SECOND DIVISION

[G.R. No. 220546. December 7, 2016.]

LUZON IRON DEVELOPMENT GROUP CORPORATION AND

CONSOLIDATED IRON SANDS, LTD. , petitioners, vs.
BRIDESTONE MINING AND DEVELOPMENT CORPORATION
and ANACONDA MINING AND DEVELOPMENT CORPORATION ,
respondents.

DECISION

MENDOZA, J : p

This petition for review on certiorari with prayer for the issuance of a
writ of preliminary injunction and/or temporary restraining order (TRO) seeks
to reverse and set aside the September 8, 2015 Decision 1 of the Court of
Appeals (CA) in CA-G.R. SP No. 133296, which affirmed the March 18, 20132
and September 18, 2013 3 Orders of the Regional Trial Court, Branch 59,
Makati City (RTC), in the consolidated case for rescission of contract and
damages.
The Antecedents
On October 25, 2012, respondents Bridestone Mining and Development
C o r p o r a t i o n (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), docketed as Civil Case No. 12-1053 and Civil Case
No. 12-1054, respectively. Both complaints sought the rescission of the
Tenement Partnership and Acquisition Agreement (TPAA) 4 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. 5
Thereafter, Luzon Iron and Consolidated Iron filed their Special
Appearance with Motion to Dismiss 6 separately against Bridestone's
complaint and 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. AScHCD

On December 19, 2012, the RTC ordered the consolidation of the two
cases. 7 Subsequently, Luzon Iron and Consolidated Iron filed their Special
Appearance and Supplement to Motions to Dismiss, 8 dated January 31,
2013, seeking the dismissal of the consolidated cases. The petitioners
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 alleged that Bridestone and Anaconda were guilty of forum shopping
because they filed similar complaints before the Department of Environment
and Natural Resources (DENR), Mines and Geosciences Bureau, Regional
Panel of Arbitrators against Luzon Iron.
The RTC Orders
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 doing business in the Philippines, with Luzon Iron as its resident agent.
The RTC ruled that it had jurisdiction over the subject matter because under
clause 14.8 of the TPAA, the parties could go directly to courts when a direct
and/or blatant violation of the provisions of the TPAA had been committed.
The RTC also opined that the complaint filed before the DENR did not
constitute forum shopping because there was neither identity of parties nor
identity of reliefs sought.
Luzon Iron and Consolidated Iron moved for reconsideration, but the
RTC denied their motion in its September 18, 2013 Order.
Undaunted, they filed their petition for review with prayer for the
issuance of a writ of preliminary injunction and/or TRO before the CA.
The CA Ruling
In its September 8, 2015 Decision, the CA affirmed the March 18, 2013
and September 18, 2013 RTC Orders in denying the motions to dismiss and
the supplemental motions to dismiss. It agreed that the court acquired
jurisdiction over the person of Consolidated Iron because the summons may
be validly served through its agent Luzon Iron, considering that the latter
was merely 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 TPAA provided for an exception where parties could directly go
to court.
Further, the CA also disregarded the averment of forum shopping,
explaining that in the complaint before the RTC, both Consolidated Iron and
Luzon Iron 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 cause of action.
Hence, this appeal raising the following:

ISSUES

I
WHETHER THE COURT OF APPEALS ERRED IN RULING THAT
THE TRIAL COURT ACQUIRED JURISDICTION OVER THE PERSON
OF CONSOLIDATED IRON;
II
WHETHER THE COURT OF APPEALS ERRED IN RULING THAT
THE TRIAL COURT HAS JURISDICTION OVER THE SUBJECT
MATTER OF THE CONSOLIDATED CASES; AND
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 III
WHETHER THE COURT OF APPEALS ERRED IN RULING THAT
BRIDESTONE/ANACONDA WERE NOT GUILTY OF FORUM
SHOPPING. 9
Petitioners Luzon Iron and Consolidated Iron insist that the RTC has no
jurisdiction over the latter because it is a foreign corporation which is neither
doing business nor has transacted business in the Philippines. They argue
that there could be no means by which the trial court could acquire
jurisdiction over the person of Consolidated Iron under any mode of service
of summons. The petitioners claim that the service of summons to
Consolidated Iron was defective because the mere fact that Luzon Iron was a
wholly-owned subsidiary of Consolidated Iron did not establish that Luzon
Iron was the agent of Consolidated Iron. They emphasize that Consolidated
Iron and Luzon Iron are two distinct and separate entities.
The petitioners further assert that the trial court had no jurisdiction
over the consolidated cases because of the arbitration clause set forth in the
TPAA. They reiterate that Luzon Iron and Consolidated Iron were guilty of
forum shopping because their DENR complaint contained similar causes of
action 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 RTC issued conflicting orders in dismissing or upholding the
complaints filed before them.
Position of Respondents
In their Comment/Opposition, 10 dated January 7, 2016, respondents
Bridestone and Anaconda countered that the RTC validly acquired
jurisdiction over the person of Consolidated Iron. They posited that
Consolidated Iron was doing business in the Philippines as Luzon Iron was
merely its conduit. Thus, they insisted that summons could be served to
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.
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 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 in not moving for the referral of the case for arbitration instead of
merely filing a motion to dismiss. They added that actions that are subject to
arbitration agreement were merely suspended, and not dismissed. AcICHD

Reply of Petitioners
In their Reply, 11 dated April 29, 2016, the petitioners stated that
Consolidated Iron was not necessarily doing business in the Philippines by
merely establishing a wholly-owned subsidiary in the form of Luzon Iron.
Also, they asserted that Consolidated Iron had not been validly served the
summons because Luzon Iron is neither its resident agent nor its
representative in the Philippines. The petitioners explained that Luzon Iron,
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 as a wholly-owned subsidiary, had a separate and distinct personality from
Consolidated Iron.
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. Lastly, they insisted that the
respondents were guilty of forum shopping in simultaneously filing
complaints before the trial court and the DENR.

The Court's Ruling

The petition is impressed with merit.

Filing of complaints
before the RTC and the
DENR is forum shopping
Forum shopping is committed when multiple suits involving the same
parties and the same causes of action are filed, either simultaneously or
successively, for the purpose of obtaining a favorable judgment through
means other than appeal or certiorari. 12 The prohibition on forum shopping
seeks to prevent the possibility that conflicting decisions will be rendered by
two tribunals. 13
I n Spouses Arevalo v. Planters Development Bank, 14 the Court
elaborated that forum shopping vexed the court and warranted the dismissal
of the complaints. Thus:
Forum shopping is the act of litigants who repetitively avail
themselves of multiple judicial remedies in different fora,
simultaneously or successively, all substantially founded on the same
transactions and the same essential facts and circumstances; and
raising substantially similar issues either pending in 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 should not be allowed to pursue simultaneous
remedies in two different courts, for to do so would
constitute abuse of court processes which tends to degrade
the administration of justice, wreaks havoc upon orderly
judicial procedure, and adds to the congestion of the heavily
burdened dockets of the courts.
xxx xxx xxx
What is essential in determining the existence of forum-
shopping is the vexation caused the courts and litigants by a
party who asks different courts and/or administrative
agencies to rule on similar or related causes and/or grant the
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 same or substantially similar reliefs, in the process creating
the possibility of conflicting decisions being rendered upon
the same issues.
xxx xxx xxx
We emphasize that the grave evil sought to be avoided by the
rule against 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 rules results in
the dismissal of a case. The acts committed and described herein
can possibly constitute direct contempt. 15 [Emphases supplied]
There is forum shopping when the following elements are present: (a)
identity 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 founded on the same facts; and (c) the identity of the two preceding
particulars, such that any judgment rendered in the other action will,
regardless of which party is successful, amounts to res judicata in the action
under consideration. 16 All the above-stated elements are present in the case
at bench.
First, there is identity of parties. In both the complaints before the RTC
and the DENR, Luzon Iron was impleaded as defendant while Consolidated
Iron was only impleaded in the complaint before the RTC. Even if
Consolidated 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 between a party in the first case and a party in the second case,
even if the latter was not impleaded in the other case. 17 Consolidated Iron
and Luzon Iron had a common interest under the TPAA as the latter was a
wholly-owned subsidiary of the former.
Second , there is identity of causes of action. A reading of the
complaints filed before the RTC and the DENR reveals that they had almost
identical causes of action and they prayed for similar reliefs as they
ultimately sought the return of their respective Exploration Permit on the
ground of the alleged violations of the TPAA committed by the petitioners. 18
I n Yap v. Chua , 19 the Court ruled that identity of causes of action did not
mean absolute identity. TAIaHE

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 determine whether the causes of
action are identical is to ascertain whether the same evidence
will sustain both actions, or whether there is an identity in
the facts essential to the maintenance of the two actions. If
the same facts or evidence would sustain both, the two
actions are considered the same, and a judgment in the first
case is a 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 operation of the principle that one
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 and the same cause of action shall not be twice litigated between the
same parties or their privies. xxx 20 [Emphases supplied]
In the case at bench, both complaints filed before different fora
involved similar facts and issues, the resolution of which depends on
analogous evidence. Thus, the filing of two separate complaints by the
petitioners with the RTC and the DENR clearly constitutes forum shopping.
It is worth noting that the very evil which the prohibition against forum
shopping sought to prevent had happened — the RTC and the DENR had
rendered conflicting decisions. The trial court ruled that it had jurisdiction
notwithstanding the arbitration clause in the TPAA. On the other hand, the
DENR found that it was devoid of jurisdiction because the matter was subject
to arbitration.
Summons were not
validly served
Section 12 of Rule 14 of the Revised Rules of Court provides that "
[w]hen the defendant is a foreign private juridical entity which has
transacted business in 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 government official designated by law to that
effect, or on any of its officers or agents within the Philippines."
The Rule on Summons, as it now reads, thus, makes the question
whether Consolidated Iron was "doing business in the Philippines" irrelevant
as Section 12, Rule 14 of the Rules of Court was broad enough to cover
corporations which have "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
additional modes by which summons may be served. A.M. No. 11-3-6-SC 21
thus provides:
Section 12, Rule 14 of the Rules of Court is hereby amended to
read as follows:
"SEC. 12. Service upon foreign private juridical entity.
— When the defendant is a foreign private juridical entity
which has transacted business in 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 government official designated by law
to that effect, or on any of its officers or agents within the
Philippines.
If the foreign private juridical entity is not registered in
the Philippines or has no resident agent, service may,
with leave of court, be effected out of the Philippines
through any of the following means:
a) By personal service coursed through the
appropriate court in the foreign country with the
assistance of the Department of Foreign Affairs;
b) By publication once in a newspaper of
general circulation in the country where the
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 defendant may be found and by serving a copy of
the summons and the court order by registered
mail at the last known address of the defendant;
c) By facsimile or any recognized electronic
means that could generate proof of service; or
d) By such other means as the court may in its
discretion direct."
The petitioners are mistaken in arguing that it cannot be served
summons because under Section 15, Rule 14 of the Rules of Court,
extrajudicial service of summons may be resorted to only when the action is
in rem or quasi in rem and not when the action is in personam. The premise
of the petitioners is erroneous as the rule on extraterritorial service of
summons provided in Section 15, Rule 14 of the Rules of Court is a specific
provision dealing precisely with the service of summons on a defendant
which does not reside and is not found in the Philippines. 22 On the other
hand, Section 12, Rule 14 thereof, specifically applies to a defendant foreign
private juridical entity which had transacted business in the Philippines.
Both rules may provide for similar modes of service of summons,
nevertheless, they should only be applied in particular cases, with one
applicable to defendants which 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 the case at bench, it is crystal clear that Consolidated Iron
transacted business in the Philippines as it was a signatory in the TPAA that
was 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 14 of the Rules of Court.
In Atiko Trans, Inc. v. Prudential Guarantee and Assurance, Inc. , 23 the
Court elucidated on the means by which summons could be served on a
foreign juridical entity, to wit: cDHAES

On this score, we find for the petitioners. Before it was

amended by A.M. No. 11-3-6-SC, Section 12 of Rule 14 of the Rules of
Court reads:
SEC. 12. Service upon foreign private juridical entity.
— When the defendant is a foreign private juridical entity
which has transacted business in 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 government official designated by law
to that effect, or on any of its officers or agents within the
Philippines.
Elucidating on the above provision of the Rules of Court, this
Court declared in Pioneer International, Ltd. v. Guadiz, Jr. that when
the defendant is a foreign juridical entity, service of summons may be
made upon:
1. Its resident agent designated in accordance with
law for that purpose;
2. The government official designated by law to receive
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 summons if the corporation does not have a resident
agent; or,
3. Any of the corporation's officers or agents within
the Philippines. 24 [Emphasis supplied]
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
Iron. Such service of summons, however, was defective.
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
cannot be deemed a service to a resident agent 25 under the first mode of
service.
Likewise, the respondents err in insisting that Luzon Iron could be
served summons as an agent of Consolidated Iron, it being a wholly-owned
subsidiary of the latter. The allegations in the complaint must clearly show a
connection between the principal foreign corporation and its alleged agent
corporation with respect to the transaction in question as a general
allegation of agency will not suffice. 26 In other words, the allegations of the
complaint taken as whole should be able to convey that the subsidiary is but
a business conduit of the principal or that by reason of fraud, their separate
and distinct 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 exercises control over the former does not justify disregarding
their separate personality. It is true that under the TPAA, Consolidated Iron
wielded great control over the actions of Luzon Iron under the said
agreement. This, nonetheless, does not warrant the conclusion that Luzon
Iron was a mere conduit of Consolidated Iron. In Pacific Rehouse Corporation
v. CA, 28 the Court ruled:
Albeit the RTC bore emphasis on the alleged control exercised
by Export 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 the mother company. Even
control over the financial and operational concerns of a
subsidiary company does not by itself call for 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
intent is lacking in this case. 29 [Emphasis supplied]
In the case at bench, the complaint merely contained a general
statement that Luzon Iron was the resident agent of Consolidated Iron, and
that it was a 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 latter exercised control over the former to the extent that their
separate and 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.

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 To reiterate, the Court did not acquire jurisdiction over Consolidated
Iron 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.
On the abovementioned procedural issues alone, the dismissal of the
complaints before the RTC was warranted. Even granting that the complaints
were not procedurally defective, there still existed enough reason for the
trial court to refrain from proceeding with the case.
Controversy must be
referred for arbitration
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 said
provision provides:
If, for any reasonable reason, the Parties cannot resolve a
material fact, material event or any dispute arising out of or in
connection with this TPAA, including any question regarding its
existence, validity or termination, within 90 days from its notice, shall
be referred to and finally resolved by arbitration in Singapore in
accordance with the Arbitration Rules of the Singapore International
Arbitration Centre ("SIAC Rules") for the time being in force, 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
allowed the parties to directly resort to courts in case of a direct and/or
blatant violation of the provisions of the TPAA. Paragraph 14.8 stated:
Each Party agrees not to commence or procure the
commencement of any challenge or claim, action, judicial or
legislative enquiry, review or other investigation into the sufficiency,
validity, legality or constitutionality of (i) the assignments of the
Exploration Permit Applications(s) (sic) to LIDGC, (ii) any other
assignments contemplated by this TPAA, and/or (iii) or (sic) any
agreement to which the Exploration Permit Application(s) may be
converted, unless a direct and/or blatant violation of the provisions of
the TPAA has been committed. 31
I n Bases Conversion Development Authority v. DMCI Project
Developers, Inc., 32 the Court emphasized that the State favored arbitration,
to wit:
The state adopts a policy in favor of arbitration . Republic
Act No. 9285 expresses this policy:
SEC. 2. Declaration of Policy. — It is hereby declared the
policy of the State to actively promote party autonomy in the
resolution of disputes or the freedom of the parties to make their own
arrangements to resolve their disputes. Towards this end, the
State shall encourage and actively 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
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 ADR as an efficient tool and an alternative procedure for the
resolution of appropriate cases. Likewise, the State shall enlist
active private sector participation in the settlement of disputes
through ADR. This Act shall be without prejudice to the adoption by
the Supreme Court of any ADR system, such as mediation,
conciliation, arbitration, or any combination thereof as a means of
achieving speedy and efficient means of resolving cases pending
before all courts in the Philippines which shall be governed by such
rules as the Supreme Court may approve from time to time.
Our policy in favor of party autonomy in resolving
disputes has been reflected in our laws as early as 1949 when
our Civil Code was approved. Republic Act No. 876 later explicitly
recognized the validity and enforceability of parties' decision to
submit disputes and related issues to arbitration.
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. 33 [Emphases
supplied]
Thus, 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. cTDaEH

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
abovementioned 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.
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 TPAA occurs. If such interpretation is to be espoused, the
arbitration clause would be rendered inutile as practically all matters may be
directly brought before the courts. Such construction is anathema to the
policy favoring arbitration.
A closer perusal of the TPAA will also reveal that paragraph 14 and all
its sub-paragraphs are general provisions, whereas paragraphs 15 and all its
sub-clauses specifically refer to arbitration. When general and specific
provisions are inconsistent, the specific provision shall be paramount and
govern the general provision. 34
The petitioners' failure to refer the case for arbitration, however, does
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 not render the arbitration clause in the TPAA inoperative. In Koppel, Inc. v.
Makati Rotary Club Foundation, Inc. (Koppel) , 35 the Court explained that an
arbitration clause becomes operative, notwithstanding the lack of a formal
request, when a party has appraised the trial court of the existence of an
arbitration clause, viz.:
xxx The operation of the arbitration clause in this case is not
at all 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" pursuant to Section 24 of RA. No. 9285 is not
the sole means by which an arbitration clause may be validly invoked
in a pending suit.
Section 24 of R.A. No. 9285 reads:
SEC. 24. Referral to Arbitration. — A court before which an action
is brought in a matter which is the subject matter of an arbitration
agreement shall, if at least one party so requests not later than the
pre-trial conference, or upon the request of both parties thereafter,
refer the parties to arbitration unless it finds that the arbitration
agreement is null and void, inoperative or incapable of being
performed.
T h e "request" referred to in the above provision is, in turn,
implemented by 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 4: REFERRAL TO ADR
Rule 4.1. Who makes the request. — A party to a pending action
filed in violation of the arbitration agreement, whether contained in
an arbitration clause or in a submission agreement, may request the
court to refer the parties to arbitration in accordance with such
agreement.
xxx xxx xxx
Attention must be paid, however, to the salient wordings of
Rule 4.1. It reads: "[a] party to a pending action filed in violation of
the arbitration agreement xxx may request the court to refer the
parties to arbitration in accordance with such agreement."
In using the word "may" to qualify the act of filing a
"request" under Section 24 of R.A. No. 9285, the Special ADR
Rules clearly did not intend to limit the invocation of an
arbitration agreement in a pending suit solely via such
"request." After all, non-compliance with an arbitration 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.
In this case, it is conceded that petitioner was not able to file a
separate "request" of arbitration before the MeTC. However, it is
equally conceded that the petitioner, as early as in its Answer
with Counterclaim, had already apprised the MeTC of the
existence of the arbitration clause in the 2005 Lease Contract
and, more significantly, of its desire to have the 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]
It is undisputed that the petitioners Luzon Iron and Consolidated Iron
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 never made any formal request for arbitration. As expounded in Koppel,
however, a 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 aware of the existence of the arbitration clause in the TPAA as they
repeatedly raised this as an issue in all their motions to dismiss. As such, it
was enough to activate the arbitration clause and, thus, should have alerted
the RTC in proceeding with the case.
Moreover, judicial restraint should be exercised pursuant to the
competence-competence principle embodied in Rule 2.4 of the Special Rules
of Court on Alternative Dispute Resolution. 37 The said provision reads:
RULE 2.4. Policy Implementing Competence-Competence
Principle. — The arbitral tribunal shall be accorded the first
opportunity or competence to rule 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 the existence or
validity of the arbitration agreement. When a court is asked to
rule upon issue/s affecting the competence or jurisdiction of
an arbitral tribunal in a dispute brought before it, either
before or after the 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 issues. cSaATC

Where the court is asked to make a determination of whether

the arbitration agreement is null and void, inoperative or incapable of
being performed, under this policy of judicial restraint, the court must
make no more than a prima facie determination of that issue.
Unless the court, pursuant to such prima facie determination,
concludes that the arbitration agreement is null and void, inoperative
or incapable of being performed, the court must suspend the action
before it and refer the parties to arbitration pursuant to the
arbitration agreement. [Emphasis supplied]
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 before the RTC should have been dismissed considering that the
petitioners were able to establish the ground for their dismissal, that is,
violating the prohibition on forum shopping. The parties, nevertheless, are
directed to initiate arbitration proceedings as provided under Paragraph 15.1
of the TPAA.
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, Makati City, is hereby SET ASIDE. The complaints in Civil Case
Nos. 12-1053 and 12-1054 are DISMISSED. The parties, however, are
ORDERED to commence arbitration proceedings pursuant to Paragraph 15.1
of the Tenement Partnership and Acquisition Agreement.
SO ORDERED.
Carpio, Brion, * Del Castillo and Leonen, JJ., concur.
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 Footnotes
* On Leave.

1. Penned by Associate Justice Socorro B. Inting with Associate Justice Remedios

A. Salazar-Fernando and Associate Justice Priscilla J. Baltazar-Padilla,
concurring; rollo, pp. 6-14.
2. Penned by Presiding Judge Winlove M. Dumayas; id. at 843-847.

3. Id. at 922.
4. Id. at 121-134.

5. Id. at 22-25.

6. Id. at 195-215, 311-331.

7. Id. at 26.

8. Id. at 375-379.
9. Id. at 34.

10. Id. at 1272-1310.

11. Id. at 1319-1347.

12. Vda. de Karaan v. Atty. Aguinaldo , G.R. No. 182151, September 21, 2015.

13. Philippine Postal Corporation v. CA, 722 Phil. 860 (2013).

14. 68 Phil. 236 (2012).

15. Id. at 25-251.

16. Heirs of Marcelo Sotto v. Palicte, 726 Phil. 651 (2014).

17. Spouses Santos v. Heirs of Domingo Lustre, 583 Phil. 118, 127 (2008).

18. Rollo , pp. 528 and 612.

19. 687 Phil. 392 (2012).

20. Id. at 401.

21. Amendment of Section 12, Rule 14 of the Rules of Court on Service upon
Foreign Private Juridical Entity.
22. NM Rothschild & Sons (Australia) Limited v. Lepanto Consolidated Mining
Company, 677 Phil. 351, 370 (2011).
23. 671 Phil. 388 (2011).
24. Id. at 399-400.

25. Section 128 of the Corporation Code.

26. French Oil Mill Machinery Co., Inc. v. CA, 356 Phil. 780, 785 (1998).

27. Signetics Corporation v. CA, 296-A Phil. 782, 792 (1993).

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 28. 730 Phil. 325 (2014).

29. Id. at 751.

30. Rollo , pp. 131-132.

31. Id. at 128.

32. G.R. No. 173137, January 11, 2016.

33. Id.

34. TSPIC Corporation v. TSPIC Employees Union, 568 Phil. 744, 785 (2008).
35. 717 Phil. 337 (2013).

36. Id. at 359-360.

37. A.M. No. 07-11-08-SC.

38. Rule 4.5, A.M. No. 07-11-08-SC.

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