Anaconda's complaint.

Both motions to dismiss presented similar grounds for

dismissal. They contended that the RTC could not acquire jurisdiction over
Consolidated Iron because it was a foreign corporation that had never
transacted business in the Philippines. Likewise, they argued that the RTC
had no jurisdiction over the subject matter because of an arbitration clause in
the TPAA.
SECOND DIVISION
On December 19, 2012, the RTC ordered the consolidation of the two
cases.7 Subsequently, Luzon Iron and Consolidated Iron filed their Special
G.R. No. 220546, December 07, 2016 Appearance and Supplement to Motions to Dismiss, 8 dated January 31,
2013, seeking the dismissal of the consolidated cases. The petitioners
LUZON IRON DEVELOPMENT GROUP CORPORATION AND alleged that Bridestone and Anaconda were guilty of forum shopping
CONSOLIDATED IRON SANDS, LTD., Petitioners, v. BRIDESTONE because they filed similar complaints before the Department of Environment
MINING AND DEVELOPMENT CORPORATION AND ANACONDA MINING and Natural Resources (DENR), Mines and Geosciences Bureau, Regional
AND DEVELOPMENT CORPORATION, Respondents. Panel of Arbitrators against Luzon Iron.

DECISION The RTC Orders

MENDOZA, J.: In its March 18, 2013 Order, the RTC denied the motions to dismiss, as well
as the supplemental motion to dismiss, finding that Consolidated Iron was
This petition for review on certiorari with prayer for the issuance of a writ of doing business in the Philippines, with Luzon Iron as its resident agent. The
preliminary injunction and/or temporary restraining order (TRO) seeks to RTC ruled that it had jurisdiction over the subject matter because under
reverse and set aside the September 8, 2015 Decision1 of the Court of clause 14.8 of the TPAA, the parties could go directly to courts when a direct
Appeals (CA) in CA-G.R. SP No. 133296, which affirmed the March 18, and/or blatant violation of the provisions of the TPAA had been committed.
20132 and September 18, 20133 Orders of the Regional Trial Court, Branch The RTC also opined that the complaint filed before the DENR did not
59, Makati City (RTC), in the consolidated case for rescission of contract and constitute forum shopping because there was neither identity of parties nor
damages. identity of reliefs sought.

The Antecedents. Luzon Iron and Consolidated Iron moved for reconsideration, but the RTC
denied their motion in its September 18, 2013 Order.
On October 25, 2012, respondents Bridestone Mining and Development
Corporation (Bridestone) and Anaconda Mining and Development Undaunted, they filed their petition for review with prayer for the issuance of
Corporation (Anaconda) filed separate complaints before the RTC for a writ of preliminary injunction and/or TRO before the CA.
rescission of contract and damages against petitioners Luzon Iron
Development Group Corporation (Luzon Iron) and Consolidated Iron Sands, The CA Ruling
Ltd. (Consolidated Iron), docketed as Civil Case No. 12-1053 and Civil Case
No. 12-1054, respectively. Both complaints sought the rescission of the In its September 8, 2015 Decision, the CA  affirmed the March 18, 2013 and
Tenement Partnership and Acquisition Agreement (TPAA)4 entered into by September 18, 2013 RTC Orders in denying the motions to dismiss and the
Luzon Iron and Consolidated Iron, on one hand, and Bridestone and supplemental motions to dismiss. It agreed that the court acquired jurisdiction
Anaconda, on the other, for the assignment of the Exploration Permit over the person of Consolidated Iron because the summons may be validly
Application of the former in favor of the latter. The complaints also sought the served through its agent Luzon Iron, considering that the latter was merely
return of the Exploration Permits to Bridestone and Anaconda.5 the business conduit of the former. The CA also sustained the jurisdiction of
the RTC over the subject matter opining that the arbitration clause in the
Thereafter, Luzon Iron and Consolidated Iron filed their Special Appearance TPAA provided for an exception where parties could directly go to court.
with Motion to Dismiss6 separately against Bridestone's complaint and
Further, the CA also disregarded the averment of forum shopping, explaining RTC issued conflicting orders in dismissing or upholding the complaints filed
that in the complaint before the RTC, both Consolidated Iron and Luzon Iron before them.
were impleaded but in the complaint before the DENR only the latter was
impleaded. It stated that there was no identity of relief and no identity of Position of Respondents
cause of action.
In their Comment/Opposition,10 dated January 7, 2016, respondents
Hence, this appeal raising the following: Bridestone and Anaconda countered that the RTC validly acquired
jurisdiction over the person of Consolidated Iron. They posited that
ISSUES Consolidated Iron was doing business in the Philippines as Luzon Iron was
merely its conduit. Thus, they insisted that summons could be served to
I Luzon Iron as Consolidated Iron's agent. Likewise, they denied that they
were guilty of forum shopping as the issues and the reliefs prayed for in the
complaints before the RTC and the DENR differed.
WHETHER THE COURT OF APPEALS ERRED IN RULING THAT THE
TRIAL COURT ACQUIRED JURISDICTION OVER THE PERSON OF
CONSOLIDATED IRON; Further, the respondents asserted that the trial court had jurisdiction over the
complaints because the TPAA itself allowed a direct resort before the courts
in exceptional circumstances. They cited paragraph 14.8 thereof as basis
II
explaining that when a direct and/or blatant violation of the TPAA had been
committed, a party could go directly to the courts. They faulted the petitioners
WHETHER THE COURT OF APPEALS ERRED IN RULING THAT THE in not moving for the referral of the case for arbitration instead of merely filing
TRIAL COURT HAS JURISDICTION OVER THE SUBJECT MATTER OF a motion to dismiss. They added that actions that are subject to arbitration
THE CONSOLIDATED CASES; AND agreement were merely suspended, and not dismissed.

III Reply of Petitioners

WHETHER THE COURT OF APPEALS ERRED IN RULING THAT In their Reply,11 dated April 29, 2016, the petitioners stated that Consolidated
BRIDESTONE/ANACONDA WERE NOT GUILTY OF FORUM SHOPPING.9 Iron was not necessarily doing business in the Philippines by merely
establishing a wholly-owned subsidiary in the form of Luzon Iron. Also, they
Petitioners Luzon Iron and Consolidated Iron insist that the RTC has no asserted that Consolidated Iron had not been validly served the summons
jurisdiction over the latter because it is a foreign corporation which is neither because Luzon Iron is neither its resident agent nor its representative in the
doing business nor has transacted business in the Philippines. They argue Philippines. The petitioners explained that Luzon Iron, as a wholly-owned
that there could be no means by which the trial court could acquire subsidiary, had a separate and distinct personality from Consolidated Iron.
jurisdiction over the person of Consolidated Iron under any mode of service
of summons. The petitioners claim that the service of summons to The petitioners explained that Paragraph 14.8 of the TPAA should not be
Consolidated Iron was defective because the mere fact that Luzon Iron was a construed as an authority to directly resort to court action in case of a direct
wholly-owned subsidiary of Consolidated Iron did not establish that Luzon and/or blatant violation of the TPAA because such interpretation would
Iron was the agent of Consolidated Iron. They emphasize that Consolidated render the arbitration clause nugatory. They contended that, even for the
Iron and Luzon Iron are two distinct and separate entities. 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
The petitioners further assert that the trial court had no jurisdiction over the a party was not required to file a formal request for arbitration before an
consolidated cases because of the arbitration clause set forth in the TPAA. arbitration clause became operational. Lastly, they insisted that the
They reiterate that Luzon Iron and Consolidated Iron were guilty of forum respondents were guilty of forum shopping in simultaneously filing complaints
shopping because their DENR complaint contained similar causes of action before the trial court and the DENR.
and reliefs sought. They stress that the very evil sought to be prevented by
the prohibition on forum shopping had occurred when the DENR and the The Court's Ruling
The petition is impressed with merit. rules results in the dismissal of a case. The acts committed and described
herein can possibly constitute direct contempt.15 [Emphases supplied]
Filing of complaints
before the RTC and the There is forum shopping when the following elements are present: (a) identity
DENR is forum shopping of parties, or at least such parties representing the same interests in both
actions; (b) identity of rights asserted and reliefs prayed for, the relief being
Forum shopping is committed when multiple suits involving the same parties founded on the same facts; and (c) the identity of the two preceding
and the same causes of action are filed, either simultaneously or particulars, such that any judgment rendered in the other action will,
successively, for the purpose of obtaining a favorable judgment through regardless of which party is successful, amounts to res judicata in the action
means other than appeal or certiorari.12 The prohibition on forum shopping under consideration.16 All the above-stated elements are present in the case
seeks to prevent the possibility that conflicting decisions will be rendered by at bench.
two tribunals.13
First, there is identity of parties. In both the complaints before the RTC and
In Spouses Arevalo v. Planters Development Bank,14 the Court elaborated the DENR, Luzon Iron was impleaded as defendant while Consolidated Iron
that forum shopping vexed the court and warranted the dismissal of the was only impleaded in the complaint before the RTC. Even if Consolidated
complaints. Thus: Iron was not impleaded in the DENR complaint, the element still exists. The
requirement is only substantial, and not absolute, identity of parties; and
there is substantial identity of parties when there is community of interest
Forum shopping is the act of litigants who repetitively avail themselves of
between a party in the first case and a party in the second case, even if the
multiple judicial remedies in different fora, simultaneously or successively, all
latter was not impleaded in the other case.17 Consolidated Iron and Luzon
substantially founded on the same transactions and the same essential facts
Iron had a common interest under the TPAA as the latter was a wholly-
and circumstances; and raising substantially similar issues either pending in
owned subsidiary of the former.
or already resolved adversely by some other court; or for the purpose of
increasing their chances of obtaining a favorable decision, if not in one court,
then in another. The rationale against forum-shopping is that a party Second, there is identity of causes of action. A reading of the complaints filed
should not be allowed to pursue simultaneous remedies in two different before the RTC and the DENR reveals that they had almost identical causes
courts, for to do so would constitute abuse of court processes which of action and they prayed for similar reliefs as they ultimately sought the
tends to degrade the administration of justice, wreaks havoc upon return of their respective Exploration Permit on the ground of the alleged
orderly judicial procedure, and adds to the congestion of the heavily violations of the TPAA committed by the petitioners.18 In Yap v. Chua,19 the
burdened dockets of the courts. Court ruled that identity of causes of action did not mean absolute identity.

xxxx Hornbook is the rule that identity of causes of action does not mean absolute
identity; otherwise, a party could easily escape the operation of res
judicata by changing the form of the action or the relief sought. The test to
What is essential in determining the existence of forum-shopping is the
determine whether the causes of action are identical is to ascertain
vexation caused the courts and litigants by a party who asks different
whether the same evidence will sustain both actions, or whether there
courts and/or administrative agencies to rule on similar or related
is an identity in the facts essential to the maintenance of the two
causes and/or grant the same or substantially similar reliefs, in the
actions. If the same facts or evidence would sustain both, the two
process creating the possibility of conflicting decisions being rendered
actions are considered the same, and a judgment in the first case is a
upon the same issues.
bar to the subsequent action. Hence, a party cannot, by varying the form of
action or adopting a different method of presenting his case, escape the
xxxx operation of the principle that one and the same cause of action shall not be
twice litigated between the same parties or their privies. xxx20 [Emphases
We emphasize that the grave evil sought to be avoided by the rule against supplied]
forum-shopping is the rendition by two competent tribunals of two separate
and contradictory decisions. To avoid any confusion, this Court adheres
strictly to the rules against forum shopping, and any violation of these
In the case at bench, both complaints filed before different  fora involved a) By personal service coursed through the appropriate court in the foreign
similar facts and issues, the resolution of which depends on analogous country with the assistance of the Department of Foreign Affairs;
evidence. Thus, the filing of two separate complaints by the petitioners with
the RTC and the DENR clearly constitutes forum shopping. b) By publication once in a newspaper of general circulation in the country
where the defendant may be found and by serving a copy of the summons
It is worth noting that the very evil which the prohibition against forum and the court order by registered mail at the last known address of the
shopping sought to prevent had happened—the RTC and the DENR had defendant;
rendered conflicting decisions. The trial court ruled that it had jurisdiction
notwithstanding the arbitration clause in the TPAA. On the other hand, the c) By facsimile or any recognized electronic means that could generate proof
DENR found that it was devoid of jurisdiction because the matter was subject of service; or
to arbitration.
d) By such other means as the court may in its discretion direct."
Summons were not
validly served The petitioners are mistaken in arguing that it cannot be served summons
because under Section 15, Rule 14 of the Rules of Court, extrajudicial
Section 12 of Rule 14 of the Revised Rules of Court provides that "[w]hen the service of summons may be resorted to only when the action is in
defendant is a foreign private juridical entity which has transacted business rem or quasi in rem and not when the action is in personam. The premise of
in the Philippines, service may be made on its resident agent designated in the petitioners is erroneous as the rule on extraterritorial service of summons
accordance with law for that purpose, or, if there be no such agent, on the provided in Section 15, Rule 14 of the Rules of Court is a specific provision
government official designated by law to that effect, or on any of its officers dealing precisely with the service of summons on a defendant which does
or agents within the Philippines." not reside and is not found in the Philippines. On the other hand, Section 12,
Rule 14 thereof, specifically applies to a defendant foreign private juridical
The Rule on Summons, as it now reads, thus, makes the question whether entity which had transacted business in the Philippines. Both rules may
Consolidated Iron was "doing business in the Philippines" irrelevant as provide for similar modes of service of summons, nevertheless, they should
Section 12, Rule 14 of the Rules of Court was broad enough to cover only be applied in particular cases, with one applicable to defendants which
corporations which have "transacted business in the Philippines." do not reside and are not found in the Philippines and the other to foreign
private juridical entities which had transacted business in the Philippines.
In fact, under the present legal milieu, the rules on service of summons on
foreign private juridical entities had been expanded as it recognizes In the case at bench, it is crystal clear that Consolidated Iron transacted
additional modes by which summons may be served. A.M No. 11-3-6- business in the Philippines as it was a signatory in the TPAA that was
SC21 thus provides: executed in Makati. Hence, as the respondents argued, it may be served with
the summons in accordance with the modes provided under Section 12, Rule
Section 12. Rule 14 of the Rules of Court is hereby amended to read as 14 of the Rules of Court.
follows:
In Atiko Trans, Inc. v. Prudential Guarantee and Assurance, Inc.,23 the Court
"SEC. 12. Service upon foreign private juridical entity. — When the elucidated on the means by which summons could be served on a foreign
defendant is a foreign private juridical entity which has transacted business in juridical entity, to wit:
the Philippines, service may be made on its resident agent designated in
accordance with law for that purpose, or, if there be no such agent, on the On this score, we find for the petitioners. Before it was amended by A.M. No.
government official designated by law to that effect, or on any of its officers 11-3-6-SC, Section 12 of Rule 14 of the Rules of Court reads:
or agents within the Philippines.
SEC. 12. Service upon foreign private juridical entity. — When the defendant
If the foreign private juridical entity is not registered in the Philippines or has is a foreign private juridical entity which has transacted business in the
no resident agent, service may, with leave of court, be effected out of the Philippines, service may be made on its resident agent designated in
Philippines through any of the following means: accordance with law for that purpose, or, if there be no such agent, on the
government official designated by law to that effect, or on any of its officers Albeit the RTC bore emphasis on the alleged control exercised by Export
or agents within the Philippines. Bank upon its subsidiary E-Securities, "[c]ontrol, by itself, does not mean that
the controlled corporation is a mere instrumentality or a business conduit of
Elucidating on the above provision of the Rules of Court, this Court declared the mother company. Even control over the financial and operational
in  Pioneer International, Ltd. v. Guadiz, Jr. that when the defendant is a concerns of a subsidiary company does not by itself call for
foreign juridical entity, service of summons maybe made upon: disregarding its corporate fiction. There must be a perpetuation of fraud
behind the control or at least a fraudulent or illegal purpose behind the
control in order to justify piercing the veil of corporate fiction. Such fraudulent
1. Its resident agent designated in accordance with law for
intent is lacking in this case.29 [Emphasis supplied]
that purpose;chanrobleslaw

2. The government official designated by law to receive In the case at bench, the complaint merely contained a general statement
summons if the corporation does not have a resident agent; that Luzon Iron was the resident agent of Consolidated Iron, and that it was a
or, wholly-owned subsidiary of the latter. There was no allegation showing that
Luzon Iron was merely a business conduit of Consolidated Iron, or that the
3. Any of the corporation's officers or agents within the latter exercised control over the former to the extent that their separate and
Philippines.24 [Emphasis supplied] distinct personalities should be set aside. Thus, Luzon Iron cannot be
deemed as an agent of Consolidated Iron in connection with the third mode
of service of summons.
The Court, however, finds that Consolidated Iron was not properly served
with summons through any of the permissible modes under the Rules of
Court. Indeed, Consolidated Iron was served with summons through Luzon To reiterate, the Court did not acquire jurisdiction over Consolidated Iron
Iron. Such service of summons, however, was defective. because the service of summons, coursed through Luzon Iron, was
defective. Luzon Iron was neither the resident agent nor the conduit or agent
of Consolidated Iron.
It is undisputed that Luzon Iron was never registered before the Securities
and Exchange Commission (SEC) as Consolidated Iron's resident agent.
Thus, the service of summons to Consolidated Iron through Luzon Iron On the abovementioned procedural issues alone, the dismissal of the
cannot be deemed a service to a resident agent25cralawred under the first complaints before the RTC was warranted. Even granting that the complaints
mode of service. were not procedurally defective, there still existed enough reason for the trial
court to refrain from proceeding with the case.
Likewise, the respondents err in insisting that Luzon Iron could be served
summons as an agent of Consolidated Iron, it being a wholly-owned Controversy must be
subsidiary of the latter. The allegations in the complaint must clearly show a referred for arbitration
connection between the principal foreign corporation and its alleged agent
corporation with respect to the transaction in question as a general allegation The petitioners insisted that the RTC had no jurisdiction over the subject
of agency will not suffice.26 In other words, the allegations of the complaint matter because under Paragraph 15.1 of the TPAA, any dispute out of or in
taken as whole should be able to convey that the subsidiary is but a business connection with the TPAA must be resolved by arbitration. The said provision
conduit of the principal or that by reason of fraud, their separate and distinct provides:
personality should be disregarded.27 A wholly-owned subsidiary is a distinct
and separate entity from its mother corporation and the fact that the latter If, for any reasonable reason, the Parties cannot resolve a material fact,
exercises control over the former does not justify disregarding their separate material event or any dispute arising out of or in connection with this TPAA,
personality. It is true that under the TPAA, Consolidated Iron wielded great including any question regarding its existence, validity or termination, within
control over the actions of Luzon Iron under the said agreement. This, 90 days from its notice, shall be referred to and finally resolved by arbitration
nonetheless, does not warrant the conclusion that Luzon Iron was a mere in Singapore in accordance with the Arbitration Rules of the Singapore
conduit of Consolidated Iron. In Pacific Rehouse Corporation v. CA,28 the International Arbitration Centre ("SIAC Rules") for the time being in force,
Court ruled: which rules are deemed to be incorporated by reference in this clause
15.1.30
The RTC, as the CA agreed, countered that Paragraph 14.8 of the TPAA Thus, consistent with the state policy of favoring arbitration, the present
allowed the parties to directly resort to courts in case of a direct and/or TPAA must be construed in such a manner that would give life to the
blatant violation of the provisions of the TPAA. Paragraph 14.8 stated: arbitration clause rather than defeat it, if such interpretation is permissible.
With this in mind, the Court views the interpretation forwarded by the
Each Party agrees not to commence or procure the commencement of any petitioners as more in line with the state policy favoring arbitration.
challenge or claim, action, judicial or legislative enquiry, review or other
investigation into the sufficiency, validity, legality or constitutionality of (i) the Paragraphs 14.8 and 15.1 of the TPAA should be harmonized in such a way
assignments of the Exploration Permit Applications(s) (sic) to LIDGC, (ii) any that the arbitration clause is given life, especially since such construction is
other assignments contemplated by this TPAA, and/or (iii) or (sic) any possible in the case at bench. A synchronized reading of the
agreement to which the Exploration Permit Application(s) may be converted, abovementioned TPAA provisions will show that a claim or action raising the
unless a direct and/or blatant violation of the provisions of the TPAA has sufficiency, validity, legality or constitutionality of: (a) the assignments of the
been committed.31 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
In Bases Conversion Development Authority v. DMCI Project Developers, only when there is a direct and/or blatant violation of the TPAA. In turn, the
Inc.,32 the Court emphasized that the State favored arbitration, to wit: said action or claim is commenced by proceeding with arbitration, as
espoused in the TPAA.
The state adopts a policy in favor of arbitration. Republic Act No. 9285
expresses this policy: The Court disagrees with the respondents that Paragraph 14.8 of the TPAA
should be construed as an exception to the arbitration clause where direct
court action may be resorted to in case of direct and/or blatant violation of the
SEC. 2.  Declaration of Policy. — It is hereby declared the policy of the State
TPAA occurs. If such interpretation is to be espoused, the arbitration clause
to actively promote party autonomy in the resolution of disputes or the
would be rendered inutile as practically all matters may be directly brought
freedom of the parties to make their own arrangements to resolve their
before the courts. Such construction is anathema to the policy favoring
disputes. Towards this end, the State shall encourage and actively
arbitration.
promote the use of Alternative Dispute Resolution (ADR) as an
important means to achieve speedy and impartial justice and declog
court dockets. As such, the State shall provide means for the use of A closer perusal of the TPAA will also reveal that paragraph 14 and all its
ADR as an efficient tool and an alternative procedure for the resolution sub-paragraphs are general provisions, whereas paragraphs 15 and all its
of appropriate cases. Likewise, the State shall enlist active private sector sub-clauses specifically refer to arbitration. When general and specific
participation in the settlement of disputes through ADR. This Act shall be provisions are inconsistent, the specific provision shall be paramount and
without prejudice to the adoption by the Supreme Court of any ADR system, govern the general provision.34
such as mediation, conciliation, arbitration, or any combination thereof as a
means of achieving speedy and efficient means of resolving cases pending The petitioners' failure to refer the case for arbitration, however, does not
before all courts in the Philippines which shall be governed by such rules as render the arbitration clause in the TPAA inoperative. In Koppel, Inc. v.
the Supreme Court may approve from time to time. Makati Rotary Club Foundation, Inc. (Koppel),35 the Court explained that an
arbitration clause becomes operative, notwithstanding the lack of a formal
Our policy in favor of party autonomy in resolving disputes has been request, when a party has appraised the trial court of the existence of an
reflected in our laws as early as 1949 when our Civil Code was arbitration clause, viz:
approved. Republic Act No. 876 later explicitly recognized the validity and
enforceability of parties' decision to submit disputes and related issues to xxx The operation of the arbitration clause in this case is not at all
arbitration. defeated by the failure of the petitioner to file a formal "request" or
application therefor with the MeTC. We find that the filing of a "request"
Arbitration agreements are liberally construed in favor of proceeding to pursuant to Section 24 of R.A. No. 9285 is not the sole means by which an
arbitration. We adopt the interpretation that would render effective an arbitration clause may be validly invoked in a pending suit.
arbitration clause if the terms of the agreement allow for such
interpretation.33 [Emphases supplied] Section 24 of R.A. No. 9285 reads:
SEC. 24.  Referral to Arbitration. — A court before which an action is brought aware of the existence of the arbitration clause in the TPAA as they
in a matter which is the subject matter of an arbitration agreement shall, if at repeatedly raised this as an issue in all their motions to dismiss. As such, it
least one party so requests not later that the pre-trial conference, or upon the was enough to activate the arbitration clause and, thus, should have alerted
request of both parties thereafter, refer the parties to arbitration unless it the RTC in proceeding with the case.
finds that the arbitration agreement is null and void, inoperative or incapable
of being performed. Moreover, judicial restraint should be exercised pursuant to the competence-
competence principle embodied in Rule 2.4 of the Special Rules of Court on
The "request" referred to in the above provision is, in turn, implemented by Alternative Dispute Resolution.37 The said provision reads:
Rules 4.1 to 4.3 of A.M. No. 07-11-08-SC or the Special Rules of Court on
Alternative Dispute Resolution (Special ADR Rules): RULE 2.4. Policy Implementing Competence-Competence Principle. — The
arbitral tribunal shall be accorded the first opportunity or competence to rule
RULE 4: REFERRAL TO ADR on the issue of whether or not it has the competence or jurisdiction to decide
a dispute submitted to it for decision, including any objection with respect to
Rule 4.1. Who makes the request. — A party to a pending action filed in the existence or validity of the arbitration agreement. When a court is asked
violation of the arbitration agreement, whether contained in an arbitration to rule upon issue/s affecting the competence or jurisdiction of an
clause or in a submission agreement, may request the court to refer the arbitral tribunal in a dispute brought before it, either before or after the
parties to arbitration in accordance with such agreement. arbitral tribunal is constituted, the court must exercise judicial restraint
and defer to the competence or jurisdiction of the arbitral tribunal by
allowing the arbitral tribunal the first opportunity to rule upon such
xxxx
issues.
Attention must be paid, however, to the salient wordings of Rule 4.1. It reads:
Where the court is asked to make a determination of whether the arbitration
"[a] party to a pending action filed in violation of the arbitration agreement
agreement is null and void, inoperative or incapable of being performed,
xxx may request the court to refer the parties to arbitration in accordance
under this policy of judicial restraint, the court must make no more than
with such agreement."
a prima facie determination of that issue.
In using the word "may" to qualify the act of filing a "request" under
Unless the court, pursuant to such prima facie determination, concludes that
Section 24 of R.A. No. 9285, the Special ADR Rules clearly did not
the arbitration agreement is null and void, inoperative or incapable of being
intend to limit the invocation of an arbitration agreement in a pending
performed, the court must suspend the action before it and refer the parties
suit solely via such "request." After all, non-compliance with an arbitration
to arbitration pursuant to the arbitration agreement. [Emphasis supplied]
agreement is a valid defense to any offending suit and, as such, may even
be raised in an answer as provided in our ordinary rules of procedure.
Generally, the action of the court is stayed if the matter raised before it is
subject to arbitration.38 In the case at bench, however, the complaints filed
In this case, it is conceded that petitioner was not able to file a separate
before the RTC should have been dismissed considering that the petitioners
"request" of arbitration before the MeTC. However, it is equally conceded
were able to establish the ground for their dismissal, that is, violating the
that the petitioner, as early as in its Answer with Counterclaim, had
prohibition on forum shopping. The parties, nevertheless, are directed to
already apprised the MeTC of the existence of the arbitration clause in
initiate arbitration proceedings as provided under Paragraph 15.1 of the
the 2005 Lease Contract and, more significantly, of its desire to have the
TPAA.
same enforced in this case. This act of petitioner is enough valid
invocation of his right to arbitrate. xxx 36 [Emphases supplied; italics in the
original] WHEREFORE, the petition is GRANTED. The September 8, 2015 Decision
of the Court of Appeals in CA-G.R. SP No. 133296, affirming the March 18,
2013 and September 18, 2013 Orders of the Regional Trial Court, Branch 59,
It is undisputed that the petitioners Luzon Iron and Consolidated Iron never
Makati City, is hereby SET ASIDE. The complaints in Civil Case Nos. 12-
made any formal request for arbitration. As expounded in Koppel, however, a
1053 and 12-1054 are DISMISSED. The parties, however, are ORDERED to
formal request is not the sole means of invoking an arbitration clause in a
pending suit. Similar to the said case, the petitioners here made the RTC
 16
commence arbitration proceedings pursuant to Paragraph 15.1 of the Heirs of Marcelo Sotto v. Palicte, 726 Phil. 651 (2014).
Tenement Partnership and Acquisition Agreement.
17
Spouses Santos v. Heirs of Domingo Lustre, 583 Phil. 118, 127 (2008).
SO ORDERED.
18
 Rollo, pp. 528 and 612.
Carpio, (Chairperson), Del Castillo, and Leonen, JJ., concur.
Brion, J., on leave. 19
 687 Phil. 392 (2012).

Endnotes: 20
 Id. at 401.

21
 Amendment of Section 12, Rule 14 of the Rules of Court on Service Upon
1
 Penned by Associate Justice Socorro B. Inting with Associate Justice Foreign Private Juridical Entity.
Remedios A. Salazar-Fernando and Associate Justice Priscilla J. Baltazar-
Padilla, concurring; rollo, pp. 6-14. 22
NM Rothschild & Sons (Australia) Limited v. Lepanto Consolidated Mining
Company, 677 Phil. 351, 370 (2011).
2
 Penned by Presiding Judge Winlove M. Dumayas; id. at 843-847.
23
 671 Phil. 388 (2011).
3
 Id. at 922.
24
 Id. at 399-400.
4
 Id. at 121-134.
25
cralawred Section 128 of the Corporation Code.
5
 Id at 22-25.
26
French Oil Mill Machinery Co., Inc. v. CA, 356 Phil. 780, 785 (1998).
6
 Id. at 195-215, 311-331.
27
Signetics Corporation v. CA, 296-A Phil. 782, 792 (1993).
7
 Id. at 26.
28
 730 Phil. 325 (2014).
8
 Id. at 375-379.
29
 Id. at 751.
9
 Id. at 34.
30
Rollo, pp. 131-132.
10
 Id. at 1272-1310.
31
 Id. at 128.
11
 Id. at 1319-1347.
32
 G.R. No. 173137, January 11, 2016.
12
Vda. de Karaan v. Atty. Aguinaldo, G.R. No. 182151, September 21, 2015.
33
 Id.
13
 Philippine Postal Corporation v. CA, 722 Phil. 860 (2013).
34
TSPIC Corporation v. TSPIC Employees Union, 568 Phil. 744, 785 (2008).
14
 68 Phil. 236 (2012).
35
 717 Phil. 337 (2013).
15
 Id. at 25-251.
36
 Id. at 359-360.

37
 A.M. No. 07-11-08-SC

38
 Rule 4.5, A.M. No. 07-11-08-SC.