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JORGE GONZALES & PANEL OF ARBITRATORS v. CLIMAX MINING LTD.

,
CLIMAX-ARIMCO MINING CORP., & AUSTRALASIAN PHILIPPINE MINING INC.,
16195, February 28, 2005
J. Tinga
FACTS
Petitioner Jorge Gonzales, as claim owner 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 letteragreement designated as the May 14, 1987 Letter of Intent with Geophilippines Inc.,
and Inmex Ltd. Under said agreement petitioner granted both companies
collectively, the exclusive right to explore and survey mining claims for a period of
36 months within which the latter could 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 February 28, 1989,
the same parties to said Letter of Intent renegotiated the same whereby the
exploration of the mining claims was extended for another period of three years. On
March 9, 1991, Petitioner, together with the same parties in the first addendum and
Arimco Mining Corporation and Aumex Philippines Inc. signed another Addendum
contract which stated that Arimco Mining Corp. would apply to the Government of
the Philippines for permission to mine the claims as the Governments contractor
under the Financial and Technical Assistance Agreement (FTAA). On June 20, 1994,
Said Corporation obtained the FTAA and carried out work under said agreement.
Respondents entered into a Memorandum of Agreement whereby Climax Mining
Corporation transferred its FTAA to the Australasian Philippine Mining Inc. (APMI). On
November 8, 1999 Petitioner Gonzales filed before the Panel of Arbitrators, Region
II, Mines and Geosciences Buereau of the Department of Environment and Natural
Resources a complaint against Climax-Arimco, Climax and APMI seeking the
declaration of nullity or termination of the Addendum Contract, the FTAA, the
Operating and Financial Accomodation Contract, the assignment, accession
agreement, and the memorandum of agreement. He further prayed for an
unspecified amount of actual and exemplary damages plus attorneys fees and for
the issuance of a TRO and/or writ of preliminary injunction to restrain or enjoin
respondents from further implementing the questioned agreements on the grounds
of fraud, oppression, and/or violation of Sec. 2, Article XII of the constitution
perpetrated by the foreign respondents. The Panel of Arbitrators dismissed the
complaint for lack of jurisdiction. Petitioner moved for reconsideration which was
granted by the panel with regard to the issues of nullity, termination, withdrawal or
damages, but upheld their decision that they had no jurisdiction over the question
of constitutionality of the addendum agreement and FTAA. Respondents in turn filed
their motion for reconsideration but were denied. Respondents then filed a petition
for certiorari before the court of appeals. On July 30, 2003 the CA granted the
petition and declared the previous orders of the panel invalid stating that the Panel
of Arbitrators didnt have jurisdiction over the complaint of petitioner which
questioned the application and interpretation of laws and did not involve any mining
dispute. The CA denied petitioners subsequent motion for reconsideration for lack
of merit. On March 22, 2004 then file a Petition for Review on Certiorari under rule
45.

ISSUES
1. Whether there was forum-shopping on the part of respondents for their
failure to disclose to the Court their filing of a Petition to compel for
arbitration before the RTC of Makati City, which is currently pending.
2. Whether counsel for respondent Climax had authority to file the petition
for certiorari before the CA.
3. Whether the complaint filed by the petitioner raises a mining dispute over
which the Panel of Arbitrators has jurisdiction.
4. Whether the dispute between the parties should be brought for arbitration
under RA No. 876.
RULING
1. whether or not there was forum shopping committed by respondents:
It cannot be determined from petitioners mere allegations in the
petition that the Petition to Compel for Arbitration instituted by respondent
Climax-Arimco involves related causes of action and the grant of the same
reliefs is similar to those involved in the instant case. 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.
2. Whether counsel for respondent Climax had authority to file the petition for
certiorari before the CA.
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
the dismissal of the petition. Said requirement also applies to corporations,
the Rule of Court making no distinction between natural and juridical persons.
The signatory in the case of corporation should be a duly authorized director
or officer of the corporation who has knowledge of the matter being certified.
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. Although the
petitioner was correct in his allegation, said issue is irrelevant to the decision
of the court in denying the petition of herein petitioner.
3. Whether the complaint filed by the petitioner raises a mining dispute over
which the Panel of Arbitrators has jurisdiction.
A mining dispute is a dispute involving: rights to mining areas, mineral
agreements, FTAAs, or permits, and surface owners, occupants and
claimholders/concessionaries. Under RA 7942, the Panel of Arbitrators has
exclusive and original jurisdiction to hear and decide this mining disputes.
The CA is correct in stating that the Panels jurisdiction is limited to those

mining disputes which raise the questions of fact or matters requiring the
application of technological knowledge and experience. 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.
4. Whether the dispute between the parties should be brought for arbitration
under RA No. 876.
The SC agreed with the petitioner that the case should not be brought
under the ambit of the arbitration law, but for 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, the litigants are enjoined from taking
consistent positions. The complaint should have been filed before the regular
courts as it involves issues which are judicial in nature.
WHEREFORE, the Petition for Review in Certiorari under Rule 45 was DENIED
and the orders of the Panel of Arbitrators were SET ASIDE with costs against
petitioner.

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