Benguet Corp. v.

DENR
G.R. No. 163101, February 13, 2008, 545 SCRA 196

Facts:
Benguet and J.G. Realty entered into a Royalty Agreement with Option to Purchase (RAWOP) with
a stipulation of prior resort to voluntary arbitration.
When Benguet issued a letter informing J.G. Realty of its intention to develop the mining
claims, J.G. Realty responded that the RAWOP is terminated since Benguet failed to undertake
development within two years from its execution in accordance with their Royalty Agreement.
Benguet replied that it complied with its obligation and the commercial operation was
hampered by the non-issuance of a Mines Temporary Permit by the Mines and Geosciences Bureau
(MGB) which must be considered as force majeure.
J.G. Realty filed a Petition for Declaration of Nullity/Cancellation of the RAWOP with the
Legaspi City Panel of Arbitrators (POA). The POA granted the petition and excluded Benguet from
the joint MPSA Application. The Mines Adjudication Board (MAB) upheld the POA decision. Hence,
Benguet filed the instant petition.
Issue:
Whether the controversy should have first been submitted to arbitration before the POA took
cognizance
of the case?
Ruling:
Yes. The controversy should have first been submitted to arbitration pursuant to the RAWOP;
however,
Benguet is estopped from questioning POA’s jurisdiction.

A stipulation in the contract which provides for the requirement of prior resort to voluntary
arbitration before the parties can go to court is not illegal; it is a valid stipulation that must be
adhered to
by the parties.
J.G. Realty failed to distinguish between compulsory and voluntary arbitration. Although POA’s
mandate is to arbitrate disputes involving mineral agreements, such is compulsory arbitration. The
nature
of the arbitration provision in the RAWOP is voluntary and does not involve any government agency.
Thus, the SC held that “POA has no jurisdiction over the dispute which is governed by RA No. 876,
the arbitration law.” However, Benguet is estopped from questioning POA’s jurisdiction. Aside from
the
fact that Benguet filed an answer and participated in the POA proceedings, when the POA decision
was
rendered, Benguet filed an appeal with the MAB and also actively participated in the proceedings
therein.
“In this factual milieu, the Court rules that the jurisdiction of POA and that of MAB can no longer
be questioned by Benguet at this late hour. What Benguet should have done was to immediately
challenge
the POA’s jurisdiction by a special civil action for certiorari when POA ruled that it has jurisdiction
over
the dispute. To redo the proceedings fully participated in by the parties after the lapse of seven
years
from date of institution of the original action with the POA would be anathema to the speedy and
efficient
administration of justice.”