ALTERNATIVE DISPUTE RESOLUTION | LUZON IRON DEVT GROUP CORP. AND CONSOLIDATED IRON SANDS, LTD. V. BRIDESTONE MINING AND DEVT. CORP. G.R. NO. 220546., DECEMBER 7, 2016
LUZON
IRON DEVT GROUP CORP. AND CONSOLIDATED IRON SANDS, LTD. V. BRIDESTONE MINING
AND DEVT. CORP.
G.R.
NO. 220546., DECEMBER 7, 2016
TOPIC/DOCTRINE
arbitration
agreements are liberally construed in favor of proceeding to arbitration. We
adopt the interpretation that would render effective an arbitration clause if
the terms of the agreement
allow for such interpretation.
FACTS
On October 25, 2012, respondents
Bridestone Mining and Development Corporation (Bridestone) and Anaconda Mining
and Development Corporation (Anaconda) filed separate complaints before the RTC
for rescission of contract and damages against petitioners Luzon Iron
Development Group Corporation (Luzon Iron) and Consolidated Iron Sands, Ltd.
(Consolidated Iron). Both complaints sought the rescission of the Tenement
Partnership and Acquisition Agreement (TPAA) entered into by Luzon Iron and
Consolidated Iron, on one hand, and Bridestone and Anaconda, on the other, for
the assignment of the Exploration Permit Application of the former in favor of
the latter. The complaints also sought the return of the Exploration Permits to
Bridestone and Anaconda.
The petitioners insisted that the RTC
had no jurisdiction over the subject matter because under Paragraph 15.1 of the
TPAA, any dispute out of or in connection with the TPAA must be resolved by
arbitration. The RTC, as the CA agreed, countered that Paragraph 14.8 of the
TPAA allowed the parties to directly resort to courts in case of a direct
and/or blatant violation of the provisions of the TPAA.
The petitioners explained that Paragraph
14.8 of the TPAA should not be construed as an authority to directly resort to
court action in case of a direct and/or blatant violation of the TPAA because
such interpretation would render the arbitration clause nugatory. They
contended that, even for the sake of argument, the judicial action under the
said provisions was limited to issues or matters which were inexistent in the
present case. They added that a party was not required to file a formal request
for arbitration before an arbitration clause became operational.
ISSUE
Whether RTC had no
jurisdiction over the subject matter because under Paragraph 15.1 of the TPAA,
any dispute out of or in connection with the TPAA must be resolved by
arbitration.
RULING
Yes.
The court
ruled that arbitration
agreements are liberally construed in favor of proceeding to arbitration. [We]
adopt the interpretation that would render effective an arbitration clause if
the terms of the agreement allow for such interpretation.
Here, the court ruled that consistent
with the state policy of favoring arbitration, the present TPAA must be
construed in such a manner that would give life to the arbitration clause
rather than defeat it, if such interpretation is permissible. With this in
mind, the Court views the interpretation forwarded by the petitioners as more
in line with the state policy favoring arbitration. Paragraphs 14.8 and 15.1 of
the TPAA should be harmonized in such a way that the arbitration clause is
given life, especially since such construction is possible in the case at
bench. A synchronized reading of the above mentioned TPAA provisions will show
that a claim or action raising the sufficiency, validity, legality or
constitutionality of: (a) the assignments of the EP to Luzon Iron; (b) any
other assignments contemplated by the TPAA; or (c) any agreement to which the
EPs may be converted, may be instituted only when there is a direct and/or
blatant violation of the TPAA. In turn, the said action or claim is commenced
by proceeding with arbitration, as espoused in the TPAA.
