SECOND DIVISION

[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 : p

Petitioner Jorge Gonzales, as claimowner of mineral deposits located within the

Addendum Area of In uence 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 Government's 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 Mining Corporation and Climax Mining Ltd., as rst parties, and
Australasian Philippines Mining Inc., as second party) dated 23 December 1996 and
Assignment, Accession Agreement 4 (between Climax-Arimco Mining Corporation and
Australasian Philippines Mining Inc.) dated 3 December 1996. Respondent Climax Mining
Corporation (Climax) and respondent Australasian Philippines Mining Inc. (APMI) entered
into a Memorandum of Agreement 5 dated 1 June 1991 whereby the former transferred its
FTAA to the latter. iatdcjur

On 8 November 1999, petitioner Gonzales led before the Panel of Arbitrators,

Region II, Mines and Geosciences Bureau of the Department of Environment and Natural
Resources, against respondents Climax-Arimco Mining Corporation (Climax-Arimco),
Climax, and APMI, 6 a Complaint 7 seeking the declaration of nullity or termination of the
Addendum Contract, the FTAA, the Operating and Financial Accommodation Contract, the
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 Assignment, Accession Agreement, and the Memorandum of Agreement. Petitioner
Gonzales prayed for an unspeci ed 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 confederating with one another and with each
other. . . ." 8
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 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 Agreement and FTAA, it held that it had no jurisdiction. 9
Respondents led 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 and exploitation of minerals over the disputed area.
10

Respondents assailed the orders of the Panel of Arbitrators via a petition for
certiorari before the Court of Appeals.ECTHIA

On 30 July 2003, the Court of Appeals granted the petition, declaring that the Panel
of Arbitrators did not have jurisdiction over the complaint led by petitioner. 11 The
jurisdiction of the Panel of Arbitrators, said the Court of Appeals, is limited only to the
resolution of mining disputes, de ned 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 violation 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 is four years from the time of the
discovery of the fraud. 12 When petitioner led his complaint before the Panel in 1999, his
action had already prescribed. Also, the Court of Appeals noted that fraud and duress only
make a contract voidable, 13 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 petitioner's motion for reconsideration for lack
of merit. 14
Petitioner led 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
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 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.CHDaAE

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
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 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 le the petition for
certiorari before the Court of Appeals considering that the signor of the petition for
certiorari's Veri cation and Certi cation of Non-forum Shopping was not authorized to
sign the same in behalf of respondent Climax.
(c) Whether the complaint led 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 led 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. HIAESC

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 rm of Sycip Salazar Hernandez & Gatmaitan to le the petition before the Court of
Appeals. There is allegedly no Secretary's Certi cate from respondent Climax attached to
the petition. The Veri cation and Certi cation 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 led 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,
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 together with the petition, a sworn certi cation of non-forum shopping, and failure to
comply with this requirement is su cient ground for dismissal of the petition. The
requirement that petitioner should sign the certi cate 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 o cer of the corporation" who has knowledge of the matter being certi ed. 15 If, as in
this case, the petitioner is a corporation, a board resolution authorizing a corporate o cer
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 le 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 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. 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. 2 4 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 con icting 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. 2005cdasia

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
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 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 nancial 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
nancial and technical capacity to put the project into commercial production, when in
truth it had no such quali cation 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 led 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, 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 nancial 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;

xxx xxx xxx

(7) Those expressly prohibited or declared void by law.
xxx xxx xxx

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
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 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 con ict. 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 rst determining the main
issue. aCIHcD

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 de nitely 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 Mining Act, the subject FTAA and future FTAAs, and the
need to avert a multiplicity of suits." 3 3
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 nally 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
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 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 led
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, Austria-Martinez, Callejo, Sr. and Chico-Nazario, JJ., concur.

Footnotes
1. Rollo, pp. 389-421.
2. Id. at 422-474.
3. Id. at 475-479.
4. Id. at 480-483.
5. Id. at 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 330-331.
7. Id. at 521-596.
8. Id. at 521.
9. Id. at 605-610.
10. Id. at 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 492-499.
12. See Article 1391, Civil Code.
13. See Article 1390 (2), Civil Code.
14. Rollo, p. 501.
15. Zulueta v. Asia Brewery, Inc., G.R. No. 138137, 8 March 2001, 354 SCRA 100.
16. MC Engineering, Inc. v. NLRC, 412 Phil. 614 (2001).
17. Rollo, pp. 669-670.
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.
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 21. Ibid.
22. Citing Philex Mining Corporation v. Zaldivia, 150 Phil. 547 (1972).
23. 356 Phil. 341.

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 (1974); Philex Mining Corporation v. Zaldivia, supra at note
22; Espinosa v. Makalintal, 79 Phil. 134.
26. Rollo, p. 651.
27. Id. at 367, 590-591.
28. IV TOLENTINO, 1991 ed., p. 596.
29. Ibid.
30. Rollo, p. 380.
31. La Bugal-B'laan Tribal Association, Inc. et al. v. Victor O. Ramos, et al., G.R. No. 127882,
1 December 2004.
32. The Implementing Rules and Regulations of Rep. Act No. 7942.

33. Supra at note 31.

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