Three construction projects

were entered into by Titan-

Ikeda with Uniwide. However,
the latter allegedly failed to
pay the amount due after the
completion of all the projects.
By reason of which, Titan-
Ikeda filed with the RTC an
action for a sum of money
against Uniwide. An
arbitration proceeding was
proceeded after Uniwide
moved for the dismissal of the
said case in court.
 Thereafter, the arbitrators
issued terms of
reference(TOR) which was
signed by the parties. Uniwide
did not attempt to modify the
TOR to accommodate its
belated counterclaim on
deadlines for liquidated
damages. Titan then filed the
case with CIAC.
 In its decision, the CIAC
declared the following:
That in Project 1, Uniwide
is absolved of any liability.
In Project 2, Uniwide is
absolved of any liability for
VAT payment and for the
account of Titan, and Titan
is absolved from liability for
defective construction.
 In Project 3, Uniwide is
held liable for unpaid
balance (5,158,364.63)
plus 12% interest/annum
and to pay the full VAT
for the additional work
where no written
authorization was
presented.
 Whether or not
CIAC should have
applied the Rules
of Court in the
arbitration
proceeding.
 No. The rule of Procedure
Governing Construction
Arbitration promulgated by
the CIAC contains no
provision on the application of
the Rules of Court to
arbitration proceedings, even
in a suppletory capacity. Such
importation of the Rules of
Court provision on
amendment to conform to
evidence would contravene
the spirit, if not the letter of
the CIAC rules.
This is for the reason that the
formulation of the Terms of
Reference is done with the
active participation of the
parties and their counsel
themselves. The TOR is
further required to be signed
by all the parties, their
respective counsel and all the
members of the Arbitral
Tribunal.
Unless the issues thus carefully
formulated in the Terms of
Reference were expressly
showed to be amended, issues
outside thereof may not be
resolved. As already noted in
the Decision, "no attempt was
ever made by the [Uniwide] to
modify the TOR in order to
accommodate the issues
related to its belated
counterclaim" on this issue.
 Arbitration has been defined
as "an arrangement for taking
and abiding by the judgment
of selected persons in some
disputed matter, instead of
carrying it to established
tribunals of justice, and is
intended to avoid the
formalities, the delay, the
expense and vexation of
ordinary litigation.
 FACTS

Benguet Corporation (“Benguet”) and J.G.

Realty and Mining (“J.G. Realty”) entered
into a Royalty Agreement with Option to
Purchase (“RAWOP”), wherein J.G. Realty
was acknowledged as the owner of four
mining claims covered by Mineral
Production Sharing Agreement (“MPSA”)
Application No. APSA-V-0009 jointly filed
by J.G. Realty as claim owner and
Benguet as operator.
 FACTS

The RAWOP, among others, provide that

“any disputes between Benguet and [J.G.
Realty] with reference to anything
whatsoever pertaining to [the
RAWOP] shall not be cause of any action
in any court or administrative agency but
shall be referred to a Board of Arbitrators
consisting of three (3) members, one to
be selected by Benguet, another to be
selected by [J.G. Realty] and the third to
be selected by the aforementioned two
arbitrators so appointed.”
 FACTS

It further provides that “no action shall be

instituted in court as to any matter in
dispute as hereinabove stated, except to
enforce the decision of the majority of the
Arbitrators.” J.G. Realty subsequently
informed Benguet that it was terminating
the RAWOP by reason of Benguet’s
failure to comply with its obligations
thereunder.
 FACTS

J.G. Realty sought the cancellation of the

RAWOP, filing a petition for this purpose
with the Panel of Arbitrators
(“POA”) having territorial jurisdiction over
the mining area involved. In its Decision,
the POA declared the RAWOP
cancelled. The decision was affirmed on
appeal to the Mines Adjudication Board
(“MAB”).A
 ISSUE

Whether or not the

POA lacks jurisdiction
over the dispute in
view of the arbitration
clause.
 RULING

The Court resolved this issue in the

affirmative ruling that under Philippine
domestic arbitration law, an agreement to
avail of voluntary arbitration before resort
is made to the courts or quasi-judicial
agencies of the government is a valid
contractual stipulation that must be
adhered to by the parties.
 RULING

Interpreting the provisions of the law and of

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

In resolving this issue, the Court rejected the

contention of J.G. Realty that prior resort to
arbitration is unavailing in the instant case because
the POA’s mandate is to arbitrate disputes
involving mineral agreements. It stated that there
is a clear distinction between compulsory and
voluntary arbitration. The arbitration provided by
the POA is compulsory, while the nature of the
arbitration provision in the RAWOP is voluntary, not
involving any government agency.
 RULING

Interestingly, it is not clear if or how the

ruling will impact other types of
commercial disputes which, under
Philippine law, are required to undergo
compulsory arbitration by a government
agency, such as labor disputes. Notably,
Republic Act No. 9285 provides that its
provisions shall not apply to the resolution
of labor disputes.
END OF PRESENTATION

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