View full case

JORGE GONZALES v. CLIMAX MINING LTD.

FACTS:

Petitioner Jorge Gonzales entered into a mining agreement with Geophilippines, Inc. and Inmex Ltd. to explore and survey mining claims in the Addendum Area of Influence in Didipio. The agreement was later extended for three more years. In 1991, petitioner and other parties signed an Addendum to the agreement, allowing Arimco Mining Corporation to mine the claims under a Financial and Technical Assistance Agreement (FTAA). Petitioner obtained the FTAA in 1994. Respondents Climax-Arimco Mining Corporation and Australasian Philippines Mining Inc. entered into contracts involving the FTAA.

Petitioner filed a Complaint before the Panel of Arbitrators seeking nullity or termination of various contracts. The Panel dismissed the Complaint for lack of jurisdiction but later reconsidered and granted the Motion for Reconsideration regarding nullity, termination, withdrawal, or damages. However, the Panel held that it had no jurisdiction over the constitutionality of the Addendum Agreement and FTAA.

Respondents filed a motion for reconsideration, which was denied. They then filed a petition for certiorari before the Court of Appeals, arguing that the Panel of Arbitrators did not have jurisdiction over the complaint and that the action to annul the Addendum Contract should have been filed earlier. The Court of Appeals granted the petition, finding that the Panel of Arbitrators did not have jurisdiction as the complaint did not involve a mining dispute and raised issues of fraud, oppression, and violation of the Constitution. The Court of Appeals also ruled that the contract should have been challenged earlier and that fraud and duress only make a contract voidable, not inexistent.

Petitioner filed a Petition for Review on Certiorari before the Supreme Court, assailing the decision of the Court of Appeals. Petitioner argues that the Court of Appeals should have dismissed the respondent's petition for failing to comply with procedural requirements. Petitioner also questions the authority of respondent Climax to file the petition for certiorari and challenges the jurisdiction of the Panel of Arbitrators, arguing that the dispute should be brought before the regular courts. Petitioner claims that the contract should be declared null and void due to fraud. The Supreme Court needs to resolve issues related to forum-shopping, authority to file the petition for certiorari, jurisdiction of the Panel of Arbitrators, and the applicability of the Arbitration Law.

ISSUES:

  1. Whether respondents are guilty of forum-shopping for failing to disclose that they had filed a Petition to Compel for Arbitration before the RTC of Makati City.

  2. Whether there was authority granted by respondent Climax to the law firm of Sycip Salazar Hernandez & Gatmaitan to file the petition before the Court of Appeals.

  3. Whether the Panel of Arbitrators has jurisdiction over the Complaint filed by petitioner.

  4. Whether the dispute raised in the Complaint qualifies as a mining conflict within the jurisdiction of the Panel of Arbitrators.

  5. Whether the constitutionality of the FTAA is a judicial question.

  6. Whether arbitration before the Panel of Arbitrators is proper when there is a disagreement between the parties as to the interpretation and application of provisions of a contract.

  7. Whether allegations of fraud and duress in the execution of a contract can be subject to arbitration proceedings.

  8. Whether the case should be brought for arbitration under Rep. Act 876 pursuant to the arbitration clause in the Addendum Contract.

RULING:

  1. The Court cannot determine if respondents are guilty of forum-shopping based on mere allegations in the petition. Petitioner failed to attach copies of the Petition to Compel for Arbitration or any order or resolution related to that case. The issues in the case before the RTC of Makati City and in the petition for certiorari before the Court of Appeals are different. The former seeks implementation of the arbitration clause, while the latter raises the issue of grave abuse of discretion.

  2. Petitioner is correct that failure to comply with the requirement to attach a board resolution authorizing the signatory renders the petition subject to dismissal. In this case, there was no subsequent compliance nor refutation by respondent Climax.

  3. The Panel of Arbitrators does not have jurisdiction over the Complaint filed by petitioner. The basic issue in petitioner's Complaint is the presence of fraud or misrepresentation allegedly attendant to the execution of the Addendum Contract and the other contracts emanating from it, rendering them invalid and not binding upon the parties. The dispute involves the determination of the validity or voidness of the contracts, which is a legal or judicial question requiring the exercise of judicial function.

  4. The dispute raised in the Complaint is not a mining conflict within the jurisdiction of the Panel of Arbitrators. The Complaint does not involve disputes over rights to mining areas or disputes between claimholders or concessionaires. The main question raised is the validity of the Addendum Contract, the FTAA, and subsequent contracts. The question of rights to the mining area pursuant to these contracts is corollary to the main issue and cannot be resolved without first determining the validity of the contracts.

  5. The constitutionality of the FTAA is a judicial question. The Panel of Arbitrators does not have jurisdiction over constitutional issues as they involve the exercise of judicial power. The question of constitutionality is exclusively within the jurisdiction of the courts to resolve. Moreover, the Panel of Arbitrators has already conceded in previous orders that it does not have jurisdiction over issues of constitutionality.

  6. 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 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.

  7. 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.

  8. The case should not be brought under the ambit of the Arbitration Law because the question of the 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 while also impugning its existence or validity. The complaint should have been filed before the regular courts as it involved issues which are judicial in nature.

PRINCIPLES:

  • A certification of non-forum shopping must be signed by a duly authorized person, even in the case of corporations.

  • The Panel of Arbitrators has jurisdiction over mining disputes, particularly those involving rights to mining areas, mineral agreements, and surface owners.

  • The Panel's jurisdiction is limited to mining disputes involving questions of fact or matters requiring technological knowledge and experience.

  • Adjudication of mining cases has been made a purely administrative matter, with primary powers granted to administrative bodies and civil or contractual disputes left for the courts.

  • Fraud or misrepresentation can render a contract voidable, which can be annulled upon proper grounds in accordance with Article 1390 of the Civil Code.

  • Contracts with causes, objects, or purposes contrary to law, morals, good customs, public order, or public policy are inexistent and void from the beginning, in accordance with Article 1409(1) of the Civil Code.

  • The determination of the validity or voidness of contracts is a legal or judicial question that requires the exercise of judicial function, including the ascertainment of applicable laws, interpretation and application of those laws, and the rendering of a judgment based on such laws.

  • Disputes over the validity or voidness of contracts are not within the jurisdiction of the Panel of Arbitrators as they involve legal or judicial questions.

  • The Panel of Arbitrators has jurisdiction only over disputes involving rights to mining areas or disputes between claimholders or concessionaires.

  • Constitutional issues, such as the constitutionality of an agreement, are exclusively within the jurisdiction of the courts to resolve as they involve the exercise of judicial power.

  • Arbitration is proper when there is a disagreement between the parties as to the interpretation and application of provisions of a contract.

  • Allegations of fraud and duress in the execution of a contract are matters within the jurisdiction of the ordinary courts of law.

  • The validity of a contract and allegations of fraud and duress in its execution cannot be subject to arbitration proceedings.

  • A party cannot rely on a contract and claim rights or obligations under it while also impugning its existence or validity.

  • When a complaint involves issues that are judicial in nature, it should be filed before the regular courts.