SPECIAL
SECOND DIVISION
JORGE GONZALES and G.R. No.
161957
PANEL OF ARBITRATORS,
Petitioners,
Present:
PUNO,
C. J.,
Chairperson,
-
versus – AUSTRIA-MARTINEZ,
CALLEJO, SR.,
TINGA, and
NAZARIO, JJ.
CLIMAX MINING LTD.,
CLIMAX-ARIMCO MINING CORP.,
and AUSTRALASIAN
MINING INC.,
Respondents.
x---------------------------------------------------------------------------------
x
JORGE
GONZALES, G.R.
No. 167994
Petitioner,
-
versus
–
HON.
OSCAR B. PIMENTEL, in his
capacity
as PRESIDING JUDGE of BR. 148
of
the REGIONAL TRIAL COURT of
MINING
CORPORATION,
Respondents.
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--------------------------------------------------- x
R E S O L U T I ON
Tinga, J.:
This is a consolidation of two
petitions rooted in the same disputed Addendum Contract entered into by the
parties. In G.R. No. 161957, the Court
in its Decision of
Respondents Climax Mining Ltd., et
al., (respondents) filed their Motion for Partial Reconsideration and/or
Clarification[3] seeking
reconsideration of that part of the Decision holding that the case should not
be brought for arbitration under Republic Act (R.A.) No. 876, also known as the
Arbitration Law.[4] Respondents, citing American jurisprudence[5]
and the UNCITRAL Model Law,[6]
argue that the arbitration clause in the Addendum Contract should be treated as
an agreement independent of the other terms of the contract, and that a claimed
rescission of the main contract does not avoid the duty to arbitrate. Respondents add that Gonzales’s argument relating
to the alleged invalidity of the Addendum Contract still has to be proven and
adjudicated on in a proper proceeding; that is, an action separate from the
motion to compel arbitration. Pending
judgment in such separate action, the Addendum Contract remains valid and
binding and so does the arbitration clause therein. Respondents add that the holding in the
Decision that “the case should not be brought under the ambit of the
Arbitration Law” appears to be premised on Gonzales’s having “impugn[ed] the
existence or validity” of the addendum contract. If so, it supposedly conveys the idea that Gonzales’s
unilateral repudiation of the contract or mere allegation of its invalidity is
all it takes to avoid arbitration.
Hence, respondents submit that the court’s holding that “the case should
not be brought under the ambit of the Arbitration Law” be understood or
clarified as operative only where the challenge to the arbitration agreement
has been sustained by final judgment.
Both parties were required to file their
respective comments to the other party’s motion for
reconsideration/clarification.[7] Respondents filed their Comment on
On the other hand, G.R. No. 167994 is
a Rule 65 petition filed on 6 May 2005, or while the motions for reconsideration in G.R.
No. 161957[10] were
pending, wherein Gonzales challenged the orders of the Regional Trial Court
(RTC) requiring him to proceed with the arbitration proceedings as sought by
Climax-Arimco Mining Corporation (Climax-Arimco).
On
We first tackle the more recent case
which is G.R. No. 167994. It stemmed
from the petition to compel arbitration filed by respondent Climax-Arimco before
the RTC of Makati City on
On
On
On
Climax-Arimco then filed a motion to
resolve its pending motion to compel arbitration. The RTC denied the same in its
On
On
Gonzales
moved for reconsideration on
Gonzales
thus filed the Rule 65 petition assailing the Orders dated
In
support of his argument, Gonzales invokes Sec. 6 of R.A. No. 876:
Sec. 6. Hearing
by court.—A party aggrieved by the failure, neglect or refusal of another
to perform under an agreement in writing providing for arbitration may petition
the court for an order directing that such arbitration proceed in the manner
provided for in such agreement. Five
days notice in writing of the hearing of such application shall be served
either personally or by registered mail upon the party in default. The court shall hear the parties, and upon
being satisfied that the making of the agreement or such failure to comply
therewith is not in issue, shall make an order directing the parties to proceed
to arbitration in accordance with the terms of the agreement. If the making of the agreement or default be
in issue the court shall proceed to summarily hear such issue. If the finding be that no agreement in
writing providing for arbitration was made, or that there is no default in the
proceeding thereunder, the proceeding shall be dismissed. If the finding be that a written provision
for arbitration was made and there is a default in proceeding thereunder, an
order shall be made summarily directing the parties to proceed with the
arbitration in accordance with the terms thereof.
The court shall decide all motions,
petitions or applications filed under the provisions of this Act, within ten (10)
days after such motions, petitions, or applications have been heard by it.
Gonzales
also cites Sec. 24 of R.A. No. 9285 or the “Alternative Dispute Resolution Act
of 2004:”
Sec. 24. Referral to Arbitration.—A
court before which an action is brought in a matter which is the subject matter
of an arbitration agreement shall, if at least one party so requests not later
than the pre-trial conference, or upon the request of both parties thereafter,
refer the parties to arbitration unless it finds that the arbitration agreement
is null and void, inoperative or incapable of being performed.
According to Gonzales, the
above-quoted provisions of law outline the procedure to be followed in
petitions to compel arbitration, which the RTC did not follow. Thus, referral of the parties to arbitration
by Judge Pimentel despite the timely and properly raised issue of nullity of
the Addendum Contract was misplaced and without legal basis. Both R.A. No. 876 and R.A. No. 9285 mandate
that any issue as to the nullity, inoperativeness, or incapability of
performance of the arbitration clause/agreement raised by one of the parties to
the alleged arbitration agreement must be determined by the court prior to
referring them to arbitration. They
require that the trial court first determine or resolve the issue of nullity,
and there is no other venue for this determination other than a pre-trial and
hearing on the issue by the trial court which has jurisdiction over the
case. Gonzales adds that the assailed
Respondent Climax-Arimco, on the other
hand, assails the mode of review availed of by Gonzales. Climax-Arimco cites Sec. 29 of R.A. No. 876:
Sec. 29. Appeals.—An appeal may be taken from an order
made in a proceeding under this Act, or from a judgment entered upon an award
through certiorari proceedings, but such appeals shall be limited to questions
of law. The proceedings upon such an
appeal, including the judgment thereon shall be governed by the Rules of Court
in so far as they are applicable.
Climax-Arimco mentions that the
special civil action for certiorari employed by Gonzales is available only
where there is no appeal or any plain, speedy, and adequate remedy in the
ordinary course of law against the challenged orders or acts. Climax-Arimco then points out that R.A. No.
876 provides for an appeal from such orders, which, under the Rules of Court,
must be filed within 15 days from notice of the final order or resolution
appealed from or of the denial of the motion for reconsideration filed in due
time. Gonzales has not denied that the
relevant 15-day period for an appeal had elapsed long before he filed this
petition for certiorari. He cannot use
the special civil action of certiorari as a remedy for a lost appeal.
Climax-Arimco adds that an application
to compel arbitration under Sec. 6 of R.A. No. 876 confers on the trial court
only a limited and special jurisdiction, i.e., a jurisdiction solely to
determine (a) whether or not the parties have a written contract to arbitrate,
and (b) if the defendant has failed to comply with that contract. Respondent cites La Naval Drug Corporation
v. Court of Appeals,[22] which
holds that in a proceeding to compel arbitration, “[t]he arbitration law
explicitly confines the court’s authority only to pass upon the issue of
whether there is or there is no agreement in writing providing for
arbitration,” and “[i]n the affirmative, the statute ordains that the court
shall issue an order ‘summarily directing the parties to proceed with the
arbitration in accordance with the terms thereof.’”[23] Climax-Arimco argues that R.A. No. 876 gives
no room for any other issue to be dealt with in such a proceeding, and that the
court presented with an application to compel arbitration may order arbitration
or dismiss the same, depending solely on its finding as to those two limited
issues. If either of these matters is
disputed, the court is required to conduct a summary hearing on it. Gonzales’s proposition contradicts both the
trial court’s limited jurisdiction and the summary nature of the proceeding
itself.
Climax-Arimco further notes that
Gonzales’s attack on or repudiation of the Addendum Contract also is not a
ground to deny effect to the arbitration clause in the Contract. The arbitration agreement is separate and severable
from the contract evidencing the parties’ commercial or economic transaction,
it stresses. Hence, the alleged defect
or failure of the main contract is not a ground to deny enforcement of the
parties’ arbitration agreement. Even the
party who has repudiated the main contract is not prevented from enforcing its
arbitration provision. R.A. No. 876 itself
treats the arbitration clause or agreement as a contract separate from the
commercial, economic or other transaction to be arbitrated. The statute, in particular paragraph 1 of Sec.
2 thereof, considers the arbitration stipulation an independent contract in its
own right whose enforcement may be prevented only on grounds which legally make
the arbitration agreement itself revocable, thus:
Sec. 2. Persons and matters subject to
arbitration.—Two or more
persons or parties may submit to the arbitration of one or more arbitrators any
controversy existing, between them at the time of the submission and which may
be the subject of an action, or the parties to any contract may in such
contract agree to settle by arbitration a controversy thereafter arising
between them. Such submission or
contract shall be valid, enforceable and irrevocable, save upon such grounds as
exist at law for the revocation of any contract.
x
x x x
The grounds Gonzales invokes for the
revocation of the Addendum Contract—fraud and oppression in the execution
thereof—are also not grounds for the revocation of the arbitration clause in
the Contract, Climax-Arimco notes. Such
grounds may only be raised by way of defense in the arbitration itself and
cannot be used to frustrate or delay the conduct of arbitration
proceedings. Instead, these should be
raised in a separate action for rescission, it continues.
Climax-Arimco emphasizes that the
summary proceeding to compel arbitration under Sec. 6 of R.A. No. 876 should
not be confused with the procedure in Sec. 24 of R.A. No. 9285. Sec. 6 of R.A. No. 876 refers to an
application to compel arbitration where the court’s authority is limited to resolving
the issue of whether there is or there is no agreement in writing providing for
arbitration, while Sec. 24 of R.A. No. 9285 refers to an ordinary action which covers
a matter that appears to be arbitrable or subject to arbitration under the
arbitration agreement. In the latter
case, the statute is clear that the court, instead of trying the case, may, on
request of either or both parties, refer the parties to arbitration, unless it
finds that the arbitration agreement is null and void, inoperative or incapable
of being performed. Arbitration may even
be ordered in the same suit brought upon a matter covered by an arbitration
agreement even without waiting for the outcome of the issue of the validity of
the arbitration agreement. Art. 8 of the
UNCITRAL Model Law[24] states
that where a court before which an action is brought in a matter which is
subject of an arbitration agreement refers the parties to arbitration, the
arbitral proceedings may proceed even while the action is pending.
Thus, the main issue raised in the
Petition for Certiorari is whether it was proper for the RTC, in the proceeding
to compel arbitration under R.A. No. 876, to order the parties to arbitrate
even though the defendant therein has raised the twin issues of validity and nullity
of the Addendum Contract and, consequently, of the arbitration clause therein
as well. The resolution of both Climax-Arimco’s
Motion for Partial Reconsideration and/or Clarification in G.R. No. 161957 and Gonzales’s
Petition for Certiorari in G.R. No. 167994 essentially turns on whether the question
of validity of the Addendum Contract bears upon the applicability or
enforceability of the arbitration clause contained therein. The two pending matters shall thus be jointly
resolved.
We
address the Rule 65 petition in G.R. No. 167994 first from the remedial law
perspective. It deserves to be dismissed on procedural grounds, as it was filed
in lieu of appeal which is the prescribed remedy and at that far beyond the
reglementary period. It is elementary in
remedial law that the use of an erroneous mode of appeal is cause for dismissal
of the petition for certiorari and it has been repeatedly stressed that a
petition for certiorari is not a substitute for a lost appeal. As its nature, a
petition for certiorari lies only where there is “no appeal,” and “no plain,
speedy and adequate remedy in the ordinary course of law.”[25] The Arbitration Law specifically provides for
an appeal by certiorari, i.e., a petition for review under certiorari
under Rule 45 of the Rules of Court that raises pure questions of law.[26] There is no merit to Gonzales’s argument that
the use of the permissive term “may” in Sec. 29, R.A. No. 876 in the filing of
appeals does not prohibit nor discount the filing of a petition for certiorari
under Rule 65.[27] Proper interpretation of the aforesaid
provision of law shows that the term “may” refers only to the filing of an
appeal, not to the mode of review to be employed. Indeed, the use of “may” merely reiterates
the principle that the right to appeal is not part of due process of law but is
a mere statutory privilege to be exercised only in the manner and in accordance
with law.
Neither
can BF Corporation v. Court of Appeals[28]
cited by Gonzales support his theory. Gonzales
argues that said case recognized and allowed a petition for certiorari under
Rule 65 “appealing the order of the Regional Trial Court disregarding the
arbitration agreement as an acceptable remedy.”[29] The
BF Corporation case had its origins
in a complaint for collection of sum of money filed by therein petitioner BF
Corporation against Shangri-la Properties, Inc. (SPI). SPI moved to suspend the proceedings alleging
that the construction agreement or the Articles of Agreement between the
parties contained a clause requiring prior resort to arbitration before
judicial intervention. The trial court found
that an arbitration clause was incorporated in the Conditions of Contract
appended to and deemed an integral part of the Articles of Agreement. Still, the trial court denied the motion to
suspend proceedings upon a finding that the Conditions of Contract were not
duly executed and signed by the parties.
The trial court also found that SPI had failed to file any written
notice of demand for arbitration within the period specified in the arbitration
clause. The trial court denied SPI's motion for reconsideration and ordered it
to file its responsive pleading. Instead
of filing an answer, SPI filed a petition for certiorari under Rule 65, which the
Court of Appeals, favorably acted upon.
In a petition for review before this Court, BF Corporation alleged,
among others, that the Court of Appeals should have dismissed the petition for
certiorari since the order of the trial court denying the motion to suspend
proceedings “is a resolution of an incident on the merits” and upon the
continuation of the proceedings, the trial court would eventually render a
decision on the merits, which decision could then be elevated to a higher court
“in an ordinary appeal.”[30]
The
Court did not uphold BF Corporation’s argument.
The issue raised before the Court was whether SPI had taken the proper
mode of appeal before the Court of Appeals.
The question before the Court of Appeals was whether the trial court had
prematurely assumed jurisdiction over the controversy. The question of
jurisdiction in turn depended on the question of existence of the arbitration
clause which is one of fact. While on
its face the question of existence of the arbitration clause is a question of
fact that is not proper in a petition for certiorari, yet since the
determination of the question obliged the Court of Appeals as it did to interpret the contract documents
in accordance with R.A. No. 876 and existing jurisprudence, the question is
likewise a question of law which may be properly taken cognizance of in a
petition for certiorari under Rule 65, so the Court held.[31]
The
situation in B.F. Corporation is not
availing in the present petition. The disquisition in B.F. Corporation led to the conclusion that in order that the question
of jurisdiction may be resolved, the appellate court had to deal first with a
question of law which could be addressed in a certiorari proceeding. In the present case, Gonzales’s petition
raises a question of law, but not a question of jurisdiction. Judge Pimentel acted in accordance with the
procedure prescribed in R.A. No. 876 when he ordered Gonzales to proceed with
arbitration and appointed a sole arbitrator after making the determination that
there was indeed an arbitration agreement.
It has been held that as long as a court acts within its jurisdiction
and does not gravely abuse its discretion in the exercise thereof, any supposed
error committed by it will amount to nothing more than an error of judgment reviewable
by a timely appeal and not assailable by a special civil action of certiorari.[32] Even if we overlook the employment of the
wrong remedy in the broader interests of justice, the petition would
nevertheless be dismissed for failure of Gonzalez to show grave abuse of
discretion.
Arbitration, as an alternative mode of
settling disputes, has long been recognized and accepted in our jurisdiction. The Civil Code is explicit on the matter.[33] R.A.
No. 876 also expressly authorizes arbitration of domestic disputes. Foreign arbitration, as a system of settling
commercial disputes of an international character, was likewise recognized when
the Philippines adhered to the United Nations "Convention on the
Recognition and the Enforcement of Foreign Arbitral Awards of 1958," under
the 10 May 1965 Resolution No. 71 of the Philippine Senate, giving reciprocal
recognition and allowing enforcement of international arbitration agreements
between parties of different nationalities within a contracting state.[34] The enactment of R.A. No. 9285 on
Disputes do not go to arbitration
unless and until the parties have agreed to abide by the arbitrator’s
decision. Necessarily, a contract is
required for arbitration to take place and to be binding. R.A. No. 876 recognizes the contractual
nature of the arbitration agreement, thus:
Sec. 2. Persons and matters subject to
arbitration.—Two or more
persons or parties may submit to the
arbitration of one or more arbitrators any controversy existing, between them
at the time of the submission and which may be the subject of an action, or the
parties to any contract may in such contract agree to settle by arbitration a controversy thereafter arising
between them. Such submission or contract shall be valid, enforceable and
irrevocable, save upon such grounds as exist at law for the revocation of any
contract.
Such
submission or contract may include question arising out of valuations,
appraisals or other controversies which may be collateral, incidental,
precedent or subsequent to any issue between the parties.
A
controversy cannot be arbitrated where one of the parties to the controversy is
an infant, or a person judicially declared to be incompetent, unless the
appropriate court having jurisdiction approve a petition for permission to
submit such controversy to arbitration made by the general guardian or guardian
ad litem of the infant or of the
incompetent. [Emphasis added.]
Thus,
we held in Manila Electric Co. v. Pasay
Transportation Co.[35]
that a submission to arbitration is a contract. A clause in a contract
providing that all matters in dispute between the parties shall be referred to
arbitration is a contract,[36]
and in Del Monte Corporation-USA v. Court
of Appeals[37] that
“[t]he provision to submit to arbitration any dispute arising therefrom and the
relationship of the parties is part of that contract and is itself a contract. As a rule, contracts are respected as the law
between the contracting parties and produce effect as between them, their
assigns and heirs.”[38]
The
special proceeding under Sec. 6 of R.A. No. 876 recognizes the contractual
nature of arbitration clauses or agreements.
It provides:
Sec. 6. Hearing
by court.—A party aggrieved by the failure, neglect or refusal of another
to perform under an agreement in writing
providing for arbitration may petition the court for an order directing
that such arbitration proceed in the manner provided for in such
agreement. Five days notice in writing
of the hearing of such application shall be served either personally or by
registered mail upon the party in default.
The court shall hear the parties, and upon being satisfied that the making of the agreement or such failure to
comply therewith is not in issue, shall make an order directing the parties
to proceed to arbitration in accordance with the terms of the agreement. If the making of the agreement or default be
in issue the court shall proceed to summarily hear such issue. If the finding be that no agreement in writing providing for
arbitration was made, or that there is no default in the proceeding
thereunder, the proceeding shall be dismissed.
If the finding be that a written
provision for arbitration was made and there is a default in proceeding
thereunder, an order shall be made summarily directing the parties to proceed
with the arbitration in accordance with the terms thereof.
The court shall decide all motions,
petitions or applications filed under the provisions of this Act, within ten
days after such motions, petitions, or applications have been heard by it. [Emphasis added.]
This special proceeding is the
procedural mechanism for the enforcement of the contract to arbitrate. The jurisdiction of the courts in relation to
Sec. 6 of R.A. No. 876 as well as the nature of the proceedings therein was
expounded upon in La Naval Drug
Corporation v. Court of Appeals.[39] There it was held that R.A. No. 876 explicitly
confines the court's authority only to the determination of whether or not there
is an agreement in writing providing for arbitration. In the affirmative, the statute ordains that
the court shall issue an order "summarily directing the parties to proceed
with the arbitration in accordance with the terms thereof." If the court, upon the other hand, finds that
no such agreement exists, "the proceeding shall be dismissed."[40] The
cited case also stressed that the proceedings are summary in nature.[41] The same thrust was made in the earlier case
of Mindanao Portland Cement Corp. v.
McDonough Construction Co. of Florida[42] which
held, thus:
Since there
obtains herein a written provision for arbitration as well as failure on
respondent's part to comply therewith, the court a quo rightly ordered the parties to proceed to arbitration in
accordance with the terms of their agreement (Sec. 6, Republic Act 876).
Respondent's arguments touching upon the merits of the dispute are improperly
raised herein. They should be addressed to the arbitrators. This proceeding is
merely a summary remedy to enforce the agreement to arbitrate. The duty of the
court in this case is not to resolve the merits of the parties' claims but only
to determine if they should proceed to arbitration or not. x x x x[43]
Implicit
in the summary nature of the judicial proceedings is the separable or
independent character of the arbitration clause or agreement. This was highlighted in the cases of Manila Electric Co. v.
The
doctrine of separability, or severability as other writers call it, enunciates that an arbitration agreement is
independent of the main contract. The
arbitration agreement is to be treated as a separate agreement and the
arbitration agreement does not automatically terminate when the contract of
which it is part comes to an end.[46]
The
separability of the arbitration agreement is especially significant to the
determination of whether the invalidity of the main contract also nullifies the
arbitration clause. Indeed, the doctrine
denotes that the invalidity of the main contract, also referred to as the
“container” contract, does not affect the validity of the arbitration
agreement. Irrespective of the fact that
the main contract is invalid, the arbitration clause/agreement still remains
valid and enforceable.[47]
The
separability of the arbitration clause is confirmed in Art. 16(1) of the UNCITRAL
Model Law and Art. 21(2) of the UNCITRAL Arbitration Rules.[48]
The
separability doctrine was dwelt upon at length in the U.S. case of Prima Paint Corp. v. Flood & Conklin
Manufacturing Co.[49] In that case, Prima Paint and Flood and
Conklin (F & C) entered into a consulting agreement whereby F & C undertook
to act as consultant to Prima Paint for six years, sold to Prima Paint a list
of its customers and promised not to sell paint to these customers during the
same period. The consulting agreement
contained an arbitration clause. Prima
Paint did not make payments as provided in the consulting agreement, contending
that F & C had fraudulently misrepresented that it was solvent and able for
perform its contract when in fact it was not and had even intended to file for
bankruptcy after executing the consultancy agreement. Thus, F & C served Prima Paint with a
notice of intention to arbitrate. Prima
Paint sued in court for rescission of the consulting agreement on the ground of
fraudulent misrepresentation and asked for the issuance of an order enjoining F
& C from proceeding with arbitration.
F & C moved to stay the suit pending arbitration. The trial court granted F & C’s motion,
and the U.S. Supreme Court affirmed.
The
U.S. Supreme Court did not address Prima Paint’s argument that it had been
fraudulently induced by F & C to sign the consulting agreement and held
that no court should address this argument.
Relying on Sec. 4 of the Federal Arbitration Act—which provides that “if
a party [claims to be] aggrieved by the alleged failure x x x of another to
arbitrate x x x, [t]he court shall hear the parties, and upon being satisfied
that the making of the agreement for arbitration or the failure to comply
therewith is not in issue, the court shall make an order directing the parties
to proceed to arbitration
x x x. If the making of the arbitration agreement or
the failure, neglect, or refusal to perform the same be in issue, the court
shall proceed summarily to the trial thereof”—the U.S. High Court held that the
court should not order the parties to arbitrate if the making of the
arbitration agreement is in issue. The
parties should be ordered to arbitration if, and only if, they have contracted
to submit to arbitration. Prima Paint
was not entitled to trial on the question of whether an arbitration agreement
was made because its allegations of fraudulent inducement were not directed to
the arbitration clause itself, but only to the consulting agreement which
contained the arbitration agreement.[50] Prima
Paint held that “arbitration clauses are ‘separable’ from the contracts in
which they are embedded, and that where no claim is made that fraud was
directed to the arbitration clause itself, a broad arbitration clause will be
held to encompass arbitration of the claim that the contract itself was induced
by fraud.”[51]
There
is reason, therefore, to rule against Gonzales when he alleges that Judge
Pimentel acted with grave abuse of discretion in ordering the parties to
proceed with arbitration. Gonzales’s
argument that the Addendum Contract is null and void and, therefore the
arbitration clause therein is void as well, is not tenable. First, the proceeding in a petition for
arbitration under R.A. No. 876 is limited only to the resolution of the
question of whether the arbitration agreement exists. Second, the separability of the arbitration
clause from the Addendum Contract means that validity or invalidity of the
Addendum Contract will not affect the enforceability of the agreement to
arbitrate. Thus, Gonzales’s petition for
certiorari should be dismissed.
This brings
us back to G.R. No. 161957. The adjudication
of the petition in G.R. No. 167994 effectively modifies part of the Decision
dated
The
Motion for Reconsideration of Gonzales in G.R. No. 161957 should also be
denied. In the motion, Gonzales raises
the same question of jurisdiction, more particularly that the complaint for
nullification of the Addendum Contract pertained to the DENR Panel of Arbitrators, not the regular
courts. He insists that the subject of his
complaint is a mining dispute since it involves a dispute concerning rights to
mining areas, the Financial and Technical Assistance Agreement (FTAA) between
the parties, and it also involves claimowners.
He adds that the Court failed to rule on other issues he raised, such as
whether he had ceded his claims over the mineral deposits located within the
Addendum Area of Influence; whether the complaint filed before the DENR Panel
of Arbitrators alleged ultimate facts of fraud; and whether the action to
declare the nullity of the Addendum Contract on the ground of fraud has
prescribed.
These
are the same issues that Gonzales raised in his Rule 45 petition in G.R. No.
161957 which were resolved against him in the Decision of
The
question of whether Gonzales had ceded his claims over the mineral deposits in
the Addendum Area of Influence is a factual question which is not proper for determination
before this Court. At all events, moreover,
the question is irrelevant to the issue of jurisdiction of the DENR Panel of
Arbitrators. It should be pointed out
that the DENR Panel of Arbitrators made a factual finding in its Order dated 18
October 2001, which it reiterated in its Order dated 25 June 2002, that
Gonzales had, “through the various agreements, assigned his interest over the
mineral claims all in favor of [Climax-Arimco]” as well as that without the
complainant [Gonzales] assigning his interest over the mineral claims in favor
of [Climax-Arimco], there would be no FTAA to speak of.”[52] This finding was affirmed by the Court of
Appeals in its Decision dated
The
Court of Appeals likewise found that Gonzales’s complaint alleged fraud but did
not provide any particulars to substantiate it.
The complaint repeatedly mentioned fraud, oppression, violation of the
Constitution and similar conclusions but nowhere did it give any ultimate facts
or particulars relative to the allegations.[54]
Sec. 5,
Rule 8 of the Rules of Court specifically provides that in all averments of
fraud, the circumstances constituting fraud must be stated with particularity. This is to enable the opposing party to
controvert the particular facts allegedly constituting the same. Perusal of the complaint indeed shows that it
failed to state with particularity the ultimate facts and circumstances constituting
the alleged fraud. It does not state
what particulars about Climax-Arimco’s financial or technical capability were
misrepresented, or how the misrepresentation was done. Incorporated in the body of the complaint are
verbatim reproductions of the contracts, correspondence and government
issuances that reportedly explain the allegations of fraud and
misrepresentation, but these are, at best, evidentiary matters that should not be
included in the pleading.
As to
the issue of prescription, Gonzales’s claims of fraud and misrepresentation
attending the execution of the Addendum Contract are grounds for the annulment
of a voidable contract under the Civil Code.[55] Under Art. 1391 of the Code, an action for
annulment shall be brought within four years, in the case of fraud, beginning
from the time of the discovery of the same.
However, the time of the discovery of the alleged fraud is not clear
from the allegations of Gonzales’s complaint.
That being the situation coupled with the fact that this Court is not a
trier of facts, any ruling on the issue of prescription would be uncalled for
or even unnecessary.
WHEREFORE,
the Petition for Certiorari in G.R. No. 167994 is DISMISSED. Such dismissal effectively renders
superfluous formal action on the Motion for Partial Reconsideration and/or
Clarification filed by Climax Mining Ltd., et al. in G.R. No. 161957.
The Motion for Reconsideration filed by Jorge
Gonzales in G.R. No. 161957 is DENIED WITH FINALITY.
SO
ORDERED.
DANTE O. TINGA
Associate Justice
WE CONCUR:
REYNATO S. PUNO
Chief Justice
Chairperson
MA. ALICIA AUSTRIA-MARTINEZ ROMEO J. CALLEJO, SR.
Associate Justice Associate Justice
MINITA
V. CHICO-NAZARIO
Associate Justice
C E R T I F I C A T I
O N
Pursuant to Article VIII, Section 13
of the Constitution, it is hereby
certified that the conclusions in the above Resolution were reached in
consultation before the case was assigned to the writer of the opinion of the
Court.
REYNATO
S. PUNO
Chief
Justice
[4]The pertinent portion of the assailed
decision reads:
Petitioner also disagrees with the Court
of Appeals’ ruling that the case should be brought for arbitration under Rep.
Act [No.] 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. No. 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. Rollo [G.R. No. 161957],
p. 695
[6]Art. 16(1) thereof states: “The arbitral tribunal may rule on its own
jurisdiction, including any objections with respect to the existence or
validity of the arbitration agreement.
For that purpose, an arbitration clause which forms part of a contract
shall be treated as an agreement independent of the other terms of the
contract. A decision by the arbitral
tribunal that the contract is null and void shall not entail ipso jure the invalidity of the
arbitration clause.” The Model Law was
adopted in Republic Act No. 9285 or the “Alternative Dispute Resolution Act of
2004” (in Sec. 19 thereof).
[11]Clause 19.1 of the Addendum Contract, rollo
(G.R. No. 167994), p. 87. It reads: “All disputes arising out of or in connection
with the Contract, which cannot be settled amicable among the Parties, shall be
finally settled under Republic Act No. 876, otherwise known as ‘The Arbitration
Law,” as may be amended from time to time.
It is agreed, however, that at all events and notwithstanding any
provision of Republic Act No. 876, only one arbitrator shall be appointed by
all the Parties. For purposes of such
appointment and at all proceedings hereunder, each of the CLAIMOWNER and ARIMCO
shall have one vote. AUMEX,
GEOPHILIPPINES and INMEX shall jointly have only one vote and, for purposes
hereof, GEOPHILIPPINES and INMEX hereby irrevocably constitute AUMEX as their
attorney-in-fact, in their place, name and stead, to exercise the voting right
granted hereunder. If the CLAIMOWNER,
ARIMCO and AUMEX fail to agree on an arbitrator within 30 days from the date
they first begin considering persons to act as arbitrator, such arbitrator
shall be appointed by the appropriate court in accordance with Republic Act No.
876. The Parties agree that the venue of
the arbitration and all actions under the Contract shall be Metro Manila,
Philippines. The Parties further agree
that the decision of the arbitrator shall be binding and enforceable upon the
Parties and that no judicial action may be instituted by any Party against any
other Party under the Contract except as provided in this Clause 19.1.”
[21]
[24]Sec. 19 of R.A. No. 9258
adopts the UNCITRAL Model Law for international commercial arbitration, while
Sec. 33 of R.A. No. 9258 makes certain portions of the UNCITRAL Model Law,
including Art. 8, applicable to domestic arbitration.
[25]
[26]Justice Romero, in his
dissenting opinion in Asset Privatizatoin
Trust v. Court of Appeals, 360 Phil. 768, 824-825 (1998), had occasion to
discuss the mode of review under Sec. 29 of R.A. No. 876:
The term “certiorari” in
[Sec. 29 of R.A. No. 876] refers to an ordinary appeal under Rule 45, not the
special action of certiorari under Rule 65.
It is an “appeal,” as Section 29 proclaims. The proper forum for this action is, under
the old and the new rules of procedure, the Supreme Court. Thus, Section 2(c) of Rule 41 of the 1997
Rules of Civil Procedure states that, “In all cases where only questions of law
are raised or involved, the appeal shall be to the Supreme Court by petition
for review on certiorari in accordance with Rule 45.” Moreover, Section 29 limits the appeal to
“questions of law,” another indication that it is referring to an appeal by
certiorari under Rule 45 which, indeed, is the customary manner of reviewing
such issues. On the other hand, the extraordinary remedy of certiorari under
Rule 65 may be availed of by a party where there is “no appeal, nor any plain,
speedy, and adequate remedy in the course of law,” and under circumstances
where “a tribunal, board or officer exercising judicial functions, has acted
without or in excess of its or his jurisdiction, or with grave abuse of
discretion.”
[34]National
Union Fire Insurance Company of Pittsburgh v. Stolt-Nielsen Philippines, Inc., G.R. No. 87958, 26 April 1990, 184 SCRA
682.
[40]Supra note 22
at 91.
[41]
[47]Id. Accordingly, the termination or
avoidance (for example, following a fraudulent misrepresentation) of a contract
which was initially valid will not affect the validity of the arbitration agreement. The doctrine also recognizes in this way the
wish of the parties to have disputes arising out of their contract settled by
arbitration, even if that contract is no longer in existence.
In the