G.R. No.
161957             February 28, 2005 dated 3 December 1996. Respondent Climax Mining
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
Government’s contractor under a Financial and
Technical Assistance Agreement (FTAA). On 20 June
1994, Arimco Mining Corporation obtained the FTAA2
and carried out work under the FTAA.
Respondents executed the Operating and Financial
Accommodation Contract3 (between Climax-Arimco
Mining Corporation and Climax Mining Ltd., as first
parties, and Australasian Philippines Mining Inc., as
second party) dated 23 December 1996 and Assignment,
Accession Agreement4 (between Climax-Arimco Mining
Corporation and Australasian Philippines Mining Inc.)
Corporation (Climax) and respondent Australasian
Philippines Mining Inc. (APMI) entered into a
Memorandum of Agreement5 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 Corporation (Climax-Arimco), Climax,
and APMI,6 a Complaint7 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
releifs 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 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 and exploitation of
minerals over the disputed area.10
Respondents assailed the orders of the Panel of RESPONDENTS’ FAILURE TO
Arbitrators via a petition for certiorari before the Court COMPLY WITH THE RULES ON
of Appeals.1ªvvphi1.nét DISCLOSURE IN THE
"VERIFICATION AND
On 30 July 2003, the Court of Appeals granted the CERTIFICATION" PORTION OF
petition, declaring that the Panel of Arbitrators did not THEIR PETITION A QUO.
have jurisdiction over the complaint filed by petitioner. 11
The jurisdiction of the Panel of Arbitrators, said the II.
Court of Appeals, is limited only to the resolution of
mining disputes, defined as those which raise a question WHETHER THE HONORABLE COURT OF
of fact or matter requiring the technical knowledge and APPEALS DEPARTED FROM THE RULES AND
experience of mining authorities. It was found that the ESTABLISHED JURISPRUDENCE WHEN IT DID
complaint alleged fraud, oppression and violation of the NOT DISMISS THE PETITION A QUO FILED BY
Constitution, which called for the interpretation and RESPONDENT CLIMAX DESPITE THE LACK OF
application of laws, and did not involve any mining THE REQUISITE AUTHORITY TO FILE THE
dispute. The Court of Appeals also observed that there PETITION A QUO.
were no averments relating to particular acts constituting
fraud and oppression. It added that since the Addendum B. SUBSTANTIVE GROUND
Contract was executed in 1991, the action to annul it
should have been brought not later than 1995, as the THE HONORABLE COURT OF APPEALS ERRED
prescriptive period for an action for annulment is four IN GRANTING THE PETITION A QUO FILED BY
years from the time of the discovery of the fraud. 12 When RESPONDENTS AND IN DENYING MOTION FOR
petitioner filed his complaint before the Panel in 1999, RECONSIDERATION FILED BY PETITIONER FOR
his action had already prescribed. Also, the Court of UTTER LACK OF BASIS IN FACT AND IN LAW.
Appeals noted that fraud and duress only make a
contract voidable,13 not inexistent, hence the contract I.
remains valid until annulled. The Court of Appeals was
of the opinion that the petition should have been settled
WHETHER THE HONORABLE
through arbitration under Republic Act No. 876 (The
COURT OF APPEALS DEPARTED
Arbitration Law) as stated in Clause 19.1 of the
FROM THE RULES AND
Addendum Contract. The Court of Appeals therefore
ESTABLISHED JURISPRUDENCE
declared as invalid the orders dated 18 October 2001 and
WHEN IT HELD THAT PETITIONER
25 June 2002 issued by the Panel of Arbitrators. On 28
CEDED HIS CLAIMS OVER THE
January 2004, the Court of Appeals denied petitioner’s
MINERAL DEPOSITS LOCATED
motion for reconsideration for lack of merit. 14
WITHIN THE ADDENDUM AREA
OF INFLUENCE.
Petitioner filed on 22 March 2004 this Petition for
Review on Certiorari Under Rule 45 assailing the
II.
decision and resolution of the Court of Appeals.
Petitioner raises the following issues:
WHETHER THE HONORABLE
COURT OF APPEALS DEPARTED
A. PROCEDURAL GROUND
FROM THE RULES AND
ESTABLISHED JURISPRUDENCE
THE HONORABLE COURT OF APPEALS SHOULD WHEN IT HELD THAT THE PANEL
HAVE SUMMARILY DISMISSED RESPONDENTS’ OF ARBITRATORS IS BEREFT OF
PETITION A QUO FOR FAILURE TO COMPLY JURISDICTION OVER THE
WITH PROCEDURAL REQUIREMENTS. SUBJECT MATTER OF CASE NO.
058.
I.
III.
WHETHER THE HONORABLE
COURT OF APPEALS DEPARTED WHETHER THE HONORABLE
FROM THE RULES AND COURT OF APPEALS DEPARTED
ESTABLISHED JURISPRUDENCE FROM THE RULES AND
WHEN IT DID NOT DISMISS THE ESTABLISHED JURISPRUDENCE
PETITION A QUO DESPITE
 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 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.
(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 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.l^vvphi1.net 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.191a\^/phi1.net
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.24 Decisions25 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 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 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
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.