SECOND DIVISION Mining Corporation and Climax Mining Ltd.
Mining Corporation and Climax Mining Ltd., as first parties,
[G.R. No. 161957. February 28, 2005]
JORGE GONZALES and PANEL OF
ARBITRATORS, petitioners, vs. CLIMAX MINING LTD.,
CLIMAX-ARIMCO MINING CORP., and
AUSTRALASIAN PHILIPPINES MINING
INC., respondents.
DECISION
TINGA, J.:
Petitioner Jorge Gonzales, as claimowner of mineral
deposits located within the Addendum Area of Influence in
Didipio, in the provinces of Quirino and Nueva Vizcaya,
entered into a co-production, joint venture and/or
production-sharing letter-agreement designated as
the May 14, 1987 Letter of Intent with Geophilippines, Inc,
and Inmex Ltd. Under the agreement, petitioner, as
claimowner, granted to Geophilippines, Inc. and Inmex Ltd.
collectively, the exclusive right to explore and survey the
mining claims for a period of thirty-six (36) months within
which the latter could decide to take an operating
agreement on the mining claims and/or develop, operate,
mine and otherwise exploit the mining claims and market
any and all minerals that may be derived therefrom.
On 28 February 1989, the parties to the May 14, 1987
Letter of Intent renegotiated the same into the February 28,
1989 Agreement whereby the exploration of the mining
claims was extended for another period of three years.
On 9 March 1991, petitioner Gonzales, Arimco Mining
Corporation, Geophilippines Inc., Inmex Ltd., and Aumex
Philippines, Inc. signed a document designated as
the Addendum to the May 14, 1987 Letter of Intent and
February 28, 1989 Agreement with Express Adhesion
Thereto (hereafter, the Addendum Contract).[1] Under
the Addendum Contract, Arimco Mining Corporation would
apply to the Government of the Philippines for permission
to mine the claims as the Governments contractor under
a Financial and Technical Assistance Agreement (FTAA).
On 20 June 1994, Arimco Mining Corporation obtained the
FTAA[2] and carried out work under the FTAA.
Respondents executed the Operating and Financial
Accommodation Contract[3] (between Climax-Arimco
constitutionality of the Addendum Agreement and FTAA, it
and Australasian Philippines Mining Inc., as second party) held that it had no jurisdiction.[9]
dated 23 December 1996 and Assignment, Accession
Agreement[4] (between Climax-Arimco Mining Corporation Respondents filed their motion for reconsideration but this
was denied on 25 June 2002. The Panel of Arbitrators
and Australasian Philippines Mining Inc.) dated 3
maintained that there was a mining dispute between the
December 1996. Respondent Climax Mining Corporation
parties since the subject matter of the Complaint arose
(Climax) and respondent Australasian Philippines Mining
from contracts between the parties which involve the
Inc. (APMI) entered into a Memorandum of
exploration and exploitation of minerals over the disputed
Agreement[5] dated 1 June 1991 whereby the former
transferred its FTAA to the latter. area.[10]
On 8 November 1999, petitioner Gonzales filed before the Respondents assailed the orders of the Panel of Arbitrators
Panel of Arbitrators, Region II, Mines and Geosciences via a petition for certiorari before the Court of Appeals.
Bureau of the Department of Environment and Natural
On 30 July 2003, the Court of Appeals granted the petition,
Resources, against respondents Climax-Arimco Mining
declaring that the Panel of Arbitrators did not have
Corporation (Climax-Arimco), Climax, and
jurisdiction over the complaint filed by petitioner. [11]The
APMI,[6] a Complaint[7] seeking the declaration of nullity or
jurisdiction of the Panel of Arbitrators, said the Court of
termination of the Addendum Contract, the FTAA,
Appeals, is limited only to the resolution of mining disputes,
the Operating and Financial Accommodation
defined as those which raise a question of fact or matter
Contract, the Assignment, Accession Agreement, and
requiring the technical knowledge and experience of mining
the Memorandum of Agreement. Petitioner Gonzales
authorities. It was found that the complaint alleged fraud,
prayed for an unspecified amount of actual and exemplary
oppression and violation of the Constitution, which called
damages plus attorneys fees and for the issuance of a
for the interpretation and application of laws, and did not
temporary restraining order and/or writ of preliminary
involve any mining dispute. The Court of Appeals also
injunction to restrain or enjoin respondents from further
observed that there were no averments relating to
implementing the questioned agreements. He sought said
particular acts constituting fraud and oppression. It added
releifs on the grounds of FRAUD, OPPRESSION and/or
that since the Addendum Contract was executed in 1991,
VIOLATION of Section 2, Article XII of the CONSTITUTION
the action to annul it should have been brought not later
perpetrated by these foreign RESPONDENTS, conspiring
than 1995, as the prescriptive period for an action for
and confederating with one another and with each other.[8]
annulment is four years from the time of the discovery of
On 21 February 2001, the Panel of Arbitrators dismissed the fraud.[12] When petitioner filed his complaint before the
the Complaint for lack of jurisdiction. Petitioner moved for Panel in 1999, his action had already prescribed. Also, the
Court of Appeals noted that fraud and duress only make a
reconsideration and this was granted on 18 October 2001,
contract voidable,[13] not inexistent, hence the contract
the Panel believing that the case involved a dispute
remains valid until annulled. The Court of Appeals was of
involving rights to mining areas and a dispute involving
the opinion that the petition should have been settled
surface owners, occupants and claim
through arbitration under Republic Act No. 876 (The
owners/concessionaires. According to the Panel, although
Arbitration Law) as stated in Clause 19.1 of the Addendum
the issue raised in the Complaint appeared to be purely
Contract. The Court of Appeals therefore declared as
civil in nature and should be within the jurisdiction of the
invalid the orders dated 18 October 2001 and 25 June 2002
regular courts, a ruling on the validity of the assailed
issued by the Panel of Arbitrators. On 28 January 2004, the
contracts would result to the grant or denial of mining rights
Court of Appeals denied petitioners motion for
over the properties; therefore, the question on the validity
reconsideration for lack of merit.[14]
of the contract amounts to a mining conflict or dispute.
Hence, the Panel granted the Motion for
Petitioner filed on 22 March 2004 this Petition for Review
Reconsideration with regard to the issues of nullity,
on Certiorari Under Rule 45 assailing the decision and
termination, withdrawal or damages, but with regard to the
resolution of the Court of Appeals. Petitioner raises the
following issues:
A.
PROCEDURAL GROUND
THE HONORABLE COURT OF APPEALS SHOULD
HAVE SUMMARILY DISMISSED RESPONDENTS
PETITION A QUO FOR FAILURE TO COMPLY WITH
PROCEDURAL REQUIREMENTS.
i.
WHETHER THE HONORABLE COURT OF APPEALS
DEPARTED FROM THE RULES AND ESTABLISHED
JURISPRUDENCE WHEN IT DID NOT DISMISS THE
PETITION A QUO DESPITE RESPONDENTS FAILURE
TO COMPLY WITH THE RULES ON DISCLOSURE IN
THE VERIFICATION AND CERTIFICATION PORTION OF
THEIR PETITION A QUO.
ii.
WHETHER THE HONORABLE COURT OF APPEALS
DEPARTED FROM THE RULES AND ESTABLISHED
JURISPRUDENCE WHEN IT DID NOT DISMISS THE
PETITION A QUO FILED BY RESPONDENT CLIMAX
DESPITE THE LACK OF THE REQUISITE AUTHORITY
TO FILE THE PETITION A QUO.
B.
SUBSTANTIVE GROUND
THE HONORABLE COURT OF APPEALS ERRED IN
GRANTING THE PETITION A QUO FILED BY
RESPONDENTS AND IN DENYING MOTION FOR
RECONSIDERATION FILED BY PETITIONER FOR
UTTER LACK OF BASIS IN FACT AND IN LAW.
i.
WHETHER THE HONORABLE COURT OF APPEALS
DEPARTED FROM THE RULES AND ESTABLISHED
JURISPRUDENCE WHEN IT HELD THAT PETITIONER
CEDED HIS CLAIMS OVER THE MINERAL DEPOSITS
LOCATED WITHIN THE ADDENDUM AREA OF
INFLUENCE.
ii.
WHETHER THE HONORABLE COURT OF APPEALS
DEPARTED FROM THE RULES AND ESTABLISHED
JURISPRUDENCE WHEN IT HELD THAT THE PANEL OF
ARBITRATORS IS BEREFT OF JURISDICTION OVER
THE SUBJECT MATTER OF CASE NO. 058.
iii.
WHETHER THE HONORABLE COURT OF APPEALS
DEPARTED FROM THE RULES AND ESTABLISHED
JURISPRUDENCE WHEN IT HELD THAT THE
COMPLAINT FILED BY THE PETITIONER FAILED TO
ALLEGE ULTIMATE FACTS OR PARTICULARS OF
FRAUD.
iv.
WHETHER THE HONORABLE COURT OF APPEALS
DEPARTED FROM THE RULES AND ESTABLISHED
JURISPRUDENCE WHEN IT HELD THAT PETITIONER
AND RESPONDENTS SHOULD SUBMIT TO
ARBITRATION UNDER R.A. 876.
v.
WHETHER THE HONORABLE COURT OF APPEALS
DEPARTED FROM THE RULES AND ESTABLISHED
JURISPRUDENCE WHEN IT HELD THAT THE ACTION
TO DECLARE THE NULLITY OF THE ADDENDUM
CONTRACT, FTAA, OFAC AND AAAA ON THE GROUND
OF FRAUD HAS PRESCRIBED.
The issues for resolution in this petition for review are:
(a) Whether there was forum-shopping on the part of
respondents for their failure to disclose to this Court their
filing of a Petition to Compel for Arbitration before the
Regional Trial Court of Makati City, Branch 148, which is
currently pending.
(b) Whether counsel for respondent Climax had authority to
file the petition for certiorari before the Court of Appeals
considering that the signor of the petition for certioraris
Verification and Certification of Non-forum Shopping was
not authorized to sign the same in behalf of respondent
Climax.
(c) Whether the complaint filed by petitioner raises a mining
dispute over which the Panel of Arbitrators has jurisdiction,
or a judicial question which should properly be brought
before the regular courts.
(d) Whether the dispute between the parties should be
brought for arbitration under Rep. Act No. 876.
Let us deal first with procedural matters.
Petitioner claims that respondents are guilty of forum-
shopping for failing to disclose before this Court that they
had filed a Petition to Compel for Arbitration before the
RTC of Makati City. However, it cannot be determined from
petitioners mere allegations in the Petition that the Petition
to Compel for Arbitration instituted by respondent Climax-
Arimco, involves related causes of action and the grant of
the same or substantially the same reliefs as those involved
in the instant case. Petitioner did not attach copies of
the Petition to Compel for Arbitration or any order or
resolution of the RTC of Makati City related to that case.
Furthermore, it can be gleaned from the nature of the two
actions that the issues in the case before the RTC of Makati
City and in the petition for certiorari before the Court of
Appeals are different. A petition for certiorari raises the
issue of whether or not there was grave abuse of discretion,
while the Petition to Compel for Arbitrationseeks the
implementation of the arbitration clause in the agreement
between the parties.
Petitioner next alleges that there was no authority granted
by respondent Climax to the law firm of Sycip Salazar
Hernandez & Gatmaitan to file the petition before the Court
of Appeals. There is allegedly no Secretarys Certificate
from respondent Climax attached to the petition. The
Verification and Certification only contains a statement
made by one Marianne M. Manzanas that she is also the
authorized representative of [respondent Climax] without
presenting further proof of such authority. Hence, it is
argued that as to respondent Climax, the petition filed
before the Court of Appeals is an unauthorized act and the
assailed orders of the Panel of Arbitrators have become
final.
Under Section 3, Rule 46 of the Rules of Court, a petitioner
is required to submit, together with the petition, a sworn
certification of non-forum shopping, and failure to comply
with this requirement is sufficient ground for dismissal of the
petition. The requirement that petitioner should sign the
certificate of non-forum shopping applies even to
corporations, the Rules of Court making no distinction
between natural and juridical persons. The signatory in the
case of the corporation should be a duly authorized director
or officer of the corporation who has knowledge of the
matter being certified.[15] If, as in this case, the petitioner is
a corporation, a board resolution authorizing a corporate
officer to execute the certification against forum-shopping
is necessary. A certification not signed by a duly authorized
person renders the petition subject to dismissal.[16]
On this point, we have to agree with petitioner. There
appears to be no subsequent compliance with the
requirement to attach a board resolution authorizing the
signor Marianne M. Manzanas to file the petition in behalf
of respondent Climax. Respondent also failed to refute this
in its Comment.[17] However, this latter issue becomes
irrelevant in the light of our decision to deny this petition for
review for lack of jurisdiction by the Panel of Arbitrators
over the complaint filed by petitioner, as will be discussed
below.
We now come to the meat of the case which revolves
mainly around the question of jurisdiction by the Panel of
Arbitrators: Does the Panel of Arbitrators have jurisdiction
over the complaint for declaration of nullity and/or
termination of the subject contracts on the ground of fraud,
oppression and violation of the Constitution? This issue
may be distilled into the more basic question of whether
the Complaint raises a mining dispute or a judicial question.
A judicial question is a question that is proper for
determination by the courts, as opposed to a moot question
or one properly decided by the executive or legislative
branch.[18] A judicial question is raised when the
determination of the question involves the exercise of a
judicial function; that is, the question involves the
determination of what the law is and what the legal rights of
the parties are with respect to the matter in controversy.[19]
On the other hand, a mining dispute is a dispute involving
(a) rights to mining areas, (b) mineral agreements, FTAAs,
or permits, and (c) surface owners, occupants and
claimholders/concessionaires.[20] Under Republic Act No.
7942 (otherwise known as the Philippine Mining Act of
1995), the Panel of Arbitrators has exclusive and original
jurisdiction to hear and decide these mining
disputes.[21] The Court of Appeals, in its questioned
decision, correctly stated that the Panels jurisdiction is
limited only to those mining disputes which raise questions
of fact or matters requiring the application of technological
knowledge and experience.[22]
In Pearson v. Intermediate Appellate Court,[23] this Court
observed that the trend has been to make the adjudication
of mining cases a purely administrative
matter.[24] Decisions[25] of the Supreme Court on mining
disputes have recognized a distinction between (1) the
primary powers granted by pertinent provisions of law to the
then Secretary of Agriculture and Natural Resources (and
the bureau directors) of an executive or administrative
nature, such as granting of license, permits, lease and
contracts, or approving, rejecting, reinstating or canceling
applications, or deciding conflicting applications, and (2)
controversies or disagreements of civil or contractual
nature between litigants which are questions of a judicial
nature that may be adjudicated only by the courts of justice.
This distinction is carried on even in Rep. Act No. 7942.
The Complaint charged respondents with disregarding and
ignoring the provisions of the Addendum Contract, violating
the purpose and spirit of the May 14, 1987 Letter of
Intent and February 28, 1989 Agreement, and acting in a
fraudulent and oppressive manner against petitioner and
practicing fraud and deception against the
Government.[26] Petitioner alleged in his Complaint that
under the original agreements (the May 14, 1987 Letter of
Intent and February 28, 1989 Agreement) respondent
Climax-Arimco had committed to complete the Bankable
Feasibility Study by 28 February 1992, but the same was
not accomplished. Instead, respondent Climax-Arimco,
through false and insidious representations and
machinations by alleging technical and financial capacity,
induced petitioner to enter into the Addendum Contract and
the FTAA in order to repeatedly extend the option period
within which to conduct the feasibility study. In essence,
petitioner alleges that respondents, conspiring and
confederating with one another, misrepresented under
the Addendum Contract and FTAA that respondent Climax-
Arimco possessed financial and technical capacity to put
the project into commercial production, when in truth it had
no such qualification whatsoever to do so. By so doing,
respondents have allegedly caused damage not only to
petitioner but also to the Republic of the Philippines. [27]
It is apparent that the Panel of Arbitrators is bereft of
jurisdiction over the Complaint filed by petitioner. The basic
issue in petitioners Complaint is the presence of fraud or
misrepresentation allegedly attendant to the execution of
the Addendum Contract and the other contracts emanating
from it, such that the contracts are rendered invalid and not
binding upon the parties. It avers that petitioner was misled
by respondents into agreeing to the Addendum
Contract. This constitutes fraud which vitiated petitioners
consent, and under Article 1390 of the Civil Code, is one of
the grounds for the annulment of a voidable contract.
Voidable or annullable contracts, before they are set aside,
are existent, valid, and binding, and are effective and
obligatory between the parties.[28] They can be ratified.[29]
Petitioner insists that the Complaint is actually one for the
declaration of nullity of void contracts. He argues that
respondents, by their lack of financial and technical
competence to carry out the mining project, do not qualify
to enter into a co-production, joint venture or production
sharing agreement with the Government, in circumvention
of and in patent violation of the spirit and purpose of the
Constitution, particularly Section 2, Article XII thereof.
Petitioner relies on the Civil Code for support:[30]
Art. 1409. The following contracts are inexistent and void
from the beginning:
(1) Those whose cause, object or purpose is contrary to
law, morals, good customs, public order or public policy;
....
(7) Those expressly prohibited or declared void by law.
....
Petitioner asserts that for circumventing and being in patent
violation of the Constitution, the Addendum Contract, the
FTAA and the other contracts are void contracts. As such,
they do not produce any effect and cannot be ratified.
However, whether the case involves void or voidable
contracts is still a judicial question. It may, in some
instances, involve questions of fact especially with regard
to the determination of the circumstances of the execution
of the contracts. But the resolution of the validity or
voidness of the contracts remains a legal or judicial
question as it requires the exercise of judicial function. It
requires the ascertainment of what laws are applicable to
the dispute, the interpretation and application of those laws,
and the rendering of a judgment based thereon. Clearly,
the dispute is not a mining conflict. It is essentially judicial.
The complaint was not merely for the determination of
rights under the mining contracts since the very validity of
those contracts is put in issue.
The Complaint is not about a dispute involving rights to
mining areas, nor is it a dispute involving claimholders or
concessionaires. The main question raised was the validity
of the Addendum Contract, the FTAA and the subsequent
contracts. The question as to the rights of petitioner or
respondents to the mining area pursuant to these contracts,
as well as the question of whether or not petitioner had
ceded his mining claims in favor of respondents by way of
execution of the questioned contracts, is merely corollary to
the main issue, and may not be resolved without first
determining the main issue.
The Complaint is also not what is contemplated by Rep. Act
No. 7942 when it says the dispute should involve FTAAs.
The Complaint is not exclusively within the jurisdiction of
the Panel of Arbitrators just because, or for as long as, the
dispute involves an FTAA. The Complaint raised the issue
of the constitutionality of the FTAA, which is definitely a
judicial question. The question of constitutionality is
exclusively within the jurisdiction of the courts to resolve as
this would clearly involve the exercise of judicial power. The
Panel of Arbitrators does not have jurisdiction over such an
issue since it does not involve the application of technical
knowledge and expertise relating to mining. This the Panel
of Arbitrators has even conceded in its Orders dated 18
October 2001 and 25 June 2002. At this juncture, it is
worthy of note that in a case,[31] which was resolved only on
1 December 2004, this Court upheld the validity of the
FTAA entered into by the Republic of the Philippines and
WMC (Philippines), Inc. and constitutionality of Rep. Act
No. 7942 and DENR Administrative Order 96-40.[32] In fact,
the Court took the case on an original petition, recognizing
the exceptional character of the situation and the
paramount public interest involved, as well as the necessity
for a ruling to put an end to the uncertainties plaguing the
mining industry and the affected communities as a result of
doubts case upon the constitutionality and validity of the SO ORDERED.
Mining Act, the subject FTAA and future FTAAs, and the
need to avert a multiplicity of suits.[33]
Arbitration before the Panel of Arbitrators is proper only
when there is a disagreement between the parties as to
some provisions of the contract between them, which
needs the interpretation and the application of that
particular knowledge and expertise possessed by members
of that Panel. It is not proper when one of the parties
repudiates the existence or validity of such contract or
agreement on the ground of fraud or oppression as in this
case. The validity of the contract cannot be subject of
arbitration proceedings. Allegations of fraud and duress in
the execution of a contract are matters within the
jurisdiction of the ordinary courts of law. These questions
are legal in nature and require the application and
interpretation of laws and jurisprudence which is
necessarily a judicial function.
Petitioner also disagrees with the Court of Appeals ruling
that the case should be brought for arbitration under Rep.
Act 876, pursuant to the arbitration clause in the Addendum
Contract which states that [a]ll disputes arising out of or in
connection with the Contract, which cannot be settled
amicably among the Parties, shall finally be settled under
R.A. 876. He points out that respondents Climax and APMI
are not parties to the Addendum Contract and are thus not
bound by the arbitration clause in said contract.
We agree that the case should not be brought under the
ambit of the Arbitration Law, but for a different reason. The
question of validity of the contract containing the agreement
to submit to arbitration will affect the applicability of the
arbitration clause itself. A party cannot rely on the contract
and claim rights or obligations under it and at the same time
impugn its existence or validity. Indeed, litigants are
enjoined from taking inconsistent positions. As previously
discussed, the complaint should have been filed before the
regular courts as it involved issues which are judicial in
nature.
WHEREFORE, in view of the foregoing, the Petition for
Review on Certiorari Under Rule 45 is DENIED. The
Orders dated 18 October 2001 and 25 June 2002 of the
Panel of Arbitrators are SET ASIDE. Costs against
petitioner Jorge Gonzales.