It had $een held that as lon1 as a (ourt a(ts within its 5urisdi(tion and does not 1ravel% a$use its dis(retion in the e9er(ise thereof, an% supposed error (o..itted $% it will a.ount to nothin1 .ore than an error of 5ud1.ent reviewa$le $% a ti.el% appeal and not assaila$le $% a spe(ial (ivil a(tion of certiorari."4 In this (ase, petitioner raises $efore the C) the issue that the respondent @ud1e a(ted in e9(ess of 5urisdi(tion or with 1rave a$use of dis(retion in refusin1 to dis.iss, or at least suspend, the pro(eedin1s a =uo despite the fa(t that the part%Ns a1ree.ent to ar$itrate had not $een (o.plied with. Nota$l%, the RTC found the e9isten(e of the ar$itration (lause, sin(e it said in its de(ision that :hardl% disputed is the fa(t that the ar$itration (lause in Fuestion (ontravenes several provisions of the )r$itration =aw 9 9 9 and to appl% Se(tion - of the )r$itration =aw to su(h an a1ree.ent would result in the disre1ard of the afore*(ited se(tions of the )r$itration =aw and render the. useless and .ere surplusa1es.: Gowever, notwithstandin1 the findin1 that an ar$itration a1ree.ent e9isted, the RTC denied petitioner4s .otion and dire(ted petitioner to file an answer. In *a :aval Dru/ Corporation v. Court o! 'ppeals,"5 it was held that R.). No. 7-' e9pli(itl% (onfines the (ourtNs authorit% onl% to the deter.ination of whether or not there is an a1ree.ent in writin1 providin1 for ar$itration. In the affir.ative, the statute ordains that the (ourt shall issue an order su..aril% dire(tin1 the parties to pro(eed with the ar$itration in a((ordan(e with the ter.s thereof. If the (ourt, upon the other hand, finds that no su(h a1ree.ent e9ists, the pro(eedin1s shall $e dis.issed. In issuin1 the Order whi(h denied petitioner4s ;otion to Dis.iss6Suspend Pro(eedin1s and to Refer Controvers% to Eoluntar% )r$itration, the RTC went $e%ond its authorit% of deter.inin1 onl% the issue of whether or not there is an a1ree.ent in writin1 providin1 for ar$itration $% dire(tin1 petitioner to file an answer, instead of orderin1 the parties to pro(eed to ar$itration. In

so doin1, it a(ted in e9(ess of its 5urisdi(tion and sin(e there is no plain, speed%, and adeFuate re.ed% in the ordinar% (ourse of law, petitionerNs resort to a petition for certiorari is the proper re.ed%. <e now pro(eed to the su$stantive issue of whether the C) erred in findin1 that this (ase (annot $e $rou1ht under the ar$itration law for the purpose of suspendin1 the pro(eedin1s in the RTC. <e find .erit in the petition. )r$itration, as an alternative .ode of settlin1 disputes, has lon1 $een re(o1ni?ed and a((epted in our 5urisdi(tion."' R.). No. 7-'"- authori?es ar$itration of do.esti( disputes. #orei1n ar$itration, as a s%ste. of settlin1 (o..er(ial disputes of an international (hara(ter, is li ewise re(o1ni?ed."7 The ena(t.ent of R.). No. &!75 on )pril !, !884 further institutionali?ed the use of alternative dispute resolution s%ste.s, in(ludin1 ar$itration, in the settle.ent of disputes."& ) (ontra(t is reFuired for ar$itration to ta e pla(e and to $e $indin1. !8 Su$.ission to ar$itration is a (ontra(t !" and a (lause in a (ontra(t providin1 that all .atters in dispute $etween the parties shall $e referred to ar$itration is a (ontra(t.!! The provision to su$.it to ar$itration an% dispute arisin1 therefro. and the relationship of the parties is part of the (ontra(t and is itself a (ontra(t.!, In this (ase, the (ontra(t sued upon $% respondent provides for an ar$itration (lause, to witC )R3ITR)TION )n% dispute whi(h the 3u%er and Seller .a% not $e a$le to settle $% .utual a1ree.ent shall $e settled $% ar$itration in the Cit% of New Kor $efore the ).eri(an )r$itration )sso(iation, The )r$itration )ward shall $e final and $indin1 on $oth parties. The C) ruled that ar$itration (annot $e ordered in this (ase, sin(e petitioner alle1ed that the (ontra(t $etween the parties did not e9ist or was invalid and ar$itration is not proper when one of the parties repudiates the e9isten(e or validit% of the (ontra(t. Thus, said the C)C Notwithstandin1 our rulin1 on the validit% and enfor(ea$ilit% of the assailed ar$itration (lause providin1 for forei1n ar$itration, it is our (onsidered opinion that the (ase at $en(h still (annot $e $rou1ht under the )r$itration =aw for the purpose of suspendin1 the pro(eedin1s $efore the trial (ourt. <e note that in its ;otion to Dis.iss6Suspend Pro(eedin1s, et(, petitioner Car1ill alle1ed, as one of the 1rounds thereof, that the alle1ed (ontra(t $etween the parties do not le1all% e9ist or is invalid. )s posited $% petitioner, it is their (ontention that the said (ontra(t, $earin1 the ar$itration (lause, was never (onsu..ated $% the parties. That $ein1 the (ase, it is $ut proper that su(h issue $e first resolved $% the (ourt throu1h an appropriate trial. The issue involves a Fuestion of fa(t that the trial (ourt should first resolve. )r$itration is not proper when one of the parties repudiates the e9isten(e or validit% of the (ontra(t. )propos is +on?ales v. Cli.a9 ;inin1 =td., 45! SCR) '8-, /+.R.No."'"&5-0, where the Supre.e Court held thatC T2e A1e$0)o* o/ 8(')+)0, o/ 02e co*0r(c0 co*0()*)*7 02e (7reeme*0 0o $1bm)0 0o (rb)0r(0)o* .)'' (//ec0 02e (&&')c(b)')0, o/ 02e (rb)0r(0)o* c'(1$e )0$e'/. A &(r0, c(**o0 re', o* 02e co*0r(c0 (*+ c'()m r)720$ or ob')7(0)o*$ 1*+er )0 (*+ (0 02e $(me 0)me )m&17* )0$ e%)$0e*ce or 8(')+)0,. I*+ee+, ')0)7(*0$ (re e*?o)*e+ /rom 0(@)*7 )*co*$)$0e*0 &o$)0)o*$....

ConseFuentl%, the petitioner herein (annot (lai. that the (ontra(t was never (onsu..ated and, at the sa.e ti.e, invo es the ar$itration (lause provided for under the (ontra(t whi(h it alle1es to $e non*e9istent or invalid. Petitioner (lai.s that private respondent4s (o.plaint la( s a (ause of a(tion due to the a$sen(e of an% valid (ontra(t $etween the parties. )pparentl%, the ar$itration (lause is $ein1 invo ed .erel% as a fall$a( position. The petitioner .ust first addu(e eviden(e in support of its (lai. that there is no valid (ontra(t $etween the. and should the (ourt a Fuo find the (lai. to $e .eritorious, the parties .a% then $e spared the ri1ors and e9penses that ar$itration in a forei1n land would surel% entail.!4 Gowever, the 0on<ales (ase,!5 whi(h the C) relied upon for not orderin1 ar$itration, had $een .odified upon a .otion for re(onsideration in this wiseC 9 9 9 T2e (+?1+)c(0)o* o/ 02e &e0)0)o* )* G.R. No. 16D996 e//ec0)8e', mo+)/)e$ &(r0 o/ 02e Dec)$)o* +(0e+ 2< ;ebr1(r, 200C )* G.R. No. 1619CD. Be*ce, .e *o. 2o'+ 02(0 02e 8(')+)0, o/ 02e co*0r(c0 co*0()*)*7 02e (7reeme*0 0o $1bm)0 0o (rb)0r(0)o* +oe$ *o0 (//ec0 02e (&&')c(b)')0, o/ 02e (rb)0r(0)o* c'(1$e )0$e'/. A co*0r(r, r1')*7 .o1'+ $177e$0 02(0 ( &(r0,G$ mere re&1+)(0)o* o/ 02e m()* co*0r(c0 )$ $1//)c)e*0 0o (8o)+ (rb)0r(0)o*. T2(0 )$ e%(c0', 02e $)01(0)o* 02(0 02e $e&(r(b)')0, +oc0r)*e, ($ .e'' ($ ?1r)$&r1+e*ce (&&',)*7 )0, $ee@$ 0o (8o)+. <e add that when it was de(lared in +.R. No. "'"&5- that the (ase should not $e $rou1ht for ar$itration, it should $e (larified that the (ase referred to is the (ase a(tuall% filed $% +on?ales $efore the DENR Panel of )r$itrators, whi(h was for the nullifi(ation of the .ain (ontra(t on the 1round of fraud, as it had alread% $een deter.ined that the (ase should have $een $rou1ht $efore the re1ular (ourts involvin1 as it did 5udi(ial issues.!' In so rulin1 that the validit% of the (ontra(t (ontainin1 the ar$itration a1ree.ent does not affe(t the appli(a$ilit% of the ar$itration (lause itself, we then applied the do(trine of separa$ilit%, thusC The do(trine of separa$ilit%, or severa$ilit% as other writers (all it, enun(iates that an ar$itration a1ree.ent is independent of the .ain (ontra(t. The ar$itration a1ree.ent is to $e treated as a separate a1ree.ent and the ar$itration a1ree.ent does not auto.ati(all% ter.inate when the (ontra(t of whi(h it is a part (o.es to an end. The separa$ilit% of the ar$itration a1ree.ent is espe(iall% si1nifi(ant to the deter.ination of whether the invalidit% of the .ain (ontra(t also nullifies the ar$itration (lause. Indeed, the do(trine denotes that the invalidit% of the .ain (ontra(t, also referred to as the :(ontainer: (ontra(t, does not affe(t the validit% of the ar$itration a1ree.ent. Irrespe(tive of the fa(t that the .ain (ontra(t is invalid, the ar$itration (lause6a1ree.ent still re.ains valid and enfor(ea$le. !Respondent ar1ues that the separa$ilit% do(trine is not appli(a$le in petitioner4s (ase, sin(e in the 0on<ales (ase, Cli.a9*)ri.(o sou1ht to enfor(e the ar$itration (lause of its (ontra(t with +on?ales and the for.er4s .ove was pre.ised on the e9isten(e of a valid (ontra(tD while +on?ales, who resisted the .ove of Cli.a9*)ri.(o for ar$itration, did not den% the e9isten(e of the (ontra(t $ut .erel% assailed the validit% thereof on the 1round of fraud and oppression. Respondent (lai.s that in the (ase $efore 2s, petitioner who is the part% insistent on ar$itration also (lai.ed in their ;otion to Dis.iss6Suspend Pro(eedin1s that the (ontra(t sou1ht $% respondent to $e res(inded did not e9ist or was not (onsu..atedD thus, there is no roo. for the appli(ation of the separa$ilit% do(trine, sin(e there is no (ontainer or .ain (ontra(t or an ar$itration (lause to spea of. <e are not persuaded. )ppl%in1 the 0on<ales rulin1, an ar$itration a1ree.ent whi(h for.s part of the .ain (ontra(t shall not $e re1arded as invalid or non*e9istent 5ust $e(ause the .ain (ontra(t is invalid or did not (o.e into e9isten(e, sin(e the ar$itration a1ree.ent shall $e treated as a separate

a1ree.ent independent of the .ain (ontra(t. To reiterate. a (ontrar% rulin1 would su11est that a part%4s .ere repudiation of the .ain (ontra(t is suffi(ient to avoid ar$itration and that is e9a(tl% the situation that the separa$ilit% do(trine sou1ht to avoid. Thus, we find that even the part% who has repudiated the .ain (ontra(t is not prevented fro. enfor(in1 its ar$itration (lause. ;oreover, it is worth% to note that respondent filed a (o.plaint for res(ission of (ontra(t and da.a1es with the RTC. In so doin1, respondent alle1ed that a (ontra(t e9ists $etween respondent and petitioner. It is that (ontra(t whi(h provides for an ar$itration (lause whi(h states that :an% dispute whi(h the 3u%er and Seller .a% not $e a$le to settle $% .utual a1ree.ent shall $e settled $efore the Cit% of New Kor $% the ).eri(an )r$itration )sso(iation. The ar$itration a1ree.ent (learl% e9pressed the parties4 intention that an% dispute $etween the. as $u%er and seller should $e referred to ar$itration. It is for the ar$itrator and not the (ourts to de(ide whether a (ontra(t $etween the parties e9ists or is valid. Respondent (ontends that assu.in1 that the e9isten(e of the (ontra(t and the ar$itration (lause is (on(eded, the C)4s de(ision de(linin1 referral of the parties4 dispute to ar$itration is still (orre(t. It (lai.s that its (o.plaint in the RTC presents the issue of whether under the fa(ts alle1ed, it is entitled to res(ind the (ontra(t with da.a1esD and that issue (onstitutes a 5udi(ial Fuestion or one that reFuires the e9er(ise of 5udi(ial fun(tion and (annot $e the su$5e(t of an ar$itration pro(eedin1. Respondent (ites our rulin1 in 0on<ales wherein we held that a panel of ar$itrator is $ereft of 5urisdi(tion over the (o.plaint for de(laration of nullit%6or ter.ination of the su$5e(t (ontra(ts on the 1rounds of fraud and oppression attendant to the e9e(ution of the addendu. (ontra(t and the other (ontra(ts e.anatin1 fro. it, and that the (o.plaint should have $een filed with the re1ular (ourts as it involved issues whi(h are 5udi(ial in nature. Su(h ar1u.ent is .ispla(ed and respondent (annot rel% on the 0on<ales (ase to support its ar1u.ent. In 0on<ales, petitioner +on?ales filed a (o.plaint $efore the Panel of )r$itrators, Re1ion II, ;ines and +eos(ien(es 3ureau, of the Depart.ent of Environ.ent and Natural Resour(es /DENR0 a1ainst respondents Cli.a9* ;inin1 =td, Cli.a9*)ri.(o and )ustralasian Philippines ;inin1 In(, see in1 the de(laration of nullit% or ter.ination of the addendu. (ontra(t and the other (ontra(ts e.anatin1 fro. it on the 1rounds of fraud and oppression. The Panel dis.issed the (o.plaint for la( of 5urisdi(tion. Gowever, the Panel, upon petitioner4s .otion for re(onsideration, ruled that it had 5urisdi(tion over the dispute .aintainin1 that it was a .inin1 dispute, sin(e the su$5e(t (o.plaint arose fro. a (ontra(t $etween the parties whi(h involved the e9ploration and e9ploitation of .inerals over the disputed area.1@$p.i1 Respondents assailed the order of the Panel of )r$itrators via a petition for certiorari $efore the C). The C) 1ranted the petition and de(lared that the Panel of )r$itrators did not have 5urisdi(tion over the (o.plaint, sin(e its 5urisdi(tion was li.ited to the resolution of .inin1 disputes, su(h as those whi(h raised a Fuestion of fa(t or .atter reFuirin1 the te(hni(al nowled1e and e9perien(e of .inin1 authorities and not when the (o.plaint alle1ed fraud and oppression whi(h (alled for the interpretation and appli(ation of laws. The C) further ruled that the petition should have $een settled throu1h ar$itration under R.). No. 7-' W the )r$itration =aw W as provided under the addendu. (ontra(t. On a review on certiorari, we affir.ed the C)Ns findin1 that the Panel of )r$itrators who, under R.). No. -&4! of the Philippine ;inin1 )(t of "&&5, has e9(lusive and ori1inal 5urisdi(tion to hear and de(ide .inin1 disputes, su(h as .inin1 areas, .ineral a1ree.ents, #T))s or per.its and surfa(e owners, o((upants and (lai.holders6(on(essionaires, is $ereft of 5urisdi(tion over the (o.plaint for de(laration of nullit% of the addendu. (ontra(tD thus, the Panels4 5urisdi(tion is li.ited onl% to those .inin1 disputes whi(h raised Fuestion of fa(ts or .atters reFuirin1 the te(hni(al nowled1e and e9perien(e of .inin1 authorities. <e then saidC

In Pearson v. Inter.ediate )ppellate Court, this Court o$served that the trend has $een to .a e the ad5udi(ation of .inin1 (ases a purel% ad.inistrative .atter. De(isions of the Supre.e Court on .inin1 disputes have re(o1ni?ed a distin(tion $etween /"0 the pri.ar% powers 1ranted $% pertinent provisions of law to the then Se(retar% of )1ri(ulture and Natural Resour(es /and the $ureau dire(tors0 of an e9e(utive or ad.inistrative nature, su(h as 1rantin1 of li(ense, per.its, lease and (ontra(ts, or approvin1, re5e(tin1, reinstatin1 or (an(elin1 appli(ations, or de(idin1 (onfli(tin1 appli(ations, and /!0 (ontroversies or disa1ree.ents of (ivil or (ontra(tual nature $etween liti1ants whi(h are Fuestions of a 5udi(ial nature that .a% $e ad5udi(ated onl% $% the (ourts of 5usti(e. This distin(tion is (arried on even in Rep. )(t No. -&4!.!7 <e found that sin(e the (o.plaint filed $efore the DENR Panel of )r$itrators (har1ed respondents with disre1ardin1 and i1norin1 the addendu. (ontra(t, and a(tin1 in a fraudulent and oppressive .anner a1ainst petitioner, the (o.plaint filed $efore the Panel was not a dispute involvin1 ri1hts to .inin1 areas, or was it a dispute involvin1 (lai.holders or (on(essionaires, $ut essentiall% 5udi(ial issues. <e then said that the Panel of )r$itrators did not have 5urisdi(tion over su(h issue, sin(e it does not involve the appli(ation of te(hni(al nowled1e and e9pertise relatin1 to .inin1. It is in this (onte9t that we said thatC )r$itration $efore the Panel of )r$itrators is proper onl% when there is a disa1ree.ent $etween the parties as to so.e provisions of the (ontra(t $etween the., whi(h needs the interpretation and the appli(ation of that parti(ular nowled1e and e9pertise possessed $% .e.$ers of that Panel. It is not proper when one of the parties repudiates the e9isten(e or validit% of su(h (ontra(t or a1ree.ent on the 1round of fraud or oppression as in this (ase. The validit% of the (ontra(t (annot $e su$5e(t of ar$itration pro(eedin1s. )lle1ations of fraud and duress in the e9e(ution of a (ontra(t are .atters within the 5urisdi(tion of the ordinar% (ourts of law. These Fuestions are le1al in nature and reFuire the appli(ation and interpretation of laws and 5urispruden(e whi(h is ne(essaril% a 5udi(ial fun(tion.!& In fa(t, <e even (larified in our resolution on +on?alesN .otion for re(onsideration that :when we de(lared that the (ase should not $e $rou1ht for ar$itration, it should $e (larified that the (ase referred to is the (ase a(tuall% filed $% +on?ales $efore the DENR Panel of )r$itrators, whi(h was for the nullifi(ation of the .ain (ontra(t on the 1round of fraud, as it had alread% $een deter.ined that the (ase should have $een $rou1ht $efore the re1ular (ourts involvin1 as it did 5udi(ial issues.: <e .ade su(h (larifi(ation in our resolution of the .otion for re(onsideration after rulin1 that the parties in that (ase (an pro(eed to ar$itration under the )r$itration =aw, as provided under the )r$itration Clause in their )ddendu. Contra(t. <GERE#ORE, the petition is GRANTED. The De(ision dated @ul% ,", !88' and the Resolution dated Nove.$er ",, !88' of the Court of )ppeals in C)*+.R. SP No. 58,84 are RE!ERSED (*+ SET ASIDE. The parties are here$% ORDERED to SU="IT the.selves to the ar$itration of their dispute, pursuant to their @ul% "", "&&' a1ree.ent. SO ORDERED. G.R. No. 1619CD -(*1(r, 22, 200D

-ORGE GONHALES, Petitioner, vs. BON. OSCAR =. PI"ENTEL, )* 2)$ c(&(c)0, ($ PRESIDING -UDGE o/ =R. 16< o/ 02e REGIONAL TRIAL COURT o/ "A ATI CITY, (*+ CLI"AI-ARI"CO "INING CORPORATION, Respondents. RESO=2TION TINGA, J.: This is a (onsolidation of two petitions rooted in the sa.e disputed )ddendu. Contra(t entered into $% the parties. In +.R. No. "'"&5-, the Court in its De(ision of !7 #e$ruar% !885" denied the Rule 45 petition of petitioner @or1e +on?ales /+on?ales0. It held that the DENR Panel of )r$itrators had no 5urisdi(tion over the (o.plaint for the annul.ent of the )ddendu. Contra(t on 1rounds of fraud and violation of the Constitution and that the a(tion should have $een $rou1ht $efore the re1ular (ourts as it involved 5udi(ial issues. 3oth parties filed separate .otions for re(onsideration. +on?ales avers in his ;otion for Re(onsideration ! that the Court erred in holdin1 that the DENR Panel of )r$itrators was $ereft of 5urisdi(tion, reiteratin1 its ar1u.ent that the (ase involves a .inin1 dispute that properl% falls within the a.$it of the PanelNs authorit%. +on?ales adds that the Court failed to rule on other issues he raised relatin1 to the suffi(ien(% of his (o.plaint $efore the DENR Panel of )r$itrators and the ti.eliness of its filin1. Respondents Cli.a9 ;inin1 =td., et al., /respondents0 filed their ;otion for Partial Re(onsideration and6or Clarifi(ation, see in1 re(onsideration of that part of the De(ision holdin1 that the (ase should not $e $rou1ht for ar$itration under Repu$li( )(t /R.).0 No. 7-', also nown as the )r$itration =aw.4 Respondents, (itin1 ).eri(an 5urispruden(e5 and the 2NCITR)= ;odel =aw,' ar1ue that the ar$itration (lause in the )ddendu. Contra(t should $e treated as an a1ree.ent independent of the other ter.s of the (ontra(t, and that a (lai.ed res(ission of the .ain (ontra(t does not avoid the dut% to ar$itrate. Respondents add that +on?alesNs ar1u.ent relatin1 to the alle1ed invalidit% of the )ddendu. Contra(t still has to $e proven and ad5udi(ated on in a proper pro(eedin1D that is, an a(tion separate fro. the .otion to (o.pel ar$itration. Pendin1 5ud1.ent in su(h separate a(tion, the )ddendu. Contra(t re.ains valid and $indin1 and so does the ar$itration (lause therein. Respondents add that the holdin1 in the De(ision that :the (ase should not $e $rou1ht under the a.$it of the )r$itration =aw: appears to $e pre.ised on +on?alesNs havin1 :i.pu1nIedJ the e9isten(e or validit%: of the addendu. (ontra(t. If so, it supposedl% (onve%s the idea that +on?alesNs unilateral repudiation of the (ontra(t or .ere alle1ation of its invalidit% is all it ta es to avoid ar$itration. Gen(e, respondents su$.it that the (ourtNs holdin1 that :the (ase should not $e $rou1ht under the a.$it of the )r$itration =aw: $e understood or (larified as operative onl% where the (hallen1e to the ar$itration a1ree.ent has $een sustained $% final 5ud1.ent. 3oth parties were reFuired to file their respe(tive (o..ents to the other part%Ns .otion for re(onsideration6(larifi(ation.- Respondents filed their Co..ent on "- )u1ust !885,7 while +on?ales filed his onl% on !5 @ul% !88'.& On the other hand, +.R. No. "'-&&4 is a Rule '5 petition filed on ' ;a% !885, or while the .otions for re(onsideration in +.R. No. "'"&5-"8 were pendin1, wherein +on?ales (hallen1ed the orders of the Re1ional Trial Court /RTC0 reFuirin1 hi. to pro(eed with the ar$itration pro(eedin1s as sou1ht $% Cli.a9*)ri.(o ;inin1 Corporation /Cli.a9*)ri.(o0. On 5 @une !88', the two (ases, +.R. Nos. "'"&5- and "'-&&4, were (onsolidated upon the re(o..endation of the )ssistant Division Cler of Court sin(e the (ases are rooted in the sa.e )ddendu. Contra(t.

-ORGE GONHALES (*+ PANEL O; AR=ITRATORS, Petitioners, vs. CLI"AI "INING LTD., CLI"AI-ARI"CO "INING CORP., (*+ AUSTRALASIAN PBILIPPINES "INING INC., Respondents. 9********************************************************************************* 9 G.R. No. 16D996 -(*1(r, 22, 200D

<e first ta( le the .ore re(ent (ase whi(h is +.R. No. "'-&&4. It ste..ed fro. the petition to (o.pel ar$itration filed $% respondent Cli.a9*)ri.(o $efore the RTC of ;a ati Cit% on ," ;ar(h !888 while the (o.plaint for the nullifi(ation of the )ddendu. Contra(t was pendin1 $efore the DENR Panel of )r$itrators. On !, ;ar(h !888, Cli.a9*)ri.(o had sent +on?ales a De.and for )r$itration pursuant to Clause "&.""" of the )ddendu. Contra(t and also in a((ordan(e with Se(. 5 of R.). No. 7-'. The petition for ar$itration was su$seFuentl% filed and Cli.a9*)ri.(o sou1ht an order to (o.pel the parties to ar$itrate pursuant to the said ar$itration (lause. The (ase, do( eted as Civil Case No. 88*444, was initiall% raffled to 3r. ",! of the RTC of ;a ati Cit%, with @ud1e Ger.inio I. 3enito as Presidin1 @ud1e. Respondent Cli.a9*)ri.(o filed on 5 )pril !888 a .otion to set the appli(ation to (o.pel ar$itration for hearin1. On "4 )pril !888, +on?ales filed a .otion to dis.iss whi(h he however failed to set for hearin1. On "5 ;a% !888, he filed an )nswer with Counter(lai.,"! Fuestionin1 the validit% of the )ddendu. Contra(t (ontainin1 the ar$itration (lause. +on?ales alle1ed that the )ddendu. Contra(t (ontainin1 the ar$itration (lause is void in view of Cli.a9*)ri.(oNs a(ts of fraud, oppression and violation of the Constitution. Thus, the ar$itration (lause, Clause "&.", (ontained in the )ddendu. Contra(t is also null and void a( initio and le1all% ine9istent.1a$p.i1.net On "7 ;a% !888, the RTC issued an order de(larin1 +on?alesNs .otion to dis.iss .oot and a(ade.i( in view of the filin1 of his )nswer with Counter(lai.. ", On ," ;a% !888, +on?ales as ed the RTC to set the (ase for pre*trial. "4 This the RTC denied on "' @une !888, holdin1 that the petition for ar$itration is a spe(ial pro(eedin1 that is su..ar% in nature."5 Gowever, on - @ul% !888, the RTC 1ranted +on?alesNs .otion for re(onsideration of the "' @une !888 Order and set the (ase for pre*trial on "8 )u1ust !888, it $ein1 of the view that +on?ales had raised in his answer the issue of the .a in1 of the ar$itration a1ree.ent."' Cli.a9*)ri.(o then filed a .otion to resolve its pendin1 .otion to (o.pel ar$itration. The RTC denied the sa.e in its !4 @ul% !888 order. On !7 @ul% !888, Cli.a9*)ri.(o filed a ;otion to Inhi$it @ud1e Ger.inio I. 3enito for :not possessin1 the (old neutralit% of an i.partial 5ud1e.:"- On 5 )u1ust !888, @ud1e 3enito issued an Order 1rantin1 the ;otion to Inhi$it and ordered the re*rafflin1 of the petition for ar$itration. "7 The (ase was raffled to the sala of pu$li( respondent @ud1e Os(ar 3. Pi.entel of 3ran(h "47. On !, )u1ust !888, Cli.a9*)ri.(o filed a .otion for re(onsideration of the !4 @ul% !888 Order."& Cli.a9*)ri.(o ar1ued that R.). No. 7-' does not authori?e a pre*trial or trial for a .otion to (o.pel ar$itration $ut dire(ts the (ourt to hear the .otion su..aril% and resolve it within ten da%s fro. hearin1. @ud1e Pi.entel 1ranted the .otion and dire(ted the parties to ar$itration. On ", #e$ruar% !88", @ud1e Pi.entel issued the first assailed order reFuirin1 +on?ales to pro(eed with ar$itration pro(eedin1s and appointin1 retired C) @usti(e @or1e CoFuia as sole ar$itrator.!8 +on?ales .oved for re(onsideration on !8 ;ar(h !88" $ut this was denied in the Order dated ;ar(h !885.!" +on?ales thus filed the Rule '5 petition assailin1 the Orders dated ", #e$ruar% !88" and ;ar(h !885 of @ud1e Pi.entel. +on?ales (ontends that pu$li( respondent @ud1e Pi.entel a(ted with 1rave a$use of dis(retion in i..ediatel% orderin1 the parties to pro(eed with ar$itration despite the proper, valid, and ti.el% raised ar1u.ent in his )nswer with Counter(lai. that the )ddendu. Contra(t, (ontainin1 the ar$itration (lause, is null and void. +on?ales has also sou1ht a te.porar% restrainin1 order to prevent the enfor(e.ent of the assailed orders dire(tin1 the parties to ar$itrate, and to dire(t @ud1e Pi.entel to hold a pre*trial (onferen(e and the ne(essar% hearin1s on the deter.ination of the nullit% of the )ddendu. Contra(t.

In support of his ar1u.ent, +on?ales invo es Se(. ' of R.). No. 7-'C Se(. '. )earin/ (& court.S) part% a11rieved $% the failure, ne1le(t or refusal of another to perfor. under an a1ree.ent in writin1 providin1 for ar$itration .a% petition the (ourt for an order dire(tin1 that su(h ar$itration pro(eed in the .anner provided for in su(h a1ree.ent. #ive da%s noti(e in writin1 of the hearin1 of su(h appli(ation shall $e served either personall% or $% re1istered .ail upon the part% in default. The (ourt shall hear the parties, and upon $ein1 satisfied that the .a in1 of the a1ree.ent or su(h failure to (o.pl% therewith is not in issue, shall .a e an order dire(tin1 the parties to pro(eed to ar$itration in a((ordan(e with the ter.s of the a1ree.ent. If the .a in1 of the a1ree.ent or default $e in issue the (ourt shall pro(eed to su..aril% hear su(h issue. If the findin1 $e that no a1ree.ent in writin1 providin1 for ar$itration was .ade, or that there is no default in the pro(eedin1 thereunder, the pro(eedin1 shall $e dis.issed. If the findin1 $e that a written provision for ar$itration was .ade and there is a default in pro(eedin1 thereunder, an order shall $e .ade su..aril% dire(tin1 the parties to pro(eed with the ar$itration in a((ordan(e with the ter.s thereof. The (ourt shall de(ide all .otions, petitions or appli(ations filed under the provisions of this )(t, within ten /"80 da%s after su(h .otions, petitions, or appli(ations have $een heard $% it. +on?ales also (ites Se(. !4 of R.). No. &!75 or the :)lternative Dispute Resolution )(t of !884C: Se(. !4. Re!erral to 'r(itration.S) (ourt $efore whi(h an a(tion is $rou1ht in a .atter whi(h is the su$5e(t .atter of an ar$itration a1ree.ent shall, if at least one part% so reFuests not later than the pre*trial (onferen(e, or upon the reFuest of $oth parties thereafter, refer the parties to ar$itration unless it finds that the ar$itration a1ree.ent is null and void, inoperative or in(apa$le of $ein1 perfor.ed. )((ordin1 to +on?ales, the a$ove*Fuoted provisions of law outline the pro(edure to $e followed in petitions to (o.pel ar$itration, whi(h the RTC did not follow. Thus, referral of the parties to ar$itration $% @ud1e Pi.entel despite the ti.el% and properl% raised issue of nullit% of the )ddendu. Contra(t was .ispla(ed and without le1al $asis. 3oth R.). No. 7-' and R.). No. &!75 .andate that an% issue as to the nullit%, inoperativeness, or in(apa$ilit% of perfor.an(e of the ar$itration (lause6a1ree.ent raised $% one of the parties to the alle1ed ar$itration a1ree.ent .ust $e deter.ined $% the (ourt prior to referrin1 the. to ar$itration. The% reFuire that the trial (ourt first deter.ine or resolve the issue of nullit%, and there is no other venue for this deter.ination other than a pre*trial and hearin1 on the issue $% the trial (ourt whi(h has 5urisdi(tion over the (ase. +on?ales adds that the assailed ", #e$ruar% !88" Order also violated his ri1ht to pro(edural due pro(ess when the trial (ourt erroneousl% ruled on the e9isten(e of the ar$itration a1ree.ent despite the a$sen(e of a hearin1 for the presentation of eviden(e on the nullit% of the )ddendu. Contra(t. Respondent Cli.a9*)ri.(o, on the other hand, assails the .ode of review availed of $% +on?ales. Cli.a9*)ri.(o (ites Se(. !& of R.). No. 7-'C Se(. !&. 'ppeals.S)n appeal .a% $e ta en fro. an order .ade in a pro(eedin1 under this )(t, or fro. a 5ud1.ent entered upon an award throu1h (ertiorari pro(eedin1s, $ut su(h appeals shall $e li.ited to Fuestions of law. The pro(eedin1s upon su(h an appeal, in(ludin1 the 5ud1.ent thereon shall $e 1overned $% the Rules of Court in so far as the% are appli(a$le. Cli.a9*)ri.(o .entions that the spe(ial (ivil a(tion for (ertiorari e.plo%ed $% +on?ales is availa$le onl% where there is no appeal or an% plain, speed%, and adeFuate re.ed% in the ordinar% (ourse of law a1ainst the (hallen1ed orders or a(ts. Cli.a9*)ri.(o then points out that R.). No. 7-' provides for an appeal fro. su(h orders, whi(h, under the Rules of Court, .ust $e

filed within "5 da%s fro. noti(e of the final order or resolution appealed fro. or of the denial of the .otion for re(onsideration filed in due ti.e. +on?ales has not denied that the relevant "5* da% period for an appeal had elapsed lon1 $efore he filed this petition for (ertiorari. Ge (annot use the spe(ial (ivil a(tion of (ertiorari as a re.ed% for a lost appeal. Cli.a9*)ri.(o adds that an appli(ation to (o.pel ar$itration under Se(. ' of R.). No. 7-' (onfers on the trial (ourt onl% a li.ited and spe(ial 5urisdi(tion, i.e., a 5urisdi(tion solel% to deter.ine /a0 whether or not the parties have a written (ontra(t to ar$itrate, and /$0 if the defendant has failed to (o.pl% with that (ontra(t. Respondent (ites *a :aval Dru/ Corporation v. Court o! 'ppeals,!! whi(h holds that in a pro(eedin1 to (o.pel ar$itration, :ItJhe ar$itration law e9pli(itl% (onfines the (ourtNs authorit% onl% to pass upon the issue of whether there is or there is no a1ree.ent in writin1 providin1 for ar$itration,: and :IiJn the affir.ative, the statute ordains that the (ourt shall issue an order Rsu..aril% dire(tin1 the parties to pro(eed with the ar$itration in a((ordan(e with the ter.s thereof.N:!, Cli.a9*)ri.(o ar1ues that R.). No. 7-' 1ives no roo. for an% other issue to $e dealt with in su(h a pro(eedin1, and that the (ourt presented with an appli(ation to (o.pel ar$itration .a% order ar$itration or dis.iss the sa.e, dependin1 solel% on its findin1 as to those two li.ited issues. If either of these .atters is disputed, the (ourt is reFuired to (ondu(t a su..ar% hearin1 on it. +on?alesNs proposition (ontradi(ts $oth the trial (ourtNs li.ited 5urisdi(tion and the su..ar% nature of the pro(eedin1 itself. Cli.a9*)ri.(o further notes that +on?alesNs atta( on or repudiation of the )ddendu. Contra(t also is not a 1round to den% effe(t to the ar$itration (lause in the Contra(t. The ar$itration a1ree.ent is separate and severa$le fro. the (ontra(t eviden(in1 the partiesN (o..er(ial or e(ono.i( transa(tion, it stresses. Gen(e, the alle1ed defe(t or failure of the .ain (ontra(t is not a 1round to den% enfor(e.ent of the partiesN ar$itration a1ree.ent. Even the part% who has repudiated the .ain (ontra(t is not prevented fro. enfor(in1 its ar$itration provision. R.). No. 7-' itself treats the ar$itration (lause or a1ree.ent as a (ontra(t separate fro. the (o..er(ial, e(ono.i( or other transa(tion to $e ar$itrated. The statute, in parti(ular para1raph " of Se(. ! thereof, (onsiders the ar$itration stipulation an independent (ontra(t in its own ri1ht whose enfor(e.ent .a% $e prevented onl% on 1rounds whi(h le1all% .a e the ar$itration a1ree.ent itself revo(a$le, thusC Se(. !. Persons and matters su(1ect to ar(itration.STwo or .ore persons or parties .a% su$.it to the ar$itration of one or .ore ar$itrators an% (ontrovers% e9istin1, $etween the. at the ti.e of the su$.ission and whi(h .a% $e the su$5e(t of an a(tion, or the parties to an% (ontra(t .a% in su(h (ontra(t a1ree to settle $% ar$itration a (ontrovers% thereafter arisin1 $etween the.. Su(h su$.ission or (ontra(t shall $e valid, enfor(ea$le and irrevo(a$le, save upon su(h 1rounds as e9ist at law for the revo(ation of an% (ontra(t. 9999 The 1rounds +on?ales invo es for the revo(ation of the )ddendu. Contra(tSfraud and oppression in the e9e(ution thereofSare also not 1rounds for the revo(ation of the ar$itration (lause in the Contra(t, Cli.a9*)ri.(o notes. Su(h 1rounds .a% onl% $e raised $% wa% of defense in the ar$itration itself and (annot $e used to frustrate or dela% the (ondu(t of ar$itration pro(eedin1s. Instead, these should $e raised in a separate a(tion for res(ission, it (ontinues. Cli.a9*)ri.(o e.phasi?es that the su..ar% pro(eedin1 to (o.pel ar$itration under Se(. ' of R.). No. 7-' should not $e (onfused with the pro(edure in Se(. !4 of R.). No. &!75. Se(. ' of R.). No. 7-' refers to an appli(ation to (o.pel ar$itration where the (ourtNs authorit% is li.ited to resolvin1 the issue of whether there is or there is no a1ree.ent in writin1 providin1 for ar$itration, while Se(. !4 of R.). No. &!75 refers to an ordinar% a(tion whi(h (overs a .atter that appears to $e ar$itra$le or su$5e(t to ar$itration under the ar$itration a1ree.ent. In the latter (ase, the statute is (lear that the (ourt, instead of tr%in1 the (ase, .a%, on reFuest of either or $oth parties, refer the parties to ar$itration, unless it finds that the ar$itration a1ree.ent is null

and void, inoperative or in(apa$le of $ein1 perfor.ed. )r$itration .a% even $e ordered in the sa.e suit $rou1ht upon a .atter (overed $% an ar$itration a1ree.ent even without waitin1 for the out(o.e of the issue of the validit% of the ar$itration a1ree.ent. )rt. 7 of the 2NCITR)= ;odel =aw!4 states that where a (ourt $efore whi(h an a(tion is $rou1ht in a .atter whi(h is su$5e(t of an ar$itration a1ree.ent refers the parties to ar$itration, the ar$itral pro(eedin1s .a% pro(eed even while the a(tion is pendin1. Thus, the .ain issue raised in the Petition for Certiorari is whether it was proper for the RTC, in the pro(eedin1 to (o.pel ar$itration under R.). No. 7-', to order the parties to ar$itrate even thou1h the defendant therein has raised the twin issues of validit% and nullit% of the )ddendu. Contra(t and, (onseFuentl%, of the ar$itration (lause therein as well. The resolution of $oth Cli.a9*)ri.(oNs ;otion for Partial Re(onsideration and6or Clarifi(ation in +.R. No. "'"&5- and +on?alesNs Petition for Certiorari in +.R. No. "'-&&4 essentiall% turns on whether the Fuestion of validit% of the )ddendu. Contra(t $ears upon the appli(a$ilit% or enfor(ea$ilit% of the ar$itration (lause (ontained therein. The two pendin1 .atters shall thus $e 5ointl% resolved. <e address the Rule '5 petition in +.R. No. "'-&&4 first fro. the re.edial law perspe(tive. It deserves to $e dis.issed on pro(edural 1rounds, as it was filed in lieu of appeal whi(h is the pres(ri$ed re.ed% and at that far $e%ond the re1le.entar% period. It is ele.entar% in re.edial law that the use of an erroneous .ode of appeal is (ause for dis.issal of the petition for (ertiorari and it has $een repeatedl% stressed that a petition for (ertiorari is not a su$stitute for a lost appeal. )s its nature, a petition for (ertiorari lies onl% where there is :no appeal,: and :no plain, speed% and adeFuate re.ed% in the ordinar% (ourse of law.:!5 The )r$itration =aw spe(ifi(all% provides for an appeal $% (ertiorari, i.e., a petition for review under (ertiorari under Rule 45 of the Rules of Court that raises pure Fuestions of law.!' There is no .erit to +on?alesNs ar1u.ent that the use of the per.issive ter. :.a%: in Se(. !&, R.). No. 7-' in the filin1 of appeals does not prohi$it nor dis(ount the filin1 of a petition for (ertiorari under Rule '5.!- Proper interpretation of the aforesaid provision of law shows that the ter. :.a%: refers onl% to the filin1 of an appeal, not to the .ode of review to $e e.plo%ed. Indeed, the use of :.a%: .erel% reiterates the prin(iple that the ri1ht to appeal is not part of due pro(ess of law $ut is a .ere statutor% privile1e to $e e9er(ised onl% in the .anner and in a((ordan(e with law. Neither (an 3# Corporation v. Court of )ppeals!7 (ited $% +on?ales support his theor%. +on?ales ar1ues that said (ase re(o1ni?ed and allowed a petition for (ertiorari under Rule '5 :appealin1 the order of the Re1ional Trial Court disre1ardin1 the ar$itration a1ree.ent as an a((epta$le re.ed%.:!& The 3# Corporation (ase had its ori1ins in a (o.plaint for (olle(tion of su. of .one% filed $% therein petitioner 3# Corporation a1ainst Shan1ri*la Properties, In(. /SPI0. SPI .oved to suspend the pro(eedin1s alle1in1 that the (onstru(tion a1ree.ent or the )rti(les of )1ree.ent $etween the parties (ontained a (lause reFuirin1 prior resort to ar$itration $efore 5udi(ial intervention. The trial (ourt found that an ar$itration (lause was in(orporated in the Conditions of Contra(t appended to and dee.ed an inte1ral part of the )rti(les of )1ree.ent. Still, the trial (ourt denied the .otion to suspend pro(eedin1s upon a findin1 that the Conditions of Contra(t were not dul% e9e(uted and si1ned $% the parties. The trial (ourt also found that SPI had failed to file an% written noti(e of de.and for ar$itration within the period spe(ified in the ar$itration (lause. The trial (ourt denied SPI4s .otion for re(onsideration and ordered it to file its responsive pleadin1. Instead of filin1 an answer, SPI filed a petition for (ertiorari under Rule '5, whi(h the Court of )ppeals, favora$l% a(ted upon. In a petition for review $efore this Court, 3# Corporation alle1ed, a.on1 others, that the Court of )ppeals should have dis.issed the petition for (ertiorari sin(e the order of the trial (ourt den%in1 the .otion to suspend pro(eedin1s :is a resolution of an in(ident on the .erits: and upon the (ontinuation of the pro(eedin1s, the trial (ourt would eventuall% render a de(ision on the .erits, whi(h de(ision (ould then $e elevated to a hi1her (ourt :in an ordinar% appeal.:,8 The Court did not uphold 3# CorporationNs ar1u.ent. The issue raised $efore the Court was whether SPI had ta en the proper .ode of appeal $efore the Court of )ppeals. The Fuestion $efore the Court of )ppeals was whether the trial (ourt had pre.aturel% assu.ed 5urisdi(tion

over the (ontrovers%. The Fuestion of 5urisdi(tion in turn depended on the Fuestion of e9isten(e of the ar$itration (lause whi(h is one of fa(t. <hile on its fa(e the Fuestion of e9isten(e of the ar$itration (lause is a Fuestion of fa(t that is not proper in a petition for (ertiorari, %et sin(e the deter.ination of the Fuestion o$li1ed the Court of )ppeals as it did to interpret the (ontra(t do(u.ents in a((ordan(e with R.). No. 7-' and e9istin1 5urispruden(e, the Fuestion is li ewise a Fuestion of law whi(h .a% $e properl% ta en (o1ni?an(e of in a petition for (ertiorari under Rule '5, so the Court held.," The situation in 3.#. Corporation is not availin1 in the present petition. The disFuisition in 3.#. Corporation led to the (on(lusion that in order that the Fuestion of 5urisdi(tion .a% $e resolved, the appellate (ourt had to deal first with a Fuestion of law whi(h (ould $e addressed in a (ertiorari pro(eedin1. In the present (ase, +on?alesNs petition raises a Fuestion of law, $ut not a Fuestion of 5urisdi(tion. @ud1e Pi.entel a(ted in a((ordan(e with the pro(edure pres(ri$ed in R.). No. 7-' when he ordered +on?ales to pro(eed with ar$itration and appointed a sole ar$itrator after .a in1 the deter.ination that there was indeed an ar$itration a1ree.ent. It has $een held that as lon1 as a (ourt a(ts within its 5urisdi(tion and does not 1ravel% a$use its dis(retion in the e9er(ise thereof, an% supposed error (o..itted $% it will a.ount to nothin1 .ore than an error of 5ud1.ent reviewa$le $% a ti.el% appeal and not assaila$le $% a spe(ial (ivil a(tion of (ertiorari.,! Even if we overloo the e.plo%.ent of the wron1 re.ed% in the $roader interests of 5usti(e, the petition would nevertheless $e dis.issed for failure of +on?ale? to show 1rave a$use of dis(retion. )r$itration, as an alternative .ode of settlin1 disputes, has lon1 $een re(o1ni?ed and a((epted in our 5urisdi(tion. The Civil Code is e9pli(it on the .atter.,, R.). No. 7-' also e9pressl% authori?es ar$itration of do.esti( disputes. #orei1n ar$itration, as a s%ste. of settlin1 (o..er(ial disputes of an international (hara(ter, was li ewise re(o1ni?ed when the Philippines adhered to the 2nited Nations :Convention on the Re(o1nition and the Enfor(e.ent of #orei1n )r$itral )wards of "&57,: under the "8 ;a% "&'5 Resolution No. -" of the Philippine Senate, 1ivin1 re(ipro(al re(o1nition and allowin1 enfor(e.ent of international ar$itration a1ree.ents $etween parties of different nationalities within a (ontra(tin1 state. ,4 The ena(t.ent of R.). No. &!75 on ! )pril !884 further institutionali?ed the use of alternative dispute resolution s%ste.s, in(ludin1 ar$itration, in the settle.ent of disputes. Disputes do not 1o to ar$itration unless and until the parties have a1reed to a$ide $% the ar$itratorNs de(ision. Ne(essaril%, a (ontra(t is reFuired for ar$itration to ta e pla(e and to $e $indin1. R.). No. 7-' re(o1ni?es the (ontra(tual nature of the ar$itration a1ree.ent, thusC Se(. !. Persons and matters su(1ect to ar(itration.STwo or .ore persons or parties .a% su$.it to the ar$itration of one or .ore ar$itrators an% (ontrovers% e9istin1, $etween the. at the ti.e of the su$.ission and whi(h .a% $e the su$5e(t of an a(tion, or the parties to an% (ontra(t .a% in su(h (ontra(t a1ree to settle $% ar$itration a (ontrovers% thereafter arisin1 $etween the.. Su(h su$.ission or (ontra(t shall $e valid, enfor(ea$le and irrevo(a$le, save upon su(h 1rounds as e9ist at law for the revo(ation of an% (ontra(t. Su(h su$.ission or (ontra(t .a% in(lude Fuestion arisin1 out of valuations, appraisals or other (ontroversies whi(h .a% $e (ollateral, in(idental, pre(edent or su$seFuent to an% issue $etween the parties. ) (ontrovers% (annot $e ar$itrated where one of the parties to the (ontrovers% is an infant, or a person 5udi(iall% de(lared to $e in(o.petent, unless the appropriate (ourt havin1 5urisdi(tion approve a petition for per.ission to su$.it su(h (ontrovers% to ar$itration .ade $% the 1eneral 1uardian or 1uardian ad lite. of the infant or of the in(o.petent. IE.phasis added.J Thus, we held in ;anila Ele(tri( Co. v. Pasa% Transportation Co.,5 that a su$.ission to ar$itration is a (ontra(t. ) (lause in a (ontra(t providin1 that all .atters in dispute $etween the

parties shall $e referred to ar$itration is a (ontra(t,,' and in Del ;onte Corporation*2S) v. Court of )ppeals,- that :ItJhe provision to su$.it to ar$itration an% dispute arisin1 therefro. and the relationship of the parties is part of that (ontra(t and is itself a (ontra(t. )s a rule, (ontra(ts are respe(ted as the law $etween the (ontra(tin1 parties and produ(e effe(t as $etween the., their assi1ns and heirs.:,7 The spe(ial pro(eedin1 under Se(. ' of R.). No. 7-' re(o1ni?es the (ontra(tual nature of ar$itration (lauses or a1ree.ents. It providesC Se(. '. )earin/ (& court.S) part% a11rieved $% the failure, ne1le(t or refusal of another to perfor. under an a1ree.ent in writin1 providin1 for ar$itration .a% petition the (ourt for an order dire(tin1 that su(h ar$itration pro(eed in the .anner provided for in su(h a1ree.ent. #ive da%s noti(e in writin1 of the hearin1 of su(h appli(ation shall $e served either personall% or $% re1istered .ail upon the part% in default. The (ourt shall hear the parties, and upon $ein1 satisfied that the .a in1 of the a1ree.ent or su(h failure to (o.pl% therewith is not in issue, shall .a e an order dire(tin1 the parties to pro(eed to ar$itration in a((ordan(e with the ter.s of the a1ree.ent. If the .a in1 of the a1ree.ent or default $e in issue the (ourt shall pro(eed to su..aril% hear su(h issue. If the findin1 $e that no a1ree.ent in writin1 providin1 for ar$itration was .ade, or that there is no default in the pro(eedin1 thereunder, the pro(eedin1 shall $e dis.issed. If the findin1 $e that a written provision for ar$itration was .ade and there is a default in pro(eedin1 thereunder, an order shall $e .ade su..aril% dire(tin1 the parties to pro(eed with the ar$itration in a((ordan(e with the ter.s thereof. The (ourt shall de(ide all .otions, petitions or appli(ations filed under the provisions of this )(t, within ten da%s after su(h .otions, petitions, or appli(ations have $een heard $% it. IE.phasis added.J This spe(ial pro(eedin1 is the pro(edural .e(hanis. for the enfor(e.ent of the (ontra(t to ar$itrate. The 5urisdi(tion of the (ourts in relation to Se(. ' of R.). No. 7-' as well as the nature of the pro(eedin1s therein was e9pounded upon in =a Naval Dru1 Corporation v. Court of )ppeals.,& There it was held that R.). No. 7-' e9pli(itl% (onfines the (ourt4s authorit% onl% to the deter.ination of whether or not there is an a1ree.ent in writin1 providin1 for ar$itration. In the affir.ative, the statute ordains that the (ourt shall issue an order :su..aril% dire(tin1 the parties to pro(eed with the ar$itration in a((ordan(e with the ter.s thereof.: If the (ourt, upon the other hand, finds that no su(h a1ree.ent e9ists, :the pro(eedin1 shall $e dis.issed.: 48 The (ited (ase also stressed that the pro(eedin1s are su..ar% in nature.4" The sa.e thrust was .ade in the earlier (ase of ;indanao Portland Ce.ent Corp. v. ;(Donou1h Constru(tion Co. of #lorida 4! whi(h held, thusC Sin(e there o$tains herein a written provision for ar$itration as well as failure on respondent4s part to (o.pl% therewith, the (ourt a Fuo ri1htl% ordered the parties to pro(eed to ar$itration in a((ordan(e with the ter.s of their a1ree.ent /Se(. ', Repu$li( )(t 7-'0. Respondent4s ar1u.ents tou(hin1 upon the .erits of the dispute are i.properl% raised herein. The% should $e addressed to the ar$itrators. This pro(eedin1 is .erel% a su..ar% re.ed% to enfor(e the a1ree.ent to ar$itrate. The dut% of the (ourt in this (ase is not to resolve the .erits of the parties4 (lai.s $ut onl% to deter.ine if the% should pro(eed to ar$itration or not. 9 9 9 94, I.pli(it in the su..ar% nature of the 5udi(ial pro(eedin1s is the separa$le or independent (hara(ter of the ar$itration (lause or a1ree.ent. This was hi1hli1hted in the (ases of ;anila Ele(tri( Co. v. Pasa% Trans. Co.44 and Del ;onte Corporation*2S) v. Court of )ppeals.45 The do(trine of separa$ilit%, or severa$ilit% as other writers (all it, enun(iates that an ar$itration a1ree.ent is independent of the .ain (ontra(t. The ar$itration a1ree.ent is to $e treated as a separate a1ree.ent and the ar$itration a1ree.ent does not auto.ati(all% ter.inate when the (ontra(t of whi(h it is part (o.es to an end.4'

The separa$ilit% of the ar$itration a1ree.ent is espe(iall% si1nifi(ant to the deter.ination of whether the invalidit% of the .ain (ontra(t also nullifies the ar$itration (lause. Indeed, the do(trine denotes that the invalidit% of the .ain (ontra(t, also referred to as the :(ontainer: (ontra(t, does *o0 affe(t the validit% of the ar$itration a1ree.ent. Irrespe(tive of the fa(t that the .ain (ontra(t is invalid, the ar$itration (lause6a1ree.ent still re.ains valid and enfor(ea$le. 4The separa$ilit% of the ar$itration (lause is (onfir.ed in )rt. "'/"0 of the 2NCITR)= ;odel =aw and )rt. !"/!0 of the 2NCITR)= )r$itration Rules.47 The separa$ilit% do(trine was dwelt upon at len1th in the 2.S. (ase of Pri.a Paint Corp. v. #lood L Con lin ;anufa(turin1 Co.4& In that (ase, Pri.a Paint and #lood and Con lin /# L C0 entered into a (onsultin1 a1ree.ent where$% # L C undertoo to a(t as (onsultant to Pri.a Paint for si9 %ears, sold to Pri.a Paint a list of its (usto.ers and pro.ised not to sell paint to these (usto.ers durin1 the sa.e period. The (onsultin1 a1ree.ent (ontained an ar$itration (lause. Pri.a Paint did not .a e pa%.ents as provided in the (onsultin1 a1ree.ent, (ontendin1 that # L C had fraudulentl% .isrepresented that it was solvent and a$le for perfor. its (ontra(t when in fa(t it was not and had even intended to file for $an rupt(% after e9e(utin1 the (onsultan(% a1ree.ent. Thus, # L C served Pri.a Paint with a noti(e of intention to ar$itrate. Pri.a Paint sued in (ourt for res(ission of the (onsultin1 a1ree.ent on the 1round of fraudulent .isrepresentation and as ed for the issuan(e of an order en5oinin1 # L C fro. pro(eedin1 with ar$itration. # L C .oved to sta% the suit pendin1 ar$itration. The trial (ourt 1ranted # L CNs .otion, and the 2.S. Supre.e Court affir.ed. The 2.S. Supre.e Court did not address Pri.a PaintNs ar1u.ent that it had $een fraudulentl% indu(ed $% # L C to si1n the (onsultin1 a1ree.ent and held that no (ourt should address this ar1u.ent. Rel%in1 on Se(. 4 of the #ederal )r$itration )(tSwhi(h provides that :if a part% I(lai.s to $eJ a11rieved $% the alle1ed failure 9 9 9 of another to ar$itrate 9 9 9, ItJhe (ourt shall hear the parties, and upon $ein1 satisfied that the .a in1 of the a1ree.ent for ar$itration or the failure to (o.pl% therewith is not in issue, the (ourt shall .a e an order dire(tin1 the parties to pro(eed to ar$itration 9 9 9. If the .a in1 of the ar$itration a1ree.ent or the failure, ne1le(t, or refusal to perfor. the sa.e $e in issue, the (ourt shall pro(eed su..aril% to the trial thereof:S the 2.S. Gi1h Court held that the (ourt should not order the parties to ar$itrate if the .a in1 of the ar$itration a1ree.ent is in issue. The parties should $e ordered to ar$itration if, and onl% if, the% have (ontra(ted to su$.it to ar$itration. Pri.a Paint was not entitled to trial on the Fuestion of whether an ar$itration a1ree.ent was .ade $e(ause its alle1ations of fraudulent indu(e.ent were not dire(ted to the ar$itration (lause itself, $ut onl% to the (onsultin1 a1ree.ent whi(h (ontained the ar$itration a1ree.ent.58 Pri.a Paint held that :ar$itration (lauses are Rsepara$leN fro. the (ontra(ts in whi(h the% are e.$edded, and that where no (lai. is .ade that fraud was dire(ted to the ar$itration (lause itself, a $road ar$itration (lause will $e held to en(o.pass ar$itration of the (lai. that the (ontra(t itself was indu(ed $% fraud.:5" There is reason, therefore, to rule a1ainst +on?ales when he alle1es that @ud1e Pi.entel a(ted with 1rave a$use of dis(retion in orderin1 the parties to pro(eed with ar$itration. +on?alesNs ar1u.ent that the )ddendu. Contra(t is null and void and, therefore the ar$itration (lause therein is void as well, is not tena$le. #irst, the pro(eedin1 in a petition for ar$itration under R.). No. 7-' is li.ited onl% to the resolution of the Fuestion of whether the ar$itration a1ree.ent e9ists. Se(ond, the separa$ilit% of the ar$itration (lause fro. the )ddendu. Contra(t .eans that validit% or invalidit% of the )ddendu. Contra(t will not affe(t the enfor(ea$ilit% of the a1ree.ent to ar$itrate. Thus, +on?alesNs petition for (ertiorari should $e dis.issed. This $rin1s us $a( to +.R. No. "'"&5-. The ad5udi(ation of the petition in +.R. No. "'-&&4 effe(tivel% .odifies part of the De(ision dated !7 #e$ruar% !885 in +.R. No. "'"&5-. Gen(e, we now hold that the validit% of the (ontra(t (ontainin1 the a1ree.ent to su$.it to ar$itration does not affe(t the appli(a$ilit% of the ar$itration (lause itself. ) (ontrar% rulin1 would su11est that a part%Ns .ere repudiation of the .ain (ontra(t is suffi(ient to avoid ar$itration. That is e9a(tl% the situation that the separa$ilit% do(trine, as well as 5urispruden(e appl%in1 it, see s to avoid. <e

add that when it was de(lared in +.R. No. "'"&5- that the (ase should not $e $rou1ht for ar$itration, it should $e (larified that the (ase referred to is the (ase a(tuall% filed $% +on?ales $efore the DENR Panel of )r$itrators, whi(h was for the nullifi(ation of the .ain (ontra(t on the 1round of fraud, as it had alread% $een deter.ined that the (ase should have $een $rou1ht $efore the re1ular (ourts involvin1 as it did 5udi(ial issues. The ;otion for Re(onsideration of +on?ales in +.R. No. "'"&5- should also $e denied. In the .otion, +on?ales raises the sa.e Fuestion of 5urisdi(tion, .ore parti(ularl% that the (o.plaint for nullifi(ation of the )ddendu. Contra(t pertained to the DENR Panel of )r$itrators, not the re1ular (ourts. Ge insists that the su$5e(t of his (o.plaint is a .inin1 dispute sin(e it involves a dispute (on(ernin1 ri1hts to .inin1 areas, the #inan(ial and Te(hni(al )ssistan(e )1ree.ent /#T))0 $etween the parties, and it also involves (lai.owners. Ge adds that the Court failed to rule on other issues he raised, su(h as whether he had (eded his (lai.s over the .ineral deposits lo(ated within the )ddendu. )rea of Influen(eD whether the (o.plaint filed $efore the DENR Panel of )r$itrators alle1ed ulti.ate fa(ts of fraudD and whether the a(tion to de(lare the nullit% of the )ddendu. Contra(t on the 1round of fraud has pres(ri$ed.1avvp.i1.net These are the sa.e issues that +on?ales raised in his Rule 45 petition in +.R. No. "'"&5whi(h were resolved a1ainst hi. in the De(ision of !7 #e$ruar% !885. +on?ales does not raise an% new ar1u.ent that would swa% the Court even a $it to alter its holdin1 that the (o.plaint filed $efore the DENR Panel of )r$itrators involves 5udi(ial issues whi(h should properl% $e resolved $% the re1ular (ourts. Ge alle1ed fraud or .isrepresentation in the e9e(ution of the )ddendu. Contra(t whi(h is a 1round for the annul.ent of a voida$le (ontra(t. Clearl%, su(h alle1ations entail le1al Fuestions whi(h are within the 5urisdi(tion of the (ourts. The Fuestion of whether +on?ales had (eded his (lai.s over the .ineral deposits in the )ddendu. )rea of Influen(e is a fa(tual Fuestion whi(h is not proper for deter.ination $efore this Court. )t all events, .oreover, the Fuestion is irrelevant to the issue of 5urisdi(tion of the DENR Panel of )r$itrators. It should $e pointed out that the DENR Panel of )r$itrators .ade a fa(tual findin1 in its Order dated "7 O(to$er !88", whi(h it reiterated in its Order dated !5 @une !88!, that +on?ales had, :throu1h the various a1ree.ents, assi1ned his interest over the .ineral (lai.s all in favor of ICli.a9*)ri.(oJ: as well as that without the (o.plainant I+on?alesJ assi1nin1 his interest over the .ineral (lai.s in favor of ICli.a9*)ri.(oJ, there would $e no #T)) to spea of.:5! This findin1 was affir.ed $% the Court of )ppeals in its De(ision dated ,8 @ul% !88, resolvin1 the petition for (ertiorari filed $% Cli.a9*)ri.(o in re1ard to the "7 O(to$er !88" Order of the DENR Panel.5, The Court of )ppeals li ewise found that +on?alesNs (o.plaint alle1ed fraud $ut did not provide an% parti(ulars to su$stantiate it. The (o.plaint repeatedl% .entioned fraud, oppression, violation of the Constitution and si.ilar (on(lusions $ut nowhere did it 1ive an% ulti.ate fa(ts or parti(ulars relative to the alle1ations.54 Se(. 5, Rule 7 of the Rules of Court spe(ifi(all% provides that in all aver.ents of fraud, the (ir(u.stan(es (onstitutin1 fraud .ust $e stated with parti(ularit%. This is to ena$le the opposin1 part% to (ontrovert the parti(ular fa(ts alle1edl% (onstitutin1 the sa.e. Perusal of the (o.plaint indeed shows that it failed to state with parti(ularit% the ulti.ate fa(ts and (ir(u.stan(es (onstitutin1 the alle1ed fraud. It does not state what parti(ulars a$out Cli.a9*)ri.(oNs finan(ial or te(hni(al (apa$ilit% were .isrepresented, or how the .isrepresentation was done. In(orporated in the $od% of the (o.plaint are ver$ati. reprodu(tions of the (ontra(ts, (orresponden(e and 1overn.ent issuan(es that reportedl% e9plain the alle1ations of fraud and .isrepresentation, $ut these are, at $est, evidentiar% .atters that should not $e in(luded in the pleadin1. )s to the issue of pres(ription, +on?alesNs (lai.s of fraud and .isrepresentation attendin1 the e9e(ution of the )ddendu. Contra(t are 1rounds for the annul.ent of a voida$le (ontra(t under

the Civil Code.55 2nder )rt. ",&" of the Code, an a(tion for annul.ent shall $e $rou1ht within four %ears, in the (ase of fraud, $e1innin1 fro. the ti.e of the dis(over% of the sa.e. Gowever, the ti.e of the dis(over% of the alle1ed fraud is not (lear fro. the alle1ations of +on?alesNs (o.plaint. That $ein1 the situation (oupled with the fa(t that this Court is not a trier of fa(ts, an% rulin1 on the issue of pres(ription would $e un(alled for or even unne(essar%. <GERE#ORE, the Petition for Certiorari in +.R. No. "'-&&4 is DIS;ISSED. Su(h dis.issal effe(tivel% renders superfluous for.al a(tion on the ;otion for Partial Re(onsideration and6or Clarifi(ation filed $% Cli.a9 ;inin1 =td., et al. in +.R. No. "'"&5-. The ;otion for Re(onsideration filed $% @or1e +on?ales in +.R. No. "'"&5- is DENIED <ITG #IN)=ITK. SO ORDERED. G.R. No. 169::2 ;ebr1(r, 11, 200<

The parties appointed Professor )lfredo #. Tadiar to a(t as sole ar$itrator. The% stipulated on the followin1 issues in their ter.s of referen(e /TOR0'C ". <as the $road(ast of <INS <EEB=K $% the (lai.ant dul% authori?ed $% the respondent Iherein petitionerJO !. Did su(h $road(ast (onstitute a .aterial $rea(h of the a1ree.ent that is a 1round for ter.ination of the a1ree.ent in a((ordan(e with Se(tion ", /a0 thereofO ,. If so, was the $rea(h seasona$l% (ured under the sa.e (ontra(tual provision of Se(tion ", /a0O 4. <hi(h part% is entitled to the pa%.ent of da.a1es the% (lai. and to the other reliefs pra%ed forO 999 999 999

A=S-C=N =ROADCASTING CORPORATION, petitioner, vs. WORLD INTERACTI!E NETWOR SYSTE"S EWINSF -APAN CO., LTD., respondent. DECISION CORONA, J.# This petition for review on (ertiorari under Rule 45 of the Rules of Court see s to set aside the #e$ruar% "', !885 de(ision" and )u1ust "', !885 resolution! of the Court of )ppeals /C)0 in C)*+.R. SP No. 7"&48. On Septe.$er !-, "&&&, petitioner )3S*C3N 3road(astin1 Corporation entered into a li(ensin1 a1ree.ent with respondent <orld Intera(tive Networ S%ste.s /<INS0 @apan Co., =td., a forei1n (orporation li(ensed under the laws of @apan. 2nder the a1ree.ent, respondent was 1ranted the e9(lusive li(ense to distri$ute and su$li(ense the distri$ution of the television servi(e nown as :The #ilipino Channel: /T#C0 in @apan. 3% virtue thereof, petitioner undertoo to trans.it the T#C pro1ra..in1 si1nals to respondent whi(h the latter re(eived throu1h its de(oders and distri$uted to its su$s(ri$ers. ) dispute arose $etween the parties when petitioner a((used respondent of insertin1 nine episodes of <INS <EEB=K, a wee l% ,5*.inute (o..unit% news pro1ra. for #ilipinos in @apan, into the T#C pro1ra..in1 fro. ;ar(h to ;a% !88!., Petitioner (lai.ed that these were :unauthori?ed insertions: (onstitutin1 a .aterial $rea(h of their a1ree.ent. ConseFuentl%, on ;a% &, !88!,4 petitioner notified respondent of its intention to ter.inate the a1ree.ent effe(tive @une "8, !88!. Thereafter, respondent filed an ar$itration suit pursuant to the ar$itration (lause of its a1ree.ent with petitioner. It (ontended that the airin1 of <INS <EEB=K was .ade with petitioner4s prior approval. It also alle1ed that petitioner onl% threatened to ter.inate their a1ree.ent $e(ause it wanted to rene1otiate the ter.s thereof to allow it to de.and hi1her fees. Respondent also pra%ed for da.a1es for petitioner4s alle1ed 1rant of an e9(lusive distri$ution li(ense to another entit%, NGB /@apan 3road(astin1 Corporation0.5

The ar$itrator found in favor of respondent.- Ge held that petitioner 1ave its approval to respondent for the airin1 of <INS <EEB=K as shown $% a series of written e9(han1es $etween the parties. Ge also ruled that, had there reall% $een a .aterial $rea(h of the a1ree.ent, petitioner should have ter.inated the sa.e instead of sendin1 a .ere noti(e to ter.inate said a1ree.ent. The ar$itrator found that petitioner threatened to ter.inate the a1ree.ent due to its desire to (o.pel respondent to re*ne1otiate the ter.s thereof for hi1her fees. Ge further stated that even if respondent (o..itted a $rea(h of the a1ree.ent, the sa.e was seasona$l% (ured. Ge then allowed respondent to re(over te.perate da.a1es, attorne%4s fees and one*half of the a.ount it paid as ar$itrator4s fee. Petitioner filed in the C) a petition for review under Rule 4, of the Rules of Court or, in the alternative, a petition for (ertiorari under Rule '5 of the sa.e Rules, with appli(ation for te.porar% restrainin1 order and writ of preli.inar% in5un(tion. It was do( eted as C)*+.R. SP No. 7"&48. It alle1ed serious errors of fa(t and law and6or 1rave a$use of dis(retion a.ountin1 to la( or e9(ess of 5urisdi(tion on the part of the ar$itrator. Respondent, on the other hand, filed a petition for (onfir.ation of ar$itral award $efore the Re1ional Trial Court /RTC0 of >ue?on Cit%, 3ran(h &,, do( eted as Civil Case No. >*84*5"7!!. ConseFuentl%, petitioner filed a supple.ental petition in the C) see in1 to en5oin the RTC of >ue?on Cit% fro. further pro(eedin1 with the hearin1 of respondent4s petition for (onfir.ation of ar$itral award. )fter the petition was ad.itted $% the appellate (ourt, the RTC of >ue?on Cit% issued an order holdin1 in a$e%an(e an% further a(tion on respondent4s petition as the assailed de(ision of the ar$itrator had alread% $e(o.e the su$5e(t of an appeal in the C). Respondent filed a .otion for re(onsideration $ut no resolution has $een issued $% the lower (ourt to date.7 On #e$ruar% "', !885, the C) rendered the assailed de(ision dis.issin1 )3S*C3NNs petition for la( of 5urisdi(tion. It stated that as the TOR itself provided that the ar$itrator4s de(ision shall $e final and unappeala$le and that no .otion for re(onsideration shall $e filed, then the petition for review .ust fail. It ruled that it is the RTC whi(h has 5urisdi(tion over Fuestions relatin1 to ar$itration. It held that the onl% instan(e it (an e9er(ise 5urisdi(tion over an ar$itral award is an appeal fro. the trial (ourt4s de(ision (onfir.in1, va(atin1 or .odif%in1 the ar$itral award. It further stated that a petition for (ertiorari under Rule '5 of the Rules of Court is proper in ar$itration (ases onl% if the (ourts refuse or ne1le(t to inFuire into the fa(ts of an ar$itrator4s award. The dispositive portion of the C) de(ision readC

<GERE#ORE, the instant petition is here$% DIS"ISSED for la( of 5urisdi(tion. The appli(ation for a writ of in5un(tion and te.porar% restrainin1 order is li ewise DENIED. The Re1ional Trial Court of >ue?on Cit% 3ran(h &, is dire(ted to pro(eed with the trial for the Petition for Confir.ation of )r$itral )ward. SO ORDERED. Petitioner .oved for re(onsideration. The sa.e was denied. Gen(e, this petition. Petitioner (ontends that the C), in effe(t, ruled thatC /a0 it should have first filed a petition to va(ate the award in the RTC and onl% in (ase of denial (ould it elevate the .atter to the C) via a petition for review under Rule 4, and /$0 the assailed de(ision i.plied that an a11rieved part% to an ar$itral award does not have the option of dire(tl% filin1 a petition for review under Rule 4, or a petition for (ertiorari under Rule '5 with the C) even if the issues raised pertain to errors of fa(t and law or 1rave a$use of dis(retion, as the (ase .a% $e, and not dependent upon su(h 1rounds as enu.erated under Se(tion !4 /petition to va(ate an ar$itral award0 of R) 7-' /the )r$itration =aw0. Petitioner alle1ed serious error on the part of the C). The issue $efore us is whether or not an a11rieved part% in a voluntar% ar$itration dispute .a% avail of, dire(tl% in the C), a petition for review under Rule 4, or a petition for (ertiorari under Rule '5 of the Rules of Court, instead of filin1 a petition to va(ate the award in the RTC when the 1rounds invo ed to overturn the ar$itratorNs de(ision are other than those for a petition to va(ate an ar$itral award enu.erated under R) 7-'. R) 7-' itself .andates that it is the Court of #irst Instan(e, now the RTC, whi(h has 5urisdi(tion over Fuestions relatin1 to ar$itration,& su(h as a petition to va(ate an ar$itral award. Se(tion !4 of R) 7-' provides for the spe(ifi( 1rounds for a petition to va(ate an award .ade $% an ar$itratorC Se(. !4. 0rounds !or vacatin/ a$ard. * I* (*, o*e o/ 02e /o''o.)*7 c($e$, 02e co1r0 m1$0 m(@e (* or+er 8(c(0)*7 02e (.(r+ upon the petition of an% part% to the (ontrovers% when su(h part% proves affir.ativel% that in the ar$itration pro(eedin1sC /a0 The award was pro(ured $% (orruption, fraud, or other undue .eansD or /$0 That there was evident partialit% or (orruption in the ar$itrators or an% of the.D or /(0 That the ar$itrators were 1uilt% of .is(ondu(t in refusin1 to postpone the hearin1 upon suffi(ient (ause shown, or in refusin1 to hear eviden(e pertinent and .aterial to the (ontrovers%D that one or .ore of the ar$itrators was disFualified to a(t as su(h under se(tion nine hereof, and willfull% refrained fro. dis(losin1 su(h disFualifi(ations or of an% other .is$ehavior $% whi(h the ri1hts of an% part% have $een .ateriall% pre5udi(edD or /d0 That the ar$itrators e9(eeded their powers, or so i.perfe(tl% e9e(uted the., that a .utual, final and definite award upon the su$5e(t .atter su$.itted to the. was not .ade. 3ased on the fore1oin1 provisions, the law itself (learl% provides that the RTC .ust issue an order va(atin1 an ar$itral award onl% :in an% one of the . . . (ases: enu.erated therein. 2nder the le1al .a9i. in statutor% (onstru(tion e3pressio unius est e3clusio alterius, the e9pli(it

.ention of one thin1 in a statute .eans the eli.ination of others not spe(ifi(all% .entioned. )s R) 7-' did not e9pressl% provide for errors of fa(t and6or law and 1rave a$use of dis(retion /proper 1rounds for a petition for review under Rule 4, and a petition for (ertiorari under Rule '5, respe(tivel%0 as 1rounds for .aintainin1 a petition to va(ate an ar$itral award in the RTC, it ne(essaril% follows that a part% .a% not avail of the latter re.ed% on the 1rounds of errors of fa(t and6or law or 1rave a$use of dis(retion to overturn an ar$itral award. 'damson v. Court o! 'ppeals"8 1ave a.ple warnin1 that a petition to va(ate filed in the RTC whi(h is not $ased on the 1rounds enu.erated in Se(tion !4 of R) 7-' should $e dis.issed. In that (ase, the trial (ourt va(ated the ar$itral award see.in1l% $ased on 1rounds in(luded in Se(tion !4 of R) 7-' $ut a (loser readin1 thereof revealed otherwise. On appeal, the C) reversed the de(ision of the trial (ourt and affir.ed the ar$itral award. In affir.in1 the C), we heldC The Court of )ppeals, in reversin1 the trial (ourt4s de(ision held that the nullifi(ation of the de(ision of the )r$itration Co..ittee was not $ased on the 1rounds provided $% the )r$itration =aw and that 999 private respondents /petitioners herein0 have failed to su$stantiate with an% eviden(e their (lai. of partialit%. Si1nifi(antl%, even as respondent 5ud1e ruled a1ainst the ar$itrator4s award, he (ould not find fault with their i.partialit% and inte1rit%. E8)+e*0',, 02e *1'')/)c(0)o* o/ 02e (.(r+ re*+ere+ (0 02e c($e (0 b(r .($ *o0 m(+e o* 02e b($)$ o/ (*, o/ 02e 7ro1*+$ &ro8)+e+ b, '(.. 999 999 999

I0 )$ c'e(r, 02ere/ore, 02(0 02e (.(r+ .($ 8(c(0e+ *o0 bec(1$e o/ e8)+e*0 &(r0)(')0, o/ 02e (rb)0r(0or$ $ut $e(ause the latter interpreted the (ontra(t in a wa% whi(h was not favora$le to herein petitioners and $e(ause it (onsidered that herein private respondents, $% su$.ittin1 the (ontrovers% to ar$itration, was see in1 to rene1e on its o$li1ations under the (ontra(t. 999 999 999

It is (lear then that 02e Co1r0 o/ A&&e('$ re8er$e+ 02e 0r)(' co1r0 not $e(ause the latter reviewed the ar$itration award involved herein, $ut bec(1$e 02e re$&o*+e*0 (&&e''(0e co1r0 /o1*+ 02(0 02e 0r)(' co1r0 2(+ *o 'e7(' b($)$ /or 8(c(0)*7 02e (.(r+. /E.phasis supplied0. In (ases not fallin1 under an% of the afore.entioned 1rounds to va(ate an award, the Court has alread% .ade several pronoun(e.ents that a petition for review under Rule 4, or a petition for (ertiorari under Rule '5 .a% $e availed of in the C). <hi(h one would depend on the 1rounds relied upon $% petitioner. In *u<on Development ,ank v. 'ssociation o! *u<on Development ,ank Emplo&ees,"" the Court held that a voluntar% ar$itrator is properl% (lassified as a :Fuasi*5udi(ial instru.entalit%: and is, thus, within the a.$it of Se(tion & /,0 of the @udi(iar% Reor1ani?ation )(t, as a.ended. 2nder this se(tion, the Court of )ppeals shall e9er(iseC 999 999 999

/,0 E9(lusive appellate 5urisdi(tion over all final 5ud1.ents, de(isions, resolutions, orders or awards of Re1ional Trial Courts and Fuasi*5udi(ial a1en(ies, )*$0r1me*0(')0)e$, $oards or (o..issions, in(ludin1 the Se(urities and E9(han1e Co..ission, the E.plo%eesN Co.pensation Co..ission and the Civil Servi(e

Co..ission, e9(ept those fallin1 within the appellate 5urisdi(tion of the Supre.e Court in a((ordan(e with the Constitution, the =a$or Code of the Philippines under Presidential De(ree No. 44!, as a.ended, the provisions of this )(t and of su$para1raph /"0 of the third para1raph and su$para1raph /40 of the fourth para1raph of Se(tion "- of the @udi(iar% )(t of "&47. /E.phasis supplied0 )s su(h, de(isions handed down $% voluntar% ar$itrators fall within the e9(lusive appellate 5urisdi(tion of the C). This de(ision was ta en into (onsideration in approvin1 Se(tion " of Rule 4, of the Rules of Court."! ThusC SECTION ". %cope. * This Rule shall appl% to appeals fro. 5ud1.ents or final orders of the Court of Ta9 )ppeals and fro. awards, 5ud1.ents, final orders or resolutions of or authori?ed $% an% Fuasi*5udi(ial a1en(% in the e9er(ise of its Fuasi*5udi(ial fun(tions. ).on1 these a1en(ies are the Civil Servi(e Co..ission, Central 3oard of )ssess.ent )ppeals, Se(urities and E9(han1e Co..ission, Offi(e of the President, =and Re1istration )uthorit%, So(ial Se(urit% Co..ission, Civil )eronauti(s 3oard, 3ureau of Patents, Trade.ar s and Te(hnolo1% Transfer, National Ele(trifi(ation )d.inistration, Ener1% Re1ulator% 3oard, National Tele(o..uni(ations Co..ission, Depart.ent of )1rarian Refor. under Repu$li( )(t Nu.$er ''5-, +overn.ent Servi(e Insuran(e S%ste., E.plo%ees Co.pensation Co..ission, )1ri(ultural Inventions 3oard, Insuran(e Co..ission, Philippine )to.i( Ener1% Co..ission, 3oard of Invest.ents, Constru(tion Industr% )r$itration Co..ission, and 8o'1*0(r, (rb)0r(0or$ (102or)9e+ b, '(.. /E.phasis supplied0 This rule was (ited in %evilla Tradin/ Compan& v. %emana,", -anila -idto$n )otel v. ,orromeo,"4 and :ippon Paint Emplo&ees #nion-Olalia v. Court o! 'ppeals."5 These (ases held that the proper re.ed% fro. the adverse de(ision of a voluntar% ar$itrator, if errors of fa(t and6or law are raised, is a petition for review under Rule 4, of the Rules of Court. Thus, petitioner4s (ontention that it .a% avail of a petition for review under Rule 4, under the (ir(u.stan(es of this (ase is (orre(t. )s to petitioner4s ar1u.ents that a petition for (ertiorari under Rule '5 .a% also $e resorted to, we hold the sa.e to $e in a((ordan(e with the Constitution and 5urispruden(e. Se(tion " of )rti(le EIII of the "&7- Constitution provides thatC SECTION ". The 5udi(ial power shall $e vested in one Supre.e Court and in su(h lower (ourts as .a% $e esta$lished $% law. -1+)c)(' &o.er )*c'1+e$ 02e +10, o/ 02e co1r0$ o/ ?1$0)ce to settle a(tual (ontroversies involvin1 ri1hts whi(h are le1all% de.anda$le and enfor(ea$le, and 0o +e0erm)*e .2e02er or *o0 02ere 2($ bee* ( 7r(8e (b1$e o/ +)$cre0)o* (mo1*0)*7 0o '(c@ or e%ce$$ o/ ?1r)$+)c0)o* o* 02e &(r0 o/ (*, br(*c2 or )*$0r1me*0(')0, o/ 02e Go8er*me*0. /E.phasis supplied0 )s .a% $e 1leaned fro. the a$ove stated provision, it is well within the power and 5urisdi(tion of the Court to inFuire whether an% instru.entalit% of the +overn.ent, su(h as a voluntar% ar$itrator, has 1ravel% a$used its dis(retion in the e9er(ise of its fun(tions and prero1atives. )n% a1ree.ent stipulatin1 that :the de(ision of the ar$itrator shall $e final and unappeala$le: and :that no further 5udi(ial re(ourse if either part% disa1rees with the whole or an% part of the ar$itrator4s award .a% $e availed of: (annot $e held to pre(lude in proper (ases the power of 5udi(ial review whi(h is inherent in (ourts."' <e will not hesitate to review a voluntar% ar$itrator4s award where there is a showin1 of 1rave a$use of authorit% or dis(retion and su(h is properl%

raised in a petition for (ertiorari"- and there is no appeal, nor an% plain, speed% re.ed% in the (ourse of law."7 Si1nifi(antl%, Insular %avin/s ,ank v. ;ar East ,ank and Trust Compan&"& definitivel% outlined several 5udi(ial re.edies an a11rieved part% to an ar$itral award .a% underta eC /"0 a petition in the proper RTC to issue an order to va(ate the award on the 1rounds provided for in Se(tion !4 of R) 7-'D /!0 a petition for review in the C) under Rule 4, of the Rules of Court on Fuestions of fa(t, of law, or .i9ed Fuestions of fa(t and lawD and /,0 a petition for (ertiorari under Rule '5 of the Rules of Court should the ar$itrator have a(ted without or in e9(ess of his 5urisdi(tion or with 1rave a$use of dis(retion a.ountin1 to la( or e9(ess of 5urisdi(tion. Nevertheless, althou1h petitionerNs position on the 5udi(ial re.edies availa$le to it was (orre(t, we sustain the dis.issal of its petition $% the C). The re.ed% petitioner availed of, entitled :alternative petition !or revie$ under Rule A3 or petition !or certiorari under Rule BC,: was wron1. Ti.e and a1ain, we have ruled that the re.edies of appeal and (ertiorari are .utuall% e9(lusive and not alternative or su((essive.!8 Proper issues that .a% $e raised in a petition for review under Rule 4, pertain to errors of fa(t, law or .i9ed Fuestions of fa(t and law.!" <hile a petition for (ertiorari under Rule '5 should onl% li.it itself to errors of 5urisdi(tion, that is, 1rave a$use of dis(retion a.ountin1 to a la( or e9(ess of 5urisdi(tion.!! ;oreover, it (annot $e availed of where appeal is the proper re.ed% or as a su$stitute for a lapsed appeal.!, In the (ase at $ar, the Fuestions raised $% petitioner in its alternative petition $efore the C) were the followin1C ). TGE SO=E )R3ITR)TOR CO;;ITTED SERIO2S ERROR )ND6OR +R)EE=K )32SED GIS DISCRETION IN R2=IN+ TG)T TGE 3RO)DC)ST O# :<INS <EEB=K: <)S D2=K )2TGORIMED 3K )3S*C3N. 3. TGE SO=E )R3ITR)TOR CO;;ITTED SERIO2S ERROR )ND6OR +R)EE=K )32SED GIS DISCRETION IN R2=IN+ TG)T TGE 2N)2TGORIMED 3RO)DC)ST DID NOT CONSTIT2TE ;)TERI)= 3RE)CG O# TGE )+REE;ENT. C. TGE SO=E )R3ITR)TOR CO;;ITTED SERIO2S ERROR )ND6OR +R)EE=K )32SED GIS DISCRETION IN R2=IN+ TG)T <INS SE)SON)3=K C2RED TGE 3RE)CG. D. TGE SO=E )R3ITR)TOR CO;;ITTED SERIO2S ERROR )ND6OR +R)EE=K )32SED GIS DISCRETION IN R2=IN+ TG)T TE;PER)TE D);)+ES IN TGE );O2NT O# P","'',&55.88 ;)K 3E )<)RDED TO <INS. E. TGE SO=E )R3ITR)TOR CO;;ITTED SERIO2S ERROR )ND6OR +R)EE=K )32SED GIS DISCRETION IN )<)RDIN+ )TTORNEK4S #EES IN TGE 2NRE)SON)3=E );O2NT )ND 2NCONSCION)3=E );O2NT O# P758,888.88.

#. TGE ERROR CO;;ITTED 3K TGE SO=E )R3ITR)TOR IS NOT ) SI;P=E ERROR O# @2D+;ENT OR )32SE O# DISCRETION. IT IS +R)EE )32SE O# DISCRETION T)NT);O2NT TO =)CB OR EQCESS O# @2RISDICTION. ) (areful readin1 of the assi1ned errors reveals that the real issues (allin1 for the C)4s resolution were less the alle1ed 1rave a$use of dis(retion e9er(ised $% the ar$itrator and .ore a$out the ar$itratorNs appre(iation of the issues and eviden(e presented $% the parties. Therefore, the issues (learl% fall under the (lassifi(ation of errors of fa(t and law S Fuestions whi(h .a% $e passed upon $% the C) via a petition for review under Rule 4,. Petitioner (leverl% (rafted its assi1n.ent of errors in su(h a wa% as to straddle $oth 5udi(ial re.edies, that is, $% alle1in1 serious errors of fa(t and law /in whi(h (ase a petition for review under Rule 4, would $e proper0 and 1rave a$use of dis(retion /$e(ause of whi(h a petition for (ertiorari under Rule '5 would $e per.issi$le0. It .ust $e e.phasi?ed that ever% law%er should $e fa.iliar with the distin(tions $etween the two re.edies for it is not the dut% of the (ourts to deter.ine under whi(h rule the petition should fall.!4 Petitioner4s plo% was fatal to its (ause. )n appeal ta en either to this Court or the C) $% the wron1 or inappropriate .ode shall $e dis.issed.!5 Thus, the ('0er*(0)8e petition filed in the C), $ein1 an inappropriate .ode of appeal, should have $een dis.issed outri1ht $% the C). WBERE;ORE, the petition is here$% DENIED. The #e$ruar% "', !885 de(ision and )u1ust "', !885 resolution of the Court of )ppeals in C)*+.R. SP No. 7"&48 dire(tin1 the Re1ional Trial Court of >ue?on Cit%, 3ran(h &, to pro(eed with the trial of the petition for (onfir.ation of ar$itral award is A;;IR"ED. Costs a1ainst petitioner. SO ORDERED.

G.R. No. 166D1D

"(, 19, 2006

TRANS;IELD PBILIPPINES, INC., Petitioner, vs. LUHON BYDRO CORPORATION, AUSTRALIA AND NEW HEALAND =AN ING GROUP LI"ITED (*+ SECURITY =AN CORPORATION, Respondents. RESO=2TION TINGA, J.: The ad5udi(ation of this (ase proved to $e a two*sta1e pro(ess as its (onstituent parts involve two se1re1ate $ut eFuall% i.portant issues. The first sta1e relatin1 to the .erits of the (ase, spe(ifi(all% the Fuestion of the propriet% of (allin1 on the se(urities durin1 the penden(% of the ar$itral pro(eedin1s, was resolved in favor of =u?on G%dro Corporation /=GC0 with the CourtNs De(ision" of !! Nove.$er !884. The se(ond sta1e involvin1 the issue of foru.*shoppin1 on whi(h the Court reFuired the parties to su$.it their respe(tive .e.oranda! is disposed of in this Resolution. The disposal of the foru.*shoppin1 (har1e is (ru(ial to the parties to this (ase on a((ount of its profound effe(t on the final out(o.e of the international ar$itral pro(eedin1s whi(h the% have (hosen as their prin(ipal dispute resolution .e(hanis..,

=GC (lai.s that Transfield Philippines, In(. /TPI0 is 1uilt% of foru.*shoppin1 when it filed the followin1 suitsC ". Civil Case No. 84*,,! filed on "& ;ar(h !884, pendin1 $efore the Re1ional Trial Court /RTC0 of ;a ati, 3ran(h 5' for (onfir.ation, re(o1nition and enfor(e.ent of the Third Partial )ward in (ase ""!'4 TE6;<, ICC International Court of )r$itration, entitled Trans!ield P.ilippines Inc. v. *u<on )&dro Corporation.4 !. ICC Case No. ""!'46TE6;<, Trans!ield P.ilippines Inc. v. *u<on )&dro Corporation filed $efore the International Court of )r$itration, International Cha.$er of Co..er(e /ICC0 a reFuest for ar$itration dated , Nove.$er !888 pursuant to the Turn e% Contra(t $etween =GC and TPID ,. +.R. No. "4'-"-, Trans!ield P.ilippines Inc. v. *u<on )&dro Corporation 'ustralia and :e$ Dealand ,ankin/ 0roup *imited and %ecurit& ,ank Corp. filed on 5 #e$ruar% !88", whi(h was an appeal $% (ertiorari with pra%er for TRO6preli.inar% prohi$itor% and .andator% in5un(tion, of the Court of )ppeals De(ision dated ," @anuar% !88" in C)*+.R. SP No. '"&8". a. C)*+.R. SP No. '"&8" was a petition for review of the De(ision in Civil Case No. 88*","!, wherein TPI (lai.ed that =GCNs (all on the se(urities was pre.ature (onsiderin1 that the issue of default has not %et $een resolved with finalit%D the petition was however denied $% the Court of )ppealsD $. Civil Case No. 88*","! was a (o.plaint for in5un(tion with pra%er for te.porar% restrainin1 order and6or writ of preli.inar% in5un(tion dated 5 Nove.$er !888, whi(h sou1ht to restrain =GC fro. (allin1 on the se(urities and respondent $an s fro. transferrin1 or pa%in1 of the se(uritiesD the (o.plaint was denied $% the RTC. On the other hand, TPI (lai.s that it is =GC whi(h is 1uilt% of foru.*shoppin1 when it raised the issue of foru.*shoppin1 not onl% in this (ase, $ut also in Civil Case No. 84*,,!, and even as ed for the dis.issal of the other (ase $ased on this 1round. ;oreover, TPI ar1ues that =GC is reliti1atin1 in Civil Case No. 84*,,! the ver% sa.e (auses of a(tion in ICC Case No. ""!'46TE6;<, and even .anifestin1 therein that it will present eviden(e earlier presented $efore the ar$itral tri$unal.5 ;eanwhile, )NM 3an and Se(urit% 3an .oved to $e e9(used fro. filin1 a .e.orandu.. The% (lai. that with the finalit% of the CourtNs De(ision dated !! Nove.$er !884, an% resolution $% the Court on the issue of foru.*shoppin1 will not .ateriall% affe(t their role as the $an in1 entities involved are (on(erned.' The Court 1ranted their respe(tive .otions. On " )u1ust !885, TPI .oved to set the (ase for oral ar1u.ent, positin1 that the resolution of the Court on the issue of foru.*shoppin1 .a% have si1nifi(ant i.pli(ations on the interpretation of the )lternative Dispute Resolution )(t of !884, as well as the via$ilit% of international (o..er(ial ar$itration as an alternative .ode of dispute resolution in the (ountr%. - Said .otion was opposed $% =GC in its opposition filed on ! Septe.$er !885, with =GC ar1uin1 that the respe(tive .e.oranda of the parties are suffi(ient for the Court to resolve the issue of foru.* shoppin1.7 On !7 O(to$er !885, TPI filed its ;anifestation and Reiterative ;otion& to set the (ase for oral ar1u.ent, where it .anifested that the International Cha.$er of Co..er(e /ICC0 ar$itral tri$unal had issued its #inal )ward orderin1 =GC to pa% TPI 2SV!4,5,,,-,8.88 /in(ludin1 the 2SV"-,&--,7"5.88 pro(eeds of the two stand$% letters of (redit0. TPI also

su$.itted a (op% thereof with a Supple.ental Petition"8 to the Re1ional Trial Court /RTC0, see in1 re(o1nition and enfor(e.ent of the said award."" The essen(e of foru.*shoppin1 is the filin1 of .ultiple suits involvin1 the sa.e parties for the sa.e (ause of a(tion, either si.ultaneousl% or su((essivel%, for the purpose of o$tainin1 a favora$le 5ud1.ent."! #oru.*shoppin1 has li ewise $een defined as the a(t of a part% a1ainst who. an adverse 5ud1.ent has $een rendered in one foru., see in1 and possi$l% 1ettin1 a favora$le opinion in another foru., other than $% appeal or the spe(ial (ivil a(tion of (ertiorari, or the institution of two or .ore a(tions or pro(eedin1s 1rounded on the sa.e (ause on the supposition that one or the other (ourt would .a e a favora$le disposition.", Thus, for foru.*shoppin1 to e9ist, there .ust $e /a0 identit% of parties, or at least su(h parties as represent the sa.e interests in $oth a(tionsD /$0 identit% of ri1hts asserted and relief pra%ed for, the relief $ein1 founded on the sa.e fa(tsD and /(0 the identit% of the two pre(edin1 parti(ulars is su(h that an% 5ud1.ent rendered in the other a(tion will, re1ardless of whi(h part% is su((essful, a.ount to res 1udicata in the a(tion under (onsideration."4 There is no identit% of (auses of a(tion $etween and a.on1 the ar$itration (ase, the instant petition, and Civil Case No. 84*,,!. The ar$itration (ase, ICC Case No. ""!'4 TE6;<, is an ar$itral pro(eedin1 (o..en(ed pursuant to the Turn e% Contra(t $etween TPI and =GC, to deter.ine the pri.ar% issue of whether the dela%s in the (onstru(tion of the pro5e(t were e9(used dela%s, whi(h would (onseFuentl% render valid TPINs (lai.s for e9tension of ti.e to finish the pro5e(t. To1ether with the pri.ar% issue to $e settled in the ar$itration (ase is the eFuall% i.portant Fuestion of .onetar% awards to the a11rieved part%. On the other hand, Civil Case No. 88*","!, the pre(ursor of the instant petition, was filed to en5oin =GC fro. (allin1 on the se(urities and respondent $an s fro. transferrin1 or pa%in1 the se(urities in (ase =GC (alls on the.. Gowever, in view of the fa(t that =GC (olle(ted the pro(eeds, TPI, in its appeal and petition for review as ed that the sa.e $e returned and pla(ed in es(row pendin1 the resolution of the disputes $efore the ICC ar$itral tri$unal."5 <hile the ICC (ase thus (alls for a thorou1h review of the fa(ts whi(h led to the dela% in the (onstru(tion of the pro5e(t, as well as the attendant responsi$ilities of the parties therein, in (ontrast, the present petition puts in issue the propriet% of drawin1 on the letters of (redit durin1 the penden(% of the ar$itral (ase, and of (ourse, a$sent a final deter.ination $% the ICC )r$itral tri$unal. ;oreover, as pointed out $% TPI, it did not pra% for the return of the pro(eeds of the letters of (redit. <hat it as ed instead is that the said .one%s $e pla(ed in es(row until the final resolution of the ar$itral (ase. ;eanwhile, in Civil Case No. 84*,,!, TPI no lon1er see s the issuan(e of a provisional relief, $ut rather the issuan(e of a writ of e9e(ution to enfor(e the Third Partial )ward. Neither is there an identit% of parties $etween and a.on1 the three /,0 (ases. The ICC (ase onl% involves TPI and =GC lo1i(all% sin(e the% are the parties to the Turn e% Contra(t. In (o.parison, the instant petition in(ludes Se(urit% 3an and )NM 3an , the $an s sou1ht to $e en5oined fro. releasin1 the funds of the letters of (redit. The Court a1rees with TPI that it would $e ineffe(tual to as the ICC to issue writs of preli.inar% in5un(tion a1ainst Se(urit% 3an and )NM 3an sin(e these $an s are not parties to the ar$itration (ase, and that the ICC )r$itral tri$unal would not even $e a$le to (o.pel =GC to o$e% an% writ of preli.inar% in5un(tion issued fro. its end."' Civil Case No. 84*,!!, on the other hand, lo1i(all% involves TPI and =GC onl%, the% $ein1 the parties to the ar$itration a1ree.ent whose partial award is sou1ht to $e enfor(ed.

)s a funda.ental point, the penden(% of ar$itral pro(eedin1s does not fore(lose resort to the (ourts for provisional reliefs. The Rules of the ICC, whi(h 1overns the partiesN ar$itral dispute, allows the appli(ation of a part% to a 5udi(ial authorit% for interi. or (onservator% .easures."=i ewise, Se(tion "4 of Repu$li( )(t /R.).0 No. 7-' /The )r$itration =aw0"7 re(o1ni?es the ri1hts of an% part% to petition the (ourt to ta e .easures to safe1uard and6or (onserve an% .atter whi(h is the su$5e(t of the dispute in ar$itration. In addition, R.). &!75, otherwise nown as the :)lternative Dispute Resolution )(t of !884,: allows the filin1 of provisional or interi. .easures with the re1ular (ourts whenever the ar$itral tri$unal has no power to a(t or to a(t effe(tivel%. "& TPINs verified petition in Civil Case No. 84*,,!, filed on "& ;ar(h !884, was (aptioned as one :#orC Confir.ation, Re(o1nition and Enfor(e.ent of #orei1n )r$itral )ward in Case ""!'4 TE6;<, ICC International Court of )r$itration, RTransfield Philippines, In(. v. =u?on G%dro Corporation /Pla(e of ar$itrationC Sin1apore0.:!8 In the said petition, TPI pra%edC ". That the TGIRD P)RTI)= )<)RD dated #e$ruar% "7, !884 in Case No. ""!'46TE6;< .ade $% the ICC International Court of )r$itration, the si1ned ori1inal (op% of whi(h is hereto atta(hed as )nne9 :G: hereof, $e (onfir.ed, re(o1ni?ed and enfor(ed in a((ordan(e with law. !. That the (orrespondin1 writ of e9e(ution to enfor(e >uestion ," of the said Third Partial )ward, $e issued, also in a((ordan(e with law. ,. That TPI $e 1ranted su(h other relief as .a% $e dee.ed 5ust and eFuita$le, and allowed, in a((ordan(e with law.!" The pertinent portion of the Third Partial )ward!! relied upon $% TPI were the answers to >uestions "8 to !', to witC :>uestion ,8 Did TPI I=GCJ wron1full% draw upon the se(urit%O Kes :>uestion ," Is TPI entitled to have returned to it an% su. wron1full% ta en $% =GC for liFuidated da.a1esO Kes :>uestion ,! Is TPI entitled to an% a((eleration (ostsO TPI is entitled to the reasona$le (osts TPI in(urred after T%phoon Me$ as a result of =GCNs 5 #e$ruar% "&&& Noti(e to Corre(t.!, )((ordin1 to =GC, the filin1 of the a$ove (ase (onstitutes foru.*shoppin1 sin(e it is the sa.e (lai. for the return of 2SV"-.& ;illion whi(h TPI .ade $efore the ICC )r$itral Tri$unal and $efore this Court. =GC adds that while Civil Case No. 84*,,! is st%led as an a(tion for .one%, the Third Partial )ward used as $asis of the suit does not authori?e TPI to see a writ of e9e(ution for the su.s drawn on the letters of (redit. Said award does not even (ontain an order for the pa%.ent of .one%, $ut instead has reserved the Fuantifi(ation of the a.ounts for a su$seFuent deter.ination, =GC ar1ues. In fa(t, even the #ifth Partial )ward, !4 dated ,8 ;ar(h !885, does not (ontain su(h orders. =GC insists that the de(larations or the partial awards issued $% the ICC )r$itral Tri$unal do not (onstitute orders for the pa%.ent of .one% and are not intended to $e enfor(ea$le as su(h, $ut .erel% (onstitute a.ounts whi(h will $e in(luded in

the #inal )ward and will $e ta en into a((ount in deter.inin1 the a(tual a.ount pa%a$le to the prevailin1 part%.!5 R.). No. &7!5 provides that international (o..er(ial ar$itrations shall $e 1overned shall $e 1overned $% the ;odel =aw on International Co..er(ial )r$itration /:;odel =aw:0 adopted $% the 2nited Nations Co..ission on International Trade =aw /2NCITR)=0.!' The 2NCITR)= ;odel =aw providesC )RTIC=E ,5. Reco/nition and en!orcement /"0 )n ar$itral award, irrespe(tive of the (ountr% in whi(h it was .ade, shall $e re(o1ni?ed as $indin1 and, upon appli(ation in writin1 to the (o.petent (ourt, shall $e enfor(ed su$5e(t to the provisions of this arti(le and of arti(le ,'. /!0 The part% rel%in1 on an award or appl%in1 for its enfor(e.ent shall suppl% the dul% authenti(ated ori1inal award or a dul% (ertified (op% thereof, and the ori1inal ar$itration a1ree.ent referred to in arti(le - or a dul% (ertified (op% thereof. If the award or a1ree.ent is not .ade in an offi(ial lan1ua1e of this State, the part% shall suppl% a dul% (ertified translation thereof into su(h lan1ua1e. ;oreover, the New Kor Convention,!- to whi(h the Philippines is a si1nator%, 1overns the re(o1nition and enfor(e.ent of forei1n ar$itral awards. The appli(a$ilit% of the New Kor Convention in the Philippines was (onfir.ed in Se(tion 4! of R.). &!75. Said law also provides that the appli(ation for the re(o1nition and enfor(e.ent of su(h awards shall $e filed with the proper RTC. <hile TPINs resort to the RTC for re(o1nition and enfor(e.ent of the Third Partial )ward is san(tioned $% $oth the New Kor Convention and R.). &!75, its appli(ation for enfor(e.ent, however, was pre.ature, to sa% the least. True, the ICC )r$itral Tri$unal had indeed ruled that =GC wron1full% drew upon the se(urities, %et there is no order for the pa%.ent or return of the pro(eeds of the said se(urities. In fa(t, Para1raph !"4!, whi(h is the final para1raph of the Third Partial )ward, readsC !"4!. )ll other issues, in(ludin1 an% issues as to Fuantu. and (osts, are reserved to a future award.!7 ;eanwhile, the tri$unal issued its #ifth Partial )ward!& on ,8 ;ar(h !885. It (ontains, a.on1 others, a de(laration that while =GC wron1full% drew on the se(urities, the drawin1 was .ade in 1ood faith, under the .ista en assu.ption that the (ontra(tor, TPI, was in default. Thus, the tri$unal ruled that while the a.ount drawn .ust $e returned, TPI is not entitled to an% da.a1es or interests due to =GCNs drawin1 on the se(urities.,8 In the #ifth Partial )ward, the tri$unal orderedC '. Order '." +eneral "''. This #ifth Partial )ward deals with .an% issues of Fuantu..1avvp.il.net Gowever, it does not resolve the. all. T2e o10$0(*+)*7 A1(*01m )$$1e$ .)'' be +e0erm)*e+ )* ( /101re (.(r+. It will (ontain a re(on(iliation of the a.ounts awarded to ea(h part% and a deter.ination of the net a.ount pa%a$le to Clai.ant or Respondent, as the (ase .a% $e. "'-. In view of this the Tri$unal will .a e no orders for pa%.ent in this #ifth Partial )ward. The Tri$unal will .a e a nu.$er of de(larations (on(ernin1 the Fuantu. issues it has resolved in

this )ward to1ether with the outstandin1 lia$ilit% issues. T2e +ec'(r(0)o*$ +o *o0 co*$0)010e or+er$ /or 02e &(,me*0 o/ mo*e, (*+ (re *o0 )*0e*+e+ 0o be e*/orce(b'e ($ $1c2. T2e, mere', co*$0)010e (mo1*0$ .2)c2 .)'' be )*c'1+e+ )* 02e ;)*(' A.(r+ (*+ .)'' be 0(@e* )*0o (cco1*0 )* +e0erm)*)*7 02e (c01(' (mo1*0 &(,(b'e .," /E.phasis Supplied.0 #urther, in the De(larations part of the award, the tri$unal heldC '.! De(larations "'7. The Tri$unal .a es the followin1 de(larationsC 999 ,. =GC is lia$le to repa% TPI the fa(e value of the se(urities drawn down $% it, na.el%, V"-,&--,7"5. It is not lia$le for an% further da.a1es (lai.ed $% TPI in respe(t of the drawdown of the se(urities. 9 9 9.,! #inall%, on & )u1ust !885, the ICC )r$itral tri$unal issued its #inal )ward, in essen(e awardin1 2SV!4,5,,,-,8.88, whi(h in(luded TPINs (lai. of 2V"-,&--,7"5.88 for the return of the se(urities fro. =GC.,, The fa(t that the ICC )r$itral tri$unal in(luded the pro(eeds of the se(urities shows that it intended to .a e a final deter.ination6award as to the said issue onl% in the #inal )ward and not in the previous partial awards. This supports =GCNs position that when the Third Partial )ward was released and Civil Case No. 84*,,! was filed, TPI was not %et authori?ed to see the issuan(e of a writ of e9e(ution sin(e the Fuantifi(ation of the a.ounts due to TPI had not %et $een settled $% the ICC )r$itral tri$unal. Notwithstandin1 the fa(t that the a.ount of pro(eeds drawn on the se(urities was not disputed the appli(ation for the enfor(e.ent of the Third Partial )ward was pre(ipitatel% filed. To repeat, the de(larations .ade in the Third Partial )ward do not (onstitute orders for the pa%.ent of .one%. )nent the (lai. of TPI that it was =GC whi(h (o..itted foru.*shoppin1, suffi(e it to sa% that its $are alle1ations are not suffi(ient to sustain the (har1e. <GERE#ORE, the Court RESO=EES to DIS;ISS the (har1es of foru.*shoppin1 filed $% $oth parties a1ainst ea(h other. No pronoun(e.ent as to (osts. SO ORDERED.