Gonzales Vs Climax

8/6/2019 SUPREME COURT REPORTS ANNOTATED VOLUME 452
VOL. 452, FEBRUARY 28, 2005 607

Gonzales vs. Climax Mining Ltd.
*
G.R. No. 161957. February 28, 2005.
JORGE GONZALES and PANEL OF ARBITRATORS,

petitioners, vs. CLIMAX MINING LTD., CLIMAX-
ARIMCO MIN-ING CORP., and AUSTRALASIAN
PHILIPPINES MINING INC., respondents.
Actions; Alternative Dispute Resolution; Arbitration; Forum

Shopping; Pleadings and Practice; There is no forum shopping
where one is a petition for certiorari which raises the issue of
whether or not there was grave abuse of discretion while the other
is a Petition to Compel for Arbitration seeking the implementation
of the arbitration clause in the agreement between the parties.—
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 petitioner’s 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
_______________
* SECOND DIVISION.
608
608 SUPREME COURT REPORTS ANNOTATED

www.central.com.ph/sfsreader/session/0000016c678071ec7dcabc8d003600fb002c009e/t/?o=False 1/19
whether or not there was grave abuse of discretion, while the

Petition to Compel for Arbitration seeks the implementation of the
arbitration clause in the agreement between the parties.
Same; Same; Same; Same; Same; If 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.—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. 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. 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. 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.
Same; Same; Same; Mining Claims; Words and Phrases; 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 while 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.—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. A judicial question is raised when
the determination of the question involves the exercise of a
judicial function; that is, the question involves the
609
VOL. 452, FEBRUARY 28, 2005 609
determination of what the law is and what the legal rights of the
parties are with respect to the matter in controversy. 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. 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. The Court
of Appeals, in its questioned decision, correctly stated that the
Panel’s jurisdiction is limited only to those mining disputes which
raise questions of fact or matters requiring the application of
technological knowledge and experience.
Same; Same; Same; Same; The trend has been to make the
adjudication of mining cases a purely administrative matter.—In
Pearson v. Intermediate Appellate Court, this Court observed that
the trend has been to make the adjudication of mining cases a
purely administrative matter. Decisions 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.
Same; Same; Same; Same; Contracts; The resolution of the
validity or voidness of the contracts remains a legal or judicial
question as it requires the exercise of judicial function.—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 com-
610
plaint was not merely for the determination of rights under the
mining contracts since the very validity of those contracts is put
in issue.
Same; Same; Same; Same; Same; The question of
constitutionality is exclusively within the jurisdiction of the courts
to resolve as this would clearly involve the exercise of judicial
power and a 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.—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, 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. 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 Mining
Act, the subject FTAA and future FTAAs, and the need to avert a
multiplicity of suits.”
Same; Same; Same; Same; Same; 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.—
611
VOL. 452, FEBRUARY 28, 2005 611
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.
Same; Same; Same; Same; 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.—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.
PETITION for review on certiorari of the decision and

resolution of the Court of Appeals.
The facts are stated in the opinion of the Court.

Puno and Puno Law Offices for petitioner.
Sycip, Salazar, Hernandez & Gatmaitan for
respondents.
TINGA, J.:
Petitioner Jorge Gonzales, as claimowner of mineral

deposits located within the Addendum Area of Influence in
Didipio,
612

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 1
Adhesion
Thereto (hereafter, the Addendum Contract). Under the
Addendum Contract, Arimco Mining Corporation would
apply to the Government of the Philippines for permission
to mine the claims as the Government’s contractor under a
Financial and Technical Assistance Agreement (FTAA). On
20 June
2
1994, Arimco Mining Corporation obtained the
FTAA and carried out work under the FTAA.
Respondents executed3 the Operating and Financial
Accommodation Contract (between Climax-Arimco Mining
Corporation and Climax Mining Ltd., as first parties, and
Australasian Philippines Mining Inc., as second party)
dated 23
_______________
1 Rollo, pp. 389-421.

2 Id., at pp. 422-474.
3 Id., at pp. 475-479.
613
VOL. 452, FEBRUARY 28, 2005 613

4
4
December 1996 and Assignment, Accession Agreement
(between Climax-Arimco Mining Corporation and
Australasian Philippines Mining Inc.) dated 3 December
1996. Respondent Climax Mining Corporation (Climax) and
respondent Australasian Philippines Mining, 5
Inc. (APMI)
entered into a Memorandum of Agreement dated 1 June
1991 whereby the former transferred its FTAA to the
latter.
On 8 November 1999, petitioner Gonzales filed before
the Panel of Arbitrators, Region II, Mines and Geosciences
Bureau of the Department of Environment and Natural
Resources, against respondents Climax-Arimco Mining 6
Corporation7
(Climax-Arimco), Climax, and APMI, a
Complaint seeking the declaration of nullity or
termination of the Addendum Contract, the FTAA, the
Operating and Financial Accommodation Contract, the
Assignment, Accession Agreement, and the Memorandum of
Agreement. Petitioner Gonzales prayed for an unspecified
amount of actual and exemplary damages plus attorney’s
fees and for the issuance of a temporary restraining order
and/or writ of preliminary injunction to restrain or enjoin
respondents from further implementing the questioned
agreements. He sought said reliefs on the grounds of
“FRAUD, OPPRESSION and/or VIOLATION of Section 2,
Article XII of the CONSTITUTION perpetrated by these
foreign RESPONDENTS, conspiring and 8
confederating
with one another and with each other….”
On 21 February 2001, the Panel of Arbitrators dismissed
the Complaint for lack of jurisdiction. Petitioner moved for
reconsideration and this was granted on 18 October 2001,
the
_______________
4 Id., at pp. 480-483.

5 Id., at pp. 484-490.
6 Herein respondent Climax-Arimco is the predecessor-in-interest of
Arimco Mining Corporation. Respondents Climax-Arimco and APMI are
wholly owned and controlled subsidiaries of respondent Climax. Id., at pp.
330-331.
7 Id., at pp. 521-596.
8 Id., at p. 521.
614

Panel believing that the case involved a dispute involving

rights to mining areas and a dispute involving surface
owners, occupants and claim owners/concessionaires.
According to the Panel, although the issue raised in the
Complaint appeared to be purely civil in nature and should
be within the jurisdiction of the regular courts, a ruling on
the validity of the assailed contracts would result to the
grant or denial of mining rights over the properties;
therefore, the question on the validity of the contract
amounts to a mining conflict or dispute. Hence, the Panel
granted the Motion for Reconsideration with regard to the
issues of nullity, termination, withdrawal or damages, but
with regard to the constitutionality of the Addendum 9
Agreement and FTAA, it held that it had no jurisdiction.
Respondents filed their motion for reconsideration but
this was denied on 25 June 2002. The Panel of Arbitrators
maintained that there was a mining dispute between the
parties since the subject matter of the Complaint arose
from contracts between the parties which involve the
exploration
10
and exploitation of minerals over the disputed
area.
Respondents assailed the orders of the Panel of
Arbitrators via a petition for certiorari before the Court of
Appeals.
On 30 July 2003, the Court of Appeals granted the
petition, declaring that the Panel of Arbitrators did not11
have jurisdiction over the complaint filed by petitioner.
The jurisdiction of the Panel of Arbitrators, said the Court
of Appeals, is limited only to the resolution of mining
disputes, defined as those which raise a question of fact or
matter requiring the technical knowledge and experience of
mining authorities. It was found that the complaint alleged
fraud, oppression and viola-
_______________
9 Id., at pp. 605-610.

10 Id., at pp. 611-619.
11 Penned by Justice Eliezer R. de los Santos, concurred in by Justices
Romeo A. Brawner and Jose C. Mendoza of the Twelfth division. Id., at pp.
492-499.
615
VOL. 452, FEBRUARY 28, 2005 615

tion of the Constitution, which called for the interpretation

and application of laws, and did not involve any mining
dispute. The Court of Appeals also observed that there
were no averments relating to particular acts constituting
fraud and oppression. It added that since the Addendum
Contract was executed in 1991, the action to annul it
should have been brought not later than 1995, as the
prescriptive period for an action for annulment 12is four
years from the time of the discovery of the fraud. When
petitioner filed his complaint before the Panel in 1999, his
action had already prescribed. Also, the Court of Appeals
noted that13
fraud and duress only make a contract
voidable, not inexistent, hence the contract remains valid
until annulled. The Court of Appeals was of the opinion
that the petition should have been settled through
arbitration under Republic Act No. 876 (The Arbitration
Law) as stated in Clause 19.1 of the Addendum Contract.
The Court of Appeals therefore declared as invalid the
orders dated 18 October 2001 and 25 June 2002 issued by
the Panel of Arbitrators. On 28 January 2004, the Court of
Appeals denied 14
petitioner’s motion for reconsideration for
lack of merit.
Petitioner filed on 22 March 2004 this Petition for
Review on Certiorari Under Rule 45 assailing the decision
and 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.
_______________
12 See Article 1391, Civil Code.

13 See Article 1390 (2), Civil Code.
14 Rollo, p. 501.
616

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.

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.

JURISPRUDENCE WHEN IT HELD THAT PETITIONER
CEDED HIS CLAIMS OVER THE MINERAL DEPOSITS
LOCATED WITHIN THE ADDENDUM AREA OF INFLUENCE.
ii.

JURISPRUDENCE WHEN IT HELD THAT THE PANEL OF
ARBITRATORS IS BEREFT OF JURISDICTION OVER THE
SUBJECT MATTER OF CASE NO. 058.
617
VOL. 452, FEBRUARY 28, 2005 617

iii.

JURISPRUDENCE WHEN IT HELD THAT THE COMPLAINT
FILED BY THE PETITIONER FAILED TO ALLEGE
ULTIMATE FACTS OR PARTICULARS OF FRAUD.
iv.

JURISPRUDENCE WHEN IT HELD THAT PETITIONER AND
RESPONDENTS SHOULD SUBMIT TO ARBITRATION UNDER
R.A. 876.
v.

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 certiorari’s 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.
618

(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 petitioner’s 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 Arbitration
seeks 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 Secretary’s
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
619
VOL. 452, FEBRUARY 28, 2005 619

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”
15
who has knowledge of
the matter being certified. 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 duly16authorized
person renders the petition subject to dismissal.
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.
17
Respondent also failed to refute this
in its Comment. 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.
_______________
15 Zulueta v. Asia Brewery, Inc., G.R. No. 138137, 8 March 2001, 354
SCRA 100.
16 MC Engineering, Inc. v. National Labor Relations Commission, 412
Phil. 614; 360 SCRA 183 (2001).
17 Rollo, pp. 669-670.
620

A judicial question is a question that is proper for

determination by the courts, as opposed to a moot question
or one 18properly decided by the executive or legislative
branch. 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
19
are with respect to the matter in
controversy.
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 20
owners,
occupants and claimholders/concessionaires. Under
Republic Act No. 7942 (otherwise known as the Philippine
Mining Act of 1995), the Panel of Arbitrators has exclusive
and original
21
jurisdiction to hear and decide these mining
disputes. The Court of Appeals, in its questioned decision,
correctly stated that the Panel’s jurisdiction is limited only
to those mining disputes which raise questions of fact or
matters requiring the 22 application of technological
knowledge and experience. 23
In Pearson v. Intermediate Appellate Court, this Court
observed that the trend has been to make the adjudication 24
of mining 25
cases a purely administrative matter.
Decisions of the Supreme Court on mining disputes have
recognized a distinction between (1) the primary powers
granted by perti-
_______________
18 Black’s Law Dictionary, 8th Ed. (2004), p. 864.

19 Jose Agaton R. Sibal, Philippine Legal Encyclopedia (1986), p. 472.
20 Section 77, Rep. Act No. 7942, as amended.
21 Ibid.
22 Citing Philex Mining Corporation v. Zaldivia, 150 Phil. 547; 43
SCRA 479 (1972).
23 356 Phil. 341; 295 SCRA 27.
24 Citing Twin Peaks Mining Association v. Philex Mining Corporation,
No. L-49835, 18 December 1979, 94 SCRA 768.
25 Pio v. Marcos, 155 Phil. 668; 56 SCRA 726 (1974); Philex Mining
Corporation v. Zaldivia, supra at note 22; Espinosa v. Makalintal, 79 Phil.
134.
621
VOL. 452, FEBRUARY 28, 2005 621

nent 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 26
practicing fraud and deception against the Government.
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 27
to petitioner but
also to the Republic of the Philippines.
_______________
26 Rollo, p. 651.
27 Id., at pp. 367, 590-591.
622

It is apparent that the Panel of Arbitrators is bereft of

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, 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 petitioner’s 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,
28
and are
effective29and obligatory between the parties. They can be
ratified.
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, Article30 XII thereof.
Petitioner relies on the Civil Code for support:
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.
....
_______________
28 IV Tolentino, 1991 ed., p. 596.

29 Ibid.
30 Rollo, p. 380.
623
VOL. 452, FEBRUARY 28, 2005 623

Petitioner asserts that for circumventing and being in

patentviolation of the Constitution, the Addendum
Contract, theFTAA 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
624

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 2002.31
At this juncture, it is
worthy of note that in a case, 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 32Rep. Act
No. 7942 and DENR Administrative Order 96-40. 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
Mining Act, the subject FTAA and future33
FTAAs, and the
need to avert a multiplicity of suits.”
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.
_______________
31 La Bugal-B’laan Tribal Association, Inc., et al. v. Victor O. Ramos, et

al., G.R. No. 127882, 1 December 2004, 445 SCRA 1.
32 The Implementing Rules and Regulations of Rep. Act No. 7942.
33 Supra at note 31.
625
VOL. 452, FEBRUARY 28, 2005 625

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.
SO ORDERED.
Puno (Chairman), Austria-Martinez, Callejo, Sr.

and Chico-Nazario, JJ., concur.
Petition denied.
Note.—The potentials of arbitration as one of the

alternative dispute resolution methods that are now
rightfully vaunted as “the wave of the future” in
international relations, is recognized worldwide. (BF
Corporation vs. Court of Appeals, 288 SCRA 267 [1998])
——o0o——
626
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8/6/2019 SUPREME COURT REPORTS ANNOTATED VOLUME 452

VOL. 452, FEBRUARY 28, 2005 607

JORGE GONZALES and PANEL OF ARBITRATORS,

Actions; Alternative Dispute Resolution; Arbitration; Forum

608 SUPREME COURT REPORTS ANNOTATED

Gonzales vs. Climax Mining Ltd.

whether or not there was grave abuse of discretion, while the

VOL. 452, FEBRUARY 28, 2005 609

Gonzales vs. Climax Mining Ltd.

610 SUPREME COURT REPORTS ANNOTATED

Gonzales vs. Climax Mining Ltd.

VOL. 452, FEBRUARY 28, 2005 611

Gonzales vs. Climax Mining Ltd.

Arbitration before the Panel of Arbitrators is proper only when

PETITION for review on certiorari of the decision and

The facts are stated in the opinion of the Court.

Petitioner Jorge Gonzales, as claimowner of mineral

612 SUPREME COURT REPORTS ANNOTATED

in the provinces of Quirino and Nueva Vizcaya, entered

1 Rollo, pp. 389-421.

VOL. 452, FEBRUARY 28, 2005 613

4 Id., at pp. 480-483.

614 SUPREME COURT REPORTS ANNOTATED

Panel believing that the case involved a dispute involving

9 Id., at pp. 605-610.

VOL. 452, FEBRUARY 28, 2005 615

tion of the Constitution, which called for the interpretation

THE HONORABLE COURT OF APPEALS SHOULD HAVE

12 See Article 1391, Civil Code.

616 SUPREME COURT REPORTS ANNOTATED

WHETHER THE HONORABLE COURT OF APPEALS

WHETHER THE HONORABLE COURT OF APPEALS

THE HONORABLE COURT OF APPEALS ERRED IN

WHETHER THE HONORABLE COURT OF APPEALS

WHETHER THE HONORABLE COURT OF APPEALS

VOL. 452, FEBRUARY 28, 2005 617

WHETHER THE HONORABLE COURT OF APPEALS

WHETHER THE HONORABLE COURT OF APPEALS

WHETHER THE HONORABLE COURT OF APPEALS

The issues for resolution in this petition for review are:

(a) Whether there was forum-shopping on the part of

618 SUPREME COURT REPORTS ANNOTATED

(d) Whether the dispute between the parties should be

Let us deal first with procedural matters.

VOL. 452, FEBRUARY 28, 2005 619

certification of non-forum shopping, and failure to comply

the certificate of non-forum shopping applies even to

620 SUPREME COURT REPORTS ANNOTATED

A judicial question is a question that is proper for

judicial function; that is, the question involves the

18 Black’s Law Dictionary, 8th Ed. (2004), p. 864.

VOL. 452, FEBRUARY 28, 2005 621

nent provisions of law to the then Secretary of Agriculture

conflicting applications, and (2) controversies or

622 SUPREME COURT REPORTS ANNOTATED

It is apparent that the Panel of Arbitrators is bereft of

that petitioner was misled by respondents into agreeing to

28 IV Tolentino, 1991 ed., p. 596.

VOL. 452, FEBRUARY 28, 2005 623

Petitioner asserts that for circumventing and being in

question as it requires the exercise of judicial function. It

624 SUPREME COURT REPORTS ANNOTATED

Arbitrators does not have jurisdiction over such an issue