1

APT V. CA
In 1968, the government undertook to support the financing of Marinduque Mining and Industrial Corporation (MMIC). The
government then issued debenture bonds in favor of MMIC which enable the latter to take out loans from the
Development Bank of the Philippines (DBP) and the Philippine National Bank (PNB). The loans were mortgaged by
MMIC’s assets. In 1984 however, MMIC’s indebtedness reached P13.7 billion and P8.7 billion to DPB and PNB
respectively. MMIC had trouble paying and this exposed the government, because of the debenture bonds, to a P22
billion obligation.
In order to mitigate MMIC’s loan liability, a financial restructuring plan (FRP) was drafted in the presence of MMIC’s
representatives as well as representatives from DBP and PNB. The two banks however never formally approved the said
FRP. Eventually, the staggering loans became overdue and PNB and DBP chose to foreclose MMIC’s assets, FRP no
longer feasible at that point. So the assets were foreclosed and were eventually assigned to the Asset Privatization Trust
(APT).
Later, Jesus Cabarrus, Sr., a stockholder of MMIC initiated a derivative suit against PNB and DBP with APT being
impleaded as the successor in interest of the two banks. The suit basically questioned the foreclosure as Cabarrus
asserted that the foreclosure was invalid because he insisted that the FRP was adopted by PNB and DBP as a
consequence of the presence of the banks’ representatives when the said FRP was drafted. Cabarrus asserts that APT
should restore the assets to MMIC and that PNB and DBP should honor the FRP. The suit was filed in the RTC of Makati
but while the case was pending, the parties agreed to submit the case for arbitration. Hence, Makati RTC dismissed the
case upon motion of the parties.
The Arbitration Committee (AC) which heard the case ruled in favor of Cabarrus. The AC granted Cabarrus prayer and at
the same time awarded him P10 million in moral damages. Not only that, the AC also awarded P2.5 billion in moral
damages in favor of MMIC to be paid by the government. APT’s MFR was denied. Cabarrus then filed before the Makati
RTC a motion to confirm the arbitration award. APT opposed the same as it alleged that the motion is improper. Makati
RTC denied APT’s opposition and confirmed the arbitration award. The Court of Appeals affirmed the ruling of the RTC.
ISSUE: Whether or not the ruling of the Arbitration Committee as affirmed by the Regional Trial Court of Makati (Branch
62) and the Court of Appeals is correct.
HELD: No.

1. The award of damages in favor of MMIC is improper. First, it was not made a party to the case. The derivative suit filed by
Cabarrus failed to implead MMIC. So how can an award for damages be awarded to a non-party? Second, even if MMIC,
which is actually a real party in interest, was impleaded, it is not entitled to moral damages. It is not yet a well settled
jurisprudence that corporations are entitled to moral damages. While the Supreme Court in some cases did award certain
corporations moral damages for besmirched reputations, such is not applicable in this case because when the alleged
wrongful foreclosure was done, MMIC was already in bad standing hence it has no good wholesome reputation to protect.
So it could not be said that there was a “reputation” besmirched by the act of foreclosure. Likewise, the award of moral
damages in favor of Cabarrus is invalid. He cannot have possibly suffered any moral damages because the alleged
wrongful act was committed against MMIC. It is a basic postulate that a corporation has a personality separate and
distinct from its stockholders. The properties foreclosed belonged to MMIC, not to its stockholders. Hence, if wrong was
committed in the foreclosure, it was done against the corporation.
2. The FRP is not valid hence the foreclosure is valid. The mere presence of DBP’s and PNB’s representatives during the
drafting of FRP is not constitutive of the banks’ formal approval of the FRP. The representatives are personalities distinct
from PNB and DBP. PNB and DBP have their own boards and officers who may have different decisions. The
representatives were not shown to have been authorized by the respective boards of the two banks to enter into any
agreement with MMIC.
3. Further, the proceeding is procedurally infirm. RTC Makati had already dismissed the civil case when the parties opted for
arbitration. Hence, it should have never took cognizance of the Cabarrus’ motion to confirm the AC’ award. The same
should have been brought through a separate action not through a motion because RTC Makati already lost jurisdiction
over the case when it dismissed it to give way for the arbitration. The arbitration was a not a continuation of the civil case
filed in Makati RTC.
 2

ORMOC SUGARPLANTERS V. CA
Facts

Several sugar planters entered into milling contracts with sugar milling companies. The contracts stated that:

 34% of the sugar and molasses produced from milling sugarcane belonged to the milling companies as
compensation;
 65% thereof would go to the planters; and
 the remaining 1% would go to the association to which the planters belonged. This 1% was to be used by the
association for any purpose that it deemed fit for its members. However, if the planters were not members of any
association, then the 1% would revert to the milling company.

The contracts also provided that the milling companies could not, during the life of the milling contract, execute any
agreement that would provide additional or better benefits to a planter without the written consent of the association,
except to planters whose plantations were situated in areas at least 30 kilometres beyond the mill. Any and all disputes
arising between the parties concerning contracts had to be submitted to arbitration. 

In 1999 the associations filed an application in court for arbitration without impleading their individual member planters.
The associations claimed that the milling companies violated the milling contract when they gave the 1% share to
independent planters who did not belong to any association instead of that share reverting to the milling companies. The
associations contended that the milling companies accorded the independent planters additional benefits and thus asked
that an order be issued directing the parties to commence arbitration. 

The milling companies moved to dismiss because the associations had no milling contract – and therefore no arbitration
agreement – with them. It was the individual planters, not the associations, which were the signatories to the milling
contracts. 

The key issue was whether planters' associations had legal standing to file suit against, or demand arbitration from, the
milling companies. 

Decision 

Planters' associations are incorporated entities with judicial personalities that are separate and distinct from their
members. Only the member planters – and not the associations – signed the milling contracts which contained the
arbitration agreement. Not being parties to the milling contracts which contained the arbitration agreement, the planters'
associations had no agreement to arbitrate with the milling companies. 

It was argued that the associations could sue the milling companies and seek arbitration because even if they were not
signatories to the milling contracts, they were representatives of the planters. However, there was no provision in the
milling contracts stating that the planters had authorised their respective associations to represent them in a dispute.
Moreover, under Philippine procedural rules, the associations could not initiate court action or arbitration proceedings in
their own name, as they had done. Every action, rather had to be prosecuted in the name of the real party in interest. 

The associations further argued that they could demand and sue for arbitration independent of the planters because the
milling contracts were contracts pour autrui (ie, conferring a benefit on a third-party beneficiary). However, a reading of the
pertinent provisions of the milling contracts indicated that even if the 1% was given to the associations, it did not redound
to the benefit of the associations, but was intended to be used for their member planters. Besides, it was stipulated that
the 1% would revert back to the milling companies if the contracting planters were not affiliated with any recognised
association.
STANFILCO V. DOLE
In Stanfilco Employees Agrarian Reform Beneficiaries Multi-Purpose Cooperative (SEARBEMCO) v. Dole Philippines, Inc.
(Stanfilco Division) [“Dole”], et al., G.R. No. 154048, November 27, 2009, a dispute arose between Dole and
SEARBEMCO in connection with their Banana Production and Purchase Agreement (BPPA). Dole filed a civil action not
 3

only against SEARBEMCO but also against certain third persons who were not parties to the BPPA. On the issue of
whether or not a civil action should be referred to arbitration when only some of the parties are bound by an
arbitration agreement, the Supreme Court ruled in the negative. IT held that Dole’s civil complaint was not
premature, notwithstanding non submission to arbitration, because it impleaded persons who were not parties to
the BPPA with respect to whom any arbitral award will not be binding. Notably, the ruling is contrary to Rule 4.7 of
the ADR Rules that courts shall not decline to refer some or all of the parties (to a civil action) to arbitration on the ground
that not all of them are bound by the arbitration agreement or that referral to arbitration will result in multiplicity of suits.
The Stanfilco ruling is also notable for holding, albeit in an obiter, that since the dispute need not be referred to arbitration
because of the inclusion of third parties, the parties are also not required to submit to the Barangay Agrarian Reform
Committee for mediation and conciliation pursuant to Republic Act No. 6657 or the Comprehensive Agrarian Reform Law
of 1988. The Court apparently failed to take into account the difference between arbitration as a mode of alternative
dispute resolution, which is essentially voluntary, and mandatory dispute resolution proceedings required by law.

Demosthenes P. Agan, Jr., et al. v. Philippine International Air Terminals Co., Inc. (PIATCO), et al., G.R.
No. 155001; Salacnib F. Baterina, et al. v. PIATCO, et al., G.R. No. 155547; Cefernio C. Lopez, et al. v. PIATCO, et
al., G.R. No. 155661, May 5, 2003

Facts:
The cases at bar are special civil actions for certiorari and prohibition, they contend that the principle of hierarchy
of courts precludes this Court from taking primary jurisdiction over them.

Briefly, On October 5, 1994, Asia’s Emerging Dragon Corp. (AEDC) submitted an unsolicited proposal to the
Philippine Government through the Department of Transportation and Communication (DOTC) and Manila International
Airport Authority (MIAA) for the construction and development of the NAIA IPT III under a build-operate-and-transfer
arrangement pursuant to R.A. No. 6957, as amended by R.A. No. 7718 (BOT Law). In accordance with the BOT Law and
its Implementing Rules and Regulations, the DOTC/MIAA invited the public for submission of competitive and comparative
proposals to the unsolicited proposal of AEDC.  On September 20, 1996 a consortium composed of the People’s Air
Cargo and Warehousing Co., Inc. (Paircargo), Phil. Air and Grounds Services, Inc. (PAGS) and Security Bank Corp.
(Security Bank) (collectively, Paircargo Consortium), submitted their competitive proposal to the Prequalification Bids and
Awards Committee (PBAC)

The DOTC issued the notice of award for the NAIA IPT III project to the Paircargo Consortium, which later
organized into herein respondent PIATCO. On July 12, 1997, the Government, through its duly government officers
signed the “Concession Agreement for the Build-Operate-and-Transfer Arrangement of the Ninoy Aquino International
Airport Passenger Terminal III” (1997 Concession Agreement). On November 26, 1998, the 1997 Concession Agreement
was superseded by the Amended and Restated Concession Agreement (ARCA) containing certain revisions and
modifications from the original contract. A series of supplemental agreements was entered into by the Government and
PIATCO.

Various petition was filed to to annul the 1997 Concesion Agreement, the Arca and the supplements and to prohibit
DOTC and MIAA from implementing them.

The court granted the said petitions and declared the 1987 Concession Agreement, the Arca and the supplements
null and void. Thus, this petition was filed seeking for the reversal of the decision of the Courtand pray that the petition be
dismissed. PIATCO prays that the court should not strike down the entire 1997 Concession Agreement, the ARCA and its
supplements in light of seperability clause. Respondent Congresman and NMTAI also pray that in alternative, the cases at
bar should be refers to arbitration pursuant to the provision of ARCA.

Issue: PIATCO assails the jurisdiction of the court over the proceedings in lieu of their agreement to first submit any
dispute to arbitration proceedings.

Ruling: The arbit step taken by PIATCO did not oust the court of its jurisdiction. It is established that petitioners in the
present cases who have presented legitimate interests in the resolution of the controversy are not parties to the PIATCO
contracts. They cannot be bound by the arbit clause and cannot be compelled to submit to the proceedings. A speedy and
decisive resolution of all the critical issues in the present controversy cannot be made before an arbitral tribunal.
 4

FSI v. MRTDC

The Supreme Court has affirmed an order of the Construction Industry Arbitration Commission (CIAC) directing the Metro
Rail Transit Development Corp (MRTDC) to pay a construction firm the amount of US$2.82 million as bonus for the early
completion of a multi-level podium structure of the so-called North Triangle Project. 

In a 29-page decision penned by Associate Justice Presbitero Velasco, Jr, the Court's Second Division granted the
petition filed by local construction firm Filipinas (Pre-Fab Bldg) Systems Inc. seeking to nullify the January 6, 2004 ruling
of the Court of Appeals.

The appellate court, in the decision, set aside the CIAC's award for technical time extension in the amount of US$2.82
million to FSI.

Records showed that MRTDC is the owner of MRT-3 North Triangle Development Project at the corner of Epifanio De los
Santos Avenue and North Avenue in Quezon City. 

The North Triangle Project (NTP) was part of the Manila North Triangle Project, which was conceived as a major hub of
the light rail transit line system along EDSA from North Triangle area near corner Quezon Avenue and EDSA, and
connecting to the Light Rail Transit 1 starting in Pasay City at the intersection of Taft Avenue and EDSA. 

Part of the NTP is the construction of a podium structure, which will serve as the depot and maintenance area for the
trains and will serve as the foundation for any commercial development. 

MRTDC engaged Parsons International, an international project management firm, and Interpro, a local construction
management company (PIJV) to act as the Project Management Team that will supervise and monitor the project.

Working under the project managers appointed by PJIV was David Sampson, who was designated as the area
construction manager tasked to monitory the day-to-day activities on the site with the help of other PJIV area engineers.

Six contractors submitted their bids for the construction of a four-level podium facility in the project, which would serve as
the depot and maintenance area for the trains and would serve as the base or foundation for any commercial
development. 

The project was initially awarded to the lowest bidder, Gammon Phils. Inc. while Filipinas Systems, Inc. (FSI) submitted
the second lowest bid.

Subsequently MRTDC decided to construct levels one and two of the project only with third level to be constructed on the
area above the workshop. GPI submitted another proposal. Accordingly, FSI submitted a letter-proposal proposing to
construct the two-level podium facility within 180 days for P879 million. 

FSI ended up with the project after GPI declined the new terms. 

Part of the notice of award/notice to proceed (NOA-NTP) are the provisions stating that FSI would have to pay
US$100,000 per day of delay based on the six-month period and that the MRTDC would have to pay US$30,000 per day
of accomplishment. 

The MRTDC said the construction period was reckoned on July 14, 1998 to end 180 days on January 14, 1999. 

Modification of the project

In the course of the construction, there were several change orders issued by MRTDC to FSI, which included the
realignment or shifting or several columns and the construction of sewerage treatment plant and septic tank, among
others. 

FSI finished 98.7 percent of the project on April 30, 1999 or 106 days from the original January 14, 1999 deadline.
 5

Full completion was achieved on May 17, 1999. 

Subsequently, FSI issued a letter to Sampson noting that it is entitled to time extensions. Sampson approved the
extension but only for a period of 200 days.

Thereafter, FSI issued several letters to MRTDC asking for payment of additional amounts for owner-caused delays. 

FSI claimed that by virtues NOA-NTP, for each day MRTDC was delayed in paying FSI's progress billing, the latter was
entitled to a corresponding additional day for the completion of the project.

FSI contended that payment of the progress billings had been delayed for 1,800 days and that adding that the previous
200 day extension, the extension period would total 2,000 days. 

Taking into account the completion of the project on May 30, 1999 and taking into account the 2,000 day extension, FSI
claimed that it completed the project 1,894 days ahead of schedule which would amount to an early accomplishment
bonus of US$56,82 million. 

FSI also demanded from MRDTC the payment of actual extended cost in the amount of P33.14 million due to the
extended project time which it attributed to MRTDC's change orders. 

FSI also claimed that MRTDC's change orders which affected the design of the project also resulted in extra costs
amounting to P99. 5 million. 

MRTDC, however refused to pay the claims saying that FSI failed to finish the construction of the project within the 180-
day period agreed upon and that it had already paid FSI the amounts due for work accomplished as well as for interest on
delayed payments. 

On June 5, 2002,FSI filed with the CIAOC a request for adjudication of its claims against MRTDC.

The CIAC, however, declared that FSI is entitled to a technical time extension of 200 days or until August 2, 1999 as
authorized by Sampson. 

Thus, the CIAC held that FSI finished the construction of the project on April 30, 1999 or 94 days before the deadline
which made the latter entitled to an early accomplishment bonus of US$2.82 million. 

The CIAC did not grant the other claims of the FSI. 

In reversing the decision of the CIAC, the appellate court gave credence to the argument of MRTDC that the change
orders issued by the project manager is not binding without its consent to modify its contract with FSI. 

Since, MRTDC did not authorize the modification of the contract, it is not bound to honor pay for the change orders.

Absurd claim

The Supreme Court, however, held under Article 20.07 of the General Conditions Contract, change orders can be
executed immediately and that contract modification is not a pre-condition for it 

The Court also described as absurd the claim of MRTDC that the project manager could order changes in the contract but
cannot bind the owner to it. 

"Having to await for the consent of the owner to change orders would defeat the purpose of authorizing the project
manager to order such changes," the Court noted.

"Verily, David Sampson was authorized to order changes in the contract work as well as binding MRTDC to it," the SC
said.
 6

Fifth Issue: The parties must equally share the arbitration costs

Philippine National Construction Corporation v. Court of Appeals provides the general rule in the determination of who
should bear the costs of arbitration, to wit:

In respect of the costs of arbitration, Sec. 5, Article XV of the Rules of Procedure Governing Construction Arbitration
states:

Decision as to Cost of Arbitration. In the case of non-monetary claims or where the parties agreed that the sharing of fees
shall be determined by the Arbitrator(s), the award shall, in addition to dealing with the merits of the case, fix the cost of
arbitration, and/or decide which of the parties shall bear the cost(s) or in what proportion the cost(s) shall be borne by
each.

Rule 142 of the Revised Rules of Court of the Philippines governing the imposition of costs likewise provides the
following:

Section 1. Costs Ordinarily follow the result of suit. Unless otherwise provided in these rules, costs shall be allowed to the
prevailing party as a matter of course, but the court shall have power for special reasons, to adjudge that either party shall
pay the cost of an action, or that the same shall be divided, as may be equitable.[27]

In the instant case, there is no basis for assessing the arbitration costs against one party or the other, as the parties
prayers were only partially granted. We find it is just and equitable that both parties equally share the costs of arbitration.

PYRO COPPER V. MINES ADJUDICATION BOARD

Petitioner is a corporation duly organized and existing under Philippine laws engaged in the business of mining. On 31
March 2000, petitioners Application for Mineral Production Sharing Agreement (MPSA), identified as APSA-SF-000089,
with the Mines and Geo-Sciences Bureau (MGB) of the DENR, Regional Office No. 1, San Fernando City in La Union, for
the exploration, development and commercial utilization of certain pyrite ore and other mineral deposits in a 4,360.71-
hectare land in Dasol, Pangasinan, was approved and MPSA No. 153-2000-1 was issued in its favor.

Private respondent is also a corporation organized and existing under the laws of the Philippines and engaged in the
business of mining. On 12 September 2003, private respondent filed an Application for Exploration Permit[7] with MGB
covering the same properties covered by and during the subsistence of APSA-SF-000089 and MPSA No. 153-2000-1[8]
of petitioner. In turn, petitioner filed a Verified Protest/Opposition to the Application for Exploration Permit of the private
respondent. It was allegedly filed with the Panel of Arbitrators[9] on 30 August 2005 and was received by the latter on 5
September 2005. The case was docketed as Case No. 2005-00012-I.

Prior, however, to petitioners filing of its Verified Protest/Opposition to the private respondents Application for Exploration
Permit, petitioners MPSA No. 153-2000-1 was cancelled per DENR Memorandum Order (DMO) No. 2005-03[10] issued
by the DENR Secretary Michael Defensor on 1 February 2005. Petitioner moved for the reconsideration of DMO No.
2005-03, which the DENR Secretary denied in its Decision[11] dated 14 June 2005.[12]

On 1 September 2005,[13] the MGB issued EP No. 05-001 to private respondent.

In an Order dated 14 September 2005, the Panel of Arbitrators dismissed motu proprio the Verified Protest/Opposition of
petitioner for the following reasons: (1) the instant pleading was filed out of time; (2) in view of the issuance of EP No. 05-
001 to private respondent, the Verified Protest/Opposition of petitioner to the Application for Exploration Permit of private
respondent was rendered moot and academic; (3) the Panel of Arbitrators had no authority/jurisdiction to cancel, deny
and/or revoke EP No. 05-001 of private respondent, the same being lodged with the MGB, the issuing authority; and (4)
petitioner failed to include a certification against forum shopping.[14] Petitioner moved for its reconsideration, but the
Panel of Arbitrators denied the same in its Order dated 27 December 2005.[15]

Petitioner elevated by appeal to the MAB the Orders dated 14 September 2005 and 27 December 2005 of the Panel of
Arbitrators, docketed as MAB Case No. 0147-06.

Subsequently, in a Decision[16] dated 28 December 2006 in MAB Case No. 0147-06, the MAB dismissed the appeal of
petitioner, on the following grounds: (a) the Verified Protest/Opposition of petitioner to the Application for Exploration
Permit of private respondent was filed beyond the reglementary period; and (b) the Verified Protest/Opposition of
petitioner did not include a certification against forum shopping.[17]
 7

Petitioner filed with the Court of Appeals a Petition for Review under Rule 43 of the 1997 Revised Rules of Civil
Procedure, which was docketed as CA-G.R. SP No. 97663.

In a Resolution dated 23 February 2007, the Court of Appeals dismissed the said Petition, pursuant to Section 7, Rule 43,
of the 1997 Revised Rules of Civil Procedure,[18] for failure of petitioner to attach thereto some pertinent and relevant
documents required under Section 6 of the same Rule.[19]

Petitioner filed a Motion for Reconsideration of the 23 February 2007 Resolution, together with the required documents.
Private respondent, however, in its Comment,[20] still prayed for the dismissal of the Petition in CA-G.R. SP No. 97663 for
failure of petitioner to submit Atty. Acsays authority to sign the Verification and Certification against Forum Shopping.

Petitioner was given an opportunity to submit Atty. Acsays written authority, but failed to do so. Consequently, the Court of
Appeals issued a Resolution dated 6 September 2007, denying for lack of merit the Petition in CA-G.R. SP No. 97663.

To resolve the foregoing issues, the Court must address the more specific issues beloW

I. Whether the subsequently attached Minutes of the Special Meeting dated 22 January 2007 of the
Board of Directors of petitioner sufficiently granted Atty. Acsay authority to sign the Verification and Certification against
Forum Shopping which accompanied the Petition in CA-G.R. SP No. 97663.

II. Whether the Verified Protest/Opposition of petitioner to the Application for Exploration Permit of
private respondent was filed out of time.

III. Whether the Verified Protest/Opposition of petitioner filed before the MAB needs to be
accompanied by a Certification against Forum Shopping.

IV. Whether the issuance by the DENR Secretary of DMO No. 2005-03 on 1 February 2005 which
cancelled MPSA No. 153-2000-1 of petitioner and the issuance by MGB of EP No. 05-001 in favor of private respondent
on 1 September 2005 rendered the Verified Protest/Opposition of petitioner moot and academic.

V. Whether the Panel of Arbitrators has jurisdiction to cancel, deny and/or revoke EP No. 05-001
issued by MGB to private respondent.

Finally, petitioner posits that Section 77 of Republic Act No. 7942 and Sections 202 to 203 of its Implementing Rules vest
the Panel of Arbitrators with the jurisdiction to entertain and accept any claim, protest or opposition filed directly with its
office. In the discharge thereof, the office and function bestowed upon the Panel of Arbitrators include the power and
authority to deny clearances, exclude exploration permits, and not to accept or entertain the same.

The Court disagrees.

Section 77 of Republic Act No. 7942 establishes the jurisdiction of the Panel of Arbitrators, thus:

Sec. 77. Panel of Arbitrators. x x x. Within thirty (30) working days, after the submission of the case by the parties for
decision, the panel shall have exclusive and original jurisdiction to hear and decide on the following:

a. Disputes involving rights to mining areas;

b. Disputes involving mineral agreements or permits;

c. Disputes involving surface owners, occupants and claimholders/concessionaires; and

d. Disputes pending before the Bureau and the Department at the date of the effectivity of this Act. (Emphasis
supplied.)

In Olympic Mines and Development Corporation v. Platinum Group Metals Corporation[43] citing Celestial Nickel Mining
Exploration Corporation v. Macroasia Corporation,[44] this Court made the following pronouncements as regards
paragraphs (a) and (b) of Section 77 of Republic Act No. 7942:

In Celestial Nickel Mining Exploration Corporation v. Macroasia Corporation, et al., this Court speaking through Justice
Velasco, specified the kind of disputes that fall under Section 77(a) of the Mining Act:

The phrase disputes involving rights to mining areas refers to any adverse claim, protest, or opposition to an application
for a mineral agreement.
 8

xxx

[T]he power of the POA to resolve any adverse claim, opposition, or protest relative to mining rights under Section 77 (a)
of RA 7942 is confined only to adverse claims, conflicts, and oppositions relating to applications for the grant of mineral
rights. x x x. Clearly, POAs jurisdiction over disputes involving rights to mining areas has nothing to do with the
cancellation of existing mineral agreements. (Emphases supplied.)

xxxx

Parenthetically, the permit referred to in Section 77(b) of the Mining Act pertains to exploration permit, quarry permit, and
other mining permits recognized in Chapters IV, VIII, and IX of the Mining Act. An operating agreement, not being among
those listed, cannot be considered as a mineral permit under Section 77 (b). (Emphases supplied.)

It is clear from the ruling of the Court in Olympic Mines and Celestial Nickel Mining that the Panel of Arbitrators only has
jurisdiction over adverse claims, conflicts, and oppositions relating to applications for the grant of mineral rights, but not
over cancellation of mineral rights already granted and existing.

As to who has jurisdiction to cancel an existing exploration permit, Section 28 of DAO NO. 96-40 explicitly provides:

Section 28. Cancellation of an Exploration Permit. The Director/concerned Regional Director may cancel the Exploration
Permit for failure of the Permittee to comply with any of the requirements and for violation(s) of the terms and conditions
under which the Permit is issued. For renewed Exploration Permits, the Secretary upon the recommendation of the
Director shall cause the cancellation of the same.

According to Section 5 of DAO No. 96-40, Director means the Director of the MGB Central Office, while Regional Director
means the Regional Director of any MGB Regional Office. As the authority to issue an Exploration Permit is vested in the
MGB, then the same necessarily includes the corollary power to revoke, withdraw or cancel the same.[45] Indisputably,
the authority to deny, revoke, or cancel EP No. 05-001 of private respondent is already lodged with the MGB, and not with
the Panel of Arbitrators.

WHEREFORE, premises considered, the instant Petition for Review on Certiorari of petitioner Pyro Copper Mining
Corporation is hereby DENIED. The Resolutions dated 23 February 2007 and 6 September 2007 of the Court of Appeals
in CA-G.R. SP No. 97663 are hereby AFFIRMED. Costs against the petitioner.

LM POWER v. CAPITOL

On February 22, 1983, Petitioner LM Power Engineering Corporation and Respondent Capitol Industrial Construction
Groups Inc. entered into a Subcontract Agreement involving electrical work at the Third Port of Zamboanga.[5]

On April 25, 1985, respondent took over some of the work contracted to petitioner.[6] Allegedly, the latter had failed to
finish it because of its inability to procure materials.[7]

Upon completing its task under the Contract, petitioner billed respondent in the amount of P6,711,813.90.[8] Contesting
the accuracy of the amount of advances and billable accomplishments listed by the former, the latter refused to pay.
Respondent also took refuge in the termination clause of the Agreement.[9] That clause allowed it to set off the cost of the
work that petitioner had failed to undertake -- due to termination or take-over -- against the amount it owed the latter.

Because of the dispute, petitioner filed with the Regional Trial Court (RTC) of Makati (Branch 141) a Complaint[10] for the
collection of the amount representing the alleged balance due it under the Subcontract. Instead of submitting an Answer,
respondent filed a Motion to Dismiss,[11] alleging that the Complaint was premature, because there was no prior recourse
to arbitration.

In its Order[12] dated September 15, 1987, the RTC denied the Motion on the ground that the dispute did not involve the
interpretation or the implementation of the Agreement and was, therefore, not covered by the arbitral clause.[13]

After trial on the merits, the RTC[14] ruled that the take-over of some work items by respondent was not equivalent to a
termination, but a mere modification, of the Subcontract. The latter was ordered to give full payment for the work
completed by petitioner.

ISSUES:
 9

Whether or not there exist[s] a controversy/dispute between petitioner and respondent regarding the interpretation and
implementation of the Sub-Contract Agreement dated February 22, 1983 that requires prior recourse to voluntary
arbitration;

In the affirmative, whether or not the requirements provided in Article III [1] of CIAC Arbitration Rules regarding request for
arbitration ha[ve] been complied with[.][17]

We side with respondent. Essentially, the dispute arose from the parties ncongruent positions on whether certain
provisions of their Agreement could be applied to the facts. The instant case involves technical discrepancies that are
better left to an arbitral body that has expertise in those areas. In any event, the inclusion of an arbitration clause in a
contract does not ipso facto divest the courts of jurisdiction to pass upon the findings of arbitral bodies, because the
awards are still judicially reviewable under certain conditions.[18]

Clearly, the resolution of the dispute between the parties herein requires a referral to the provisions of their Agreement.
Within the scope of the arbitration clause are discrepancies as to the amount of advances and billable accomplishments,
the application of the provision on termination, and the consequent set-off of expenses.

A review of the factual allegations of the parties reveals that they differ on the following questions: (1) Did a
take-over/termination occur? (2) May the expenses incurred by respondent in the take-over be set off against the amounts
it owed petitioner? (3) How much were the advances and billable accomplishments?

The resolution of the foregoing issues lies in the interpretation of the provisions of the Agreement. According to
respondent, the take-over was caused by petitioners delay in completing the work. Such delay was in violation of the
provision in the Agreement as to time schedule:

Being an inexpensive, speedy and amicable method of settling disputes,[24] arbitration -- along with mediation,
conciliation and negotiation -- is encouraged by the Supreme Court. Aside from unclogging judicial dockets, arbitration
also hastens the resolution of disputes, especially of the commercial kind.[25] It is thus regarded as the wave of the future
in international civil and commercial disputes.[26] Brushing aside a contractual agreement calling for arbitration between
the parties would be a step backward.[27]

Consistent with the above-mentioned policy of encouraging alternative dispute resolution methods, courts should liberally
construe arbitration clauses. Provided such clause is susceptible of an interpretation that covers the asserted dispute, an
order to arbitrate should be granted.[28] Any doubt should be resolved in favor of arbitration.

Second Issue:

Prior Request for Arbitration

According to petitioner, assuming arguendo that the dispute is arbitrable, the failure to file a formal request for arbitration
with the Construction Industry Arbitration Commission (CIAC) precluded the latter from acquiring jurisdiction over the
question. To bolster its position, petitioner even cites our ruling in Tesco Services Incorporated v. Vera.[30] We are not
persuaded.

Section 1 of Article II of the old Rules of Procedure Governing Construction Arbitration indeed required the submission of
a request for arbitration, as follows:

SECTION. 1. Submission to Arbitration -- Any party to a construction contract wishing to have recourse to arbitration by
the Construction Industry Arbitration Commission (CIAC) shall submit its Request for Arbitration in sufficient copies to the
Secretariat of the CIAC; PROVIDED, that in the case of government construction contracts, all administrative remedies
available to the parties must have been exhausted within 90 days from the time the dispute arose.

Tesco was promulgated by this Court, using the foregoing provision as reference.

On the other hand, Section 1 of Article III of the new Rules of Procedure Governing Construction Arbitration has
dispensed with this requirement and recourse to the CIAC may now be availed of whenever a contract contains a clause
for the submission of a future controversy to arbitration, in this wise:
 10

SECTION 1. Submission to CIAC Jurisdiction An arbitration clause in a construction contract or a submission to arbitration
of a construction dispute shall be deemed an agreement to submit an existing or future controversy to CIAC jurisdiction,
notwithstanding the reference to a different arbitration institution or arbitral body in such contract or submission. When a
contract contains a clause for the submission of a future controversy to arbitration, it is not necessary for the parties to
enter into a submission agreement before the claimant may invoke the jurisdiction of CIAC.

The foregoing amendments in the Rules were formalized by CIAC Resolution Nos. 2-91 and 3-93.[31]

The difference in the two provisions was clearly explained in China Chang Jiang Energy Corporation (Philippines) v. Rosal
Infrastructure Builders et al.[32] (an extended unsigned Resolution) and reiterated in National Irrigation Administration v.
Court of Appeals,[33] from which we quote thus:

Under the present Rules of Procedure, for a particular construction contract to fall within the jurisdiction of CIAC, it is
merely required that the parties agree to submit the same to voluntary arbitration Unlike in the original version of Section
1, as applied in the Tesco case, the law as it now stands does not provide that the parties should agree to submit disputes
arising from their agreement specifically to the CIAC for the latter to acquire jurisdiction over the same. Rather, it is plain
and clear that as long as the parties agree to submit to voluntary arbitration, regardless of what forum they may choose,
their agreement will fall within the jurisdiction of the CIAC, such that, even if they specifically choose another forum, the
parties will not be precluded from electing to submit their dispute before the CIAC because this right has been vested
upon each party by law, i.e., E.O. No. 1008.[34]

Clearly, there is no more need to file a request with the CIAC in order to vest it with jurisdiction to decide a
construction dispute.

The arbitral clause in the Agreement is a commitment on the part of the parties to submit to arbitration the disputes
covered therein. Because that clause is binding, they are expected to abide by it in good faith.[35] And because it covers
the dispute between the parties in the present case, either of them may compel the other to arbitrate.[36]

Since petitioner has already filed a Complaint with the RTC without prior recourse to arbitration, the proper procedure to
enable the CIAC to decide on the dispute is to request the stay or suspension of such action, as provided under RA 876
[the Arbitration Law].[37]

WHEREFORE, the Petition is DENIED and the assailed Decision AFFIRMED. Costs against petitioner.